



COURT OF APPEAL FOR ONTARIO

CITATION: Lee v. Richcraft Homes Ltd., 2019 ONCA 7

DATE: 20190111

DOCKET: M49710 (M49016)

Rouleau, van Rensburg and Roberts JJ.A.

BETWEEN

Byeongheon Lee

Moving Party

and

Richcraft Homes Ltd.

Responding Party

Byeongheon Lee, acting in person

John D. Dempster, via teleconference, for the responding
    party

Heard: December 10, 2018

REASONS FOR DECISION

[1]

This is a panel review of two orders of single judges of this court. The
    first motion judge refused an extension of time for the moving party,
    Byeongheon Lee, to move for leave to appeal an order of a single judge of the
    Divisional Court. The second motion judge refused an extension of time for Mr.
    Lee to seek a panel review of the first motion judges order.

[2]

In August 2015, Mr. Lee commenced an action against the respondent
    Richcraft Homes Ltd. (Richcraft), the owner of a commercial plaza, asserting
    that as the owner of Jay-Pee Dry Cleaners, he had suffered business losses of
    $200,000 and special damages of loss of income and loss of equipment in the
    amount of $150,000.

[3]

The substance of the claim is that Mr. Lees use of and access to the
    dry cleaning premises was interfered with by another tenant that operated a
    daycare from three other units at the plaza, that the landlord ignored his
    complaints, threatened to terminate the lease, and ultimately did terminate the
    tenancy after seeing a mattress on the premises and insisting the premises were
    being used as residential accommodation.

[4]

Richcraft was properly served with the statement of claim, did not
    defend the action, and was noted in default. After learning of the claim from
    Mr. Lee, Richcraft moved in June 2016 to set aside the noting in default under
    r. 19.03 and to strike out the statement of claim as disclosing no reasonable
    cause of action under r. 21.01(1)(b) of the
Rules of Civil Procedure
, R.R.O.
    1990, Reg. 194.

[5]

Richcrafts motion was supported by the affidavit of its chief
    operations officer. The affidavit appended a draft statement of defence and the
    affiant deposed that the facts pleaded in the defence were true. The draft
    defence stated that the plaintiff was not a party to the lease, which was
    between Richcraft and Jay-Pee Dry Cleaners 2004 Inc. (Jay-Pee), and had no
    cause of action in his personal capacity. It also asserted that the lease was
    properly terminated after the tenant permitted the premises to be used as residential
    sleeping accommodations and failed, after notice, to cure the default.

[6]

Mr. Lee responded to the motion with his own affidavit, essentially
    deposing to the facts alleged in his statement of claim and attaching proof of
    service of the claim.

[7]

Neither partys materials included a copy of the lease. In the course of
    argument, the master asked to see the lease, presumably in order to determine
    whether, as Richcraft contended, Mr. Lee had no personal claim as a tenant of
    the property. The lease that was provided by Richcrafts counsel was dated in
    2009 and was between Richcraft as landlord and Jay-Pee as tenant. Mr. Lees
    primary concern, as expressed to this court, is his contention that Richcraft
    misled the master by providing the wrong lease. Mr. Lee provided a copy of a
    lease dated January 1, 2010, which included his name as guarantor.

[8]

The master concluded that Mr. Lee had no apparent standing under the
    lease. He also stated that, while the statement of claim contained grievances
    against the landlord, it did not articulate a claim for damages based on a
    recognizable cause of action. He stated that the only possible cause of action
    would have been for a breach of the landlords covenants and wrongful
    termination of the lease, but that these grounds were not pleaded in a comprehensive
    or understandable form. The master noted that nothing in the claim alleged that
    the lease was not properly terminated or explained how Mr. Lee, in his personal
    capacity, had a right to sue. The master refused leave to amend because the
    plaintiff was not a proper party to sue for damages under the lease. The
    masters order dismissing Mr. Lees claim was dated June 7, 2016.

[9]

Mr. Lee appealed the masters order to a single judge of the Divisional
    Court. The appeal was dismissed on June 16, 2017. The judge concluded that the
    master applied the correct legal test, that there was evidence to support his conclusion
    that Mr. Lee had no standing or personal cause of action, and that he was
    correct in concluding that the statement of claim on its face did not disclose
    a cause of action. He also stated that the master had good reason to refuse
    leave to amend the statement of claim and that a dismissal of the action was
    the only possible outcome.

[10]

Mr.
    Lee then sought leave to appeal the Divisional Court order to this court. He emailed
    Richcrafts counsel his notice of motion for leave to appeal on July 7, 2017,
    three days after the 15-day time limit for such a motion. He subsequently
    brought a motion for an order to extend the time for leave to appeal. The motion
    was set down and heard in April 2018. The first motion judge dismissed the
    motion, on the grounds that Mr. Lee, although having a
bona fide
intention
    to appeal, had not adequately explained his delay in moving forward with the
    motion for leave to appeal, and that the motion appeared to lack merit because
    Mr. Lees appeal raised questions of fact.

[11]

The
    second motion judge dismissed Mr. Lees motion for an extension of time to seek
    a panel review of the order of the first motion judge. He found that Mr. Lees
    explanation for the five-week delay in bringing the motion for a panel review
    was not compelling, and that his application for review of the first motion
    judges order was without merit, as the first motion judge had provided
    detailed and cogent reasons for denying the extension of time, including that
    Mr. Lee was attempting to appeal the Divisional Court decision based on factual
    errors, and he could point to no legal error.

[12]

Mr.
    Lee then brought a motion before this panel seeking to review the order of the
    second motion judge. The motion was opposed by Richcraft. Counsel for Richcraft
    fairly agreed that the panel should proceed to review the order of the first
    motion judge if it was inclined to reverse the decision of the second motion
    judge, and made submissions accordingly, seeking to support both orders.

[13]

For
    the reasons that follow, we have decided to set aside the orders of both motion
    judges in this matter, and to extend the time for Mr. Lee to bring his motion
    for leave to appeal the Divisional Court order, dated June 16, 2017, that
    upheld the masters order dismissing his action.

[14]

The
    test for extending time is whether the justice of the case requires that an
    extension be given. While each case depends on its own circumstances, the court
    will typically take into consideration (a) whether the moving party formed a
bona
    fide
intention to appeal within the relevant time period; (b) the length
    of, and explanation for, the delay in filing; (c) any prejudice to the
    responding parties occasioned by the delay; and (d) the merits of the proposed
    appeal. This is the appropriate test whether the motion is to extend time to
    appeal, or to extend time to file a motion for leave to appeal:
Enbridge
    Gas Distribution Inc. v. Froese
, 2013 ONCA 131, 114 O.R. (3d) 636, at
    para. 15.

[15]

In
    our view, the justice of the case strongly favours an extension of time for Mr.
    Lee to file his notice of leave to appeal. These grounds apply equally to this
    panels review of the second motion judges order.

[16]

First,
    not only did Mr. Lee intend to move for leave to appeal to this court, he
    communicated this intention to Richcraft by preparing and sending by email his
    notice of motion for leave to appeal. It was only three days late. The real
    delay here was in the motion to extend time. Mr. Lee only brought this motion more
    than nine months after purporting to serve Richcraft. This delay was a
    significant period of time that was not accounted for, even considering that
    Mr. Lee was not represented by legal counsel. In
Miller Manufacturing and
    Development Co. v. Alden
(1979)
,
    13 C.P.C. 63 (Ont. C.A.), a case referred to by the first motion judge, a lengthy
    delay in filing a notice of appeal and perfecting the appeal after having
    served the notice of appeal, led the court to doubt the firmness of the
    appellants intention to appeal and resulted in prejudice to the respondent.
    Such inferences however were not available in the present case. As the first
    motion judge found, Mr. Lee always maintained an intention to appeal and
    Richcraft did not claim prejudice. In our view, in the absence of prejudice to
    Richcraft this unexplained delay, on its own, is not sufficient to deny Mr.
    Lees request for an extension of time.

[17]

Second,
    in our view the leave to appeal motion has a reasonable chance of success. There
    were arguable errors in the orders of the court below in striking the statement
    of claim without leave to amend.

[18]

Richcrafts
    motion to strike was brought under r. 21, as a motion to dismiss a claim that
    discloses no reasonable cause of action. Since rule 21 motions are required to
    be heard by judges, the master was unable to hear the motion under this rule.
    Instead, he agreed at the hearing to consider the motion to strike under r.
    25.11 (which permits the court to strike, with or without leave to amend, a
    pleading that is scandalous, frivolous or vexatious, or an abuse of the process
    of the court).

[19]

In
Panalpina Inc. v. Sharma
(1988)
,
    29 C.P.C. (2d) 222, Master Sandler helpfully explained the difference between motions
    to strike out pleadings under r. 25.11 and r. 21.01: at pp. 234-35, 241. He
    correctly stated that, to determine whether there is jurisdiction, the master
    first needs to decide which rule is the real basis for the motion, regardless
    of what the moving party is claiming: at p. 231; see also
A.B. v. Halton
    Childrens Aid Society
, 2016 ONSC 6195 (Master), at paras. 21-23. The
    master hearing the motion in this case was required to adjourn the motion to a
    judge, if it was in fact a motion to strike for failure to disclose a
    reasonable cause of action, under r. 21. Here, the primary reason for the
    masters dismissal of the claim without leave to amend was that Mr. Lee lacks
    standing. Standing is a matter that is properly addressed in a r. 21 motion: see
George-McCool v. Toronto (City) Police Service Board
, 2008 CanLII
    54778 (Ont. S.C.), at para. 6. To the extent that the masters decision was
    based on Mr. Lees lack of standing, it appears to have been made outside the
    masters jurisdiction under r. 25.11.

[20]

The
    master also concluded that the claim was frivolous and an abuse of process,
    apparently because of the deficiencies in Mr. Lees pleading. As the exercise
    of the power set out in rule 25.11 denies a litigant a full trial of the merits
    of the claim, it must be exercised only in the clearest of cases:
Wernikowski
    v. Kirkland, Murphy & Ain
(1999), 50 O.R. (3d) 124 (C.A.), leave to
    appeal to SCC refused, [2000] S.C.C.A. No. 98, at para. 12;
M.A.S.
    (Litigation guardian of) v. Ludwig
(2004)
, 245 D.L.R. (4th) 149 (Ont. C.A.), at p. 154. Reading the
    statement of claim generously, Mr. Lees claim is for damages for the loss of
    his business and equipment as a result of Richcrafts conduct in failing to
    deal with his complaints about the other tenant and in terminating the lease.
    The master ought to have considered whether the pleadings deficiencies could
    have been addressed through amendments to the statement of claim under rules 26
    and 5.04(2), to clarify Mr. Lees personal claim based on his plea of harassment
    and/or to add Jay-Pee, the tenant under the lease, as a plaintiff. See for
    example
Mazzucca v. Silvercreek Pharmacy Ltd.
(2001), 56 O.R. (3d)
    768, and in particular (with the abolition of the doctrine of special
    circumstances), the concurring reasons of Laskin J.A. in that case.

[21]

The
    test for leave to appeal an order of the Divisional Court exercising its
    appellate jurisdiction is set out in
Re Sault Dock Co. Ltd. and City of
    Sault Ste. Marie
, [1973] 2 O.R. 479 (C.A.), at pp. 480-81; see also
Enbridge
,
    at paras. 19-22. Typically, the matter will present an arguable question of law
    or mixed fact and law requiring the interpretation of Ontario statutes or
    regulations, principles of law or, where the point in issue involves a question
    of public importance, a municipal by-law, or agreement. The court may also
    grant leave to appeal when there has been a departure from established
    principles of law that would result in a miscarriage of justice, or when there
    has
clearly
been an error in a judgment or order of the Divisional
    Court: see
Sault Dock
at p. 481;
Enbridge
at paras. 21-22.

[22]

As
    we have already explained, in our view the motion for leave to appeal has
    apparent merit, based on errors in the orders of the court below. The masters
    order dismissing Mr. Lees claim without leave to amend, that was upheld by
    order of the Divisional Court, disposed of Mr. Lees claim against Richcraft.
    We note that, if the order dismissing Mr. Lees claim had been made on a r. 21
    motion before a judge, he would have been able to appeal the order directly to
    this court, without leave. The overall justice of the case accordingly favours
    granting the extension of time sought by Mr. Lee.

[23]

For
    these reasons, we allow Mr. Lees motion and set aside the orders of the first
    and the second motion judges in this matter. Mr. Lee shall file his notice of
    motion for leave to appeal within 15 days of this order. He shall then comply
    with r. 61.03.1(4)-(6), filing three copies of his motion record and factum on
    the motion for leave to appeal and, should he choose to do so, a book of
    authorities, with proof of service on the respondent within 30 days after the
    filing of the notice of motion for leave to appeal.

[24]

There
    will be no costs of this motion.

Paul Rouleau J.A.

K. van Rensburg J.A.

L.B. Roberts J.A.


