Court File and Parties

Court File No.: CV-15-533471 Date: 2016-06-09 Ontario Superior Court of Justice

Between: Kiwon Park, Plaintiff/Defendant by Counterclaim – and – Jaesuck An (also known as Andy An) and 1397280 Ontario Ltd. o/a Western Town College for ESL, Defendants/Plaintiffs by Counterclaim

Counsel: Robert Choi, for the Plaintiff/Defendant by Counterclaim Matthew Diskin & Meredith Bacal, for the Defendants/Plaintiffs by Counterclaim

Heard: March 29, 2016

Before: S.A.Q. Akhtar J.

[1] On 8 January 2016, I heard the commencement of a summary judgment motion brought by the plaintiff, Kiwon Park, to recover monies he alleged were owed to him by the defendant, Jaesuck An, as a result of a debt settlement agreement (“the agreement”) made between the parties on 23 October 2014.

[2] The plaintiff alleged that he and the defendant had entered into a business arrangement whereby An borrowed $300,000 to acquire 90% of the shares of Western Town College for ESL (WTC). The plaintiff alleges that he subsequently agreed to relinquish all rights in relation to WTC and the defendant agreed to repay the sum of $300,000. The plaintiff further contends that after repaying a portion of that amount, the defendant refused to honour his agreement to pay the remaining part of the monies.

[3] The defendant denied the existence of a contract or agreement on the basis that no consideration had passed between the parties. In the alternative, he argued that if an agreement or contract did exist, the plaintiff was in breach by failing to leave the ‘English as a Second Language (ESL) industry’.

[4] Since the success of the plaintiff’s motion depended on fulfilment of all contractual terms in the agreement, I ordered a mini-trial, pursuant to the principles of Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, in order to determine whether (a) the plaintiff had promised to leave the ESL industry and (b) if so, whether that promise was a term of the agreement.

[5] In the interim, both parties requested a Case Management Meeting as the defendants had notified the plaintiff of their intention to bring motions seeking security for costs and an amendment of their separate counterclaim to the plaintiff’s action. The purpose of the amendment was to include the allegation that the plaintiff was in breach of any agreement by failing to leave the ESL industry. This, of course, is the very issue that the mini-trial was supposed to resolve. The plaintiff’s lawyer, Mr. Choi, objected to the amendment on the ground that it would prejudice his summary judgment motion.

[6] Accordingly, I ordered the amendment motion be heard on the same day as the mini-trial. As a consequence of these developments, the defendant gave notice that, if the amendment was granted, they would move to strike the mini-trial and ask the court to dismiss the plaintiff’s summary judgment motion.

[7] On 29 March 2016, I granted the defendant’s motion to amend his counterclaim and dismissed the plaintiff’s summary judgment motion, with reasons to follow. These are those reasons.

The Defendant’s Motion to Amend the Counterclaim

[8] The defendant argues that there is a presumption that his amendment is to be presumptively approved, as per the following comments of Moldaver J.A. (as he then was) in Andersen Consulting v. Canada (Attorney General) (2001), 150 O.A.C. 177 (Ont. C.A.), at para. 37:

Without diminishing the concerns raised by the motions judge, they cannot be used to emasculate the well-established rule that amendments like those sought in the present case should be presumptively approved unless they would occasion prejudice that cannot be compensated by costs or an adjournment; they are shown to be scandalous, frivolous, vexatious or an abuse of the court's process; or they disclose no reasonable cause of action. (See generally Atlantic Steel Industries Inc. v. CIGNA Insurance Co. of Canada (1997), 33 O.R. (3d) 12 (Ont. Gen. Div.) and Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959 per Wilson J. at p. 980)

[9] The plaintiff argues that such an amendment would be prejudicial as the defendant is belatedly seeking to re-define the issues of litigation on the eve of the summary judgment motion to gain an advantage. He relies on Pace v. Delzotto, [1996] O.J. No. 143 (Ont. Gen. Div.), where Sharpe J. (as he then was) held that amendments should not be allowed to substantially alter the case to be met or “cooper up” a case after a “first run”. See also: Robinson v. Robinson (1989), 70 O.R. (2d) 249 (H.C.), at pp. 255-6.

[10] I agree with the principles that the plaintiff advances but disagree that the amendments would have the prejudicial effect he alleges. Those amendments do not involve the withdrawal of admissions nor do they determine the plaintiff’s summary judgment motion. Any potential prejudice would be borne by the defendant as the summary judgment motion might result in the court making findings of fact against him on the allegation that the plaintiff was in breach of the agreement. It may well be that these findings result in the defendants being estopped from asserting this aspect of the counterclaim.

[11] However, this is not a reason for disallowing the fundamental right of the defendant to amend the counterclaim. Additionally, finding in favour of the plaintiff on the summary judgment motion would not determine the entire counterclaim, as the amendments are simply claims in the alternative to those already pleaded.

[12] I find that the proposed amendments are not “frivolous, vexatious or an abuse of the court’s process” within the meaning of the Andersen Consulting test. I also find that they disclose a reasonable cause of action. Accordingly, I grant the application to amend the counterclaim.

Should the Claims be Heard Together?

[13] The now-familiar rule in Hryniak is that summary judgment should issue if there is no genuine issue for trial. The converse principle is that once a court identifies an issue that requires a trial, it should decline to grant summary judgment.

[14] At the 8 January 2016 hearing, I was not fully aware of the inextricable intertwining of the issues contained in the defendant’s counterclaim and the plaintiff’s summary judgment motion.

[15] If I accept the plaintiff’s position, I would be holding that a valid agreement existed between the parties. At that point the defendants would allege that, despite the existence of the agreement, they were not obliged to fulfil its terms because the plaintiff failed to leave the ESL industry.

[16] The defendants forcefully contend that the plaintiff’s promise to leave the industry was a critical representation which convinced An to approve the terms of the agreement. As noted previously, the court would therefore have to make findings on the proposed amendments to the counterclaim in the summary judgment motion.

[17] Moreover, even if the court found no breach by the plaintiff, the defendant’s alternative claim in the amended pleadings alleges that the plaintiff’s promise to leave the ESL industry led to the defendants paying out sums of money that they would not otherwise have paid. The defendant alleges that the plaintiff made his promise knowing that it would be relied upon and not be honoured.

[18] The upshot is that if the summary judgment motion and the counterclaim both proceed separately, there will be two separate hearings on the same subject matter, i.e. the terms of the agreement; whether a breach occurred; and what damages flowed from that breach.

[19] It makes no sense, from the very reasons that underpin Hryniak, to embark on such a process, as that would not only result in a waste of judicial resources and elevated costs, but would also raise the spectre of inconsistent findings. As Karakatsanis J. pointed out in Hryniak, at para. 58:

This inquiry into the interest of justice is, by its nature, comparative. Proportionality is assessed in relation to the full trial. It may require the motion judge to assess the relative efficiencies of proceeding by way of summary judgment, as opposed to trial. This would involve a comparison of, among other things, the cost and speed of both procedures.

[20] Finally, I note that the summary judgment motion concerns only An and not the separate, co-defendant, WTC. The result of the motion would therefore not affect WTC, who would continue to a second hearing of the same issues.

[21] For the reasons set out above, I conclude that it is in the interests of justice that the motion for summary judgment be dismissed as there is a genuine issue requiring a trial. All claims should be joined together in the interests of judicial economy, consistency and fairness.

[22] In the unusual circumstances of this case, I order that costs of this motion be reserved to the jurisdiction of the trial judge.

S.A.Q. Akhtar J. Released: 9 June 2016