Citation and Court Information

CITATION: Lipsitz et al. v. The Queen et al., 2010 ONSC 3190

DIVISIONAL COURT FILE No.: 529/09 DIVISIONAL COURT FILE No.: 517/09 COURT FILE No.: 08-CV-348228PD1

DATE: 2010-06-15

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Parties

BETWEEN:

DR. JEFFREY LIPSITZ, SLEEP DISORDERS CENTRE OF METROPOLITAN TORONTO INC., SLEEP DISORDERS CENTRE – OTTAWA INC. and SLEEP CLINIC NETWORK OF ONTARIO INC., Plaintiffs

– and –

HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF ONTARIO, COLLEGE OF PHYSICIANS AND SURGEONS OF ONTARIO, DR. JOHN FLEETHAM, CAROLYN KEMP, DR. DANIEL KLASS, DR. MICHAEL FITZPATRICK, SANDRA HALKO, DR. ROCCO GERACE, KAREN STANLEY, MARSHA BARNES, DR. MOHAMED R. GOOLAM HUSSAIN, LORI DAVIS, TRACEY MARSHALL, JEFF MORGENSTERN, BRUCE KIRTON, Defendants

Counsel and Hearing

Neil M. Abramson and Rebecca Fisch, Counsel for the Plaintiffs, Responding Parties on the Motion for Leave to Appeal

Kim Twohig and Lise Favreau, Counsel for Her Majesty the Queen in Right of the Province of Ontario, Karen Stanley, Marsha Barnes, Jeff Morgenstern and Bruce Kirton, some of the Defendants and some of the Moving Parties on a Motion for Leave to Appeal

Michelle Brodey, Counsel for College of Physicians and Surgeons of Ontario, Dr. John Fleetham, Carolyn Kemp, Sandra Halko, Dr. Rocco Gerace, Dr. Mohamed R. Goolam Hussain, Lori Davis, Tracey Marshall, some of the Defendants, also separate Moving Parties on a separate Motion for Leave to Appeal

HEARD at Toronto: APRIL 22, 2010

Endorsement

GREER J.:

[1] Two separate Motions for Leave to Appeal from the decision of Mr. Justice Belobaba (“the Motions Judge”) dated October 20, 2009, were brought on before me. One of the moving parties is Her Majesty the Queen in Right of the Province of Ontario, together with the other moving parties as noted above, all of whom are employees of the government. These persons I will refer to as “the Ontario Defendants.”

[2] The Ontario Defendants brought a motion for summary judgment on the grounds of the immunity provisions set out in sections 38.1 and 38(1) of the Independent Health Facilities Act (“IHFA”) and on the grounds of abuse of process and collateral attack. In the alternative, the Ontario Defendants sought an Order striking out the Amended Statement of Claim (“the Claim”) as disclosing no reasonable cause of action against them.

[3] Under separate Notice of Motion for Leave, the College of Physicians and Surgeons of Ontario plus the other named persons noted above are also moving parties on their own Motion for Leave to Appeal from the decision. I will refer to them as “the College Defendants”.

[4] The Motions Judge in his Order dated October 20, 2009 dismissed the Ontario Defendants’ Motion to dismiss the action and strike the Claim of the Plaintiffs, on the grounds that it disclosed no cause of action. The Motion for Leave is subject to one exception. The Ontario Defendants see part of decision of the Motions Judge as final in nature. That part, they tell me, is being appealed by them to the Court of Appeal. The interlocutory parts of the decision are the subject of these two Motions for Leave to Appeal before me.

[5] The two Motions were heard together by me, with counsel attempting not to duplicate their legal arguments. Each group of parties has set out an extensive list of alleged errors each says the Motions Judge committed. I summarize those alleged errors as follows:

(a) Those alleged by the Ontario Defendants

They say the Judge erred as follows:

(i) in interpreting section 38.1 of the IHFA respecting what steps are accorded immunity from civil action as not “listed actions” under that section.

(ii) in how he dealt with inspections, investigations and/or assessments and the immunity provision in the IHFA.

(iii) in finding that the Superior Court of Justice is the proper forum for adjudicating an action for a “closure conspiracy” with respect to the Plaintiffs’ independent health facilities.

(iv) in finding that the action is not an abuse of process.

(v) in finding that the Plaintiffs do not seek to re-litigate issues that were before the Health Services Appeal and Review Board (“HSARB”).

(vi) in finding that the action is not a direct or collateral attack on the administrative proceedings under IHFA.

(vii) in misapprehending the evidence that was before him and in so doing made a number of palpable and overriding errors.

(viii) in failing to strike out the Claim as disclosing no cause of action.

(ix) in deciding that even if he had found that the Claim discloses no reasonable cause of action, he would not have denied them an opportunity to amend, without providing an analysis or stating what part of the pleadings could be amended.

(b) Those alleged by the College Defendants

The College Defendants agree with the Ontario Defendants respecting the errors they say the Judge committed. In addition, they say he also erred as follows:

(i) in concluding that there were genuine issues for trial as to which portions of the Claim would be barred by s.38.0 of the IHFA.

(ii) in finding that the Plaintiffs are not attacking prior administrative decisions made under the IHFA or seeking to re-litigate issues that were before the HSARB.

(iii) in misapprehending certain evidence before him, thereby making a number of palpable and overriding errors regarding the HSARB proceedings.

[6] Both sets of Defendants say that there are conflicting decisions by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal, and it is desirable that leave to appeal should be granted. Further, there say that there appears to be good reason to doubt the correctness of the Order, and that the proposed appeal involves matters of such importance that leave to appeal should be granted.

Some background facts

[7] There is some complexity to this proceeding since it involves a number of Plaintiffs and Defendants. The Plaintiff Dr. Lipsitz, at one point owned twelve (12) sleep clinics in Ontario between 1999 and 2007. They were financially very successful for Dr. Lipsitz and his companies. They were, however, subject in Ontario to licensing and regulatory requirements under the IHFA.

[8] The facts are carefully set out by the Motions Judge in his Endorsement dismissing the Defendants’ Motion. He points out that Dr. Lipsitz, is “not challenging any particular decision or action of the defendants.” He says in paragraph 4 of his Endorsement that Dr. Lipsitz is:

…now suing the defendants, in essence, for allegedly conspiring to shut him down. This realization – that the defendants were engaged in a “closure campaign” –came to him only after trying to survive years of repeated administrative investigations and orders that in his view were improper and were being conducted and imposed in bad faith, simply to close him down.

He notes that Dr. Lipsitz describes what took place in a detailed Claim followed by a fifty-nine (59) page affidavit, where Dr. Lipsitz points to the fact that this closure took place even though his sleep clinics were being operated properly and there was no evidence of any harm ever resulting to any of his patients anywhere in Ontario.

[9] Dr. Lipsitz alleges his loss was as a result of the “barrage of inspections, investigations and/or assessments” conducted by the Defendants. All of this eventually led to Dr. Lipsitz having to close down his clinics and sell them in what he saw as a “distress sale”. In para. 9 of his Endorsement, the Motions Judge says:

The plaintiffs’ claim for damages alleges conspiracy, unlawful interference with economic relations, abuse of process and abuse of public office.

Counsel for the plaintiffs has advised that the negligence claims have been deleted and will not be pursued.

The Defendants’ position

[10] The Defendants point to the fact that after the Director issued various cease-operating Orders during the time the clinics were in operation, Dr. Lipsitz appealed these Orders. Prior to the actual hearing taking place, the parties entered into Minutes of Settlement, where Dr. Lipsitz agreed to file monthly reports and allow further inspections to take place. The Appeal to the Board was dismissed on the consent of the Director and Dr. Lipsitz.

[11] The process repeated itself again, say the Defendants, until Dr. Lipsitz finally sold the clinics.

[12] After Dr. Lipsitz issued his Statement of Claim against the Defendants, they moved under Rule 21, and under S.38.1 and S.38.(1) of the IHFA, saying that the action was an abuse of process as it was trying to relitigate what had been before the Board. They further say that the Pleadings did not disclose any cause of action, said that there were no genuine issues for trial.

[13] The Defendants also say that the Motions Judge did not allow them to make oral submissions on some issues and the he did not go through each cause of action and its elements and analyze each one separately. They say that the claims against all of the Defendants involve intentional torts, with very serious allegations raised against them such as acting in bad faith.

[14] The specific claims of unlawful conduct, which the Plaintiffs allege led to their claim for damages are:

(a) negligent performance of statutory duty;

(b) unlawful interference with economic relations;

(c) abuse of public office;

(d) abuse of process; and

(e) conspiracy.

[15] They say, however, that no individual specifics were pleaded with any particularity by Dr. Lipsitz. They further say that some of the claims in the Claim contain extraordinary allegations, such as accusing the Defendants of “…routinely engaging in false and unfairly critical reporting,” and of “…undertaking a campaign of harassment and intimidation through excessive and unreasonable investigation and assessment.”

[16] The Defendants say that these are all very serious allegations that encompass a large number of people who are alleged to have committed these torts over a long period of time. They say the implication of S.38(1), the immunity provision of the Act, and what is being alleged by the Plaintiffs, is of importance beyond the scope of those Defendants who have been sued.

[17] The Defendants further point to S.38.1 of the Act, which states that no compensation shall be payable by the Crown, the Minister, the Director or other per engaged in the administration of the Act in respect of any loss suffered as a result of the Minister or Director refusing to issue or renew, revoke, suspend or other limit a licence such as Dr. Lipsitz had. This issue, alone, they say is reason to doubt the correctness of the reasons. They say that a cease and desist order is subsumed into S.38.1 of the Act. They say the Motions Judge gave an overly narrow interpretation of these sections.

[18] Finally, the Defendants say there is no genuine issue for Trial.

The Position of the Plaintiffs

[19] The Plaintiffs say that the Defendants simply do not like the decision of the Motions Judge and that they are trying to reargue before me, what was already argued before the Motions Judge (the Motion for Leave having taken a full day). They say there is no good reason to doubt the correctness of the Motions Judge’s reasons.

[20] The Plaintiffs say that while the Defendants produced many cases on pleadings in support of their position that the detail in their Claim does not provide enough specific detail regarding each Defendant’s participation in the various intentional torts alleged. Each of those cases turns on its own facts. No case, they say is the same factual situation as the extraordinary facts pleaded on behalf of Dr. Lipsitz. This, however, say the Plaintiffs, gives no reason for me to doubt the correctness of the Motions Judge’s decision.

[21] The Plaintiffs point to Dr. Lipsitz’s fifty-five (55) page Claim, which they say may not be at a “perfect” level of particularity, but is more than sufficient for the case to proceed, as found by the Motions Judge. They further point to Dr. Lipsitz’s fifty-nine (59) page affidavit plus the four (4) volumes of exhibits as again being more than sufficient in particularity to move the case ahead. They note that none of the Defendants decided to cross-examine Dr. Lipsitz on this affidavit.

[22] In addition, the Plaintiffs say that the Motions Judge had ten (10) volumes of evidence before him plus “hundreds of pages of facta”, which were presented over a two (2) day Motion. They say the Motions Judge considered all of the written materials before him, heard long oral argument and gave a considered decision. They say that the Defendants are trying to shut down the litigation at this stage before it really starts.

[23] The Plaintiffs say that pleadings must be read generously, and in doing so, there is no reason to doubt the correctness of the Motions Judge’s decision. Everything I have heard on the Motion for Leave, says the Plaintiffs, was what the Motions Judge heard.

[24] The Plaintiffs point to the manner in which the Defendants have proceeded, saying that what they really want to do is go before the whole panel of the Divisional Court to move to Strike the Pleadings. If this is done, say the Plaintiffs, it would virtually be impossible to sue the government or any other large institution. It is not necessary, they say, to have every detail, exact date and time and by whom the intentional torts were committed at this point in the litigation. If that were the case, they say, no one would be able to sue wrongdoers.

[25] Discovery and production of documents have not yet taken place, say the Plaintiffs. Once this takes place, the pleadings may be amended again. They note that none of the pleadings cases cited by the Defendants are even close to the facts in this action. Dr. Lipsitz says the Defendants were deliberately trying to close his clinics. All of this involved the interference of many government officials working together or alone and if one had to produce exact details at this stage, one could never sue the government.

[26] The Plaintiffs say that in these circumstances, where a government and organization such as the College are being sued, there is no need at this stage to identify all individuals to be involved and state in extreme particularity what each person is alleged to have done. In addition, they say that special damages can overlap the torts pleaded. They note that all of the damages flowing from the tort of conspiracy are set out.

The Test under rule 62.02(4)

[27] The test under rule 62.02(4) is a two part test. It states that Leave to Appeal shall not be granted unless either subrule a) or subrule b) is found by the Judge to apply. It reads:

Leave to appeal shall not be granted unless,

(a) There is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal, and it is in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or

(b) There appear to the judge hearing the motion there is good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.

Analysis

[28] The Motions Judge’s decision is nine pages in length and is a carefully crafted document. In paragraph 3 of the Endorsement, the Motions Judge states that despite the voluminous material before him, “…this was not, in the end, a difficult decision”. He then says:

I have concluded that the motion must be dismissed. None of the other grounds advanced above apply on the facts herein. I will, of course, discuss each of them.

Despite the able arguments of counsel for the Defendants, I agree with the conclusion reached by the Motions Judge. I find that the Defendants have not met either test under rule 62.02(4). I dismiss the Defendants’ Motion for Leave to Appeal for the reasons that follow.

[29] The Motions Judge set out certain facts relating to the Plaintiffs’ claims. He then went on to analyze whether the claim for damages was barred by s.38.1 of the IHFA. He distinguished between s.38.1 of the Act and s.38(1), noting that there was “…no good faith limitation in s.38.1” and that there are enumerated situations which are covered by the immunity limitation. Since what took place, as claimed in this action, is not among those listed, says the Motions Judge, immunity is not available in those circumstances. The Judge made no error of fact and law in coming to the decision he did. He sees there being a genuine issue for trial as to the quantum of the Plaintiffs’ loss. There is no error here.

[30] The Motions Judge dismisses the Defendants allegation that the Plaintiffs’ claim amount to a “collateral attack on a prior administrative decision”. He does not see it as a re-litigation of the issues settled by the parties, as Dr. Lipsitz is not seeking to reinstate a licence or re-open a clinic. He simply seeks “money damages for tortious conduct.”

[31] The Motions Judge finds that the claim is not a re-litigation of issues that were before the HSARB and that the action is not an abuse of process nor would it be a misuse of the Court’s procedure. It would not, he says, bring the administration of justice into disrepute. The Motions Judge had before him fulsome evidence on all these issues as well as an abundance of case law. I see no error in the conclusions he came to.

[32] In his analysis of the Plaintiffs’ Claim, the Motions Judge found that it was sufficient in detail and documentation pleaded with respect to the to let the action move ahead with respect to the tortious claim of conspiracy, interference with economic relations, abuse of process and abuse of public office. He sees this as the Defendants’ weakest argument. He finds in para. 37 of his Endorsement that this is not a case where it is “plain and obvious” that the statement of claim discloses no reasonable cause of action or where the plaintiffs’ claim cannot possibly succeed.

[33] The Defendants say that there are many conflicting decisions with respect to the pleadings. They object to what they say is the Plaintiffs’ attempts to go on a “fishing expedition” in this action. In order to satisfy the criteria under subrule 62.02(4)(a), however, the conflicting cases must present a difference in principle and not merely a different outcome as a result of the exercise of discretion. See: Leone v. University of Toronto Outing Club, 2007 20109 (ON SC), [2007] O.J. No. 2152 (S.C.J.) para. 52, where Mr. Justice Stong said, “I deem none of the cases to which the defendants referred the court to give rise to a conflicting decision because they called for specific factual determinations. They do not provide a good reason to doubt the correctness of the order in question.” I adopt that reasoning. While there were many pleadings cases put before me, as was pointed out by the Motions Judge, who had all the same cases before him, none were the same on the facts. The Motions Judge was entitled to come to the conclusion he did.

[34] I have found that the Defendants have not met the test under subrule 62.02(4) either. There is no reason to doubt the correctness of the decision and the appeal does not involve matters of such importance that leave should be granted.

[35] As was pointed out by Justice Aston in Tireco Inc. v. YHI (Canada) Inc., [2009] O.J. No. 4245 (Div. Ct.), in para.7, even if the allegations raised are “arguably inelegant and skeletal articulation”, the necessary elements of the tort can fairly be applied or read into other specifics pleaded at this stage in the proceedings. There is no reason to doubt the correctness of the decision. The Court is obliged to read the Claim as “generously as possible and to accommodate any inadequacies” that may result from drafting deficiencies. See: KRP Enterprises Inc. v. Haldimand (County), [2008] O.J. No. 2104 (S.C.J.) at para.15.

[36] In Greslik v. Ontario Legal Aid Plan, 1988 4842 (ON SCDC), [1988] O.J. No. 525, 65 O.R. (2d) 110, (Div. Ct.), the Court found that in order to be a matter of “such importance”, it must be matter of public importance and matters relevant to the “development of the law and the administration of justice”, not a matter that is only of particular importance to the litigants themselves. In the case at bar, although the government and the College are being sued, while they are litigants with great resources, this does not make the case one of public importance. While governments have immunity from being sued in certain instances, this is not one of them, as was pointed out by the Motions Judge.

[37] For all the reasons as noted above, the Defendants’ Motions for Leave to Appeal is dismissed. Order to go accordingly.

[38] The Plaintiffs, being successful on the Motion, are entitled to their Costs. If the parties cannot agree on the scale and quantum of those Costs, they shall submit written submissions to me no longer than three pages plus dockets and case law, within one month of this Order.

Greer J.

Released: June 15, 2010

CITATION: Lipsitz et al. v. The Queen et al., 2010 ONSC 3190

DIVISIONAL COURT FILE No.: 529/09 DIVISIONAL COURT FILE No.: 517/09 COURT FILE No.: 08-CV-348228PD1

DATE: 2010-06-15

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

BETWEEN:

DR. JEFFREY LIPSITZ, SLEEP DISORDERS CENTRE OF METROPOLITAN TORONTO INC., SLEEP DISORDERS CENTRE – OTTAWA INC. and SLEEP CLINIC NETWORK OF ONTARIO INC., Plaintiffs

– and –

HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF ONTARIO, COLLEGE OF PHYSICIANS AND SURGEONS OF ONTARIO, DR. JOHN FLEETHAM, CAROLYN KEMP, DR. DANIEL KLASS, DR. MICHAEL FITZPATRICK, SANDRA HALKO, DR. ROCCO GERACE, KAREN STANLEY, MARSHA BARNES, DR. MOHAMED R. GOOLAM HUSSAIN, LORI DAVIS, TRACEY MARSHALL, JEFF MORGENSTERN, BRUCE KIRTON, Defendants

ENDORSEMENT

Greer J.

Released: June 15, 2010