Court File and Parties

Court File No.: CV-22-60874 Date: 2023-03-27 Ontario Superior Court of Justice

Between: 2257573 Ontario Inc., Plaintiff – and – Albert Paul Mifsud and Eldon Lindbergh Hunt, Defendants

Counsel: G.S. Chandok, for the Plaintiff L. Lung, for Eldon Lindbergh Hunt Albert Paul Mifsud, not appearing

Heard: March 8, 2023

DECISION ON RULE 21 MOTION

Before: The Honourable Justice J. R. Henderson

INTRODUCTION

[1] This is a motion brought by the defendant, Eldon Lindbergh Hunt (“Hunt”), for an order striking out the statement of claim as against Hunt pursuant to rule 21.01(1)(b) of the Rules of Civil Procedure on the ground that the statement of claim does not disclose a reasonable cause of action.

[2] The plaintiff is the mortgagee of a property known as 253 Four Mile Creek Road, Niagara-on-the-Lake (“the property”). The plaintiff obtained judgment against the owner of the property for payment and possession of the property, and thereafter entered into an agreement of purchase and sale to sell the property to a third party.

[3] The plaintiff alleges that Hunt, the lawyer for the defendant Albert Paul Mifsud (“Mifsud”), registered a caution against the property on behalf of Mifsud (“the Mifsud caution”). The plaintiff pleads that the registration of the Mifsud caution prevented the plaintiff from closing the agreement of purchase and sale, thereby causing the plaintiff to suffer damages.

[4] Hunt submits that at all relevant times he was acting as Mifsud’s lawyer, and that the statement of claim, as drafted, discloses no reasonable cause of action against Hunt. Therefore, counsel for Hunt asks that the statement of claim be struck without leave for the plaintiff to amend the claim.

[5] The plaintiff submits that the statement of claim properly discloses reasonable causes of action against Hunt in tort, and under s.132 of the Land Titles Act (“LTA”). In the alternative, if any portion of the statement of claim is struck, the plaintiff requests leave to amend the claim.

THE LAW

[6] Rule 21.01(1) of the Rules of Civil Procedure reads:

A party may move before a judge … (b) to strike out a pleading on the ground that it discloses no reasonable cause of action or defence, and the judge may make an order or grant judgment accordingly.

[7] On a motion brought by a defendant under rule 21.01 the motions judge must determine whether it is “plain and obvious” that no reasonable cause of action is disclosed in the statement of claim. In doing so, the motions judge must accept that the facts alleged in the statement of claim are true unless they are patently ridiculous or incapable of proof, and the court must read the pleadings generously with allowances for drafting deficiencies or inadequacies. See the cases of Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, Trillium Power Wind Corp. v. Ontario (Ministry of Natural Resources), 2013 ONCA 683 at paras. 30-31, and Folland v. Ontario, [2003] O.J. No. 1048 (Ont. C.A.) at para. 10.

[8] The burden on a defendant to prove that a plaintiff’s claim should be struck for disclosing no reasonable cause of action is very high. The court should only exercise its power under rule 21.01 in the clearest of cases. See the Folland decision at para. 10.

THE PLAINTIFF’S AFFIDAVIT

[9] In response to Hunt’s motion, the plaintiff delivered an affidavit sworn by Anil Kingrani, a director of the plaintiff corporation. Rule 21.01(2) of the Rules of Civil Procedure states that no evidence is admissible on a motion under rule 21.01(1)(b). However, counsel for the plaintiff urged me to accept this affidavit to assist me in understanding the plaintiff’s claim against Hunt and to explain some of the alleged deficiencies in the statement of claim.

[10] I find that the affidavit, read as a whole, constitutes evidence that is inadmissible on this motion. A plaintiff who responds to a rule 21.01 motion is not permitted to submit sworn testimony to explain or clarify what the plaintiff was trying to state in the pleadings. The role of the court on such a motion is to consider the words used in the statement of claim to determine whether those words, read generously, disclose a reasonable cause of action.

[11] For these reasons, the affidavit of Anil Kingrani is hereby struck in its entirety. I will disregard the contents of that affidavit for the purpose of this decision.

THE STATEMENT OF CLAIM

[12] Paragraph 1 of the statement of claim is the prayer for relief. At paragraph 1(a) the plaintiff requests an injunction requiring the defendants to discharge the Mifsud caution.

[13] At paragraph 1(b) the plaintiff requests the following relief:

[A] Declaration that the Defendant Albert Paul Mifsud does not have and has never had an interest in the said Property and the registration of a Caution against the Property by the Defendants was improper and illegal and entitles the Plaintiff to compensation from the Defendants pursuant to Section 132 of the Land Titles Act … in the amount of $1,150,000.00.

[14] The factual allegations set out in paragraphs 2 to 11 of the statement of claim are not controversial. In those paragraphs the plaintiff alleges that the owner of the property is Maryam Furney (“Furney”), that the plaintiff held a mortgage on the property pursuant to a transfer of charge, that the mortgage went into default, that the plaintiff obtained judgment for payment and for possession of the property, that the plaintiff delivered a notice of sale, and that the owner failed to redeem the mortgage.

[15] At paragraphs 12 and 13 the plaintiff pleads that the plaintiff entered into an agreement of purchase and sale with a third party with a closing date of May 24, 2022. At paragraph 14 the plaintiff alleges that the agreement of purchase and sale did not close because of two cautions that were registered against the property.

[16] The plaintiff pleads that the first caution was registered by Furney on March 22, 2022, and that it was later deleted by the Land Titles Registrar. The plaintiff pleads that the second caution was the Mifsud caution that was registered against the property on May 25, 2022.

[17] At paragraphs 16 and 23 the plaintiffs allege that Mifsud had no interest in the property and was not entitled to register a caution against the property. Further, at paragraphs 19 and 20 the plaintiffs allege that Mifsud had previously registered a caution against the property and therefore required permission of the Land Titles Registrar to register the Mifsud caution.

[18] The first alleged cause of action against Hunt is a claim pursuant to s.132 of the LTA. At paragraph 16 the plaintiff pleads, “the Defendant Hunt, who acted as the lawyer for the Defendant Mifsud and had knowledge that the Defendant Mifsud had no interest in the Property entitling him to register a Caution, registered it in any event.” At paragraph 22, the plaintiff pleads that it relies upon s.132 of the LTA.

[19] The second, alternative, cause of action pleaded against Hunt is an intentional tort. This alternative claim, and all facts in support of this claim, are contained in paragraph 25, which reads as follows: “In the alternative, the Defendant Hunt is liable to the Plaintiff for knowingly interfering with the contractual relationship between the Plaintiff and the purchaser of the subject Property for the amount of the sale price as the Defendant Hunt knew that registering the Caution would prevent the sale of the subject Property.”

ANALYSIS

[20] Hunt raises three overlapping grounds in support of his argument that the statement of claim does not disclose a reasonable cause of action against Hunt.

[21] First, Hunt correctly states that the plaintiff’s claim for damages arises from the fact that the agreement of purchase and sale between the plaintiff and a third party failed to close. In the statement of claim the plaintiff alleges that the closing date for the agreement was May 24, 2022, and that the Mifsud caution was registered on May 25, 2022.

[22] Thus, counsel for Hunt submits that the Mifsud caution could not possibly have prevented the agreement from closing as it was not registered until one day after the closing date of the agreement of purchase and sale. There is nothing in the statement of claim that explains how the registration of the Mifsud caution could have prevented the agreement from closing.

[23] I accept Hunt’s submissions on this point. On the facts as pleaded, I find that it is plain and obvious that the statement of claim does not disclose a reasonable cause of action against any defendant because the foundation for the claim, the failure to close the agreement on May 24, could not have been caused by the registration of the Mifsud caution on May 25.

[24] Counsel for the plaintiff attempted to offer an explanation for this deficiency in the pleadings, but in my view that explanation was in reality a request for leave to amend the statement of claim, which I will deal with later in this decision.

[25] The second ground raised by Hunt relates to the allegation that Hunt is liable to the plaintiff pursuant to s.132 of the LTA. Section 132 of the LTA reads:

A person who registers a caution without reasonable cause is liable to make to any person who may sustain damage by its registration such compensation as is just, and the compensation shall be deemed to be a debt due from the person who has registered the caution to the person who has sustained damage.

[26] Hunt submits that s.132 confers a statutory cause of action against a person who registers a caution without reasonable cause, but it does not confer a cause of action against a lawyer who registers a caution on behalf of his/her client.

[27] The plaintiff submits that Hunt is a “person” within the meaning of s.132. Therefore, if Hunt registered the caution for Mifsud and Hunt knew that Mifsud had no interest in the property, the plaintiff submits that the plaintiff has a cause of action against Hunt under s.132.

[28] There is no case law that considers the meaning of the word “person” in s. 132 of the LTA. However, there were two cases from 1980, MacIntyre v Commerce Capital Mortgage Corp., 28 O.R. (2d) 353, and Micro Carpets Ltd. v. De Souza Developments Ltd., 29 O.R. (2d) 77, that considered a similar, but not identical, provision of The Judicature Act.

[29] At that time section 41(4) of The Judicature Act read:

Any person who registers a certificate or caution referred to in subsection 1 without a reasonable claim to title to or interest in the land is liable for any damages sustained by any person as a result of its registration.

[30] At issue in those two cases was whether the word “person” in s.41(4) was broad enough to include a lawyer who registered a certificate or a caution on behalf of a client. In my view, that issue was determined definitively by Robins J. in the Micro Carpets case, who wrote the following at para. 5:

The "persons" to whom the section is applicable, in my opinion, are those who actually assert for themselves a "claim to title to or interest in the land". In obtaining or registering a certificate a solicitor makes no claim of his own, he acts only on his client's behalf and under his client's instructions. As I interpret s. 41(4), no cause of action is conferred by it against a solicitor acting qua solicitor and, in my view, he is not subject to liability by virtue of that section if it should later develop that his client had no reasonable claim to the land.

[31] The current legislation provides that a caution may be registered pursuant to s.128(1) of the LTA by a “person claiming to have an interest in registered land.” Therefore, although the comparable sections of The Judicature Act and the LTA are not identical, I find that the above-mentioned statement by Robins J. applies equally to s.132 of the LTA. Specifically, I find that the word “person” in s.132 refers to the person who asserts for themselves a claim to title to, or interest in, the land; it does not extend to a solicitor acting qua solicitor who registers a caution on behalf of a client.

[32] Therefore, on this second ground, I find that it is plain and obvious that the statement of claim does not disclose a reasonable cause of action against Hunt under s.132 of the LTA.

[33] Third, counsel for Hunt submits that the alleged cause of action for intentionally interfering with contractual relations cannot succeed as the plaintiff has not pleaded the facts that are required to support such a claim. I agree.

[34] To prove this intentional tort the plaintiff must establish that the defendant committed an actionable unlawful act against a third party, and that act intentionally caused economic harm to the plaintiff. See the case of A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12, at para. 5.

[35] In the statement of claim, the plaintiffs have not identified any unlawful act allegedly committed by Hunt against a third party. Further, the plaintiffs have not identified any third party against whom such an act may have been committed. Accordingly, I find it is plain and obvious that the statement of claim does not disclose a reasonable cause of action against Hunt for intentionally interfering with contractual relations.

[36] For all these reasons, all of the claims against Hunt contained in the statement of claim will be struck.

LEAVE TO AMEND

[37] As I indicated earlier, counsel for the plaintiff attempted to explain and clarify the particulars of the allegations against Hunt. In doing so, counsel acknowledged that there may be some deficiencies in the drafting of the statement of claim that needed to be corrected. Usually, after a successful rule 21.01 motion by a defendant, a plaintiff will be given an opportunity to correct the deficiencies in the pleadings.

[38] Hunt’s counsel submits that the plaintiff in this case should not be given the opportunity to amend the pleadings because, in part, the plaintiff cannot succeed against Hunt under s.132 of the LTA. Given my decision, I accept that a claim against Hunt under s.132 cannot succeed; however, there remains a possibility that the pleadings can be amended to properly plead that Hunt has committed a common law tort.

[39] Hunt’s counsel also submits that the plaintiff has not filed a proposed amended statement of claim, and therefore the defendants and the court are not aware of the proposed amendments. In my view, it is preferable for a plaintiff to file a proposed amended statement of claim if the plaintiff will be requesting leave to amend, but failure to do so is not fatal.

[40] I accept that counsel for the plaintiff now has clear direction from this court as to the deficiencies in the pleadings, and may be able to draft a proper amended pleading. Accordingly, I will grant leave to the plaintiff to deliver an amended statement of claim within 30 days.

COSTS

[41] The parties made an agreement in advance regarding costs. Based on that agreement, I order costs payable by the plaintiff to Hunt on a partial indemnity basis in the amount of $7,734 all-inclusive, payable within 30 days.

CONCLUSION

[42] For these reasons, it is ordered:

1. All of the claims in the statement of claim against the defendant Hunt are hereby struck.
2. The plaintiff is granted leave to deliver an amended statement of claim within 30 days of the date of this decision.

J. R. Henderson J. Released: March 27, 2023