2018 ONSC 2781, 2018 ONSC 2781

CITATION : Chamberlin v. Myers 2018 ONSC 2781 COURT FILE NO.: CV-14-509942 MOTION HEARD: 20 April 2018 SUPERIOR COURT OF JUSTICE - ONTARIO RE: Richard Chamberlin, Penny Chamberlin, Dean Myers Chevrolet Oldsmobile

(1991) Limited, Plaintiffs AND: Dean Myers, Dean Myers Chevrolet Oldsmobile Ltd. and Dean Myers Leasing Ltd., Defendants BEFORE: Master Jolley COUNSEL: Jerome Stanleigh, Counsel for the Moving Party Plaintiffs Wade Morris and Walter Stasyshyn, Counsel for the Responding Party Defendants HEARD: 20 April 2018 REASONS FOR DECISION Overview and the Issue [ 1 ] The plaintiffs bring this motion for an order granting them leave to discontinue this action or, in the alternative, an order staying the action until the health of Penny Chamberlin, the wife of the plaintiff Richard Chamberlin, daughter of the defendant Dean Myers and a former plaintiff herself, is such that she can participate. [ 2 ] On 26 October 2017 the plaintiffs served a notice of discontinuance.

The defendants refused to consent to its filing unless the discontinuance included a term that it was with prejudice to the plaintiffs bringing another action against the defendants asserting that Richard Chamberlin (“Chamberlin”) has a beneficial equitable ownership interest in property located at 3180 Dufferin Street, Toronto (the “Property”) owned by the defendant Dean Myers Leasing Ltd. (“Dean Myers Leasing”). [ 3 ] The plaintiffs wish to preserve the right to bring such an action.

They also wish to discontinue the action without costs. [ 4 ] The issue then is whether the plaintiffs should be permitted to discontinue their action and, if so, whether any terms should be attached to that discontinuance. The Facts [ 5 ] Chamberlin is the directing mind of the plaintiff Dean Myers Chevrolet Oldsmobile

(1991) Limited (“Dean Myers (1991)”). Dean Myers (1991) operates a car dealership from the Property and has done so for the past 27 years. The defendant Dean Myers owns the defendants Dean Myers Chevrolet Oldsmobile Ltd. (“Dean Myers Ltd.”) and Dean Myers Leasing. [ 6 ] Chamberlin deposes that because of his wife’s ill health and her inability to withstand the emotional strain of this proceeding, they have decided to discontinue this action. [ 7 ] Mr. Myers is 90 years old and wishes to settle his affairs without leaving unresolved litigation for his remaining children and estate to contend with.

He argues that unless this claim by Chamberlin to a beneficial interest and cloud on title to the Property is removed, he is unable to sell the Property and settle his affairs, as he wishes.

For this reason, the defendants object to the discontinuance unless it is with prejudice to the plaintiffs claiming a beneficial interest in the Property in any future action or claiming any relief in any future action that is claimed or could have been claimed in this action. [ 8 ] While Chamberlin has from time to time in materials before this court advised that the plaintiffs do not intend to initiate any other action involving Mr. Myers and the Property, he has always qualified his statement to say that that is his present intention and he could change his mind at any time.

Accordingly, nothing can be taken from that representation. Penny Chamberlin deposes that she and Richard “are not interested in pursuing any further claim against my father, Dean Myers”. Despite these statements, the plaintiffs are not prepared to consent to a discontinuance with a term that would preclude them from suing Dean Myers or the defendants in future and alleging a beneficial interest in the Property.

Further, it is clear from the alternative relief sought that the plaintiffs are looking to postpone the litigation, not terminate it. [ 9 ] I heard this motion with the assumption that Chamberlin will sue Mr. Myers and his companies in future and claim not only the relief sought in this action but also (if it is not already claimed) a beneficial interest in the Property. The Present Claim [ 10 ] Chamberlin pleads that he and Dean Myers reached an agreement without counsel present that as long as Dean Myers’

company received $20,000,000 on the sale of the Property, Chamberlin would have an unfettered right to negotiate the sale on his ownterms. Chamberlin argues that this agreement was reached to ensure that he would have sufficient funds money to cover the cost ofstarting up his dealership in another location and to allow for his future endeavours. [11] Chamberlin pleads that, after reaching that agreement, in early 2012 he negotiated a sale of the Property to RioCan for$34,000,000, with the verbal approval of Dean Myers.

He alleges that once the agreement was signed, Dean Myers entered into directnegotiations with RioCan, the result of which was to cause the transaction to be aborted. [12] In the statement of claim, the plaintiffs seek a declaration that Mr. Myers breached the agreement he had with Chamberlin toallow him to sell the Property, causing him to lose $14,000,000. They seek an injunction preventing the defendants from dealing withthe Property and a declaration that the defendants may not enter into any agreement to sell the Property without first obtaining theplaintiffs’ approval.

They also allege that the defendants’ actions in failing to uphold the terms of sale with RioCan have caused PennyChamberlin mental and physical distress which has in turn caused her to contract a near fatal disease. Lastly, they seek a declaration thatthey are entitled to exercise an option to purchase the Property granted under a lease between Dean Myers (1991) and Dean Myers Ltd.dated 1 February 2007. [13] The plaintiffs state that they do not claim a beneficial interest in the Property in this action. This action is a breach of contractclaim arising from the aborted RioCan sale.

The plaintiffs have or had pending a motion to amend the statement of claim to include aclaim on behalf of Chamberlin to a beneficial interest in the Property, but they have not pursued that amendment in light of this motion. The defendants have a motion to amend their defence to include a counterclaim for a declaration that the plaintiffs have no beneficialinterest in the Property. That motion has been adjourned sine die, pending the outcome of this motion. [14] In their substantive response to this claim, the defendants deny that Chamberlin had authority to convey the Property.

Theyplead, among other things, that the agreement of purchase and sale was signed by Chamberlin on behalf of an entity that did not own theProperty. They plead that RioCan insisted on an agreement with the correct legal entity, signed by the proper corporate signingauthorities. RioCan also wanted a longer due diligence period and a condition added to deal with rezoning. The defendants allege that itwas those issues that caused the RioCan transaction to fail and not any action on their part.

The Law [15] Rule 23.01(1) provides that a plaintiff may discontinue all or part of an action against a defendant after the close of pleadingswith leave of the court.

If all or part of the action is discontinued, a party may bring a motion for costs of the action within 30 days ofthe discontinuance (Rule 23.01(5)). [16] The defendants argue that because there is a ten year limitation period for claiming an interest in land, absent an order barringthe plaintiffs from commencing a further action, the defendants remain exposed for some years to a future claim by the plaintiffs for thissame relief, including or in addition to a beneficial interest in the Property. [17] The case law has held that a court may withhold leave to discontinue in special circumstances.

As noted in Simanic v. Ross(2004) (ON SC), 71 O.R. (3d) 161 at paragraph 25: On a motion for leave to discontinue, the court is to balance and weigh the rights and interests of the parties. It is to consider theprejudice that would befall the plaintiff in not being permitted to discontinue against the prejudice to the defendant if leave were granted,taking into account in each case the court’s ability to neutralize prejudice through the imposition of terms. [18] The defendants argue that the discontinuance should not be allowed. If it is to be allowed, it should be on terms to protectMr. Myers.

In support of their position, the defendants first argue that it is disingenuous to use Penny’s illness as grounds to seek adiscontinuance. Second, they argue that they will suffer significant prejudice if these claims are permitted to continue in suspensionindefinitely. [19] While the defendants do not dispute that Penny is ill, they note that she was ill when these proceedings commenced. Despiteher illness, she swore an affidavit in support of this motion on 31 January 2018.

She was then unable to be cross examined on thataffidavit because of her illness. (It should be noted that Penny is no longer a personal plaintiff in this action, her claim having beenstruck on consent in August 2015.) The defendants also note that Chamberlin recently commenced another action against Dean Myersrelating to the lease of the Property, demonstrating that Penny’s illness is not preventing him from litigating as he claims. [20] I do have some concerns about the genuineness of the reasons given by the plaintiffs for wishing to discontinue.

In support ofthis motion, on 6 December 2017 Chamberlin deposed that Penny’s health had been so badly compromised that he, as her caregiver,could no longer carry on with the litigation and that she needed to be relieved of this family dispute. Then, three weeks later, on 27December 2017, Chamberlin commenced an application against Dean Myers Ltd. and Dean Myers Leasing seeking a declaration thatDean Myers (1991) had properly renewed its lease until either 1 February 2023 or 1 April 2025.

In response to this concern, Chamberlinargues and I do accept that his application was an urgent necessity as Dean Myers Leasing was taking the position that the lease was dueto expire on 1 February 2018. Had Chamberlin not challenged that position, his 27 year business and the livelihood of his 100 or soemployees would be in jeopardy. [21] The defendants argue that I should strike or give no weight to the affidavit that Penny swore as they have been unable to test itthrough cross examination and she and Chamberlin have refused to allow Chamberlin to answer questions about the contents of heraffidavit.

In an earlier attendance before me, I ordered that Penny’s cross examination was to be restricted to three hours and was to takeplace by skype if it could not take place in person due to Penny’s health. In the end, Penny was not cross examined either in person or byskype. I have placed no weight on Penny’s affidavit. While it was not known at the time she swore the affidavit that she would undergoa bone marrow transplant, it was a ground of this motion relied on by the plaintiffs in December 2017 that Penny’s illness was criticaland would likely require drastic treatment.

It would be prejudicial to the defendants for the court to rely on that affidavit without themhaving had the opportunity to question Penny or, at a minimum, Chamberlin, on it.

[ 22 ] While the plaintiffs objected to the affidavit sworn by Walter Stasyshyn and filed by the defendants in response to this motion as not being the best evidence, I find that the affidavit is appropriate and I have relied on it. Mr. Stasyshyn is mentioned by name in a number of places in the statement of claim as having taken certain actions in regard to the RioCan transaction. His affidavit is based on his first-hand knowledge as to what transpired and what his dealings with Mr.

Myers were then and over the years as his long time counsel. [ 23 ] Whether it is solely as a result of Penny’s illness or also in the hope of attempting a resolution of these acrimonious family issues – while holding the trump card of reasserting their claims if settlement is not reached – I do accept that the plaintiffs wish to discontinue at this stage due to Penny’s illness. The case is distinguishable from Simanic , supra, where the party seeking to discontinue was doing so only to obtain a change in venue and compel the defendant to defend himself in St.

Kitts rather than in Ontario. [ 24 ] I also note, for the reasons discussed below, that if the discontinuance were not granted and the action proceeded as presently constituted, the defendants would still be left to defend a claim for an equitable interest in the Property at some future date. Forcing Chamberlin on in this action will not result in an end to the litigation between the parties which was a factor in Simanic . [ 25 ] I find that the plaintiffs should be permitted to discontinue their action.

The issue then, is on what terms. [ 26 ] The defendants argue that there will be significant prejudice to them if the discontinuance does not include a term precluding the plaintiffs from litigating any issue either raised or that could have been raised in this action, including any claim by Chamberlin for an equitable interest in the Property, whether or not it is included in the present statement of claim. [ 27 ] The defendants note that Chamberlin’s claim in this action is wholly dependent on a conversation that he says he had with Mr. Myers.

It was made without witnesses and without the involvement of lawyers. This can also be said for his claim to a beneficial interest in the Property. He has been asked whether there was an agreement in writing concerning this alleged interest and was equivocal. In any event, he has refused to date to produce any written agreement, if there is one. As such, his claim for this breach of contract and for his alleged beneficial interest will be determined based on the credibility of two parties.

If Chamberlin is granted leave to discontinue this action without terms, he may choose to bring his claim five years from now when Mr. Myers is 95 years old or, perhaps, has passed away. The defendants argue that it would be most unfair for Mr. Myers (or his estate) if he could not have these issues dealt with while he is alive and able to refute the allegations. This is particularly so where it is not alleged that there is any supporting documentation or witnesses to these alleged agreements.

Further, while Penny has deposed to the existence of an agreement with regard to the RioCan transaction, she has not been cross examined and has refused to allow Chamberlin to be questioned on the issues raised in her affidavit. [ 28 ] The defendants argue that not only should the plaintiffs be precluded from suing later concerning the RioCan transaction, they should also be prohibited from claiming a beneficial interest in the Property.

They argue that a beneficial interest is claimed in this action or that it could have been claimed and should be prohibited on that basis. [ 29 ] Although Chamberlin has stated on a number of occasions that he has a beneficial interest in the Property and has clearly reserved the right to claim such an interest in the future, having reviewed the claim, I do not find that the defendants have claimed that beneficial interest in this action.

There are a number of points that support this reading, three of which I note here. [ 30 ] First, current claim does not specifically claim a beneficial interest in the prayer for relief. It claims various declarations and damages arising from the alleged breach of the RioCan transaction. The defendants argue that the claim must by necessity include the beneficial interest claim as there is no other basis for the plaintiffs’ claim for a certificate of pending litigation or for an injunction prohibiting the defendants from selling the Property without the plaintiffs’ consent.

To the contrary, I note that the plaintiffs claim that Dean Myers (1991) has an option to purchase the Property under its lease agreement with Dean Myers Ltd. and that option is the basis for both the claim for a CPL and for an injunction on a sale absent the plaintiffs’ approval. [ 31 ] Second, the plaintiffs brought a motion returnable 11 December 2015, which ultimately did not proceed, in which they sought to amend the statement of claim to include a claim for a declaration that Chamberlin has “a legal, equitable and/or beneficial interest in the Property”.

The seeking of such an addition supports my reading that the statement of claim does not presently include a beneficial interest claim by Chamberlin. [ 32 ] Third, on 11 April 2016 the defendants brought a motion to enforce a settlement they believed they had reached with the plaintiffs. As part of the settlement, the defendants required a full and final release. The plaintiffs objected to the scope of that release as it included a provision that would have extinguished their right to assert an interest in the Property.

The plaintiffs were prepared to sign a release relating to the RioCan agreement but not relating to any future claim in equity with respect to the Property or to any matter that could have reasonably been pleaded but had not been. [ 33 ] In her reasons of 2 May 2016 Justice Pollak described the issue as follows: To summarize the dispute between the parties, the plaintiff wishes to have the release restricted to this action, but the defendants insist that the release should include any future action against the defendants that could arise in any way out of the facts giving rise to the claim between the parties or to the defendants right with respect to the sale of the subject property, even if such an action was not covered by the scope of the action at issue.

The plaintiffs argue that because there is no agreement on the issue of the scope of the release and specifically the right of the plaintiffs to commence further action against the defendants for any matters which do not specifically arise out of the statement of claim, there is

no agreement to settle between the parties pursuant to 49.09. Both parties on this motion acknowledge that the defendants require a release, which completely bars any further right of action by the plaintiffs against them, which is in any way connected to or related to the property at issue even if those claims were not made in the within action. [ 34 ] Pollak, J. held that the plaintiffs had not agreed to give up any action connected to the Property. As such she held that there was no agreement reached and therefore no settlement.

She did not go so far as to find, as plaintiffs’ counsel suggested, that the equitable property claim was not raised in this action. Her Honour found that whether or not that claim was made in this action, the parties had not reached an agreement to its release. The plaintiffs had only agreed to a release concerning the RioCan transaction issues. [ 35 ] I do not find that the plaintiffs have claimed an equitable ownership interest in the Property in this action.

However, that is not the end of the matter as the defendants argue that the plaintiffs should be precluded from making that claim in future as it is a claim that could have been included in the action. Further, for the reasons set out above, they argue that it would be unfair to permit Chamberlin to sit on that claim until Mr. Myers was unable to respond to it. [ 36 ] I have considerable sympathy for the position of Mr.

Myers. [ 37 ] I am prepared to grant leave to discontinue the claim with the proviso that the plaintiffs are prohibited in future from litigating the issues concerning the RioCan transaction that were raised or that could have been raised in this action. Unlike the equitable interest claim, this is not a claim that Mr. Myers can easily get before the court himself as it is the plaintiffs’ breach and damages claim. Further, Mr.

Myers was denied the opportunity to obtain evidence on this RioCan transaction issue for future use, if needed, when Chamberlin refused to answer most questions about the transaction and about the agreement he alleged between him and Mr. Myers to allow him to sell the Property and retain a significant financial benefit. Further, the plaintiffs refused to have Penny or Chamberlin answer questions on the information in Penny’s affidavit concerning the alleged agreement to allow Chamberlin to negotiate and sell the Property to RioCan.

Balancing the rights of the parties if leave were granted, the only way to neutralize the prejudice to the defendants on these issues that have formed the basis of this statement of claim since 2014 is to prohibit these issues from being raised by the plaintiffs in the future. [ 38 ] However, I am not disposed to include as a term of the discontinuance a prohibition against Chamberlin claiming an equitable interest in the Property in future separate from the RioCan agreement he alleges had with Mr.

Myers for three reasons. [ 39 ] First, there has been no determination on the merits of Chamberlin’s equitable interest claim and it has not been raised in this action. Nor is the beneficial ownership claim so inextricably linked with the RioCan transaction claim that it should be considered a claim that “could have been made” in this action and precluded on that basis. To determine that Chamberlin should forever be precluded from pursuing this interest would effectively give the defendants judgment on their proposed counterclaim without the need for a trial. [ 40 ] In 1623242 Ontario Inc. v.

Great Lakes Copper Inc. 2016 ONSC 1002 , the court granted the discontinuance sought by the plaintiff but imposed a term barring the plaintiff from bringing any future claim that was or could have been raised in that action. But a close reading of that case makes it clear that the term imposed prohibited the plaintiff from suing in relation to claims that were or could have been asserted in the action and that arose from the same transaction and had a factual nexus to the existing action, not causes of action between the parties generally. That is the term I have imposed here.

It prohibits the plaintiffs from commencing an action on issues raised or that could have been raised in relation to the RioCan transaction. It does not prohibit the plaintiffs from commencing an action on issues that were not raised in this litigation or that are not part of the factual matrix of the RioCan transaction. [ 41 ] Second, Mr. Myers suffers no more prejudice now in terms of responding to Chamberlin’s assertion than he would have suffered had Chamberlin waited until just before the expiry of the ten year limitation period to claim a beneficial interest in the Property. Mr.

Myers suffers no additional prejudice because the plaintiffs have chosen to sue on the RioCan agreement issue and now wish to discontinue that claim than he would suffer in defending the equitable interest claim in future had this RioCan claim never been brought. The defendants argue that once Chamberlin sued Mr. Myers, he should be required to sue on all of his claims.

While that position is understandable, there is no legal principle that would compel Chamberlin to do so, particularly where the equitable interest claim has not been pursued in this action to date. [ 42 ] Third, the defendants can take steps on their own now to have the issue of Chamberlin’s alleged equitable interest determined. In April 2016 plaintiffs’ counsel advised the defendants that they intended to seek leave to amend their claim to seek a declaration that Chamberlin held an equitable or beneficial interest in the Property.

After declaring this intention, the plaintiffs took no steps to pursue the claim or move this action forward. In order to bring this matter to a resolution, defendants’ counsel advised of their intention to amend the defence to include a counterclaim for a declaration that Chamberlin and the plaintiffs had no interest in the Property. In support of their motion, the defendants stated that Mr.

Myers was in his late 80s and it was unknown how much longer he would have to defend himself and to traverse the version of the facts alleged by the plaintiffs. [ 43 ] After the defendants served their motion to amend, the plaintiffs served this motion to discontinue. The master hearing the defendants’ motion adjourned it sine die to be heard after the disposition of this motion.

She was of the view that a discontinuance may end the litigation. [ 44 ] Rather than proceed by counterclaim in this discontinued action as they had proposed, the defendants may now proceed by application or action seeking the declaration that they intended to seek in their counterclaim, namely that Chamberlin and the plaintiffs have no interest in the Property. This will permit Mr. Myers to obtain finality on this issue and allow him to settle his affairs without waiting for Chamberlin to sue at some future time.

Disposition [ 45 ] In exercising my discretion to grant or withhold leave to discontinue, I have considered a variety of factors including the progress of the action, the prejudice suffered by either party should leave be granted or refused and the ability to neutralize prejudice by imposing terms. Having analyzed all these factors, I grant the plaintiffs’ motion for leave to discontinue with a term that they are prohibited from commencing any action in future relating to the issues raised in this claim concerning the RioCan transaction or to issues that could have been raised concerning the RioCan transaction.

The term does not go so far as to restrict the plaintiffs’ ability to pursue Chamberlin’s equitable interest claim in the Property in future, subject to any defence the defendants have that any new claim is statute barred. [ 46 ] As a further term of the discontinuance, the plaintiffs are obliged to pay to the defendants their costs of defending this action. If those costs cannot be settled, the parties may

schedule a further attendance before me on that issue. [ 47 ] I similarly encourage counsel to attempt to come to a resolution on the costs of this motion. If they are unable to do so by 31 May 2018, the plaintiffs may file costs submissions no more than three pages in length and a costs outline by 8 June 2018. The defendants may file responding costs submissions of a similar length by 22 June 2018. Master Jolley Date: 1 May 2018