Executive Summary: Key Legal and Evidentiary Issues

• The defendant moved to strike the plaintiff's Superior Court statement of claim on grounds of res judicata, lack of jurisdiction, and expiry of the limitation period.
• Claims for property damage, rental income loss, and related damages were barred by res judicata, as a substantially identical claim had been finally dismissed by the Richmond Hill Small Claims Court on June 28, 2024.
• All claims arising from the tenancy were statute-barred, as the two-year limitation period had expired before the Superior Court action was filed on September 8, 2024.
• New allegations of defamation and psychological harm, while not caught by res judicata or the limitation period, were defeated by the doctrine of absolute privilege.
• Statements made in the defendant's LTB application could not ground a civil claim in defamation or mental suffering, as absolute privilege protects all statements made in judicial or quasi-judicial proceedings.
• Leave to amend was denied because the claim's deficiencies were radical defects incapable of being cured by amendment.

Facts of the case

This matter arose from a residential tenancy at 742 Beman Drive, Newmarket, Ontario. Maryam Shafikhani, as landlord, and Daniel Degni, as tenant, entered into a tenancy agreement commencing November 25, 2019. The tenancy ended on November 10, 2021, when the defendant permanently vacated the property. Shafikhani subsequently pursued claims for property damage, rental income loss, loss of opportunity, diminished property value, emotional and psychological harm, and defamation — alleging that the defendant's conduct during the tenancy, and his later filing of a claim with the Landlord and Tenant Board (LTB), caused her significant harm.

Before commencing the present Superior Court action, Shafikhani had filed an Amended Plaintiff's Claim in the Richmond Hill Small Claims Court on November 21, 2022, seeking damages for property damage, rental income loss, special damages, and punitive and exemplary damages. On June 28, 2024, Deputy Judge Darvish dismissed that claim for want of jurisdiction, finding that the LTB held exclusive jurisdiction over the subject matter. That decision was never appealed. Shafikhani then issued the present claim in the Ontario Superior Court of Justice on September 8, 2024, seeking damages that largely mirrored the earlier Small Claims Court claim, along with new allegations of defamation and psychological harm arising from the defendant's LTB filing.

Applicable legal framework

Several legal doctrines and statutory provisions governed the court's analysis. The doctrine of res judicata operates to prevent the same parties from relitigating issues that have been finally determined on their merits. Under section 168(2) of the Residential Tenancies Act, 2006 (RTA), the LTB holds exclusive jurisdiction over all matters in which jurisdiction is conferred by the RTA, and civil courts have no concurrent authority in such matters. The basic two-year limitation period under section 4 of the Limitations Act, 2002 bars proceedings commenced after the second anniversary of the day on which the claim was discovered. Finally, the doctrine of absolute privilege protects statements made in judicial or quasi-judicial proceedings from forming the basis of any civil action, including claims in defamation or for intentional infliction of mental suffering.

Reasoning and analysis

Justice McCarthy found that the Deputy Judge's June 28, 2024 decision — which dismissed the Small Claims Court claim on the basis that the LTB held exclusive jurisdiction — was substantive and final, not merely procedural. Because nearly all of the relief sought in the present claim had also been sought in the prior action (property damage, lost rent, special damages, and punitive and exemplary damages), res judicata operated to bar those portions of the claim. The court noted that the plaintiff had deliberately limited her Small Claims Court claim to $35,000 to remain within that court's monetary jurisdiction, foreclosing any argument that she had originally intended to pursue her claim in Superior Court.

On the limitation period, the court found that the property damage was discovered no later than November 10, 2021, meaning the two-year limitation period expired on November 10, 2023 — nearly a year before the Superior Court action was filed on September 8, 2024. The claim for loss of opportunity and diminished property value, which the plaintiff herself tied to the April–July 2022 market period, was similarly statute-barred, with the latest possible limitation date being July 31, 2024.

As for the new allegations of defamation and psychological harm, which arose from the defendant's LTB application filed in November 2022, the court found these survived res judicata and the limitation period — but were nonetheless barred by the doctrine of absolute privilege. Relying on Big Pond Communications 2000 Inc. v. Kennedy and Dooley v. C.N. Weber Ltd., the court held that statements made in judicial or quasi-judicial proceedings, including LTB applications, attract absolute privilege regardless of whether they have any factual foundation. Permitting the plaintiff to pursue these claims would therefore constitute an abuse of process.

Ruling and overall outcome

The defendant's motion was allowed in its entirety. Justice McCarthy struck the whole of the plaintiff's statement of claim dated September 8, 2024, without leave to amend, finding that the deficiencies were radical and could not be remedied by amendment. The court held that no amendment could resurrect the pleading given the combined effect of res judicata, the expired limitation period, the LTB's exclusive jurisdiction, and the doctrine of absolute privilege. The question of costs was left open, with the parties directed to appear before the court virtually if they could not agree on the form of any order or the issue of costs. No specific monetary amount was awarded or ordered in the decision. The defendant, Daniel Degni, was the successful party on the motion.