Court File and Parties

COURT FILE NO.: 14-501787OT DATE: May 17, 2016

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: S.I. SYSTEMS PARTNERSHIP Plaintiff AND LI GENG, XIN XU a.k.a. JIMMY XU, QUARKSYS CONSULTING INC. and X & C HI-TECH INC. Defendants

BEFORE: MASTER NATHALIE CHAMPAGNE

COUNSEL: Christiaan Jordaan, for the Plaintiff Melynda Layton, for the Defendants

HEARD: April 19, 2016

Endorsement

Background

[1] The plaintiff brings this motion for an order to amend its Statement of Claim.

[2] The plaintiff S.I. Systems Partnership (S.I.) is a partnership formed under the laws of Alberta that supplies professional services to businesses and government entities. Among other professional services, the plaintiff provides resources in the areas of information technology and computer software engineering (collectively IT).

[3] Each of the named defendants are IT consultants who were consultants on a contract with the plaintiff between April 1, 2013 and March 31, 2014.

[4] The defendant Quarksys Consulting Inc. is a business corporation formed under the laws of Ontario with a registered office in Kanata, Ontario.

[5] The plaintiff alleges that it contracted with Quarksys and X&C to provide IT services to the plaintiff’s client, the RCMP. It is alleged that the consulting contracts with Quarksys and X&C contained a non-solicit and non-compete clause extending for a period of time following the termination of those contracts. Specifically, the clause prohibited solicitation, acceptance, employment or consulting with an S.I. client, directly or indirectly, for a period of six months following the termination of the consulting contract.

[6] It is alleged that the defendants breached this non-compete clause in their contracts by soliciting the RCMP and providing it with IT services in contradiction with the aforementioned clause which resulted in damages to the plaintiff.

[7] Examinations for discovery of the defendants took place in January 2015 and April 2015. The plaintiff contends that information with respect to additional claims against the defendants arose during the discovery process. The plaintiff therefore wishes to amend its Statement of Claim to increase the amount of general damages it seeks against the defendants and to include among others, material facts supporting a claim for inducement of breach of contract. The material facts they wish to plead include solicitation of employment from the RCMP and alleging that the defendants solicited the RCMP to employ contractors that were working for the plaintiff on a contract for the RCMP.

[8] It is the defendants’ position that if the claimant plaintiff is successful and is permitted to amend its Statement of Claim it will face an unreasonable increase in costs and will triple the amount of the claim against them.

The Issues

[9] Whether the plaintiff should be granted leave to amend its Statement of Claim as proposed.

[10] Whether allowing the plaintiff to amend its claim would result in prejudice to the defendant that could not be compensated for by costs.

Disposition

[11] Having read the materials before me including the motion records, factums and books of authorities submitted by both parties and having considered the oral submissions of counsel, I am prepared to grant the plaintiff leave to amend its Statement of Claim as proposed.

Statutes and Jurisprudence

[12] Rule 26.01 of the Rules of Civil Procedure sets out as follows:

26.01 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. R.R.O. 1990, Reg. 194, r. 26.01.

Analysis

[13] Rule 26.01 of the Rules of Civil Procedure governs the amendment of pleadings and directs that a court shall grant leave to amend a pleading at any stage of an action unless prejudice would result that could not be compensated for by an order for costs or an adjournment.

[14] The Ontario Court of Appeal in Marks v. the City of Ottawa, 2011 ONCA 248, para 19, makes it clear that while there is no absolute right to amend pleadings and the court has discretion to deny leave for a party to amend his/her pleadings, the general rule is that amendments to pleadings are to be presumptively approved with exceptions. In Andersen Consulting v. Canada (2001), O.J. No 3576, the Court of Appeal makes clear that those exceptions would be where prejudice to a party could not be compensated for by costs or an adjournment or in instances where the proposed amendments disclosed no cause of action or would be considered scandalous, frivolous, vexatious or an abuse of the court’s process. The court of Appeal in Marks adds that amendments should not be permitted which if originally pleaded, would have been struck or if the amendment is untenable at law.

[15] The defendants deny that they breached their contracts and are unwilling to consent to the amendment of the Statement of Claim. It is their position that the amendments do not give rise to a tenable claim, specifically, the claim of inducement of breach of contract. I disagree. I am of the view that amendments proposed support that claim.

[16] The plaintiff argues that it needs to amend its Statement of Claim to include additional relevant facts that support its claim, which were not known until the examinations for discovery. The amendments proposed are indicated in the plaintiff’s motion record at Tab 1 referred to as Schedule “A”, Amended Statement of Claim.

[17] Having reviewed the evidence of both parties and the proposed amendments to the Statement of Claim, I am unable to conclude that the proposed amendments to the pleadings are frivolous, vexatious or an abuse of the court’s process, nor do the proposed amendments fail to disclose a reasonable cause of action. While the proposed amendments may prejudice the defendant because further examinations for discovery may be required, there is no evidence before the court to suggest that the prejudice could not be compensated for by an order for costs, and I believe it can be.

[18] In the circumstances, I am prepared to grant the plaintiff leave to amend its pleadings accordingly.

[19] Costs of this motion to the plaintiff are fixed in the amount of $5,000.00.

[20] In addition, the plaintiff is granted leave to conduct additional examinations for discovery of the defendants for no more than 3 hours each for the examinations of Li Geng and Xin Xu. The plaintiff shall pay the defendants costs at a rate of $250.00 per hour plus HST for up to 6 hours of examination time and 2 hours of preparation time.

Master Nathalie Champagne