REICHMANN v. KOPLOWITZ, 2012 ONSC 5063
COURT FILE NO.: CV-12-449847
MOTION HEARD: SEPTEMBER 6, 2012
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Faigie Reichmann v. Mark Koplowitz, also known as Mendy Koplowicz and Mississauga Apartments Partnership
BEFORE: MASTER R.A. MUIR
COUNSEL:
Devin Jarcaig for the Moving Parties/Defendants
Morris Cooper for the Responding Party/Plaintiff
REASONS FOR DECISION
[ 1 ] This motion is brought by the defendants pursuant to Rule 25.10 of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194 (the “Rules”) for an order that the plaintiff provide particulars of certain allegations found in the statement of claim.
[ 2 ] This litigation involves a partnership dispute between a brother and sister. It appears that in June, 1994, the plaintiff and the defendant Mark Koplowitz (“Mark”), along with their parents, formed a partnership called the “Mississauga Apartments Partnership” (the “Partnership”). The parents have since passed away.
[ 3 ] The Partnership is the registered owner of a multi-unit apartment building located at 190 Wyndham Street in Mississauga. Mark is the property manager. The plaintiff alleges that she owns a 50% interest in the Partnership. In addition, she alleges that Mark has failed to provide her with a true and accurate accounting, improperly appropriated partnership property to his own use, taken improper management fees and generally acted without regard to his legal and fiduciary obligations to the plaintiff. The statement of claim seeks an accounting, along with damages for conversion, misappropriation, wrongfully withheld profits and punitive and exemplary damages. The claims total more than $2,000,000.00.
[ 4 ] The statement of claim was issued on March 27, 2012 and served shortly thereafter. On May 8, 2012, the defendants served a notice of intent to defend, a request to inspect documents and a demand for particulars. The plaintiff’s reply to the request to inspect documents and the demand for particulars was served on May 7, 2012. The defendants take the position that the plaintiff’s reply to the demand for particulars is insufficient.
[ 5 ] The defendants seek the following particulars:
Particulars of paragraph 1 of the statement of claim and specifically, particulars of what relief is being sought against which defendants;
Particulars of paragraph 15 of the statement of claim and specifically, details of the requests made by the plaintiff for an accounting;
Particulars of how Mark’s annual statements were deliberately false and misleading and in what manner;
Particulars of paragraph 16 of the statement of claim and specifically, what property Mark allegedly appropriated to himself, when he did so and how he did so and how Mark converted the Partnership’s net income for his own benefit;
Particulars of the plaintiff’s direct proprietary interest in the Partnership as alleged in paragraph 17 of the statement of claim; and,
Particulars of Mark’s alleged appropriation of the Partnership’s profits as set out in paragraph 21 of the statement of claim.
[ 6 ] The plaintiff replied to the demand for particulars, in part, as follows:
The relief sought in the statement of claim is against both defendants and no further particulars of paragraph 1 are required as that paragraph only sets out the claims the plaintiff is making;
The plaintiff made numerous requests of Mark and his lawyer for an accounting, both in writing and orally;
The false and misleading annual statements are those statements prepared by Mark for the years 2009, 2010 and 2011. The statements are false and misleading insofar as they deal with the plaintiff’s percentage ownership in the Partnership, management fees, charitable contributions and other improper expenses;
The Partnership property was allegedly appropriated by Mark by writing cheques payable to the plaintiff and then fraudulently endorsing those cheques to his benefit and by Mark understating income, overstating expenses, improperly charging expenses for management fees and making unauthorized charitable contributions;
The plaintiff alleges that she has a 50% proprietary interest in the Partnership and not the 25% interest set out in the annual Partnership statements prepared by Mark; and,
Mark appropriated the Partnership’s profits to himself by allocating 60% of the Partnership interest to himself, refusing to distribute the plaintiff’s interest in the Partnership and converting payments owing to the plaintiff for his own benefit.
[ 7 ] The defendants argue that the statement of claim and the particulars provided fail to meet the minimum level of material fact disclosure required by the Rules . Specifically, they argue that the allegations made by the plaintiff are in the nature of fraud and misrepresentation. Such a pleading, they submit, requires full particularity, in accordance with Rule 25.06(8).
[ 8 ] The plaintiff argues that this action is only at the pleadings stage. The defendants are entitled to further details and particulars at discovery but the court should not order any further particulars at the pleadings stage. The plaintiff submits that her claim is sufficiently particularized in the statement of claim and in her reply to the defendants’ demand for particulars. She submits that no further particulars are necessary in order to allow the defendants to plead to the statement of claim.
[ 9 ] In my decision in Areva NP GmbH v. Atomic Energy of Canada Ltd. , [2009] O.J. No. 4372 (S.C.J. – Master) , I summarized the applicable law regarding particulars as follows:
39 Rule 25.10 has been interpreted to require particulars of a pleading only when the particulars sought are not within the knowledge of the party seeking them and when they are necessary to enable that party to plead. In Obonsawin v. Canada, [2001] G.S.T.C. 26 (ON S.C.), Epstein J. (as she then was) had occasion to comment on when particulars should be ordered. At p. 26-9 of that Report she stated as follows:
In terms of the general principles, the test for when particulars should be ordered is that set out in the decision in Physicians' Services . In that case the court applied the principles laid down in cases such as Fairbairn v. Sage , 1925 403 (ON CA) , 56 O.L.R. 462 , [1925] 2 D.L.R. 536 in which it was held that particulars for pleading will only be ordered when (1) they are not within the knowledge of the party demanding them, and (2) they are necessary to enable the other party to plead. While other cases such as Champagne v. Kapuskasing Plumbing & Heating Ltd. ( 1996), 48 C.P.C. (3d) 111 (Ont. Div. Ct.) , help explain why particulars are ordered such as to define the issues, to prevent surprise at trial, to enable adequate preparation for trial, and to facilitate the hearing, I am of the view that the Physicians' Services case remains the authority as to when the court should order particulars.
40 See also: Caputo v. Imperial Tobacco Ltd. (1996), 48 C.P.C. (3d) 339 (Ont. Ct. G.D.) at 343 ; Physicians Services' Inc. v. Cass , 1971 359 (ON CA) , [1971] 2 O.R. 626 (C.A.) at 627 ; and Mirshahi v. Suleman, above, at para. 17
41 The onus to satisfy the Court that particulars are necessary, and not within the knowledge of the party requesting them, rests with the party requesting the particulars. See Obonsawin , above, at p. 26-10. AECL, therefore, has the onus of demonstrating that it does not know the information requested in the list of particulars at paragraph 3 of the Notice of Motion. As stated in Master Sandler's decision in Copland , above, at 588:
In between the concept of "material facts" and the concept of "evidence", is the concept of "particulars". These are additional bits of information, or data, or detail, that flesh out the "material facts", but they are not so detailed as to amount to "evidence". These additional bits of information, known as "particulars", can be obtained by a party under new rule 25.10 , if the party swears an affidavit showing that the particulars are necessary to enable him to plead to the attacked pleading, and that the "particulars" are not within the knowledge of the party asking for them. An affidavit is not necessary only where the pleading is so bald that the need for particulars is patently obvious from the pleading itself. New rule 25.10 is substantially the same as former Rule 140, and in my view, the law on this subject has not changed by reason of the change from the Rules of Practice to the Rules of Civil Procedure .
[ 10 ] Having applied the principles set out above, I have come to the conclusion that no further particulars are necessary. First, I am satisfied that the statement of claim, when read together with the particulars provided, does in fact meet the minimum level of required fact disclosure, even accepting that some of the allegations are in the nature of fraud or misrepresentation. The statement of claim and the reply to the demand for particulars are more than simply bald allegations of wrongdoing. They set out the nature of the parties relationship (a partnership), the duties and responsibilities undertaken by Mark in connection with the Partnership (property management and preparation of annual reports), and the plaintiff’s areas of concern (inaccurate accounting, management fees, charitable contributions, improper expenses, fraudulently endorsed cheques and improper allocation of the partners’ respective partnership interests).
[ 11 ] Second, it is important to remember that an order for particulars is a discretionary one. The court must make the order that is just in the circumstances of each case. See Fairbairn v. Sage (1925), 1925 403 (ON CA) , 56 O.L.R. 462 (C.A.) at page 471 . The plaintiff and Mark are partners (as well as being siblings). It appears that Mark has been the property manager for the Partnership since at least 2000. He prepared the annual statements. The factual background set out in the statement of claim would seem to indicate that the information necessary to plead would be within the knowledge of the defendants. Moreover, there is no evidence from Mark that such particulars are not within his knowledge and that he is unable to plead to the statement of claim without them. As I have indicated above, I do not view the statement of claim, as particularized by the plaintiff’s reply to the defendants’ demand for particulars, to be “so bald that the need for particulars is patently obvious from the pleading itself”. See Copland v. Commodore Business Machines Ltd. , 1985 2190 (ON SC) , [1985] O.J. No. 2675 (S.C.O. – Master) at paragraph 13 .
[ 12 ] For the reasons set out above, it is my view that no further particulars are required in the circumstances of this case. The defendants’ motion is therefore dismissed. The defendants shall serve their statement of defence by no later than September 28, 2012.
[ 13 ] At the conclusion of the argument of this motion, the parties agreed that the successful party should receive a costs order on a partial indemnity basis in the range of $5,000.00 to $6,000.00. I have reviewed and considered the parties’ costs outlines and the factors and principles set out in Rule 57.01(1). In my view, it is fair and reasonable that the defendants pay the plaintiff’s costs of this motion in the amount of $5,000.00, inclusive of HST and disbursements, payable within 30 days.
________________________Master R.A. Muir
DATE: September 7, 2012