COURT FILE NO.: CV-15-520657

MOTION HEARD: 27 June 2018

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CareerDoor Inc., Plaintiff

AND:

Jobs2Web Inc., SuccessFactors, Inc. and SAP America, Inc., Defendants

BEFORE: Master Jolley

COUNSEL: Roy Wise, Counsel for the Moving Party Plaintiff

Peter Ruby, Counsel for the Responding Party Defendants SuccessFactors, Inc. and SAP America, Inc.

HEARD: 27 June 2018

REASONS FOR DECISION

Overview

[1] The plaintiff sues the defendants for outstanding sales commissions. It brings this motion for leave to amend its amended statement of claim. The defendants SuccessFactors, Inc. and SAP America, Inc. (hereinafter, the “defendants”) oppose the motion and raise three objections. They argue that (a) the plaintiff is estopped from requesting any further amendments based on representations the plaintiff made to the defendants when it sought and obtained their consent to the first amendment to the claim in July 2016; (b) the amendments raise new causes of action that are barred by the Limitations Act, 2002, S.O. 2002, c.24, Sched. B; and (c) the amendments cause the defendants prejudice that cannot be compensated for by costs or an adjournment.

Issue 1: Is the plaintiff estopped from requesting further amendments to its amended statement of claim?

[2] The claim was issued on 27 January 2015. In May 2016 the plaintiff sought to amend that claim. Included in that amendment was a new paragraph 25 which stated as follows:

“25. CareerDoor states that it has over time met with and educated a number of potential clients with the defendants’ programs. Such process is one that frequently takes place over an extended period of time. Further, CareerDoor delivered details of such communications to the Defendants’ sales teams and frequently continued to introduce the sales team to customers’ critical personnel and attended at meetings if requested, to assist the marketing team. A comprehensive list of such customers is appended as Schedule “A” hereto.”

[3] Schedule A listed 160 companies. The proposed amended claim also expanded the theory of the plaintiff’s commission claim to include not only those companies with sales sourced through the plaintiff but also those companies in Canada to whom the defendants sold their product, even if the plaintiff was not the direct source of the sale, albeit at the different percentage (paragraph 9 of the amended claim).

[4] The defendants argue that they relied on the plaintiff’s representation that Schedule A was the “comprehensive” (i.e. complete) list of the companies the plaintiff claimed it had contacted. They agreed to consent to the amendment, trading off the expanded scope of the claim that now included any Canadian sales for a fixed list of companies for which the plaintiff made a claim. Their consent was a package deal.

[5] Having obtained the defendants’ consent to that amendment, the plaintiff now seeks to further amend its claim. It seeks to increase the number of Schedule A companies from 160 to 164 and to add a second grouping of 878 companies, which it sets out in Schedule B, for which it claims commission. Its proposed amended amended paragraph 25 reads as follows, with proposed amendments italicized:

“25. CareerDoor states that it has over time met with and educated a number of potential clients with the defendants’ programs. Such process is one that frequently takes place over an extended period of time. Further, CareerDoor delivered details of such communications to the Defendants’ sales teams and frequently continued to introduce the sales team to customers’ critical personnel and attended at meetings if requested, to assist the marketing team. A comprehensive list of 164 sold or interested and qualified customers, including the 12 referred to in paragraph 24 is appended as Schedule “A” hereto. In total CareerDoor during the period of its relationship approached and marketed the Defendants’ programs to 878 companies referenced in Schedule B hereto.”

[6] Estoppel by representation requires a positive representation made by the party whom it is sought to bind, with the intention that it shall be acted on by the party with whom he or she is dealing, the latter having so acted upon it as to make it inequitable that the party making the representation should be permitted to dispute its truth, or do anything inconsistent with it. (Ryan v. Moore 2005 SCC 38 at paragraph 5).

[7] In order to assert estoppel there must be a representation by the plaintiff upon which the defendants rely. Here for the defendants to successfully advance their position, the plaintiff’s would have had to have represented that it would not seek to amend the claim further if the defendants consented to the amendment because its Schedule A list was final. There is a statement in the claim that the list is comprehensive. The court would have to infer from that statement that the plaintiff, by its request for the defendants’ consent, was representing that it would never seek another amendment. There is no support for that interpretation in the material before me. I find there was no positive representation made by the plaintiff that it would not seek a further amendment in future.

Issue 2: Do the amendments raise new causes of action that are barred by the [Limitations Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-24-sch-b/latest/so-2002-c-24-sch-b.html)?

[8] A court will not grant leave to amend where the new allegations proposed to be added to a pleading raise a new cause of action after the expiry of the applicable limitation period. (Honest Art, Inc. v. Decode Entertainment Inc. 2017 ONSC 4740 at paragraph 5). As noted in that same case, the court will apply a factually-oriented approach to what constitutes a new cause of action.

[9] If the amendments (a) plead an alternative claim for relief arising out of the same facts previously pleaded and no new facts are relied upon, (b) amount simply to different legal conclusions drawn from the same set of facts and/or (c) simply provide particulars of an allegation already pled, or additional facts upon which the original right of action is based, a new cause of action is not asserted (Morden & Perell, The Law of Civil Procedure in Ontario, 2^nd ed (Markham: LexisNexis Canada Inc. 2014 at page 142; see also Beauchamp (Litigation Guardian of) v. Gervais 2015 ONSC 5848).

[10] The use of a broader, factually-oriented approach to determining whether a new cause of action has been pleaded was advanced by the court in Sweda Farms Ltd. v. Ontario Egg Producers 2011 ONSC 6146 and endorsed by the Divisional Court in Farmers Oil and Gas Inc. v. Ontario (Ministry of Natural Resources) 2015 ONSC 6359. In Sweda, the court stated, “… the defendants’ basic entitlement is to have notice of the factual matrix out of which the claim for relief arises.” As summarized by Nordheimer, J. in Farmers Oil at paragraph 22:

… the distinction between the authorities relied upon by the appellant, and those relied upon by the respondent, turns on whether the proposed amendments do, or do not, arise out of the same facts, or the factual matrix, that was pleaded in the original statement of claim. If they do, then the amendments should be permitted. If they do not, and the limitation period has expired, then the amendments should be refused.

[11] The defendants argue that the contract with the plaintiff ended in December 2014 at the latest. The plaintiff first raised these amendments with the defendants in December 2016. The defendants argue that these are new causes of action and are out of time.

[12] The plaintiff argues that these are not new causes of action. It argues that it has pleaded breach of contract against the defendants as a result of their failure to pay commissions owing to it for sales it generated through leads or sales in Canada. It takes the position that the amendments are simply particulars of the defendants’ breaches and arise out of the same factual matrix that was pleaded in the original statement of claim. I agree.

[13] The original claim issued in January 2015 claimed:

(a) damages for breach of contract;

(b) in the alternative, damages for quantum meruit or unjust enrichment;

(c) an accounting of all contracts entered into by the defendants through the agency of the plaintiff;

(d) a mandatory order requiring disclosure of any contracts entered into by the defendants as a result of the plaintiff’s introductions and further particulars of any contracts where negotiations remain in progress; and

(e) a mandatory order requiring the defendants to provide particulars of any contracts or renewals or contracts to be renewed entered into through the agency of the plaintiff.

[14] The plaintiff pleads in the introduction to paragraph 24 listing the contracts for which it claims commission that the list is “to the best of its knowledge and without prejudice to its claim for further disclosure and for referral commission”. Further it pleads in paragraph 26 that “full particulars of contracts subsequently entered into, fees received and referral commissions owing on account of its services are not within its knowledge as a result of the Defendants’ failure to report or to account.”

[15] I find that the additional list of companies which the plaintiff approached and the addition of four further companies to the list of companies that were interested or qualified customers are not new causes of action. They arise out of the same factual matrix from which the original claim arose, namely the defendants’ alleged breach of the contract with the plaintiff and failure to pay commissions owing. They are particulars of the existing claims already made.

[16] I do not need to consider the discoverability issue in detail as I find that these proposed amendments do not constitute new causes of action.

Issue 3: Do the amendments sought cause the defendants non-compensable prejudice, contrary to Rule 26.01?

[17] The defendants allege that their ability to defend these new allegations is compromised because many relevant employees have left the organizations and their relevant computer systems have changed. This is particularly relevant to the quantum meruit aspect of the claim as the defendants argue that they will have to obtain information from their salespeople as to the value added by the plaintiff to any sale generated. The defendants advised that their employment attrition rate was 17.5% in 2015, 11.5% in 2016 and 10.4% in 2017. While this may be challenging, there is insufficient evidence before me that this rate is different from any other commercial litigant. Nor is there evidence that this information cannot be obtained from those individuals even if they are now employed elsewhere.

[18] As to the change in computer systems, there is some evidence before me that the defendants were contractually obliged to maintain information about sales opportunities that the plaintiff found as well as information about payments they received for new or renewed contracts throughout the term of the contract so that commission could be tracked and calculated. I also note that the plaintiff deposed in his affidavit in support of this motion that he provided written or oral reports to the defendants with an outline of his sales efforts and included listings of the contacts made with some detail. As a result the defendants were aware during the engagement that the plaintiff had contacted 878 companies to introduce the software and educate or attempt to educate them as to its benefits.

[19] The defendants’ concern over the internal resources they need to assemble records is understandable but is something that can be addressed through a discovery plan and the application of Rule 29.2.03, if necessary.

Conclusion

[20] Leave is granted to amend the amended statement of claim in the form attached as Exhibit “B” to the affidavit of Rachel Bezaire sworn 12 April 2017 found in the plaintiff’s amended motion record.

[21] The plaintiff claims its costs of the motion on a partial indemnity basis in the amount of $23,991.38. The defendants’ partial indemnity rate in their costs outline was $39,783.63, with an actual cost incurred of $108,702.04.

[22] The plaintiff chose to file voluminous materials on the motion and each party chose to incur the costs of cross examining the other’s deponent, including the defendants’ deponent in Philadelphia. I order the defendants to pay to the plaintiff its costs of this motion in the all-inclusive sum of $15,000 within 30 days of today’s date. While those costs are significant for a motion to amend, they are evidently within the reasonable expectation of the defendants.

Master Jolley

Date: 3 July 2018