A case on multiplicity of proceedings and abuse of process (Crook v. Adler, 2021)

An interesting ruling published on CanLII yesterday in the context of an N12, a settlement agreement, subsequent claim of bad faith / T5 (due to the fact that the property was listed for sale within 1 year after the former tenant vacated) and landlord's claim of breach of settlement agreement:

Crook v. Adler, 2021 ONSC 7719 (CanLII), <https://canlii.ca/t/jkrbn>

"[9] In determining a motion under Rule 21.01(3)(c), it is incumbent on the court to assess whether the continuation of the action will cause substantial prejudice to the moving party because it would be oppressive or vexatious or an abuse of the court’s process, and whether the dismissal or stay would cause an injustice to the responding party. The factors to consider include the likelihood and effect of the two matters proceeding in tandem, the possibility and effect of different results, the potential for double recovery, and the effect of possible delay: Ibid., at paras. 14-15.

[10] The doctrine of abuse of process generally prohibits a multiplicity of proceedings. A new proceeding that asserts the same claims as an existing proceeding, and that would amount to relitigating the same issues, constitutes an abuse of the court’s process. This doctrine applies to proceedings before courts and administrative tribunals alike.

[11] The presence of duplicate proceedings satisfies the requirements of Rule 21.01(3)(c) as well as Rule 21.01(3)(d): Maynes v. Allen-Vanguard Technologies Inc., 2011 ONCA 125, at para. 36. Thus, where the causes of action and alleged damages claimed in multiple proceedings arise from the same factual matrix, the proceedings are considered duplicative and are an abuse of the court’s process: Carbone v. DeGroote, 2018 ONSC 109, at paras 35-7.

[12] The record before me establishes that Crook would be prejudiced by having to defend both the Counterclaim and the Landlord and Tenant application, as she would be forced to incur two sets of legal costs and the Tenants would have the opportunity for double recovery. On the other hand, 213 and Adler would not be prejudiced by the dismissal of their Counterclaim, as they would retain the ability to pursue their claims at the Landlord and Tenant Board where they first went to pursue their claims): Ibid., at para. 35."

From Rule 21.01(3) of the Rules of Civil Procedure:

https://www.ontario.ca/laws/regulation/900194#BK169

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For greater context:

Crook v. Adler, 2021 ONSC 7719 (CanLII), <https://canlii.ca/t/jkrbn>

"... [1]               The Defendants, Kerry Adler (“Adler”), 2138746 Ontario Inc. (“213”) and Rachel Bellissimo (“Bellissimo”), have brought a Counterclaim in this proceeding against the Plaintiff, Kathleen Crook (“Crook”). Crook contends that the claims advanced in the Counterclaim are duplicative of claims that Adler and 213 have advanced in separate proceedings before the Landlord and Tenant Board.

 

[2]               It is Crook’s position that the simultaneous pursuit of identical claims in two different forums amounts to an abuse of this court’s process. The Defendants have refused Crook’s reasonable request that they choose one of the Counterclaim or the Landlord and Tenant Application to pursue. No one has filed materials on behalf of any of the Defendants despite being properly served.

 

[3]               Crook is the owner of a luxury residential property in Toronto. 213 was a tenant of the property and Adler is a director and officer of that company. Bellissimo was never a tenant of the property, but rather was an employee of 213 with no legal relationship with Crook.

[4]               In July 2020, the 213 and Adler commenced an Application at the Landlord and Tenant Board in which they allege that Crook acted in bad faith in serving them with a notice to terminate their tenancy for landlord’s own use. Specifically, they alleged that:

 

a.      Crook served them with the termination notice;

 

b.      they vacated the property as a result of having been served with the termination notice;

c.      they subsequently discovered that Crook had listed the property for sale within the one-year period following the date on which they vacated the property;

 

d.      the termination notice was therefore given in bad faith; and

 

e.   Crook’s conduct entitled them to monetary compensation.

 

[5]               In September 2020, Crook commenced the within action. In the Statement of Claim, Crook alleges, among other things, that the Tenants’ commencement of the Tenant Application constitutes a breach of a settlement agreement that was reached between Crook and 213 and Adler in prior proceedings before the Landlord and Tenant Board . In December 2020, the Defendants delivered a Statement of Defence and Counterclaim in which they allege:

 

a.      Crook served them with the termination notice;

 

b.      they vacated the property as a result of having been served with the termination notice following negotiations with Crook;

 

c.      they subsequently discovered that Crook had listed the property for sale within the one-year period following the date on which they vacated the property;

 

d.      the termination notice was therefore given in bad faith; and

 

e.   Crook’s conduct entitled them to monetary compensation.

[6]               As indicated, Bellissimo is a party to the Counterclaim despite the fact that she was never a tenant of the property, was not one of the recipients of the termination notice, and was never in any other relationship with Crook. Bellissimo’s only involvement in the events at issue in these proceedings is that she signed the Settlement Agreement and made representations on behalf of the tenants, 213 and Adler – i.e. her employers.

 

[7]               The affidavit evidence in the record states that Crook attempted to avoid the necessity of bringing this motion by requesting that the Defendants discontinue either the Tenant Application or the within Counterclaim. The Defendants refused this request, taking the position that they are entitled to simultaneously pursue both the Tenant Application and the Counterclaim. They are not so entitled.

 

[8]               Rule 21.01(3)(c) of the Rules of Civil Procedure allows a defendant to move to have an action stayed or dismissed on the basis that another proceeding is pending in Ontario or another jurisdiction between the parties in respect of the same subject matter. This rule applies equally to claims and counterclaims: Birdseye Security Inc. v. Milosevic, 2020 ONCA 355, at para 14. Rule 21.01(3)(d) and rule 25.11 allows a defendant to move to have an action stayed or dismissed on the basis that the action is frivolous, vexatious, or an abuse of the court’s process.

 

[9]               In determining a motion under Rule 21.01(3)(c), it is incumbent on the court to assess whether the continuation of the action will cause substantial prejudice to the moving party because it would be oppressive or vexatious or an abuse of the court’s process, and whether the dismissal or stay would cause an injustice to the responding party. The factors to consider include the likelihood and effect of the two matters proceeding in tandem, the possibility and effect of different results, the potential for double recovery, and the effect of possible delay: Ibid., at paras. 14-15.

 

[10]           The doctrine of abuse of process generally prohibits a multiplicity of proceedings. A new proceeding that asserts the same claims as an existing proceeding, and that would amount to relitigating the same issues, constitutes an abuse of the court’s process. This doctrine applies to proceedings before courts and administrative tribunals alike.

 

[11]           The presence of duplicate proceedings satisfies the requirements of Rule 21.01(3)(c) as well as Rule 21.01(3)(d): Maynes v. Allen-Vanguard Technologies Inc., 2011 ONCA 125, at para. 36. Thus, where the causes of action and alleged damages claimed in multiple proceedings arise from the same factual matrix, the proceedings are considered duplicative and are an abuse of the court’s process: Carbone v. DeGroote, 2018 ONSC 109, at paras 35-7.

 

[12]           The record before me establishes that Crook would be prejudiced by having to defend both the Counterclaim and the Landlord and Tenant application, as she would be forced to incur two sets of legal costs and the Tenants would have the opportunity for double recovery. On the other hand, 213 and Adler would not be prejudiced by the dismissal of their Counterclaim, as they would retain the ability to pursue their claims at the Landlord and Tenant Board where they first went to pursue their claims): Ibid., at para. 35.

 

[13]           As already set out above, Bellissimo was not a tenant of the property and had no other relationship with Crook. The Counterclaim as advanced by Bellissimo contains no viable cause of action. It cannot survive a challenge under Rule 21.01(3)(d), as it is frivolous and vexatious.

 

[14]           In light of all of this, the Counterclaim is dismissed in its entirety.

 

[15]           As the successful party, Crook is entitled to a reasonable expectation that it will receive an order for payment of its costs unless there are special circumstances: Lundy’s Regency Arms Corp. v. Potato Factory Bar & Grill Corp., 2020 ONSC 238, at para 11 (Div Ct). Using rounded off numbers, Crook seeks costs on a partial indemnity basis of $5,300 plus disbursements of $450.00, inclusive of HST. This is not an unreasonable amount given the effort that Crook’s counsel was put to.

[16]           An award of this amount satisfies the principle of indemnity for the successful party and is not an amount that would take the unsuccessful parties by surprise: Rules 57.01(1)(0.a) and (0.b). In general, it satisfies the overriding principles of fairness and reasonableness that guide courts in awarding costs: Boucher v. Public Accountants Council for the Province of Ontario, (2004) 71 O.R. (3d) 728 (Ont CA).

[17]           Adler, 213, and Bellissimo shall pay Crook costs in the all-inclusive amount of $5,750. They are jointly and severally liable for this amount, which is payable forthwith.

 

                                                                                                           

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                                                                                                                     Morgan J.

Date: November 23, 2021"

Disclaimer:

You should not act or rely on any information provided in this blog. It is not legal advice, and the content is provided for general discussion and general information purposes only and to help encourage further research. To ensure your interests are protected, retain or formally seek legal advice from a licensed legal professional.

Never disclose details about your specific legal matters outside of situations when you have established solicitor-client relationship with a qualified legal professional. By using this blog, you acknowledge and accept this warning and agree to waive all liability for use of any information contained in this blog.

Can notices of termination be shortened contractually?

Occasionally we get questions about whether or not notices of termination can be shortened contractually.

First, there is already an option to terminate early via a mutual agreement of termination (e.g. N11 form), which can be signed for any date in the future, as long as it is not signed at the time when the tenancy agreement is entered into or as a condition of entering into the tenancy agreement (see RTA subsection 37(5)). If both parties agree to terminate, the tenant would owe rent only up until the termination date on the agreement of termination (N11), assuming the tenant vacates on or by that date.

However, what if the tenancy agreement itself has a lease clause that would allow for a landlord or a tenant to terminate the tenancy with a shorter notice? Would this clause be valid and enforceable?

1)

First, it is obvious that the answer for landlords' notices of termination is "no": each section on eviction in the RTA specifies minimum notices for different grounds, and if the tenant doesn't vacate, the landlord has to file with the Board (RTA ss. 43(2)(b)), and the tenant is entitled to dispute the landlord's application at the LTB (RTA ss. 43(2)(c)). Besides, the whole point of RTA section 37 (security of tenure) is that "a tenancy may be terminated only in accordance with this Act". And RTA sections 3 and 4 make it generally impossible to contract out of statutory rights and obligations under the Act.

2)

What about tenants?

Technically, the rules are the same, including inability to contract out of statutory rights and obligations under the RTA (RTA s. 3 and RTA s. 4), including minimum notices.

One might argue that, despite minimum statutory requirements for tenant's notices of termination (which are spelled out in RTA section 44), in practice, tenants can vacate early anyway (there is no mechanism of keeping tenants if they want to vacate). (See more on this in this post.) And the landlord would just be able to sue them for loss of rental income as a result of breach of contract, as long as the landlord can show that the landlord minimized his losses for the tenant's breach (RTA s. 16, RTA ss. 88(4)) by actively trying to re-rent the unit and no double-dipping occurred (RTA ss. 88(3)). (See more on this in this post.)

So could a tenant and a landlord agree in their lease that the tenant can provide a shorter (e.g. 30 days') notice of termination? Would this clause be valid and enforceable?

A pretty old case in Pinheiro v. Bowes, 1994 CanLII 7479 (ON SC), <https://canlii.ca/t/1wc1r> (which, by the way, was used later in 1086891 Ontario Inc. v. Barber, 2007 CanLII 18734 (ON SCDC), <https://canlii.ca/t/1rldv>, which confirmed that landlords cannot contract out of their statutory right to increase rent every 12 months, as per RTA s. 119) analyzed this specific scenario in detail, and the answer seems to be "no", i.e. minimum notice requirements in the RTA would trump the lease clause.

"[11] I must express some discomfiture at permitting a landlord to rely on the statutorily created invalidation of that landlord’s own lease proviso, but it is not for a judge to run roughshod over a statute in an effort to protect a tenant.

[...]

[14] In my view, while s. 99 was largely created to protect tenants, it cannot be said to be contrary to public policy to enforce it in favour of a landlord. Section 99 provides a broadly gauged protective rule for landlord-tenant relationships and must be enforced as it plainly reads and provides. On its face, it invalidates the lease proviso in issue and makes the tenant liable for one month’s additional rent."

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Pinheiro v. Bowes, 1994 CanLII 7479 (ON SC), <https://canlii.ca/t/1wc1r>

"[1] KILLEEN J.:—This application by the landlord under s. 113 of the Landlord and Tenant Act, R.S.O. 1990, c. L.7, has been narrowed down, by agreement, to one issue, namely, whether a contractual provision as to notice of termination may override s. 80(1) of the Act.

The agreed facts

[2] The parties entered a lease which contained the following provisions as to notice of termination:

19. (a) If either the Tenant or the Landlord wishes to terminate the tenancy at the end of the term created by this agreement then he will give notice to that effect in writing delivered personally by hand or by Her Majesty’s mail not less than 60 days prior to the expiration of this agreement.

(b) If either party has given such notice the rented premises may be shown to prospective tenants at all reasonable hours after delivery of the notice.

(c) If no such notice pursuant to this paragraph has been delivered by either party, then the Tenant shall become a monthly tenant under the terms and conditions herein set out, providing that nothing herein shall prevent the parties agreeing to any other terms for said monthly tenancy.

(d) The Landlord and Tenant further agree that the monthly tenancy created by (c) may be terminated by giving written notice to terminate on or before the last day of one month of the tenancy to be effective on the last day of the following month of the tenancy.

[3] It is acknowledged that, after the specified term of this lease, the tenant became a monthly tenant by operation of para. 19(c) above. Thereafter, the tenant stayed in the premises for some time and, on October 27, 1993, served a written notice purporting to terminate the tenancy as of November 30, 1993. In doing so, the tenant thought that she was lawfully complying with the one-month notice proviso set out in para. 19(d) of the lease.

[4] If the tenant was entitled to rely on para. 19(d), then, of course, she owes nothing further to the landlord. If, however, that clause cannot be relied upon, then the tenant owes the landlord one additional month’s rent by virtue of s. 99 of the Act.

The resolution of the notice issue

[5] The parties acknowledge that two provisions of the Act must be considered in deciding the central issue of this case. These sections are as follows:

80(1) This Part applies to tenancies of residential premises and tenancy agreements despite any other Act or Parts I, II, or III of this Act and despite any agreement or waiver to the contrary except as specifically provided in this Part.

…

99(1) A notice to terminate a monthly tenancy shall be given not less than sixty days before the date the termination is specified to be effective and shall be specified to be effective on the last day of a month of the tenancy.

[6] Mr. Schlemmer, for the tenant, argues that s. 99, which creates a notice period of 60 days for monthly tenancies, does not bind the tenant in this case because of the express provision in the lease which permits termination on notice for the lesser period of 30 days.

[7] Mr. Schnurr, on the other hand, argues that s. 80(1), in clear and unambiguous language, invalidates the shorter one-month notice period in the lease for all purposes and, in combination with s. 99(1), effectively requires the tenant, or landlord, to give 60 days notice.

[8] At first blush, it may seem anomalous or even unjust to hold that a landlord may successfully argue the invalidity of a lease provision in a lease form which that landlord has proferred as a basis for a contractual bargain. Here, after all, the landlord has provided a lease form which permits either party to terminate a monthly tenancy on one month’s notice and not the longer period in s. 99(1) of the Act.

[9] Yet, s. 80(1) represents the legislative sticking point and it seems to be crystal clear in its intent. Section 80(1) says, in explicit terms, that every provision of Part IV applies to all residential tenancy agreements and that this is so “despite any agreement or waiver to the contrary except as specifically provided in this Part” (emphasis added).

[10] I can identify no ambiguity in s. 80(1) and the parties acknowledge that there is nothing in Part IV which permits any agreement or waiver to the contrary.

[11] I must express some discomfiture at permitting a landlord to rely on the statutorily created invalidation of that landlord’s own lease proviso, but it is not for a judge to run roughshod over a statute in an effort to protect a tenant.

[12] I realize that there is a host of arcane common law decisional authorities which permit a party for whose benefit a special protective clause was created to waive such clause and elect to carry on with a contract. Such waiver rulings are, however, a product of private contract principles and can have no pride of place where the legislature has spoken authoritatively and clearly the other way. There is nothing, for example, in the Interpretation Act, R.S.O. 1990, c. I.11, from which the tenant can draw comfort in her effort to rely on waiver or something like waiver.

[13] Judges must accept statutes as they find them if they are clear and unambiguous and catch the factual situation under consideration.

[14] In my view, while s. 99 was largely created to protect tenants, it cannot be said to be contrary to public policy to enforce it in favour of a landlord. Section 99 provides a broadly gauged protective rule for landlord-tenant relationships and must be enforced as it plainly reads and provides. On its face, it invalidates the lease proviso in issue and makes the tenant liable for one month’s additional rent. In the circumstances, there will be no order for costs.

Judgment accordingly."

Disclaimer:

You should not act or rely on any information provided in this blog. It is not legal advice, and the content is provided for general discussion and general information purposes only and to help encourage further research. To ensure your interests are protected, retain or formally seek legal advice from a licensed legal professional.

Never disclose details about your specific legal matters outside of situations when you have established solicitor-client relationship with a qualified legal professional. By using this blog, you acknowledge and accept this warning and agree to waive all liability for use of any information contained in this blog.