Court File and Parties
CITATION: Meireis v. Topyurek 2023 ONSC 5236 COURT FILE NO.: CV-20-00650592 DATE: 20230918 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: JOSE MEIREIS, Plaintiff AND: ALI TOPYUREK, VELI TOPYUREK and BESEY TOPYUREK, Defendants
BEFORE: Koehnen J.
COUNSEL: A. Conte for the plaintiff
HEARD: April 19, 2023 (virtually), June 19, 2023 (in writing)
Endorsement
1These reasons address two issues:
i. Should this matter proceed by way of default trial? ii. If so, how should the claim be disposed of in substance?
2The claim arises out of a simple joint venture concerning the construction and sale of a house. The plaintiff entered into a joint venture with the defendants Veli and Ali Topyurek. Veli is Ali’s father. The fundamental term of the joint venture was that the plaintiff on the one hand and Veli and Ali on the other hand would share costs and profits of the house equally. The plaintiff alleges that this did not occur and seeks a monetary judgment that would equalize the contributions and entitlements of the two sides.
3The defendant Besey Topyurek it is the wife of Veli and the mother of Ali. She is alleged to have guaranteed a mortgage for which the plaintiff has had to assume sole responsibility even though both sides agreed to share the costs and benefits of the joint venture equally.
Should the Matter Proceed by Default Trial?
4There was some controversy before me about whether this matter should proceed by way of default. I summarize below the history of that controversy and my reasons for permitting it to proceed by default trial.
5Veli was served with the statement of claim on November 7, 2020 when it was placed into his hands by a process server, as appears from the affidavit of Man Ho Herman Tsi sworn December 7, 2020. That same event constituted service on Besey, given that Veli was an adult member of Besey’s household. An order for substituted service was obtained against Ali who was served pursuant to that order as appears from the affidavit of service of Ilana Isakovitch sworn May 18, 2021.
6When no defence was received, Besey and Veli were noted in default on January 11, 2021 and Ali was noted in default on May 18, 2021.
7The matter first came before me on November 7, 2022 as an unopposed trial. My endorsement of that date indicates that the defendants had not been given notice of the trial date. The endorsement also refers to the practice on the civil list of requiring notice to defendants of default proceedings pursuant to authorities such as Elekta v. Rodkin 2012 ONSC 2062 and Casa Manila Inc. v. Iannuccilli, 2018 ONSC 7083. I therefore adjourned the trial to December 13, 2022 and required the plaintiff to serve the defendants with my endorsement and a copy of the draft judgment they sought.
8After being served with those materials, the defendants expressed an intention to appear but could not attend on December 13. I therefore rescheduled that attendance to December 21, 2022. On December 21, 2022, Mr. David Markovitch appeared on behalf of the defendants. As noted in my endorsement of December 21, 2022 the statement of claim did come to Veli’s and Besey’s attention when it was served on them. Mr. Markovitch submitted that the defendants “do not speak English and did not know what to do about it.” It appears that Ali was served by substituted service at an address at which he no longer lived.
9I was prepared to set aside the noting in default without putting the defendants through the time or expense of a formal motion and without requiring the defendants to satisfy the test for setting aside a noting in default. A further case conference was held on January 23, 2023 to establish the terms of setting aside the noting in default. On January 23, 2023 I set a case timetable for the action that required the defendants to deliver statements of defence by March 3, 2023. I also set timetables for exchange of affidavits of documents, examinations for discovery, answers to undertakings and for a mediation, all to be completed by July 31, 2023. I ordered that the timetable be peremptory because there had been too much delay already as a result of the defendants’ failure to respond to the initial claim. Finally, I ordered the defendants to pay the plaintiff costs of $1,500 thrown away for the default proceedings and ordered that those costs were payable as a pre-condition to filing their defence. These directions were incorporated into a formal order of the same date.
10The defendants did not pay the costs ordered and did not deliver a defence by the date required.
11After counsel for the plaintiff sought a date for a default trial, a series of written submissions, case conferences and email directions ensued. I invited Mr. Markovitch to make submissions about why I should not proceed by default trial as a result of the defendants’ failure to pay the cost award and failure to defend by the peremptory deadline. Mr. Markovitch explained that there had been an earthquake in Turkey on February 6, 2023 that affected the defendants’ hometown. According to Mr. Markovitch, the defendants
arranged emergency assistance the best they can given their own circumstances. This caused financial strain in addition to the ongoing emotional stress. The clients will need some time to pay the funds in, but financial hardship in the face of human tragedy should not foreclose a defence.
12In the submissions that ensued, the defendants never once proposed a date on which they would pay the $1,500 cost award or on which they would deliver statements of defence. I note as well that the earthquake in Turkey occurred on February 6, 2023. That was approximately one month before the statements of defence and the cost award were due. The defendants made no application, either formal or informal, to be relieved of the costs order. They simply remained silent and did not abide by the order. Put plainly, they ignored a peremptory court order that was imposed on them because of their earlier failure to comply with the court’s process.
13The only excuse the defendants offer for not paying the cost award of $1,500 is that they were suffering financially because of contributions they had made to earthquake relief in Turkey. That is not a ground for refusing to abide by a court order. There will always be charitable causes to which a defendant can contribute that might, on some metaphysical level, amount to a morally superior claim to their resources than does a legal obligation. There will always be natural disasters, famine, and all manner human suffering that we can help alleviate by contributing money to worthy causes. Contributing money to worthy causes does not, however, excuse us from obeying court orders or complying with other legal obligations.
14It is well-known that hearing dates on the Toronto civil list are subject to long delays. At the moment, the waiting time for a motion longer than two hours is approximately 15 months. Those delays have a variety of causes. Many of those causes can be addressed by the court and the parties using tools currently available to them. One cause of such delays is the seemingly constant need for courts to revisit matters that have already been decided because parties refuse to abide by court orders. This case provides a classic example. Having failed to abide by the court’s process, the court was obliged to re-visit the defendant’s ability to defend by setting aside the noting in default and setting a timetable. The court was then required to revisit the issue again when the defendants failed to comply with the order. The court was then required to revisit the issue several more times given the successive submissions of the defendants; all because the defendants refused to pay $1,500 in costs and deliver a statement of defence or even propose dates by which they would do so. Those efforts simply waste the court’s and the plaintiff’s time. Time spent on those matters means time taken away from matters where parties are prepared to abide by the rules and abide by court orders. Those latter parties suffer delay because judges have their time devoured by revisiting things time and time again which ought not to be revisited.
15To surrender to such tactics would amount to a denial of justice. The solution to breaching a peremptory court order should not be the issuance of another order. That would ultimately condone and reward tactics that are designed to exhaust plaintiffs psychologically and financially. Such an approach leads plaintiffs to accept improvident settlements because the justice system will not meaningfully enforce its own process. Such an approach leads others to not even bring claims because the process is too expensive and exhausting.
16Court orders must be obeyed. That is simply the end of it. If a party cannot obey a court order it can seek relief before the obligation under the order is to be performed. The defendants here did no such thing. They simply ignored the order and have never once provided a date by which they would comply.
17In these circumstances I am satisfied that the defendants should remain noted in default and that the matter should proceed by default trial.
Substantive Disposition of the Claim
18Under rule 19.02 (1) (a) a defendant who has been noted in default “is deemed to admit the truth of all allegations of fact made in the statement of claim.” I set out below the material allegations on which the plaintiff claims judgment, the paragraphs of the statement of claim in which those allegations are found and my conclusion and explanation for why the allegation does or does not support a claim for default judgment. The plaintiff also filed affidavits in support of his claim for default judgment dated April 4 and June 19, 2023 which essentially repeat the allegations in the statement of claim but for added details about construction costs.
19In early 2017, Ali proposed a venture to the plaintiff pursuant to which they would purchase a property at 52 Unsworth Ave. in Toronto, tear it down, build a new home and sell the new home. Ali proposed that the plaintiff take a 50% interest in the venture and that Ali and Veli own the remaining 50% (statement of claim at paragraph 6). On closing, title to the Unsworth Avenue property was put in the names of the plaintiff and Veli. Ali explained that the property should not be registered in his name because he owed money to others. Ali explained, however, that both he and Veli would be responsible for the project (statement of claim at paragraph 9).
20These allegations (confirmed in the plaintiff’s affidavits) support the finding of a partnership in which the plaintiff was responsible for 50% of the costs and was entitled to 50% of the profit of the construction at 53 Unsworth and that Ali and Veli were liable for and entitled to the remaining 50% of the costs and profit.
21Sometime before 2017, the plaintiff completed work on Veli’s house for which he was owed $18,000 which Veli never paid. Ali and Velli promised that the $18,000 would be paid when the new house that was to be constructed was sold (statement of claim at paragraph 8). This allegation is sufficient to hold both Ali and Veli liable for the $18,000 debt.
22The plaintiff advanced $20,000 by bank draft dated March 28, 2017 as his half of the deposit on the purchase of the house. Ali explained that he did not have the deposit money readily available and asked the plaintiff to put in the remaining $20,000 which would be reconciled when the house was sold. The plaintiff did so by bank draft dated March 29, 2020 (statement of claim at paragraph 8). This allegation is sufficient to support liability of $20,000 against Ali and Veli.
23To close the purchase of the Unsworth property, each side provided $200,000 in cash which each obtained by mortgaging another property that each owned and funding the balance by way of a mortgage on the Unsworth property (statement of claim at paragraph 10).
24On May 24, 2017 the plaintiff paid an additional $50,000 into a bank account that Ali opened for the project. Ali was to provide an additional $50,000 which he never did. (statement of claim at paragraph 13). This allegation is sufficient to support a liability of $25,000 against Ali and Velli on the theory that expenses were to be borne by each side equally.
25On October 31, 2017 the plaintiff contributed a further $20,000 that was unmatched by the defendants. On May 16, 2018 the plaintiff advanced a further $4,700 that was unmatched by the defendant (statement of claim at paragraph 13). This allegation is sufficient to support a liability of $12,350 against Ali and Velli on the theory that expenses were to be borne by each side equally.
26At some point, the parties put a construction mortgage of $340,000 on the Unsworth property. The defendant Besey guaranteed the construction mortgage (statement of claim at paragraph 19). The construction mortgage went into default in 2019 before the sale of the house. The defendants refused to assist in payment of the construction mortgage. The plaintiff was required to remove the mortgage from the Unsworth property and register it on another property that the plaintiff owned to prevent the Unsworth property from being sold by the mortgagee (statement of claim at paragraph 14).
27As of October 24, 2019 the amount owing on the construction mortgage was $445,811.16. The plaintiff has been servicing that mortgage on his own ever since (statement of claim at paragraph 14). Interest on the construction mortgage was 6.5% per year. Interest on the construction mortgage between October 24, 2019 and June 21, 2023 as set out in exhibit K to the affidavit of Jose Meireis June 19, 2023 is $100,112.09. I have calculated the interest at $79.39 per day. Calculating interest to the date of these reasons (September 18, 2023) adds a further 88 days for an additional interest amount of $6,458.32. This brings the total amount owing on the construction mortgage to $552,381.57. These allegations support a judgment against Ali and Veli of one half of the total amount owing on the construction mortgage or $276,190.79.
28As noted, the statement of claim alleges that Besey guaranteed the construction mortgage. Besey is therefore liable for one half of the amount owing on the construction mortgage, namely $276,190.79.
29The Unsworth property was sold for $2,310,000 (statement of claim at paragraph 15). Ali asserts that the cost of construction of the house was $1,467,000 and claimed that out of the proceeds of sale. The plaintiff asserts that, based on his experience, construction of the house should not have cost more than $1 million and that Ali used the excess for other purposes.
30The plaintiff submitted an affidavit dated June 19, 2023 that provided further details of the cost of construction. It notes that the house was approximately 2500 square feet and attached detailed plans of the house. It also attached a brief opinion from Precision General Construction Inc. to the effect that the cost of construction in Toronto in 2018 ranged between $380 and $420 for an average finish home and between $450 and $500 for a high end luxury home. The plaintiff assumes the highest cost of construction of $500 which would put construction cost $500 x 2500 or $1,250,000.
31The difference between the cost of $1,250,000 and the amount of $1,467,000 that Ali and Veli claimed is $217,000. The plaintiff is entitled to one half of that amount or $108,500 as damages.
32The plaintiff claims in paragraph 11 of the statement of claim that Ali and Veli removed a further $174,000 from the project because they had asserted that they had put $174,000 into the project. It appears that this fact was contained as a recital to a partnership agreement that the parties signed. The partnership agreement was not in the record before me. The plaintiff states in paragraph 11 of the statement of claim:
The plaintiff trusted Ali and did not doubt this at that time, but now believes that this was not true and that not only did Ali and his father put nothing more than their share of the purchase price of the house into the project, they recovered vent the purchase price by misappropriating monies that were borrowed to do the construction.
33Recall that rule 19.02 (1) (a) deems a defendant to admit the truth of all allegations of fact made in the statement of claim. The only allegation of fact in respect of the $174,000 is that the plaintiff “now believes” it is not true. The fact alleged is that of the plaintiff’s belief. A statement of fact about the plaintiff’s belief is not sufficient to award judgment, especially not when the plaintiff admitted the fact in the partnership agreement.
34As a result of the foregoing, judgment shall go against Ali and Veli for the amounts set out in paragraphs 21, 22, 24, 25, 27 and 29-31 above which come to a total of $460,040.79. The plaintiff is entitled to judgment against Besey in the amount of $276,190.79.
35The plaintiff seeks costs of $19,766.46 including HST and disbursements. Plaintiff’s has confirmed that this is on a partial indemnity scale. Of that amount, $14,720 is on account of lawyer’s time without HST. I have reviewed the plaintiff’s bill of costs and am satisfied that the time spent and fee charged is reasonable for the size and nature of the claim.
Date: September 18, 2023 Koehnen J.