Court File and Parties

COURT FILE NO.: CV-17-588553

RELEASED: 2019/01/25

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Troy Vassos v. Enterra Holdings Ltd. and Golder Associates Ltd.

BEFORE: Master Graham

HEARD: January 22, 2019

COUNSEL: Stephanie Pope for the plaintiff Jordan Simon for the defendants (moving parties)

Reasons for Decision

(Defendants’ motion to amend the statement of defence)

[1] The plaintiff Troy Vassos worked for the defendant Golder Associates from January 1, 2013 until January 29, 2016, when his employment was terminated without cause. His claim for damages arising from his termination includes allegations of oppression and bad faith based on the defendants’ failure to pay him the fair market value of his shares in the defendant Enterra Holdings Ltd. as of his termination date. The central issue is the date on which Vassos received notice that his employment would be terminated because the valuation method subsequent to January 1, 2016 provided for a higher price per share than if he received notice in 2015.

[2] The defendants now move to amend their statement of defence. The plaintiff opposes the motion in respect of some of the amendments on the basis that the defendants are seeking to withdraw admissions. For the reasons set out below, I have concluded that the defendants should be granted leave to amend their statement of defence in accordance with the proposed amendments in their draft amended pleading.

The pleadings

[3] The substance of Vassos’ claim with respect to the valuation of his shares is contained in paragraphs 10, 13 and 14 of the statement of claim:

10. On or about December 15, 2015, Vassos received notice that the Defendant would be terminating his employment effective January 29, 2016. After some negotiation between the parties, the Defendant issued a revised termination letter on January 4, 2016 (the “Separation Agreement”).

11. Instead of receiving the fair market value of his shares as of January 29, 2016, which was $58.74 USD per share, Vassos received the value of his shares as of December 15, 2015 which was $38.09 USD. This resulted in lost compensation of $146,098.75 USD for his 7075 vested shares.

12. By paying out the valuation of Vassos’ shares as at December 15, 2015, the Defendant acted in an oppressive manner which resulted in unfair prejudice to Vassos and demonstrated unfair disregard for his rights as a minority shareholder.

[4] In their statement of defence, the defendants deny these and other allegations in the statement of claim. With respect to the timing of their termination of Vassos’ employment, they plead, in paragraphs 4, 13 and 20:

4. The Plaintiff, Troy Vassos, was hired by Golder Associates to work as a Senior Environmental Engineer for the Mine Water Group in Vancouver, British Columbia. The Plaintiff worked for Golder Associates from January 1, 2013 until January 29, 2016, at which time the Plaintiff’s employment was terminated without cause. The Plaintiff was provided verbal notice of the termination on December 15, 2015 and written notice on December 22, 2015.

5. On December 15, 2015 the Plaintiff was advised that Golder Associates would be terminating his employment on a without cause basis. After discussions between the parties, the Plaintiff was issued written notice of termination on December 22, 2015. The letter indicated that the Plaintiff’s termination would be effective January 29, 2016.

6. The Plaintiff accepted the Defendant’s severance package and signed the full and final release on January 4, 2016.

[5] In response to the statement of defence, the plaintiff delivered a reply containing the following pleadings:

3. . . . Mr. Vassos did not receive written notice of termination on December 22, 2015. Rather, Mr. Vassos received written notice of termination on January 4, 2016.

4. Contary to paragraphs 13 and 19 of the Defence, the Plaintiff’s notice of termination was not given until January 4, 2016. While the written notice of termination was dated December 22, 2015 and indicated that the termination would be effective on January 29, 2016, this notice was sent on January 4, 2016, via email. As such, the Defendants did not provide written notice of termination as required by statute and the Personalized Agreement until January 4, 2016.

[6] The substance of the defendants’ original pleading is that Vassos was provided with verbal notice of termination on December 15, 2015, written notice on December 22, 2015, and signed a release with respect to his termination on January 4, 2016.

[7] The defendants now move to amend various paragraphs of their statement of defence, essentially to plead that Vassos was provided with written notice of termination of his employment on December 15, 2015. Although there are other proposed amendments to the statement of defence, the contentious amendments identified by Vassos are those to the existing paragraphs 4, 13 and 20 set out above and are as contained in the proposed amended paragraphs 4, 14 and 25:

4. The Plaintiff, Troy Vassos, was hired by Golder Associates to work as a Senior Environmental Engineer for the Mine Water Group in Vancouver, British Columbia. The Plaintiff worked for Golder Associates from January 1, 2013 until January 29, 2016, at which time the Plaintiff’s employment was terminated without cause. The Plaintiff was provided verbal written notice of the termination on December 15, 2015 and written notice on December 22, 2015.

5. On December 15, 2015 the Plaintiff was advised that Golder Associates would be terminating his employment on a without cause basis. On that date, the Plaintiff met with Dan Walker and Neil McQuitty and was advised of his termination, and at that time was provided with a written termination letter, enclosing a severance package offer, which exceeded both the Plaintiff’s statutory entitlements and his entitlements under the termination provision of his Employment Contract, as well as a full and final release to be signed in exchange for accepting the severance package (“Termination Letter”). After discussions between the parties, the Plaintiff was issued written notice of termination on December 22, 2015. The letter indicated that the Plaintiff’s termination would be effective January 29, 2016.

6. The Plaintiff accepted the Defendant’s severance package and signed the full and final release on January 4, 2016.

Applicable Rules of Civil Procedure

[8] The defendants submit that the court is required to grant the proposed amendments pursuant to rule 26.01:

26.01 On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment. [emphasis added]

[9] The plaintiff opposes the proposed amendments on the basis that they include a withdrawal of the defendants’ admission that the date of their written notice of termination to the plaintiff was December 22, 2015. Pursuant to rule 51.05, a party may withdraw an admission in a pleading only on consent or with leave of the court:

51.05 An admission made in response to a request to admit, a deemed admission under rule 51.03 or an admission in a pleading may be withdrawn on consent or with leave of the court.

[10] The decision in Hughes v. Toronto Dominion Bank, cited below, refers to rule 1.04(1):

1.04(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

Case law

[11] The defendants submit that the proposed amendments do not involve the withdrawal of an admission, so leave to withdraw an admission is not required. The defendants rely on Yang (Litigation Guardian of) v. Simcoe (County), 2011 ONSC 6405 (para. 46):

46 Generally, admissions in a pleading are made boldly and baldly and they are, in general, specific and identifiable admissions (Zellers Inc. v. Group Resources Inc., 1995 CanLII 7141 (ON SC), [1995] O.J. No. 5 (Gen. Div.)). An admission contemplated by rule 51 is one that is an unambiguous deliberate concession to a position taken by the defendant (Hughes v. Toronto Dominion Bank, [2002] O.J. No. 2145). An admission contemplated by rule 51 occurs when the plaintiff admits that a set of facts were [sic] posed by the defendant is correct (Belsat Video Marketing Inc. v. Zellers Inc., [2003] O.J. No. 3168 (Master)). An admission must be an intentional concession to the other side and not simply the result of the words chosen in the claim (Belsat, supra). A factual pleading made in error cannot fairly be characterized as a deliberate admission (Kamei Sushi Japanese Restaurant Ltd. v. Epstein, [1996] B.C.J. No. 1223 (B.C.S.C.)).

[12] The parties agree that the test with respect to the granting of leave to withdraw an admission is as set out in Antipas v. Coroneos, 1988 CanLII 10348 (ON SC), [1988] O.J. No. 137 (para. 14), cited with approval in numerous subsequent authorities including Szelazek Investments Ltd. v. Orzech (1996), 44 C.P.C.(3d) 102 (C.A.), Hughes, supra (para. 7), and Kostruba and Sons Inc. v. Pervez, [2011] O.J. No. 3729 (para. 39). The three requirements of the test are:

(1) The proposed amendment raises a triable issue. As stated in Phillips v. Disney, [2018] O.J. No. 833 (para. 25): “[T]he requirement to demonstrate a ‘triable issue’ requires the moving party to demonstrate that the proposed amendments raise an arguable case on the merits.”

(2) The admission was inadvertent or resulted from wrong instructions. This branch of the test should be given a liberal interpretation. As stated in Hughes, supra (para. 8): “In a perfect world, all documents would be reviewed and all witnesses interviewed before the pleadings were crafted but that is not the reality of practice. The governing principle of our rules as set out in Rule 1.04(1) is not furthered if parties are not allowed to correct mistakes in pleading if a full exploration of the facts and documents reveals them. As stated by Saunders J. in Antipas, supra ‘if there is a triable issue, a party should be able to withdraw an admission upon furnishing a reasonable explanation for the change in position’.”

(3) The withdrawal will not result in any prejudice that cannot be compensated for in costs. As stated in Kostruba, supra (para. 42), “Of the three criteria, prejudice is obviously the most significant. However, as noted by Saunders J. in Antipas, the onus is on the moving party to show that the opposite party will not be prejudiced, rather than the reverse as is the case under rule 26.01”.

[13] With respect to the issue of prejudice, the following passage from Kostruba (para. 43) is also significant:

43 The stage of the action at which the withdrawal of the admission is requested is relevant. Early on in the action, the reliance of the opposite party on the admission will not be as great. It will not be as difficult for the opposite party to reformulate its case. Later, after discoveries have been held and evidence for trial has been marshalled, it will be more difficult. Prejudice will be more apparent.

Issues on the motion

[14] The issues on the motion are:

1. Do the defendants’ proposed amendments to their statement of defence constitute withdrawals of admissions?

2. If the amendments are withdrawals of admissions, have the defendants demonstrated:

(1) That the proposed amendments give rise to an arguable case on the merits.

(2) That the admissions were inadvertent or resulted from wrong instructions, and

(3) That the withdrawal will not result in any prejudice that cannot be compensated for in costs.

Analysis of the issues

[15] I will now consider each of the issues enumerated above.

Do the defendants’ proposed amendments to their statement of defence constitute withdrawals of admissions?

[16] As stated above, the substance of the defendants’ proposed amendments is that they gave Vassos written notice of his termination on December 15, 2015, rather than on December 22, 2015. To address the issue of whether the proposed amended statement of defence contains a withdrawal of an admission, it is necessary to look at the statement of claim and the original statement of defence to determine whether any portion of the statement of defence amounts to “an unambiguous deliberate concession to a position taken by the [plaintiff]” as contemplated by both Hughes and Yang, supra.

[17] As indicated above, Vassos pleads in his statement of claim (para. 10) that on or about December 15, 2015 he received notice that the defendants would be terminating his employment effective January 29, 2016, following which the defendants issued a revised termination letter on January 4, 2016. Vassos further pleads (para. 21) that Golder Associates terminated him on December 15, 2015 and provided him with working notice until January 29, 2016. There is no pleading in the statement of claim of a written notice letter dated December 22, 2015.

[18] The defendants plead in their existing statement of defence (paras. 4 and 13) that Vassos was provided with verbal notice of termination on December 15, 2015 and written notice on December 22, 2015.

[19] The deletion of the pleading in amended paragraphs 4 and 14, that written notice was provided on December 22, 2015, is not a withdrawal of an admission because the statement of claim contains no allegation that the defendants’ written notice to the plaintiff was provided on December 22, 2015. To constitute an admission, a pleading must be “an unambiguous deliberate concession to a position taken by the plaintiff” [emphasis added]. Vassos never pleaded that written notice was provided by letter of December 22, 2015, so the defendants cannot be taken to have conceded to any such position. The amendment is therefore not a withdrawal of an admission.

[20] Based on the finding that there is no withdrawal of an admission, the proposed pleading amendment is governed by rule 26.01, and shall be granted unless prejudice would result that could not be compensated for by costs or an adjournment. The only prejudice to the plaintiff from granting the amendment is that he may need to incur the additional expense of delivering an amended reply to the amended statement of defence, for which he can be compensated by costs. Accordingly, the defendants should be granted leave to amend the statement of defence.

Have the defendants satisfied the test for withdrawal of an admission?

[21] In case I am incorrect in concluding that the proposed amendments to the statement of defence do not constitute the withdrawal of an admission, I will also apply the Antipas test to the proposed amendments. The application of this test requires a review of the evidence filed on the motion.

[22] The defendants’ evidence is contained in the affidavit of Jeffrey Goodman, a lawyer at the firm representing them. He deposes that, while the parties do not dispute that Vassos’ shares are to be valued as at the date that notice of termination was provided to him, the parties do disagree as to when notice was provided.

[23] The defendants rely on information from Nicole Clark, identified as “the lawyer in [the defendant] Golder’s legal department who had the most knowledge of both the acquisition of the Plaintiff’s company which resulted in his employment with the Defendants and the termination of the Plaintiff’s employment.” At the time that the defendants delivered their statement of defence (filed on February 21, 2018), Ms. Clark was on maternity leave and was unavailable to assist in drafting the statement of defence or in identifying relevant documents. The original pleading that Vassos was provided with written notice of his termination on December 22, 2015 was based on a termination letter of that date found in Vassos’ employment file.

[24] Defendants’ counsel first spoke with Ms. Clark after April 30, 2018, when she had recently returned from maternity leave, at which time she pointed out errors in the statement of defence relating to when Vassos originally received the termination letter and provided related documents. Specifically, Ms. Clark provided counsel with a termination letter dated December 15, 2015, as opposed to December 22, 2015 as originally alleged in the statement of defence. Ms. Clark also provided counsel with a copy of an email dated December 18, 2015 from Vassos to the defendant requesting that minor changes be made to the December 15, 2015 termination letter.

[25] The December 15, 2015 termination letter is not contained in the defendants’ motion materials, and counsel on the motion acknowledged this oversight as a “glaring omission”. Significantly, however, Vassos’ responding material does not deny the existence of a termination letter of that date. Equally importantly, the defendants’ motion materials include a copy of an email dated December 18, 2015 from Vassos to Neil McQuitty and Dan Walker, two of the principals of Golder Associates, in which Vassos states that he “took a look at the documents you gave me” and requested changes to three paragraphs each identified by section numbers. Even in the absence of a copy of the December 15, 2015 letter, Vassos’ own email written three days later, acknowledging receipt of communication from the defendants apparently setting out the terms of his termination and requesting changes to those terms, is consistent with Vassos having received that letter.

[26] Vassos’ responding evidence, contained in an affidavit from his lawyer Mr. Persaud, reviews correspondence between first Vassos and then his former counsel Mr. Smart, and Kevin Stubblebine, Chief Legal Officer of Golder Associates. The focus of this correspondence was the valuation of Vassos’ shares. Mr. Smart’s letter of December 19, 2016 refers to the termination letter of December 22, 2015 not being delivered to Vassos until January 4, 2016. Mr. Stubblebine’s email of January 13, 2017 states that “Mr. Vassos received clear and unequivocal notice of his termination in 2015. The communications surrounding final edits to his termination letter make that clear.”

Do the proposed amendments give rise to an arguable case on the merits?

[27] The defendants have provided uncontradicted evidence that Vassos was given a termination letter dated December 15, 2015 and that Vassos received that letter and responded to it on December 18, 2015. Even without seeing the termination letter dated December 15, 2015, the evidence that such a letter exists, was given to Vassos and that Vassos responded to it on December 18, 2015 (as opposed to in January when the valuation methodology changed), is sufficient to create an arguable case on the merits that there was, in fact, a written termination letter provided to the plaintiff on December 15, 2015. The defendants have therefore satisfied this part of the test.

Were the admissions inadvertent or did they result from wrong instructions?

[28] The defendants’ evidence is that, owing to Ms. Clark’s absence from the office when the statement of defence was prepared, defendants’ counsel were not given instructions regarding the written notice provided to the plaintiff by way of the December 15, 2015 termination letter. The instructions from the defendants to their litigation counsel were therefore incomplete and required correction. As stated in para. 8 of Hughes, supra, “The governing principle of our rules as set out in Rule 1.04(1) is not furthered if parties are not allowed to correct mistakes in pleading if a full exploration of the facts and documents reveals them.” The additional information provided by Ms. Clark on her return from maternity leave completed the full examination of the issues on the merits contemplated in Hughes.

[29] I accept that any admissions in the statement of defence resulted from wrong instructions in that those initial instructions did not include reference to the December 15, 2015 termination letter and Vassos’ December 18, 2015 response.

[30] As stated in Kamei Sushi, supra, a factual pleading made in error cannot fairly be characterized as a deliberate admission. The evidence that the defendant’s original pleading, that Vassos was provided with verbal notice of termination on December 15, 2015 and written notice on December 22, 2015, was based on incomplete and therefore erroneous information, also supports my initial conclusion that that pleading did not constitute an admission in the first place.

Will the withdrawal result in any prejudice that cannot be compensated for in costs?

[31] The onus is on the party seeking the amendment to demonstrate that no prejudice would result from the withdrawal of an admission. The defendants’ evidence, which the plaintiff does not dispute, is that affidavits of documents have not been exchanged and examinations for discovery have not been held. In addition, the fact that the responding party Vassos is in a better position than the defendants to know whether he has been prejudiced, and has provided no evidence to that effect, assists the court in concluding that no prejudice would result from the withdrawal of any admission.

[32] There is no evidence that the plaintiff relied to his detriment on the defendants’ original pleading that they gave the plaintiff verbal rather than written notice on December 15, 2015, other than that his reply responded to the original pleading. The fact that this action is still at an early stage, a consideration identified as relevant in Kostruba, supra, militates against any finding of non-compensable prejudice. The only prejudice is that the plaintiff may need to prepare an amended reply, for which, as stated above, he can be compensated by costs.

[33] I therefore conclude that the withdrawal of any pleading characterized as an admission would not result in prejudice to the plaintiff that cannot be compensated for by costs.

Summary and decision

[34] In summary, I have concluded that the proposed amendments to the statement of defence, including the passages deleted from the original pleading, do not constitute withdrawals of admissions. The defendants should therefore be granted leave to amend the statement of defence, subject to the plaintiff being compensated for the costs of having to prepare an amended reply. If the proposed amendments do include withdrawals of admissions, then I have concluded that the defendants have satisfied the applicable test that would allow them to withdraw those admissions and amend their statement of defence.

[35] Defendants’ counsel agreed that Vassos should recover some amount for his costs associated with preparing an amended reply to the amended statement of defence. For their assistance, I would suggest that a reasonable figure would be $1,000.00 inclusive of HST, based on approximately 3.5 hours of Mr. Persaud’s time at his partial indemnity rate of $250.00/hr, plus HST.

[36] The defendants are hereby granted leave to amend their statement of defence in accordance with the draft attached to their notice of motion, subject to payment of Vassos’ costs of an amended reply. The plaintiff is hereby granted leave to deliver an amended reply.

Costs

[37] At the conclusion of the hearing, both counsel filed costs outlines and made submissions on the issue of costs. The defendants requested substantial indemnity costs. I accept that the defendants, as the successful parties, should be awarded their costs of the motion. However, the plaintiff’s response to this motion, while unsuccessful, did not approach the reprehensible, scandalous or outrageous conduct that would warrant substantial indemnity costs (Hamilton v. Open Window Bakery Ltd., 2004 SCC 9).

[38] The defendants’ costs outline sets out a partial indemnity costs figure of $4,893.84, based on $3,892.00 for fees, $505.96 for HST and $495.89 for disbursements. This figure should be compared with the figure in the plaintiff’s costs outline of $6,676.96, based on $6,520.00 for fees and $156.96 for disbursements. Given that the defendants’ figure for fees of $3,892.00 is more than $2,500.00 less than what the plaintiff would have been seeking if successful, I can only conclude that it is a fair and reasonable figure, well within the plaintiff’s expectations.

[39] The presumption in rule 57.03(1)(a) is that on the hearing of a contested motion, unless the court is satisfied that a different order would be more just, the court shall fix the costs of the motion and order them to be paid within 30 days. There was no submission that “a different order would be more just” and accordingly, the plaintiff shall pay the defendants’ costs of the motion fixed at $4,893.84 payable within 30 days. The plaintiff’s costs of preparing an amended reply should be set off against this figure. I have commented above as to what an appropriate figure would be and if counsel cannot agree, they may arrange to address the issue.

[40] I thank both counsel for their able submissions.

MASTER GRAHAM

January 25, 2019