CITATION: 1225145 Ontario Inc. v. Kelly (The Artists' Corner), 2007 ONCA 17

DATE: 20070115

DOCKET: C45782

COURT OF APPEAL FOR ONTARIO

RE:

1225145 ONTARIO INC. (Plaintiff (Respondent in Appeal)) – and – WAYNE KELLY, c.o.b. as THE ARTISTS’ CORNER (Defendant (Appellant in Appeal))

AND BETWEEN:

WAYNE KELLY, c.o.b. as THE ARTISTS’ CORNER (Plaintiff by Counterclaim (Appellant in Appeal)) – and – 1225145 ONTARIO INC., TERRY VELENOSI, ANNE WERNER, also known as ANNE VELENOSI, BERNHARD WERNER, and FOX RUN HORSE PRODUCTS INC., also known as D.B.A. WERNER EQUESTRIAN CENTRE and as THE HORSEMAN’S SHOP (Defendants by Counterclaim (Respondents in Appeal))

BEFORE:

BORINS, ARMSTRONG and LANG JJ.A.

COUNSEL:

Matthew G. Moloci

for the appellant, Wayne Kelly

Robert W. Wilson

for the respondent 1225145 Ontario Inc., Terry Velenosi and Anne Werner, also known as Anne Velenosi

Brian Duxbury

for the respondent Bernard Werner, Fox Run Horse Products Inc. a.k.a. D.B.A. Werner Equestrian Centre and as The Horseman’s Shop

HEARD & RELEASED ORALLY:

January 9, 2007

On appeal from the Order of Mr. Justice David S. Crane of the Superior Court of Justice dated July 7, 2006.

E N D O R S E M E N T

[1] This is an appeal from the order of Justice Crane of the Superior Court of Justice who denied an application by the appellant to amend his pleading. The appellant sought to amend a counterclaim by adding a claim for specific performance. The motion judge refused the amendment. In doing so, he baldly stated: “The claim for specific perform-ance in this case is untenable.” No explanation for this conclusion is provided. No reference is made to rule 26.01 of the Rules of Civil Procedure that provides:

On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

[2] The respondents allege prejudice due to delay as the vendor of the property in issue now lives in Switzerland and is insolvent. The respondents assert that if a specific performance claim had been made at the outset of this litigation, they would have cross-claimed against the vendor. The respondents assert that a crossclaim at this stage would be pointless.

[3] The respondents submit that the amendment should not have been permitted because the evidence suggests that the appellant had made an election to pursue damages in lieu of specific performance. The evidence on this point is contradictory. In any event, this was not a summary judgment motion.

[4] The respondents also assert that the appellant’s tenancy has been terminated and, with it, the option to purchase, which was contained in the governing lease.

[5] The thrust of the respondents’ position is that they have a good defence to a claim for specific performance. That is a matter for trial. We are not persuaded that the respondents have made out a case for prejudice sufficient to provide a basis to deny the amendment.

[6] The appeal is allowed. The order of the motion judge is set aside and leave to amend is granted. Costs of the motion and the appeal are to the appellant fixed at $7,000.00 inclusive of disbursements and GST.

“S. Borins J.A.”

“Robert P. Armstrong J.A.”

“S. Lang J.A.”