Court File and Parties

COURT FILE NO.: 12-37653

DATE: 2018-03-06

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Jacob Van Halteren, plaintiff

AND: De Boer Tool Inc., defendant

BEFORE: Mr Justice Ramsay

COUNSEL: A. Katz for the plaintiff; Tyler H. McLean for the defendant

HEARD: March 6, 2018 at Hamilton

ENDORSEMENT

[1] These are my reasons for denying the plaintiff’s motion for leave to amend the statement of claim.

[2] In 2002 the plaintiff advanced the defendant $500,000 on the strength of a promissory note. The note was due on demand or on September 1, 2006, whichever came earlier. No demand was made for payment and indebtedness was not acknowledged by the defendant before the limitation period expired in 2008. The plaintiff sued in 2012 on the promissory note and on another note said to have been executed in 2008. The plaintiff moved for summary judgement. Parayeski J. denied summary judgement on the ground that recovery on the first note was barred by the Limitation Act, 2002, S.O. 2002, c.24, Sch. B., and recovery on the second note was not available because the note was a forgery. The plaintiff now moves for a third time to amend the statement of claim.

[3] In the latest amended statement of claim, the plaintiff seeks:

a. a declaration that the principals of the defendant converted the plaintiff’s shares in the corporate defendant to themselves or in the alternative that they have been unjustly enriched;

b. a declaration that those principals have committed civil fraud;

c. a declaration that he is the owner of the shares in question;

d. a declaration that he is a “complainant” within the meaning of the Business Corporations Act;

e. a remedy for oppression under that Act; and

f. damages and costs.

[4] Rule 26.01 provides that the court shall grant leave to amend unless prejudice would result that could not be compensated by costs or an adjournment. The amendment, however, has to be tenable in the sense that it cannot be improper on its face, either because it is frivolous or because it does not disclose a reasonable cause of action. At this stage, the motion judge does not engage in an assessment of the merits of the case. In Marks v. Ottawa (City), 2011 ONCA 248 the Court said:

19 Although the general rule is that amendments are presumptively approved, there is no absolute right to amend pleadings. The court has a residual right to deny amendments where appropriate: Daniele v. Johnson (1999), 1999 CanLII 19921 (ON SCDC), 45 O.R. (3d) 498 (Div. Ct.) at paras. 11-15.2 Further, I would agree that the proper factors to be considered are those first set out in Simrod v. Cooper, [1952] O.W.N. 720 (H.C.J. Master) at p. 721, aff'd at p. 723 (H.C.J.), and quoted with approval in Vaiman v. Yates (1987), 1987 CanLII 4345 (ON SC), 60 O.R. (2d) 696 (H.C.J.) at p. 698, which can be summarized as follows:

An amendment should be allowed unless it would cause an injustice not compensable in costs.

The proposed amendment must be shown to be an issue worthy of trial and prima facie meritorious.

No amendment should be allowed which, if originally pleaded, would have been struck.

The proposed amendment must contain sufficient particulars.

[5] The proposed amendment essentially makes two alternative claims: either the defendant or its principals made him a shareholder but denied him the fruits of his property or they told him that they would make him a shareholder but did not, which caused him to part with the $500,000 in the first place.

The limitation period

[6] Section 16.1 (1) of the Limitations Act, 2002 provides that there is no limitation period in respect of a proceeding for a declaration if no consequential relief is sought. The present claim, however, does not fall under that exception. The pith and substance of the claim is damages or a property interest in shares to compensate for $500,000 advanced to the defendant. No shares actually exist. It would be impossible for the court to make a declaration of rights with respect to shares that cannot be identified. The only meaningful remedy for the plaintiff would be in the nature of consequential relief. Accordingly the applicable prescription is the general limitation of two years after the cause of action is discovered or discoverable.

[7] Furthermore, the plaintiff cannot maintain that he discovered his claim as a shareholder when he reviewed the defendant’s productions in 2017. At the cross-examination of the defendant’s principal on January 7, 2014, the defendant’s counsel told the plaintiff’s counsel that the defendant’s position was that the plaintiff had no shares in the corporation and no interest in the corporation. On April 8, 2014 the plaintiff swore an affidavit in which he acknowledged the admission that no shares had been issued to him. He thus discovered no later than April 2014 that his right to an interest in the company in any form was disputed.

[8] The fraudulent misrepresentations as to the defendant’s intention to convey shares are said to have caused the plaintiff to part with the $500,000. Again, by April 2014 he must have known that the defendant had not conveyed any shares and had no intention of doing so.

Abuse of process

[9] The present motion is an abuse of process. On December 2, 2013 Glithero J. dismissed a similar motion in this very case. It is res judicata that the cause of action with respect to the shares had been discovered by then, and its limitation period had expired. Glithero J. concluded:

26 In my opinion, this is a case where a plaintiff, faced with a denial of the promissory note upon which the action was originally based, seeks to avoid any problems which may arise from alleged forgery of the note, and instead switch to a new cause of action in respect of which the Limitations Act has expired.

[10] Nothing in the defendant’s productions of 2017 changes the nature of the dispute. It is the same old, statute-barred claim, however it is pleaded. The new causes of action cannot possibly succeed. They can only be motivated by a desire to vex the defendant and its principals.

[11] For all these reasons I denied leave to amend the statement of claim.

J.A. Ramsay J.

Date: 2018-03-06