Court File and Parties

Court File No.: CV-18-66878
Date: 2025-03-18
Court: Ontario Superior Court of Justice

Between:
Tadeusz Mazgaj
Plaintiff
(M. Bailey as agent for B. Kurpis, Counsel for the Plaintiff)

-and-

Fabio Adrian Corzo Reyes
Defendant
(M. Harris for all Responding Parties)

Heard: March 13, 2025

Decision on Motion
Justice J. Krawchenko

Introduction

[1] The Plaintiff seeks leave to amend his Statement of Claim to add Melissa Corzo Reyes (“Mrs. Reyes”) and Mark Ziegert (“Mr. Ziegert”) as named Defendants to this action.

[2] Mrs. Reyes is the spouse of the named defendant and Mr. Ziegert is his stepfather.

[3] The named defendant, and proposed new defendants oppose the motion.

Facts

[4] The claim relates to a series of loans made by the Plaintiff to the Defendant between 2006 and 2014.

[5] The Statement of Claim was issued on 21 September 2018 as against Fabio Adrian Corzo Reyes (“Mr. Reyes”) only.

[6] At the time the claim was issued, Mr. Reyes owned a residential property as a joint tenant with his spouse Mrs. Reyes.

[7] On 24 October 2019, Mr. Reyes was examined for discovery. He was asked where he lived and with whom, he replied that he lived at 140 Dennis Drive, Smithville, Ontario with his wife, three daughters and grandmother-in-law. When asked “Is it you and your wife who are on the mortgage….” Mr. Reyes’ counsel interjected, but not before Mr. Reyes answered “No”. Counsel for Mr. Reyes objected to any further questions along this line with regards to property.

[8] On 30 March 2020, Mr. Reyes made a Consumer Proposal which resulted in a stay of these proceedings. The consumer proposal statement of affairs, sworn by Mr. Reyes, made no reference to real property, but did specifically state “WITHIN FIVE YEARS PRIOR TO THE DATE OF THE INITIAL BANKRUPTCY EVENT, HAVE YOU, EITHER IN CANADA OR ELSEWHERE Sold or disposed of any property? No.”

[9] On 28 February 2023 Mr. Reyes made an assignment in bankruptcy and in that instance, in his sworn statement of affairs, he again made no reference to real property, however, he did specifically state that “WITHIN FIVE YEARS PRIOR TO THE DATE OF THE INITIAL BANKRUPTCY EVENT, HAVE YOU, EITHER IN CANADA OR ELSEWHERE Sold or disposed of any property? Yes.”

[10] The Plaintiff contends that it was only after the receipt of the second statement of affairs that further investigation into the disposition of property was warranted in the form of title searches.

[11] In her affidavit sworn on 27 August 2024, Mrs. Reyes deposed the following.

a. In April 2017 her husband suffered a workplace injury which made it difficult to maintain high payments on their new home mortgage on 90 Anastasia Boulevard, Smithville, ON (“Anastasia” property), a property which they owned together.

b. In May 2018 she and her husband listed the Anastasia property for sale.

c. On 08 June 2018, she and her husband received a demand letter from the Plaintiff’s lawyer advising that certificate of pending litigation would be sought and that any attempt to transfer the named defendant’s share in the Anastasia property would be viewed as a fraudulent conveyance.

d. On 28 June 2018 Mr. and Mrs. Reyes entered into an Agreement of Purchase and Sale for the Anastasia property for the price of $660,000.00 with an original closing date of 31 August 2018.

e. The Statement of Claim in this action was issued on 11 September 2018.

f. The Anastasia property sale closed on 24 September 2018. At Exhibit H to the affidavit of Mrs. Reyes is the Trust Ledger Statement from the closing that shows that she and her husband received $139,571.74 as the net proceeds of sale.

g. On 28 June 2019, Mrs. Reyes and her husband’s stepfather Mr. Ziegert purchased 140 Dennis Drive, Smithville, Ontario (“Dennis Drive” property).

h. On 22 October 2021 Mrs. Reyes and Mr. Ziegert purchased 17 Christina Lane, Smithville, ON for $713,953.00 (“Christina Lane” property).

i. On 29 October 2021, Mrs. Reyes and Mr. Ziegert sold the Dennis Drive property for $1,130,000.00.

j. On 07 September 2022, Mrs. Reyes transferred the Christina Lane property to Mr. Ziegert and Rosario Isabel Ziegert for $950,000.00. At Exhibit Q of Mrs. Reyes’ affidavit, the Trust Ledger Statement on this sale shows a “balance due on closing” on the sale price as $741,201.06 and also shows that Mrs. Reyes received the net proceeds of $131,593.61.

k. On 12 August 2022, Mrs. Reyes and Mr. Ziegert purchased 6384 Springcreek Road, Smithville, ON (“Springcreek” property) for $937,367.00 as tenants in common.

l. On 30 November 2022, the Plaintiff sought Summary Judgment on the claim. At the same time the Defendant sought leave to amend his defence. The Summary Judgment was dismissed and leave to amend the defence was granted. In deciding that motion the court wrote at paragraph 29:

“Quite apart from the merits of the case generally, it may very well be that the Plaintiff’s claim will be found to be statute barred, based on the evidence in general and on the content of the February 26, 2015 letters in particular. However, it is not possible for this court to proceed with confidence to draw that conclusion and proceed to summary judgment, given the conflicting evidence and the communication barriers that exist. This is a case where a genuine issue does exist requiring a trial for a fair and just determination on the merits.”

[12] What is significant from the summary judgment motion is that no determination was made on the limitations issue and the presiding justice found that a trial on the merits was required.

The Issues

[13] The issues on this motion are as follows:

a. Should the moving party be allowed to amend his Statement of Claim pursuant to Rule 26.01?

b. Should the Proposed Defendants be added as parties to the action pursuant to Rule 5.04(2)?

Discussion

[14] Rule 26.01 states that on motion at any stage of an action, the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment. In a case such as this, where pleadings are closed, leave of the court is required (Rule 26.02).

[15] The Proposed Defendants argue that the motion should be dismissed because they would suffer prejudice as they would be drawn into a litigation that may ultimately be found to be statute barred and they would be required to expend funds in defending same. This form of “prejudice” is faced by all defendants involved in litigation, however, the Rule addresses this issue with potential costs consequences if a plaintiff is not successful. I would give no effect to that argument.

[16] The notion of prejudice is also approached from another angle wherein the responding parties also cite Polla v. Croatian (Toronto) Credit Union Limited, 2020 ONCA for the proposition that the expiry of a limitation period in respect of a proposed new claim is a form of non-compensable prejudice, where leave to amend to assert a new cause of action will be refused; however, this requires the court to determine the question of whether a limitation has tolled as was the case in Polla in order to refuse leave. Unlike the Polla case, this is a motion to amend and not a motion for summary judgment or trial and I am unable to make a limitation/discoverability determination on this record.

[17] In Griffiths v. Canaccord Capital Corp., the court held that when considering an amendment to pleadings under the Rules, the court “…should not examine whether there is sufficient evidence to sustain the pleading, weigh evidence or make findings of fact” as to do so “would …turn the motion into a summary judgment motion…”. Also, as per Atlantic Steel Industries Inc. v. Cigna Insurance Co. of Canada, amendments should generally be granted unless it is abundantly clear that upon giving the Claim a generous reading, the amendments seek to advance an action that is impossible of succeeding.

[18] On these facts, the amendments including allegations relating to the nature of the conveyances as between family members and the possible implications of same are appropriate at this stage and leave to amend ought to be granted.

[19] With regards to the addition of parties, Rule 5.04(2) provides that a court may add a party, on such terms that are just, unless prejudice would result that could not be compensated by costs or an adjournment. In considering whether to exercise its discretion to add parties, the Divisional Court in Rebello v. Ontario, 2022 ONSC 4094 set out a four-part test, which on the facts of this case, are met, specifically, the amendment meets the requirements of Rule 26.01, the joinder is appropriate under 5.02(2) or 5.03, the joinder would not unduly delay or complicate the case or cause undue prejudice, and there is no improper purpose motivating the addition of parties and it does not amount to an abuse of process.

[20] Regarding 5.02(2), the claims asserted relate to the same or series of transactions (the cumulative real estate transactions) and it appears that joining the added parties would promote the convenient administration of justice. And with regards to 5.03, persons whose presence is necessary to enable the court to adjudicate the issues effectively and completely shall be joined as a party to the proceeding and those are the proposed additional defendants.

Conclusion

[21] For the foregoing reasons, the motion is granted in accordance with paragraphs 1-4 of the moving party’s draft order found at table 220 on Case Centre.

[22] With regards to costs, if the parties cannot come to agreement on that issue, they may make brief written submission of no longer than 2 pages, double spaced (excluding bills of costs and offers to settle). The submission shall be forwarded through the judicial assistants to my attention on the following schedule:

a. The moving party by no later than 4 April 2025.

b. The responding party by no later than 11 April 2025.

Justice J. Krawchenko

Released: March 18, 2025

Additional Note

[1] In Pola, the plaintiff sought to amend his amended statement of claim after three weeks of trial, alleging misrepresentation that was not previously pleaded. In this case, parties agreed to continue the trial and argue the issue of the amendment at the conclusion of trial. The trial judge, having had the benefit of hearing all the evidence in the case, was in a position to rule on the mid-trial motion by deciding the issue of limitation periods and specifically addressing discoverability.