COURT OF APPEAL FOR ONTARIO

CITATION: RWDI Air Inc. v. N-SCI Technologies Inc., 2015 ONCA 817

DATE: 20151126

DOCKET: C60275

Hoy A.C.J.O., MacFarland and Lauwers JJ.A.

BETWEEN

RWDI Air Inc.

Plaintiff (Appellant)

and

N-SCI Technologies Inc., Oldman Power, LP, Oldman Power Holdings Inc. and Starwood Energy Group Global, LLC

Defendants (Respondents)

Justin Heimpel, for the appellant

Justin Necpal and Jonathan Roth, for the defendants (respondents) Oldman Power, LP, Oldman Power Holdings Inc. and Starwood Energy Group Global, LLC

Heard: November 6, 2015

On appeal from the order of Justice I. Bloom of the Superior Court of Justice, dated March 2, 2015.

ENDORSEMENT

[1] The appellant, RWDI Air Inc., appeals the March 2, 2015 order of the motion judge, striking its claim as against the respondents, Starwood Energy Group Global, LLC; Oldman Power, LP; and Oldman Power Holdings Inc. (collectively, the “Starwood Defendants”), without leave to amend.

The Background

[2] In its statement of claim, the appellant alleged the following. The Starwood Defendants are the developers of a natural gas-fired power generation facility in Alberta. One or more of the Starwood Defendants contracted with N-SCI Technologies Inc. for the supply of engineering and project management services necessary for the development of the facility. N-SCI in turn retained the appellant to provide various engineering services. The appellant provided the services and issued invoices, but N-SCI has failed to pay the invoices to date.

[3] The appellant sued N-SCI and the Starwood Defendants, claiming they were unjustly enriched by the services the appellant provided. The Starwood Defendants moved to have the statement of claim as against them struck under r. 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[4] The motion judge concluded that it was plain and obvious that the appellant’s claim for unjust enrichment against the Starwood Defendants could not succeed at trial: the existence of the contract between the Starwood Defendants and N-SCI was a valid juristic reason for the enrichment. The motion judge denied the appellant’s request for leave to amend to plead that either the Starwood Defendants were in breach of the contract between themselves and N-SCI or that the contract was invalid. He explained that a breach would not remove the valid juristic reason for the enrichment, and held that there was no basis to add an entirely new allegation of contractual invalidity to the statement of claim.

The Issues on Appeal

[5] The appellant argues that the motion judge made three errors.

[6] First, he erred by considering only the allegations in the statement of claim and not taking into account allegations in N-SCI’s statement of defence and crossclaim. N-SCI alleges that the Starwood Defendants have not paid N-SCI for any of its services on the project and that the responsibility for payment of the appellant’s invoices lies with the Starwood Defendants.

[7] Second, the motion judge erred in concluding that it was plain and obvious that the appellant’s unjust enrichment claim as against the Starwood Defendants had no reasonable possibility of success at trial on the basis that the existence of a contract between the Starwood Defendants and N-SCI constituted a juristic reason for the Starwood Defendants’ enrichment. It argues that, while a contract may constitute a juristic reason for enrichment that will preclude a claim for unjust enrichment, whether a contract in fact does so in a particular case is a determination that should be made at trial after the evidence surrounding the contract, including its validity and other factors, is properly assessed. To illustrate the danger of making such a finding on a Rule 21 motion, it points to cases where a contract was found not to constitute a juristic reason for enrichment: MacKinnon v. Ontario Municipal Employees Retirement Board, 2007 ONCA 874, 88 O.R. (3d) 269; Pacific National Investments Ltd. v. Victoria (City), 2004 SCC 75, [2004] 3 S.C.R. 575; Saskatchewan Power Corporation v. Swift Current (City), 2007 SKCA 27, 293 Sask. R. 6; and Brookfield Financial Real Estate Group Ltd. v. Azorim Canada (Adelaide Street) Inc., 2012 ONSC 3818, 111 O.R. (3d) 580.

[8] Third, the motion judge erred by not permitting the appellant to amend its statement of claim to plead that either the Starwood Defendants were in breach of the contract between themselves and N-SCI or that the contract was invalid. The appellant submits that leave to amend should only be denied in the clearest of cases and that, in the absence of any articulated basis upon which leave to amend was denied, a litigant should not be deprived of the opportunity to remedy deficient pleadings, especially when no prior amendments have been made. It argues that the motion judge failed to articulate why he did not grant leave to amend.

Analysis

[9] We deal with the appellant’s arguments in turn.

[10] We reject the appellant’s first argument that the motion judge erred by considering only the allegations in the statement of claim and not taking into account allegations in N-SCI’s statement of defence and crossclaim. The appellant provides no authority for its proposition. The motion judge properly considered only the facts pleaded by the appellant. As the Starwood Defendants argue, accepting as true the facts pleaded by all parties to the litigation could put the court in the position of having to accept as true potentially conflicting versions of the facts. Moreover, it is clear from the motion judge’s reasons that, had he accepted the facts pleaded by N-SCI as true for the purposes of the motion, he would still have struck the appellant’s claim.

[11] We also reject the appellant’s second argument that the existence of a contract between the Starwood Defendants and N-SCI constituted a juristic reason for the Starwood Defendants’ enrichment. The established categories of juristic reason include a contract: Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 43. Each of the cases that the appellant cites turned on very specific facts. In three of them – MacKinnon, Pacific National and Saskatchewan Power – the validity of the contracts relied on by the defendant as constituting a juristic reason was at issue. In Brookfield, there was a dispute as to whether the contract between the parties applied in the circumstances that gave rise to the alleged unjust enrichment claim.

[12] Here, the appellant did not plead any facts that put the validity of the contracts between the Starwood Defendants and N-SCI and between N-SCI and the appellant in issue. Nor did it assert that the services it provided were outside of the scope of those contracts.

[13] The motion judge did not err in concluding that, on the facts pleaded, there was no reasonable possibility that the appellant’s claim in unjust enrichment could succeed.

[14] Finally, we also reject the appellant’s third argument. The appellant does not identify how the motion judge erred in the exercise of his discretion by not granting leave to amend. The fact that a plaintiff has not previously amended its pleadings is not in itself a basis for interfering with an order denying leave to amend. Contrary to the appellant’s submission, the motion judge gave clear reasons for denying the appellant’s request for leave. We agree with the motion judge that a breach by the Starwood Defendants of the contract between themselves and N-SCI would not remove the valid juristic reason for the enrichment. The motion judge also explained that there was no basis for the appellant’s proposed allegation of contractual invalidity. Before us, the appellant confirmed that its proposed allegation of contractual invalidity is speculative: it has no knowledge of any material facts that would support its proposed bald allegation that the contract between the Starwood Defendants and N-SCI is invalid. Where a plaintiff seeks leave to amend its claim to make new allegations, but it is clear that he does not have knowledge of, and therefore cannot plead, the material facts to support the allegation, leave to amend may be refused: Miguna v. Ontario (Attorney General) (2005), 2005 CanLII 46385 (ON CA), 262 D.L.R. (4th) 222 (Ont. C.A.), at paras. 18 and 22. We therefore see no basis for this court to interfere with motion judge’s exercise of discretion in denying the appellant leave to amend its statement of claim.

Disposition and Costs

[15] This appeal is accordingly dismissed. The respondent shall be entitled to costs of the appeal fixed in the amount of $10,000, inclusive of disbursements and HST.

“Alexandra Hoy A.C.J.O.”

“J. MacFarland J.A.”

“P. Lauwers J.A.”