



COURT OF APPEAL FOR ONTARIO

CITATION: Baradaran v.
    Tarion Warranty Corporation, 2014 ONCA 597


DATE: 20140819

DOCKET: C57426

Feldman, Watt and van Rensburg JJ.A.

BETWEEN

Manoucher Baradaran

Plaintiff (Appellant)

and

Tarion
    Warranty Corporation, Roger Boyd, Abbassgholi

Nasseri and Master Custom
    Homes Inc.

Defendants (Respondents)

Manoucher Baradaran, acting in person

Howard L. Shankman, for the respondents Abassgholi
    Nasseri and Master Custom Homes Inc.

Sophie Vlahakis, for the respondents Tarion Warranty
    Corporation and Roger Boyd

Heard: June 16, 2014

On appeal from the orders of Justice Thomas J. McEwen of
    the Superior Court of Justice, dated July 9, 2013, with reasons for decision reported
    at 2013 ONSC 3145, and reasons for costs reported at 2013 ONSC 6559.

van Rensburg J.A.:

Introduction

[1]

This is an appeal from the orders of McEwen J. dated July 9, 2013. The
    first order, dismissing the appellants action in Superior Court, resulted from
    a motion in the action by respondents Master Custom Homes Inc. (Master),
    Abbassgholi Nasseri (Nasseri), and Tarion Warranty Corporation (Tarion), who
    were the remaining defendants to the action. The motion was brought under rules
    20 and 21 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194.

[2]

The second order, declaring the appellant to be a vexatious litigant and
    prohibiting him from continuing or commencing any action without leave against Master
    and Nasseri and prohibiting the appellant without leave from any further action
    against Tarion and its representatives with respect to certain matters only,
    resulted from an application by Master and Nasseri under s. 140 of the
Courts
    of Justice Act,
R.S.O. 1990, c. C.43.

[3]

The appellant also appeals the refusal of McEwen J. to grant his motion
    for leave to amend the statement of claim.

Background Facts

[4]

The appellant has been involved in a long-standing dispute with the
    respondents over alleged construction defects in his home located in Toronto,
    which he purchased in October 2007. Master, a corporation of which Nasseri is a
    principal, was the builder and vendor of the house. The respondent Tarion is a
    non-profit corporation that administers the mandatory warranties and
    compensation scheme under the
Ontario New Home Warranties Plan Act,
R.S.O.
    1990, c. O.31 (the Act).

[5]

Section 13(1) of the Act provides for the following statutory warranties,
    subject to exclusions in s. 13(2), for all new homes sold in Ontario:

13. (1) Every
    vendor of a home warrants to the owner,

(a) that the home,

(i) is constructed in a workmanlike manner and is free from
    defects in material,

(ii) is fit for habitation, and

(iii) is constructed in accordance with the Ontario Building
    Code;

(b) that the home is free of major structural defects as
    defined by the regulations; and

(c) such other warranties as are prescribed by the regulations.

[6]

Section 14(3) provides that a homeowner has a right to claim from the
    Tarion guarantee fund, damages resulting from a breach of warranty where the
    homeowner has a cause of action against the vendor or builder, as the case may
    be, for damages resulting from breach of warranty.

[7]

Section 13(6) provides that the statutory warranties apply despite any
    agreement or waiver to the contrary, and are in addition to any other rights the
    owner may have and to any other warranty agreed upon.

[8]

The appellant addressed his complaints about defects in his home through
    the warranty and claims process under the Act. He made complaints about
    deficiencies on the 30-day and first year-end claim forms which were submitted
    to Tarion, with a copy provided to Master. Some of the issues were resolved
    between the appellant and Master. Other alleged defects were pursued through
    the inspection, assessment and decision process provided under the Act.

[9]

In response to the construction defect claims asserted by the appellant,
    Tarion issued a warranty assessment report and three decision letters, dated,
    respectively, October 7, 2008, November 18, 2008, December 16, 2008 and April
    30, 2009. In the warranty assessment report, Tarion determined that, of the 45
    construction defects alleged by the appellant, only one was warranted and
    required repair by Master. All of the other alleged defects were found to be
    not warranted. In some cases, Tarion concluded that there was no defect in
    work or materials or violation of the
Ontario Building Code
; in others,
    Tarion identified an item of damage, but was unable to determine the cause.
    There were other reasons Tarion concluded that certain alleged defects were not
    warranted, including that the complaint was with respect to a design defect,
    and that the item was not subject to statutory warranties but may be covered by
    the purchase and sale agreement. The appellant raised an additional 30 separate
    deficiencies following the warranty assessment report, which Tarion addressed
    in its three decision letters.

[10]

The
    appellant appealed the findings in the Tarion decision letters to the Licence
    Appeal Tribunal (the Tribunal). The appellant, Master, Nasseri and Tarion
    were all parties to the appeal.

[11]

Prior
    to the appeal, Tarion agreed that some of the outstanding claims that had been
    denied were in fact warranted.

[12]

In
    the course of the hearing, Tarion reassessed a number of other claims that it
    had originally denied. Tarion advised the appellant by letter dated October 7,
    2009 that it would issue a reassessment report confirming that these items
    would be warranted and that they would be withdrawn from the various decision
    letters and not form part of the hearing before the Tribunal. Warranty
    assessment reports were issued November 5 and 6, 2009 confirming that the items
    were warranted and that the vendor was required to remedy them.

[13]

The
    reassessed claims were later the subject of two decision letters dated February
    11, 2010. While Tarion confirmed that these items were defects that amounted to
    a breach of warranty, the claims were all denied on the basis that the
    appellant had refused access to the home to Master to complete the repairs, and
    to Tarions field claim representative to assess the warranted items.

[14]

The
    February 2010 decision letters informed the appellant that he had a right of appeal
    to the Tribunal. No such appeal was taken.

[15]

Of
    the 30 alleged deficiencies addressed in Tarions three initial decision
    letters, a total of 12 were resolved or reassessed as warranted, leaving 18
    claims to be considered by the Tribunal. The appeal hearing with respect to these
    items lasted 16 days. Thirteen witnesses, including experts, provided evidence at
    the hearing. In its decision dated August 25, 2010, the Tribunal concluded that
    two of the contested claims were warranted. The Tribunal noted the undisputed
    fact that the relationship between the appellant and the respondent was
    acrimonious and, in order to avoid further conflict, acceded to the appellants
    request that payment be ordered out of the guarantee fund rather than the
    usual order that Tarion carry out repairs. The Tribunal ordered payment to
    the appellant of the sum of $800. This amount was set off against costs awarded
    against the appellant of $1,600.

[16]

The
    appellant also submitted claims to Tarion under the Act at the end of the second-year
    warranty period. In a decision letter dated November 30, 2009, Tarion concluded
    that none of the defects were warranted. This decision was also appealed to the
    Tribunal. The appeal hearing with respect to these claims lasted three days,
    and again the appellant, Tarion, Master and Nasseri participated. The Tribunal dismissed
    the appeals on June 23, 2010. An appeal of this decision was dismissed by the
    Divisional Court on April 5, 2011, and leave to appeal to this court was
    refused.

The Small Claims Court Action

[17]

The
    appellant commenced an action against Nasseri in Small Claims Court on February
    25, 2008, alleging a number of defects in the home and claiming damages of
    $10,000. This claim, which was defended by Nasseri, has not been pursued.

The Superior Court Action

[18]

The
    appellant commenced Action No. CV-10-413391 in the Superior Court on November
    1, 2010. The respondents in this appeal were named as defendants to the action.
    An employee of Tarion, Roger Boyd, was also originally named as a defendant;
    however, the action was dismissed against him, and that decision was upheld by
    this court:
Baradaran v. Tarion Warranty Corporation
, 2014 ONCA 123.

[19]

In
    the statement of claim the appellant seeks general damages of $500,000 and
    special damages of $500,000. The pleading refers to the various complaints made
    by the appellant to Tarion, the handling of the complaints by Tarion, and
    Nasseris refusal to fix the defects. The substance of the claim appears to be
    pleaded at paras. 23 to 27. After referring to the appeal hearing of the 30-day
    claim and year-end claim before the Tribunal, the appellant pleads:

23.     During the Process of the Hearing, Tarion warranted the
    following items:

1. Slate Tiles in front of the house, (30 Days Application).

2. Uneven bricks flooring on drive way leading to back.

3. Drive way leading to the garage is too steep, (30 Days
    Application).

4. Cold room need a fan, (30 Days Application).

5. Exterior Stone in Drive way has been fallen, (year-End
    Application).

6. The Stucco on the left side of the exterior is uneven,

7. A few stone are missing in the exterior of the property.

8. [T]he door from the basement hallway to garage was
    damaged.

9. Gap between walls and bricks in driveway.

24.     At the Hearing, Mr. Nasseri did testify before the
    Tribunal that he unsuccessfully attempted to repair the deficiencies a number
    of times. It is therefore time to allow a more competent contractor to address
    the deficiencies to save costs for all involved. Previous case-law has shown
    that where there is a great deal of animosity between Mr. Nasseri and the
    homeowner, the Tribunal will order that Mr. Nasseri not be permitted to do the
    repairs but that a third party contractor do the work.
CLAIM No. 4773-ONHWPA - Claim

25.     The Plaintiff advised the Tribunal that there was a
    great deal of animosity between Mr. Nasseri and himself, as seen in a letter
    dated January 12, 2009 from Shadi Nasseri, responding to his service of
    documents to Mr. Nasseri. In her letter, she indicates that she advised [the
    Plaintiff] not to ever trespass on the [Mr. Nasseris] property the next time
    [he] set foot on the [Mr. Nasseris] property [they would] call the police for
    trespass. The Plaintiff does not see any circumstances under which he would be
    able to work with Mr. Nasseri in the future.

26.     Shortly after the Hearing with [the Tribunal], the
    Plaintiff received an email from Linda Leclair at Tarion indicating that, Mr.
    Boyd will attend to his home to do a quotation with respect to the items that
    were warranted, he advised Tarion particularly Linda Leclair, that he lost his
    trust on Mr. Boyd and he preferred an independent contractor do the quotation,
    however as he mentioned before he believed there was some financial issue
    between Mr. Boyd and Mr. Nasseri and that was the reason he did not let him
    come to inspect Major Defect and Tarion sent Mr. Bryan to do inspection.

27.     Mr. Boyd and Mr. Nasseri without the other independent
    contractor came to the Premises to do the quotation for warranted items, the
    Plaintiff told him that he would not trust him to do the quotation and he left,
    immediately he sent a letter to Tarion and Licence Appeal Tribunal and advised
    all the parties of this situation and since he did not receive any
    documentation to his request.

[20]

The
    statement of claim includes particulars of the damages alleged to have been
    suffered, including psychological damage, and damage to the appellants vehicle
    from the slope deficiencies in the driveway (para. 28). There is also a claim
    for special damages and future expenses (para. 32).

Decision of the Court Below

[21]

McEwen
    J.  referred to for convenience as the application judge  heard two motions
    and an application in respect of the appellants action. First, he heard a
    motion by the respondents to dismiss or stay the action on the basis of
res
    judicata,
issue estoppel and abuse of process. Second, he considered a
    motion by the appellant to amend the statement of claim to include certain
    claims for compensatory damages against Tarion, and to add his wife and
    children as plaintiffs and include their claims for personal injuries and
    psychological harm. Third, the application judge heard the application by
    Master and Nasseri for an order under s. 140 of the
Courts of Justice Act
.

[22]

The
    application judge accepted the respondents position that the statement of
    claim was an attempt to relitigate matters already determined by the Tribunal. He
    stated:

In this action, Baradaran did not seek damages for the two
    items that the Tribunal found were warranted (the rust on an iron railing and a
    missing backyard light).

Although the Statement of Claim was difficult to understand, a
    close reading disclosed that Baradarans complaints in this action arose solely
    from the complaints he made to Tarion, specifically, how they were dealt with
    by Tarion and adjudicated by the Tribunal. In particular, Baradaran complained
    that the defendants refused to pay for warranted items, which caused him
    damage, as well as physical and emotional injuries. There were further
    allegations that the defendants breached their contracts to Baradaran by
    failing to honour warranties which, again, resulted in the aforementioned
    losses.

[23]

The
    application judge stated that any uncertainty as to whether the appellant was
    seeking to relitigate the same issues in the action that were decided by the
    Tribunal was resolved by the appellants own evidence given at his
    cross-examination, where he responded affirmatively to the question: So the
    construction deficiencies that youre complaining about in this action are the
    same construction deficiencies that you complained about to Tarion in 2008 and
    2009, arent they?

[24]

The
    application judge observed that the Tribunal, in dismissing the appellants
    claims for breach of warranty, had already found against the appellant on the
    liability issues that would need to be determined in the action.

[25]

The
    application judge dismissed the action after concluding that the decisions of
    the Tribunal gave rise to issue estoppel. He also observed that the action was
    barred by the doctrine of
res judicata,
and that the action
    constituted a collateral attack on the correctness of the Tribunals decisions
    and an abuse of process.

[26]

With
    respect to the appellants motion to amend his pleadings, the application judge
    concluded that, if he was wrong with respect to the dismissal of the action, he
    would have permitted the amendments to the appellants own claims, but would
    have disallowed the amendments to assert claims by the appellants spouse and
    children, without prejudice to their right to commence their own actions or to
    bring their own motions to be added as plaintiffs.

[27]

With
    respect to the vexatious litigant application, the application judge considered
    the appellants history of commencing claims against a variety of persons (48
    Small Claims Court actions in Toronto since 2003 and 11 actions in the Superior
    Court since 2007), his obstreperous conduct while appearing before tribunals, the
    fact that he wrongly held himself out as a licensed paralegal, and his pattern
    of expanding his grievances to include lawyers who acted against him and judges
    who had presided over the proceedings. The application judge also considered
    evidence that the appellant had made complaints to the Law Society of Upper
    Canada against the respondents counsel of record in the Superior Court action,
    and had reported one judge to the Canadian Judicial Council and another to the
    Regional Senior Justice. He had failed to pay outstanding costs totalling
    $4,500 in the action and the $800 awarded by the Tribunal.

[28]

The
    application judge concluded:

When one reviews the totality of the proceedings that have
    been commenced by Baradaran, many of which have been unsuccessful, and when one
    examines his conduct and his pattern of escalating attacks against other
    lawyers and members of the judiciary, a finding that he has engaged in
    vexatious litigation is inescapable.

[29]

The
    application judge declared the appellant a vexatious litigant and prohibited him
    from instituting or continuing litigation against Master and Nasseri, their
    agents, solicitors, employees and assigns, without both leave of the court and
    payment of all outstanding costs orders against him in the Tribunal proceeding
    and the action. The order also prohibited the appellant from instituting or
    continuing proceedings against Tarion and its agents, solicitors, employees and
    assigns without leave in respect of the two matters dealt with by the Tribunal.

[30]

Tarion
    was awarded costs in the sum of $3,544.12, and Master and Nasseri were awarded
    costs of $24,927.14, both payable by the appellant on or before January 3,
    2014.

Issues

[31]

The
    appellant challenges the dismissal of his action and the vexatious litigant
    order. The issues on appeal are whether the action ought to have been dismissed
    (specifically, whether the doctrine of issue estoppel in fact operates to
    preclude all of the claims in the action), and whether the appellant ought to
    have been declared a vexatious litigant and made subject to the restrictions
    provided for in the order. If the action is to survive, the appellant seeks an
    order permitting all of the amendments to the statement of claim that he
    pursued before the application judge.

[32]

For
    the reasons that follow, I would allow the appeal in part.

The Dismissal Order

[33]

The
    application judge dismissed the appellants Superior Court action on the basis
    of issue estoppel,
res judicata
and abuse of process. Fundamental to
    his decision was the conclusion that the appellant was seeking in the action to
    relitigate the very issues that had been determined against him by the
    Tribunal.

[34]

As
    the point of departure, it is important to recall that proceedings under the
    Act do not necessarily preclude a civil action based on the same facts.

[35]

In
Metropolitan Toronto Condominium Corp. No. 1352 v. Newport Beach
    Development Inc.
, 2012 ONCA 850, 113 O.R. (3d) 673 (
Newport Beach
),
    this court considered the appeal of an order dismissing a rule 21 motion
    brought by a new home vendor seeking to dismiss an action against it as an
    abuse of process. The vendor argued that the claims were for alleged defects in
    respect of which the owner had already pursued relief under the Act, resulting
    in a decision against the owner by Tarion. Writing for the court, Laskin J.A.
    described the statutory scheme, including the right to pursue a claim for
    breach of statutory warranty and review rights. He referred to s. 13(6) of the
    Act, which provides that the statutory warranties are in addition to any other
    rights the homeowner may have. Laskin J.A. held, at para. 76, that Tarion
    decisions do not give rise to issue estoppel. However, at para. 77, he limited
    his conclusion to Tarion decisions and left open the question whether issue
    estoppel would have succeeded if the respondent had unsuccessfully appealed the
    Tarion decision to the Tribunal.

[36]

The
    appellant, as part of his record on appeal, filed a transcript of the proceedings
    before the application judge. It is apparent from the transcript that
Newport
    Beach
, although the leading authority on the scope of the Act and whether
    and to what extent proceedings under the Act may preclude a civil action, was
    not referred to by any of the parties in the court below. Indeed, the
    respondents only addressed this case during argument in the appeal at the specific
    request of the panel.

[37]

On
    the authority of
Newport Beach
, the fact that the appellant pursued
    his complaints under the Act and received certain adverse decisions from Tarion
    with respect to his claims would not preclude a civil action in respect of the
    same defects. The appellants admission that in the action he was complaining
    about the same defects that he complained about to Tarion, which was relied on
    both by the application judge and by the respondents in this court, is
    irrelevant: the appellant was entitled under the Act to engage in the statutory
    claims process
and
to pursue a legal action.

[38]

The
    respondents assert that
Newport Beach
leaves open the question whether
    a decision of the Tribunal adverse to the claimant may give rise to issue
    estoppel, and contend that in this case the application judge correctly gave
    such effect to the Tribunals decisions. The error in this argument however is
    that the construction defects pleaded in the statement of claim are those that
    were ultimately found by Tarion to be warranted (the reassessed claims), and
    not the alleged defects that the Tribunal found were not warranted.

[39]

The
    respondents submit that, to the extent that the appellants claims in the
    action are based on defects that Tarion reassessed as warranted, but ultimately
    rejected on the basis of the denial of access to the home (under the February
    2010 decision letters), issue estoppel should apply because the Tarion
    decisions were not appealed to the Tribunal. This argument is met by
Newport
    Beach
: a Tarion decision against a homeowner does not give rise to issue
    estoppel. In any event, the decision letters state that the defects the
    appellant continued to complain about had been further investigated and were in
    fact warranted. Rejection of a claim for compensation by Tarion based on lack
    of access does not negate the existence of a construction defect, or indeed the
    statutory warranty itself. The Act permits the appellant to pursue his claims
    in respect of such warranties in a court proceeding.

[40]

In
    my view, the application judge misconstrued the appellants claims and the
    statutory regime, and therefore wrongly applied the doctrines of issue
    estoppel,
res judicata
and abuse of process to preclude all claims
    asserted in the action. The application judge erred in concluding that the
    appellant is seeking in this action to relitigate the issues that were decided
    against him by the Tribunal, and in dismissing the action.

[41]

I
    recognize that the appellants own materials  including parts of the statement
    of claim, the affidavits he filed in the court below, and indeed the factum he
    filed in the appeal  may suggest that his action in the Superior Court is
    about a great deal more than the defects in his home that Tarion has already
    found to be warranted. For example, the appellants affidavit of March 25, 2013
    includes many allegations that are irrelevant or only collateral to what is
    pleaded in the statement of claim, including complaints about the conduct of
    the lawyers and judges involved in this matter as well as about the Tribunal
    proceedings, and allegations of corruption and conspiracies.

[42]

The
    substance of the action however depends on the allegations contained in the
    statement of claim. The essence of the claim relates to the construction
    defects that the appellant claims were determined by Tarion to be warranted. It
    is these claims that the appellant has chosen to assert in a court proceeding.

[43]

If
    the appellant, notwithstanding how the action is currently pleaded, chooses to pursue
    items that were determined by the Tribunal against him, the respondents, in addition
    to any other defences they may have to such specific claims, would be entitled
    to assert issue estoppel. I would not comment on any such defence, but only
    observe that the action as pleaded asserts claims that were not already
    determined against the appellant by the Tribunal, and that are not precluded by
    issue estoppel. As such, there was no basis for dismissing the action on the
    respondents motion.

The Vexatious Litigant Order

[44]

Section
    140(1) of the
Courts of Justice Act
permits a judge to make a
    vexatious litigant order where satisfied that the person has persistently and
    without reasonable grounds, (a) instituted vexatious proceedings in any court;
    or (b) conducted a proceeding in any court in a vexatious manner.

[45]

The
    impetus for the vexatious litigant order in this case was the respondents contention
    that the appellant, having had recourse to the claims procedure under the Act, had
    no right to pursue his action in the Superior Court, and that such action was
    itself a vexatious proceeding. I have rejected that position, and as such the
    key consideration for the vexatious litigant order in this case falls away.

[46]

The
    only outstanding proceeding between the appellant and the respondents in the
    court system (apart from the dormant Small Claims Court action) is the one
    Superior Court action that the appellant will be permitted to continue. There
    is no evidence of the appellant having instituted any vexatious proceeding
    against any of the respondents at this time.

[47]

There
    is evidence that the appellant has conducted himself in a vexatious manner in
    respect of the Tribunal proceedings and in the course of the Superior Court
    action. The application judge described such conduct as obstreperous. While
    such conduct no doubt makes it difficult for both opposing counsel and the
    court to understand and deal with the appellants claims in the action, is
    distracting and impedes the proper resolution of the litigation, it does not
    justify the vexatious litigant order in the terms made by the application judge
    in this case.

[48]

At
    the suggestion of the respondents, the application judge, after declaring the
    appellant a vexatious litigant, made an order that was limited in scope. It was
    designed to put an end to the Superior Court litigation as well as any future
    attempts by the appellant to relitigate issues the court believed had already
    been determined. It was premised on the erroneous conclusion that the Superior
    Court action itself was vexatious.

[49]

The
    respondents rely on a volume of legal proceedings pursued by the appellant
    against other parties, litigation which the appellant contends was warranted
    given his activities as a paralegal acting for some 500 clients. The
    application judge observed that it was difficult to put all the claims [the
    appellant] has commenced into context given the limited evidence at the
    application. Even if such evidence of other actions suggests that the
    appellant has engaged in a pattern of vexatious litigation against other
    parties, the concern addressed by the order was to put an end to the
    appellants attempts to litigate against the respondents. Whatever mischief may
    have been caused by the appellants pattern of litigation at large was not
    addressed by the order in this case which precluded only legal action in the
    courts by the appellant against the respondents. As such, the appellants
    pattern of litigation against others is not sufficient reason to uphold the
    vexatious litigant order in this case.

[50]

For
    all of these reasons, I would set aside the vexatious litigant order. I would
    also observe that the Superior Court action would benefit from case management
    under rule 77, and I urge the parties to seek an order in this regard.

The Appellants Motion to Amend

[51]

The
    application judge concluded that, if he had not dismissed the action, he would
    have allowed the appellant to amend the statement of claim to pursue
    compensatory damages for depression and property damage and to make resulting
    minor amendments, subject to any defences the defendants might raise, including
    any limitation period defence. The application judge would have refused the
    proposed amendments to add the appellants wife and daughters as plaintiffs and
    claims on their behalf. The order refusing to allow such amendments was without
    prejudice to the right of the appellants wife and children to commence their
    own actions or to bring their own motions.

[52]

The
    application judge extended considerable latitude to the appellant to argue the
    amendment of the statement of claim in the absence of a formal notice of motion.
    I see no error in his conclusion that, if the action were to continue, the
    appellant would be entitled to make the proposed amendments to his own claims,
    but not permitted to add as parties to the litigation and to assert claims by
    his wife and children. The application judge refused this relief because the
    appellant had no legal authority to represent such parties at the motion, no
    notice of motion had been delivered by them, no litigation guardian had been
    appointed for the children, and no lawyer had been appointed to act on their
    behalf. There is no reason to interfere with this decision, and I would uphold
    the decision of the application judge on this point.

Disposition

[53]

For
    these reasons, I would allow the appeal in part. I would set aside the decision
    dismissing the appellants action, the orders made against the appellant under
    s. 140 of the
Courts of Justice Act
, and the costs award of the
    application judge. I would grant the appellant leave to amend the statement of
    claim in the terms and to the extent the application judge would have
    permitted. I would not order costs of the appeal.

Released: August 19, 2014

(KF)                                                                        
    K. van Rensburg J.A.

I agree K. Feldman J.A.

I
    agree David Watt J.A.


