SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 09-CV-379032

MOTION HEARD: April 30, 2014

Re: St. Takla Hemanote Drugs Ltd.

Plaintiff

v.

Pharmoy Distributing Inc., Pharmoy Distributing (Two)
Inc. carrying on business as South End Pharmacy,
Faruq Ladhani and Ian James

Defendants

BEFORE: Master Thomas Hawkins

COUNSEL:
Michael Katzman for moving plaintiff
F (416) 628-2224

J. Sebastian Winny for responding defendants
other than Ian James
F 1 (519) 744-7974

No one for defendant Ian James (noted in default)

REASONS FOR DECISION

Nature of Motion

[1] This is a motion by the plaintiff for leave to amend the statement of claim in terms of the draft statement of claim found at schedule “A” to the plaintiff’s notice of motion. This pleading should be entitled “Fresh as Amended Statement of Claim” so as to clearly distinguish it from the original statement of claim. The plaintiff is hereby given leave to make that amendment.

Leave to Bring this Motion Not Required

[2] The plaintiff has set this action down for trial. During argument, there was discussion about whether the plaintiff needed leave to bring this motion. The plaintiff’s notice of motion in part seeks leave to bring this motion “if required”. In my view such leave is not required. Rule 26.01 (quoted below in paragraph [4]), which governs motions for leave to amend a pleading, opens with the words “On motion at any stage of an action.” This would, for example, permit a plaintiff to bring a motion for leave to amend the statement of claim at the stage of the action after the plaintiff has set the action down for trial.

[3] Rule 48.04 dealing with the consequences of setting an action down for trial is not a bar to a motion for leave to amend a pleading under rule 26.01. See Soulos v. Korkontzilas (1990), 1990 6751 (ON SC), 74 O.R. (2d) 766 (H.C.J.).

[4] As I have said, motions for leave to amend a pleading are governed by rule 26.01. Rule 26.01 provides as follows.

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.

[5] The first proposed amendments are five additions to clauses 1 (a) of the original statement of claim. Clause 1(a) and the five additions provide as follows.

1. The Plaintiff claims as against the Defendants Pharmoy Distributing Inc. (“Pharmoy”), Pharmoy Distributing (Two) Inc. (“Pharmoy Two”), Faruq Ladhani (“Ladhani”) jointly and severally:

(a) Damages in the amount of $1,000,000.00 for breach of warranty, breach of non-competition agreement and for inducing and assisting the Defendant Ian James (“James”) to breach his contractual and fiduciary duties with the Plaintiff;

(a.1) In the alternative damages in the amount of $1,000,000.00 for unjust enrichment.

(a.2) In the further alternative damages in the amount of $1,000,000.00 for fraudulent and/or negligent misrepresentation.

(a.3) In the further alternative damages in the amount of $1,000,000.00 for the tort of deceit.

(a.4) In the further alternative damages in the amount of $1,000,000.00 for intentional interference with economic relations.

(a.5) In the further alternative disgorgement of any profits derived by the defendants for breach of warranty and breach of non-competition agreement.

[6] These amendments do not allege any new causes of action. They simply identify by name the particular civil wrongs committed by one or more of the defendants as alleged elsewhere in the statement of claim, and set out the remedy sought for those civil wrongs. Clause (a.5) simply seeks an additional remedy for two civil wrongs already alleged in the statement of claim. A remedy by itself is not a cause of action.

[7] These amendments will not cause the first three defendants to suffer non-compensable prejudice. These amendments do not seek relief against the fourth defendant Ian James.

[8] The plaintiff is therefore given leave to make the amendments set out in clauses 1 (a.1) to 1 (a.5).

[9] The next proposed amendment is found in paragraph 28.1. There the plaintiff proposes to allege the following.

28.1 The Plaintiff further states that the representations made by the Defendants Pharmoy and Ladhani that they did not have information or knowledge which, if known to the Plaintiff, might reasonably be expected to deter the Plaintiff from proceeding with the purchase were so made through the words and conduct of the Defendants Pharmoy and Ladhani. The Plaintiff states that said representations were false and were made by the Defendants Ladhani and Pharmoy at a time when both the Defendants Pharmoy and Ladhani had knowledge of the falsity of the statement, or alternatively were reckless as to whether or not the representations were true when it was made.

[10] The facts alleged in the first sentence of paragraph 28.1 are, with one exception, already alleged in paragraph 12 of the existing statement of claim. In paragraph 12 of the existing statement of claim the plaintiff alleges that the representation in question was made in a statutory declaration provided by the first Pharmoy defendant. A corporation cannot swear or affirm a statutory declaration. Only a natural person can do that. It follows that the statutory declaration provided by the first Pharmoy defendant must have been sworn by either the defendant Ladhani or the defendant James. The first sentence of the proposed paragraph 28.1 provides one particular of the allegations in original paragraph 12: the statutory declaration was sworn or affirmed by the defendant Ladhani. This is the one exception I refer to at the beginning of this paragraph. This is not a new cause of action. It is a fact that was implicit in the original statement of claim.

[11] The second sentence of proposed paragraph 28.1 alleges facts that were already alleged in paragraph 27 of the original statement of claim with the exception that the defendant Ladhani is identified as the natural person who swore or affirmed the subject statutory declaration.

[12] In paragraph 27 of the original statement of claim the plaintiff alleges the following.

27. The Plaintiff states that the Defendant Pharmoy is in breach of the representation and warranty contained at paragraph 6 of the offer to purchase and incorporated in the Statutory Declaration that it provided on the closing to the said effect in that it had [no] information or knowledge which if known to the purchaser might reasonably be expected to deter the purchaser from completing the transaction.

[13] I have added the word “no” to the third line of paragraph 27. Otherwise, this paragraph makes no sense, given the other allegations in the statement of claim. The plaintiff is given leave to make this amendment to the statement of claim.

[14] In my view the second sentence of proposed paragraph 28.1 does not raise any new cause of action for the same reasons that the first sentence of this paragraph does not do so. Further, it simply provides particulars arising from the core factual nexus set out in the original statement of claim. That is not a new cause of action.

[15] The next proposed amendment is found in paragraph 28.2. There the plaintiff alleges the following.

28.2 The Plaintiff states that it relied upon the false representation and was induced to enter the agreement by virtue of the same, and as a result, suffered considerable damages as claimed in the prayer for relief. The Plaintiff accordingly claims damages as set out in the prayer for relief for fraudulent or negligent misrepresentation, and/or the tort of deceit.

[16] In my view, proposed paragraph 28.2 alleges facts that expressly found or are implicit in original paragraph 28, and identifies the particular civil wrongs complained of. This does not amount to any new cause of action.

[17] Original paragraph 28 of the statement of claim alleges the following.

28. The Plaintiff states as a result of the breach of the said representation and warranty the Plaintiff has paid a substantially excessive amount for the purchase of the goodwill of the West End Pharmacy.

[18] The next proposed amendment to the statement of claim is found in proposed paragraph 28.3. In this paragraph the plaintiff alleges as follows.

28.3 Further and/or in the further alternative, the Plaintiff states that in respectively causing a false statutory declaration to be sworn and executing said statutory declaration, the Defendants Pharmoy and Ladhani interfered with the Plaintiff’s business and livelihood by unlawful means and with the intention to injure the Plaintiff by causing the plaintiff to pay an amount well in excess of market value for the purchase of the business. The Plaintiff has suffered considerable economic loss as a result and claims the same from the Defendants as set out in the prayer for relief as a result of the tort of intentional interference with economic relations.

[19] This paragraph simply alleges facts that are expressly or implicitly set out in paragraphs 12, 27 and 28 of the original statement of claim and sets out both a new legal consequence flowing from those originally pleaded facts and a new remedy. This paragraph does not set out any new cause of action.

[20] The final amendment which the plaintiff wishes to make is found in paragraph 34.1. In this paragraph the plaintiff alleges as follows.

34.1 The Plaintiff further states that by conducting themselves in the manner described in the within Statement of Claim, the Defendants have been enriched to the corresponding deprivation of the Plaintiff, and there exists no juristic reason for the enrichment to remain with the Defendants. The Plaintiff accordingly seeks damages as set out in the prayer for relief for unjust enrichment, and further and/or in the alternative, for disgorgement of any profits improperly derived by the Defendants’ wrongful conduct hereinbefore described.

[21] As a matter of law, litigant in the position of the plaintiff has the option of claiming one of two remedies: either its own losses or the gain to the defendants flowing from the civil wrongs the defendants allegedly committed. Paragraph 34.1 simply alleges that the plaintiff is entitled to new remedies based on facts expressly or implicitly set out in the factual matrix found in original statement of claim. This paragraph does not raise any new causes of action.

Result

[22] For all these reasons, the plaintiff is given leave to amend the statement of claim as asked.

Costs

[23] The plaintiff has been successful on this motion and should receive the costs of it. I fix those costs at $3,000 and order the defendants other than Ian James jointly and severally to pay such costs to the plaintiff within 30 days.

(original signed)__

Date: June 17_, 2014
Master Thomas Hawkins