Court File and Parties
COURT FILE NO.: CV-21-0425-00 DATE: 2023-09-15
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 1876029 Ontario Ltd. o/a B. Gibson Mechanical v. Smart Renovation Solutions Ltd. And Walaji Estate Inc.
HEARD: September 14, 2023
BEFORE: Fregeau J.
COUNSEL: Robin Lepere, for the Plaintiffs Tarek Abuteen, appearing for Smart Renovations Solutions Ltd. Walaji Estate Inc. previously noted in default
Endorsement on Motion
[1] This motion, brought by the Plaintiff, requests:
- An order striking out the Statement of Defence and Counterclaim of the Defendant, Smart Renovation Solutions Ltd. (“Smart Reno”);
- Judgment in accordance with the Statement of Claim; and
- Costs of the motion on a substantial indemnity basis.
[2] Tarek Abuteen appeared at the hearing of this motion and requested that it be adjourned into January 2024. The reasons provided by Mr. Abuteen in support of his request for an adjournment did not include any suggestion that Smart Reno was in the process of, or intended to, retain counsel to represent the corporation in this action. Following submissions on the adjournment request, it was denied.
[3] Smart Reno subcontracted the Plaintiff, 1876029 Ontario Ltd. o/a B. Gibson Mechanical (“Gibson”) to supply and install various mechanical works at the premises municipally known as 200 Rowland Street, Thunder Bay, Ontario (the “property”).
[4] Gibson alleges that it has not been paid in full pursuant to the terms of the subcontract and commenced this action against the Defendants. The Defendant, Walaji Estate Inc., is the owner of the property. It did not defend the claim and has been noted in default.
[5] Smart Reno, through counsel, served a Statement of Defence and Counterclaim on January 21, 2022. A Reply and Defence to Counterclaim was served on Smart Reno’s counsel on February 8, 2022. On March 1, 2022, counsel for Gibson received notice that counsel retained by Smart Reno was no longer going to be acting for the corporation and that Tarek Abuteen, who describes himself as the “directing mind” of the corporation, intended to represent Smart Reno in this litigation moving forward.
[6] On March 2, 2022, counsel for Gibson received an email from Mr. Abuteen in which he purported to serve a Notice of Intent to Act in Person. Counsel for Gibson advised Mr. Abuteen that he was required to bring a motion under Rule 15.01(2) of the Rules of Civil Procedure seeking leave to represent Smart Reno in this litigation.
[7] A motion was then brought by Smart Reno seeking leave to have Mr. Abuteen represent Smart Reno in this action. This motion was heard on April 14, 2022 (the “First Motion”).
[8] On July 11, 2022, Nieckarz J. issued her decision on the First Motion. She denied Mr. Abuteen leave to represent Smart Reno but allowed Mr. Abuteen to file a further motion on/before August 5, 2022, with specific information she had listed in her decision and indicated that she would re-consider his request.
[9] Mr. Abuteen did file a further motion with additional evidence (the “Second Motion”) again requesting leave to represent Smart Reno in this proceeding.
[10] On October 5, 2022, Nieckarz J. ordered Smart Reno to pay costs of the First Motion to Gibson in the amount of $2,710.00 within 30 days (the “First Cost Decision”). The First Cost Decision was stayed pending the determination of the Second Motion on October 18, 2022.
[11] The Second Motion was heard by Nieckarz J. on November 17, 2022. On February 21, 2023, Nieckarz J. once again denied Mr. Abuteen leave to represent Smart Renovations in this proceeding. Nieckarz J. also lifted the stay on the First Cost Decision.
[12] On August 30, 2023, Nieckarz J. released her Endorsement on Costs on the Second Motion. Smart Reno was ordered to pay to Gibson costs of the Second Motion in the amount of $2,000.00 within 30 days.
[13] Smart Reno sought leave to appeal Nieckarz J.’s decisions denying him leave to represent Smart Reno. Its motion for leave to appeal was dismissed by the Divisional Court on June 16, 2023, with costs payable by Smart Renovations to Gibson in the amount of $2,663.98 within 30 days (the “Divisional Court Decision”).
[14] Mr. Abuteen then served a Notice of Motion for Leave to Appeal the Divisional Court Decision to the Court of Appeal on June 30, 2023. Due to filing irregularities, the Court of Appeal ultimately declined to accept Mr. Abuteen’s Notice of Motion for Leave to Appeal.
[15] Smart Reno has not paid the outstanding costs awards totaling $7,373.98 and counsel for the plaintiff has not been contacted by a lawyer retained by Smart Reno in relation to this proceeding.
[16] Pursuant to very thorough reasons as set out in the endorsements of Nieckarz J., dated April 14 and November 17, 2022, Mr. Abuteen has been denied leave to represent Smart Reno in this litigation. The Divisional Court has denied Mr. Abuteen leave to appeal Justice Nieckarz’s rulings and he has failed to properly advance his attempted appeal of the Divisional Court’s decision. Nonetheless, Mr. Abuteen still declines to retain counsel to represent Smart Reno in this litigation. Smart Reno has also failed to pay any portion of the $7,373.98 in costs owing to Gibson.
[17] Smart Reno and/or Mr. Abuteen has failed to comply with the mandatory provisions of Rule 15.01(2) of the Rules of Civil Procedure. If a corporate party does not comply with Rule 15.01(2), the other party may move to have their pleading struck: See 19212 Ontario Ltd. v. Astrochrome Crankshaft Toronto Ltd. (Master), at para. 19.
[18] As noted by Gibson at the hearing of this motion, this is a modest claim in the amount of $34,391.83. The Statement of Claim was issued on November 25, 2021. In her April 14, 2022, endorsement, Nieckarz J., at para. 28, expressed concerns about delay, increased costs and unfairness to the plaintiff if Mr. Abuteen was to be granted leave to represent Smart Reno. These concerns were reiterated in the November 17, 2022, endorsement of Justice Nieckarz. It is now September 2023, this litigation has not advanced, significant costs have been incurred by Gibson and the costs awarded against Smart Reno remain unpaid.
[19] Rule 15 of the Rules of Civil Procedure does not contemplate what is to occur if a corporate party fails and/or refuses to comply with the mandatory requirement of Rule 15.01(2). Rule 1.04(2) of the Rules of Civil Procedure provides that where matters are not provided for in the Rules, the practice shall be determined by analogy to them.
[20] Rule 15.04(6) of the Rules of Civil Procedure requires that a corporation shall, within 30 days after being served with an order removing its lawyer from the record, either appoint a new lawyer of record or obtain an order under Rule 15.01(2) granting it leave to be represented by a person other than a lawyer. Rule 15.04(7) of the Rules of Civil Procedure states that if a corporation fails to comply with subrule (6), the court may dismiss its proceeding or strike out its defence.
[21] In my view, Smart Reno’s steadfast refusal to retain counsel, following the dismissal of its Rule 15.01(2) motion seeking leave to allow Mr. Abuteen to represent the corporation, is analogous to a corporation failing to comply with Rule 15.04(6), which invokes Rule 15.04(7), granting the court the discretionary authority to dismiss a proceeding or strike out a defence.
[22] I recognize that an order removing the lawyer of record for the corporation is required prior to the application of Rules 15.04(6) and (7). In my opinion, the dismissal of a Rule 15.01(2) motion seeking leave is analogous to an order removing a lawyer of record for a corporation.
[23] Rule 2.01(1)(b) of the Rules of Civil Procedure provides that the court, only where and as necessary in the interest of justice, may set aside the proceeding or a step, document or order in the proceeding in whole or in part. I conclude that it is necessary in the interest of justice to strike the Statement of Defence and Counterclaim of the Defendant, Smart Renovations Solutions Ltd.
[24] The Defendant, Smart Renovations Solutions Ltd. shall pay to the Plaintiff its costs of this motion fixed on a partial indemnity basis at $1,821, inclusive of HST and Disbursements.
[25] An order shall issue as per the draft order filed by Gibson on this motion, as amended regarding costs as set out in para. 24 herein.
“Original signed by” The Hon. Mr. Justice J.S. Fregeau
DATE: September 15, 2023