Court of Appeal for Ontario

Date: 20241121 Docket: COA-24-CV-0094 & COA-24-CV-0118

Before: Fairburn A.C.J.O., Coroza and Sossin JJ.A.

DOCKET: COA-24-CV-0094

BETWEEN

Emaduddin Chowdhury*, Refayat Tahsina Alam*, Suhail Syed*, Rizwana Banu*, Mohamed Aftab Pasha*, Ranbir Singh Cheema*, Lakhvir Kaur Cheema*, Jaskarandeep Singh Luddu*, Rupinder Kaur Jaswal*, Hardeep Singh Khosa*, Manjit Kaur Khosa*, Jawed Yusuf*, Ranjit Singh Toor*, Sukhwinder Kaur Toor*, Balwinder Singh Toor, Harpinder Kaur Toor, Ajinder Singh Sandhu, Manjot Singh Sandhu, David Predovich*, Kerrese Predovich*, Usman Sharif*, 2784612 Ontario Inc., and 2784162 Ontario Inc.

Plaintiffs (Appellants)

and

Exquisite Bay Development Inc., Bay Homes Inc., Bay International Inc., Bay Management Inc., 2474229 Ontario Inc., 2468924 Ontario Inc., 2460741 Ontario Inc., Bay Lawrence Inc., Ahmed Raza Yousuf, Muhammad Yousuf, Harinder Takhar, James John Murray, Kiran Malhotra, Mohammad Taiyab Mansoor, Vandyk – The Ravine Limited, Vandyk Properties Incorporated, John Vandyk*, Richard Ma*, Sherman Chan*, 2462686 Ontario Inc., Ella Boltyansky, Yuri Boltyansky, KingSett Mortgage Corporation, Maneesh Prabhakar, 2213155 Ontario Inc., Mint Capital Mic Inc., and John Doe Corporation

Defendants (Respondents*)

DOCKET: COA-24-CV-0118

AND BETWEEN

Mohammed Tariq

Plaintiff (Appellant)

and

Exquisite Bay Development Inc., Ahmed Raza Yousuf, Muhammad Yousuf, Bay Management Inc., Harinder Takhar, James John Murray, Kiran Malhotra, Bay Homes Inc., Bay International Inc., Mohammad Taiyab Mansoor, Bay Lawrence Inc., 2462686 Ontario Inc., Ella Boltyansky, Yury Boltyansky, 2213155 Ontario Inc., Maneesh Prabhakar, Mint Capital Mic Inc., 2474229 Ontario Inc., 2468924 Ontario Inc., 2460741 Ontario Inc., Vandyk Properties Incorporated, Vandyk – The Ravine Limited, John Vandyk*, Richard Ma*, Sherman Chan*, KingSett Mortgage Corporation, Muhammed Iqbal Ghauri, and Roomana Ghauri

Defendants (Respondents*)

Counsel: Rocco G. Scocco and Anique N.G. Dublin, for the appellants Josh Suttner, for the respondent Richard Ma Nina Perfetto for the respondent Sherman Chan No one appearing for the respondent John Vandyk

Heard: November 15, 2024

On appeal from the order of Justice Robert Centa of the Superior Court of Justice, dated January 2, 2024.

Reasons for Decision

[1] At the conclusion of the hearing of the appeal, we dismissed the appeal with reasons to follow. We now provide our reasons.

[2] Briefly, the facts underlying the proceedings are as follows. The appellants entered into agreements with a developer, Exquisite Bay Development Inc. (“Exquisite”), to purchase pre-construction homes.

[3] Exquisite did not complete the construction and sold the development to Vandyk-the Ravine Limited (“Vandyk”). After the sale to Vandyk, Exquisite terminated its agreements with the appellants but retained their deposits.

[4] Consequently, the appellants sued a group of defendants involved with the failed development including Vandyk and several of its directors.

[5] Each defendant brought a motion to strike the statement of claim under r. 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. In comprehensive and lengthy reasons, the motion judge struck out several claims advanced by the appellants. He granted leave to amend some, but not all of the struck claims. Importantly, the motion judge struck the appellants’ claim against Vandyk’s directors and denied leave to amend the claim.

[6] The appellants’ appeal the order of the motion judge as against three Vandyk directors: Mr. Richard Ma, Mr. John Vandyk, and Mr. Sherman Chan (the “respondents”).

[7] The appellants argue that there is a viable claim against the respondents based on the tort of unlawful act conspiracy. While they acknowledge that their pleading may have been deficient at the proceeding below, they submit that the motion judge erred by not reading the pleading generously to allow for any drafting deficiencies and by denying leave to amend. The appellants additionally rely on new information that has been brought to their attention to support their argument that they have a viable claim against the respondents.

[8] The motion judge recognized that striking a claim and denying leave to amend should only occur in the clearest of cases. He also observed that a pleading advanced against directors of a company, as in this case, must be examined carefully with a high level of scrutiny: ADGA Systems International Ltd. v. Valcom Ltd. (1999), 43 O.R. (3d) 101 (C.A.).

[9] The motion judge concluded that it was plain and obvious that no tenable cause of action against the respondents was possible on the facts as alleged in the claim. After noting that the respondents enjoyed protection from civil liability when acting in their capacity as directors, he found that the claim did not set out allegations of conduct that took the respondents outside of their role as directors of the corporation. He made the following findings:

The statement of claim did not plead any facts alleging that the Vandyk directors took any actions in their personal capacity or even explain what each director was alleged to have done…Tellingly, every allegation against the individual directors was also made against the Vandyk companies. In many cases, the statement of claim used the term “Vandyk Defendants” to refer compendiously to the companies and the directors.

[10] The motion judge denied leave to amend the claim because he found that the appellants were unable point to any material facts or suggest any amendments to their claims that would make out a plausible claim against the Vandyk directors, despite having been put on clear notice that the respondents had challenged the sufficiency of the pleading.

[11] We see no error in the motion judge’s careful analysis. It was open to him to find that the appellants’ claims were deficient and that leave to amend should be denied. The appellants have not identified any factual or legal error in the motion judge’s reasons that would allow us to intervene.

[12] In their factum, under the heading “Additional Facts to be Pled”, the appellants outline new information that they claim has been discovered since the motion judge’s ruling. They contend this information supports their submission that the claim can be amended to advance a viable claim of conspiracy against the respondents. For their part, the respondents argue that this information is an attempt to make up for earlier deficiencies in the appellants’ claim and has been improperly placed before this court.

[13] We need not decide whether this material is properly before the court because the appellants did not seek leave to adduce fresh evidence on appeal. The sole issue before us is whether the motion judge erred in striking the claim against the respondents and declining to grant leave to amend. As we have explained, there is no basis on which to interfere with the discretionary ruling below. That said, nothing in these reasons should be taken as precluding the appellants from returning to the motion judge, who is also case managing the proceedings, to raise the issue under r. 59.06(2)(a) of the Rules of Civil Procedure if new facts have arisen or been discovered after the order was made.

[14] The appeal is dismissed. We fix costs of the appeal in the agreed upon amount of $14,000 to the respondent Richard Ma and $6,427.44 to the respondent Sherman Chan. No costs are awarded to the respondent John Vandyk.

“Fairburn A.C.J.O.”

“S. Coroza J.A.”

“L. Sossin J.A.”