Brookfield Financial Real Estate Group Limited v. Azorim Canada (Adelaide Street) Inc.

[Indexed as: Brookfield Financial Real Estate Group Ltd. v. Azorim Canada (Adelaide Street) Inc.]

111 O.R. (3d) 580

2012 ONSC 3818

Ontario Superior Court of Justice,

D.M. Brown J.

July 23, 2012

Civil procedure -- Pleadings -- Statement of claim -- Striking out -- Plaintiff real estate agent taking position that it was entitled to its fee under listing agreement as it had introduced purchaser to defendant -- Defendant denying that plaintiff was entitled to fee -- Plaintiff bringing action for damages based on breach of contract and unjust enrichment before closing and bringing motion for interlocutory injunction -- Sale of property cancelled and purchaser agreeing to purchase shares of defendant -- Plaintiff moving to amend its claim to argue that restructuring of transaction through share sale constituted indirect sale of property which fell within sales fee provision of listing agreement, to plead that listing agreement contained implied term requiring defendant to perform its obligations thereunder in good faith and to recast unjust enrichment allegation as one based on reconstructed transaction -- Defendant moving to strike out claim as disclosing no reasonable cause of action -- Plaintiff's motion granted and defendant's motion dismissed -- That amended contractual claims stood no chance of success at trial not plain and obvious -- Dispute over existence of juristic reason for enrichment not making it plain and obvious that claim of unjust enrichment could not succeed.

Corporations -- Oppression -- Complainant -- Plaintiff real estate agent taking position that it was entitled to its fee under listing agreement as it had introduced purchaser to defendant -- Defendant denying that plaintiff was entitled to fee -- Plaintiff bringing action for payment of its fee before closing and bringing motion for interlocutory injunction -- Sale of property cancelled and purchaser agreeing to purchase shares of defendant -- Plaintiff moving to amend its claim to add oppression claim on basis that defendant had acted oppressively by restructuring transaction as sale of shares in order to avoid paying fee -- Motion granted -- It was not plain and obvious that plaintiff would not succeed at trial in establishing itself as complainant under s. 248 of Business Corporations Act or in making out oppression claim in these circumstances -- Business Corporations Act, R.S.O. 1990, c. B.16, s. 248.

The defendant entered into an exclusive listing agreement with the plaintiff real estate agent. The plaintiff alleged that it introduced P Ltd. to the defendant and subsequently discovered that the defendant had agreed to sell the property to P Ltd. It took the position that it was entitled to be paid its fee under the terms of the listing agreement. The defendant denied its entitlement to a sales fee. Before the property was sold, the plaintiff commenced an action for payment of the sales fee, pleading claims sounding in breach of contract and unjust enrichment, and brought a motion for an interlocutory order requiring the defendant to pay the sales fee into court. Before that motion was heard, counsel for the defendant informed the plaintiff that the agreement for the sale of the property [page581] had been cancelled and that P Ltd. had agreed to purchase the shares of the defendant from a related company, A. Holdings. The plaintiff brought a motion to add A. Holdings as a defendant, to revise its breach of contract claim by asserting claims that the restructuring of the transaction through the share sale constituted an indirect sale of the property which fell within the sales fee provision of the listing agreement and that the listing agreement contained an implied term requiring the defendant to perform its obligations thereunder in good faith and so as not to frustrate the plaintiff's right to a sales fee, and to recast its allegation of unjust enrichment as one based on the reconstructed transaction. The plaintiff also sought to add a new claim for oppression. The defendant moved under rule 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to strike out the plaintiff's claim as disclosing no reasonable cause of action.

Held, the plaintiff's motion should be granted; the defendant's motion should be dismissed.

On a motion to amend a statement of claim, the court will consider the tenability of a proposed claim by applying the principles developed under the rule 21.01(1)(b) analysis. Rule 21(1)(b) operates to weed out the hopeless claims because they fail to state legally sufficient claims. If the pleading asserts a legally sufficient claim, rule 21.01(1)(b) does not subject the claim to an analysis of the strength or weakness of the evidence advanced by the party in support of its claim.

The defendant had not demonstrated that it was plain and obvious that the amended contractual claims asserted by the plaintiff stood no chance of success. On their face, the proposed amendments met the requirements for pleading a particular interpretation of a contractual term and pleading an implied term.

The plaintiff had pleaded the constituent elements of a claim for unjust enrichment. A dispute over whether there was any juristic reason for the enrichment did not make it plain and obvious that the claim of unjust enrichment could not succeed.

Given the very fact-specific nature of oppression claims, the lack of any definitive legal principle barring an oppression claim in circumstances where a contract existed between the parties, and the allegations made by the plaintiff that the defendant, with the assistance of A. Holdings, deliberately terminated the proposed sale of the real property and replaced it with a new share sale structure in order to avoid paying a commission, it was not plain and obvious that the plaintiff could not succeed at trial in establishing itself as a complainant under s. 248 of the Business Corporations Act or making out its oppression claim.

MOTION by the plaintiff to add a party and to amend a statement of claim; MOTION by the defendant to strike the claim.

Cases referred to

• Burns Fry Ltd. v. Khurana (1985), 1985 CanLII 2149 (ON SC), 51 O.R. (2d) 257, [1985] O.J. No. 2573, 20 D.L.R. (4th) 245, 8 C.C.E.L. 242, 31 A.C.W.S. (2d) 334 (H.C.J.)
• Canada Trust Realty Inc. v. Onondaga Camp Co., [2000] O.J. No. 4821 (C.A.), affg [1998] O.J. No. 3146 (Gen. Div.)
• Dalex Co. v. Schwartz Levitsky Feldman (1994), 1994 CanLII 7290 (ON SC), 19 O.R. (3d) 463, [1994] O.J. No. 1388, 23 C.C.L.I. (2d) 294, 48 A.C.W.S. (3d) 1117 (Gen. Div.)
• Downtown King West Development Corp. v. Massey Ferguson Industries Ltd. (1996), 1996 CanLII 1232 (ON CA), 28 O.R. (3d) 327, [1996] O.J. No. 926, 133 D.L.R. (4th) 550, 89 O.A.C. 373, 1 R.P.R. (3d) 1, 62 A.C.W.S. (3d) 60 (C.A.)
• Luxor (Eastbourne) Ltd. v. Cooper, [1941] A.C. 108, [1941] 1 All E.R. 33 (H.L.)
• Marks v. Ottawa (City), [2011] O.J. No. 1445, 2011 ONCA 248, 280 O.A.C. 251, 81 M.P.L.R. (4th) 161
• Rio Algom Ltd. v. Canada (Attorney General), [2012] O.J. No. 100, 2012 ONSC 550 (S.C.J.)
• Teva Canada Ltd. v. Bank of Montreal, [2012] O.J. No. 3098, 2012 ONCA 486, consd [page582]
• Remo Valente Real Estate (1990) Ltd. v. Portofino Riverside Tower Inc. (2011), 108 O.R. (3d) 401, [2011] O.J. No. 5711, 2011 ONCA 784, 286 O.A.C. 165, 212 A.C.W.S. (3d) 394, 93 B.L.R. (4th) 124, distd

Other cases referred to

• Aristocrat Restaurants Ltd. (c.o.b. Tony's East) v. Ontario, [2003] O.J. No. 5331 (S.C.J.)
• Atlantic Steel Industries, Inc. v. Cigna Insurance Co. of Canada (1997), 1997 CanLII 12125 (ON SC), 33 O.R. (3d) 12, [1997] O.J. No. 1278, 31 O.T.C. 184, 70 A.C.W.S. (3d) 39 (Gen. Div.)
• Boma Manufacturing Ltd. v. Canadian Imperial Bank of Commerce, 1996 CanLII 149 (SCC), [1996] 3 S.C.R. 727, [1996] S.C.J. No. 111, 140 D.L.R. (4th) 463, 203 N.R. 321, [1997] 2 W.W.R. 153, 82 B.C.A.C. 161, 27 B.C.L.R. (3d) 203, 66 A.C.W.S. (3d) 1127, EYB 1996-67134, J.E. 96-2218
• Cohen v. Cambridge Mercantile Corp., [2007] O.J. No. 2305, 33 B.L.R. (4th) 248, 158 A.C.W.S. (3d) 213, 2007 CanLII 21596 (S.C.J.)
• Dale v. Toronto Real Estate Board, [2012] O.J. No. 215, 2012 ONSC 512 (S.C.J.)
• Dumbrell v. Regional Group of Companies (2007), 85 O.R. (3d) 616, [2007] O.J. No. 298, 2007 ONCA 59, 279 D.L.R. (4th) 201, 220 O.A.C. 64, 25 B.L.R. (4th) 171, 55 C.C.E.L. (3d) 155, 154 A.C.W.S. (3d) 1097
• Galan v. Alekno, 1950 CanLII 80 (ON CA), [1950] O.R. 387, [1950] O.J. No. 347, [1950] 3 D.L.R. 9 (C.A.)
• GATX Corp. v. Hawker Siddeley Canada Inc., [1996] O.J. No. 1462, 1 O.T.C. 322, 27 B.L.R. (2d) 251, 1996 CanLII 8286, 62 A.C.W.S. (3d) 700 (Gen. Div.)
• Gestion Trans-Tek Inc. v. Shipment Systems Strategies Ltd., [2001] O.J. No. 4710, [2001] O.T.C. 860, 20 B.L.R. (3d) 156, 14 C.C.E.L. (3d) 116, 110 A.C.W.S. (3d) 69, 2001 CanLII 28312 (S.C.J.)
• Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93, 74 D.L.R. (4th) 321, 117 N.R. 321, [1990] 6 W.W.R. 385, J.E. 90-1436, 49 B.C.L.R. (2d) 273, 4 C.C.L.T. (2d) 1, 43 C.P.C. (2d) 105, 23 A.C.W.S. (3d) 101
• International Werner Technologies Inc. v. Galaxie Syndicated Real Estate Ltd., [1992] A.J. No. 1044 (Q.B.)
• J.S.M. Corp. (Ontario) Ltd. v. Brick Furniture Warehouse Ltd., [2008] O.J. No. 958, 2008 ONCA 183, 164 A.C.W.S. (3d) 788, 234 O.A.C. 59, 41 B.L.R. (4th) 51, 67 R.P.R. (4th) 1
• MacKinnon v. Ontario Municipal Employees Retirement Board (2007), 88 O.R. (3d) 269, [2007] O.J. No. 4860, 2007 ONCA 874, 64 C.C.P.B. 1, 62 C.C.E.L. (3d) 191, 162 A.C.W.S. (3d) 917, 232 O.A.C. 3, 288 D.L.R. (4th) 688, 42 B.L.R. (4th) 157
• Nareerux Import Co. v. Canadian Imperial Bank of Commerce, [2007] O.J. No. 3824, 285 D.L.R. (4th) 385, 2007 CanLII 41892, 160 A.C.W.S. (3d) 1040 (S.C.J.)
• Piedra v. Copper Mesa Mining Corp., [2011] O.J. No. 1041, 2011 ONCA 191, 280 O.A.C. 1, 332 D.L.R. (4th) 118
• R. v. Imperial Tobacco Canada Ltd., [2011] 3 S.C.R. 45, [2011] S.C.J. No. 42, 2011 SCC 42, 308 B.C.A.C. 1, 419 N.R. 1, 2011EXP-2380, J.E. 2011-1326, 335 D.L.R. (4th) 513, 205 A.C.W.S. (3d) 92, 21 B.C.L.R. (5th) 215, 25 Admin. L.R. (5th) 1, 86 C.C.L.T. (3d) 1, [2011] 11 W.W.R. 215, 83 C.B.R. (5th) 169
• Research Capital Corp. v. Skyservice Airlines Inc., [2009] O.J. No. 2016, 2009 ONCA 418, affd 2008 CanLII 30703 (ON SC), [2008] O.J. No. 2526, 2008 CarswellOnt 3754 (S.C.J.)
• Royal Trust Corp. of Canada v. Hordo, [1993] O.J. No. 1560, 10 B.L.R. (2d) 86, 41 A.C.W.S. (3d) 809 (Gen. Div.)
• Tas-Mari Inc. v. DiBattista Gambin Developments Ltd. (2009), 97 O.R. (3d) 579, [2009] O.J. No. 3296, 63 B.L.R. (4th) 228, 85 C.L.R. (3d) 83, 85 R.P.R. (4th) 196, 2009 CanLII 41355, 179 A.C.W.S. (3d) 825 (S.C.J.)
• The Plan Group v. Bell Canada (2009), 96 O.R. (3d) 81, [2009] O.J. No. 2829, 2009 ONCA 548, 252 O.A.C. 71, 81 C.L.R. (3d) 9, 62 B.L.R. (4th) 157, 179 A.C.W.S. (3d) 40
• Transamerica Life Canada Inc. v. ING Canada Inc. (2003), 2003 CanLII 9923 (ON CA), 68 O.R. (3d) 457, [2003] O.J. No. 4656, 234 D.L.R. (4th) 367, 41 B.L.R. (3d) 1, [2004] I.L.R. I-4258, 127 A.C.W.S. (3d) 235 (C.A.)
• Ventas Inc. v. Sunrise Senior Living Real Estate Investment Trust (2007), 85 O.R. (3d) 254, [2007] O.J. No. 1083, 2007 ONCA 205, 222 O.A.C. 102, 29 B.L.R. (4th) 312, 56 R.P.R. (4th) 163, 156 A.C.W.S. (3d) 95

Statutes referred to

• Business Corporations Act, R.S.O. 1990, c. B.16, ss. 245(c), 248 [as am.], (2) [page583]

Rules and regulations referred to

• Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 21, 21.01(1)(b), 26, 26.01

Authorities referred to

• Perell, Paul M., and John W. Morden, The Law of Civil Procedure in Ontario, 1st ed. (Markham, Ont.: LexisNexis, 2010)

M. Watson, for plaintiff Brookfield Financial Real Estate Group Limited. P. Cavanagh, for defendant Azorim Canada (Adelaide Street) Inc. and the proposed defendant Azorim Holdings South America Ltd.

D.M. BROWN J.: --

I. Competing Motions to Amend a Claim and to Strike Out the Claim

[1] In this action, Brookfield Financial Real Estate Group Limited sues Azorim Canada (Adelaide Street) Inc. ("Azorim"), the prior owner of an office building located at 525 Adelaide Street West, Toronto, for a commission payment under a listing agreement. Brookfield moves to amend its claim to add, as a defendant, Azorim Holdings South America Ltd. ("Azorim Holdings"), a party related to Azorim, and to include revised claims for breach of contract and unjust enrichment, as well as a new claim for oppression.

[2] Azorim resists the proposed amendments and moves under rule 21.01(1)(b) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] to strike out Brookfield's claim as disclosing no reasonable cause of action.

[3] For the reasons set out below, I grant Brookfield's motion and dismiss the motion by Azorim Canada.

II. Background Events

[4] Brookfield carries on business as a commercial real estate agent. Azorim owned an office building located at 525 Adelaide Street West, Toronto.

[5] In February 2011, Azorim renewed an exclusive listing agreement with Brookfield to market the property; an earlier listing agreement had been signed in June 2010. The renewed listing agreement had a term which expired on June 1, 2011. Under the listing agreement, Azorim agreed to pay Brookfield a sales fee equal to 1.6 per cent of the final sale price of the [page584] property out of the proceeds of sale. The listing agreement also provided:

18. The Sales Fee shall be deemed to have been earned, only upon successful completion of the sale of the Property, in whole or part, pursuant to an Offer to purchase accepted by the Vendor:

i) During the Term (as defined in Section 24), whether introduced by the Advisor or not ("the Buyer"); or

ii) Within one hundred and twenty (120) days after the expiry of the Term (the "holdover Period"), if such Buyer or any Person in which the Buyer has any interest or with the Buyer is not at arm's length (within the meaning of the Income Tax Act (Canada)), was introduced by the Advisor or a co-operating broker to the Vendor, or was contacted, directly or indirectly, by the Vendor or its agents or representatives during the Term.

19. If the transaction fails to close as a result of a default by the Vendor, the Sales Fee shall become due and payable immediately. (Emphasis added)

The listing agreement stipulated that "irrespective of who makes the initial contact with the eventual purchaser, the Advisor shall be paid the Sales Fee as described herein, by the Vendor".

[6] Brookfield alleges that one of the potential purchasers it introduced to Azorim was Plazacorp Investments Limited. Brookfield filed evidence on its motion to amend indicating that in late February 2011 it had informed Plazacorp that the property was back on the market for sale.

[7] Azorim is a wholly owned subsidiary of an Israeli real estate corporation, Azorim Investment, Development and Construction Co. Ltd. ("Azorim Parent"). Brookfield filed evidence on its motion to amend, indicating that on March 4, 2011 it had updated Azorim Parent on its efforts to market the property.

[8] In early March 2011, Hershey Friedman, a Canadian developer, purchased a controlling interest in Azorim Parent and appointed a new CEO of that company. Brookfield pleaded that following that change in control and management, Azorim executives informed Brookfield that they could not respond to communications concerning the property. Brookfield received no further direction concerning the sale of the property.

[9] Brookfield pleaded that "quite by accident" in July 2011, it learned that Azorim had agreed to sell the property to Plazacorp with a scheduled closing date of August 17, 2011. On July 21, 2011, Brookfield wrote to Azorim taking the position that "because Brookfield introduced Plazacorp to Azorim, and Plazacorp was contacted by Brookfield during the Term, Brookfield is entitled to be paid, out of the sales proceeds and at the time of closing, the Sales Fee, calculated as One Hundred [page585] and Sixty Basis Points (1.60%) of $25,000,000, the sale price of the Property, plus HST". Brookfield enclosed an invoice for $400,000.

[10] On July 29, 2011, Azorim responded by denying Brookfield's entitlement to a sales fee.

III. Procedural History

[11] Brookfield commenced this action on August 12, 2011, seeking payment of the sales fee, as well as orders requiring Azorim to hold the sales fee in trust for it from the proceeds of the sale of the property. At that time, Brookfield pleaded claims sounding in both breach of contract and unjust enrichment. Brookfield also immediately brought a motion for an interlocutory order requiring Azorim to pay into court the sales fee. On August 19, 2011, Low J. scheduled the injunction to be heard on August 29.

[12] Later that day, following the parties' attendance in Motions Scheduling Court, counsel for Azorim informed counsel for Brookfield:

I advise that Azorim Canada (Adelaide Street) Inc., ("Azorim") and Plazacorp Holdings Limited ("Plazacorp") have agreed to terminate the agreement for the sale of the property municipally known as 523-525 Adelaide Street West, Toronto. Plazacorp has agreed to purchase the shares of Azorim from Azorim Holdings South America Ltd. and closing of this agreement will be on August 30, 2011.

This information obviously affects the basis for your client's action (and motion)[.]

[13] Brookfield's counsel responded on August 22, 2011:

Brookfield takes the position that the reconstructed transaction is a clear attempt by Azorim -- now with Plazacorp's complicity -- to circumvent its obligations under the Exclusive Listing Agreement.

Accordingly, Brookfield will be amending the Statement of Claim to add Azorim Holdings South America Ltd. and Plazacorp as defendants and to add a claim for oppression under the OBCA[.]

[14] Brookfield thereupon amended its notice of motion returnable August 29 to seek leave to amend its claim to include Azorim Holdings as a defendant and to require proceeds equivalent to the sales fee to be paid into court upon the closing of the share purchase transaction.

[15] The parties appeared before Low J. on August 29 having worked out the terms of a consent order. The recital to the consent order stated that Azorim Holdings had agreed to place $450,000 from the share purchase transaction closing proceeds in trust with its solicitors, Fraser Milner Casgrain LLP, and [page586] "Azorim Holdings has undertaken to the Plaintiff, without prejudice, that the funds so deposited will be held by FMC in trust until the final disposition of the within action". Brookfield agreed to withdraw its request for injunctive relief concerning the share purchase transaction, and the parties also agreed that Brookfield's motion to amend its statement of claim was adjourned and "the costs of this motion are reserved to the trial judge" (emphasis added).

[16] On December 23, 2011, Brookfield scheduled its motion to amend its claim for a hearing before a master on February 13, 2012. It withdrew that motion on consent on February 7, 2012, I presume because the parties had agreed to transfer the motion to the Commercial List given Brookfield's intent to amend its pleading to include an oppression claim. On February 16, 2012, Morawetz J. approved the transfer of the action to the Commercial List for purposes of hearing Brookfield's leave to amend motion and Azorim's counter-motion under Rule 21 to strike out the claim as disclosing no reasonable cause of action.

[17] Following that attendance before Morawetz J., the parties filed their respective motion records. Azorim, in its motion dated March 9, 2012, sought an order under rule 21.01(1)(b) striking out Brookfield's statement of claim on the following ground:

The Statement of Claim does not contain a factual assertion that there has been a successful completion of the sale of the Property. Therefore, on the facts pleaded, even presuming them to be true for the purpose of this motion, the Defendant could not be liable for payment of a Sales Fee under the Listing Agreement.

I must confess that a certain air of surreality surrounded Azorim's assertion given the history of the proceeding which I outlined above. Of course there was no factual assertion of "a successful completion of the sale of the Property"! The statement of claim was issued prior to the contemplated closing in order to obtain injunctive relief. Paragraph 16 of the statement of claim had pleaded:

As a result of the foregoing events, under the terms of the Listing Agreement the Sales Fee will become due and owing to Brookfield on the closing of the sale of the Property.

In light of where matters stood on August 12, 2011, when Brookfield issued its claim, that was the only allegation of material fact available to Brookfield in the circumstances.

[18] In its factum, Azorim explained the tactical reason for bringing its Rule 21 motion -- if Brookfield failed in its motion for leave to amend, its claim would fail because it did not plead a successful closing of the real estate sale. But that is not how [page587] Azorim's factum reads as a whole. It is clear that Azorim has brought its Rule 21 motion as a defence to Brookfield's motion for leave to amend its claim.

[19] In any event, Brookfield filed an April 5, 2012 motion record for leave to amend its claim. The salient amendments to the relief sought by Brookfield are as follows: (i) the addition of Azorim Holdings as a defendant; (ii) a claim that the restructuring of the transaction through the share sale constituted an indirect sale of the property which fell within the sales fee provision of the listing agreement and that both defendants hold the sales fee in trust for Brookfield and should pay the sales fee to it; (iii) a declaration against both Azorim and Azorim Holdings pursuant to s. 248 of the Ontario Business Corporations Act, R.S.O. 1990, c. B.16 ("OBCA") that, in effect, the restructuring of the property sale with Plazacorp into the share purchase transaction effected a result which was oppressive, unfairly prejudicial to or unfairly disregarded the interest of Brookfield, and claim for damages under the OBCA to Brookfield, as an aggrieved person, in the amount of $400,000.

[20] In its proposed amended statement of claim, Brookfield pleaded the following material facts: (i) the restructuring of the transaction "was a clear and flagrant attempt by Azorim and Azorim Holdings to circumvent Azorim's obligations and Brookfield's rights under the Listing Agreement"; (ii) Brookfield had a "reasonable expectation that Azorim and its affiliates would not restructure the sale of the Property in an attempt to avoid paying the Sales Fee under the Listing Agreement"; (iii) Brookfield is a creditor of Azorim for the purpose of s. 248(2) of the OBCA; (iv) the listing agreement "contained an implied term requiring Azorim to perform its obligations thereunder in good faith and so as not to frustrate Brookfield's right to a Sales Fee"; (v) Azorim "did not act reasonably, breached its duty of good faith, and attempted to deprive Brookfield of the Sales Fee [page588] by participating in the restructuring of the transaction. Azorim Holdings knowingly assisted and participated with Azorim in that endeavour"; and (vi) under the reconstructed transaction Azorim, and Azorim Holdings would be unjustly enriched if they could avoid paying the sales fee. In simple terms, Brookfield contends that Azorim, in an effort to avoid paying a sales fee, did an "end run" around the listing agreement by restructuring its land sale agreement with Plazacorp into a share purchase agreement using its parent, Azorim Holdings, as the vendor.

[21] The only evidence filed by Azorim in response to Brookfield's motion to amend was the agreement of purchase and sale between Azorim Holdings and Plazacorp. Section 7 of that agreement contained an indemnity from Azorim Holdings in favour of Plazacorp in respect of any damages suffered arising out of the Brookfield claim.

IV. Analysis

A. The governing legal principles

A.1 Motions to amend claims

[22] The analysis must start with a consideration of Brookfield's request to amend its statement of claim. The relevant portions of Rule 26 of the Rules of Civil Procedure read as follows:

26.01 On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

26.02 A party may amend the party's pleading, (a) without leave, before the close of pleadings, if the amendment does not include or necessitate the addition, deletion or substitution of a party to the action[.]

[23] I adopt, as succinctly summarizing the legal principles applicable to motions to amend pleadings, the following passages from Morden and Perell, The Law of Civil Procedure in Ontario, 1st ed. (Markham, Ont.: LexisNexis, 2010):

The rule is mandatory and amendments must be allowed unless the responding party can demonstrate prejudice that cannot be compensated by costs. The prejudice must arise as a result of the amendment and pre-existing prejudice unconnected to the amendment will not suffice[.][page589]

With the exception of an amendment to plead a statute-barred claim, the onus of proving prejudice is on the party alleging it[.]

On a motion to amend a pleading, the court does not examine the factual merits of the proposed amendments or the moving party's motives for seeking the amendment, but it does examine whether as a matter of law, the amendment raises a tenable claim or defence and whether the proposed amendment has been properly pleaded in the sense of complying with the rules that govern pleadings, including sufficient particularity. Put somewhat differently, it makes little sense to grant an amendment that will immediately be challenged as legally unsound, and the court may inquire into the merits to ensure that the amendment is tenable in law and compliant with the rules of pleading. The case law establishes that proposed amendments are to be read generously with allowance for deficiencies in drafting[.]

Where an amendment to a pleading includes the addition of a party, then the court must also consider whether the joinder would satisfy the requirements of the Rules on the joinder of parties and claims[.] [^1]

[24] Morden and Perell published their text in 2010. A year later, the Court of Appeal, in its decision in Marks v. Ottawa (City), [^2] identified a list of factors to be considered on a motion to amend under rule 26.01 which included not only that "[n]o amendment should be allowed which, if originally pleaded, would have been struck", but that "[t]he proposed amendment must be shown to be an issue worthy of trial and prima facie meritorious". [^3] The Court of Appeal's analysis of the pleading in that case sheds some light on the precise meaning of that last factor. In upholding the motion judge's refusal of that part of the motion which sought to amend a pleading to include a claim for negligent misrepresentation, the court stated:

I agree that there should be some scope for a plaintiff to bring a novel claim or argue for the creation of a new tort. In this case, however, the facts alleged fall so far outside of what has been established as negligent misrepresentation that I agree that there is no realistic prospect that the action will succeed. [^4]

Consequently, notwithstanding the language in the Marks case that a "proposed amendment must be shown to be an issue worthy of trial and prima facie meritorious", the specific analysis of the proposed amended claim conducted by the Court of Appeal resembled that performed by a court on a motion to strike a [page590] claim (or defence) under rule 21.01(1)(b). I therefore conclude that on a motion to amend a statement of claim, a court will consider the "tenability" of a proposed claim by applying the principles developed under the rule 21.01(1)(b) analysis. [^5]

[25] I find support for that view in the recent decision of the Court of Appeal in Teva Canada Ltd. v. Bank of Montreal, [^6] in which the defendant, the Bank of Nova Scotia, sought leave to amend its statement of defence to an account holder's claim for conversion to plead the defence of estoppel by negligence against the account holder. In upholding the dismissal of the Bank's motion to amend, the Court of Appeal concurred with the court below that the proposed defence of estoppel by negligence was untenable in law. The Court of Appeal concluded that the decision of the Supreme Court of Canada in Boma Manufacturing Ltd. v. Canadian Imperial Bank of Commerce [^7] was dispositive with respect to a defence of contributory negligence in the circumstances of cheques fraudulently issued by an employee. The Court of Appeal stated [at paras. 20 and 22]:

We are of the view that if one applies the line of reasoning set out by the court in Boma to the circumstances in this case, it is not tenable that a court would recognize the new duty of care urged by Scotia Bank, nor would it recognize the availability of a defence of estoppel by negligence which Bank of Nova Scotia seeks to plead. Doing so would change the allocation of risk and affect the certainty with which participants in the banking system now conduct banking transactions. . . . . .

In our view, that reasoning is apposite the circumstances in this case. In summary, we agree with the appeal judge that the proposed plea of estoppel by negligence is not tenable and that leave to amend to assert that plea should not be granted.

[26] Azorim did not argue that it would suffer prejudice if leave to amend were granted, nor did it argue that the addition of Azorim Holdings would violate the principles of joinder. Azorim's opposition to the amendment sought was that if the proposed claim originally had been pleaded in that form, it would have been struck out as disclosing no reasonable cause of action. [page591]

A.2 The "no reasonable cause of action" standard

[27] Last year, in R. v. Imperial Tobacco Canada Ltd., the Supreme Court of Canada reviewed the purpose of a motion to strike out a claim and the test applicable on such a motion. As to the purpose of such a motion, the Supreme Court observed that "[t]he power to strike out claims that have no reasonable prospect of success . . . unclutters the proceedings, weeding out the hopeless claims and ensuring that those that have some chance of success go on to trial". This promotes two goods: "efficiency in the conduct of the litigation and correct results". However, the court sounded a note of caution about motions to strike:

Valuable as it is, the motion to strike is a tool that must be used with care. The law is not static and unchanging. Actions that yesterday were deemed hopeless may tomorrow succeed[.] [^8]

[28] With regards to the test applicable on a motion to strike out a claim as disclosing no reasonable cause of action, the Supreme Court stated:

A claim will only be struck if it is plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action . . . Another way of putting the test is that the claim has no reasonable prospect of success. Where a reasonable prospect of success exists, the matter should be allowed to proceed to trial[.] . . . . .

A motion to strike for failure to disclose a reasonable cause of action proceeds on the basis that the facts pleaded are true, unless they are manifestly incapable of being proven . . . No evidence is admissible on such a motion . . . It is incumbent on the claimant to clearly plead the facts upon which it relies in making its claim. A claimant is not entitled to rely on the possibility that new facts may turn up as the case progresses. The claimant may not be in a position to prove the facts pleaded at the time of the motion. It may only hope to be able to prove them. But plead them it must. The facts pleaded are the firm basis upon which the possibility of success of the claim must be evaluated. If they are not pleaded, the exercise cannot be properly conducted.

[A motion to strike] is not about evidence, but the pleadings. The facts pleaded are taken as true. Whether the evidence substantiates the pleaded facts, now or at some future date, is irrelevant to the motion to strike. The judge on the motion to strike cannot consider what evidence adduced in the future might or might not show. . . . . . [page592]

The question is whether, considered in the context of the law and the litigation process, the claim has no reasonable chance of succeeding. [^9]

[29] Finally, as our Court of Appeal recently recalled in Piedra v. Copper Mesa Mining Corp.:

Neither the length and complexity of the issues, the novelty of the cause of action, nor the potential for the defendant to present a strong defence should prevent the plaintiff from proceeding with his or her case. Only if the action is certain to fail because it contains a radical defect . . . should the relevant portions of a plaintiff's statement of claim be struck out [under a summary proceedings rule]. [^10]

The nature of the "radical defect" required to justify striking out a claim was described in very narrow terms by Epstein J., as she then was, in Dalex Co. v. Schwartz Levitsky Feldman:

In order to foreclose the consideration of an issue past the pleadings stage, the moving party must show that there is an existing bar in the form of a decided case directly on point from the same jurisdiction demonstrating that the very issue has been squarely dealt with and rejected by our courts. Only by restricting successful attacks of this nature to the narrowest of cases can the common law have a full opportunity to be refined or extended[.] [^11]

Whether the standard is so unambiguously strict may be open to some debate, but the judicial sentiment expressed in the Dalex case reflects the strong reluctance of courts to strike out claims unless they are devoid of any reasonable prospect of success.

[30] In sum, rule 21.01(1)(b) operates to weed out the hopeless claims, based on a review of the pleadings, because they fail to state legally sufficient claims. [^12] If the pleading asserts a legally sufficient claim, rule 21.01(1)(b) does not subject the claim to an analysis of the strength or weakness of the evidence advanced by the party in support of its claim. That is why under the rule a court assumes the facts pleaded in the claim can be proved. Put another way, rule 21.01(1)(b) does not provide a vehicle by which an opposing party can seek a final disposition of a claim on the evidence -- that function falls to a motion for summary [page593] judgment or the trial. The purpose of rule 21.01(1)(b) is more modest -- to assess the tenability at law of a pleaded claim. [^13]

[31] Against that background, let me turn to the specific amendments sought by Brookfield and the arguments advanced by Azorim in opposition to the amendments.

B. Brookfield's proposed amendment to its contractual claims

[32] Brookfield seeks to amend its claim to assert a claim that the restructuring of the transaction through the share sale constituted an indirect sale of the property which falls within the sales fee provision of the listing agreement. Brookfield also intends to plead that the listing agreement "contained an implied term requiring Azorim to perform its obligations thereunder in good faith and so as not to frustrate Brookfield's right to a Sales Fee", and Azorim "did not act reasonably, breached its duty of good faith, and attempted to deprive Brookfield of the Sales Fee by participating in the restructuring of the transaction".

B.1 The interpretation claim: an "indirect sale"

[33] Azorim submitted that Brookfield's proposed plea of an "indirect sale" conflicted with the plain and unambiguous language of the listing agreement and was incorrect as a matter of law and, as well, that there was no basis in law to imply into the listing agreement a term requiring Azorim to perform its obligations in good faith. Brookfield contended that the phrase "sale of the Property" in the listing agreement took its meaning, in part, from the mandate Azorim gave to Brookfield in the agreement "to structure, arrange and negotiate to meet the objectives of the Vendor, as deemed necessary to transact the mandate", such language reflecting an understanding by the parties that the ultimate transaction might differ from a traditional transfer of legal title to a property. [page594]

[34] Certainly, the contractual right of a listing agent to a commission depends upon the nature and effect of the contract between the owner of the property and the agent. [^14] Azorim submitted that as a matter of law a contract for commissions on the sale of real property could not give rise to rights to a commission on the sale of the shares of the company which owned the property. I do not accept that submission for the purpose of this pleadings motion for two reasons.

[35] First, although in substance the exercise of interpreting a contract is a legal exercise, it most often contains a fact-finding dimension: the proper interpretation and application of the principles of contractual interpretation is a question of law; a trial judge's determination of the factual matrix, consideration of extrinsic evidence and consideration of the evidence as a whole is a question of fact; and the application of the legal principles to the language of the contract in the context of the relevant facts, or a question involving an intertwining of fact and law, is a question of mixed fact and law. [^15] The process of interpreting a contract necessarily requires a court to consider the "factual matrix" in which a contract was made in order to discern the meaning of a contractual term. That the consideration of the "factual matrix" operates as an integral part of the interpretative process, even in cases where no ambiguity in contractual language exists, was made clear by the Court of Appeal in Dumbrell v. Regional Group of Companies Inc.:

The text of the written agreement must be read as a whole and in the context of the circumstances as they existed when the agreement was created. The circumstances include facts that were known or reasonably capable of being known by the parties when they entered into the written agreement[.]

A consideration of the context in which the written agreement was made is an integral part of the interpretative process and is not something that is resorted to only where the words viewed in isolation suggest some ambiguity. To find ambiguity, one must come to certain conclusions as to the meaning of the words used. A conclusion as to the meaning of words used in a written contract can only be properly reached if the contract is considered in the context in which it was made: see McCamus, The Law of Contracts (Toronto: Irwin Law, 2005) at 710-11. [^16] [page595]

The significant factual component of any contractual interpretative exercise makes it difficult to conclude, at the pleadings stage, that a proffered interpretation of a contractual term, such as "sale of the Property" in the present case, stands no chance of success or is flawed as a matter of law.

[36] Second, the particular Ontario case relied upon by Azorim in support of its submission on this point, Canada Trust Realty Inc. v. Onondaga Camp Co., [^17] illustrates the importance of the factual inquiry to the interpretative process. [^18] In that case, the court concluded that the sale of the shares of the company which owned certain real property fell outside the terms of the listing agreement for the sale of the property. However, the facts of that case differed markedly from those in the present one in that (i) the vendor was conducting concurrent efforts to sell the realty and to sell the shares; (ii) the listing agent knew of the vendor's efforts to sell the shares; (iii) the listing agreement in question was executed at a time when the listing agent knew of the vendor's efforts to sell the shares; and (iv) a 30-day cancellation clause was incorporated in the listing agreement with the knowledge of the listing agent that if it was unable to find a purchaser for the land, the vendor might sell the shares.

B.2 The implication of a term to perform contractual obligations in good faith

[37] Brookfield seeks to plead that the listing agreement contained an implied term "requiring Azorim to perform its obligations thereunder in good faith and so as not to frustrate Brookfield's right to a Sales Fee", an implied term which Brookfield contends Azorim breached by participating in the restructuring of the transaction. Brookfield proposes to plead that Azorim Holdings knowingly assisted and participated with Azorim to do so. [page596]

[38] In Rio Algom Ltd. v. Canada (Attorney General), [^19] Perell J. provided a succinct summary of the law concerning the implication of terms into a contract. Noting that "a court will imply terms to a contract based on the presumed intention of the parties and to give the contract business efficacy" only "[a]fter a careful review of the background to the contract", Perell J. stated that the case law has identified three situations where terms will be implied: (i) as a matter of an established custom or usage; (ii) as a matter of presumed intention because it is necessary to give business efficacy to a contract; and (iii) as an incident of a particular class of relationship. In all three cases, the implication must meet the test of necessity:

In determining whether the parties would have intended an unexpressed term to be a part of their contract, the court must be careful not to determine what reasonable parties would or ought to have intended to give their contract business efficacy[.]

[T]he court does not look for an objective intent of what a reasonable contracting party ought to have intended. The court is not engaged in an exercise of making a better contract for one or both of the parties. The court remains engaged in an exercise of interpreting the actual contract signed by the parties. [^20]

[39] Azorim submitted that the law does not permit implying a term into the listing agreement that Azorim perform its obligations in good faith so as not to frustrate Brookfield's right to a sales fee. In support of its argument, Azorim relied on four cases. In the first case, the 1940 House of Lords decision in Luxor (Eastbourne) Ltd. v. Cooper, [^21] the Law Lords had refused to imply such a term into an agreement under which a commission was payable only upon the completion of a specified event, observing that the agent ran the risk of the event not occurring and the implication of a term was not necessary to give business efficiency to such a contingency arrangement. Viscount Simon, however, noted that some cases "with unusual facts" had implied such a term, including cases where "there was nothing whatsoever to explain why the contract did not go through other than the unwillingness of the defendant to proceed". [^22] Although the Luxor case resembled the present one in that the agent had [page597] introduced a potential purchaser of the land to the owner, Luxor differed from the present case in that no contract for sale was entered into with the potential purchaser and the owners ended up selling their shares to a person not introduced to them by the agent.

[40] The second case, Burns Fry Ltd. v. Khurana, [^23] involved a claim by an investment dealer for a commission on the sale of a business. Although some negotiations took place between the business owner and a prospective purchaser, at the end of the day the owner decided not to sell his business. In his trial decision, Krever J., as he then was, found, as a fact, that the owner's change of mind "occurred in good faith and did not come about in order to deprive the plaintiff of an opportunity to earn a commission". [^24] In addressing the plaintiff's argument that the contract contained an implied term that the owner would not change his mind about selling his business, the court followed much of the analysis in the Luxor case and then drew heavily on its finding of fact that the business owner had acted in good faith [at para. 27]:

The debate need not be resolved in this case. I believe that whether one resorts to the test of necessity, for the purpose of giving the agreement between the plaintiff and Mr. Khurana business efficacy or to the test of reasonableness, for the purpose of arriving at a fair result, the conclusion must be the same. There is no justification for holding that there is an implied term in the agreement that under no circumstances would Mr. Khurana change his mind or abandon his intention to sell his equity in the company. The plaintiff deliberately chose to make its right to a commission depend upon the successful completion of a transaction with anyone introduced by it and equally deliberately chose not to contract in a way that assured it of payment for services rendered regardless of outcome. It did so in order to maximize its return and in doing so it ran the business risk that Mr. Khurana would, in good faith, decide against divesting himself of his interest in the company. No term needs to be implied to give the agreement business efficacy. Nor, given the plaintiff's preference for a contingent fee agreement, with its attendant and inherent risk, is it reasonable to imply such a term. Neither the agreement nor its unsuccessful ending can be said to be unfair and no bad faith on the part of the defendant is suggested by the plaintiff. The action, then, to the extent that it is one for damages for breach of contract, therefore fails.

[41] In the third case, Rio Algom v. Canada (Attorney General), supra, the court, on a summary judgment motion, refused to imply in a contract a term which would indemnify one party [page598] for increased production costs and similarly declined to find that the refusal by the other party to provide such an indemnity constituted a breach of its duty of good faith in contractual performance. The summary by Perell J. of the jurisprudence concerning any duty of good faith to perform contractual obligations reveals the current uncertainty surrounding the status of such a duty:

However, while Canadian courts have been cautious about the scope of a doctrine of good faith in the performance of contracts, the doctrine is developing, and it does have a role to play. As Associate Chief Justice O'Connor also noted in Transamerica Life Canada Inc. v. ING Canada Inc., supra, at para. 51: "[C]ourts have implied a duty of good faith with a view to securing the performance and enforcement of the contract made by the parties, or as it is sometimes put, to ensure that parties do not act in a way that eviscerates or defeats the objectives of the agreement that they have entered into."

In CivicLife.com Inc. v. Canada (Attorney General), 2006 CanLII 20837 (ON CA), [2006] O.J. No. 2474 (C.A.) at paras. 49-51 and in Nareerux Import Co. v. Canadian Imperial Bank of Commerce, 2009 ONCA 764 at para. 69 (discussed later in this judgment), the court referred favourably to the analysis of Professor John McCamus in his book The Law of Contracts (Toronto: Irwin Law, 2005) at pp. 784-805, where Professor McCamus groups good faith in contract performance cases into three categories of cases: (1) where there is a duty to cooperate in achieving the objectives of the agreement; (2) where there is a limit on the exercise of discretionary powers provided for in the contract to the extent that the discretion must be exercised fairly and having regard to the interests of the other contracting party; and (3) where a party is precluded from acting to evade contractual duties, such as by engaging in conduct not strictly prohibited by the letter of the terms of their agreement but that has the effect of defeating rights under the agreement. [^25]

[42] Indeed, in the Transamerica case the Court of Appeal stated [at para. 39] that "on a pleadings motion, a court should not dispose of matters of law that are not settled in the jurisprudence" and, in that case, held that the motion judge had erred in striking out the pleas involving a duty of good faith in an amended statement of defence. [^26] In this regard, I would observe that in each of the cases placed before me in which the courts declined to imply a term into a contract -- Luxor, Burns Fry and Rio Algom -- the courts reached their conclusions after a [page599] consideration of the evidence, either at trial or on a motion for summary judgment. [^27]

[43] Finally, Azorim Canada relied on the Court of Appeal decision in Downtown King West Development Corp. v. Massey Ferguson Industries Ltd., [^28] in which that court had reversed the finding by the trial judge that Massey had acted in breach of good faith by deleting the property from the final document in order to avoid engaging a right of first refusal. Azorim contended that the appellate decision established the proposition that a vendor of property could delete from a sale a parcel of land the inclusion of which might trigger a right of first refusal enjoyed by another. In my view, that portion of the decision must be read in its context. First, it was obiter, the Court of Appeal having rejected an argument that rectification was available to give effect to the right of first refusal contended for by the plaintiff. Second, the court's statement [at para. 48] that "[t]he reason for [the vendor's] unwillingness to accept any particular offer" must take into account the observation by the court which immediately followed that an effort by the vendor to sell properties en bloc to defeat an existing right of first refusal "would be an entirely different case". [^29] The decision illustrates the importance of the particular facts of any case to the question about the existence of any duty to perform a contract in good faith.

B.3 Conclusion

[44] By way of summary, Brookfield has proposed amendments to its claim which advance a particular interpretation of the listing agreement so as to cover an "indirect sale" of the property and which assert that the listing agreement contained specified implied terms, including a duty by Azorim to perform its obligations in good faith, a duty which Brookfield alleges the defendant has breached. On their face, the proposed amendments meet the requirements for pleading a particular interpretation of a contractual term and pleading an implied term. For the reasons set out above, Azorim has not demonstrated that it is plain and obvious that the amended contractual claims [page600] asserted by Brookfield stand no chance of success. I conclude by adopting the following passage from the decision of K.L. Campbell J. in Dale v. Toronto Real Estate Board, [^30] which, in my view, accurately captures the limited vetting of contractual claims performed by a court under a rule 21.01(1)(b) analysis:

Given the nature of this pleadings motion, it is not for the court to seek to conclusively interpret the legal effect of the terms (express and/or implied) of the settlement agreement between the parties against the factual matrix of their relationships or to investigate the plaintiffs' current ability to establish these assertions with admissible evidence. Rather, to successfully resist this motion to strike, it is legally sufficient for the plaintiffs to have alleged, as they have, that the defendants individually and collectively breached the express and/or implied terms of their earlier settlement agreement with the plaintiffs, and that the plaintiffs suffered damages in the result. [^31]

C. Brookfield's proposed oppression claim under the [OBCA](https://www.canlii.org/en/on/laws/stat/rso-1990-c-b16/latest/rso-1990-c-b16.html)

[45] Brookfield wishes to assert an oppression claim against Azorim and Azorim Holdings under s. 248 of the OBCA, pleading that it is a creditor of Azorim, and therefore a statutory "complainant", and seeking a declaration against both Azorim and Azorim Holdings that, in effect, the restructuring of the property sale with Plazacorp into the share purchase transaction effected a result which was oppressive, unfairly prejudicial to or unfairly disregarded the interest of Brookfield, with a consequent award of damages under the OBCA to Brookfield, as an aggrieved person, in the amount of $400,000.

[46] In opposition to Brookfield's proposed amendments, Azorim argued that Brookfield lacked status as a complainant under s. 248 of the OBCA and that, as a matter of law, no remedy was available to Brookfield because the parties had entered into a commercial agreement which defined their rights and obligations.

[47] For purposes of the oppression remedy under the OBCA, a "complainant" includes "any other person who, in the discretion of the court, is a proper person to make an application under this Part", which courts have interpreted to include creditors because s. 248 includes as actionable conduct that which "is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any . . . creditor . . . of the corporation". [^32] [page601]

[48] In Cohen v. Cambridge Mercantile Corp., [^33] a case involving a claim by a former employee against his employer for commissions owing, I canvassed the general principles concerning claims by complainant creditors under s. 248 of the OBCA for the purposes of a rule 21.01(1)(b) analysis: (i) courts have recognized creditors -- both actual and potential -- as "complainants" under s. 245(c) of the OBCA; (ii) such recognition often is given in circumstances of a corporation that is insolvent or nearing insolvency; (iii) a creditor-complainant must be a creditor, whether actual or potential, at the time of the oppressive actions about which complaint is made; (iv) a creditor-complainant must plead what were its reasonable expectations as a creditor with respect to a defendant corporation and how the defendant's conduct effected a result that oppressed, or violated, those expectations; and (v) finally, care must be taken against giving too expansive a meaning to complainant creditors so as not to turn routine debt actions into oppression applications or to give "complainant" status to a creditor where the creditor's interest in the affairs of the corporation is too remote, or where the complaints of the creditor have nothing to do with the circumstances giving rise to the debt, or if the creditor is not proceeding in good faith. [^34]

[49] In the present case, Brookfield's amended claim set out facts in support of its plea that it was a creditor of Azorim at the time of the oppressive actions about which complaint is made. On July 21, 2011, it wrote to Azorim taking the position that "because Brookfield introduced Plazacorp to Azorim, and Plazacorp was contacted by Brookfield during the Term, Brookfield is entitled to be paid, out of the sales proceeds and at the time of closing, the Sales Fee, calculated as One Hundred and Sixty Basis Points (1.60%) of $25,000,000, the sale price of the Property, plus HST". It was only after making that demand as a creditor and bringing its injunction motion, Brookfield wishes to allege, that Azorim and Azorim Holdings restructured the transaction as the sale of shares, not real property. That restructuring, Brookfield alleges, constituted oppressive conduct, and Brookfield pleaded the nature of its reasonable expectations and how the conduct of Azorim, together with Azorim Holding, [page602] violated those expectations. The proposed pleading makes clear that Brookfield seeks a remedy for oppressive conduct against it at a time when it contended Azorim was a potential debtor given the pending closing of the property sale.

[50] Azorim argued that as a matter of law, Brookfield could not qualify as a complainant and in support of that position Azorim pointed to the decision of the Court of Appeal in Remo Valente Real Estate (1990) Ltd. v. Portofino Riverside Tower Inc. [^35] In that case, the trial judge had interpreted the terms of a listing agreement to conclude that, on the facts, a financing condition had been satisfied, the result of which meant that the vendor owed the plaintiff listing agent some commissions and, consequently, the listing agent was a creditor. The Court of Appeal found that the trial judge had erred in his interpretation of the listing agreement, with the result that the listing agent was not a creditor, and therefore not a complainant under s. 248 of the OBCA. [^36]

[51] Decisions in oppression cases are very fact specific and must be read with care. In the Remo Valente case, the Court of Appeal found that the trial judge had erred in finding that the level of pre-sales had satisfied "the condition in the Project Financing commitment". In fact, the evidence showed that no formal project financing had been obtained at the relevant time, with the result that entitlement to commissions did not arise by operation of the specific language of the listing agreement. I could not see any suggestion in the Remo Valente case that any wrongful conduct by the defendant had caused the lack of formal project financing, the pre-condition to payment of commissions. By contrast, in the present case Brookfield pleads, in effect, that but for the restructuring of the transaction into a share sale, Azorim would have been obliged to pay it a commission. It alleges that the wrongful conduct of Azorim deprived it of the payment to which it otherwise was entitled. That, in my view, is quite a different case than Remo Valente.

[52] Azorim further submitted that in any event no oppression remedy was available to Brookfield as a matter of law by reason of the pre-existing contractual relationship between the parties. Certainly, authority exists for the proposition that it is not appropriate to resort to the statutory oppression remedy where a [page603] simple breach of contract has occurred. [^37] As the Court of Appeal observed in J.S.M. Corp. (Ontario) Ltd. v. Brick Furniture Warehouse, "the oppression remedy is not intended to give a creditor after-the-fact protection against risks that the creditor assumed when he entered into an agreement with a corporation". [^38] Yet, in that case, the Court of Appeal was not prepared to adopt a definitive principle of law that an oppression action did not lie where a contract existed between the parties, as was clear from the following portion of its reasons:

The position of a creditor who can, but does not, protect itself against an eventuality from which he later seeks relief under the oppression remedy, is much different than the position of a creditor who finds his interest as a creditor compromised by unlawful and internal corporate manoeuvres against which the creditor cannot effectively protect itself. In the latter case, there is much more room for relief under the oppression provisions than in the former case[.] [^39]

On its part, Brookfield pointed to cases where the evidence supported findings of both breach of contract and oppression, [^40] as well as to cases where oppression claims were allowed to proceed where the defendants had attempted to avoid contractual obligations. [^41]

[53] Given the very fact-specific nature of oppression claims, the lack of any definitive legal principle barring an oppression claim in circumstances where a contract existed between the parties, and the allegations made by Brookfield that Azorim, with the assistance of Azorim Holdings, deliberately terminated the proposed sale of the real property and replaced it with a new share sale structure in order to avoid paying a commission, I cannot say that it is plain and obvious that Brookfield would not [page604] succeed at trial in establishing itself as a complainant under OBCA s. 248 or making out its oppression claim.

[54] In reaching that conclusion, I have taken into account the argument made by Azorim that Azorim Holdings agreed to indemnify it from any direct liability to Brookfield in respect of the listing agreement. That sort of argument demonstrates that Azorim, under the guise of a rule 21.01(1)(b) analysis, really is asking the court to consider and weigh evidence on this motion. Such an evidentiary review must await a consideration of the claims on their merits and is not proper on a pleadings motion.

D. Unjust enrichment claim

[55] Finally, Brookfield sought to amend its claim to recast its allegation of unjust enrichment as one based on the reconstructed transaction, although in its prayer for relief Brookfield did not identify a remedy for its unjust enrichment claim.

[56] Azorim argued that no tangible benefit was unjustly conferred on it or Azorim Holdings upon completion of the share transaction because on the facts pleaded, "Azorim Canada did not breach the Listing Agreement and Azorim Holdings owed no contractual obligations to Brookfield". Azorim contended that a finding of no breach of contract would result in a failure of Brookfield's unjust enrichment claim because the contract would constitute a juristic reason for any benefit received. That may or may not be the case, but a determination of that issue will require a review of the evidence and the making of findings of fact. That exercise does not take place on a rule 21.01(1)(b)- style motion. As the Court of Appeal stated in MacKinnon v. Ontario Municipal Employees Retirement Board, "A dispute [whether there was a juristic reason for the enrichment] does not make it plain and obvious that the claim of unjust enrichment cannot succeed." [^42] Brookfield has pleaded the constituent elements of a claim for unjust enrichment; the merits of that claim fall to be decided at a later date.

V. Summary

[57] By way of summary, I allow Brookfield's motion and grant it leave to serve and file an amended statement of claim in the form filed on this motion, including adding Azorim Holdings as a [page605] defendant. It follows that I dismiss the motion of Azorim to strike out the statement of claim.

[58] I would encourage the parties to try to settle the costs of this motion. If they cannot, Brookfield may serve and file with my office written cost submissions, together with a bill of costs, by August 13, 2012. The Azorim defendants may serve and file with my office responding written cost submissions by August 31, 2012. The costs submissions shall not exceed three pages in length, excluding the bill of costs.

[59] In his February 16, 2012 endorsement, Morawetz J. wrote: "After disposition of motions a further 9:30 a.m. appointment to be scheduled to review whether matter to remain on Commercial List and, if so, further scheduling." To that end, the parties shall book a 9:30 appointment before me for a date prior to the end of September 2012. Both parties are to file with the Commercial Office, to my attention, at least two days before the 9:30 appointment, a joint plan and timetable identifying all further steps in this proceeding up to and including the pre-trial conference. If the parties cannot agree on a joint plan, each party shall submit its proposed version of the plan. This case appears to require no more than two or three days for trial, so I will review the plans in that light.

Plaintiff's motion granted; defendant's motion dismissed.

[^1]: (Markham, Ont.: LexisNexis, 2010), pp. 359-61.

[^2]: [2011] O.J. No. 1445, 2011 ONCA 248.

[^3]: Ibid., para. 19.

[^4]: Ibid., para. 27 (emphasis added).

[^5]: See, also, the reasons of Lax J. in Atlantic Steel Industries, Inc. v. Cigna Insurance Co. of Canada (1997), 1997 CanLII 12125 (ON SC), 33 O.R. (3d) 12, [1997] O.J. No. 1278 (Gen. Div.), para. 6.

[^6]: [2012] O.J. No. 3098, 2012 ONCA 486.

[^7]: 1996 CanLII 149 (SCC), [1996] 3 S.C.R. 727, [1996] S.C.J. No. 111.

[^8]: 2011 SCC 42, [2011] 3 S.C.R. 45, [2011] S.C.J. No. 42, paras. 19-21.

[^9]: Ibid., paras. 17, 22, 23 and 25 (emphasis added).

[^10]: [2011] O.J. No. 1041, 2011 ONCA 191, para. 36 (emphasis added), quoting Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93, at p. 980 S.C.R.

[^11]: (1994), 1994 CanLII 7290 (ON SC), 19 O.R. (3d) 463, [1994] O.J. No. 1388 (Gen. Div.), para. 4.

[^12]: Artistocrat Restaurants Ltd. (c.o.b. Tony's East) v. Ontario, [2003] O.J. No. 5331 (S.C.J.), para. 16.

[^13]: In the Atlantic Steel case, supra, Lax J. put the matter the following way, at para. 6 of her reasons: "Although both counsel put affidavit evidence before the court on this motion, I do not think that I should have regard to it in determining whether the proposed Amended Statement of Claim discloses a reasonable cause of action. Otherwise, I would be converting this motion [to amend] into a motion for summary judgment under Rule 20 . . . At the pleadings stage, the court is concerned only with the legal viability of the claim and not with screening spurious claims which will not survive trial."

[^14]: Galan v. Alekno, 1950 CanLII 80 (ON CA), [1950] O.R. 387, [1950] O.J. No. 347 (C.A.), para. 20.

[^15]: The Plan Group v. Bell Canada (2009), 2009 ONCA 548, 96 O.R. (3d) 81, [2009] O.J. No. 2829 (C.A.), paras. 22, 23 and 30.

[^16]: (2007), 85 O.R. (3d) 616, [2007] O.J. No. 298, 2007 ONCA 59, paras. 53 and 54. See, also, Ventas Inc. v. Sunrise Senior Living Real Estate Investment Trust (2007), 2007 ONCA 205, 85 O.R. (3d) 254, [2007] O.J. No. 1083 (C.A.), para. 45.

[^17]: [1998] O.J. No. 3146 (Gen. Div.), affd [2000] O.J. No. 4821 (C.A.).

[^18]: I did not find helpful the decision of an Alberta master in International Werner Technologies Inc. v. Galaxie Syndicated Real Estate Ltd., [1992] A.J. No. 1044 (Q.B.) relied on by Azorim Canada. The brief reasons did not include any of the contractual language concerning the payment of a commission. In any event, the decision was one made on a summary judgment motion, not a pleadings motion, so the master had the benefit of a full evidentiary record to render his decision, a fact which distinguishes that motion from the present one.

[^19]: [2012] O.J. No. 100, 2012 ONSC 550 (S.C.J.).

[^20]: Ibid., paras. 35-42 and 46.

[^21]: [1941] 1 All E.R. 33, [1941] A.C. 108 (H.L.).

[^22]: Ibid., p. 41 E.R.

[^23]: (1985), 1985 CanLII 2149 (ON SC), 51 O.R. (2d) 257, [1985] O.J. No. 2573 (H.C.J.).

[^24]: Ibid., para. 10.

[^25]: Rio Algom, supra, paras. 51 and 52.

[^26]: Transamerica Life Canada Inc. v. ING Canada Inc. (2003), 2003 CanLII 9923 (ON CA), 68 O.R. (3d) 457, [2003] O.J. No. 4656 (C.A.), paras. 41-64.

[^27]: In Nareerux Import Co. v. Canadian Imperial Bank of Commerce, [2007] O.J. No. 3824, 2007 CanLII 41892 (S.C.J.), Lederman J., following a trial, found that one party had breached an implied term of good faith (see para. 81).

[^28]: (1996), 1996 CanLII 1232 (ON CA), 28 O.R. (3d) 327, [1996] O.J. No. 926 (C.A.).

[^29]: Ibid., p. 342 O.R.

[^30]: [2012] O.J. No. 215, 2012 ONSC 512 (S.C.J.).

[^31]: Ibid., para. 42.

[^32]: OBCA, ss. 254(c) and 248(2).

[^33]: [2007] O.J. No. 2305, 2007 CanLII 21596 (S.C.J.), paras. 34-37.

[^34]: Royal Trust Corp. of Canada v. Hordo, [1993] O.J. No. 1560, [2011] O.J. No. 5711, 10 B.L.R. (2d) 86 (Gen. Div.), p. 92 B.L.R.

[^35]: (2011), 108 O.R. (3d) 401, [2011] O.J. No. 5711, 2011 ONCA 784.

[^36]: Ibid., paras. 25 and 26.

[^37]: J.S.M. Corp. (Ontario) Ltd. v. Brick Furniture Warehouse Ltd., [2008] O.J. No. 958, 2008 ONCA 183, para. 65; Research Capital Corp. v. Skyservice Airlines Inc., 2008 CanLII 30703 (ON SC), [2008] O.J. No. 2526, 2008 CarswellOnt 3754 (S.C.J.), para. 35, affd [2009] O.J. No. 2016, 2009 ONCA 418, para. 5.

[^38]: J.S.M. Corp., supra, para. 66.

[^39]: Ibid., para. 66.

[^40]: GATX Corp. v. Hawker Siddeley Canada Inc., [1996] O.J. No. 1462, 1996 CanLII 8286 (Gen. Div.).

[^41]: Gestion Trans-Tek Inc. v. Shipment Systems Strategies Ltd., [2001] O.J. No. 4710, 2001 CanLII 28312 (S.C.J.); Tas-Mari Inc. v. DiBattista Gambin Developments Ltd. (2009), 97 O.R. (3d) 579, [2009] O.J. No. 3296, 2009 CanLII 41355 (S.C.J.), paras. 121-25.

[^42]: (2007), 2007 ONCA 874, 88 O.R. (3d) 269, [2007] O.J. No. 4860 (C.A.), para. 78.