Court File and Parties

COURT FILE NO.: CV-23-704726 MOTION HEARD: 20241011

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Natasha Gangoo and Vincent Giuntoli, Plaintiffs AND: Docufraud Canada Ltd., Defendant

BEFORE: Associate Justice Jolley

COUNSEL: Sean McGarry, counsel for the moving party defendant Marshall Reinhart, counsel for the responding party plaintiffs

HEARD: 11 October 2024

Reasons for Decision

[1] The defendant seeks leave to issue a third party claim.

[2] The plaintiffs were involved in litigation in 2019 over a condominium board election. They hired the defendant to provide expert analysis in relation to documents submitted in that election. The defendant retained the services of the proposed third parties Brenda Petty and Brenda Petty Unlimited LLC (together, “Petty”), who testified as the plaintiffs’ expert at trial in late 2022.

[3] The defendant could have issued the third party claim as of right within ten days of filing its defence but, for the reasons explained in its motion record, determined that the third party claim was not necessary as the action was framed as one of negligence in the performance of its duties. Its position changed when it received the plaintiffs’ expert report in April 2024 which focused on the alleged negligence of Ms. Petty and the defendant’s vicarious liability for her negligence, rather than on the defendant’s own independent negligence. Defendant’s counsel was not cross examined on her explanation.

[4] Within some days of reviewing the report, the defendant sought the plaintiffs’ position on whether they intended to add Petty or whether they would consent to the defendant bringing a third party claim against her. The plaintiffs did not consent, arguing that they are prejudiced by the delay that a third party claim will cause.

[5] To quote Farrell v Costco Wholesale 2015 ONSC 7783 at paragraph 36:

If the granting of leave to issue a third party claim would not prejudice the plaintiff, then the court must grant leave. If the granting of leave would prejudice the plaintiff, then the court must exercise its discretion as to whether to do so. In exercising its discretion, the court must have regard to all the circumstances, weighing the prejudice that granting leave would cause the plaintiff against the desirability of having the issues in the main action and those giving rise to the third party claim determined at the same trial.

The plaintiffs will not suffer prejudice if leave is granted to issue the third party claim

[6] The following principles were noted in Fisher v Amherstburg, 50 C.P.C. (6th)105 at paragraph 10:

(c) there must be evidence that the plaintiff would suffer undue prejudice over and above the additional inconvenience and work involved when a third party is added; where the plaintiff fails to establish such prejudice, Rule 29.02(1.2) is mandatory and the court is obliged to grant leave to issue the third party claim;

(d) delay does not amount to prejudice; and

(h) the expense associated with a third party claim does not give rise to undue prejudice as such expenses would have been incurred had the third party action been commenced within the time prescribed by the Rules; any additional expense incurred by the plaintiff in drafting further pleadings, conducting further discoveries can be compensated for in costs.

[7] The plaintiffs argue that the delay caused by the issuance of the third party claim will cause them prejudice. They took out a line of credit to fund the underlying condominium board litigation, which they continue to pay at a rate of 7.7%. Every day of delay results in interest they can ill afford.

[8] While this may be so, that interest expense would have been incurred had the third party action been commenced within the ten day period prescribed by the rules. If there is additional expense, it can be compensable in costs, (indeed the interest on that line of credit forms part of the plaintiffs’ damages claim in this action), but I find does not give rise to prejudice such that leave should be denied.

If the plaintiffs had suffered prejudice, the balancing of factors weighs in favour of granting leave to issue the third party claim

[9] This action has proceeded very expeditiously. The claim was only issued in August 2023 and the parties had already conducted discoveries by the end of November 2023. The defendant has been cooperative in moving this action forward quickly and it confirms that it will continue to move expeditiously. There is no evidence the third party claim is being pursued as a delay tactic.

[10] The focus of both the proposed third party claim and the main action will be whether Petty was negligent in performing her services for the plaintiffs. It is true that the plaintiffs may need to attend a second examination in the event Petty pleads into the main action.

[11] I was not directed to any cases where leave to commence a third party claim was not granted when the action had not yet been set down for trial. As noted in Fisher, supra, at (f) “where a matter has not been pre-tried or set down for trial, the delay will not result in undue prejudice to the plaintiff.” In this action, the claim is barely a year old.

[12] This principle was further enunciated in Equirex Leasing Corp v. Coherent-AMT Inc., [2008] O.J. No. 1898 at paragraph 19, as follows:

[T]hat delay would not typically result in prejudice to the plaintiff where the matter has neither been pre-tried, nor set down for trial. As well, in determining whether to grant leave, the Court is required to consider the desirability of avoiding a multiplicity of proceedings and the risk of conflicting decisions, since, as a policy matter, all issues should be tried at one time even if that means some delay in proceeding to trial. Finally, expense associated with a third party claim does not give rise to undue prejudice within the meaning of the rule, since any additional expense can be compensated for in costs.

[13] As the court noted in Fisher, supra at (g), “the court must also consider the avoidance of multiplicity of proceedings and the risk of conflicting decisions, and as a policy matter, all issues should be tried at one time even if that means some delay in proceeding to trial”. The defendant has confirmed that it intends to commence an action against Petty. The only issue is whether that action will proceed together with this action as a third party claim or as a separate stand alone action.

[14] I find it would be impractical to try these same issues in two separate proceedings. The alleged negligence of Petty is a critical issue in the plaintiffs’ claim against the defendant and in the proposed third party claim. Considering the court’s resources, it is likely that there might be an order for trial together down the road even if the two actions were commenced separately. Further, it is likely that both cases would need to proceed to mediation together, given the key overlapping issue of Petty’s alleged negligence. There is no good reason not to have all issues determined in this one proceeding.

[15] In considering the applicable factors, the defendant’s motion is granted. If the parties are unable, after good faith efforts, to resolve the issue of costs, they may file their costs outline and a maximum of two pages of costs submissions with my assistant trial coordinator at Christine.Meditskos@ontario.ca by 15 November 2024. If materials are not filed by that date, I will assume they were able to resolve the costs issue.

Associate Justice Jolley Date: 16 October 2024