Oz Merchandising Inc. v. Canadian Professional Soccer League Inc., 2018 ONSC 7468

Court File and Parties

COURT FILE NO.: 04-CV-026293 DATE: 20181212

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Oz Merchandising Inc., Plaintiff

– and –

Canadian Professional Soccer League Inc., Eastern Ontario District Soccer Association, The Ontario Soccer Association, Canadian Soccer Association, Canadian Soccer League Inc., CSL Association Inc., Ira Greenspoon, Vincent Ursini, Cary Kaplan and Stan Adamson, Defendants

Counsel: N. Karnis, E. Kozloff and J. McQuaid, Counsel for the Plaintiff J. Katz, Counsel for the Defendant, OSA F. Costantini, Counsel for the Defendant, CSA

HEARD: November 5, 2018

Reasons for Decision

C.T. HACKLAND, J

1The plaintiff moves to amend its Statement of Claim. The amendments are vigorously opposed by the Canadian Soccer Association. The Ontario Soccer Association takes no position with respect to the proposed amendments.

2This is a remarkable case in that it was commenced in 2004 and still has not reached trial. However there is a fixed trial date. The case is set to be tried by judge and jury commencing April 15, 2019. The trial is set for 8 weeks. The parties are in agreement that the trial must proceed as scheduled. The plaintiff says that the amendments sought clarity or update matters already pleaded and will not require further examinations for discovery.

3The plaintiff operated a semi-professional soccer team known as the Ottawa Wizards, for 3 seasons 2001, 2002 and 2003 in the now defunct Canadian Professional Soccer League (CPSL). Pleadings have been noted closed against the CPSL as well as the Canadian Soccer League Inc., a successor entity to the CPSL and the CSL Association Inc., whose status is unascertained. The bulk of the plaintiff’s claims arise out of a long list of disputes it had with the CPSL and which resulted in the CPSL revoking the team’s franchise at the end of the 2003 season.

4The plaintiff has also claimed against the Canadian Soccer Association (CSA), the Ontario Soccer Association (OSA) and the Eastern Ontario Soccer Association (EOSA). These 3 organizations govern the sport of soccer in Eastern Ontario. The CPSL would have been subject to the CSA’s governance when the league was in existence, and specifically in the 2000-2003 period when the Ottawa Wizards played in the CPSL.

5In the current Statement of Claim, (originally issued in 2004 and amended in 2008, 2012 and finally in 2016), it is alleged that the CSA breached a contract with the plaintiff when it permitted 2 of the team’s leading players (Mponda and Yobe) to leave the team and transfer back to their native Malawi. Damages are claimed in the amount of $500,000 for the lost investment in these 2 players and loss of the opportunity to charge transfer fees and to earn profits from these 2 players. In addition, allegations are made in the current Statement of Claim that through negligence and various other intentional torts, the CSA and OSA caused and continues to cause the plaintiff economic losses relating to its Oz Dome (indoor soccer facility) business, essentially by refusing to sanction soccer activities and events in this facility.

6The plaintiff now seeks 2 further amendments to the current Statement of Claim which are somewhat similar to amendments unsuccessfully sought in the past. In September of 2017, on the eve of a previously scheduled trial date, the plaintiff moved before Master Fortier for leave to amend its Statement of Claim. The Master refused leave stating:

[26] The Plaintiff is seeking to amend its claim on the eve of trial in one of this jurisdiction’s longest running civil litigation files to plead new causes of action for claims that amount to fraud and conspiracy. The proposed amendments do not contain material facts but are rather allegations based on speculation and assumptions. There are no particulars regarding liability or damages and it is impossible for the Defendants to know the case they have to meet. Clearly, this amounts to an abuse of the process of the court and will not be allowed.

[27] To allow the proposed amendments to the claim would cause non compensable prejudice to the Defendants particularly the loss of the present trial dates. The Defendants are entitled to proceed with the trial in a case that has been outstanding for thirteen years and they would be severely prejudiced by further trial delay.

[28] The record before me shows that the allegations of corruption in the CPSL and the CSL are not new to the Plaintiffs as they have alleged. In fact, the allegations were canvassed on discovery by the Plaintiff without a motion to amend being brought at that time. I find that the Plaintiff’s lengthy delay in seeking this amendment is without justification and therefore prejudice to the Defendants is presumed.

[29] It is to be noted that the Plaintiff’s Motion Materials have been delivered outside of court ordered time limits and it is the Plaintiff’s 8th attempt to amend the Statement of Claim. The Plaintiff cannot be allowed to keep reinventing the claim. It would be prejudicial for the Defendants to be subjected to the cost and burden of defending the new set of allegations that are far more serious and involve well over $30,000.00 at this late stage.

7The trial in this matter did not proceed as scheduled due to illness of plaintiff’s counsel. As noted, a new date was set for April 15, 2019. I was then assigned to case manage this proceeding. Discussions took place with counsel to determine whether the current Statement of Claim could be amended on consent to obtain some clarification of portions of the pleading and to accommodate the plaintiff’s desire to have its pleading reflect the quantification of damages in their expert reports and to raise an issue of possible match fixing/gambling in the CPSL. It was understood that in the absence of agreement to any amendments the issue(s) would need to be addressed in a contested motion and this is that motion.

8As noted, the plaintiff seeks to introduce 2 amendments, which they assert are clarifications and/or monetary updates of matters already pleaded in the current Statement of Claim. Furthermore the plaintiff claims these amendments involve no new facts (except for updates of monetary claims already pleaded) and would not require further discovery.

Proposed amendment 1 (vicarious liability of CSA/OSA for the acts of the CPSL)

9The plaintiff seeks to amend the current Statement of Claim to allege that, arising from the role of the CSA/OSA as the governing body of soccer in Canada, there exists an agency relationship between those bodies and the CPSL so that the CSA/OSA are vicariously liable for the various legal wrongs alleged against the CPSL in the current pleading. This oversight liability is based on alleged implied contractual and tort duty of care obligations.

10The proposed amendments (underlined text), would read:

14. (a) The EODSA is a member organization of the Defendant OSA. The OSA directly oversees and sanctions the activities of the EODSA. The OSA is a member organization of the CSA. The CSA directly oversees and sanctions the activities of the OSA, and indirectly oversees the EODSA through the CSA’s oversight and sanction of the OSA. The foregoing arrangement is referred to herein as the “CSA/OSA/EODSA system”. (b) The by-laws, rules and regulations of the CSA (“the CSA governance documents”) at all material times included a mission statement which provided that the CSA, “in partnership with its Members”, was committed to promoting the growth, and development of soccer in Canada, as well as the provision of leadership and good governance for soccer. As such, the CSA entered into an agency relationship with its Members, the OSA and EODSA. (c) The Constitution, rules and regulations of the OSA (“the OSA governance documents”) at all material times provided that district associations, such as the EODSA, were active members as well as the governing bodies within their respective geographic areas. Moreover, the OSA, pursuant to this Constitution, delegated to each district association the responsibility to administer registration, appoint games officials, administer clinics and exercise responsibility over discipline and appeals. Accordingly, the EODSA was the agent of the OSA in Eastern Ontario for the purpose of administering discipline and appeals whilst the OSA was the partner and agent of the CSA for the Purpose of governing soccer in Ontario. (d) The CSA, in undertaking with its partners, the OSA and EODSA, to provide leadership and good governance for soccer in Canada, and in consideration of the receipt of various fees from teams, players and Clubs, including those controlled by the Plaintiff, had along with the OSA and EODSA, a duty of care and contractual obligation to the Plaintiff to provide good governance of soccer in Ontario as provided for in the CSA and OSA governance documents.

15. …The CSA, OSA and EODSA knew or ought to have known of the above referenced deficiencies in governance of their member or partner, the CPSL/CSL/CSLA and, in failing to address them, fell below the reasonable standard of care to which the Plaintiff was entitled. Additionally, when CPSL/CSL/CSLA was being investigated by the German Police, Interpol, the OPP and RCMP for possible involvement in illegal match fixing, the CSA, OSA and EODSA again failed to provide good governance, oversight or transparency, by withholding this information from its Membership and failing to take any proactive measures, or action of any kind. The Plaintiff states that the EODSA/OSA/CSA, as the governing bodies of soccer in Canada, are vicariously liable for the damages caused to the Plaintiff as a result of the conduct set out in this paragraph 52 and by virtue of the agency relationship among them, as described in paragraph 14 of this Statement of Claim. They are also primarily liable to the Plaintiff for the breach of their contractual obligations, as expressed in the CSA and OSA governance documents, and duty of care, good faith and fair dealing to the Plaintiff.

11The CSA objects to these proposed amendments on the basis that they would be irreparably prejudiced because now, for the first time in the 14 year history of this proceeding, they will need to defend against all of the long list of complaints alleged against the now defunct CPSL. They were never significantly involved in these disputes and the CPSL is no longer in operation and the events in issue occurred 14 to 17 years ago (2001-2004). I accept this submission. Common sense would dictate the CSA could not possibly in effect step into the shoes of a long defunct corporate entity and explain or justify the CPSL actions.

12This case is similar to Family Delicatessen Ltd., v. London (City), 2006 ONCA 5135 wherein the court observed that the:

City defendant had participated in the proceedings for some six years on the basis that it was a nominal defendant. Its participation in the lawsuit was minimal and it took a cooperative stance with the other parties. Were the proposed amendment to be allowed, the City would be in a very different position with serious allegations of misrepresentation being brought against it. Its litigation strategy may well have been entirely different. It, of course, cannot undo what has already been done in this proceeding. While it is true that the prejudice to the City flowing from the proposed dramatic change in the course of this litigation could be addressed in part by appropriate orders concerning added discoveries and related matters, we are satisfied that the City could not be put in the position it would have been to meet these allegations had they been made in a timely fashion.

13Quite apart from the irreparable prejudice the proposed amendments would create for the CSA and OSA there are several other reasons these amendments should not be allowed.

14Firstly, claims against the CSA/OSA for alleged failure to carry out their governance responsibilities in the 2001-2004 time frame are long since statute barred both by the 2 year limitation and for certain of the claims, by the ultimate 15 year limitation (see sections 4 and 15 of the Limitations Act, 2002, S.O. 2002, C. 24, Sched. B.).

15Secondly, the alleged duty of care against the CSA and OSA is undoubtedly a novel duty of care. As such the “Anns test” as explained by the Supreme Court of Canada in Cooper v. Hobart, 2001 SCC 79 is engaged. The facts supporting foreseeability and proximity are in no way reflected in the proposed pleading. Moreover, this alleged legal duty arising out of the CSA’s oversight functions opens up a potentially broad based exposure for the CSA, extending well beyond the disputes contained in the current Statement of Claim.

16Thirdly, the inclusion of a pleading about match fixing and gambling at this stage of the proceeding is untenable and would side track this jury trial into irrelevant and time consuming collateral issues. It is unknown whether criminal third parties attempted to fix matches for gambling purposes and if so how the CSA was to know about this or how resultant losses were experienced by the plaintiff. The police investigations into this issue began in 2009 some 5 years after the Ottawa Wizards left the CPSL. The current formulation of this issue is similar to amendments rejected by Master Fortier and by Master Beaudoin, (as he then was) in Oz Merchandising Inc. et al v. Canadian Professional Soccer League Inc. (July 20, 2006, unreported).

Proposed amendment 2 (to increase the claim for transfer fees in para 77(b) from $100,000 to $42 million)

17The current pleading (para 77(b)) claims against the CPSL as well as the CSA and OSA contain alleged financial losses arising from the departure of two players Mponda and Yobe. I reproduce the current para 77 in its entirety:

[77] Oz Merchandising Inc. and the Ottawa Wizards claim s damages against the CPSL/ CSL/CSLA , the OSA, and the CSA, on a joint and several basis, as follows: (a) Damages in the amount of $100,000 on account of the loss of the Plaintiff s ’ s investment in providing training, coaching, and compensation to Mponda and Yobe as professional soccer players; (b) Damages in the amount of $100,000 on account of the loss of the opportunity to charge transfer fees for releases of Mponda and Yobe from their contracts; (c) Damages in the amount of $250,000 on account of the loss of the Plaintiff s ’ s investment in providing compensation training, coaching, compensation, and in improving the abilities of various players to other player contracts which in the aggregate provided valuable and needed economic interests to support the operation of a team which included players such as Mponda and Yobe, but the value of which was lost in the absence of Mponda and Yobe. (d) Damages in the amount of $150,000 on account of the loss of the revenues arising from the loss of Mponda, Yobe, and various other players on the Ottawa Wizards soccer team.

18The plaintiff proposes to replace paragraph 77(b) above, with a revised pleading which would read as follows:

[77] OZ Merchandising Inc. claims damages against the CPSL/CSL/CSLA, the OSA, and the CSA, on a joint and several basis, as follows: (a) Damages in the amount of $250,000 on account of the loss of the Plaintiff investment in providing training, coaching, and compensation to Mponda and Yobe as professional soccer players; (b) Damages in the amount of $42,000,000 for the past and ongoing lost opportunity to develop players and lost fees that would have been obtained as a result of player sales and player transfers made on the international transfer market above and beyond those players referenced in paragraph 77(a) of this Statement of Claim;

19The parties are content with 77(a) which rephrases what is a largely incomprehensible pleading in the current paragraph 77(c). However the CSA opposes the $42 million claim, which had been $100,000 in the current claim and related arguably only to players Mponda and Yobe.

20I take the issue here to be whether the plaintiff should be allowed to claim alleged lost transfer compensation fees of not merely $100,000 for 2 players (Mponda and Yobe), but now $42,000,000 for lost transfer fees for a large number of unnamed players.

21The plaintiff’s factum attempts to explain this enormous and ill-defined claim as follows:

The amendment proposed to paragraph 77(b), would increase the claim for damages from $100,000 to $42 million in respect of the loss of the opportunity to charge transfer fees for players with the team when the franchise was pulled in 2003. The Plaintiff’s Soccer Player Transfer Value Expert Report dated May 19 2016 (the “Kara Report”), identifies 11 players whose total transfer values amount to $2.35 million. However, this figure is insufficient because the Report values the best players on the 2001 squad, but the 2003 team was much stronger, as evidenced by their much improved record that year. The Plaintiff therefore proposes to increase this head of damages to $42 million.

The Kara Report values 11 different players with the team in 2001 for a maximum total of $2.35 million. By 2003 the Ottawa Wizards were a much better team, and five of the players on the 2001 team were no longer starters with the team and most, if not all, of those five players were relegated to playing on the Ottawa Wizards farm team in Kanata. Using the minimum valuation for 2001 of $2.35 million as an annual loss, the Plaintiff argues that over the 18 years from 2001 to 2018, its loss has been in excess of $40 million [18 years (2001 to 2018 inclusive) X $2.35 million= $42.3 million].

22The plaintiff has tendered a total of 3 letters from a Mr. Kara who was employed by the plaintiff as the technical director of the Ottawa Wizards in the first year of the team’s operation (2001). These letters are tendered as Rule 53 expert reports, the admissibility of which will need to be ruled upon by the trial judge. Mr. Kara, who coaches soccer in Turkey opines that in theory some of the best players on the Ottawa Wizards in 2001 could have earned transfer fees, or some kind of compensation for the Wizards if a lower or mid-range Turkish professional team signed them. However no such fees were ever earned by the Wizards at any time. The Wizard’s franchise was revoked in 2003. The reports do not explain on what conceivable basis a transfer fee loss could accrue to the trial date, 15 years after the team ceased to exist and in regard to unnamed players and unspecified foreign soccer teams.

23It is also clear that claims for lost fees for players (other than Mponda and Yobe) are long since statute barred. Further, in the event such an amendment was allowed wide ranging discoveries would need to be pursued in respect to currently unnamed players with the inevitable loss of the present trial dates, something the plaintiff claims to wish to avoid.

24In summary, the plaintiff’s motion to amend the current version of its Statement of Claim is dismissed. Having said that, the plaintiff may re-draft or edit the current paragraph 77 of its pleading for grammar and comprehensibility but the dollar figures and the named players (Mponda and Yobe) are not to change. There are also a variety of other minor changes and edits to the current pleading which may proceed. In the event of disagreement these can be addressed in a future case conference.

25If the defendant CSA wishes to seek costs of this pleadings motion it may do so by brief written submission to be received within 2 weeks of the release of these reasons and the plaintiff may respond within 2 weeks of receiving the defendant CSA’s submission.

C.T. Hackland J