Court File and Parties
Court File No.: CV-21-00663862-0000 Date: 20230616 Ontario Superior Court of Justice
Re: 2770095 Ontario Inc., Plaintiff -and- Maxwell Dean Morgan, Tricia Edwards, 1587803 Ontario Ltd. doing business as Aramor Payments, 2513086 Ontario Inc., 2416336 Ontario Inc., Kyla Vanessa Morgan, 4th And Long Inc., Humbleberry Inc., Dopebuilder Commerce, John Doe, Jane Doe and Doe Corporations, Defendants
Before: Robert Centa J.
Counsel: Derek Ricci and Andrew Carlson, for the plaintiff (moving party) Alan Cofman and Abby McGivney, for the defendant (responding party), Tricia Edwards Keshan Sritharan, for the defendant (responding party) Maxwell Dean Morgan
Heard: June 14, 2023
Endorsement
[1] On March 24, 2023, I dismissed the action brought by the plaintiff 2770095 Ontario Inc. against a group of Ontario defendants because it was an abuse of process. I found that the plaintiff had entered into an unlawful and champertous agreement with Affinitas Medios de Pago S.A.P.I de C.V., a company headquartered in Mexico City. The plaintiff had been incorporated by an Ontario lawyer for the sole purpose of purchasing the claims of Affinitas and prosecuting them in its own name. I found that the plaintiff’s actions were champertous and did nothing to advance the cause of justice.
[2] As is its right, the plaintiff has appealed my decision to the Court of Appeal for Ontario.
[3] In addition, before the parties had the order reflecting my endorsement issued and entered, the plaintiff changed counsel and filed a motion before me. The plaintiff asks me to grant an order setting aside my decision dismissing its action, substituting Affinitas as the plaintiff in this proceeding, making some minor consequential changes to the statement of claim, and permitting the revised claim to continue.
[4] The plaintiff filed an affidavit from an executive at Affinitas stating that the company is ready, willing, and able to pursue its claims against the defendants. The plaintiff submits, on behalf of Affinitas, that Affinitas did not pursue its claims from the outset “because it was operating under the mistaken belief that it had validly assigned its claims” to the plaintiff.
[5] For the reasons that follow, I dismiss this motion.
Legal framework
[6] I agree with the plaintiff that until someone takes out the order reflecting my endorsement, I have jurisdiction to alter or vary my decision. In Montague v. Bank of Nova Scotia, 69 O.R. (3d) 87 (C.A.), the Court of Appeal for Ontario stated:
I cannot agree that the rule prohibits the trial judge from changing her order. There can be no doubt that until a judgment is formally entered in the court record, the judge has a very broad discretion to change it. In Holmes Foundry Ltd. v. Village of Point Edward; Caposite Insulations Ltd. v. Village of Point Edward, [1963] 2 O.R. 404, 39 D.L.R (2d) 621 (C.A.), Laidlaw J.A. put it this way, at p. 407 O.R.:
It is well settled in law that an order can always be withdrawn, altered or modified by a Judge either on his own initiative or on the application of party until such time as the order has been drawn up, passed and entered. I refer to Re Harrison’s Share under a Settlement, Harrison v. Harrison [1955] 1 Ch. 260 at p. 275.
[7] However, for sensible reasons of order, finality, and to maintain confidence in the impartial administration of justice, this discretion must be exercised cautiously and only for very good reasons.
[8] A judge should only change her order where the change is technical (for example correcting an arithmetic error in the calculation of damages) or if it is necessary to avoid a miscarriage of justice. Justice Nordheimer provided important guidance on the point as follows:
I acknowledge there is a fairly broad power, in a judge, to change an order after it has been announced but before it has been signed and entered. Any such change should only be made, however, if it is either technical (e.g. to correct an arithmetic error) or it is necessary to avoid a miscarriage of justice: Clayton v. British American Securities Ltd., [1935] 1 D.L.R 432 (B.C.C.A.) at pp. 440-441. Even then, if a change is to be made, it must be fully explained to ensure that the authority is not abused. The concern that arises from changes being made by a judge to an order, that has already been pronounced, has been expressed in other cases. For example, in Montague v. Bank of Nova Scotia (2004), 69 O.R. (3d) 87 (C.A.), Goudge J.A. said that, notwithstanding the very wide discretion a judge has to change his or her judgment before it is entered, that discretion had to be exercised cautiously and for very good reasons. He commented, at para. 40:
Any change to a judgment once given, no matter how soundly based, runs the risk of evoking suspicions of abuse on the part of those adversely affected. It is at the least disquieting, and to that extent can put a cloud over the administration of justice. A judge exercising this discretion bears a significant onus to explain the change.
[9] Even when they are not yet functus officio, judges must exercise their discretion to change their judgments sparingly and with great care so as not to bring the administration of justice into disrepute. 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59, [2001] 2 S.C.R. 983 at para. 61; Brown, at para. 22; Pichelli v. Kagalj, 2019 ONSC 1371, at para. 26.
[10] I would not exercise my discretion in favour of the plaintiff. In my view, it would be manifestly inappropriate to reverse my prior decision to dismiss this action and allow Affinitas to prosecute this litigation.
[11] First, the change that the plaintiff asks me to make to my decision is not merely technical. In support of its position, the plaintiff points to rules 5.04(2), which permits the substitution of one party for another, and 26.01, which requires a court to grant leave to a party to amend a pleading absent prejudice to the defendant that cannot be compensated for by costs. The plaintiff submits that there is no prejudice to the defendants, and that this should be determinative of the issue in its favour. These rules are found in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[12] I disagree. In my view, the mandatory language of rules 26.01 and 5.04(2) have no application to a situation such as this, where the action has already been dismissed. Counsel for the plaintiff candidly admitted that they could not find a single case where these rules were used to revive a dismissed action.
[13] Whether or not the plaintiff could have substituted Affinitas as a plaintiff before I dismissed this action is virtually irrelevant to the exercise of my discretion at this stage. The plaintiff and Affinitas seek a second bite at the cherry. What they seek is no mere technical amendment to my endorsement.
[14] Second, the relief requested by the plaintiff is not necessary to avoid a miscarriage of justice.
[15] No later than December 19, 2022, the defendants advised the plaintiff (and Affinitas) that they were moving to have this action dismissed as champertous. The motion was argued on February 6, 2023. There was plenty of time for the plaintiff to seek to amend its pleadings if the plaintiff and Affinitas wished to avoid the risk of finding themselves in this situation. They did not do so.
[16] Affinitas could also commence a new action in its own name. Whether or not there is a problem under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, would be an issue to be determined in that proceeding.
[17] But perhaps most importantly, there will be no miscarriage of justice if I do not grant the plaintiff’s motion. The plaintiff has appealed my decision dismissing its action to the Court of Appeal for Ontario. The plaintiff may be successful on appeal. On this motion, however, I must proceed on the basis that my decision was correct.
[18] I found that the plaintiff had abused the court’s processes. It now seeks to change its position in this litigation because, and only because, of its lack of success. There might be cases where the court would be persuaded to exercise its discretion in favour of a party found to have committed an abuse of the court’s process. This is not one of those rare cases.
[19] To accede to this plaintiff’s request would be put a cloud over the administration of justice. To grant such extraordinary relief to a special purpose vehicle created for the sole and express purpose of trafficking in litigation (Fredrickson v. Insurance Corp. of British Columbia, 28 D.L.R. (4th) 414 (B.C.C.A), at para. 21; Rizzo & Rizzo Shoes Ltd. (Re), 38 O.R. (3d) 280 (C.A.)) for its own profit would bring the administration of justice into disrepute. The motion is dismissed.
[20] If the parties are not able to resolve costs of this action, the defendants may each email their costs submission of no more than three double-spaced pages to my judicial assistant on or before June 23, 2023. The plaintiff may deliver its responding submission of no more than three double-spaced pages on or before June 30, 2023. No reply submissions are to be delivered without leave.
Robert Centa J. Date: June 16, 2023