COURT FILE NO.: CV-22-544

DATE: 2024 12 23

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Vijaya Prabakaran Sree Ranganathan and Keerthana Raguraman, Plaintiffs

AND:

Azhar Wasim, Right At Home Realty Inc. Brokerage, and Real Estate Council of Ontario, Defendants

BEFORE: Justice Ranjan K. Agarwal

COUNSEL: Preet Wadhwa, for the plaintiffs and the putative third party Saaral South Indian Restaurant Corp. o/a Saaral South Indian Restaurant

Darrell Paul, for the defendant Azhar Wasim

No one appearing for the defendants Right At Home Realty Inc. Brokerage and Real Estate Council of Ontario

No one appearing for the putative third party Wasim Investments Ltd.

HEARD: December 6, 2024

ENDORSEMENT

I. INTRODUCTION

[1] The defendant Azhar Wasim moves for leave to issue a third party claim. The putative third parties Vijaya Ranganathan and Keerthana Raguraman (who are also the plaintiffs), and Saaral South Indian Restaurant Corp. o/a Saaral South Indian Restaurant oppose the motion on several grounds, including that it’s limitations- barred.

[2] I agree. Wasim’s motion for leave to issue a third party claim was started after the limitation period for that claim expired. As a result, there’s non-compensable prejudice to the plaintiffs and an absolute bar to adding Saaral as a party.

[3] The motion is dismissed. I endorse an order that Wasim shall pay the plaintiffs’ and Saaral’s costs, fixed in the amount of $5500, within 30 days of this order.

II. BACKGROUND

[4] The plaintiffs sued Wasim and the other defendants Right at Home Realty Inc.

Brokerage and Real Estate Council of Ontario in February 2022. The plaintiffs allege that Wasim, their realtor, defrauded them into buying a house:

• the plaintiffs told Wasim that they were looking for a house with a legal basement so they could lease it to support their monthly mortgage payment

• Wasim told them that the house at 31 Tina Court, Brampton, had a legal basement and they could earn $1500 per month

• he persuaded them to offer more than the vendor’s asking price

• Wasim intentionally omitted information from the Agreement of Purchase and Sale that would’ve alerted the plaintiffs to the fact that the house didn’t have a legal basement

• the plaintiffs learned about the illegal basement just before closing, but Wasim convinced them that they could still lease it

• Wasim persuaded the plaintiffs to get a private mortgage after CIBC rejected their mortgage application, with unduly high fees and interest rate

• the municipality didn’t approve the basement for rent

[5] Though the plaintiffs didn’t sue the private lender, they pleaded losses arising from the mortgage, such as lender fees, interest payments, legal fees, and broker fees.

[6] In March 2022, Wasim and Right At Home Realty defended the claim on the basis that they didn’t act negligently. The statement of defence also pleads that the plaintiffs aren’t entitled to an order setting aside the mortgage loan.

[7] It’s unclear from these pleadings who the private lender is.

[8] In April 2022, Wasim Investments Ltd. (which is owned by Wasim) sued the plaintiffs and Saaral in a fresh action. As it turns out, Wasim Investments was the private lender. Wasim Investments claimed that the plaintiffs and Saaral breached the loan agreement:

• Saaral borrowed $90,000 from Wasim Investments, which was secured by a mortgage and promissory note

• though Wasim was the lender and the plaintiffs are the borrowers on the promissory note, Wasim Investments loaned the money and Saaral is a co- borrower

• the plaintiffs and Saaral breached the loan agreement when they made no interest payments starting December 24, 2021

[9] In November 2023, the plaintiffs and Saaral moved to have Wasim Investments’s action dismissed on several grounds under Rule 21 of the Rules of Civil Procedure.

[10] Justice Mandhane dismissed Wasim Investments’s claim as an abuse of process. The evidence on the motion led her to conclude that Wasim intended to argue, in both actions, that Wasim Investments loaned the mortgage funds to Saaral. As a result, Justice Mandhane held that there was a risk of inconsistent findings about the parties to the contract. See Wasim Investments Ltd. v Ranganathan, 2023 ONSC 6507.

[11] That said, the court ordered that Wasim Investments could move to make its claim in the existing proceeding:

THIS COURT ORDERS that if Wasim Investments Ltd. wishes to raise the issues he pleads in this action, it has remedy by bringing a motion to be added as a third party in the CV-22-544 action and making a third- party cross claim against the personal defendants and Saraal [sic] Restaurant.

[12] Wasim Investments’s appeal was dismissed. See Wasim Investments Ltd. v Ranganathan, 2024 ONCA 505. The Court of Appeal confirmed Justice Mandhane’s order, at para 5: “Any issues regarding liability for the Mortgage, including whether the lender was Mr. Wasim personally or Wasim Investments, must be addressed in the context of the 544 Action, whether through a motion to add parties or otherwise.”

III. ANALYSIS AND DISPOSITION

[13] In July 2024, Wasim (not Wasim Investments) served a draft third party claim on the plaintiffs’ lawyer. He seeks to sue the plaintiffs, Saaral, and Wasim Investments, for contribution and indemnity. The plaintiffs don’t consent.

[14] To begin, Wasim suing Wasim Investments is unusual. On the motion before Justice Mandhane, Wasim self-identified as one of Wasim Investments’s directors. He swore the supporting the affidavit in response to the plaintiffs’ motion. Justice Mandhane found that he was Wasim Investments’s owner. The Court of Appeal also described him as Wasim Investments’s owner. Wasim’s lawyer on this motion is the same lawyer who represented Wasim Investments before Justice Mandhane and the Court of Appeal.

[15] Wasim’s claim for contribution suggests that if he’s found liable to the plaintiffs, Wasim Investments must indemnify him. Wasim remains one of two directors of Wasim Investments. The other director is Tasneem-Kausar Wasim. Both directors live at the same address. At the motion hearing, Wasim’s lawyer said that Wasim Investments would be retaining its own lawyer if the motion succeeded.

[16] To add to the complexity of this matter, Justice Mandhane’s and the Court of Appeal’s assumption was that Wasim Investments would seek to be added as a party to the plaintiffs’ action (likely under rule 5.03(4)) so it could claim over against them and Saaral. I say that because Justice Mandhane dismissed Wasim Investments’s

claim; Wasim didn’t have a claim. But now I’m being asked to grant leave for Wasim, not Wasim Investments, to issue a third party claim.

[17] Wasim urges me to focus on Justice Mandhane’s order and the Court of Appeal’s decision, which he says is a full answer to the plaintiffs’ and Saaral’s objections. I disagree. The only way to unpack all of this is to focus on the claim that Wasim now seeks to issue.

A. The Test for Leave to Issue a Third Party Claim

[18] The plaintiffs and Saaral argue that Wasim doesn’t have “unqualified permission” to issue a third party claim. I agree.

[19] A third party claim (Form 29A) shall be issued within 10 days after the defendant delivers a statement of defence, or at any time before the defendant is noted in default. A third party claim may be issued at any time with the plaintiffs’ consent or with leave, which the court shall grant unless the plaintiff would be prejudiced thereby. See Rules of Civil Procedure, r 29.02(1), (1.2).

[20] I don’t know when Wasim served and filed his statement of defence, but it’s dated March 8, 2022. So he’s far out of time under the Rules. Because the plaintiffs don’t consent, he needs leave. Neither Justice Mandhane’s decision nor the Court of Appeal’s reasons purport to grant Wasim Investments’s leave to issue a third party claim, never mind Wasim.

[21] Leave is mandatory unless the plaintiff would suffer prejudice. The wording of the rule doesn’t leave room for the putative third party to allege prejudice. Here, the facts are unusual because the plaintiffs are two of the putative third parties. I don’t know why Wasim didn’t move for leave to amend his statement of defence to add a counterclaim. Under rule 27.01, he can assert a counterclaim against the plaintiffs (as parties to the main action) and join Saaral and Wasim Investments as defendants to the counterclaim. Under rule 26.01, leave to amend a pleading is mandatory unless non-compensable prejudice to the other parties would result. Given that Wasim’s claim against the plaintiffs is really a counterclaim, it’s open to the plaintiffs to argue that the issuance of a third party claim against them is prejudicial.

[22] Prejudice is “something more than simply inconvenience to or added work for the opposing party”. Delay can result in prejudice. See Crawford v Standard Building Contractors Limited, 2020 ONSC 7022, at paras 24, 35. That said, even where there’s prejudice, the court can exercise its discretion to grant leave to avoid a multiplicity of hearings. See Farrell v Costco Wholesale, 2015 ONSC 7783, at paras 35-36.

B. Is Wasim’s claim statute-barred?

[23] The plaintiffs’ and Saaral’s main argument is that they would suffer prejudice because Wasim’s claim is statue-barred by the Limitations Act, 2002, SO 2002, c 24, Sched B. They say it’s been issued more than two years after the cause of action arose.

[24] The expiry of a limitation period is a form of non-compensable prejudice. See Klassen v Beausoleil, 2019 ONCA 407, at para 26. Like there’s no “absolute right to amend

pleadings”, there’s no absolute right to start a third party claim. The court has a “residual right” to deny leave “where appropriate”. See McFadden v Psutka, 2024 ONCA 203, at para 12.

[25] Further, if a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding. See Limitations Act, s 21(1); Morrison v Barzo, 2018 ONCA 979, at para 27.

[26] The basic limitation period is two years. See Limitations Act, 2002, s 4. Under section 18, the presumptive limitation period for contribution and indemnity claims starts to run when the defendant is served. That presumptive limitation period start date, however, can be rebutted by the discoverability principles prescribed in section 5 of the Limitations Act, 2002. See Mega International Commercial Bank (Canada) v Yung, 2018 ONCA 429, at paras 67, 74.

[27] To decide this issue, I must make a finding on when Wasim first knew the elements of his claim, as listed in section 5(1)(a) of the Limitations Act, 2002. See Morrison, at para 29.

[28] Though Wasim’s draft third party claim seeks contribution and indemnity, it’s not really a claim for contribution. A defendant who caused or contributed to a plaintiff's injury is liable to compensate that plaintiff in full, even if a co-defendant or third party caused or contributed to the plaintiff's injury. The Negligence Act, RSO 1990, c N.1, allows a defendant who’s at risk of being held liable for 100 percent of the plaintiff's injury, even though he isn’t solely at fault, to recover indemnity from a co-

defendant or third party to the extent of that party’s degree of fault or reduce the plaintiff’s damages according to the plaintiff’s fault. See Hengeveld v The Personal Insurance Company, 2019 ONCA 497, at paras 22-24.

[29] Wasim’s draft third party claim doesn’t plead that the plaintiffs contributed to the alleged fraud or misrepresentation about the illegal basement. He doesn’t claim that Saaral or Wasim Investments have some fault for the disclosure about the illegal basement. Wasim’s draft third party claim is really about Wasim Investments’s loan claim. He pleads all the same facts and makes most of the same claims (like that he has an “interest” in the property). He doesn’t plead how the plaintiffs, Saaral, or Wasim Investments contributed to the alleged fraud or misrepresentation.

[30] Given that, I find that Wasim’s claim was discoverable on December 24, 2021.

Wasim has led no evidence about the limitation period. His affidavit, which is four paragraphs long, attaches Justice Mandhane’s order and the Court of Appeal’s decision, and “confirm[s] the authenticity of all the facts and averments made in the Notice of Motion”. The notice of motion pleads only that Wasim Investments lent money to the plaintiffs to buy 31 Tina Court.

[31] Wasim didn’t file his proposed third party claim, but the plaintiffs and Saaral did. In that document, Wasim pleads that the plaintiffs, Saaral, and Wasim Investments defaulted on the loan on December 24, 2021:

The defendants have defaulted and have not paid the principal amount of $90,000.00 according to the terms of the Mortgage Commitment and the Promissory Note nor have they made any payments to the defendant,

Wasim Investments Ltd., towards the interest @ 10% p.a. starting from December 24, 2021 till date and hence the principal amount of

$90,000.00 plus applicable interest remains outstanding.

[32] As a result, I find that Wasim’s loss occurred on December 24, 2021, when the plaintiffs and Saaral allegedly defaulted on the loan. He knew about the elements of his breach of contract claim then. As a result, he had to start his counterclaim or third party claim by December 24, 2023. That Wasim Investments started its action in April 2022 doesn’t suspend the limitation period—Wasim isn’t the plaintiff in that action so he didn’t start a claim. Moreover, Wasim Investments’s claim supports a finding that Wasim, as the directing mind of Wasim Investments, had all of the facts to make a breach of contract claim because that’s what he did on behalf of Wasim Investments.

[33] Wasim responds that the limitation clock was suspended by the plaintiffs’ and Saaral’s motion to strike and Wasim Investments’s appeal. I don’t accept that argument. Wasim could’ve started a counterclaim or a third party claim in the form he has now anytime before December 2023. Again, that his proposed third party claim and Wasim Investments’s claim are almost identical shows that he had all the facts necessary to plead that claim. He’s inadvertently or intentionally confusing himself and Wasim Investments.

[34] Alternatively, even if I read Justice Mandhane’s order and the Court of Appeal’s decision as applying to Wasim and Wasim Investments, the limitation period has expired. The fairest reading of these unusual facts is that the limitation period for

their claim was suspended from the date of Justice Mandhane’s order to the date of the Court of Appeal’s decision. In effect, they weren’t required to start a third party claim during that period because Wasim Investments’s claim might have been allowed to proceed. But once the Court of Appeal affirmed Justice Mandhane’s order, the limitations clock started running again. That finding means that Wasim had until July 29, 2024, to move for leave to amend his defence or start a third party claim.[^1]

[^1]: The limitation period is two years, or 730 days. From December 24, 2021 (date of default), to November 17, 2023 (Justice Mandhane’s decision), 693 days had run. The remaining 37 days continued to run starting June 22, 2024 (ONCA decision).

[35] Wasim served the draft third party claim on plaintiffs’ lawyer on July 22, 2024. But service of the draft third party claim isn’t enough to stop the limitations clock. In Bank of Nova Scotia v. PCL Constructors Canada Inc., 2009 CanLII 56303, Associate Judge Glustein (as he was then) held that “a letter requesting consent to a proposed draft pleading is not sufficient to stop the limitation period from running” (at para 94). He left open the possibility that the service of a notice of motion might stop the limitations clock. See also Philippine/Filipino Centre Toronto v Datol, 2009 CanLII 2909 (Sup Ct), at para 65. But that isn’t what happened here. There’s no evidence that Wasim served a notice of motion or motion record, or tried to schedule this motion hearing before the limitation period expired on July 29th. The motion record wasn’t served until November 3, 2024.

[36] As a result, I find that Wasim’s claim is statute-barred. Under the Limitations Act, 2002, he can’t add Wasim Investments or Saaral to this action as third parties. And it would be prejudicial to the plaintiffs to allow Wasim to start a third party claim against them after the limitation period has expired.

B. Can Wasim Investments sue the plaintiffs?

[37] The plaintiffs and Saaral argue that Wasim Investments doesn’t have a contract with any of them, so it can’t sue them. This point is irrelevant since it’s Wasim not Wasim Investments that’s seeking to claim over against them and Saaral. Further, that’s an issue to be determined on an evidentiary record—it’s Wasim’s contention that despite the legal documents, there was an agreement with Wasim Investments.

C. Is there undue delay?

[38] The plaintiffs allege undue delay. I don’t agree. They haven’t shown any prejudice from the delay that would make it “undue”. For example, they haven’t shown that the delay means they’ll encounter difficulties in pleading the case or that the action would be lengthened. See Gotaverken Energy Systems Ltd. v Canadian Great Lakes Casualty & Surety Co., [1985] OJ no 1679 (Sup Ct), at para 12; Bell Canada v. Olympia & York Developments Ltd., [1988] OJ no 1501 (CA), at para 3.

D. Is Wasim’s claim a form of litigation harassment?

[39] The plaintiffs submit that Wasim is trying to harass them through this litigation. They stress that they have spent $26,000 in legal fees, but only recovered $14,000 in costs

awards. Costs are usually only indemnified on a partial basis. So, it’s unsurprising the plaintiffs haven’t recovered all of their costs. And they sued Wasim. He’s entitled to defend himself. His defence may be unusual or unorthodox. If there’s no genuine issue requiring a trial, they can move for judgment. But there’s no evidence that Wasim is using this litigation to harass the plaintiffs.

E. Will Wasim suffer prejudice?

[40] The plaintiffs argue that Wasim won’t suffer any prejudice. But that’s not the test.

The question is whether they will suffer any non-compensable prejudice if the third party claim is issued.

F. Summary

[41] In sum, Wasim’s third party claim is barred by the Limitations Act, 2002. As a result, I endorse an order dismissing Wasim’s motion for leave to issue a third party claim. If I’m wrong, I would have granted Wasim leave to issue his third party claim because there’s no non-compensable prejudice to the plaintiffs.

IV. CONCLUSION

[42] I appreciate that Wasim may find this outcome unjust. But it’s Wasim’s own actions that have led to this result. Wasim Investments, which he controls, didn’t sue the plaintiffs or Saaral for breach of the mortgage loan. When the plaintiffs sued him, he could’ve counterclaimed for breach of contract. Instead, he had Wasim Investments start a fresh proceeding. When Justice Mandhane found that Wasim Investments’s

action was an abuse of process, he could’ve still counterclaimed for breach of the mortgage loan, or moved to add Wasim Investments as a party and claimed over against the plaintiffs and Saaral. Or, after Wasim Investments’s appeal was dismissed, Wasim could’ve moved to add Wasim Investments as a party and claimed over against the plaintiffs and Saaral. Instead, he waited until almost three years after the plaintiffs’ and Saaral’s alleged default to sue them. It’s too late.

V. COSTS

[43] The plaintiffs and Saaral seek $6224.29 in partial indemnity costs. For comparison, Wasim’s costs are $3715.

[44] Subject to the provisions of an act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid. See Courts of Justice Act, RSO 1990, c C.43, s 131.

[45] In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, together with the result in the proceeding and any offer to settle or to contribute made in writing, the factors listed in rule 57.01 of the Rules of Civil Procedure.

[46] In the usual case, costs are awarded to the prevailing party after judgment has been given. The traditional purpose of an award of costs is to indemnify the successful party in respect of the expenses sustained either defending a claim that in the end

proved unfounded (if the successful party was the defendant), or in pursuing a valid legal right (if the plaintiff prevailed). Costs awards are “in the nature of damages awarded to the successful litigant against the unsuccessful, and by way of compensation for the expense to which he has been put by the suit improperly brought”. See British Columbia (Minister of Forests) v Okanagan Indian Band, 2003 SCC 71 at paras 20-21.

[47] The main objective is to fix an amount of costs that is objectively reasonable, fair, and proportionate for the unsuccessful party to pay in the circumstances of the case, rather than to fix an amount based on the actual costs incurred by the successful litigant. See Boucher v Public Accountants Council (Ontario), 2004 CanLII 14579 (Ont CA) at para 26.

[48] As the successful parties, the plaintiffs and Saaral are entitled to their costs. This motion was complex because of the litigation history and the limitations issues. It was important to both parties—the plaintiffs have been fighting Wasim’s efforts to tie the loan to the fraud claim since early 2023. Wasim doesn’t dispute their lawyer’s hourly rates or the time expended on this motion. That said, I find the plaintiffs’ costs outline confusing—they say that the lawyer’s rate is both $300 and $600 per hour.

[49] All that said, I find that $5500 inclusive of fees, disbursements, and taxes is a fair, reasonable, and proportional amount of costs for a motion of this complexity and importance.

Agarwal J

Date: December 23, 2024