Court File and Parties
COURT FILE NO.: CV-18-00611034 MOTION HEARD: 20191107
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Hoodex Industries Limited, Plaintiff AND: Raymond Hood, Andrew Hood, Innovation Building Maintenance Inc., Innova Toronto Inc. and Tahsin Bondokji, Defendants
BEFORE: Master B. McAfee
COUNSEL: V. Arman, Counsel for the Plaintiff J. Squire, Counsel for the Defendants Innova Toronto Inc. and Tahsin Bondokji
HEARD: November 7, 2019
REASONS FOR DECISION
Nature of the Motion
[1] This is a motion brought by the plaintiff Hoodex Industries Limited (“Hoodex”) for leave to amend the amended statement of claim in the form of a fresh as amended statement of claim and for an order for trial together of the within action and action no. CV-18-605074.
[2] The relief sought on this motion is on consent of the defendants in the within action Raymond Hood (“Raymond”), Andrew Hood (“Andrew”) and Innovation Building Maintenance Inc. (“Innovation”), on consent of the proposed defendant in the within action Susan Hood (“Susan”), and on consent of the plaintiff Raymond and the defendants ICS Clean Inc. (“ICS Clean”), Integrated Contracting Solutions Inc. (“Integrated”), and ICS Facility Services Inc. (“ICS Facility”), and 1053349 Ontario Limited (“105”) in action no. CV-18-605074. The proposed defendant in the within action Claudio Vasquez (“Vasquez”) did not appear on the motion to oppose. The defendants in the within action Innova Toronto Inc. (“Innova”) and Tahsin Bondokji (“Bondokji”) (collectively “the Innova defendants”) oppose the motion.
Preliminary Issues
[3] The Innova defendants sought to walk in their responding factum and book of authorities. This material was short-served and not accepted for late filing in the court office. The plaintiff did not object to the late service or to the defendant walking in the material. I permitted the Innova defendants to walk in their responding factum and book of authorities. The Innova defendants did not deliver a responding motion record.
[4] Counsel for Hoodex brought two matters to the court’s attention. Vasquez was served with the motion record and notice of return of motion by regular mail to his last known address. These documents were not returned to sender. Vasquez did not attend on the initial return date for this motion. When attempts were made to personally serve Vasquez with the factum and book of authorities of Hoodex in advance of the second return date, the process server was advised by a family member that Vasquez no longer resided at the address and she did not know where he resided. I was content to proceed with the motion. Vasquez was served with the motion record and notice of return of motion at his last known address where family members reside. Two documents providing notice of the motion were served by mail and were not returned to sender.
[5] Plaintiff’s counsel also brought to the court’s attention the fact of a motion now scheduled by Raymond, Andrew, Susan, and Innovation seeking to strike any fresh as amended statement of claim. As noted above, the motion before me seeks leave to amend the amended statement of claim in the form of a fresh as amended statement of claim. Raymond, Andrew, Susan, and Innovation consent to this motion, including the relief for leave to amend. No adjournment of the within motion was sought. No one appeared on behalf of these parties.
The Actions
[6] On September 13, 2018, action number CV-18-605074 was commenced by statement of claim. Raymond as plaintiff claims against Hoodex as defendant for damages for wrongful dismissal in the amount of $517,500.00 and other relief.
[7] On or about May 21, 2019, the statement of claim in action number CV-18-605074 was amended to change the name of Hoodex to ICS Clean and to add Integrated, ICS Facility, and 105 as defendants.
[8] On December 17, 2018, the within action was commenced by way of statement of claim. In the statement of claim, Hoodex claims against Raymond, Andrew and Innovation for damages in the amount of $4,000,000.00, an interim and permanent injunction enjoining Raymond and Andrew from competing with Hoodex and soliciting customers and employees of Hoodex and other relief.
[9] On March 22, 2019, leave was granted to amend the statement of claim. The amendments included the adding of the Innova defendants. The Innova defendants were given notice of the motion to add them as defendants and they did not oppose that motion. The claim against the Innova defendants in the amended statement of claim includes damages in the amount of $4,000,000.00 and an interim and permanent injunction enjoining them from competing with and soliciting clients of Hoodex.
Leave to Amend
[10] Rule 26.01 of the Rules of Civil Procedure provides as follows:
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.
[11] In 1588444 Ontario Ltd. v. State Farm Fire and Casualty Co., 2017 ONCA 42, at para. 25, Justice Hourigan states in part:
The rule requires the court to grant leave to amend unless the responding party would suffer non-compensable prejudice; the amended pleadings are scandalous, frivolous, vexatious or an abuse of the court’s process; or the pleading discloses no reasonable cause of action: Iroquois Falls Power Corp. v. Jacobs Canada Inc., 2009 ONCA 517, 75 C.C.L.I. (4th) 1 (Ont. C.A.), at paras. 15-16, leave to appeal to SCC refused, 2010 CarswellOnt 425 (S.C.C.), and Andersen Consulting v. Canada (Attorney General) (2001), 150 O.A.C. 177 (Ont. C.A.), at para. 37.
[12] The Innova defendants filed no evidence on this motion. There is no evidence of prejudice. There is no issue that any limitation period has expired.
[13] The Innova defendants argue that the proposed fresh as amended statement of claim discloses no reasonable cause of action as against them.
[14] For the purposes of this motion, the proposed amendments are to be taken as true and read generously with allowances for drafting deficiencies.
[15] I have reviewed the proposed amended pleading and read the proposed amended pleading generously. I am satisfied that a reasonable cause of action is advanced as against the Innova defendants.
[16] The proposed fresh as amended statement of claim alleges several causes of action against the Innova defendants including misappropriation of confidential information and breach of confidence, intentional interference with economic relations, conversion, and conspiracy.
[17] It is alleged that Bondokji, the principal of Innova, was at all material times also an employee of Innovation. Innovation signed a Non-Competition and Non-Solicitation Agreement in favour of Hoodex.
[18] Certain particulars of the defendants’ alleged wrongful conduct are set out at paragraph 36 of the proposed fresh as amended statement of claim including:
(c) secretly meeting with representatives of Hoodex’s customers in an effort to divert business from Hoodex to Innovation and/or Innova; (e) misappropriating customer contracts belonging to Hoodex and diverting them to Innovation and/or Innova; (f) misappropriating extras to customer contracts belonging to Hoodex and diverting them to Innovation and/or Innova; (i) sharing confidential and sensitive Hoodex customer pricing information with Innovation and/or Innova, and other unauthorized third parties; (l) improperly utilizing Hoodex employees to perform work and services for Innovation and/or Innova; and (m) poaching Hoodex employees and diverting them to other employment with Innovation and/or Innova.
[19] With respect to the claim for misappropriation of confidential information and breach of confidence, at paragraph 41 of the proposed fresh as amended statement of claim it is alleged that Bondokji knowingly and intentionally engaged in the unlawful use of Hoodex’s confidential information and proprietary commercial information to advance the interests of Innovation and/or Innova to the detriment of Hoodex. Their actions include supplying Hoodex contracts, pricing information, and other documents to Innovation and/or Innova, and other unauthorized third parties. It is specifically alleged that Raymond, Andrew, and Vasquez distributed this information to Innovation, Susan, and the Innova defendants, all of whom used the information for unlawful means. I am satisfied that a reasonable cause of action with respect to these claims is pleaded.
[20] Paragraph 44 of the proposed fresh as amended statement of claim contains details of the claim for conversion. It is alleged that the defendants knew that their possession and unauthorized use and distribution of confidential information was not authorized by Hoodex, yet the defendants took, maintained possession of, and misused the confidential information to their own benefit and to the detriment of Hoodex. It is pleaded that the defendant’s misuse of Hoodex’s confidential information was inconsistent with and seriously interfered with Hoodex’s proprietary rights over such information and property.
[21] The Innova defendants rely on the decision of R. v. Stewart, 1988 CarswellOnt 110 (S.C.C.) at para. 35 in support of their position that confidential information cannot be converted. Stewart considered whether confidential information was property within the meaning of the Criminal Code. I am satisfied that a reasonable cause of action of conversion is pleaded.
[22] Paragraph 45 of the proposed fresh as amended statement of claim contains details of the claim for intentional interference with economic relations. It is pleaded that the defendants intended to injure Hoodex and have interfered with Hoodex’s business by the unlawful means pleaded in the proposed fresh as amended statement of claim. It is also pleaded that Hoodex has suffered economic loss as a result. I am satisfied that a reasonable cause of action in this regard is pleaded.
[23] Paragraph 43 of the proposed fresh as amended statement of claim contains details of the alleged conspiracy among the defendants. It is alleged that all of the defendants conspired with one another by agreeing to enter into a scheme to solicit and appropriate Hoodex’s customers, contracts, resources, and employees to wrongfully use Hoodex’s confidential information and to sabotage Hoodex’s business. It is alleged that the predominant purpose of the defendants’ conspiracy was to damage Hoodex’s business and obtain Hoodex’s customers and contracts. It is pleaded that the defendants engaged in unlawful conduct set out at paragraph 36 of the pleading in furtherance of the conspiracy knowing that injury to Hoodex would likely result.
[24] The pleadings of conspiracy also contain facts as to how Hoodex suffered damages as a result of the conspiracy and the extent of those damages. Hoodex’s damages are particularized at paragraph 47 of the proposed fresh as amended statement of claim. Hoodex pleads that it has suffered $10,000,000.00 in damages through contracts lost to Innovation and/or Innova, extras to contracts lost to Innovation and/or Innova, contracts lost due to sabotage caused by the defendants, lost opportunities to bid on and/or obtain contracts due to reputational damage caused by the defendants, and business disruption arising from lost employees and misappropriated company resources.
[25] I am satisfied that sufficient particulars of the alleged conspiracy have been pleaded and that a reasonable cause of action is advanced. The proposed pleading contains sufficient particulars of the parties and their relationship, a description of the agreement to conspire and the precise purpose and objects of the alleged conspiracy, together with the overt acts done by each of the conspirators, and the injury and damages suffered (D.G. Jewelry Inc. v. Cyberdiam Canada Ltd., 2002 CarswellOnt 1382 (Ont. S.C.J.) at paras. 32 and 33).
[26] Even if the proposed fresh as amended statement of claim lacks any particulars regarding conspiracy, Hoodex cannot be reasonably be expected to know more particulars of the alleged conspiracy at this early stage in the action (North York Branson Hospital v. Praxair Canada Inc., 1998 CarswellOnt 3847 (Ont. Gen.Div.) at para. 22, Peterson v. Highwood Distillers Ltd., 1998 ABCA 105 (Alta. C.A.) at para. 15).
[27] The Innova defendants also rely on the doctrine of merger as a basis to deny the proposed amendments alleging conspiracy. The Innova defendants rely on D.G. Jewelry at para. 37. There is more recent authority on the issue of pleadings and merger. There is authority that the doctrine of merger should not be applied at the pleadings stage (Jevco Insurance Co. v. Pacific Assessment Centre Inc., 2015 ONSC 7751, [2015] O.J. No. 6826 (Ont. Div.Ct.)). To the extent that the doctrine of merger may be applicable, the material before me does not satisfy me that leave to amend ought to be denied on the basis of the doctrine of merger.
[28] Leave is accordingly granted to amend the statement of claim in the form of the proposed fresh as amended statement of claim.
Trial Together
[29] Rule 6.01 of the Rules of Civil Procedure provides in part as follows:
6.01(1) Where two or more proceedings are pending in the court and it appears to the court that, (a) they have a question of law or fact in common; (b) the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences; or (c) for any other reason an order ought to be made under this rule, the court may order that, (d) the proceedings be consolidated, or heard at the same time or one immediately after the order; or (e) any of the proceedings be, (i) stayed until after the determination of any other of them, or (ii) asserted by way of counterclaim in any other of them.
[30] Section 138 of the Courts of Justice Act, R.S.O. 1990, C.c.43 provides as follows:
- As far as possible, multiplicity of legal proceedings shall be avoided.
[31] Rule 1.04(1) of the Rules of Civil Procedure provides as follows:
104(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
[32] I am satisfied that one or more of the “gateway” criteria set out in rule 6.01(1)(a), (b) or (c) have been satisfied. The actions have questions of fact in common, including:
(a) the alleged promise by Morley to share the proceeds of sale of his shares in Hoodex with Raymond; (b) the alleged physical altercation that occurred between Morley and Raymond; (c) whether Raymond was intentionally allowing the cleaning quality at some of the Hoodex sites for which he was responsible to deteriorate; (d) whether Raymond was stealing supplies, equipment, or employee time from Hoodex; and (e) whether there was a written employment agreement for Raymond that addresses termination.
[33] Having satisfied the “gateway” criteria, the court is required to consider all relevant factors, as well as section 138 of the Courts of Justice Act which directs the court to avoid a multiplicity of proceedings, in order to exercise the court’s discretion to make such order as are just. In Canadian National Railway v. Holmes, 2011 ONSC 4837 (Ont. S.C.J.) at para. 44 Justice D. M. Brown references the comprehensive list of factors set out by Master Dash in 1014864 Ontario Ltd. v. 1721789 Ontario Inc., 2010 ONSC 3306 (Ont. S.C.J. – Master) at para. 18:
18 A non-exhaustive list of some of the considerations on ordering trial together may, depending on the circumstances, include: (a) the extent to which the issues in each action are interwoven; (b) whether the same damages are sought in both actions, in whole or in part; (c) whether damages overlap and whether a global assessment of damages is required; (d) whether there is expected to be a significant overlap of evidence or of witnesses among the various actions; (e) whether the parties are the same; (f) whether the lawyers are the same; (g) whether there is a risk of inconsistent findings or judgment if the actions are not joined; (h) whether the issues in one action are relatively straight forward compared to the complexity of the other actions; (i) whether a decision in one action, if kept separate and tried first would likely put an end to the other actions or significantly narrow the issues for the other actions or significantly increase the likelihood of settlement; (j) the litigation status of each action; (k) whether there is a jury notice in one or more but not all of the actions; (l) whether, if the actions are combined, certain interlocutory steps not yet taken in some of the actions, such as examinations for discovery, may be avoided by relying on transcripts from the more advanced action; (m) the timing of the motion and the possibility of delay; (n) whether any of the parties will save costs or alternatively have their costs increased if the actions are tried together; (o) any advantage or prejudice the parties are likely to experience if the actions are kept separate or if they are to be tried together; (p) whether trial together of all of the actions would result in undue procedural complexities that cannot easily be dealt with by the trial judge; (q) whether the motion is brought on consent or over the objection of one or more parties.
[34] I am satisfied that the issues in the actions are interwoven and there will be significant overlap of evidence from the same witnesses, the key events being the alleged broken promise from Morley to share the proceeds of the sale of his shares in Hoodex with Raymond and the alleged assault incident that occurred in the Hoodex office between these two individuals and the alleged course of harassment by Hoodex and Morley against Raymond.
[35] Raymond and Hoodex/ICS Clean are parties in both actions.
[36] Counsel at Blaney McMurtry LLP act for Hoodex/ICS Clean in the within action and act for Hoodex/ICS Clean, Integrated Contracting, ICS Facility and 105 in action no. CV-18-605074. Counsel at Stringer LLP act for Raymond in both actions.
[37] I am satisfied that there will be a significant risk of inconsistent findings between the two actions if they are not heard together. In the within action the court could find that Morley did not promise to share the proceeds of sale of his shares in Hoodex with Raymond, but in action no. CV-18-605074 the court could find that he did. In one action it may be found that Morley assaulted Raymond and in the other action that Raymond assaulted Morley. In one action it may be found that there was no valid written employment agreement for Raymond and in the other action it may be found that there was such that Raymond breached his employment duties and non-competition and non-solicitation covenants as part of the conspiracy with the other defendants to harm Hoodex. The circumstances in which Raymond ceased working at Hoodex are the same circumstances that give rise to Hoodex’s claims against all defendants for unlawful competition and sabotage of its business.
[38] The Innova defendants are parties to the within action being the larger, more complex action.
[39] Both actions are in their early stages. No productions have been exchanged and no discoveries have been conducted.
[40] No jury notice has been served in either action.
[41] The motion is brought at an early stage and is not delaying any steps in either action.
[42] With respect to the issue of costs, the evidence of Hoodex is that legal costs will be saved if the actions are tried together. Hoodex and Raymond will likely save costs if they do not have to attend two sets of discoveries, two mediations, two pre-trials and two trials. Although there is no evidence from the Innova defendants, some increase in costs is likely to the Innova defendants.
[43] There is no evidence of prejudice from the Innova defendants if the actions are tried together.
[44] Of the total eleven parties in two actions, only two parties oppose the relief.
[45] A consideration of all relevant factors weighs in favour of an order for trial together. The relief requested in this regard is granted.
Costs
[46] Hoodex was successful on the motion and is entitled to costs. The Innova defendants, who sought $6,902.00 if successful, did not take issue with the quantum of costs sought by the Hoodex in the amount of $4,000.00. Costs of this motion are fixed in the all-inclusive sum of $4,000.00, payable by the Innova defendants to Hoodex within 30 days.
Summary of Order
[47] Order to go as follows:
- Leave is granted to amend the amended statement of claim in the form of the fresh as amended statement of claim attached as Schedule “A” to the notice of motion;
- The within action and action no. CV-18-605074 shall be tried together or one after the other as the trial Judge may direct. Relief from compliance with the deemed undertaking rule is granted. Productions shall be shared, and common discoveries shall be conducted. A joint mediation and joint pre-trial conference shall take place.
- Costs of this motion are fixed in the all-inclusive sum of $4,000.00 payable by the Innova defendants to Hoodex/ICS Clean within 30 days.
Master B. McAfee Date: December 16, 2019