2015 ONSC 5539 COURT FILE NO.: CV-11-442399 MOTION HEARD: AUGUST 27, 2015

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Central-Epicure Food Products Ltd.

v.

Elaine Weinberg

BEFORE: MASTER R.A. MUIR

COUNSEL: Christos Papadopoulos for the plaintiff Shawn Tock for the defendant Lorne Honickman for the proposed defendants

REASONS FOR DECISION

[1] The plaintiff brings this motion pursuant to Rules 5.04(2) and 26.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) for an order granting it leave to amend its statement of claim to add three new defendants and to advance a new cause of action against the existing defendant.

[2] The incident that gives rise to this action took place nearly four years ago. However, the plaintiff takes the position that the two year limitation period set out in the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B (the “Limitations Act”) has not yet expired based on the doctrine of discoverability. It submits that the earliest it could have discovered the identity of the proposed defendants and sufficient facts necessary to allow it to claim against the proposed new defendants is when it came into possession of certain information in December 2014. The plaintiff argues that it was simply unable to discover the proposed new claims before that date, despite the exercise of reasonable diligence.

BACKGROUND

[3] On October 5, 2011, Loblaws received a complaint about the quality of certain food products distributed by the plaintiff. Loblaws had purchased the products from the plaintiff in order to be re-sold to the general public through its various retail operations. The plaintiff conducted an investigation which led it to believe that the complaint had been made by the defendant. At first the defendant denied, under oath, that she even made the complaint. She suggested that her phone had been compromised. Eventually, the defendant changed her story and admitted to having made the call. She explained that her actions were a result of stress associated with ongoing medical issues.

[4] The plaintiff issued a statement of claim on December 20, 2011. It is claiming damages from the defendant for defamation, unlawful interference with economic relations and inducing breach of contract.

[5] It appears that the plaintiff had always suspected that others were involved with the complaint made to Loblaws. Specifically, the plaintiff was suspicious of one of its competitors, the proposed defendant Foodfest International 2000 Inc. (“Foodfest”) and its principal, Henry Ender.

[6] A cross-examination of the defendant took place on November 29, 2012. During the course of that examination, the plaintiff’s lawyer asked the defendant if she had ever heard of the name Henry Ender. She admitted that she had heard of the name. The plaintiff’s lawyer then asked several follow-up questions on this subject which the defendant refused to answer. The plaintiff then brought a motion in June 2013 seeking an order that the defendant answer those refused questions. The motion was dismissed as Master Haberman determined that the questions regarding Mr. Ender were not relevant for the purposes of the cross-examination. It should be noted that the motion materials before Master Haberman make it very clear that the plaintiff was looking into the role Mr. Ender may have played in this incident and had very strong suspicions about his involvement.

[7] Despite these suspicions, it appears that nothing further was done to pursue the issue of Mr. Ender’s alleged involvement until December 2014. By coincidence, the mother of the principal of the plaintiff had a discussion with a person familiar with the Ender family. During this conversation she was told that the defendant was a very good long-time friend of the proposed defendant Sue Ellen Ender. Sue Ellen Ender is Henry Ender’s former spouse and a current employee of Foodfest. This information obviously heightened the plaintiff’s suspicions.

[8] The plaintiff served its notice of motion seeking leave to amend its statement of claim on or about April 29, 2015. In addition to the existing causes of action, the proposed amended statement of claim seeks to advance a new claim based on the tort of conspiracy to injure.

ANALYSIS

[9] The relevant provisions of the Limitations Act provide as follows:

1. In this Act,

“claim” means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission;

Basic limitation period

4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

Discovery

5. (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[10] Rule 5.04(2) provides as follows:

(2) Adding, Deleting or Substituting Parties - At any stage of a proceeding the court may by order add, delete or substitute a party or correct the name of a party incorrectly named, on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

[11] Rule 5.04 is not mandatory. It uses the word “may” instead of “shall” as is found in Rule 26.01 The court retains a discretion when exercising its powers to add a new defendant to an existing proceeding.

[12] The principles applicable to motions to add parties in circumstances such as those before the court on this motion are set out in the decision of Master Dash in Wong v. Adler, 2004 8228 (ON SC), [2004] OJ No 1575 (SCJ – Master); affirmed, 2004 73251 (ON SCDC), [2005] OJ No 1400 (Div Ct).

[13] At paragraph 45 of Wong, Master Dash states as follows:

45 What is the approach a judge or master should take on a motion to add a defendant where the plaintiff wishes to plead that the limitation period has not yet expired because she did not know of and could not with due diligence have discovered the existence of that defendant? In my view, as is clearly implied in Zapfe, the motions court must examine the evidentiary record before it to determine if there is an issue of fact or of credibility on the discoverability allegation, which is a constituent element of the claim. If the court determines that there is such issue, the defendant should be added with leave to plead a limitations defence. If there is no such issue, as for example where the evidence before the motions court clearly indicates that the name of the tortfeasor and the essential facts that make up the cause of action against such tortfeasor, were actually known to the plaintiff or her solicitor more than two years before the motion to amend, the motion should be refused. If the issue is due diligence rather than actual knowledge, this is much more likely to involve issues of credibility requiring a trial or summary judgment motion, provided of course that the plaintiff gives a reasonable explanation on proper evidence as to why such information was not obtainable with due diligence. That is not to say that such motion could never be denied if the evidence is clear and uncontradicted that the plaintiff could have obtained the requisite information with due diligence such that there is no issue of fact or credibility.

[14] It is also important to emphasize that the evidentiary burden to show reasonable diligence is quite low. See Wakelin v. Gourley, 2005 23123 (ON SC), [2005] OJ No 2746 (SCJ – Master); affirmed [2006] OJ No 1442 (Div Ct), at paragraph 14.

[15] Finally, it should also be noted that the Court of Appeal has held that the passing of a limitation period is fatal to a motion under Rule 5.04(2). See Joseph v. Paramount Canada's Wonderland, 2008 ONCA 469 at paragraphs 23 and 25. The former doctrine of special circumstances no longer applies. A party cannot be added to an existing action after the expiry of the applicable limitation period.

[16] I have considered and applied these principles to the evidence before me on this motion. In my view, the plaintiff should be granted leave to amend its statement of claim as requested.

[17] Mr. Honickman made an initial objection to the plaintiff’s evidence in respect of the December 2014 conversation regarding the relationship between the defendant and Sue Ellen Ender. He argued that this evidence was triple hearsay and offended Rule 39.01(4) concerning evidence on motions based on information and belief. Mr. Honickman submitted that the evidence should be struck or given little weight. I do not agree with Mr. Honickman’s argument. In my view, the evidence is not hearsay. For the purposes of discoverability, it does not matter whether the information about the relationship between the defendant and Sue Ellen Ender is true or false. What matters is that the information came to the attention of the plaintiff in December 2014. It was only at that point that the plaintiff felt it had enough information to initiate a conspiracy claim and sought to add the Ender defendants. I am therefore not prepared to give effect to this objection.

[18] The defendants and the proposed defendants also oppose this motion on the basis that the applicable limitation period has expired. They argue that the plaintiff obviously had suspicions regarding the possible involvement of Mr. Ender as early as November 2012 but waited for more than two years to bring this motion. They state that the proposed new claims are statute barred pursuant to the provisions of the Limitations Act.

[19] The plaintiff takes the position that the claims are not statute barred. The plaintiff argues that the earliest it could have discovered the proposed claims is when it acquired the information regarding the relationship between the defendant and Sue Ellen Ender in December 2014. In fact, the plaintiff takes the position that the applicable limitation period has not yet begun to run because it is still uncertain of all of the facts and details of the alleged conspiracy.

[20] In my view, the plaintiff has met the modest burden placed upon it to demonstrate reasonable diligence. The plaintiff began its investigation of this matter immediately after the complaint was made to Loblaws. It pursued the defendant and attempted to obtain her telephone records and other information. The plaintiff asked several questions about the connection between the defendant and Mr. Ender when the defendant was cross-examined in November 2012. The defendant refused to answer the plaintiff’s questions. The plaintiff then attempted to obtain a court order requiring the defendant to answer those questions. Its motion was unsuccessful. The plaintiff may have had strong suspicions from the outset but mere suspicions are not the equivalent of actual knowledge. The information obtained in December 2014 that the defendant and Sue Ellen Ender were close friends is much different than the information obtained on the defendant’s cross-examination. All the plaintiff knew from the defendant in November 2012 is that she had heard of the name Henry Ender. It is far from clear to me that the plaintiff had sufficient information to bring this proposed claim at any point before December 2014.

[21] Perhaps the plaintiff could have done more to investigate and uncover the alleged conspiracy. That, however, is a matter for trial. In my view, the plaintiff has demonstrated reasonable diligence for the purposes of this motion. In this regard, it is important to emphasize that conspiracy is very different from other more common causes of action. A conspiracy does not take place in public. It is secret by nature. Discovering the elements of a conspiracy is far more difficult than establishing the identity of an unidentified motorist or the possible occupier of a property for example. The plaintiff has met its burden in the context of this action.

[22] The responding parties also take issue with the proposed pleading. They argue that it is deficient and lacking in particularity. As such, they submit that it is not tenable at law.

[23] I do not agree. In Tran v. University of Western Ontario, 2015 ONCA 295 at paragraph 21, the Court of Appeal affirmed that a statement of claim alleging conspiracy should contain the following elements:

(a) provide a description of the parties and their relationship with each other;

(b) plead an agreement between the parties and the objects of the alleged conspiracy;

(c) include a description of the overt acts done in furtherance of the conspiracy; and,

(d) make an allegation that the plaintiff has suffered damages as a result of the conspiracy.

[24] All of these requirements can be found in the proposed amended statement of claim. The parties are clearly and specifically identified. An allegation is made that the defendant and Sue Ellen Ender were close friends. It is also alleged that Sue Ellen Ender was aware of this litigation and the actions of the defendant. Foodfest is identified as a competitor of the plaintiff. It is alleged that Sue Ellen Ender and Henry Ender control Foodfest.

[25] The existence of an agreement is also clearly pleaded as is the object of the agreement, namely to harm the plaintiff’s business relationship with Loblaws and for Foodfest to benefit from that damaged relationship.

[26] The overt acts of the proposed new defendants of instructing the defendant to call Loblaws and make the complaint and to tender false evidence are pleaded as part of the conspiracy.

[27] Finally, the plaintiff alleges it has suffered damages as Loblaws reduced the quantity of product purchased from the plaintiff after the complaint was made.

[28] In my view, the level of specificity suggested as necessary by the responding parties is simply not realistic when advancing a claim of this nature. As I stated above, a conspiracy is furtive by nature. In most cases, the precise details will be difficult to uncover. A proposed pleading must be read generously to allow for drafting deficiencies. It must be plain and obvious that the proposed amendments disclose no reasonable cause of action before they will be struck at the pleadings stage. See Tran at paragraph 16. In my view, the plaintiff’s proposed amendments meet this test.

[29] Finally, the defendant and the proposed defendant will not be prejudiced if the amendments are permitted. Although this action is almost four years old, it has not progressed much past the pleadings stage. It has not been set down for trial.

[30] For these reasons, I have concluded that the plaintiff should be granted leave to amend its statement of claim as requested.

ORDER

[31] I therefore order as follows:

(a) the plaintiff is hereby granted leave to amend its statement of claim in the form of the proposed fresh as amended statement of claim at tab N of the motion record;

(b) the defendant and the proposed new defendants shall have leave to plead a limitations defence if so advised; and,

(c) if the parties are unable to agree on the issue of costs they shall provide the court with brief submissions in writing by October 2, 2015.

September 4, 2015

Master R. A. Muir