



COURT OF APPEAL FOR ONTARIO

CITATION: Khan v. Krylov & Company LLP, 2017 ONCA 625

DATE: 20170726

DOCKET:
C63151

Pepall, Lauwers and Huscroft JJ.A.

BETWEEN

Zaka Ullah Khan

Plaintiff (Appellant)

and

Krylov & Company and Devry Smith Frank LLP

Defendants (Respondents)

Zaka Ullah Khan, acting in person

B. Robin Moodie, for the respondent, Krylov &
    Company

Louis Covens, for the respondent, Devry
    Smith Frank LLP

Heard: May 24, 2017

On appeal from the order of Regional Senior Justice
Peter A. Daley
of the Superior Court of Justice, dated December
    2, 2016.

REASONS FOR DECISION

[1]

The motion judge dismissed the appellants
    action under rule 2.1.01 of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194,
as being frivolous, vexatious or
    otherwise an abuse of the process of the court.

A.

The Factual Context

[2]

The respondent, Krylov and Company, represented
    the appellant in his claim for damages arising from a motor vehicle accident.
    The respondent, Devry Smith Frank LLP, represented the defendant in that
    action.

[3]

The appellant subsequently sued both respondents
    in the action that is the subject matter of the r.2.1.01 dismissal. The
    statement of claim in this action noted:

On or about March 31, 2014 that [personal
    injury] action was settled and Krylov provided Khan with a cheque in the amount
    of $58,137.95.

Krylov told Khan that the total settlement
    amount was $82,500.00.

[4]

However, the statement of claim also asserted
    the following:

Khan believes the actual settlement was higher
    than the alleged $82,500.00 and in the $800,000.00 range as the associate from
    Krylov assured him of the same.

Khan believes both defendants received a
    larger compensation but misappropriated the funds and provided a smaller
    settlement to Khan.

[5]

As the motion judge noted:

At the heart of the action as asserted by the
    plaintiff in the statement of claim is the allegation that both defendant law
    firms defrauded the plaintiff by misappropriating settlement funds and forging
    his name to a final release or having him sign such a release without his
    knowledge of its contents.


B.

The Governing Principles

[6]

The law concerning rule 2.1 is new and evolving.
    It was largely summarized in
Scaduto v. The Law Society of Upper
    Canada
, 2015 ONCA 733, 343 O.A.C. 87, leave to appeal
    refused, [2015] S.C.C.A. No. 488, at paras. 7-9. This court accepted the
    approach taken by Myers J. in a series of cases including
Gao v.
    Ontario (Workplace Safety and Insurance Board)
, 2014 ONSC 6497, 37 C.L.R.
    (4th) 7 ("
Gao (No. 2)
") and
Raji v. Border Ladner
    Gervais LLP
, 2015 ONSC 801. The court noted  in
Scaduto
that the
    use of the rule should be limited to the clearest of cases where the abusive
    nature of the proceeding is apparent on the face of the pleading and there is a
    basis in the pleadings to support the resort to the attenuated process (at
    para. 8).

[7]

Justice Myers provided an important caution, at
    para.18 of

Gao (No. 2)
:

It should be borne in mind however, that even a vexatious
    litigant can have a legitimate complaint. It is not uncommon for there to be a
    real issue at the heart of a vexatious litigant's case. Care should be taken
    to allow generously for drafting deficiencies and recognizing that there may be
    a core complaint which is quite properly recognized as legitimate even if the
    proceeding itself is frivolously brought or carried out and ought to be
    dismissed.

C.

The Principles Applied

[8]

The basis of the motion judges ruling was that
    the statement of claim provided no particulars whatsoever of alleged breaches
    of fiduciary duty and negligence (at para. 20), and no particulars whatsoever
    of fraud, misappropriation and dishonesty on the part of the defendant law firms
    (at para. 21). This criticism was repeated at para. 25.

[9]

The motion judge also referred to internal
    contradictions in that having acknowledged in the pleading that he [the
    appellant] was told his tort action had settled for the sum of $82,500, at
    paragraph 13 of the statement of claim he states that he was told by a
    representative of Krylov that in fact the settlement amount would be higher
    (at para. 22).

[10]

However, in effect and read generously, the
    pleading alleges that the respondent law firms settled the motor vehicle action
    for much more than they told the appellant, and pocketed the difference between
    the higher amount of the settlement and the $82,500 stated in the release. In
    other words, the pleading alleges that the law firms conspired to defraud the
    appellant.

[11]

As distasteful as this allegation might be, it
    is not entirely implausible.  A cautious approach must be taken, as Myers J. noted
    in
Husain v. Craig
,

2015 ONSC 1754,
    at para. 10, when he asked: 
what if the plaintiff's allegations are
    true?

[12]

Rule 2.1 is an extremely blunt instrument. It is
    reserved for the clearest of cases, where the hallmarks of frivolous, vexatious
    or abusive litigation are plainly evident on the face of the pleading. Rule 2.1
    is not meant to be an easily accessible alternative to a pleadings motion, a
    motion for summary judgment, or a trial.

[13]

The hallmarks of a vexatious pleading amenable
    to being struck under rule 2.1 are well known to judges and helpfully listed in
    paras. 14-15 of
Gao (No. 2).
However, the
    statement of claim in this case bears none of them. It is short and to the
    point.
There is nothing on the face of the statement of claim that shows
    the appellant to be a vexatious litigant or that he is engaged in what Myers J.
    described in
Husain
as querulous litigant behavior (at para. 15).
Nor is there any suggestion in the material that the appellant will
    abuse the process of the court if he is confronted by other motions such as a
    motion for summary judgment at the instance of the respondents:
Mester
    v. Wah
, 2016 ONSC 4887, at para. 5. We also note that
    there is no evidence under oath of any kind, be it in the form of affidavits or
    examinations, generated in the action.  The r. 2.1.01 request is clearly
    premature.

[14]

We are unable to conclude that the appellants
    statement of claim asserts a claim that is frivolous, vexatious or an abuse of
    the courts process, measured by the criteria in the cases. Once a pleading asserts
    a cause of action and does not bear the hallmarks of frivolous, vexatious or
    abusive litigation, resort to rule 2.1 is not appropriate as a means for
    bringing the action to an early end. The motion judge erred in truncating the
    normal process.

D.

Disposition

[15]

For these reasons, the appeal is allowed and the
    order of the motion judge is set aside including the cost award. Costs, payable
    by the respondents jointly and severally, are fixed at $3,000 for the appeal
    and $2,000 for the motion below, both inclusive of disbursements and applicable
    taxes.

S.E.
    Pepall J.A.

P.
    Lauwers J.A.

Grant
    Huscroft J.A.


