Court File and Parties

COURT FILE NO.: CV-16-559259 DATE: 20161019 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: RANBAXY PHARMACEUTICALS CANADA INC. Applicant

AND:

9303-9204 QUEBEC INC. c.o.b. ONE LIFE TEAM and PIERRE BOUILLON Respondent

BEFORE: LEDERER J.

COUNSEL: Mark A.B. Donald, for the Applicant No one appeared on behalf of the Respondent

HEARD: September 28, 2016

Endorsement

[1] This is an application. The applicant seeks damages in the amount of $200,000 for breach of contract. Liability having been demonstrated and the value of the damages established, the applicant proceeds to seek orders in furtherance of execution. It wants the court to make a tracing order in its favour and to provide the applicant with the ability to “elect in whole or in part between (1) the imposition of a constructive trust and/or an equitable lien…”. The applicant wants an order that “...the defendants [ sic ] provide a full accounting of all monies received and disbursed from the applicant”.

[2] The applicant goes further – it asks for a “...personal remedy against the party or parties liable”. I confess I am not entirely sure what this refers to, but the use of the plural (parties) suggests the possibility of liability extending beyond the corporate respondent to the individual respondent, Pierre Bouillon. This is confirmed by the request for a declaration that the corporate respondent, a Québec company, is “the alter ego of Pierre Bouillon” or, in the alternative, a declaration that the corporate respondent is “a bare trustee of its property for Mr. Bouillon” and that, accordingly, the applicant is entitled to pierce the corporate veil.

[3] I am unable to order any of the remedies the applicant seeks.

[4] The applicant (Ranbaxy Pharmaceuticals Canada Inc.) alleges that it entered into a contract with the corporate respondent (9303-9204 Québec Inc. c.o.b. One Life Team) to purchase 5,000 telephones. It is said that, as a condition of the agreement, the corporate respondent was to secure a further agreement such that the applicant would be able to resell the telephones to a third party. It was part of the primary agreement that the applicant would pay to the corporate respondent a refundable deposit of $200,000. The deposit would be refunded if the corporate respondent was unable to arrange for the secondary contract providing for the resale of the telephones. The corporate respondent failed to secure the secondary contract and the applicant requested and sought the return of its deposit. The deposit has not been repaid and it represents the value of the damages requested on this application.

[5] A Notice of Application is an originating process. It should be served pursuant to the Rules of Civil Procedure. Both respondents are resident in Québec. Rule 17.02 provides that a party outside Ontario may be served with an originating process without a court order. Among the specific circumstances to which the rule applies is where the proceeding is in respect of a contract made in Ontario or where the interpretation of an instrument (for example a contract) and its enforcement are in issue. The Fresh as Amended Factum filed on behalf of the applicant raises the issue of the jurisdiction of this court. In the absence of any submissions to the contrary, I understand the contract to have been made in Ontario. Acceptance was made on behalf of the corporate respondent over the telephone and by e-mail, both of which were received by the applicant in Ontario (see: Inukshuk Wireless Partnership v. 4253311 Canada Inc. 2013 ONSC 5631, 117 O.R. (2d) 2006, at para. 25).

[6] This being so, it, nonetheless, remains a requirement that service be completed pursuant to the Rules of Civil Procedure. Those rules direct that an originating process be served personally or by “an alternative to personal service”. In this case, service was not completed in a manner that is consistent with this direction. On August 26, 2016, the Notice of Application was sent to Pierre Bouillon, who was identified as a director of the corporate respondent, by e-mail. On the same day, a second e-mail was sent to Pierre Bouillon to confirm that the return date for the application was September 28, 2016. Delivery by e-mail is not personal service. Moreover, service of a Notice of Application without an Application Record is incomplete. Evidently, the corporate respondent carried on its business at 465 rue Notre-Dame, Bureau 208, Repentigny, QC. Its “registered address” is 444 rue de la Manicouagan, Repentigny QC, which is said to be the home of Pierre Bouillon. An effort was made to complete service at both locations. It failed.

[7] At the first address (rue Notre-Dame), the bailiff left a notice of the visit but received no return call. A telephone number was located on the internet but no one answered. The e-mail which reports this notes that the company located at that address is “always closed”. There is no indication of the source of this information. Presumably, one visit to the site and an effort to telephone the company is not enough. Not much turns on it, but I point out that this assertion could be said to be double hearsay. The e-mail from the process server is found in an affidavit sworn by a paralegal associated with the Toronto law firm acting on behalf of the applicant. The author of the e-mail is not the person who attended at the place of business in Montreal, but another individual who replaced her while she was on vacation.

[8] Further, the affidavit sworn by the paralegal deposed that a notice was left “on the door” of the corporate respondent and that the deponent was informed of this by the author of the e-mail. This information is not contained in the e-mail. It is not clear to me how or by what means it was communicated to the paralegal.

[9] An attempt was made “on a rush basis” to serve the respondents at the second address (rue de la Manicouagan) but “nobody came to answer the door. The bailiff was unable to confirm if Mr. Bouillon is living there.”

[10] Finally, on September 14, 2016, the paralegal arranged for the Application Record, Factum and Book of Authorities to be sent by courier to both addresses.

[11] It is self-evident that there was no personal service. Nor was there service by an alternative to personal service. None of the requirements of the applicable rule (rule 16.03) were complied with. Service was not accepted by a lawyer; there is no endorsement accepting such service (rule 16.03(2) and (3)). There is no suggestion that the material was mailed to either address, with a receipt card, or that such a card was returned to the applicant or anyone acting on its behalf (rule 16.03(4)). The material was not left with an “adult person” or “anyone who appears to be an adult person” at the residence of Pierre Bouillon (rule 16.03(5)). What is of interest is that the rule specifically provides for service on an “extra-provincial corporation”. Rule 16.03(6) says, in part:

Where… in the case of an extra-provincial corporation, the attorney for service in Ontario cannot be found at the last address recorded with the Ministry of Consumer and Commercial Relations, service may be made on the corporation by mailing a copy of the document... to the attorney for service in Ontario... at that address.

[12] Counsel for the applicant was candid to concede that no effort had been made to inquire as to the last address recorded, with the Ministry of Consumer Relations, for the attorney for service in Ontario of the respondent corporation. Thus, no service of the respondent corporation was undertaken pursuant to the process set up for that purpose.

[13] Although it was not raised in the submissions made by counsel, I note that rule 16.04(1) and (3) provide for the possibility of an order for substituted service or dispensing with service. Rule 16.04 (1) states:

Where it appears to the court that it is impractical for any reason to effect prompt service of an originating process or any other document required to be served personally or by an alternative to personal service under these rules, the court may make an order for substituted service or, where necessary in the interest of justice, may dispense with service.

[14] At the hearing of this application, no request was made for substituted service. Counsel for the applicant sought an order for judgment. As for dispensing with service, on the particular facts of this case, it is difficult to see how it can be determined that service ought to be dispensed with when no effort was made to adhere to the rule which specifically deals with the circumstance at hand.

[15] In any case, any request to dispense with service would have to take account of the impact such an order would have in the context of the proceeding within which it was being asked for.

[16] In this case, the essence of the proceeding is a request for damages for breach of contract. Nonetheless, the party seeking relief did not commence an action. Rather, the application relies on rule 14.05(3)(d). It states:

A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is,

(d) the determination of rights that depend on the interpretation of a deed, will, contract or other instrument, or on the interpretation of a statute, order in Council, regulation or municipal by-law or resolution.

[Emphasis added]

[17] The circumstances in which the rule can be relied on as a means for resolving a dispute over the breach of a contract is limited. This can only happen when the dispute arises from an interpretation of the contract and the contract is founded on an “instrument”. Counsel for the applicant observed that this requirement is not restricted to the presence of a single document. An instrument may be comprised of several documents. This may be so. But this nuance has no role to play in this case. Here, the foundation on which the contract is founded is not in an instrument (a document) but in a telephone call. The affidavit of Satish Kanniampuram, described as an employee of the applicant, states:

I am hereby informed by Thomas Simard (“Mr. Simard”) who is employed with Ranbaxy [the applicant] as a sales manager, and do verily believe that on March 23, 2016, he spoke with the President and Chief Executive Officer of One Life Team [the corporate respondent] Pierre Bouillon (“Mr. Bouillon”). In that conversation Mr. Bouillon agreed that Ranbaxy would purchase 5000 phones and pay a refundable deposit of $200,000 (the ‘Ranbaxy Deposit’).

The Ranbaxy Deposit would be refunded if One Life Team failed to fulfil the condition of securing a contract with Ranbaxy to resell the phones to Familiprix pharmacies (‘Familiprix’).

[18] These statements may or may not indicate the presence of a contract. That, however, is not the point. Rule 14.05(3)(d) allows for the interpretation of the rights under a contract but relies on the presence of an instrument as setting out the terms of the contract to be interpreted. As I understand it, the fundamental premise is that an application is a suitable means of resolving such a disagreement because the terms of the contract are not in dispute. They are discernible from the writing found in the instrument (or several documents that may make up the instrument). Where the contract depends on an exchange other than found in an instrument, there may be a dispute as to the words used or the terms that constitute the agreement. In this case, it is not possible to know if there is such a dispute because there is no response to the assertions made on behalf of the applicant. This is not a motion for default judgment, where service has been completed, no one has responded and the facts as alleged in the Statement of Claim are taken to be proved. In this case, service, under the rules, has not been completed, there is no instrument on which we can rely as demonstrating the terms the parties have agreed to and we have no way of knowing if there is a dispute concerning the existence of a contract and, if one does exist, what its terms may be.

[19] I point out that there is a communication, dated August 8, 2016, from Pierre Boussin to Tom Simard, attached as an exhibit to the affidavit of Satish Kanniampuram which says:

As you know, we invested in the development of the service for Ranbaxy and it was only in the morning June 15 [ sic ] that your company cancelled the transaction. Unfortunately, the investments had gone ahead.

[20] While we can speculate on what this refers to, it seems to suggest some level of disagreement between the parties as to the standing of whatever agreement there may have been.

[21] In any case, counsel for the applicant is at pains to say I am wrong. There is an instrument. It is the invoice accounting for the deposit. The invoice does nothing other than demonstrate that the applicant was to purchase 5,000 telephones for $600,000 with a reimbursable deposit of $200,000. It does say that the price is subject to change and dictates how the payment is to be made. It says nothing that would explain the basis upon which the deposit would be required to be returned. It does not provide the terms of any contract which are to be interpreted to determine the rights it occasioned.

[22] There is no instrument. Rule 14.05(3)(d) does not apply.

[23] The problem of trying to proceed in this way (under rule 14.05(3)(d)) is exacerbated by a consideration of the role allegedly played by the personal respondent (Pierre Bouillon) in the events leading to this application and the basis on which he is included as a respondent in this proceeding. In short, it has nothing to do with interpreting the rights under any alleged contract. The proposition is that Pierre Bouillon, by his actions and close association with the applicant, created a situation where he should have foreseen that the applicant and its representatives would rely on him personally. It is submitted that, in these circumstances, he owed a duty of care to the applicant independent of his role as an officer of the corporate respondent. He breached that duty when, on July 11, 2016, he misled the applicant by representing to a manager that the deposit would be returned. The breach continued when he “reinvested” the funds (the deposit), although he knew or should have known that it would have to be refunded.

[24] In making these submissions, counsel for the applicant relied on the case of NBD Bank, Canada v. Dofasco Inc., 46 OR (3d) 514; 181 DLR (4th) 37; 15 CBR (4th) 67. In that case, the plaintiff bank accepted the representations of a vice-president of a subsidiary of the defendant corporation. As a result of those representations, the bank funded certain cheques in the amount of $4,000,000. When the defendant withdrew its support and the security evaporated, the bank sued the vice president personally. The court applied the test from Anns v. Merton London Borough Council, [1978] A.C. 728, [1977] 2 W.L.R. 1024 and found the vice-president personally liable. The appeal was dismissed.

[25] The circumstance in which a corporate representative or employee may be found liable in the context of acting in relation to his employment are rare. Such liability could occur when the officer is responsible for a tort that is independent of the corporation. There is no substantive evidence that, in this situation, such could be the case. The affidavit of Satish Kanniampuram says only that:

At all material times, Mr. Bouillon was the key point of contact between Ranbaxy and One Life Team. Mr. Bouillon held himself out as capable of making decisions on One Life Team’s behalf and did so in a manner designed to inspire Ranbaxy’s trust in entering into the agreement.

[26] This is not enough to presume that the relationship of Pierre Bouillon to the applicants is such that there has been an independent tort committed by Pierre Bouillon. In any case, this has nothing to do with, and is unrelated to, any determination of rights that depend on the interpretation of a contract. The finding sought to be made against the personal respondent cannot be made under the authority of an application which relies on rule 14.05(3)(d). It does not depend on any contract that may be present, whether or not its existence is demonstrated by the presence of an instrument, but on the allegation of an independent tort undertaken by the individual respondent. Again, this is not a motion for a default judgment. There has been no service under the rules. In the absence of the respondents having an opportunity to take part, and having failed to do so, the court is not in a position to accept the allegations made as proved. In the circumstances, the resolution of any independent liability of Pierre Bouillon requires an action and possibly a trial.

[27] Finally, I point out that the remedies sought take us beyond liability and into the realm of execution. The applicant wants a tracing order to determine the ultimate destination of all the funds it provided to the respondents. It seeks the ability to impose a constructive trust or equitable lien on all such funds and to determine what funds should be the subject of such trusts or liens. This would allow the applicant to interfere with the activities of the respondents, without prior notice. In the absence of service being established and the coincident opportunity of the respondents to answer the allegations that have been made, I am not prepared to make such orders.

[28] For the reasons reviewed herein, the application is dismissed.

[29] There will be no order for costs.

LEDERER J. Date: 20161019