Court File and Parties

COURT FILE NO.: CV-15-528277 MOTION HEARD: MARCH 22, 2017

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Duncan Boardman v. Kyriacos Lakkotrypis also known as Ken Lakkotrypis, 1873330 Ontario Inc. and Primo Pizza and Kebab

BEFORE: MASTER R.A. MUIR

COUNSEL: Kyriacos Lakkotrypis in person Timothy Kinnaird for the plaintiff

REASONS FOR DECISION

[1] This motion is brought by the defendant Kyriacos Lakkotrypis seeking leave to amend his statement of defence and to add a counterclaim pursuant to Rule 26.01 of the Rules of Civil Procedure, RRO 1990, Reg. 194 (the “Rules”).

[2] The plaintiff is opposed for two reasons. First, the plaintiff argued that the proposed amendments amount to a withdrawal of various admissions made in the statement of defence. The plaintiff submitted that Mr. Lakkotrypis has not sought leave to withdraw the admissions and the evidence does not support the granting of leave in any event. Second, the plaintiff took the position that Mr. Lakkotrypis is seeking to advance a counterclaim after the expiry of the applicable limitation period. [1]

[3] The plaintiff’s claim is for payment of approximately $45,000.00 allegedly loaned to the defendants to purchase and operate a pizza business. The plaintiff also claims that the agreement between him and the defendants also included a provision that the plaintiff would share in any increase in the value of the pizza business if eventually sold above the initial purchase price. It therefore appears from the statement of claim that the plaintiff is claiming an interest in the pizza business both as a creditor and as an investor, given the claim for an entitlement to a share in any increase in the value of the business.

[4] The statement of claim was issued on May 14, 2015. Mr. Lakkotrypis delivered a statement of defence on behalf of all defendants on or about June 14, 2015. Mr. Lakkotrypis eventually attended an examination for discovery on June 1, 2016. It appears that Mr. Lakkotrypis did not advise the plaintiff that he intended to amend his statement of defence until this motion was served in September 2016.

[5] The defendants’ current statement of defence appears to be based on allegations that the plaintiff somehow interfered with the defendants’ operation of the pizza business and with the efforts of the defendants to sell the business. The defendants take the position in their statement of defence that they have suffered losses as a result, for which they allege the plaintiff is at least partly responsible.

[6] The proposed amended statement of defence and counterclaim is very different. The plaintiff is a lawyer. The new pleading focuses almost exclusively on the plaintiff’s role of lawyer rather than that of creditor or investor. In the new version of the defence, Mr. Lakkotrypis alleges that the plaintiff was acting as the defendants’ lawyer throughout. He alleges that the plaintiff was in a position of conflict and acted negligently. The new pleading abandons the allegations relating to the plaintiff’s alleged interference with the operation and sale of the business. The new allegations focus largely on the plaintiff’s alleged conduct as lawyer and the legal advice provided to the defendants.

[7] The starting point on a motion to amend a pleading is to acknowledge that Rule 26.01 is mandatory. The Rule provides that the court shall grant leave to amend at any stage of a proceeding unless prejudice would result that could not be compensated for by costs or an adjournment. Proposed amendments are presumptively approved. However, the court retains a residual discretion to deny amendments where appropriate. Withdrawal of admissions and the expiry of a limitation period are two examples of situations where leave to amend may be denied. See Dharsi Estate v. Manji, 2014 ONSC 3430 (Master) at paragraphs 12 to 16; affirmed 2016 ONSC 703 (Div Ct) and Joseph at paragraphs 23 and 25.

[8] I have carefully reviewed Mr. Lakkotrypis’ proposed pleading and his original pleading. For the most part, I do not view the proposed amendments as amounting to a withdrawal of admissions. The thrust of the amendments is to advance a defence based on lawyer’s negligence rather than the previous allegations relating to the plaintiff’s interference in the business. The new allegations are not inconsistent with the original pleading. There is nothing in the proposed amendments to suggest that Mr. Lakkotrypis is now denying the existence of a debtor/creditor and business relationship between the plaintiff and the defendants. The proposed amended pleading at paragraph 5(a) expressly refers to the parties having a business discussion about purchasing the pizza business. Proposed paragraph 6(a) refers to the plaintiff agreeing to lend sufficient funds to complete the purchase. It is also important to note that the original statement of defence already includes an allegation in paragraph 6 that the plaintiff was acting as Mr. Lakkotrypis’ lawyer.

[9] I have therefore concluded that most of the proposed amendments do not amount to a withdrawal of admissions. Mr. Lakkotrypis is simply abandoning certain allegations relating to the operation and sale of the business and focusing on the allegations of lawyer negligence.

[10] There are, however, a few proposed amendments that do appear to amount to a withdrawal of admissions. The original statement of defence admitted, among others, paragraphs 3, 4 and 9 of the statement of claim. The defendant now seeks to withdraw those admissions and deny those allegations. Those admissions relate to the issue of which defendant borrowed the money from the plaintiff and whether Mr. Lakkotrypis is personally obligated to re-pay the loans. The original defence appears to admit that Mr. Lakkotrypis was the borrower. The proposed amended statement of defence takes the position that the corporate defendant was the borrower and not Mr. Lakkotrypis.

[11] The applicable test for leave to withdraw an admission involves three elements. First, the onus is on the moving party to demonstrate a triable issue with respect to the proposed amendments. Second, the moving party must provide a reasonable explanation for the change in position. Third, the moving party must demonstrate that there will be no prejudice to the opposing party that cannot be compensated for by costs. See Dharsi Estate at paragraph 20.

[12] In my view, Mr. Lakkotrypis has met this test. He has provided affidavit evidence that the corporation was to be the borrower and he was not to be personally liable for the debt. This evidence was not challenged by the plaintiff on this motion.

[13] Mr. Lakkotrypis has been mostly self-represented throughout this action. His evidence is that he did not have any legal advice when he prepared the original statement of defence. It is obvious from a review of the original statement of defence that Mr. Lakkotrypis failed to appreciate the distinction between his personal position and that of the corporation. As an example, in paragraph 6 of the original statement of defence, he states that he signed the agreement of purchase and sale for the pizza business when in fact he signed on behalf of the corporation. In my view, this absence of legal advice amounts to a reasonable explanation for his change in position in the circumstances of this action.

[14] Finally, I am satisfied that any prejudice to the plaintiff can be compensated for by costs. The plaintiff has not provided any evidence of non-compensable prejudice.

[15] I appreciate that Mr. Lakkotrypis has not expressly requested leave to withdraw the admissions as part of his notice of motion. However, I do not view that omission as fatal to his request for leave to amend his statement of defence. The plaintiff was not taken by surprise by the request. The plaintiff’s counsel was fully prepared to argue the point at the hearing of the motion. I see no element of unfairness to the plaintiff.

[16] I am therefore granting Mr. Lakkotrypis leave to withdraw the admissions related to the paragraphs of the statement of claim admitted in his original statement of defence, as set out above.

[17] Where a proposed amendment is opposed on the basis of a limitation argument, the court is entitled to assess the record to determine whether, as a question of fact, there is a reasonable explanation on proper evidence as to why the party could not have discovered the claim through the exercise of reasonable diligence. If the party does not raise any credibility issue or issue of fact that would merit consideration on a summary judgment motion or at trial and there is no reasonable explanation on the evidence as to why the party could not have discovered the claim through the exercise of reasonable diligence, the court may deny the plaintiff's motion. See Arcari at paragraph 10.

[18] I am satisfied that Mr. Lakkotrypis has met this element of the test with respect to his proposed counterclaim. The legal services allegedly provided by the plaintiff were carried out in 2013. However, it appears from the evidence on this motion that the pizza business was operating and efforts were being made to sell the business as late as the spring of 2015. The evidence shows that the plaintiff seized certain assets of the business in February 2016. It is therefore unclear on the evidence when Mr. Lakkotrypis would have suffered the damages he seeks in his counterclaim. It may have been as late as February 2016. In my view, this is an issue that would merit consideration on a summary judgment motion or at trial. It should not be decided on this pleadings motion.

[19] Mr. Lakkotrypis is hereby granted leave to amend his statement of defence in accordance with the draft amended statement of defence and counterclaim at tab 3 of his responding and cross motion record dated September 6, 2016. The plaintiff/defendant by counterclaim shall have leave to plead a limitation defence.

[20] The motion to amend the statement of defence on behalf of the corporation is adjourned without a date to allow the defendants an opportunity to bring a motion granting leave for the corporation to be represented by a person other than a lawyer. I am seized of both motions.

[21] The parties shall confer and attempt to agree on the issues of the costs of this motion, the plaintiff’s costs thrown away arising from the amendments, the amendments to the corporation’s statement of defence and leave for Mr. Lakkotrypis to represent the corporation. If they are unable to agree, they shall contact my assistant trial coordinator to obtain a further hearing date before me.

DATE: April 28, 2017 Master R.A. Muir

[1] The plaintiff did not provide the court with any authorities dealing with his limitation period argument although I note that the law in the area is well settled. See Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469 and Arcari v. Dawson, 2016 ONCA 715.