COURT OF APPEAL FOR ONTARIO

CITATION: 1615540 Ontario Inc. (Healing Hands Massage Therapy) v. Simon, 2016 ONCA 966

DATE: 20161221

DOCKET: C61955

Feldman, Lauwers and Miller JJ.A.

BETWEEN

1615540 Ontario Inc., carrying on business as Healing Hands Massage Therapy Clinic

Plaintiff (Appellant)

and

Joy Nicole Simon and Alen M. Katic

Defendants (Respondent)

AND BETWEEN

Joy Nicole Simon

Plaintiff by counterclaim (Respondent)

and

Healing Hands Massage Therapy Clinic and Asher Mahmood

Defendants by counterclaim (Appellant)

Jeffrey Radnoff and Charles Haworth, for the appellant

Joy Nicole Simon, acting in person

Heard: November 16, 2016

On appeal from the judgment of Justice Paul M. Perell of the Superior Court of Justice, dated March 7 2016, with reasons reported at 2016 ONSC 1623.

Lauwers J.A.:

[1] This case is about a bitterly fought business disengagement between the respondent, chiropractor Dr. Joy Nicole Simon, and the appellant, 1615540 Ontario Inc., carrying on business as Healing Hands Massage Therapy Clinic (“Healing Hands”), the clinic at which the respondent practised as a chiropractor from September 2010 until April 19, 2013. In the judgment under appeal, the motion judge dismissed Healing Hands’ action and allowed Dr. Simon’s counterclaim in part, granting her summary judgment against Healing Hands in the amount of $45,664.75 inclusive of costs and interest.

[2] I would allow the appeal for the following reasons.

A. The Factual and Procedural Context

[3] After Dr. Simon abruptly removed her chiropractic practise overnight on April 19, 2013, Healing Hands sued her on May 3, 2013, and brought a motion for an interlocutory injunction which was heard by the same motion judge who heard the summary judgment motions, requiring her to return patient files and records, and certain other property she took from the clinic (“injunction decision”). The motion judge made the requested order on May 22, 2013 in accordance with the Personal Health Information Protection Act 2004, S.O. 2004, c. 3, subject to certain terms, for reasons reported at 2013 ONSC 2986.

[4] The action carried on. Dr. Simon issued a statement of defence and counterclaim on September 6, 2013. Following an exchange of affidavits, Dr. Simon was cross-examined but the principal of the clinic, Mr. Asher Mahmood, was not. Healing Hands moved for summary judgment on its claim and Dr. Simon moved for summary judgment on the counterclaim.

B. The Motion Judge’s Decision

[5] In dismissing Healing Hands’ summary judgment motion and allowing Dr. Simon’s summary judgment motion in part, the motion judge stated, at para. 21:

I am satisfied from the evidence filed on this summary judgment motion that the Clinic breached its business arrangement with Dr. Simon and because of the breakdown of their relationship, she departed the practice.

[6] However, the motion judge did not identify what he considered to be the actual breach committed by Healing Hands.

[7] The motion judge awarded damages on the basis noted, at para. 21:

I am satisfied from the evidence that the manner of her departure had an adverse impact on her ability to earn an income and that her gross billings decreased despite her efforts to sustain her practice.

[8] The motion judge set out his reasoning on the quantum of damages, at paras. 16-20, and 24. However, he did not identify the legal basis on which he found Healing Hands liable for damages.

C. The Issues

[9] Did the motion judge err in:

(1) Exercising his authority to decide the motions under r. 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 in the face of conflicting evidence with respect to the business arrangement between Healing Hands and Dr. Simon?

(2) Awarding damages, and in his calculation of the quantum?

(3) Failing to address Healing Hands’ motion for summary judgment?

(4) His award of costs?

I need only to address the first and second issues.

D. Analysis

[10] The motion judge gave brief reasons for his findings granting summary judgement on the cross-motion and dismissing summary judgment by the appellant.

(1) What Was the Business Arrangement?

[11] As noted above, the entirety of the motion judge’s reasoning about Healing Hands’ breach of its business arrangement with Dr. Simon is set out, at para. 21:

I am satisfied from the evidence filed on this summary judgment motion that the Clinic breached its business arrangement with Dr. Simon and because of the breakdown of their relationship, she departed the practice.

[12] I infer that the breach relates to Mr. Mahmood’s decision to increase the clinic’s share of Dr. Simon’s billings from 20% to 35%, which the motion judge recounted in the injunction decision, at paras. 19-21.

[13] However, the evidence on this issue was strongly disputed.

Mr. Mahmood’s Evidence

[14] Mr. Mahmood states in his affidavit, on which he was not cross-examined, that the arrangement progressed from the rental of space for $80.00 a day paid by Dr. Simon to an arrangement under which 20% of her billings would be paid to the clinic, with the balance going to her. This arrangement started in the spring of 2012. Mr. Mahmood states that “given that we were friends, I agreed that she could start by paying 20% to the clinic, however, eventually, this would have to change to 35%.”

[15] By January of 2013, Mr. Mahmood deposes, the chiropractic practice was busier. He had a meeting with Dr. Simon, and advised her she would now have to pay 35% of her revenues to the clinic. Mr. Mahmood swears “Simon agreed with the relationship.” Healing Hands implemented the arrangement in January 2013.

[16] In mid-April 2013, Dr. Simon called Mr. Mahmood “in a very agitated state” complaining about a discrepancy in one of her paycheques. She questioned the 35% figure. Mr. Mahmood says: “I reminded her that she had agreed to pay 35%. She then calmed down.” Dr. Simon decamped shortly thereafter.

Dr. Simon’s Evidence

[17] Dr. Simon’s evidence is quite different. In her affidavit she takes the position that she was to pay 25% of billings to Healing Hands. She admits that in January 2013 Mr. Mahmood told her the amount would have to increase from 25% to 35%. She says that, “I expressly told Mr. Mahmood that I did not agree to this increase and no agreement was reached.”

[18] When she picked up her cheque on April 17, 2013, she noticed that the amount was lower than expected. She states:

I telephoned Mr. Mahmood to discuss this, at which time he advised me that he had deducted 35%, rather than the agreed 25%, from my practice’s gross billings. Moreover, he informed me that he had been deducting amounts at the increased rates since January 2013.

[19] This led Dr. Simon to make her departure from the clinic with patient records and clinic property.

[20] The evidence in the record establishes a clear conflict on the facts that required resolution.

Discussion

[21] The current summary judgment regime was established by the Supreme Court in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 and its companion decision, Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126. In Bruno Appliance and Furniture, Karakatsanis J. described, at para. 22, the two-step assessment process. The first step is to “ask whether the matter can be resolved in a fair and just manner on a summary judgment motion.”

[22] Where, on the record, there appears to be a genuine issue requiring a trial, then the second step is to consider whether “the need for a trial can be avoided by using the new powers provided under Rules 20.04(2.1) and (2.2).” The motion judge’s decision to exercise these powers is discretionary and attracts appellate deference, “provided that their use is not against the interest of justice”: see also Trotter Estate, 2014 ONCA 841, 122 O.R. (3d) 625, at paras. 72 and 75, and Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, at paras. 33-35.

[23] There is no doubt that a genuine factual issue existed between the parties on the evidence.

[24] The motion judge did not state how the clear differences in the evidence of Dr. Simon and of Mr. Mahmood ought to be resolved, the resolution of which would necessarily have depended largely on findings of credibility. The outcome leads to the inference that he simply preferred the evidence of Dr. Simon over the evidence of Mr. Mahmood (which was untested by cross-examination).

[25] In my view, where the evidence in the record establishes a clear conflict, it is incumbent on a summary judgment motion judge to consider expressly whether the powers provided under rr. 20.04 (2.1) and 20.04 (2.2) are to be deployed in resolving the conflict. Anything less risks substantive injustice.

(2) Damages and Quantum

[26] The motion judge described Dr. Simon’s claim for damages, at para. 20:

She deposed that her gross income between 2008 and 2011 was $39,029.10 per annum. In 2013, the year of her departure from the Clinic, she deposed that she was on track for a gross income of around $45,000. In 2014, the year after her departure, her gross income had fallen to approximately $11,000. She thus deposed that her average loss of income since her departure from the Clinic was $29,485.69. She thus claims for the loss of income for the 2.25 years since her departure for a total loss of income claim of $66,342.80.

[27] The motion judge addressed Dr. Simon’s damages claim, at para. 24:

In my opinion, she has proven a loss of income claim. However, she overstates the claim because she has not taken into account the expenses that she would have incurred to earn the gross income. Doing the best I can from the material filed on the summary judgment motion, which included patient lists and Dr. Simon's income tax statements, I conclude that her damages are $28,000 for loss of income, $1,664.75 for unpaid fees, and $16,000 for costs for a total award of $45,664.75, all inclusive.

Discussion

[28] The motion judge found that Healing Hands was liable for Dr. Simon’s loss of income for 2.25 years after she left the clinic. He did not, however, root the legal basis for this finding either in the business arrangement or in Healing Hands’ undertaking to pay damages (which it had given on the interlocutory injunction motion).

[29] It also appears that the motion judge misapprehended the position of Healing Hands on liability. He noted, at para. 14:

At the summary judgment motion, the Clinic and Dr. Mahmood's position was that the Clinic was abandoning its claim against Dr. Simon and for the counterclaim they were prepared to pay Dr. Simon $1,593.31 but without costs, given her alleged failure to act reasonably to end the business relationship and having regard to rejected offers made over the year to resolve the dispute in a commercially reasonable fashion.

[30] Healing Hands asserts that the difference between the amount that Dr. Simon would have received assuming their agreement was for a 25% proportion of her billing (the amount that she was prepared to pay), and the amount that she received (the amount calculated at a 35% proportion of her billing) was only about $1,600. Her income at the time was relatively low because she was on a virtual sabbatical as a result of the birth of her child, and was in the course of attempting to maintain or revive the practice with the assistance of a new associate she hired. Healing Hands was prepared only to pay the difference, because it was minimal, but it did not concede that it had breached its business arrangement with her.

[31] Healing Hands also asserts that the motion judge made palpable and overriding errors in his assessment of the quantum of damages, on the basis that Dr. Simon’s income actually increased after she left the clinic. The motion judge did not address this factual point.

E. Disposition

[32] Given the conflicting evidence before the motion judge, he was obliged to explain the basis for his finding of liability, and for granting summary judgment in favour of the respondent, as well his determination of the amount of the damages.

[33] I would set aside the judgment on the claim and the counterclaim, and leave the parties free to pursue their claims including, if so advised, other motions for summary judgment, without being bound by any of the determinations made in the decision under appeal.

[34] The motion judge did not address what was to be done with the interlocutory injunction, which gave custody of patient records to Healing Hands. The issue of custody remains a live issue under the Personal Health Information Protection Act 2004 and requires judicial determination, perhaps assisted by a consent order agreed to by the parties, which I would encourage them to pursue.

[35] I would fix costs payable by Dr. Simon to Healing Hands in the amount of $4,530 inclusive of disbursements and taxes. I would refer the costs of the summary judgment motion to the judge who determines this case.

Released: December 20, 2016

“P. Lauwers J.A.”

“I agree K. Feldman J.A.”

“I agree B.W. Miller J.A.”