CITATION: Van Halteren v. De Boer Tools, 2013 ONSC 6736
COURT FILE NO.: CV-12-37653
DATE: 2013/12/02
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JACOB VAN HALTEREN
John W. Findlay, for the Plaintiff
Plaintiff
- and -
De BOER TOOLS INC.
Tyler H. McLean, for the Defendant
Defendant
HEARD: Monday, October 28, 2013
GLITHERO J.
RULING
[1] The plaintiff brings this motion for an order granting leave to amend his Statement of Claim.
[2] The defendant corporation is the maker of industrial tools and molds.
[3] The plaintiff claims to have advanced $500,000.00 to the defendant in 2002. This does not appear to be disputed. The lack of precision and documentation in the dealings between the parties in respect of this advance is perplexing. It has given rise to this action.
The Claim as Originally Advanced
[4] A Notice of Action was issued on October 15, 2012. A Statement of Claim dated November 6, 2012 asserts the plaintiff’s claim in the amount of $1,086,000.00 plus interest in the amount of $228,060.00 for the period of November 21, 2008 to November 21, 2010, based on a 10% per cent per annum compounded interest rate, plus interest thereafter at the same 10% per annum compounded. The Statement of Claim otherwise identifies the plaintiff and the defendant, and simply pleads that on November 21, 2008 the defendant provided to the plaintiff a promissory note which provided that the defendant promised to pay the plaintiff the principal amount of $1,086,000.00 at the rate of 10% compounded annually on November 21, 2010. The Statement of Claim further pleads that a demand for payment has been made and that the defendant has not paid.
[5] In a Statement of Defence dated January 11, 2013, the defendant denied that it provided the plaintiff with the alleged promissory note dated November 21, 2008, upon which the plaintiff’s action rested. The defendant denies any liability.
[6] As presently pleaded, the plaintiff’s action is for payment on a promissory note, and the defence is based on the denial of the promissory note or any liability.
The Claim as Advanced In the Amendment Sought
[7] In response, the plaintiff provided the amended Statement of Claim dated May 28, 2013 that is the subject of this motion. In it, the plaintiff proposes to add Gary De Boer and Marcia De Boer, who are directors, officers and shareholders of the defendant corporation.
[8] In the amended Statement of Claim the plaintiff seeks the same amounts as it had originally. The proposed amendment, however, pleads as an alternative that the plaintiff had provided the $500,000.00 to the defendant in September 2002 on the understanding that the plaintiff would be issued shares in the defendant corporation on terms and conditions to be set forth in a shareholders agreement that would be agreeable to the plaintiff, failing which agreement the money would be an investment in the form of a loan with a return of 10% per year compounded annually. The proposed amendments plead that the plaintiff has not been issued any shares and that no shareholders agreement was negotiated or provided to him, and that accordingly, the alternate security for the monies he advanced, the $500,000.00 namely, in the form of the promissory note, remains applicable and enforceable.
[9] As a further alternative in the proposed amendments, the plaintiff pleads that Mr. and Mrs. De Boer as directors and officers conducted the business of the corporate defendant in such a manner as to be oppressive, unfairly prejudicial, and have unfairly disregarded the interests of the plaintiff as a creditor or a security holder in the defendant corporation by paying themselves salaries and other benefits, paying themselves dividends or purchasing equipment and assets unaffiliated with the corporate defendant. Accordingly, the plaintiff claims the sum of $500,000.00, plus interest at 10% compounded annually from September 1, 2002. He claims to be entitled to that amount as an oppression remedy under s. 248 (1) (g) of the Business Corporations Act, R.S.O. 1990, c. C.16.
The Motion Evidence
[10] In support of his motion, the plaintiff relies on an affidavit sworn by him on June 24, 2013, in response to an earlier motion by the defence which was later abandoned. In his affidavit, he swears to the history of having invested a total of $500,000.00 in 2002 at the request of Mr. De Boer. He asserts that the agreement was that the parties would negotiate the terms of a shareholder agreement which would specify the rights and privileges attaching to the shares to be issued to the plaintiff in return for his $500,000.00 investment. He swears to the execution of a promissory note in his favour by Mr. De Boer, as president of the corporate defendant, in the principal sum of $500,000.00, plus interest at 10%, compounded annually. The typed portion of that note contains the phrase “this promissory note is in force until a share agreement is in place”. Aside from the typed information on the note, in handwriting it purports to have been issued again on November 21, 2005, and then again on September 21, 2018 and to have been resigned by Mr. De Boer accordingly. The reference to 2018 is inexplicable to me. Beside that date, as handwritten on the document, appears the additional notation “see new doc.” This “new doc.” may be the November 21, 2008 note that was sued upon in the original Statement of Claim. In handwriting, it also adds the term “compounded” with respect to the description of the interest. That term was not found on the typewritten version.
[11] Also included in the plaintiff’s affidavit is a description of a litany of e-mails and exchanges between the parties which seem quite incomprehensible in many ways. The discussions seemed to alternate between notes and shares and it appears that no express agreement was ever reached.
[12] It appears that the defendant has retained a handwriting expert and on the basis of that expert’s advice, takes the position that the note sued upon, the one dated November 21, 2008, is a forgery.
[13] It appears to be common ground that none of the money or interest has been repaid to the plaintiff.
Discussion
[14] The plaintiff relies on the near mandatory nature of Rule 26.01 as to the granting of leave to amend pleadings, and submits that while unrelated statute-barred claims cannot be advanced by way of amendment to existing claims, the situation is different when the proposed amendment simply advances a new remedy, as opposed to a new cause of action.
[15] The defendant and proposed defendants oppose the amendment on several grounds. Firstly, it is argued that the plaintiff does not have sufficient status to advance a claim for an oppression remedy as he is neither a creditor or security holder of the corporate defendant.
[16] Secondly, the defence argues that the unfair treatment giving rise to the alleged oppression remedy, as pleaded, is worded in such a way as to allege unfair exclusion of the plaintiff from items enjoyed by the personal defendants. The defence argues that as a shareholder, the plaintiff would not have been entitled to such benefits.
[17] Thirdly, the defence claims the proposed amendment to claim for an oppression remedy is statute-barred by operation of section 4 of the Limitations Act, 2002, S.O. 2002 c.24 sched. B.
[18] I am aware that Rule 26 provides that amendments are to be granted unless a result in prejudice that can’t be compensated in costs or adjournments. There are some other limitations concerning actions which are clearly non-sustainable on their face. I am also aware that it does not fall to me to make any findings of fact on a motion of this nature.
[19] The plaintiff cites Dee Ferraro Ltd. v. Pellizzari, 2012 ONCA 55, [2012] O.J. No. 355 where the Court of Appeal allowed an appeal from a decision which had denied an amendment on the basis that it constituted a new cause of action. In that case, Justice Strathy (as he then was), cited the distinction that exists between pleading a new cause of action as opposed to pleading new or alternative remedies on the same facts. He also refers to Frohlick v. Pinkerton Canada Limited, 2008 ONCA 3, where the Court of Appeal found proposed amendments to be statute-barred because of the expiration of the limitation period and hence that there was a presumption of prejudice. In respect of the issue in that case, the court held that the original pleading contained all the facts necessary to support the amendments that were sought and that the amendments simply were in pursuit of a new form of relief, based on the same facts as originally pleaded.
[20] Here, in my opinion, there are no facts pleaded in the original Statement of Claim that could support a claim for relief in the nature of an oppression remedy. The original pleadings say nothing about shares, investment, shareholders agreement or any of the other facts detailed in the plaintiff’s affidavit that go to explain the background of the promissory note upon which the lawsuit was commenced.
[21] This plaintiff has taken the position throughout the lawsuit that he never received any shares, that he never received a draft shareholders agreement for his approval, and that he never entered into a shareholders agreement.
[22] Instead, he relies on a promissory note or notes which he claims to have been signed by Mr. De Boer on behalf of the corporate defendant. He was clearly aware that he had not been repaid any of the monies he had advanced, nor interest on them.
[23] In my opinion, to allow the amendments sought would inject a whole new set of facts into the pleading, as well as the additional cause of action sought to be advanced in the amendment.
[24] No facts were originally pleaded that could serve as a foundation for any argument of oppressive conduct.
[25] In my assessment, the plaintiff accurately, albeit perhaps inadvertently, knew that the proposed amendment constituted a new cause of action when in his notice of motion, under the title “The Grounds for the Motion”, he relied on the appropriate rule and the fact that “the Plaintiff wishes to add a cause of action;”.
[26] In my opinion, this is a case where a plaintiff, faced with a denial of the promissory note upon which the action was originally based, seeks to avoid any problems which may arise from alleged forgery of the note, and instead switch to a new cause of action in respect of which the Limitations Act has expired.
[27] For these reasons, I would dismiss the motion to amend the Statement of Claim. Some of the factual allegations with respect to the history of the promissory note may well be relevant to the trial of the issue on the promissory note given the complicated and uncertain nature of the arrangements. In my opinion, the plaintiff would be allowed to lead evidence as to the history leading up to the note without allowing amendment to the pleadings as sought.
Costs
[28] The parties may make written submissions as to costs to be provided to me at my chambers in Kitchener at the Court House, 85 Frederick Street, 7th Floor, Kitchener, Ontario N2H 0A7. The submissions should not exceed five pages in length, exclusive of bills of costs. The submissions on behalf of the defendants should be delivered within 21 days of the release of these reasons, and those of the plaintiff should be delivered within 14 days thereafter. In the event that submissions on costs are not received within those time periods, or any extensions that are sought and granted, the issue of costs will be deemed to have been settled as between the parties.
C. S. Glithero J.
Released: December 2, 2013
CITATION: Van Halteren v. De Boer Tools, 2013 ONSC 6736
COURT FILE NO.: CV-12-37653
DATE: 2013/12/02
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Jacob Van Halteren
Plaintiff
– and –
De Boer Tools Inc.
Defendant
RULING
C. S. Glithero J.
Released: December 2, 2013