ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-13-479650
DATE: 20150908

BETWEEN:

HEALING HANDS MASSAGE THERAPY CLINIC and ASHER MAHMOOD
Plaintiff/Defendants by Counterclaim

– and –

JOY NICOLE SIMON and ALEN M. KATIC
Defendants/Plaintiffs by Counterclaim

No one in attendance for the Plaintiff/Defendants by Counterclaim

Joy Nicole Simon in person

HEARD: August 11, 2015

G. DOW, j

reasons FOR JUDGMENT

[1] The defendant and plaintiff by counterclaim, Joy Nicole Simon (“Dr. Simon”) seeks default judgment on her counterclaim issued and served on or after September 6, 2013. The plaintiff and defendants by counterclaim, Healing Hands Massage Therapy Clinic and Asher Mahmood failed to defend the counterclaim and were noted in default on or about May 11, 2015. Dr. Simon chose to proceed in accordance with Rule 19.05, that is, on an ex parte basis. Dr. Simon filed a 57-paragraph affidavit with 30 exhibits/attachments in support of her claim.

Background

[2] Dr. Simon, a chiropractor since 2004, was seeking to build her chiropractic practice in downtown Toronto from 2007. She purchased the practice of another chiropractor who was leaving the area in June of 2008. Dr. Simon agreed to pay $7,500 for the other chiropractor’s list of patient files and an additional amount if a threshold level of revenue was met (Exhibit A to the affidavit of Joy Nicole Simon sworn August 6, 2015).

[3] In January, 2010, Dr. Simon began an association with Healing Hands Massage Therapy Clinic and its owner/operator Asher Mahmood (“Healing Hands” and “Mr. Mahmood”). Dr. Simon brought her active practice including a list of 977 former or active patients. The financial arrangement evolved into chiropractic services being rendered by Dr. Simon or a locum on her behalf, the billings being processed by Healing Hands and 25 percent of the revenue generated by Dr. Simon remitted to Healing hands and Mr. Mahmood for providing the facility and accounting services.

[4] Dr. Simon gave birth to her first child in January, 2012 but continued working having a locum attend in her stead. The initial locum was replaced by Dr. Lisa Caputo who executed an Agreement, September 7, 2012 (Exhibit I to the affidavit of Joy Nicole Simon sworn August 6, 2015). There are two key clauses in the Agreement, the first being section 4.5 wherein Dr. Caputo agreed “not to solicit or induce, either directly or indirectly” any of Dr. Simon’s patients for a period of two years in a geographic area of five kilometres of where Healing Hands was situate, 6 Adelaide Street East, Toronto. Any breach of this clause resulted in an agreed amount of damages “fixed in the amount of TWENTY-FIVE THOUSAND ($25,000) DOLLARS”. The other clause of note was section 7.2 which permitted Dr. Caputo to terminate the Agreement with notice “given in writing, and the notification period shall be no less than FOURTEEN (14) DAYS”.

[5] Issues arose between the parties in late 2012 which were discussed and the go forward understanding reduced to writing by Dr. Simon and supplied to Mr. Mahmood in an email January 4, 2013. The email included the sentence “Please let me know whether we’re on the same page, and whether you would like to add anything of your own.” There was no evidence presented that Mr. Mahmood responded or disagreed with the summary, the key aspect of which was Healing Hands retaining 25 percent of Dr. Simon’s gross billings for chiropractic treatments and acupuncture and that Dr. Lisa Caputo was employed by Dr. Simon as a locum practitioner. Dr. Simon was responsible for paying Dr. Caputo.

[6] However, by April, 2013 Dr. Simon began to notice her payments from Healing Hands were smaller than expected and she discovered Mr. Mahmood had begun increasing his share of the revenue to 35 percent effective January, 2013. Dr. Simon moved out April 19, 2013 taking all of the patient files to a new and nearby location.

[7] Dr. Caputo provided an email to Dr. Simon April 22 advising that she had agreed to be employed directly by Healing Hands where she would continue to practice seeing patients without any restriction or observing her Agreement. She also provided on that same date her termination of the Agreement effective that date, again, contrary to the terms of her Agreement.

[8] Healing Hands commenced an action May 3, likely served May 6, 2013 along with the Notice of Motion returnable May 8, 2013 seeking an interim/interlocutory injunction from Dr. Simon (and her spouse, Alen Katic) for return of the files. The motion proceeded May 15 with reasons released by Justice Perell May 22, 2013. Justice Perell applied the legal test with the requisite three elements of a strong prima facie case, a factor of irreparable harm and the factor of balance of convenience granting the motion as requested. It is noteworthy that at paragraph 45, Justice Perell states any adverse financial implications can be resolved “by a counterclaim against Healing Hands in the case at bar.” The costs of the motion were awarded in the cause.

[9] Dr. Simon delivered the files as ordered (although there was some dispute about the breadth and extent of the material).

[10] As indicated, a Statement of Defence and Counterclaim was delivered and served. No defence to counterclaim was served in response. The defendants by counterclaim were noted in default as of May 11, 2015. As a result, the allegations contained in the pleading of Dr. Simon are deemed to be true.

Damages

[11] Dr. Simon itemized her claim for damages beginning with the 10 percent that was deducted from the revenue she generated between January until April 14, 2013. Utilizing the daily log and monthly reports, she calculated her billings ($12,155) and her entitlement (75 percent or $9,116.25). She deducted the amount she actually received ($8,051.50). The result is a net claim of $1,064.75 and this is the first part of the award made.

[12] Regarding billings for April 15-19, 2013 that were generated and not paid, the evidence from the daily log and monthly reports indicate $920 was billed and Dr. Simon is entitled to 75 percent of this amount or $690. This amount is also awarded to Dr. Simon.

[13] In May, 2013, Aviva Canada was invoiced for treatment rendered to a patient arising from a motor vehicle accident. Aviva Canada issued a cheque June 11, 2013 for the entire amount, $2,115, payable to both Healing Hands and Dr. Simon. However, it was sent to Healing Hands who somehow succeeded in depositing it. Dr. Simon is entitled to receive 75 percent of this amount or $1,586.25 and this amount is awarded to her.

[14] Dr. Simon incurred legal fees of $12,500 to defend the action and motion heard by Justice Perell. This claim is not specifically pleaded or claimed in the counterclaim. Further, it is the subject of the order by Justice Perell that such costs were “in the cause” which I interpret to be the main action as when made, the defence and counterclaim had yet to be drafted or served. Dr. Simon declined to seek an amendment to the counterclaim although it likely remains open to her to amend her defence and counterclaim should this judgment be set aside to allow the counterclaim to be defended. To be clear, this amount is not part of the award.

[15] The most difficult part of the claim to quantify is the value of the lost business Dr. Simon has incurred as a result of the conduct of Healing Hands and Mr. Mahmood. This includes their employment of Dr. Caputo effective April 22, 2013 and her decision to continue to practice, thus performing chiropractic services in a location and on patients that a portion of the revenue should have flowed to Dr. Simon. In this regard, as part of assessing the damages claimed by Dr. Simon in paragraphs 39 and 40 of the counterclaim, I conclude she is entitled to $25,000 which is also the liquidated amount in her Agreement with Dr. Caputo.

[16] In addition, Dr. Simon filed income tax returns for 2008, up to and including 2014, which clearly show a diminution in her income. Dr. Simon admitted in her materials she was working less as a result of starting a new family but had also made arrangements to continue her practice (in an attempt to grow same) by entering into the Agreement with Dr. Caputo and a previous chiropractor. The arrangement with Dr. Caputo was to pay her 35 percent of the 75 percent she was receiving for rendering chiropractic services and acupuncture at Healing Hands. In other words, Dr. Simon ought to have received 45 percent of the revenue generated by chiropractic services at Healing Hands had the relationship not broken down. The email of January 4, 2013 summarizing the relationship between Dr. Simon and Healing Hands makes it clear she is the “owner of (and responsible for) the chiropractic practice at Healing Hands”.

[17] Dr. Simon’s net average income beginning in 2008 until the end of 2011 is $12,795.25. Dr. Simon sought that amount from April, 2013 until the present or 2.5 years. Her net income in the years subsequent to 2011 has been less than zero given additional and properly deductible expenses. This includes legal fees related to this matter. Overall, it is my view a fair and reasonable assessment of her diminished earnings and damages as a result of the breach of contract and negligent behaviour of Healing Hands and Mr. Mahmood is $28,789.31 (or 2.5 years of pre-2012 net average income or $12,795.25).

[18] Regarding her legal costs of defending the action and advancing the counterclaim, the evidence presented was in the form of a letter from Katherine Henschell, barrister and solicitor, and whose firm name appears on the Statement of Defence and Counterclaim that legal fees were charged totalling $18,715.92 for services performed. Dr. Simon confirmed this amount has been paid. This included legal work directed to defending the action against Dr. Simon (as opposed to advancing the counterclaim) and as such is not, in my view, properly recoverable as the actual legal account was not provided, I am reducing the amount claimed by approximately 15 percent or to $9,315 inclusive of fees, HST and disbursements.

[19] Dr. Simon also submitted a list of disbursements totalling $556.90 consisting of court fees, copying and binding which will also be allowed.

[20] The counterclaim includes a claim for pre-judgment interest. By my calculation, pre-judgment interest would have commenced with issuance of Statement of Defence and Counterclaim or September 6, 2013 until the present. It is now more than 24 months since the claim was advanced. It must be acknowledged that a substantial portion of the claim being advanced is of an ongoing nature. The applicable rate of pre-judgment interest is 1.3 percent per annum. In accordance with section 128 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, allowing for pre-judgment interest and section 130 giving the Court discretion to award the amount of pre-judgment interest, the amount will be fixed at $850. This represents about 50 percent of 1.3 percent per annum for 24 on the entire amount being awarded, which I have totalled to be $67,002.21.

[21] As a result, Dr. Simon is entitled to judgment against Healing Hands and Dr. Mahmood in the amount of $67,852.21.

Mr. Justice G. Dow

Released: September 8, 2015

COURT FILE NO.: CV-13-479650
DATE: 20150908

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

HEALING HANDS MASSAGE THERAPY CLINIC and ASHER MAHMOOD

Plaintiff/Defendants by Counterclaim

– and –

JOY NICOLE SIMON and ALEN M. KATIC

Defendants/Plaintiffs by Counterclaim

REASONS FOR JUDGMENT

Mr. Justice G. Dow

Released: September 8, 2015