COURT FILE NO.: CV-04-0741-00

DATE: 2012-06-27

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

STEPHEN BURNS

MR. S. BURNS appearing personally

APPLICANT

• and -

SHARAN SOHI, SOHI HOLDINGS INC.

MR. B. SACEVICH, for the DEFENDANTS

DEFENDANT

HEARD: February 13–17 and 21-24, 2012

Regional Senior Justice H.M. Pierce

Reasons For Judgment

Table of Contents

Introduction. 3

The Facts. 3

The Law.. 3

Preliminary Objections. 3

The State of the Pleadings. 3

Bankruptcy. 3

The Validity of the Assignment 3

Suits by Individual Shareholders. 3

Plaintiff’s Claims Lacking Evidence or Argument 3

Intimidation. 3

Misrepresentation. 3

Passing Off 3

Deceit 3

Plaintiff’s Claims Containing Evidence and Argument 3

Breach of Fiduciary Duty. 3

Unjust Enrichment 3

Conspiracy. 3

Inducement to Breach Contract 3

Breach of Contract 3

Intentional Interference with Economic Relations. 3

Piercing the Corporate Veil 3

Limitation Period. 3

Damages. 3

Breach of Contract 3

Withdrawal of Consent to Ms. Favuzzi’s Sublease. 3

Termination of the Leasehold. 3

Loss of a Chance. 3

Inducement to Breach Contract 3

Aggravated and Punitive Damages. 3

Prejudgment Interest 3

Conclusion. 3

Costs. 3

Introduction

[1] Stephen Burns (“the plaintiff”) claims damages personally and on behalf of his brother’s corporation, 1164280 Ontario Inc. for business losses incurred when they invested in fast food restaurants in which the defendants were involved. The plaintiff’s brother, Dennis Burns, has assigned his corporation’s rights in this litigation to the plaintiff.

[2] Sharan Sohi (“Mr. Sohi”) is the president of and shareholder in Sohi Holdings Inc. (“Sohi”). Undoubtedly he is its controlling mind. The plaintiff’s relationship with Mr. Sohi dates back to about 1993.

[3] The business transactions between the parties and others are convoluted and confusing. They encompass multiple transactions over a period of years. The plaintiff alleges they give rise to multiple causes of action.

[4] The plaintiff is not a lawyer. His case is not well-pleaded. At trial, he abandoned claims for replevin and constructive trust. He claims damages against the defendants for unjust enrichment; breach of fiduciary duty; breach of contract; the torts of intentional interference with economic relations, inducing breach of contract, intimidation and conspiracy; loss of economic opportunity; and aggravated and punitive damages.

[5] The defendants claim that Mr. Sohi is not personally liable to the plaintiff. They submit that the claims are statute-barred. They assert that the plaintiff has no standing in law to prosecute tort claims on behalf of the corporation. As well, they contend that there is no factual basis for claims of breach of contract, unjust enrichment or breach of fiduciary duty.

The Facts

[6] The documentary record connects the parties and forms a framework for the evidence as it unfolds chronologically. However, the documents do not tell the whole story.

[7] Mr. Sohi began doing business in the Intercity Shopping Centre in Thunder Bay. In or about 1990, he created a franchise for a Chinese fast food restaurant known as Simplee Chinese. His holding company, Sohi, held the rights to the franchise. The cook for the restaurant was a man named Silver Wong. In time, Sohi subleased its space in the shopping centre to Wong and entered into a franchise agreement with a company Mr. Wong incorporated to take over the fast food restaurant. Mr. Wong’s company was known as Wong Wok Cuisine.

[8] Mr. Wong’s restaurant foundered. In about September of 1993, the plaintiff acquired Mr. Wong’s shares in Wong Wok Cuisine and continued operation of the restaurant known as Simplee Chinese.

[9] Mr. Sohi’s corporation acquired a leasehold interest in unit 21 of the Intercity Shopping Centre from December 1, 1995 to November 30, 2000. The lease contained no right of renewal but the lessor and the lessee were at liberty to terminate the lease before the term expired.

[10] Mr. Sohi subsequently established two other fast food restaurants using the same franchise model. These were located on Syndicate Avenue and in the Keskus Harbour Mall in Thunder Bay. The plaintiff testified that Sohi poured money into these restaurants in an effort to make them successful. Neither of these restaurants did well.

[11] The plaintiff testified that he took over the Keskus Harbour Mall location in 2004 by paying the previous franchisee for her outstanding accounts. By the time he paid for renovations, he had invested about $44,000. Mr. Sohi testified that he was not aware of the plaintiff’s agreements to take over from the previous franchisee. There is scant documentary record about Sohi’s commercial relationship with the plaintiff at the Keskus Harbour Mall. However, Mr. Sohi was certainly aware that the plaintiff was operating the Keskus restaurant.

[12] The plaintiff wanted to relocate the Keskus restaurant. He stated that Mr. Sohi asked him to remain in the location for 6 months, after which he would consider moving the restaurant if business warranted a move. The plaintiff agreed, adding that this was a mistake.

[13] In about February of 1995, the plaintiff, Mr. Sohi and others discussed developing a nightclub in Thunder Bay. A dispute arose over the plaintiff’s interest in the venture and he threatened to sue. The plaintiff testified that Mr. Sohi threatened to take away the plaintiff’s restaurant, Simplee Chinese, if he sued. The plaintiff pleaded that Mr. Sohi exerted “illegitimate economic pressure” on Simplee Chinese and conspired with others to prevent the plaintiff from suing over the nightclub dispute.

[14] The plaintiff did sue Mr. Sohi over the nightclub venture. That case was heard first by my colleague, Mr. Justice Wright. His reasons for judgment were released in advance of these reasons and I have not reviewed them.

[15] The documentary record in this case shows that Sohi served a notice of intention to enforce its security on the plaintiff and the plaintiff’s corporations, Teg Cuisine and Wong Wok Cuisine in July, 1995. The indebtedness is stated to be $50,000. On September 1, 1995 the plaintiff testified that Mr. Sohi took the Intercity and Keskus Mall restaurants from him. The Syndicate location was owned by another franchisee and had already closed.

[16] The plaintiff conceded that neither the Keskus nor the Intercity locations were profitable and that he was running out of capital and unable to get financing. The plaintiff testified that the Keskus restaurant was a drain on cash flow in its existing location.

[17] It is noteworthy that the plaintiff made an assignment in bankruptcy on June 25, 1996. The assignment also included Wong Wok Cuisine Thunder Bay Inc. The plaintiff believed he was discharged a year after his assignment but he was uncertain on that point.

[18] The defence filed, as exhibit 95, a statement from the Office of the Superintendent of Bankruptcy concerning the plaintiff and Wong Wok Cuisine. This statement shows the “date of proceeding” as June 25, 1997 and the date of discharge as August 5, 1998.

[19] I conclude that the plaintiff was in error in recalling his dates of bankruptcy and accept as correct the dates set out in exhibit 95. The plaintiff was an undischarged bankrupt between June 25, 1997 and August 4, 1998.

[20] The relationship between the plaintiff and Mr. Sohi soured as the dispute over the nightclub continued to simmer. Perhaps Mr. Sohi was affected by the plaintiff’s bankruptcy. There is no evidence on this point. The plaintiff testified that Mr. Sohi repeatedly tried to get him to give up the litigation over the nightclub and exerted financial pressure on Dennis Burns’ corporation to encourage the plaintiff to do so. Mr. Sohi denied threatening anyone.

[21] In August, 1995, Sohi franchised the Intercity Simplee Chinese restaurant to a numbered company owned by Douglas (Al) McMillan. Mr. McMillan began running the restaurant but business was poor, at least in part because renovations to the mall interfered with food court operations.

[22] In 1996, the plaintiff’s brother, Dennis Burns, negotiated with Mr. Sohi to purchase the Intercity restaurant, including the franchise rights to Simplee Chinese. An agreement was struck which provided that a corporation to be created by Dennis Burns would acquire the rights to operate the restaurant. A memorandum of agreement between Dennis Burns and Mr. Sohi recited that:

• Sohi would renew its lease with the mall until November, 2000 and if feasible, the lease would be assigned from Sohi to Burns;

• Burns would renovate the store with a specified contribution from Sohi;

• Sohi would sell Burns the equipment for the store;

• The note payable by McMillan's corporation to Sohi would be assumed by Burns;

• Sohi would sell Burns its franchise rights for Simplee Chinese;

• Sohi would take responsibility for any loans or accounts arising from the operation of Simplee Chinese Cuisine Inc.; and

• All intellectual property ascribed to Simplee Chinese would be transferred to Burns' corporation.

[23] In due course, Dennis Burns incorporated 1164280 Ontario Inc. (“1164”) as the vehicle for this purchase. Dennis Burns was the sole shareholder; upon incorporation of the company, the plaintiff was named as the sole officer and director. The plaintiff testified that he ran 1164, did marketing and helped in the store, which included delivering food.

[24] The corporate solicitors for each party drew the appropriate agreements evidencing the transaction, which were duly executed. The Intercity Shopping Centre continued as the landlord to Sohi Holdings, which in turn sublet to 1164.

[25] The sublease between Sohi and 1164, granted May 1, 1996, incorporated all of the terms of the head lease. The term of the sublease ended a day before the term of the head lease, on November 30, 2000. However, the sublease stipulated that if the head lease was terminated for any reason, the sublease also terminated forthwith.

[26] The subtenant, 1164, was bound by the terms of Sohi’s lease with the shopping centre. In particular, it was obliged to pay basic and additional rent at the same rate and time as required by the head lease. These payments were to be made to Sohi.

[27] The sublease provided that in the event the subtenant breached its lease, the remedies available were as set out in the head lease. The failure of Sohi, however, to insist on strict performance of the terms of the sublease did not constitute a waiver of its rights or remedies, including for any subsequent breaches.

[28] Central to this case is clause 10 of the sublease between Sohi and 1164 which prohibits 1164 from subletting without the prior written consent of the sublandlord, Sohi. By the terms of the head lease, the consent of the landlord was not to be unreasonably withheld. If 1164 breached this term of the lease, Sohi was entitled to re-enter and take possession of unit 21 without notice. It is common ground that Sohi’s lease with the shopping centre contained no right of renewal after the specified term.

[29] The agreement of purchase and sale required 1164 to pay Sohi $125,000. Of this, $65,000 was paid for the location. Dennis Burns testified that without the location, the franchise was worth less than he paid for it. Burns also considered expanding the franchise to other locations.

[30] In addition, 1164 purchased franchise rights in Simplee Chinese from Sohi for $35,000. Finally, 1164 assumed a $53,279 note that McMillan’s company owed to Sohi and McMillan’s corporation became a subtenant of 1164. McMillan’s corporation agreed to pay 1164 a rental fee, a franchise fee, and payments on the note that 1164 had assumed. If McMillan’s corporation defaulted, 1164 was obliged to make up the shortfall to Sohi. Pursuant to its obligation under the head lease, Sohi had limited involvement: if McMillan and/or 1164 defaulted in paying the rent, then Sohi was on the hook.

[31] Dennis Burns expected to see Mr. Sohi in five years when it came time to re-negotiate the lease. Mr. Sohi told Dennis Burns that he would help him renew the lease. Dennis Burns added that he would not have invested in the franchise if he had known that the lease would be terminated before its term. Dennis Burns borrowed $100,000 from a bank and drew on his RRSP savings in order to finance the purchase, which included the lease of unit 21 from Sohi.

[32] McMillan’s corporation did default. By Christmas of 1996, Mr. McMillan stopped running the store. In 1997, the Intercity Shopping Centre advised Sohi there were arrears of rent for December, 1996 and January - March 1997, as well as a promotion fund payment from August, 1996 that McMillan’s company had not paid. Of necessity, 1164 stepped in to bring these arrears up to date and, with McMillan’s concurrence, looked for a new franchisee for the restaurant.

[33] Robert Favuzzi expressed an interest in acquiring the operation which would be run by his corporation. Dennis Burns testified that he sought and obtained Mr. Sohi’s approval to sell to Robert Favuzzi. Dennis Burns understood that Sohi stood in the position of landlord to 1164 pursuant to their leasing agreement and knew that Mr. Sohi’s consent to Robert Favuzzi taking over the store was required before they could proceed. Dennis Burns’ evidence was not challenged in cross-examination.

[34] The plaintiff testified that he and Mr. Sohi met with Mr. Favuzzi at the shopping centre. He stated that Mr. Sohi repeatedly gave his oral consent to Mr. Favuzzi running the restaurant. He also testified that Mr. Sohi implicitly gave his consent in writing as set out in the exchange of correspondence between his corporate solicitor and the other corporate solicitors.

[35] Mr. Favuzzi testified that he met Mr. Sohi a few times before entering into an agreement with 1164. He also testified that Mr. Sohi agreed that he could take over the restaurant. He stated that Mr. Sohi told him, “Pay the rent and everything will be fine.” Mr. Sohi also told Mr. Favuzzi that he didn’t care who ran the restaurant but that he didn’t want Stephen Burns there. Mr. Favuzzi is not a party to these proceedings and has nothing to gain from his testimony.

[36] The corporation 1164 agreed to finance Mr. Favuzzi’s purchase of the restaurant franchise if Mr. Favuzzi could provide working capital of $20,000 to run it. Mr. Favuzzi agreed to pay $140,000, subject to certain credits for assets he surrendered to 1164 and other discounts, with the balance to be paid when the lease with the mall was renewed in November, 2000. The plaintiff calculated that Mr. Favuzzi owed 1164 $93,000 after credits. These were to be paid monthly. Mr. Favuzzi took over operation of the restaurant in March, 1997 with the understanding that he and the corporate solicitors for 1164 would draw up the documentation in due course.

[37] Mr. Sohi disputed that he gave his consent to have Mr. Favuzzi purchase the operation. He cited clause 10 of the sublease between Sohi and 1164, which required 1164 to obtain prior written consent of the sublandlord before subleasing. He testified that 1164 must give 6 – 8 weeks prior notice in writing in order for the Intercity Shopping Centre to consider whether it would consent to the subtenancy. He added that the shopping centre considers the financial capacity of the corporation taking over the subtenancy; the identity of the shareholders and directors; and marketing arrangements before it determines whether it will consent. A meeting between the shopping centre vice-president and the subtenant’s directors might also be demanded as part of the approval process.

[38] Mr. Sohi testified that, in addition to his lack of consent to Mr. Favuzzi’s subtenancy, there were on-going problems with Mr. Favuzzi’s operation of the restaurant that were contrary to the strict regulations of the shopping centre. For example, Mr. Favuzzi was often late with his rent. Consequently, Mr. Sohi insisted on certified cheques for rent a day or two before it was due. Mr. Sohi collected the rent personally. On the last occasion that Mr. Favuzzi was late with the rent, Mr. Sohi had him escorted out of the mall.

[39] Mr. Favuzzi admitted that he paid the rent late 3 – 4 times. He stated that he was late with the rent once or twice in the first six months of operation. The first time, he was a day late and Mr. Sohi changed the locks on the restaurant.

[40] Mr. Favuzzi and Mr. Sohi also agreed that there was an incident where Mr. Favuzzi got into a questionable situation with an employee.

[41] Mr. Sohi was angry that Mr. Favuzzi introduced himself to the mall manager as the new owner of the Simplee Chinese outlet when the mall believed that Mr. McMillan was still the operator. He was also embarrassed because he was unaware that the location had been sold. He felt he had been “caught with his pants down,” and that his reputation was on the line. This explanation does not ring true. Mr. Sohi admitted in cross-examination that he had not informed the mall manager that Dennis Burns had purchased the Simplee Chinese franchise. It is evident that Mr. Sohi did not put much stock in keeping the mall management informed of changes in the status of his subtenants.

[42] Mr. Sohi testified that Mr. Favuzzi also failed to pay common expense and media charges related to the food court. He noted that Mr. Favuzzi was fined for infractions in connection with the restaurant’s grease trap. On another occasion, Mr. Favuzzi didn’t open the restaurant on time, and was fined by the shopping centre. Mr. Sohi changed the locks the next day. Mr. Favuzzi acknowledged having some of these difficulties.

[43] Mr. Sohi complained, no doubt with some justification, that the plaintiff was never on hand when there were problems to be sorted out with Mr. Favuzzi. The plaintiff lived and worked in Nipigon. Mr. Sohi did not like the plaintiff. He did not want to deal with him. When he complained to Dennis Burns he was told, “Stephen Burns is the president of the corporation; deal with him.” This was not what Mr. Sohi wanted to hear. Unfortunately, Mr. Sohi’s wife was ill at that time and he had teenaged children who were demanding of him. He was also operating his own restaurant franchises and was under considerable stress.

[44] I find that Mr. Sohi used the requirement in the lease for prior written consent to subletting as an ex post facto justification for his later conduct toward the plaintiff and 1164.

[45] Mr. Sohi’s rising irritation with Mr. Favuzzi and the plaintiff is no doubt reflected in the hand-written note that his corporate solicitor, John Atwood, wrote on June 5, 1997 to the corporate solicitors for Mr. Favuzzi and 1164. By this time, Mr. Favuzzi had been operating the restaurant with Mr. Sohi’s knowledge for three months. Mr. Atwood stated:

I am advised that the transferee of the business continues to operate even though consent has NOT been given to the transfer.

As well, the rent is unpaid for June.

Unless matters are corrected by the end of the day today, to the satisfaction of Mr. Sohi, locks will be changed and re-entry effected. I have prepared a NOTICE to this effect for Mr. Sohi.

[46] The rent for June was subsequently paid. The fact that Mr. Sohi instructed his solicitor to prepare for re-entry unless matters were rectified suggests he had given prior consent to Mr. Favuzzi operating the restaurant. Re-entry was not effected at that time.

[47] However, that was not the end of the matter. Mr. Atwood wrote to the solicitors on June 18, 1997 bringing another problem to their attention. He stated:

It is my understanding that the June rent is now paid.

It remains however the position of the Franchise owner that there has been a breach, by the Franchisee, of paragraph 10 of the sublease of May 1, 1996:

The Franchisee, being the “Sub-Tenant” as set out in the said sublease, agreed that it “would not, without prior written consent of the SubLandlord (i.e. the Franchisor) first obtained, assign or otherwise dispose or share any rights granted under the sublease in whole or in part, or sublet or part with, or share the possession of all or part of the sublet premises.”

Unless the Franchisee forthwith takes steps to correct this breach it may be the decision of the Franchisor to re-enter and take possession of the premises.

Your immediate written response would be appreciated.

[48] I conclude that Mr. Atwood was in error in referring to his client, Sohi, as the franchisor and 1164 as the franchisee. A memorandum dated March 28, 1996 signed by Dennis Burns and Sharan Sohi recites that “all franchise rights related to [Mr. McMillan’s company] will be assigned from Simplee Chinese Cuisine Inc. to Mr. Burns.” Mr. McMillan later confirmed this arrangement to Dennis Burns as evidenced by exhibit 15. Mr. Sohi knew he had sold the franchise rights to 1164. He said so in cross-examination. There is no indication that he corrected Mr. Atwood even though he was copied on this letter.

[49] Mr. Atwood was correct that Sohi and 1164 remained connected as sublandlord and subtenant respectively. However, I conclude that Mr. Sohi was less than candid with Mr. Atwood about having given his oral consent to Mr. Favuzzi running the restaurant.

[50] Mr. Favuzzi testified that Mr. Sohi behaved differently when there were lawyers present. Mr. Sohi characterized his solicitor, John Atwood, as the best solicitor in the city. Mr. Atwood is a senior member of the bar. It is obvious that Mr. Sohi’s lack of candor with his own solicitor influenced the positions he advanced during the course of these transactions. Mr. Atwood became an unwitting pawn in the contest between Sohi and Burns.

[51] The plaintiff complained that Mr. Sohi repeatedly attempted to interfere with Mr. Favuzzi’s operation of the restaurant. It was his contention that Mr. Sohi was exacting some revenge for the plaintiff’s refusal to withdraw his claims concerning the nightclub transaction. Mr. Sohi denied this.

[52] Exhibit 23 sets out an agreement between 1164 and Mr. Favuzzi. One of the terms of this agreement was that Mr. Favuzzi would pay 1164 a franchise fee equal to 4% of gross sales. When Mr. Favuzzi was having trouble with cash flow, Mr. Sohi told him to just pay the rent as 1164 had no right to collect franchise fees, which he characterized as “a joke.”

[53] Mr. Favuzzi testified that after he took over the restaurant, the plaintiff trained him, his wife, Cheryl Favuzzi, and their staff for a few weeks. After the plaintiff was gone from the scene, Mr. Favuzzi stated that Mr. Sohi watched him like a hawk. Mr. Favuzzi was not making money and was looking for ways to cut costs. Mr. Sohi told him he was happy to have the plaintiff out. Mr. Sohi also told Mr. Favuzzi, “I own the equipment; I own the franchise; I own the lease. If you stick with Burns, you’re out.” Mr. Favuzzi knew from his conversations with the mall manager that Sohi held the lease. Mr. Sohi emphasized that he had the power in the relationship between him and the plaintiff.

[54] On other occasions, Mr. Sohi came to see Mr. Favuzzi or join him in the food court at the mall. When the plaintiff was not present he would imply that 1164 did not own the franchise rights. He would pose the question: why pay someone for something they don’t own?

[55] As a result of this badgering, Mr. Favuzzi refused to pay franchise fees to 1164. Mr. Favuzzi and 1164 re-negotiated a deal to increase the purchase price in light of this refusal.

[56] Mr. Favuzzi had previously run a small delivery service. He had no experience with franchises and was not sophisticated in business, a fact that must have been obvious to Mr. Sohi. Mr. Favuzzi was confused about the conflicting positions of Sohi and 1164. He was confused when Mr. Sohi told him he owned the equipment. This was, of course, not true.

[57] Mr. Sohi saw Mr. Favuzzi on a daily basis. He impressed Mr. Favuzzi as being rich and powerful. Thus, when Mr. Sohi gave Mr. Favuzzi advice and told him to pay the rent to Sohi, Mr. Favuzzi complied. Mr. Favuzzi was acutely aware of the power that Mr. Sohi held over him because Mr. Sohi had locked him out of the restaurant and had even had him escorted from the mall for various infractions.

[58] Mr. Sohi took advantage of the plaintiff’s absence from the mall, telling Mr. Favuzzi that “You’re here and Stephen Burns is not. If you don’t pay, you’re out.” Mr. Sohi presented Mr. Favuzzi with common expense charges that Mr. Favuzzi didn’t understand but felt helpless to contest. Mr. Sohi told him that he was in charge; that Burns’ corporation didn’t own the franchise or the equipment and that Mr. Favuzzi was not obliged to pay Burns. He also cast doubt on the legitimacy of 1164’s documents. He told Mr. Favuzzi that Burns’ corporation did not own the restaurant. He called the plaintiff “crazy, and “a fool.” None of Mr. Favuzzi’s evidence was challenged in cross-examination.

[59] The testimony of Cheryl Favuzzi, Robert’s wife, was to the same effect. She worked in the restaurant along-side her husband. She stated that Mr. Sohi inserted himself into the relationship between her husband and 1164, telling the Favuzzis he could lock them out and issue a trespass notice. Mr. Sohi told them not to worry about the plaintiff and told them to withhold payments to 1164, who did not own the restaurant.

[60] Ms. Favuzzi testified that when the plaintiff was in the room, Mr. Sohi would acknowledge that the plaintiff was involved but when he was not present, he would tell the Favuzzis that 1164 had no ownership rights. He made these statements numerous times.

[61] Ms. Favuzzi also stated that Mr. Sohi told her he could throw them out as he owned Simplee Chinese, its assets and franchise rights. He scoffed at the agreements between 1164 and Mr. Favuzzi’s corporation. She noted that they carried on running the restaurant as usual, despite the default notice from 1164. Undoubtedly, the failure of 1164 to re-possess the restaurant persuaded the Favuzzis that Mr. Sohi was correct: Burns didn’t own Simplee Chinese. Ms. Favuzzi’s evidence was also not contested on cross-examination.

[62] Mr. Favuzzi testified that he could not make sense of it. He believed Sohi owned the franchise and the equipment. As a result of Mr. Sohi’s misrepresentations, Mr. Favuzzi felt entitled to ignore his contracts with 1164. His legal bills were mounting along with his stress level. He was in the middle and he wanted out. At trial he testified that he has since come to believe that Mr. Sohi was not telling the truth.

[63] Mr. Sohi did not recall meeting privately with either of the Favuzzis. He did not recall meetings with Mr. Favuzzi and Mr. Atwood. I conclude, however, that he did. Mr. Atwood stated that he met Mr. Favuzzi once or twice. It was likely that Mr. Sohi was present when Mr. Atwood and Mr. Favuzzi met.

[64] Mr. Sohi insisted on being provided with a copy of the buy-sell agreement between 1164 and Mr. Favuzzi’s corporation. He also demanded financial statements and a sublease with the same content as the lease between 1164 and Sohi. He wanted these documents in order to approach mall management about the change in ownership of unit 21.

[65] The plaintiff produced exhibit 31, dated July 3, 1997, which formalized the agreement of purchase and sale for the restaurant. It was signed by the plaintiff, as president of 1164, and by Mr. Favuzzi personally and on behalf of his numbered corporation.

[66] The plaintiff also produced exhibit 32, which is a lease dated June 27, 1997. This agreement acknowledges and accepts Mr. Favuzzi’s corporation as a subtenant of 1164 but preserves the status of 1164 as Sohi’s tenant. It also incorporates the terms of the lease between Sohi and 1164, as well as the head lease. It is telling that although the plaintiff and Mr. Favuzzi initialed and signed this document on behalf of their respective corporations, Mr. Sohi did not, even though he complained about the lack of written consent to the transfer. Mr. Sohi agreed he could have ratified the deal after the fact. He chose not to do so.

[67] As of July 9, 1997, Mr. Atwood set out Sohi’s terms in correspondence to Messrs. Covello and Garofalo. Mr. Covello was 1164’s corporate solicitor; Mr. Garofalo acted for Mr. Favuzzi’s corporation. The terms indicated that Sohi would consent to assign 1164’a franchise and sublease to Mr. Favuzzi’s corporation, provided:

• the shopping centre approved the assignment of the sublease;

• the assignment included a condition that Mr. Sohi be the sole conduit for discussions with the shopping centre relating to the lease or the tenancy; and

• that the five-day grace period for payment of rent be reduced to forty-eight hours in view of late payments in the preceding months.

[68] Mr. Sohi’s conditions were an ever-changing target.

[69] Mr. Sohi also advised that he did not intend to renew the lease with the shopping centre when it terminated in approximately three years. He advised Messrs. Covello and Garofalo to have their clients establish “a direct relationship with the Intercity Mall, on or before the maturity of the existing lease, if there is to be security of tenure.” This position was at odds with his insistence that no one in the leasing chain have contact or communication with the mall management.

[70] The terms of the tenancy arrangements between Sohi and 1164, and 1164 and Mr. Favuzzi, continued to be discussed into November of 1997. Correspondence that was exchanged between the three corporate solicitors confirms that amended contractual arrangements were pending at that time. Subsequently, the terms of the deal between Mr. Favuzzi and 1164 were modified.

[71] By November of 1997, the Favuzzi tenancy was so problematic that the corporate solicitors for Sohi, 1164, and Mr. Favuzzi’s corporation met together with their clients. The plaintiff represented 1164 at this meeting. Mr. Favuzzi complained that he was not making any money.

[72] Mr. Covello, as corporate solicitor for 1164, summed up the meeting to Messrs. Atwood and Garofalo by letter dated November 10, 1997. The text of his letter follows:

1. It is Sharan Sohi's clear intention on behalf of Sohi Holdings Inc. that upon expiration of the present lease with Intercity Mall of the Simplee Chinese location, that neither Sharan nor Sohi Holdings Inc. will renew the Lease.

2. Mr. Sohi agreed to enter into a direct sublease relationship at this time between Sohi Holdings Inc. and Mr. Favuzzi without the need for our client, nor his corporate entity, to guarantee such arrangement. Our clients Stephen and Dennis Burns and their corporations are released from obligations under the lease.

3. Mr. Sohi agreed that in the event the Sublease referred to above goes into default, he will provide notice to Mr. Stephen Burns at 1121 Barton Street, Thunder Bay, Ontario P7B 5N3, care of Buset & Partners to the attention of Mr. William A. Covello. Mr. Stephen Burns has agreed this will constitute sufficient notice, whether or not Buset & Partners are able to contact him thereafter or not.

4. The sublease will have the same terms as the Head-Lease. It was specifically agreed that in the event Mr. Favuzzi is in default for a period of five days, default of the lease will be triggered and Notice of same will be required. The Default provisions in the Headlease will then be applicable.

5. Although not discussed at our meeting, it would be my request that there be an Assignment of the sublease in favour of my client as security for the outstanding balance of the purchase price in the event this is not paid in full by the financing Mr. Favuzzi intends to arrange.

6. Mr. Sohi indicated that he is confident that Intercity mall management will consent to the direct Lease relationship between Sohi Holdings Inc. and Mr. Favuzzi. Mr. Sohi also indicated that it is his opinion he can obtain such consent within seven to fourteen days provided he is confident that he can approach the Mall with the assurance that this is the final version of the documents.

7. Mr. Sohi made it clear that he is not prepared to sign documentation, nor approach the Mall until the transaction between Mr. Burns and Mr. Favuzzi has either closed [sic]. If all outstanding issues preventing the closure have been dealt with and Mr. Sohi's signature is require [sic] to finalize financing, Mr. Sohi has agreed to sign so as to facilitate closing.

8. Mr. Burns agreed to pay a total of $744.00 toward the legal fees of Mr. Atwood on behalf of Sohi Holdings Inc. This will confirm that as of November 7, 1997, Mr. Stephen Burns provided a cheque payable to Buset & Partners in the amount of $744.00 which will be held in trust pending final completion of this transaction.

[73] Counsel were asked to advise of any dispute to this summary of the meeting. Representing Sohi, Mr. Atwood replied on November 25, 1997:

Subject to the following few comments the letter accurately summarizes the business transacted at our meeting.

It will be for Mr. Sohi to determine whether or not he is prepared to consent, as mentioned in paragraph #5 in the letter, to an Assignment of the sublease, for security purposes. As such an Assignment would also require the consent of the head landlord and as Mr. Sohi wants to make as few demands of the head landlord as possible, he may be reluctant to allow the Assignment.

Paragraph #7 of your letter contemplates the signature of certain documentation by Mr. Sohi. Please identify the documentation that is contemplated in paragraph #7.

With this letter I am returning to you the package of documentation that was provided to Mr. Sohi some time ago. This package may be useful to you in now preparing the final package.

[74] The plaintiff testified that he understood Mr. Sohi would not renew his lease with the mall. At the parties’ November meeting he released Mr. Sohi from his commitment to renew the lease. The plaintiff characterized this as a $200,000 liability to Sohi.

[75] I do not accept the plaintiff’s conclusion that by waiving Sohi’s promise to renew the lease, Sohi was enriched by $200,000. There was no right of renewal contained in either the head lease or the sublease. The terms of the sublease incorporated the terms of the head lease. Sohi was not contractually bound to 1164 beyond the term of Sohi’s lease with the shopping centre. Sohi could not guarantee that the shopping centre would renew the lease. Apart from the plaintiff’s assertion that this relieved Sohi of a $200,000 liability, there is no evidence to suggest that Sohi was indebted to the shopping centre if the lease was not renewed. By the time the lease was terminated, the lease was in good standing, paid by the subtenant.

[76] Renewal of the lease was a live issue in the negotiations between the plaintiff and Mr. Favuzzi. Mr. Covello wrote to Mr. Garofalo on November 10, 1997, setting out the following agreement made between the plaintiff and Mr. Favuzzi: if the lease was not renewed after December, 2000, Mr. Favuzzi would only pay 1164 the balance on the agreement of purchase and sale, said to be $150,000. Alternatively, if the lease was renewed beyond December, 2000, Mr. Favuzzi would pay 1164 an additional $55,000 upon renewal of the lease.

[77] The plaintiff testified that 1164 came to terms with Mr. Favuzzi over a revised agreement as a result of these negotiations and Mr. Favuzzi paid his monthly payments until March, 1998. This is not an accurate statement. Exhibit 38 is a notice of default dated January 16, 1998, prepared by Mr. Covello for 1164 and signed by the plaintiff. This notice gave Mr. Favuzzi and his corporation 15 days to remedy the default. Mr. Favuzzi brought the notice to Mr. Sohi who ripped it up and threw it in the garbage saying, “You don’t have to worry. I’m in charge. He breached his contract. Too bad.”

[78] In the meantime, the amended closing documents were not produced to Mr. Sohi’s solicitor. Following the November meeting, Mr. Sohi grew restive about the lack of progress in closing with Mr. Favuzzi. His solicitor wrote to Mr. Covello on January 19, 1998, in the following terms:

Since my note to you of June 5, 1997… and my letter to you of June 18, 1997 [both reproduced above], and notwithstanding our subsequent discussions and meeting, there seems to have been no real progress made in bringing existing matters to some level of finality.

The position of Sohi Holdings Inc. therefore will return to that expressed in the note aforesaid, unless matters are made final, to the satisfaction of Sohi Holdings Inc. by January 30, 1998.

To be specific – there being a breach of the sublease of May 1, 1996 (a parting with or sharing of possession of the premises, without consent), unless matters are made final, to the satisfaction of Sohi Holdings Inc., by January 30, 1998, Sohi Holdings Inc. hereby gives notice and reserves the right, without further notice, to then forthwith re-enter and take possession of the premises.

[79] Mr. Atwood wrote again to Mr. Covello on February 23, 1998, noting the lack of reply to his January 19th letter. He stated:

This letter shall serve as the formal notification of Sohi Holdings Inc., to your client 1164280 Ontario Inc. (Mr. Burns) that by reason of the breach by your client of the existing sublease, and the failure of your client to remedy the said breach (notwithstanding the many requests of Sohi Holdings Inc.), Sohi Holdings Inc. no longer recognizes any existing documentation as between 1164280 Ontario Inc. and Sohi Holdings Inc. to be binding, has re-entered and re-taken possession of premises No. 21, and is in the process of making its own contractual relationships directly with Mr. Favuzzi….

[80] Mr. Covello wrote to Mr. Atwood on March 6, 1998 asserting that the lease was in good standing. Mr. Atwood replied on March 9, 1998 that although the rent was not in arrears, the lease continued to be breached due to the lack of Sohi’s prior written consent. Mr. Covello asserted that Mr. Sohi had given oral consent to Mr. Favuzzi’s occupation of the restaurant or alternatively, he acquiesced. Matters remained at an impasse throughout that spring.

[81] Mr. Favuzzi became much less attractive as a tenant when he stopped paying rent after March of 1998. A formal notice of default was served on Mr. Favuzzi on June 4, 1998. The plaintiff claimed that after the March rent default, Mr. Sohi told the plaintiff he would continue to interfere with the restaurant until the plaintiff waived his claims in the nightclub transaction.

[82] On June 5, 1998, Mr. Covello wrote to Mr. Atwood, again disputing that 1164 was in breach of its lease and reiterating that Mr. Sohi consented and acquiesced to Mr. Favuzzi’s operation of the restaurant. The most significant part of this correspondence, for the purposes of the limitation defence, is as follows:

We regret to advise that it has come to our attention that your client is apparently conducting himself in such a way that he is inducing Mr. Favuzzi to breach his contracts with our client.

[83] Mr. Covello also warned that litigation would follow if the situation was not rectified. The plaintiff was copied on this correspondence. However, no action was then started. Undoubtedly this lapse reassured Mr. Sohi that he had the upper hand and the plaintiff would not act on his threat to sue.

[84] The corporation 1164 sued Mr. Favuzzi and his corporation in September, 1998 for specific performance of their agreement of purchase and sale dated July 3, 1997, plus payment of arrears owed under a promissory note given in April of 1997. Mr. Sohi recommended that Mr. Favuzzi declare bankruptcy and he did so in the spring of 1999.

[85] Through his solicitor, Mr. Sohi indicated that he had no wish to get involved in litigation between 1164 and Mr. Favuzzi and that, so long as the rent was paid and operational commitments maintained, he would remain neutral. Mr. Favuzzi testified and Mr. Sohi agreed that there was no sublease between his company and Sohi.

[86] Following Mr. Favuzzi’s default, Mr. Sohi approached his wife, Cheryl Favuzzi, to run the restaurant as a month-to-month tenant. He assured her that Mr. Burns didn’t own the restaurant. Ms. Favuzzi retained Mr. Tony Potestio as her corporate solicitor.

[87] In the ensuing months, the plaintiff and Cheryl Favuzzi were not able to come to terms with respect to running the restaurant. During this time, Ms. Favuzzi paid no franchise fees or other payments to 1164. By May of 1999, the plaintiff again believed that Mr. Sohi was interfering. Specifically, he cited Ms. Favuzzi’s belief that Sohi would not permit 1164 to re-enter the premises. Mr. Atwood advised that Ms. Favuzzi believed that the asking price for the restaurant was too high and recommended that an independent accountant be engaged to mediate an agreement between the plaintiff and Ms. Favuzzi.

[88] When negotiations between 1164 and Ms. Favuzzi broke down, 1164 took steps to evict Ms. Favuzzi from the restaurant effective June 1, 1999. It also launched a motion for an injunction prohibiting Ms. Favuzzi from attending at the premises.

[89] The court adjourned the motion to permit Sohi to be added as a party. In the course of the adjournment, Sohi reiterated its position that 1164 had breached its sublease with Sohi and the sublease was therefore at an end, noting that Ms. Favuzzi was on the premises as a monthly tenant with Sohi’s consent. Sohi also suggested that if Ms. Favuzzi would commit to pay 1164 a reasonable monthly rent of at least $1,500 for the remaining term of the head lease, then Sohi would agree that she remain in possession. If she did not, however, Sohi would repossess the restaurant premises and attempt to re-lease it for the balance of the term of the head lease. Again, the unresolved issue of the validity of the lease between 1164 and Sohi reared up. Who was legally entitled to control of the premises?

[90] On July 15, 1999, acting for 1164, Mr. Covello proposed a settlement to Ms. Favuzzi and confirmed that Mr. Sohi had authority to bind her.

[91] In testimony, Mr. Sohi first said that he didn’t recall anything about the settlement between Ms. Favuzzi and the plaintiff. That statement was not correct. Then, Mr. Sohi denied he acted as agent for Ms. Favuzzi; he denied that he had authority to bind her. He stated that she was represented by her own solicitor and the fight was never between Sohi and 1164. He added that he was not trying to sell something. Mr. Sohi commented that he was “breaking up a fight between kids. I never created the fight.”

[92] The plaintiff contends that Mr. Sohi acted as Ms. Favuzzi’s agent, and had authority to bind her in negotiating a settlement. Ms. Favuzzi testified that she had given Mr. Sohi authority to bind her and that he was acting on her behalf. She stated that Mr. Sohi assured her that she should not worry about the plaintiff or what was being signed, as the plaintiff didn’t own anything and Sohi could easily lock him out. She added that while she was paying Mr. Sohi a monthly cheque for rent, she believed he owned unit 21.

[93] Ms. Favuzzi testified that Mr. Sohi influenced her; if he had told her to make payments to the plaintiff, she would have. She added that he told her that the plaintiff couldn’t take over the restaurant because he didn’t own it. In referring to the settlement, he told her to “Just sign it.” When asked about this statement, Mr. Sohi indicated he didn’t recall if he told Ms. Favuzzi to sign. However, Mr. Sohi stated that he would not have advised Ms. Favuzzi not to pay, as that would have created another fight.

[94] Ms. Favuzzi testified that she signed the settlement “so that the plaintiff would stop harassing me.” As well, she felt that Mr. Sohi could evict her from the restaurant if she didn’t do what he said. This evidence was not challenged in cross-examination.

[95] The plaintiff submits that Mr. Sohi exercised illegitimate economic interference when he acted as agent for Ms. Favuzzi. He argues that Mr. Sohi is accountable to the plaintiff as a fiduciary and liable in tort for inducing breach of contract, conspiracy and other intentional torts.

[96] After a flurry of negotiations, Ms. Favuzzi and the plaintiff came to terms which are set out in exhibit 74. By that time, Ms. Favuzzi had been running the restaurant without making payments to 1164 for over a year. The terms of the settlement included Ms. Favuzzi’s corporation paying 1164 the sum of $28,500 and delivering vacant possession of unit 21 in the event of default. Ms. Favuzzi gave 1164 a $500 deposit and defaulted on the remaining payment schedule. She testified that she wanted to run the restaurant until the end of the lease. Mr. Sohi did not sign the settlement.

[97] The plaintiff testified that Mr. Sohi agreed that 1164 would be able to step in and re-take the restaurant if Ms. Favuzzi defaulted. He stated that Sohi had validated 1164’s lease. That is not necessarily how the lawyers understood the settlement. It is certainly not what happened.

[98] It was not a specific term of the settlement that Sohi consent to a sublease between Ms. Favuzzi and 1164. However, 1164 sought Sohi’s written consent to her sublease after the agreement was implemented. Mr. Sohi declined to consent. As Mr. Covello expressed it in exhibit 80, Mr. Sohi felt that a further sublease would require the consent of the shopping centre, resulting in additional difficulties and delays.

[99] Mr. Covello next sought assurances from Mr. Sohi that he would take no further objections to the validity of 1164’s sublease. This assurance was never given. However, Ms. Favuzzi and 1164 elected to treat their dispute as settled. Mr. Covello summed it up this way in his reporting letter to the plaintiff dated August 19, 1999:

As discussed we have forwarded confirmation that this matter is now at an end and have confirmed your position that the Lease remains valid.

In the event the lease does not renew come November 2000 the issue will be of no significance.

In the event Cheryl Favuzzi does not make her payments to you as due, you will clearly be in a contractual position to have her removed.

Is [sic] this occurred Mr. Sohi may then refuse to allow you to re-enter at which point you would need to prove the status of your Lease. We have the documentation ready to be utilized should this event come to pass.

We look forward to further discussions with you and will continue to monitor the situation.

[100] Concurrent with this report, Mr. Covello wrote to Mr. Atwood advising that the dispute over the validity of the lease would be held in abeyance. He also referred to Mr. Sohi’s assurance, which was given to both counsel, that he would not allow Ms. Favuzzi to continue to occupy the premises if she defaulted. In effect, 1164 postponed its dispute with Sohi.

[101] In cross-examination, Mr. Sohi was confronted with exhibit 85. It is a document dated November 24, 1999, under the letterhead of Sohi and admittedly signed by Mr. Sohi as president. It states:

To Whom It May Concern:

Effective May 1, 1999, our sublease with the tenant operating as 1191013 Ontario Inc. [Robert Favuzzi’s corporation] was terminated due to a breach in the lease agreement.

Effective May 1, 1999, 1333405 Ontario Inc. [Cheryl Favuzzi’s corporation] became a party to the sublease.

[102] Parenthetically, Ms. Favuzzi testified that she took over operation of the restaurant on April 1, 1999 not May 1, 1999.

[103] When presented with this document, Mr. Sohi stated, “I’m dumb-founded. I cannot understand why this paper exists.” He testified that he had not signed any leases with Mr. Favuzzi’s corporation; as well, he stated that there was no reason for the letter to exist. He added that if the document was prepared for the mall management, it would have been addressed to them. He also stated that any sublease would be directed to Mr. Atwood’s office. Mr. Atwood testified that he didn’t recall a sublease to Mr. Favuzzi.

[104] The plaintiff contends that the document was intended for the shopping centre management and that it contradicts the terms of the settlement between Ms. Favuzzi and 1164. There is no evidence that Cheryl Favuzzi or her corporation ever entered into a sublease with Sohi.

[105] The plaintiff also submits that the document contradicts Mr. Sohi’s position that he did not consent to Mr. Favuzzi’s corporation as subtenant, which was the basis for his position that 1164 had breached its lease.

[106] Without context for this document, it is unclear why it was written. What is clear is that Mr. Sohi’s evidence lacks credibility.

[107] Despite Mr. Sohi’s assurances that Ms. Favuzzi would pay the settlement, she did not. However, the plaintiff testified that Mr. Sohi refused to turn the restaurant over to 1164 when Ms. Favuzzi defaulted. The plaintiff claimed that because he refused to abandon his law suit over the nightclub, Mr. Sohi would not honour the settlement between 1164 and Ms. Favuzzi.

[108] Mr. Sohi testified that the shopping centre management approached him in January or February, 2000 proposing an early termination of Sohi’s lease of unit 21 in view of low sales. Mr. Sohi testified he approached the Favuzzis to see if they wanted to give up unit 21 and they agreed. He believed there would have been correspondence between Mr. Atwood and Mr. Covello about early termination of the lease.

[109] The lease with the shopping centre was set to expire on November 30, 2000. On March 10, 2000, the shopping centre confirmed with Sohi that the lease would terminate on April 30, 2000 instead. The shopping centre leased the space to Manchu Wok.

[110] I do not accept that this was the first time an early termination of the lease was discussed by Mr. Sohi and the shopping centre. Mr. Favuzzi testified that when Cheryl Favuzzi made her settlement with 1164 in the summer of 1999, the Favuzzis and their staff knew that Mr. Sohi proposed to terminate the lease early. However, no one told the plaintiff.

[111] Ms. Favuzzi testified that she approached the mall management on October 13, 1999 to try to renew the lease and was advised that the space had been rented to another.

[112] Mr. Sohi stated that he asked the Favuzzis if they wanted out of the lease early. He said that the mall offered concessions. He stated that everyone signed off and there were no “back door” deals.

[113] Mr. Favuzzi testified that some three months before the restaurant was finally closed, Mr. Sohi told them he had an opportunity to shut it down. He told them to make sure they were out. This is qualitatively different than Mr. Sohi’s account that he asked for the Favuzzis’ consent to early termination of the lease.

[114] Mr. Sohi asked Mr. Favuzzi if he wanted to sell his equipment from Simplee Chinese. Previously, Mr. Sohi had told Mr. Favuzzi that Sohi owned the equipment.

[115] It suited Mr. Sohi’s purposes to have Ms. Favuzzi as a tenant. He knew that her husband before her had struggled to earn enough money to make his payments and that she would, too. He knew that she would inevitably default. This gave him the perfect opening to approach the mall about surrendering the lease early.

[116] Mr. Sohi testified that he knew the mall management would terminate a lease early when they knew a tenant was struggling. Mr. Sohi wanted out of his lease for unit 21 and he wanted nothing to do with the plaintiff, despite his early assurances to Dennis Burns that he would help them take over Sohi’s lease with the mall. An early termination of the lease would accomplish both of these objectives.

[117] On April 5, 2000, Mr. Atwood notified Mr. Covello of the head lease’s early termination and demanded vacant possession of unit 21 no later than April 30, 2000. This is the only correspondence from Mr. Atwood about early termination of the lease. Dennis Burns testified that he had no indication that his lease was compromised. I find this to be so as a fact.

[118] I do not accept Mr. Sohi’s evidence that all of the parties consented to the early termination of the lease. The plaintiff was shocked and dismayed that 1164 received no notice from Sohi that it intended to terminate its lease with the shopping mall early. He explained that the mall store was the prototype and anchor for 1164’s franchise. He had anticipated opening negotiations with the shopping centre for renewal of the lease about six months before it terminated. The plaintiff stated that there was a failure of consideration since 1164 had paid money for nothing.

[119] Ms. Favuzzi stated that at the time of settlement she expected to run the restaurant to the end of the lease; she did not intend to close it a few months later. She relied on Mr. Sohi’s assurances contained in correspondence from his solicitor dated June 17, 1999 (exhibit 69). Mr. Atwood wrote to Messrs. Covello and Potestio proposing the following resolution to the dispute between 1164 and Ms. Favuzzi:

…To assist with these discussions, Sohi Holdings Inc. suggests the following. If Cheryl Favuzzi will commit to a reasonable monthly payment (at least $1,500.00) to 1164 Ontario Inc. for the entire remaining term of the Head lease, then Sohi Holdings Inc. will allow her to remain in possession. If she will not, then Sohi Holdings Inc. will repossess the premises and will be open to offers at large for the premises for the balance of the term of its Lease.

[120] Understandably, the plaintiff and Dennis Burns concluded that they would have an opportunity to negotiate with the shopping centre to take over the lease at the end of Sohi’s term.

[121] However, Mr. Sohi insisted that he be the only contact point with the mall management. This allowed him to orchestrate the termination of the head lease and the re-leasing of the premises secretly, without notice to the plaintiff, Dennis Burns or his corporation.

[122] The corporation 1164 was not in default to Sohi. Mr. Sohi’s refusal to facilitate transfer of the head lease to Burns’ corporation was done out of vindictiveness. There is no other explanation for his refusal. He might just as easily have suggested early termination to Burns and entered into tripartite negotiations with the mall management to have Burns take over the lease. He knew that the Simplee Chinese franchise had little or no worth to 1164 without the mall location. He knew that 1164 had purchased the equipment and had trained staff to operate in that location. But he was angry with Stephen Burns over the nightclub affair and he could not get him to back down.

[123] Ms. Favuzzi testified that she was instructed to be out of the restaurant by March 31, 2000. Her recollection seems to be in error in light of the documentary evidence of the notice to 1164 to vacate by April 30th.

[124] Manchu Wok became the shopping centre’s new tenant. It took possession of unit 21 on May 1, 2000. The plaintiff testified that he instructed Mr. Covello to commence an action when, in April, 2000, he became aware that Sohi had terminated its lease with the shopping centre. He added that Mr. Covello became ill and the action was not started until September, 2004.

[125] On March 15, 2000, Dennis Burns assigned the plaintiff his rights as a shareholder in 1164. The plaintiff testified that Dennis Burns invested $400,000 in his corporation.

[126] In about June of 2000 the plaintiff was living and working in Nipigon, Ontario. He found that gasoline had been poured around his vehicle and ignited. He believed that Mr. Sohi was behind the fire as Mr. Sohi threatened that there would be trouble if the plaintiff sued over the nightclub dispute. The plaintiff was frightened and moved abruptly to southern Ontario.

The Law

Preliminary Objections

[127] The defendants raise several objections that they say should lead to the dismissal of the action before its merits are considered. These are considered below.

[128] The application of limitation periods to the facts of this case is a threshold issue. Due to the complexity of the facts and the number of pleadings made by the plaintiff, I will address the defendants’ limitation period argument toward the end of my decision

The State of the Pleadings

[129] The defendants criticize the state of the pleadings, arguing that a court should not have to guess what causes of action form the basis of the plaintiff’s case. It is settled law that the pleadings frame the issues for the court and outline the case to be met by the defendant.

[130] This is a preliminary objection that should have been raised before the defendants drafted their statement of defence. It was open to the defendants to ask for particulars or move to strike the claim or portions of it as circumstances dictated. Having pleaded their defence, it does not lie in the mouths of the defendants to say that they didn’t understand the case.

[131] During the course of the trial, I made various rulings on the admissibility of evidence with reference to the pleadings. While the statement of claim scatters claims throughout and is neither cogent nor organized, I take into account that the plaintiff is not legally trained. In some instances, the plaintiff does not use the term of art used in the jurisprudence. However, where language in the pleadings describe the substance of a cause of action, I have treated it as a claim in these reasons.

[132] In some instances, the plaintiff made submissions based on a laundry list of claims which were not pleaded or supported by the evidence. Where the claims are without merit, they have been dismissed.

[133] At no point did the defendants submit that they were taken by surprise by the issues raised. On the contrary, much of the evidence that I heard was previously called in the related case heard by Mr. Justice Wright and was therefore anticipated by the defendants. As well, the defendants filed a detailed factum dealing with a myriad of issues as part of their argument.

[134] I conclude that the preliminary objection to the pleadings is not timely and is without merit.

Bankruptcy

[135] The defendants submit that the plaintiff was an undischarged bankrupt when he entered into dealings with Mr. and Ms. Favuzzi after June 25, 1997. They assert that Mr. Dennis Burns, knowing the plaintiff was an undischarged bankrupt,

“entered into a course of business dealings after June 25, 1997, specifically involving the barter and exchange of intangible assets to be obtained at a future date in order to avoid creditors.”

[136] The defendants do not specify what intangible assets were to be bartered or exchanged. They take issue with the plaintiff’s standing to bring this action.

[137] The articles of incorporation for 1164, filed as exhibit 9, show that May 6, 1996 was the effective date of incorporation under the Ontario Business Corporations Act, R.S.O. 1990, c. B.16. Stephen Burns is shown as president, secretary and treasurer commencing May 6, 1996 which predates his bankruptcy. Dennis Burns is shown as the sole shareholder at the date of incorporation.

[138] Section 118(1) of the Act specifies that a person who has the status of bankrupt is disqualified from being a director of a corporation. From June 25, 1997 to August 4, 1998, the plaintiff was an undischarged bankrupt. There is no prohibition on the plaintiff acting as a director once he is discharged from bankruptcy.

[139] As I have noted, the statement of claim in this case issued on September 22, 2004. After his discharge from bankruptcy, the plaintiff sought and received approval from the trustee in bankruptcy to continue this action. On November 18, 2005, the Bankruptcy Court granted an order that the plaintiff’s unrealized property rights reverted to the plaintiff. The court lifted the stay of proceedings in this and one other action, and granted leave to proceed with this action. Accordingly, the action is properly before the court.

The Validity of the Assignment

[140] On March 15, 2000 Dennis Burns assigned to the plaintiff all his rights as a common shareholder in 1164, including his rights to shareholder capital and outstanding dividends. On the same day, 1164 assigned to the plaintiff

…all rights, title, interest and obligation in, to and under the following to the assignee:

Any rights, title, interest or obligation to the lease, equipment, leasehold interest, franchise rights. copyrights, trademarks, patents, or other chattels associated with the Simplee Chinese franchise or the Simplee Chinese restaurant, unit #21 at the Intercity Shopping Centre, 1000 Fort William Road in Thunder Bay, Ontario, including any claim in any legal action versus Sharan Sohi, Sohi Holdings Inc, Simplee Chinese Cuisine Inc, Robert Favuzzi, 1191013 Ontario Inc, Cheryl Favuzzi, 1333405 Ontario Inc, or any other party to which a claim may have been made on behalf of 1164280 Ontario Inc.

[141] The terms of the assignment entitle the plaintiff to “all monies and properties” receivable by 1164 in any legal action.

[142] The defendants object that this amounts to an assignment of a bare cause of action in tort and is invalid as being contrary to public policy that prohibits champerty and maintenance or otherwise trafficking in litigation for the purpose of profit. The defendants rely on Fredrikson v. Insurance Corp. of British Columbia (1986), 1986 1066 (BC CA), 28 D.L.R. (4th) 414 (B.C.C.A.).

[143] The sole shareholder of 1164, Dennis Burns, is the plaintiff’s brother. He testified that as a result of the early termination of the lease, Simplee Chinese closed. He commented that Mr. Sohi took an unfriendly attitude toward 1164; he did not fulfill what he said he would do and what Dennis Burns expected him to do.

[144] He confirmed that the assignment to the plaintiff was made with his knowledge and consent. He added that his brother wanted to sue and he supported it.

[145] Madam Justice McLachlin considered the ambit of assignability of a cause of action in tort in Fredrikson. She held that the court will not permit assignment of a cause of action to a stranger nor permit an assignment to be a vehicle for obtaining more than the assignee is legally entitled to. However, assignments of a cause of action for a non-personal tort are permitted if the assignee “has a sufficient pre-existing interest in the litigation to negate any taint of champerty or maintenance.” The court must look to the totality of the evidence to determine if the assignment will be valid. The court recognized a “genuine pre-existing commercial interest” as a financial interest: see para. 37.

[146] Stephen Burns is not a stranger to the litigation. He had a sufficient pre-existing interest in the litigation to justify the assignment of the cause of action in tort. He was the president of the affected corporation. He managed the corporation’s business with the agreement of his brother, Dennis Burns, the sole shareholder. The plaintiff’s relationship with Mr. Sohi was both commercial and personal. The litigation arose from a dispute between the plaintiff and Mr. Sohi. I find that the evil of trafficking in litigation does not arise here. Therefore the assignment of the claims is valid.

Suits by Individual Shareholders

[147] The defendants cite the rule in Foss v. Harbottle, (1843) 67 E.R. 189 and Hercules Management Ltd. v. Ernst & Young, [1997] 2 S.C.R. 165 for the proposition that an individual shareholder has no cause of action in law for wrongs done to a corporation. The rule requires that an action for losses must either be brought by the corporation itself, through its management, or by way of derivative action.

[148] In Hercules, several shareholders sued the corporation’s auditors for negligent misrepresentation in preparing their audit report. In reviewing the rationale for the rule in Foss v. Harbottle, the court concluded that in order to avoid a multiplicity of actions by shareholders and the risk of liability in an indeterminate amount for an indeterminate time to an indeterminate class, a derivative action by shareholders would be preferable.

[149] In Hercules, the court points to a significant exception to its application of the Foss v. Harbottle rule at para. 62. The court held that the policy rationale favouring a class proceeding such as a derivative action does not apply where an individual shareholder has been individually harmed. The court concluded as follows:

…Referring to the case of Goldex Mines Ltd. v. Revill (1974), 1974 433 (ON CA), 7 O.R. (2d) 216 (Ont. C.A.), the appellants submit that where a shareholder has been directly and individually harmed, that shareholder may have a personal cause of action even though the corporation may also have a separate and distinct cause of action. Nothing in the foregoing paragraphs should be understood to detract from this principle. In finding that claims in respect of losses stemming from an alleged inability to oversee or supervise management are really derivative and not personal in nature, I have found only that shareholders cannot raise individual claims in respect of a wrong done to the corporation. Indeed, this is the limit of the rule in Foss v. Harbottle. Where, however, a separate and distinct claim (say, in tort) can be raised with respect to a wrong done to a shareholder qua individual, a personal action may well lie, assuming that all of the requisite elements of a cause of action can be made out.

[150] In my view, the Goldex exception applies to the case at bar. The plaintiff alleges that Mr. Sohi and his corporation intended to put him, his brother, Dennis, and 1164 out of business by breaching their contracts, inducing breach of contract and intentionally interfering with their economic relations. The plaintiff alleges that they were targeted by the defendants as a retaliatory measure.

[151] In this case, the corporation had only one shareholder, Dennis Burns. That fact was known to the defendants. The risk of a multiplicity of actions or indeterminate liability to an indeterminate class does not exist and therefore the policy favouring derivative actions does not arise. The defendants knew that the corporation represented Dennis Burns’ personal and exclusive investment. The defendants knew that Stephen Burns was the corporation’s manager.

[152] I therefore conclude that the rule in Foss v. Harbottle does not apply to these facts.

Plaintiff’s Claims Lacking Evidence or Argument

Intimidation

[153] The court is greatly handicapped by not having developed pleadings, a cogent evidentiary record, or considered legal argument in connection with the plaintiff’s claims. Unfortunately, the defendants do not answer many of these claims in their submissions, even when they have been pleaded and argued.

[154] In my view, the court is not obliged to create a legal argument for an unrepresented litigant. Mr. Burns’ allegation of intimidation is but one example. While the tort of intimidation is not specifically pleaded, the plaintiff alleges Mr. Sohi coerced the Favuzzis. Accordingly, I will deal with intimidation in these reasons.

[155] In Tort Law, (Toronto,Thomson Canada Limited, 2003), Lewis N. Klar discusses the tort of intimidation at pp. 625 – 628. Professor Klar describes the tort of intimidation as follows:

The essence of the tort of intimidation is that an individual acts in a way which is either self-damaging or damaging to the interests of another, due to coercion by the defendant’s express or implied threats.

The nature of the threats is described as:

…a pre-intimation of proposed action of some sort” or “an intimation by one to another that unless the latter does or does not do something the former will do something which the latter will not like.

[156] A threat may be express or implied by conduct; the threatened party must believe that the conduct will continue until he or she complies with the demanded course of action. Liability arises from a threat of an unlawful act or acts.

[157] Finally, the tort of intimidation is made out when the party that has been threatened complies with the threat. As Professor Klar notes, the intimidated party’s damaging conduct must occur as a result of the threat. While there may be a basis to argue that Mr. Sohi intimidated the Favuzzis, the plaintiff has no standing to advance a claim on their behalf.

[158] Here, the plaintiff testified that in June of 2000 his car was encircled by an accelerant and set alight. He believed Mr. Sohi was behind it as Mr. Sohi said there would be trouble if he sued. The plaintiff was not cross-examined on this evidence. Mr. Sohi did not testify about lighting the ground on fire around the plaintiff’s car; nor was he cross-examined on the subject.

[159] On these facts, the tort of intimidation is not made out. The essence of the tort is to provide compensation for a plaintiff who has acted against his or her own interests (or against that of a third party) because of intimidation. Where the plaintiff has not acted against self-interest, intimidation is not made out.

[160] In this case, there is insufficient evidence to link Mr. Sohi with the fire. However, even if Mr. Sohi did set the fire or caused it to be set, there is no evidence that the plaintiff acted in a way that was self-damaging or damaging to a third party. Mr. Burns started the law suit that gives rise to this case some four years later. Thus, it cannot be said that Mr. Burns failed to sue because of the implied threat that there would be trouble if he sued.

[161] The claim for damages for the tort of intimidation is therefore dismissed.

Misrepresentation

[162] The plaintiff referred briefly to misrepresentation in his submissions. Misrepresentation is a legal term of art as defined in the jurisprudence. As this claim was not pleaded directly or by inference, it is dismissed.

Passing Off

[163] The plaintiff also referred briefly to the tort of passing off in his submissions. This claim was not pleaded directly or by inference. There is no evidence to support it. It is therefore dismissed.

Deceit

[164] The tort of deceit was not pleaded either directly or by inference although it was referred to in passing in the plaintiff's submissions. It is also dismissed.

Plaintiff’s Claims Containing Evidence and Argument

Breach of Fiduciary Duty

[165] The plaintiff submits that Mr. Sohi acted as Cheryl Favuzzi's agent when he brokered a settlement involving Ms. Favuzzi and 1164. He argues that Mr. Sohi, as her agent, was in breach of his fiduciary duty to 1164 when he promised he would ensure that she paid in accordance with the settlement but she failed to do so.

[166] The first question is: did Mr. Sohi act as Ms. Favuzzi's agent in negotiating a settlement with 1164?

[167] An agency relationship is characterized by two elements: consent and authority. To establish consent, the principal must give permission to the agent to act and the agent must accept that grant of power from the principal. The notion of authority means that the agent has been given the ability to affect the legal position of the principal. In finding an agency relationship, the court must be satisfied that the agent had authority to bind the principal and the agent exercised that authority. The courts will protect the reasonable expectations of the parties when determining whether an agency relationship exists: see: C. Harvey & D. MacPherson, Agency Law Primer, 4th ed. (Toronto: Thomson Reuters, 2009) at. 2 - 3 & 11).

[168] A contract of agency is not required to establish an agency relationship; an agency relationship can be made orally or in writing: see Yasuda Fire and Marine Insurance Co. of Europe Ltd. v. Orion Marine Insurance Underwriting Agency Ltd., [1995] Q.B. 174, at 185; [1995] 3 All E.R. 211, at 219.

[169] An agency relationship can also be created by estoppel. Where a person, by words or conduct, represents or implies to another that a certain agency relationship exists with the result that there is reliance on that belief to another's detriment, the alleged agent cannot thereafter repudiate the apparent agency if it would cause loss or injury to those relying on the representation: see: Agency Law Primer at 47.

[170] In this case, Ms. Favuzzi testified that she gave Mr. Sohi authority to act as her agent in negotiating a settlement with 1164. She stated that she gave Mr. Sohi authority to bind her. In referring to the settlement, Ms. Favuzzi recalls Mr. Sohi telling her, "Just sign it." Mr. Favuzzi also heard Mr. Sohi instructing her to sign the settlement.

[171] Mr. Sohi denied there was any agency relationship, pointing to the fact that Ms. Favuzzi had legal counsel, Mr. Potestio.

[172] Mr. Sohi testified that he "took a bigger role than we needed to" in Ms. Favuzzi's settlement. He also complained that it took "way too much time." He acknowledged that he proposed the monthly rent she would pay as a term of settlement. He also agreed that the terms set out in exhibit 74 were in line with his suggestions.

[173] In the course of these negotiations, Mr. Sohi arranged to deal directly with Mr. Covello, who represented 1164. Mr. Sohi's involvement in these negotiations is traced through Mr. Covello's correspondence. On July 15, 1999, Mr. Covello sent Mr. Potestio a proposal to settle prefaced with this comment:

Further to my discussion with Mr. Sohi of Wednesday, July 14th and my discussion with Mr. Potestio on the same date confirming that Mr. Sohi had authority to bind Mrs. Favuzzi, this is to confirm that the proposal to deal with arrears payments is as follows…

[174] Mr. Covello wrote to Mr. Atwood on July 19, 1999 about the negotiations. His letter says in part:

Your firm has provided permission for me to deal directly with your client and we have, therefore, discussed several times with Mr. Sohi terms of the agreement ultimately reached between our client and Mr. Potestio's client. Mr. Sohi has been copied on various exchanges between our offices…

[175] Although Mr. Sohi didn't recall speaking to Mr. Covello, I find that he did. I also find that Mr. Sohi acted as Ms. Favuzzi's agent during those negotiations. Ms. Favuzzi believed Mr. Sohi was a powerful figure in business and enlisted his help in negotiating for her. The terms he suggested actually formed the basis of the settlement. Mr. Sohi was not without self-interest in accepting her commission. Mr. Sohi wanted to terminate the lease early and it would have been inconvenient to have others get in his way.

[176] Secondly, was Mr. Sohi, acting as Ms. Favuzzi's agent, in a fiduciary relationship to 1164? I conclude that he was not.

[177] In Elder Advocates of Alberta Society v. Alberta 2011 SCC 24, the Supreme Court of Canada concisely described the nature of a fiduciary relationship. At para. 22, the Court observed that the doctrine relating to fiduciary duty arises out of trust principles. It requires the fiduciary to act with absolute loyalty toward the beneficiary in managing the beneficiary's affairs.

[178] In general terms, a fiduciary relationship comprises the following characteristics:

1. The fiduciary has scope for the exercise of some discretion or power;

2. The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary's legal or practical interests;

3. The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power: see Elder at para. 27.

[179] Central to the establishment of a fiduciary relationship is evidence that the alleged fiduciary gave an undertaking of responsibility to act in the best interests of a beneficiary. In establishing this duty, the plaintiff must prove that the alleged fiduciary agreed to forsake the interests of all others in favour of those of the beneficiary in relation to the legal interest at stake: see: Elder at paras. 30 - 31.

[180] At common law, a director of a corporation has a fiduciary obligation to act in the best interests of that corporation: see: BCE Inc., Re, 2008 SCC 69, [2008] S.C.J. No 37, at para. 37. It is an open question as to whether an individual can have a fiduciary relationship with a corporation at arm's length from the alleged fiduciary. Even if an individual may owe a fiduciary duty to a corporation at arm's length from the fiduciary, the facts of this case do not establish that a fiduciary relationship existed between the parties.

[181] The relationship between Mr. Sohi and/or his corporation and the corporation 1164 does not arise from trust principles. Rather, it is contractual in nature, based on offer and acceptance, with each actor having its own interests. It is a relationship that arises out of negotiation; it is not based on the unilateral exercise of discretion by one party over the rights of another. The failure of one party to assert those rights does not change the nature of the relationship.

[182] Applying the classic indicia of a fiduciary relationship, there is no evidence that Mr. Sohi gave an undertaking in his capacity as Ms. Favuzzi's agent, to act in the best interests of 1164. Such an undertaking, if given, would have placed him in an impossible conflict of interest. As Ms. Favuzzi's agent, he would be bound to advance her interests. He could not do so while protecting 1164’s interests. As well, the fiduciary’s obligation is to act only in the interests of one, forsaking the interests of others, including his own.

[183] While Mr. Sohi was seen by the parties as a powerful figure, his power was commercial and not discretionary. The exercise of his power came from his corporation's contractual position as the sublandlord over 1164 and, in practical terms, over Ms. Favuzzi's corporation. His power did not arise from acting as agent for Ms. Favuzzi, whose corporation was the least powerful of the three parties in the settlement negotiations. She had little capital and ran her business at the mall on sufferance. But for Mr. Sohi accepting her as a month-to-month tenant in order to pay his rent and keep her business limping along, Ms. Favuzzi would have had no power in contract to enforce her right to occupy unit 21.

[184] Finally, the settlement arose out of litigation commenced by the plaintiff for 1164. The plaintiff was at liberty to refuse to settle the case and bring an action before the court. He was not obliged to negotiate with Ms. Favuzzi. When the plaintiff concluded the settlement, he was aware that Ms. Favuzzi's corporation might default on its obligations. That is why the plaintiff sought assurances that Mr. Sohi would alert him in the event of default, so that 1164 could re- take possession of unit 21. Had the plaintiff simply arranged to collect the rent from Ms. Favuzzi instead of leaving the task to Mr. Sohi do, he would have immediately been aware of any default on her part.

[185] For the same reasons, the facts of this case do not establish that Sohi Holdings Inc. was in a fiduciary relationship with 1164.

[186] There is no evidence that 1164 was vulnerable to Mr. Sohi or his corporation. The parties were not in a fiduciary relationship. Neither Mr. Sohi nor his corporation had an obligation in law to protect the interests of 1164, which was represented by its own corporate solicitor. Where there is no fiduciary relationship, there can be no cause of action for damages. The claim for damages for breach of fiduciary duty is dismissed.

Unjust Enrichment

[187] The plaintiff pleads that Mr. Sohi and his corporation were unjustly enriched by:

• receipt of franchise fees and advertising royalties of approximately $37,000 that the plaintiffs [sic] paid between September, 1993 and September, 1995;

• early termination of his corporation's lease at the expense of 1164. He contends that cancellation of the lease reduced Sohi's liability by $200,000;

• having debts related to Simplee Chinese paid on the defendants' behalf;

• receipt of funds for purchase of the Simplee Chinese store and franchise rights at the Intercity Shopping Centre;

• avoiding payment of liabilities in 2000 by early termination of the lease.

[188] To make out a claim for unjust enrichment the plaintiff must establish that there has been an enrichment or benefit to the defendant, and a corresponding detriment to the plaintiff, with no juristic reason for the enrichment: see: Kerr v. Baranow, 2011 SCC 10 at para. 32.

[189] The plaintiff attributes bad faith to Mr. Sohi in closing the two restaurants he ran at the Intercity Shopping Centre and the Keskus Harbor locations. There is no basis for the plaintiff's allegation that Sohi was unjustly enriched by the payment of franchise fees and advertising royalties until September 1995. The plaintiff was an investor in the franchisee of the business he took over at that time. Although the documentary evidence is limited, I conclude the plaintiff stepped into the franchisee’s shoes. The contractual relationship between franchisor and franchisee is the juristic reason for the payments. It is a reason recognized and supported in law. Therefore, there was no unjust enrichment.

[190] Dennis Burns and his corporation, 1164, agreed as a condition of their contract with Sohi, to assume debts owed by the previous operator and to purchase the Simplee Chinese restaurant and franchise rights associated with it. It may be argued that this was an unwise bargain. Nevertheless, it cannot be said that it was made without a juristic reason, as it gave 1164 what it bargained for: possession of the premises including the franchise rights based on a contract. There was no unjust enrichment.

[191] Liability for rent and expenses was ultimately passed from Sohi as sublandlord to 1164 as tenant to 1164's subtenant who actually operated the restaurant. Apart from the inconvenience of collecting the rent from the subtenant, there is no evidence that Sohi was ever out-of-pocket for unpaid rent or other expenses (apart from $1,000 Sohi absorbed at the termination of the lease), such that it was financially advantaged by the early termination of its lease. Ms. Favuzzi wanted to continue to operate the restaurant when the lease was terminated. It was 1164 that was out of pocket because of Ms. Favuzzi's default.

[192] There is no evidence to support the plaintiff's claims for unjust enrichment. The lease arrangement between Sohi and 1164 obliged 1164 to pay the rent for leasing the space. A contract is a juristic reason for the payment of rent.

[193] The claim for unjust enrichment is without foundation. It is dismissed.

Conspiracy

[194] The plaintiff pleaded that in the spring of 1999, Mr. Sohi conspired with Mr. Favuzzi and Ms. Favuzzi to have Mr. Favuzzi declare bankruptcy so that he might avoid his debt to 1164, and also to enable Sohi to take possession of the Simplee Chinese restaurant.

[195] It is not enough to plead allegations. Allegations do not constitute evidence. The court must consider the evidence as it is adduced at trial and draw conclusions based on that evidence.

[196] At trial, the plaintiff testified that Mr. Favuzzi made an assignment in bankruptcy in the spring of 1999. Mr. Favuzzi testified that Mr. Sohi suggested bankruptcy to him "so that Burns couldn't touch him." Mr. Favuzzi conceded that in addition to the amounts owed to Mr. Burns, by which I conclude he meant 1164, he also owed money to other creditors. He testified that the sheriff's officer would appear at the restaurant from time to time and take money out of the till. It is unclear who the beneficiary of such seizures was.

[197] In Tort Law, Professor Klar, at 628, defines the business tort of conspiracy as follows:

…A conspiracy has been defined as an "agreement of two or more to do a lawful act by unlawful means." As with other business torts, the gravamen of the wrong in conspiracy is that the defendant engaged in unlawful conduct, the task of the courts therefore being to determine the nature of this unlawfulness requirement.

Canadian law recognizes two types of conspiracy actions. The first is a conspiracy to injure, whereby two or more persons combine in order to effect the unlawful purpose of causing injury to the plaintiff. The second is a conspiracy to use unlawful means which are directed at the plaintiff, and thus cause the plaintiff injury. [Footnotes omitted.]

[198] As Professor Klar notes at 630, before the tort of conspiracy is made out, there must be an agreement between two or more persons to act, followed by execution of that agreement.

[199] In this case, Mr. Favuzzi elected to make an assignment in bankruptcy in order to gain relief from his creditors. There is no evidence that Mr. Favuzzi and Mr. Sohi formed an agreement to injure 1164 or the plaintiff. While there is evidence that Mr. Sohi did not like the plaintiff, there is no evidence of Mr. Favuzzi displaying or feeling animus toward 1164 or the plaintiff. It is not enough that Mr. Sohi wished 1164 or the plaintiff ill; one person cannot conspire with himself. Conspiracy exists in conjunction with another. Here, there is no evidence that Mr. Favuzzi joined with Mr. Sohi to injure the plaintiff or 1164.

[200] Further, it cannot be said that Favuzzi's assignment in bankruptcy constituted an unlawful purpose undertaken to cause injury to the plaintiff. Nor is resort to bankruptcy a use of unlawful means. On the contrary, bankruptcy is a process sanctioned by the Bankruptcy and Insolvency Act, R.S.C. 1985 c. B-3 for relief from debt. That Mr. Favuzzi's bankruptcy harmed 1164 is not the test. Professor Klar notes at 631:

The difficulty in establishing the tort of conspiracy to injure resides in the requirement of proving that the predominant purpose of the defendants was to cause injury to the plaintiff, as opposed to promoting the defendants' own interests. Acting in order to improve one's own interests, even if this is accomplished by damaging the plaintiff's, has always been regarded as legitimate….

[201] Mr. Favuzzi's assignment in bankruptcy relieved him of his debt burden to 1164 and others. There is no evidence that in declaring bankruptcy, Mr. Favuzzi's predominant purpose was to hurt 1164. I conclude that Mr. Favuzzi made the assignment in order to promote his own interests, though it undoubtedly harmed those of 1164. Such is the nature of an assignment in bankruptcy. The claim that Mr. Sohi and Mr. Favuzzi conspired to harm the plaintiff is dismissed.

[202] The plaintiff also argued that Mr. Sohi conspired with Ms. Favuzzi to cause injury to the plaintiff by prompting her to default on her payments to 1164. While the evidence supports that Mr. Sohi wanted the plaintiff out of the mall, there is no evidence that Ms. Favuzzi wanted this result as well. It is more probable, in my view, that Ms. Favuzzi's corporation wasn't making enough money to make the payments to 1164. I am not satisfied that Ms. Favuzzi had the necessary intention to cause injury to the plaintiff or 1164. Since a conspiracy requires a common purpose, and a common purpose has not been proven on a balance of probabilities, the claim that Mr. Sohi and Ms. Favuzzi conspired to harm the plaintiff is also dismissed.

[203] The plaintiff pleaded that Mr. Sohi conspired with Gerald Champagne, Mike McNabb, Daniel Chrusz and Leslie Anne Savitsky to exert illegitimate economic pressure on Simplee Chinese in order to prevent the plaintiff from suing over the nightclub venture. The four individuals were originally named as defendants in this case. However, the claims against Champagne, McNabb, Chrusz and Savitsky were all struck before trial as disclosing no cause of action.

[204] The evidence of the nightclub transaction was the subject of a different trial. I ruled that evidence concerning it was irrelevant except as it related to an improper motive on Mr. Sohi's part involving Simplee Chinese. There was no evidence as to conspiracy involving the four individuals named and Simplee Chinese.

[205] I conclude that this tort of conspiracy is not made out on the facts. It is also dismissed.

Inducement to Breach Contract

[206] In order to find that the tort of inducing breach of contract has been committed, the court must conclude:

a) there is a valid and enforceable contract with a third party in existence;

b) the defendants knew of the existence of the contract;

c) the defendants intended to procure the breach of the contract, as shown by an intentional interference with the plaintiff's interests; and

d) there is conduct by which the defendant directly persuaded or induced a third party to breach its contract with the plaintiff.

Necessarily, the plaintiff must have suffered damages as a result of the breach: see Capobianco v. Paige, 2007 37463 (ON SC), 36 B.L.R. (4th) 229 (S.C.J.), at para. 256.

[207] There must be an actual breach of contract for the tort to be made out: Alleslev-Krofchak v. Valcom Ltd., 2010 ONCA 557, at para. 95. As the court noted at para. 29 of Drouillard v. Cogeco Cable Inc., 2007 ONCA 322, the procurement of the breach must be intended and direct. The court adopted Professor Klar's description of the procurement of the breach at para. 29:

In order to succeed, a plaintiff must prove that the defendant intended to procure a breach of contract. In this respect, intention is proved by showing that the defendant acted with the desire to cause a breach of contract, or with the substantial certainty that a breach of contract would result from the defendant's conduct.

[208] At para. 97 of Alleslev-Krofchak, the court articulated the difference between the torts of inducing breach of contract and interference with economic relations:

If the defendant induces a third party to breach its contract with the plaintiff, the defendant ought to be liable to the plaintiff as an accessory to the unlawful conduct, namely the breach of contract suffered by the plaintiff. That is the role of the inducement tort. If the third party does not breach a contract with the plaintiff, but instead interferes with the plaintiff's economic relations as a result of unlawful means used by the defendant against that third party, the defendant ought to be liable to the plaintiff because unlawful means were employed by the defendant to intentionally harm the plaintiff. That is the role of the intentional interference tort.

[209] With these principles in mind, did Mr. Sohi induce Mr. Favuzzi and Ms. Favuzzi and their corporations to breach their contracts with 1164? Because Mr. Favuzzi and Ms. Favuzzi or their corporations were involved with 1164 at different intervals, it is convenient to consider their respective contracts in turn.

Did Mr. Sohi intentionally induce Mr. Favuzzi to breach his contract?

[210] The court must first consider whether there was a valid and enforceable contract in existence between Mr. Favuzzi’s corporation and 1164.

[211] I conclude there was. Its basic terms were set out in exhibit 23. It was acted on by the parties subsequently. Mr. Favuzzi surrendered his delivery business to 1164 for credit against the purchase price and secured the transaction with a security agreement. From March 1, 1997, he began operating the restaurant and paying 1164 the necessary costs and franchise fees.

[212] Did the defendant know of the existence of the contract between Mr. Favuzzi’s corporation and 1164? I conclude that he did. Sohi sold Dennis Burns the rights associated with the Simplee Chinese restaurant, including its franchise rights, goodwill and equipment, and leased him the space. Sohi interposed itself between 1164 and the Intercity Shopping Centre as a sublandlord. The plaintiff sought Sohi’s consent to lease to Mr. Favuzzi’s corporation. His solicitor received draft documents prepared for the transaction. Consequently, Mr. Sohi was thoroughly briefed on the contractual arrangements between 1164 and Mr. Favuzzi’s corporation. Not only did he know of the existence of the contract, Mr. Sohi was privy to the particulars.

[213] Did the defendants or either of them intentionally interfere with the interests of 1164, with the intention of procuring a breach of the contract? I conclude that Mr. Sohi did. The following are some examples of Mr. Sohi’s conduct that were directed at persuading or inducing Mr. Favuzzi’s corporation to breach its contract with 1164.

[214] Mr. Sohi well knew that Mr. Favuzzi was struggling financially in the operation of the restaurant. Mr. Sohi had been on the receiving end of enough dishonoured or late rent cheques to know. Mr. Favuzzi testified that when they met in the food court in the absence of the plaintiff, Mr. Sohi would chide Mr. Favuzzi about why he was paying franchise fees to 1164 when 1164 didn’t own the franchise. He would say to Mr. Favuzzi, “Why pay someone for something they don’t own?” Mr. Sohi also told Mr. Favuzzi that 1164 didn’t own the equipment for the restaurant. Ms. Favuzzi corroborated this testimony.

[215] Mr. Sohi presented as a successful businessman. He underscored his powerful position by ejecting Mr. Favuzzi from the restaurant for late payments or by locking him out for various infractions, even though 1164 was the immediate landlord.

[216] As Mr. Sohi intended, Mr. Favuzzi accepted that Mr. Sohi was the most powerful actor in the piece. Mr. Sohi scoffed at 1164’s documents that demonstrated ownership. When 1164 issued a default notice to Mr. Favuzzi’s corporation and then did not repossess the restaurant, the Favuzzis decided that Mr. Sohi was right.

[217] Mr. Favuzzi believed that Mr. Sohi knew the facts and would not mislead him. In time, Mr. Favuzzi stopped paying franchise fees to 1164. He became entrenched in his belief that 1164 did not own the franchise. Even Mr. Atwood, who had represented Sohi in transferring the franchise to 1164, accepted his client’s position that Sohi was the franchisor. Mr. Sohi’s misrepresentations confused Mr. Favuzzi and undermined his relationship with the plaintiff and 1164. Mr. Sohi told Mr. Favuzzi directly, “You stick with Burns and you’re out.”

[218] When Mr. Favuzzi refused to pay franchise fees, 1164 and Mr. Favuzzi’s corporation renegotiated the purchase price to compensate for his default on franchise fees.

[219] Why would Mr. Sohi act in this way? The evidence establishes that there was animosity between the plaintiff and Mr. Sohi over the soured nightclub deal and the threat of pending litigation. Mr. Sohi advised Dennis Burns that he did not want to deal with the plaintiff. In my view there is ample evidence to establish Mr. Sohi’s conduct was intentional and malicious.

[220] Mr. Sohi’s importuning led to Mr. Favuzzi’s corporation defaulting on its contractual obligations to 1164, such that breaches of contract persisted. I find that the defaults prompted by Mr. Sohi began within a month of Mr. Favuzzi assuming possession of the restaurant, in or about April of 1997. I accept Mr. Favuzzi’s evidence that Mr. Sohi’s inducements to breach his contract were made when the plaintiff was absent and that they were continuing. By June 5, 1998, Mr. Covello wrote to Mr. Atwood complaining that Mr. Sohi was inducing Mr. Favuzzi to breach his contract with 1164. For purposes of the limitations argument, I find that the plaintiff was aware that he had a cause of action against the defendants as of June 5, 1998.

Did Mr. Sohi intentionally induce Ms. Favuzzi to breach her contract?

[221] Next, it is necessary to consider whether Mr. Sohi induced Cheryl Favuzzi and her corporation to breach their contracts with 1164.

[222] The first question is whether there was a valid and enforceable contract in existence between Ms. Favuzzi’s corporation and 1164. Initially there was none; however, that changed. It is common ground that when Mr. Favuzzi’s corporation defaulted for the last time in March of 1998, Mr. Sohi approached Ms. Favuzzi to run the restaurant as his month-to-month tenant. She testified that Mr. Sohi told her that Mr. Burns didn’t own the restaurant. As she had heard Mr. Sohi say this previously, it came as no surprise.

[223] Ms. Favuzzi began running the restaurant with Mr. Sohi’s blessing and without any contractual arrangements with 1164. She believed that Sohi was in control of the premises. Indeed, she ran the restaurant without any payment to 1164 for more than a year. This must have confirmed to her Mr. Sohi’s advice that 1164 did not control the premises. Not surprisingly, Ms. Favuzzi resisted the attempts of 1164 to contract with her to regularize her possession of the restaurant. Her refusal to come to terms with 1164 is a direct consequence of Mr. Sohi’s representation that 1164 did not own the restaurant.

[224] Matters came to a head in June of 1999, when 1164 took steps to evict Ms. Favuzzi from the restaurant; it also moved for an injunction to exclude her from the premises.

[225] During an adjournment of the litigation, Sohi repeated its position that 1164 had breached its sublease with Sohi and the sublease was at an end. Despite this position, Mr. Sohi negotiated a settlement on behalf of Ms. Favuzzi. This settlement (exhibit 74) required Ms. Favuzzi’s corporation to pay 1164 the sum of $28,500, with a portion of that sum to be credited toward a purchase price to be agreed upon if the lease with 1164 was renewed. The settlement also gave 1164 the right to repossess the premises if Ms. Favuzzi’s corporation defaulted on the sublease.

[226] The plaintiff and Ms. Favuzzi signed the agreement resolving the injunction motion on behalf of their respective corporations. This agreement was a valid and enforceable contract between Ms. Favuzzi’s corporation and 1164. Mr. Sohi was aware of the contract, since he negotiated it. He was also asked to consent to the assignment of the sublease to Ms. Favuzzi’s corporation. He never did.

[227] Ms. Favuzzi’s corporation paid 1164 the sum of $500 that was due immediately upon settlement. That was the last payment she made to 1164.

[228] On its face, Sohi seemed to agree that 1164 had a possessory right to the premises. Counsel for 1164 noted the assurance Mr. Sohi gave that he would advise of any default by Ms. Favuzzi.

[229] Behind the scenes, Mr. Sohi behaved very differently. He told Ms. Favuzzi to “Just sign the agreement.” He must have been impatient with her concerns. He knew that she did not have a lot of money. He told her that she need not worry about paying Stephen Burns or the settlement as Burns’ corporation didn’t own anything. He said that Sohi could easily lock her out. He told her, however, that 1164 could not lock her out. This contradicted the terms of the settlement Ms. Favuzzi signed at Mr. Sohi’s urging. She felt that Mr. Sohi could evict her from the restaurant if she didn’t do what he said.

[230] Mr. Sohi’s disdain for the plaintiff and the settlement, as well as his implied threat that he could evict Ms. Favuzzi, undermined her settlement with the plaintiff. It induced her to breach her contract with 1164. Mr. Sohi knew that Ms. Favuzzi’s corporation had little capital and she had little money; in a competition for scarce funds, he wanted her to pay him and not Burns.

[231] Ms. Favuzzi understood clearly that Mr. Sohi did not want her to pay the plaintiff as she had agreed in the settlement contract signed July 16, 1999. Mr. Sohi’s conduct began when Mr. Favuzzi was in possession of the restaurant and continued when Ms. Favuzzi took over operation of the restaurant. Mr. Sohi didn’t like Stephen Burns. He didn’t want to be embroiled in litigation over the nightclub issue. He intended that Ms. Favuzzi breach her contract with the plaintiff. His conduct persuaded Ms. Favuzzi to breach her contract with 1164.

[232] I conclude that the defendants induced Ms. Favuzzi to breach her contract with 1164 by encouraging her to default on her payments set out in the settlement. Her first default under the payment schedule occurred on August 8, 1999.

Breach of Contract

[233] The plaintiff claims against the defendants for breach of contract. He contends that Sohi breached its contract with 1164 by refusing to consent to 1164 subletting to Mr. Favuzzi's corporation. He also submits that Sohi again breached its contract with 1164 by refusing written consent to 1164 subletting to Ms. Favuzzi's corporation. Finally, the plaintiff argues that early termination of the Sohi lease was a breach of contract.

[234] Mr. Sohi claims that 1164 was in breach of its contract by failing to secure his written consent to sublet to the Favuzzis. In the alternative, he also submits that if his consent was unreasonably withheld, the plaintiff should have sought a declaration under s. 23 of the Commercial Tenancies Act, R.S.O. 1990, c. L.7. That section permits a tenant to make an application to the court for a declaration that consent to an assignment or sublease is being unreasonably withheld.

[235] The relevant time for Mr. Sohi to give consent to Mr. Favuzzi running the restaurant was when he was first asked by Dennis or Stephen Burns for his consent. Mr. Favuzzi commenced running the restaurant in March of 1997; that was the relevant time to seek Sohi's consent. I find that Mr. Sohi gave his oral consent to Mr. Favuzzi acting as a subtenant at the Simplee Chinese restaurant at that time, before the contractual documents were drawn. The plaintiff, Dennis Burns, and Mr. Favuzzi all testified to this effect. Dennis Burns recalled Mr. Sohi saying of Mr. Favuzzi, "I don't think you'll be happy with him," implying consent. Had Mr. Sohi not given his oral consent, Dennis Burns would not have proceeded to incur the legal fees to structure a deal with Mr. Favuzzi, nor would he have presented documents to Mr. Sohi for his signature.

[236] Mr. Sohi acquiesced to Mr. Favuzzi running the restaurant. His consent to that state of affairs is also implicit in Mr. Atwood's letter to Mr. Covello of June 5, 1997. On that date, Mr. Atwood complained that Mr. Favuzzi continued to run the business without consent and that the June rent was unpaid. He demanded: "Unless matters are corrected by the end of the day today, to the satisfaction of Mr. Sohi, locks will be changed and re-entry effected." The rent was paid and re-entry was not effected. I conclude that the consent Mr. Atwood referred to was written consent. Mr. Sohi was content to let Mr. Favuzzi continue in possession once the rent was current.

[237] In this case, the significance of consent in writing is that it provides evidence of consent already given. Both Mr. Favuzzi and 1164 relied on Mr. Sohi's oral consent and instructed their solicitors to prepare documents based on it. It is unreasonable, having given oral consent, to withdraw it before the documents can be executed, provided that preparation of the documents is timely. Likewise, it was unreasonable, on these facts, to refuse to sign the documents once presented in the face of oral consent already given. I find that preparation and execution of the documents by Mr. Favuzzi and 1164 in July of 1997 was timely. It was unreasonable to change the terms of consent once given as Mr. Sohi did.

[238] It was also unreasonable to threaten to withdraw consent in order to manipulate the parties who relied on it. The lease agreement between Sohi and 1164 required that consent to sublease by 1164 not be unreasonably withheld. In this case, the consent was not withheld but withdrawn. In doing so, the defendants breached their contract with 1164 in or about July of 1997.

[239] Mr. Sohi also complained that he had not given his written consent to Ms. Favuzzi operating the restaurant. This was his justification for claiming that 1164 had breached its lease and Sohi was entitled to possession of the restaurant. This is an odd position to take in light of the evidence. Mr. Sohi recruited Ms. Favuzzi to run the restaurant, which she did under his tutelage for more than a year. Implicitly, he gave his consent to her sublease from the time he asked her to run the restaurant.

[240] Mr. Sohi negotiated the settlement with 1164 on her behalf. When presented with a consent to her sublease on or about July 19, 1999 (prior to the settlement), Mr. Sohi refused to sign. This was a second instance of withdrawing consent once it was given. Later he complained that 1164 was in breach of its lease with Sohi because they had not obtained Sohi's written consent to 1164's sublease to Ms. Favuzzi. Mr. Sohi used this allegation of breach of contract to justify his negotiation of the early termination of Sohi's lease of unit 21.

[241] Mr. Sohi's refusal to execute his consent to Ms. Favuzzi's sublease with 1164 was also unreasonable. Moreover, when exhibit 85 is considered, it was preposterous. This document, under Mr. Sohi's signature, dated November 24, 1999, declared that, effective May 1, 1999, Ms. Favuzzi's corporation became a party to a sublease with Sohi Holdings. In fact, Ms. Favuzzi was never made a party to a sublease with Sohi. This document post-dated the settlement between Ms. Favuzzi and 1164 when Mr. Sohi refused to consent to her sublease.

[242] Mr. Sohi's second instance of withdrawing consent to the sublease constituted a breach of contract from the date that the plaintiff executed the settlement agreement on August 18, 1999. The defendants are liable to the plaintiff for it.

[243] The defendants argue that that plaintiff's remedy for withholding consent is an application pursuant to s. 23 of the Commercial Tenancies Act. The Act does not authorize declaratory relief for withdrawal of consent, only for withholding consent. In my view, it has no application to the facts of this case. Moreover, it would be a sad and curious result if the defendants, having breached their contracts with 1164, were permitted to escape liability on the grounds that the plaintiff did not seek declaratory relief from the court to prevent the defendants from using all available means to drive the plaintiff and 1164 out of the shopping centre. Surely the defendants would be estopped from insisting on an application to the court in such a case.

[244] The plaintiff was aware that Mr. Sohi's refusal to consent in writing to the sublease was an issue which arose shortly after he executed the settlement. Mr. Covello wrote to him on August 19, 1999, advising that if Ms. Favuzzi defaulted on her payments to 1164 specified in the settlement, 1164 would be in a contractual position to re-possess the restaurant. However, he cautioned that Mr. Sohi might refuse his re-entry, forcing him to prove the validity of his lease. As we know, Ms. Favuzzi immediately defaulted; she made no payments after August 8, 1999.

[245] There is a third instance of the defendants breaching their contract to 1164. It occurred when the defendants surrendered their leasehold interest to the shopping centre prematurely without notice to 1164 of their intention to do so.

[246] Under the terms of the sublease agreement between Sohi and 1164 (exhibit 11), 1164 was entitled to possession of unit 21 from May 1, 1996 to November 30, 2000 absent a default or the limited circumstances set out in the head lease. None of these circumstances set out in the head lease occurred here, nor did a default occur.

[247] Section 12 of the sublease agreement also deals with amendments to the head lease. It

provides:

The Sublandlord [Sohi] and the Subtenant [1164] agree that the Sublandlord and head Landlord may, from time to time, enter into amendments of the Head Lease without notice to or consent by the Subtenant provided that such amendments do not materially increase the obligations or materially diminish the rights of the Subtenant under this Sublease. It is agreed that all other amendments to the Head Lease shall be subject to the consent of the Subtenant, such consent not to be unreasonably withheld or delayed.

[248] Sohi was not obliged to renew the lease with the shopping centre. By November, 1997, Mr. Sohi made it clear to the plaintiff that he did not intend to renew. However, he was aware that 1164 hoped to negotiate its own lease with the shopping centre at the end of Sohi's lease. Early in their business relationship, he assured Dennis Burns that he would assist him in securing the lease. The memorandum of agreement (exhibit 8) between Mr. Sohi and Dennis Burns provided that Sohi would renew its lease with the mall until November, 2000, and if feasible, the lease would then be assigned from Sohi to Burns. Mr. Burns stated he would not have invested had Mr. Sohi suggested to him that the lease could not be renewed.

[249] Dennis Burns testified that without the mall location, the Simplee Chinese franchise was worth less than the $35,000 he paid for the franchise. He viewed the mall location as critical to the success of the franchise. He indicated and I accept that Mr. Sohi compromised his investment by his early termination of the lease without notice.

[250] The early surrender of the leasehold effectively terminated 1164's possession of unit 21 before its term was up. It materially diminished the rights of the subtenant contrary to article 12 of the sublease, placing Sohi in breach of contract. Sohi did not give 1164 notice and therefore could not have sought its consent before the termination of the lease was a fait accompli. The requirement to seek consent implies that the subtenant has a choice to make. But Sohi foreclosed any choice by negotiating secretly for the early termination of the lease.

[251] As Mr. Sohi intended, his secret negotiations with the mall precluded 1164 from negotiating a continuing lease with the Intercity Shopping Centre. Sohi was not in default to the shopping centre; and 1164 was not in breach of its obligations to Sohi. Further, Sohi did not advise 1164 of any breach by Ms. Favuzzi's corporation. I conclude that the early termination of the lease was done for malicious reasons. This, too, constituted a breach of contract.

[252] The secret negotiations to terminate the lease began long before the head landlord gave notice to Sohi that terminated the lease on March 10, 2000. Despite being notified of the termination, Sohi did not bother to notify 1164 of the termination until April 5, 2000. It is from April 5, 2000 that the cause of action for this breach of contract was known to the plaintiff.

Intentional Interference with Economic Relations

[253] The plaintiff pleads that Mr. Sohi exerted "illegitimate economic pressure" on Simplee Chinese in order to persuade the plaintiff not to sue over the nightclub transaction. From the context of the pleading, and from his submissions, it is evident that the plaintiff is referring to the tort of intentional interference with economic relations. Mr. Sohi denies this allegation.

[254] The test for the tort of interference in economic relations was set out in Drouillard v. Cogeco Cable Inc., 2007 ONCA 322, at para. 14. The court must find:

a) the defendant intended to injure the plaintiff;

b) the defendant interfered with the plaintiff's economic interests by illegal or unlawful means; and

c) the plaintiff suffered economic loss as a result of the interference by unlawful means.

[255] At para. 19 of Drouillard, the court held that interference by "unlawful means" includes interference by an intentional tort: see also Alleslev-Krofchak, at para. 50.

[256] At paras. 57 - 58 of Alleslev-Krofchak, Mr. Justice Goudge clarified the rationale for the tort of intentional interference with economic relations:

"…to provide otherwise unavailable recovery for harm intentionally inflicted by unlawful means through the instrumentality of a third party."

Recovery under this head of damages is not available where the unlawful means is directly actionable by the plaintiff. If the plaintiff has a cause of action directly against the defendant, he must pursue that means of redress. The tort of intentional interference with economic relations is designed to "fill a gap where no action could otherwise be brought for intentional conduct that caused harm through the instrumentality of a third party."

[257] Mr. Justice Goudge concluded at para. 60 of Alleslev-Krofchak v. Valcom Ltd.:

In my view, therefore, it is now clear that to qualify as "unlawful means", the defendant's actions (i) cannot be actionable directly by the plaintiff and (ii) must be directed at a third party, which then becomes the vehicle through which harm is caused to the plaintiff.

[258] In this case, there is evidence that the defendant, Mr. Sohi, intended to injure the plaintiff. He tried to get Stephen Burns out of the mall. He made his intentions clear to the Favuzzis. I have already found that Mr. Sohi induced them to breach their respective contracts with the plaintiff's corporation. However, there are no other allegations that the defendants inflicted harm on the plaintiff or 1164 by unlawful means through the instrumentality of a third party. The plaintiff's allegations of conspiracy, deceit and intimidation have been dismissed. There are no other unlawful means pleaded by which the plaintiff alleges Mr. Sohi exacted harm. As I have found, the defendants are actionable directly for breach of contract.

[259] Accordingly, the plaintiff's claim for intentional interference with economic relations is dismissed.

Piercing the Corporate Veil

[260] The plaintiff submits that Mr. Sohi is liable personally for damages arising from tort and breach of contract. The defendants counter that a corporation can only act through its officers, directors, employees and other agents, and that generally, the officers and directors are not liable for actions of the corporation. They contend that there is no cause to "pierce the corporate veil" and make Mr. Sohi liable for the actions of his corporation, Sohi. They rely on Balanyk v. University of Toronto, 1999 14918 (ON SC), [1999] O.J. No 2162 (S.C.J.), at para. 56. The defendants argue that a claim for inducing breach of contract does not lie against a corporate officer or employee where a claim lies against the corporation. In this regard, they also rely on Laurier Glass v. Simplicity Computer Solutions Inc., 2011 ONSC 1510.

[261] Balanyk sets out an exception to the liability of corporations for the actions of their directors, employees or agents. That is, an individual will be civilly liable where his conduct is tortious or "exhibits a separate identity of interest from that of the corporation such as to make the act that of the individual personally…"

[262] In Laurier Glass, Mr. Justice Perell carefully considers the nuances of claims against officers and employees of a corporation who are sued for inducing breach of contract. At para. 32 he recites the general principle that:

…officers and employees of a corporation are not liable for what they do within their authority and on behalf of their corporation, but they are liable if there is some conduct on their part that is either tortious in itself or is independent misconduct from that of the corporation.

[263] Mr. Justice Perell concluded that whether an officer or employee of a corporation will be liable for his own misconduct is a question of fact. At paras. 35 – 40, he summarizes the principles to be found in the jurisprudence as follows:

1. An officer or employee of a corporation will escape liability for inducing breach of contract where the claim against the corporation is for breach of contract but the officer or employee may still be liable if he is not acting bona fide in the interests of the company;

2. An officer or employee remains liable for his personal conduct if it is tortious. It is not a defence that his actions were in furtherance of his duty to the corporation rather than for personal interests;

3. An officer or employee is not liable simply because he is a "human actor" in a corporation. Liability flows from conduct which is tortious in itself or is independent of the corporation, such that it constituted the personal conduct of the officer or employee. The conduct must take the officer or employee out of the role of the directing mind of the corporation.

[264] Immunity from personal liability is a hallmark of the corporate structure. That is one of the advantages of incorporation. However, there is an important qualification to this principle of immunity. Officers and directors are personally liable for the actions of their corporations if they engage in conduct that is tortious or they pursue a separate course from the corporation's interests to the extent that their actions become individual and fall outside of the scope of legitimate corporate activity.

[265] The defendants therefore over-state the law when they submit that an individual officer or employee of a corporation cannot be found liable in tort or contract where the corporation has been sued for the same causes of action arising from the same facts. Personal liability may exist as an exception to the general rule where there is a factual basis for liability that is in accordance with the above exceptions.

[266] Key exhibits filed at trial identify Mr. Sohi as president of Sohi: take, for example, the lease between Sohi and Intercity Shopping Centre (exhibit 10), and the sublease between Sohi Holdings and 1164 (exhibit 11). The evidence of Mr. Atwood was explicit that his instructions in corporate affairs came from Mr. Sohi. The evidence of Mr. Favuzzi and Ms. Favuzzi confirmed that Mr. Sohi was the operating mind behind Sohi. Mr. Sohi himself stated that he spoke for himself and for his corporation. It is beyond dispute that Mr. Sohi was Sohi Holdings.

[267] Do the actions of Mr. Sohi demand that the court impose personal liability on Mr. Sohi? I conclude that they do. I have determined that he induced Mr. Favuzzi and Ms. Favuzzi to breach their contracts with 1164. In committing this tort, Mr. Sohi behaved maliciously toward the plaintiff and 1164 with the intention of destroying them. He didn't like the plaintiff and wanted him out of the mall. He embarked on a campaign to achieve that end. This campaign was personal; it did nothing to advance the interests of Sohi. It could not be said to have been part of a legitimate business plan. It went beyond legitimate commercial competition.

[268] Mr. Sohi admitted that, except for $1,000 outstanding which was triggered by the termination of the lease, he was not out of pocket with respect to his dealings with 1164. Having 1164 as its subtenant did not in any way harm the financial interests of Sohi. It may in fact be argued that Mr. Sohi's vendetta against the plaintiff and 1164 has cost Sohi large amounts of money in defending this litigation.

[269] I find that where there is liability, Mr. Sohi is personally liable for damages assessed against the defendants.

Limitation Period

[270] Earlier in this decision, I wrote of the difficulties in assessing limitation period arguments when the facts of the case have yet to be laid out. The facts, as I have found them, have now been described in detail. It is therefore the appropriate time to address the limitation arguments and I do so now.

[271] The court must consider whether the plaintiff's action is statute-barred because of the limitation period. The courts have strictly enforced limitation periods in order to establish certainty and finality to legal disputes and to permit an individual to arrange his affairs without fear of liability. The limitation clock begins to run once the plaintiff knew or ought to have known of the existence of the cause of action.

[272] In this case, the statement of claim was issued on September 22, 2004. I have found the defendants liable for breaches of contract and for inducing breach of contract. It is therefore necessary to consider when these causes of action were known to the plaintiff in order to determine the applicable limitation period.

[273] In Ontario, the law relating to limitation periods was reformed by the passage of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. The new legislation took effect on January 1, 2004. Section 4 of the Limitations Act, 2002 contains a general limitation clause of two years from the date a cause of action is discovered.

[274] Before the Limitations Act, 2002 was passed, the governing legislation was the Limitations Act, R.S.O. 1990, c. L.15. Section 45 (1) (g) of the predecessor Act set out a six year limitation for "simple contract" or torts (an "action upon the case") after the cause of action arose.

[275] Transitional provisions for causes of action arising before January 1, 2004 are dealt with under section 24 of the Limitations Act, 2002. Section 24 applies to claims arising before January 1, 2004 for which no proceeding was started before that date. As all of the causes of action in this case precede January 1, 2004, and no claim was started before then, we look to the transition provisions in s. 24(5) of the Limitations Act, 2002.

[276] Section 24(5) provides:

If the former limitation period did not expire before January 1, 2004 and if a limitation period under this Act would apply were the claim based on an act or omission that took place on or after that date, the following rules apply:

i) If the claim was not discovered before January 1, 2004, this Act applies as if the act or omission had taken place on that date.

ii) If the claim was discovered before January 1, 2004, the former limitation period applies.

[277] As all the claims were discovered before January 1, 2004, a limitation period of six years from the date the cause of action was discovered applies in this case.

[278] I will first consider the limitations that apply to the breaches of contract.

[279] Mr. Sohi withdrew his consent to assignment of the sublease to Mr. Favuzzi, a fact that was known to the plaintiff and his corporate solicitor in or about July, 1997; by so doing, Sohi breached its contract with 1164. The plaintiff was obliged to bring his claim within six years from that date, or by July, 2003. He did not do so. This cause of action is statute-barred.

[280] The second breach of contract occurred when Mr. Sohi withdrew his consent to Ms. Favuzzi's sublease with 1164 at the time the settlement between Ms. Favuzzi and 1164 was finalized on August 18, 1999. The plaintiff was obliged to bring his claim before August 18, 2005. As he brought his claim within the six year time frame, this claim for breach of contract is not statute-barred.

[281] The third breach of contract involved the early termination of the lease without the knowledge or consent of 1164. This fact was made known to the plaintiff on April 5, 2000. The statement of claim was started well within the six-year limitation period and is not statute-barred.

[282] Next, I will consider the causes of action arising out of the inducement to breach contract.

[283] Mr. Sohi embarked on a course of conduct over a period of many months to induce Mr. Favuzzi to breach his contract with 1164. By June 5, 1998, Mr. Covello wrote to Mr. Atwood complaining about Mr. Sohi inducing Mr. Favuzzi to breach his contract with 1164. By this time, the plaintiff was on notice that he had a cause of action in tort against the defendants. However, no statement of claim was issued. The claim lapsed after six years, on June 5, 2004, and is therefore statute-barred.

[284] Finally, by August 8, 1999, the plaintiff was aware that Ms. Favuzzi defaulted under her payment schedule agreed to in the settlement. The exact date when the plaintiff was aware that Mr. Sohi induced her to breach her contract is less certain. There is no evidence on the point. I infer that the facts of the inducement came to the plaintiff's attention some time after Ms. Favuzzi's first default on August 8, 1999. However, for purposes of this analysis, it is sufficient that the statement of claim was issued within six years of the limitation period if the earliest date of August, 1999 is considered. Therefore, this claim is not statute-barred.

Damages

Breach of Contract

[285] I have concluded that the defendants are liable for two breaches of contract that are not statute-barred:

• Mr. Sohi’s withdrawal of consent to Ms. Favuzzi’s sublease with 1164 during the settlement on August, 18, 1999; and

• The early termination of 1164’s sublease on April 5, 2000.

[286] Before assessing damages for breach of contract, it is useful to begin with a consideration of the general principles that apply. These principles, referred to below, are set out in The Law of Contract, 5^th ed. (Toronto: Thomson Canada Limited, 2006) by G.H.L. Fridman, Q.C.

[287] Unfortunately, the court is handicapped by not having developed legal argument on damages from the parties. The plaintiff’s position is that he should be able to recover all funds invested since he acquired Mr. Wong’s shares in Simplee Chinese in 1993 together with Dennis Burns’ subsequent investments, a sum of nearly $800,000. He submits that he should be placed in the position he would have been in had the wrong not been done. The defendants say that no damages should be awarded. They make no submissions in the alternative.

[288] It is settled law that damages for breach of contract should put the plaintiff in the position he would have been in had the contract been performed. The classic statement of the principle regarding assessment of damages for breach of contract was set out in Hadley v. Baxendale (1854), 9 Ex. Ch. 341, at 354:

Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.

[289] As Professor Fridman notes, damages must first be measured objectively: what damages would the reasonable man have foreseen as being the likely and probable consequences of his breach? This is the usual measure of damages. However, the courts have, in exceptional cases, awarded damages that are not ordinarily foreseeable, as long as the damages were foreseeable in light of the special circumstances of the particular contract. The test for these damages is subjective. Professor Fridman concludes at page 725:

The appropriate general test is one of “reasonable contemplation” by the parties at the time of the contract, whether or not the results are more serious than would have been reasonably contemplated.

[290] In claiming damages, the plaintiff must establish that damages are the direct cause of the breach, and not the result of an intervening cause. Some examples are set out at page 727 of the text: loss of profits; expenses; loss of business; loss of earnings; the decrease in the value of goods or property; loss of financial advantage; or physical injury to the person or property, to name a few.

[291] The plaintiff has a duty to mitigate his loss. Damages claimed should not be too remote. Generally, damages are assessed as of the date of the breach.

[292] At page 758 of his text, Professor Fridman notes that courts have awarded damages for breach of contract where the plaintiff has lost an “expected or probable profit or advantage.” He describes the effect of the breach of contract by the defendant as preventing the plaintiff from making a probable profit. This analysis of damages extends to a loss of chance. The onus is on the plaintiff to prove a loss of chance. A loss of chance must not be speculative; rather the plaintiff’s opportunity to recover a profit or financial advantage must be proven on a balance of probabilities.

Withdrawal of Consent to Ms. Favuzzi’s Sublease

[293] Did 1164 suffer damages as a result of Mr. Sohi’s withdrawal of consent to Ms. Favuzzi’s sublease with 1164 during the settlement negotiations in the summer of 1999? I conclude that it did and that the risk of damages was foreseeable. However, Mr. Sohi’s refusal to consent to the sublease did not result in the eviction of Ms. Favuzzi. In fact, she continued to occupy the restaurant and operate it in the same fashion as she had for more than a year. I infer that she continued to pay a flow-through rent to Sohi that it paid to the head landlord. Had she not, there is no doubt that Mr. Sohi would have evicted her as he did Mr. Favuzzi before her. Alternatively, had Ms. Favuzzi defaulted, Sohi could have called on 1164 to pay the rent. There is no evidence that 1164 was called on to pay Ms. Favuzzi’s rent.

[294] Damages for this breach of contract therefore are limited to legal fees accrued in trying to resolve this issue. There is no direct evidence as to legal fees incurred by the plaintiff, whose counsel solicited Mr. Sohi’s consent to Ms. Favuzzi’s sublease. In evidence is an unsigned draft acknowledgement that Sohi withdrew its objection to assignment of the sublease to Ms. Favuzzi’s corporation together with four letters from 1164’s counsel discussing this issue. Undoubtedly, there were consultations between the plaintiff and his counsel dealing with consent to the sublease. Mr. Covello ultimately advised Mr. Atwood that 1164 would agree to disagree with the defendant’s position on the validity of the sublease. I fix these damages at $1,000.

Termination of the Leasehold

[295] In my view, the measure of the plaintiff’s damages does not equate to the money Dennis Burns invested in 1164. As the plaintiff testified, 1164 was a holding company. It did not incur the costs of running a restaurant or receive the profits from doing so. The principal profits of 1164 derived from its franchise agreements with subtenants. In addition, 1164 might realize some profit from leasing its restaurant equipment to subtenants.

[296] Were damages reasonably foreseeable when the defendants unilaterally terminated 1164’s lease on April 5, 2000? If so, what is the measure of damages?

[297] In my view, it was entirely foreseeable that 1164 would suffer damages from the early termination of the lease. An analogous case was considered by the Court of Appeal in Procopia v. D’Abbondanza, 1975 CarswellOnt 547. In that case, the plaintiff/tenant operated a billiards parlour. During the course of her tenancy, the premises were damaged by fire. When the premises were repaired, the defendant landlord refused to let the plaintiff return to the premises unless she agreed to a substantial increase in rent. The plaintiff sued and obtained judgment at trial. The Court of Appeal agreed with the trial judge’s method of assessing damages, stating that,

…the most reliable measure of damages is the difference between the present rental value of the premises and what the plaintiff would have been required to pay….

At para. 8, the Court of Appeal held:

The measure of compensation to which the plaintiff is entitled for the loss of the remainder of her leasehold interest is the present worth, as of the date of the breach of the lease, of the difference between the contractual rent to be paid over the duration of the term and the rent the premises were worth as of the date of the breach….

[298] Exhibit 10 sets out the base rent that 1164 was obliged to pay to Sohi as prescribed by the head lease. On a monthly basis, this was equivalent to $3,912.33. The percentage rent was calculated at 8%. Ms. Favuzzi was required to vacate unit 21 on April 30, 2000. From May 1 to the end of the term on November 30, 2000, the value of the rent due under 1164’s lease with Sohi was 7 months x $3,912.33 or $27,386.31.

[299] I conclude that the market value of the premises is established by the lease to Manchu Wok effective June 1, 2000 (exhibit 88). As the percentage rent is also 8%, I have not considered it in calculating the value of the leasehold. In the first three years of the Manchu Wok lease, the rent was $5,445 per month. Calculated over the same period to the end of the leasehold, the value was 7 months x $5,445 or $38,115. The difference in the values of the respective leases is $10,728.69. The plaintiff is entitled to damages in that amount.

[300] The Supreme Court of Canada also considered the measure of damages assessable in instances of a wrongful eviction in a case called Haack v. Martin, 1927 57 (SCC), [1927] S.C.R. 413. The Nova Scotia Court of Appeal cited Haack in Chater v. Elia, 1998 CarswellNS 110, observing at para. 43 that damages for wrongful eviction were not limited to the value of the unexpired term; the measure of damages includes all losses flowing from the breach. Where a loss of business was attributable to the eviction by the landlord, those damages were also recoverable.

[301] Is the plaintiff entitled to damages arising from the termination of Ms. Favuzzi’s subtenancy? I conclude he is not. Ms. Favuzzi’s corporation was in default of its payments to 1164 almost from the date of the settlement in August, 1999. Before that time, she paid no rent to 1164. Ms. Favuzzi was already in default by some $17,500 by April, 2000 with no indication she intended to honour her agreement with 1164. There is no evidence that 1164 took collection proceedings against her. Thus, it cannot be said that 1164 suffered a loss of profits from losing her as a tenant when the lease terminated early. Had Ms. Favuzzi been paying pursuant to the settlement, the plaintiff would be entitled to damages for these lost payments. However, Ms. Favuzzi did not pay 1164 and 1164 did not seem to object. The failure of 1164 to take collection measures or evict Ms. Favuzzi constituted a failure to mitigate its losses. Evidently, 1164 had lost its enthusiasm for litigation as it took no steps to evict Ms. Favuzzi for her on-going breach of contract.

Loss of a Chance

[302] When 1164 lost the opportunity to negotiate a lease with the head landlord starting December, 2000, it suffered damages that were foreseeable. Had 1164 been able to step into Sohi’s shoes, it likely would have been able to secure a subtenant to run the restaurant and make up some of the losses it incurred when financing previous subtenants’ investments.

[303] Dennis Burns’ corporation was saddled with on-going losses when its franchisees defaulted on their obligations to 1164. Because 1164 financed these franchisees, it lost money when each franchisee defaulted. Invariably the franchisees were under-capitalized. Efforts by 1164 to pass the losses on to succeeding franchisees were unsuccessful when each succeeding franchisee defaulted. Much of the shareholder’s investment in 1164 was lost in this fashion. This trend cannot be laid at the feet of the defendants where there is no evidence that the defendants induced the franchisees to breach their agreements with 1164.

[304] The corporation 1164 has a duty to mitigate its losses in claiming damages. There is no evidence that 1164 sold its restaurant equipment when Sohi terminated its lease. Nor is there any evidence that 1164 attempted to establish the Simplee Chinese franchise at another location, using its equipment to do so. Perhaps that was wise, given the experience that the plaintiff had with the Intercity Mall and Keskus Mall locations.

[305] Nevertheless, I accept Mr. Dennis Burns’ evidence that the mall location was key to the success of the franchise and that the early termination of the lease reduced the value of his investment. The mall location had visibility. His corporation had a track record as subtenant in unit 21 of the mall.

[306] Neither party offered evidence as to whether the shopping centre would be disposed to lease to 1164. The unilateral termination of Sohi’s lease with 1164 precluded 1164 from the chance of negotiating a lease with the shopping centre and continuing its franchise at that location. The mall management offered the location to Manchu Wok, suggesting that it was satisfied to have a Chinese food restaurant continue in that location.

[307] In assessing damages, the court should give effect to the expectations of the parties if they can be determined. Mr. Sohi assured Dennis Burns that he would try to facilitate transfer of Sohi’s lease to 1164 at the end of the term. Dennis Burns’ business plan rested on this assurance. He put it in writing. The plaintiff’s corporation was on site and operational. Mr. Sohi was also an established tenant in another food court enterprise. There would have been no interruption in food service by leasing to an existing subtenant. It is probable that had Mr. Sohi recommended that the shopping centre lease unit 21 to 1164, the shopping centre management would have done so, on condition that 1164 agreed to pay increased rent.

[308] What damages are attributable to a loss of a chance? Neither party made submissions on this point. I start by considering the economic value of the location as negotiated between Mr. Sohi and Mr. Burns. Dennis Burns’ corporation purchased the location from Sohi at a cost of $65,000. The cost of the franchise, equipment and other items was in addition.

[309] By comparison, the agreement made with Mr. Favuzzi’s corporation called for a purchase price of $140,000 (subject to credits) plus flow-through rent in an amount equivalent to that payable to the shopping centre plus a franchise fee of 4% of sales. There is no breakdown of this sum.

[310] The settlement made with Ms. Favuzzi’s corporation called for installments on account of arrears between August – December, 1999 of $12,000 and monthly payments of $1,500 between January and November, 2000 totalling $16,500. The agreement provided for further negotiations in the event the lease did or did not renew at the end of its term. The arrears are not specified as franchise fees, equipment rental, or other costs.

[311] The shopping centre terminated the Sohi lease and leased instead to Manchu Wok. There is no evidence whether there were other prospective tenants competing for the lease. In my view, the best evidence of value of the leasehold is the sum specified between Sohi and 1164: $65,000 for a term of 4 years, 8 months. As the termination of the lease did not end 1164’s ownership of the franchise for Simplee Chinese, I have not factored in any value for the franchise. There is no evidence as to the reduction in value of the franchise operated from another location, apart from Dennis Burns’ evidence that the franchise would be worth less at another location.

[312] Manchu Wok was also interested in leasing unit 21 and was prepared to pay higher rent. I find that the probability that 1164 would have successfully negotiated a lease with the Intercity Shopping Centre was 50%. Calculating a probability of 50% that the plaintiff could have renegotiated the lease, valued at $65,000, I find the plaintiff is entitled to damages of $32,500 for loss of a chance. The plaintiff is entitled to damages in that amount.

Inducement to Breach Contract

[313] Damages for inducing breach of contract are discretionary. They may be assessed at large. In doing so, the trial judge may assess both pecuniary and non-pecuniary damages such as injured feelings, loss of reputation, the nature of the parties’ conduct, and punishment. Consequently, no precise limit may be set on these damages: see Drouillard at para. 42.

[314] In Waxman v. Waxman, 2002 CarswellOnt 2308, at para. 1804, the court commented on the assessment of damages at large for inducing breach of contract. It observed that these damages are “a matter of impression, not addition, and can be inferred from the circumstances.” It is within the court’s discretion to award damages at the date of the breach or in the years following the breach. The plaintiff is entitled to recover overlapping damages from the offender for actual breach of contract as well as from the tortfeasor for inducing the breach of contract; the heads of damage are distinct.

[315] What damages should be assessed as a result of Mr. Sohi inducing Ms. Favuzzi to breach her contract with 1164? As I have found, Ms. Favuzzi agreed to pay 1164 the sum of $28,500 to settle the litigation. After paying $500 at the time of settlement, she paid nothing further. Mr. Sohi persuaded her that she need not be concerned with the amount of the settlement as only he could evict her from unit 21. At a minimum, 1164 suffered a loss of $28,000 as a result of Mr. Sohi’s inducement to Ms. Favuzzi to breach her contract with 1164.

[316] Is that the end of it? Not if damages are to be assessed at large. The court must also be concerned with Mr. Sohi’s conduct and with punishment as an aspect of assessing these damages.

[317] As I have previously said, Mr. Sohi’s conduct was intentional and malicious. However, as the claims arising from Mr. Sohi’s inducement to Mr. Favuzzi to breach his contract with 1164 are statute-barred, no award of damages may be made in that regard.

[318] Nevertheless, Mr. Sohi engaged in a pattern of conduct directed at manipulating 1164’s tenants in order to punish the plaintiff for litigating another dispute. Before 1164 sued Ms. Favuzzi, Mr. Sohi had begun his campaign to discredit the plaintiff in her eyes. His interference undoubtedly obstructed the plaintiff’s year-long efforts to negotiate a contract with Ms. Favuzzi for operation of the restaurant. As there was no agreement for Ms. Favuzzi to pay 1164 rent before the law suit in the summer of 1999, it is impossible to quantify these damages.

[319] Mr. Sohi was indifferent as to whether Dennis Burns or his corporation were harmed in the process. His interference forced 1164 to waste time and legal fees in suing Ms. Favuzzi and soliciting Mr. Sohi’s consent to her sublease. His conduct is especially outrageuos when we consider that Mr. Sohi would not consent to 1164’s sublease to a tenant he had chosen himself.

[320] There is no commercial justification for Mr. Sohi’s conduct. It did not arise out of legitimate business objectives or promote his corporate interests. If anything, it embroiled Sohi and his corporation in the on-going conflict with attendant legal fees. In short, Mr. Sohi’s conduct was reprehensible. It is deserving of punishment.

[321] I assess damages for inducement to breach contract at $100,000.

Aggravated and Punitive Damages

[322] I have assessed a punitive component in damages for inducing breach of contract. It would duplicate these damages if an award was also made for punitive damages and I decline to do so.

Prejudgment Interest

[323] The plaintiff is entitled to prejudgment interest pursuant to s. 128(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43. In this case, the plaintiff did not commence his action until well after the cause of action was or should have been apparent to him. The delay was entirely his. In addition, a significant portion of the judgment relates to punishment for an intentional tort. In my view, prejudgment interest should not be awarded from the date the various causes of action arose in these circumstances. Prejudgment interest is intended as an indemnity, not as a windfall.

[324] The plaintiff shall have prejudgment interest as prescribed in the Courts of Justice Act from the date the statement of claim was issued, September 22, 2004.

Conclusion

[325] For the reasons set out above, the plaintiff shall have judgment against the defendants or either of them, in the sum of $144,228.69, plus prejudgment interest as set out above.

Costs

[326] If the parties cannot agree on costs, either may apply to the trial coordinator within thirty days for an appointment to argue costs. If no appointment is obtained within thirty days of the release of this judgment, costs will be deemed settled.

[327] Costs submissions must not exceed 5 pages in addition to bills of costs and offers to settle, if any. Submissions must be served and filed by the plaintiff ten days before the costs hearing, and by the defendants five days after receiving the plaintiff’s submissions.

“Original signed by”

Regional Senior Justice H.M. Pierce

Released: June 27, 2012

COURT FILE NO.: CV-04-0741-00

DATE: 2012-06-27

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

STEPHEN BURNS

APPLICANT

• and –

SHARAN SOHI, SOHI HOLDINGS INC.

RESPONDENTS

REASONS FOR JUDGMENT

Pierce RSJ.

Released: June 27, 2012

/sb/nf