Court File and Parties

Citation: In Motion Investments Limited v. Theravitae Inc., 2010 ONCA 892

Date: 2010-12-21

Docket: C52201

Court of Appeal for Ontario

Before: Weiler, Watt and Karakatsanis JJ.A.

Between:

In Motion Investments Limited Applicant (Appellant)

and

Theravitae Inc., Richard Morley, Vincent Mark Yue Cheug also known as Vincent Mark, David Reese, David Anderson, T. Alex McPherson and Thomas Smeenk Respondents (Respondents in Appeal)

Counsel:

John P. Ormston and James Brink, for the appellant

David W. Foulds, for the respondent, Theravitae Inc.

Frank J. McLaughlin and Eric Block, for the respondents, David Reese, David Anderson, T. Alex McPherson and Thomas Smeenk

Heard and released orally: December 16, 2010

On appeal from the order of Justice Colin L. Campbell of the Superior Court of Justice, dated May 7, 2010.

Endorsement

[1] The issue on this appeal is whether the motions judge properly exercised his discretion to strike the appellant’s application with leave to re-introduce the application if costs thrown away were fixed and paid.

[2] The appellant commenced a proceeding by way of a Notice of Application pursuant to s. 241 of the Canada Business Corporations Act, R.S.C. 1985, c. C-44 in which it sought various elements of oppression relief and certain declaratory orders. In support of the application the appellant filed the affidavit of a Dr. Michael Gilad. After the respondent filed his responding material, the appellant sought to withdraw the affidavit of Dr. Gilad and to have it replaced with affidavit evidence filed by one Mr. Mak and by the evidence of a former solicitor.

[3] The motions judge found that Dr. Gilad should not have been put forward as an affiant. The appellant made the decision to rely on Dr. Gilad’s affidavit although it was aware that he did not have direct knowledge of the facts in issue. He did not make himself available for cross-examination. The motions judge held that to allow the substitution of the Gilad affidavit in these circumstances would amount to an abuse of process and would prejudice the respondents.

[4] The appellant appeals and submits that the motions judge erred in principle in striking its application because there was no evidence of actual procedural prejudice to the respondents. It relies on the fact that, as cross-examinations had not yet been held, it would have been entitled to file a reply affidavit, and submits there was no abuse of process.

[5] We disagree. There is no issue as to the law. Abuse of process includes a misuse of the court’s procedure in a way that would be manifestly unfair to a party to the litigation.

[6] In the circumstances, the motions judge was entitled to infer prejudice. Those circumstances include the conduct of the appellant, the respondent’s time and effort in responding to the original affidavit and the fact that the proffered substitute affidavit evidence was a direct response to the respondent’s affidavit. The appellant did not identify any significant procedural prejudice to it as a result of the order. Having found an abuse of process, the motions judge was entitled to exercise his discretion as he did.

[7] After the motions judge concluded that the application should be struck he further noted that the application might more appropriately be constituted as an action. He was entitled to make that observation. It was not the basis for his decision.

[8] Accordingly the appeal is dismissed.

[9] Costs of this appeal are fixed in the amount of $12,000, inclusive of disbursements and applicable taxes and are payable to the respondents. The respondents are to decide as between themselves how this amount is to be divided.

“K.M. Weiler J.A.”

“David Watt J.A.”

“Karakatsanis J.A.”