COURT FILE NO.: CV-17-199

DATE: 2020 04 24

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Glycobiosciences Inc., Plaintiff

AND:

Amosey Inc., Jai Velusamy and Sharavarthi Ponnuswamy, Defendants

BEFORE: Doi J.

COUNSEL: Kevin Drizen, for the Plaintiff

Zahar Levy, for the Defendants

HEARD: February 24, 2020

ENDORSEMENT

Overview

[1] Several motions came before the court. The Defendants moved for: a) an order to strike the statement of claim; and/orb) security for costs and other corollary relief. In cross-motions, the Plaintiff corporation moved for: a) leave for Mr. Drizen, a non-lawyer, to represent it in this action; and b) a mandatory injunction for the Defendants to delete or destroy documents, or enter into an indefinite non-disclosure agreement.

[2] During the February 24, 2020 hearing of these motions, I granted leave nunc pro tune for Mr. Drizen to represent the corporate Plaintiff, with reasons to follow, and reserved on the other motions. Below are my reasons for granting leave. For the further reasons that follow, the Plaintiffs motion for mandatory injunctive relief is dismissed, and the Defendants' motion to strike the claim is partially granted with leave to amend and security for costs.

Background

[3] In 2014, the corporate Defendant, Amosey Inc. ("AmoSey"), entered into a consulting agreement to provide the Plaintiff, Glycobiosciences Inc. ("Glyco"), with regulatory affairs services. The consulting arrangement lasted approximately two (2) years.

[4] In April 2016, Glyco stopped paying AmoSey's invoices. Despite g1vmg payment assurances, Glyco failed to pay $42,625.00 that AmoSey invoiced for services performed in 2016. Not unexpectedly, the business relationship broke down.

[5] On November 7, 2017, the Plaintiff served the Defendants with its Statement of Claim for

$2.4 million in damages for breach of contract, misuse or misappropriation of its proprietary confidential information, tortious interference with its business relationships, and fraudulent use of its proprietary information. The Defendants flatly deny Glyco's various allegations and assert that Glyco contrived its claim as leverage to resolve AmoSey's unpaid invoices.

[6] The Defendants served a demand for particulars on January 24, 2018, delivered a Notice oflntent to Defend on February 2, 2018, and gave notice of their motion to strike on February 27, 2018. The Plaintiff responded to the demand for particulars on March 26, 2018 and served its Amended Statement of Claim to particularize some of its claims on April 23, 2018.

Leave for Glyco to be Represented by a Non-Lawyer

[7] The following are my reasons for granting leave, nunc pro tune, for Mr. Drizen, a non- lawyer, to represent Glyco in this action.

[8] Rule 15.01(2) of the Rules of Civil Procedure provides:

15.01(2) A party to a proceeding that is a corporation shall be represented by a lawyer, except with leave of the court.

[9] As the moving corporation, Glyco has the onus of satisfying the court that leave to be represented by a non-lawyer ought to be granted: Ward v. 1121720 Ontario Ltd ola Havcare Investments Inc., 2015 ONSC 3873 at para 5.

[10] In exercising the discretion to grant leave under Rule 15.01(2), the courts have considered the following:

(i) Whether the proposed representative has been duly authorized by the corporation to act as its legal representative;

(ii) Whether the proposed representative has a connection to the corporation;

(iii) The structure of the corporation in terms of shareholders, officers and directors and whether it is a closely held corporation;

(iv) Whether the interests of shareholders, officers, directors, employees, creditors and other potential stakeholders are adequately protected by the granting of leave;

(v) Whether the proposed representative is reasonably capable of comprehending the issues in the litigation and advocating on behalf of the corporation. The Court should not impose too high a threshold at this stage, given that the courts abound with self-represented litigants of varying skills. The proposed representative should, however, be reasonably capable of comprehending the issues and articulating the case on behalf of the corporation;

(vi) Whether the corporation is financially capable of retaining counsel. Access to justice has been a concern troubling courts at all levels in Canada for some considerable time. It is fundamental to integrity of the courts and the reputation of the administration of justice that the parties have reasonable access to our courts. If the refusal to grant leave would effectively bar a corporation from access to justice, this factor should be given considerable weight.

De La Rocha v. Markham Endoscopy Diagnostics Inc., 2010 ONSC 5100 at para 2, citing

Extend-a-Call v. Granovski, 2009 ONSC 33047 (ONSC) at para 19.

[11] Factors that may justify a refusal ofleave include: (i) inadequate materials filed; (ii) failure to follow court direction; and (iii) evasive answers in previous court matters: Ward at para 6.

[12] Ultimately, the court is to ensure that the interests of justice are served. Rule 1.04 directs the court to construe the rules to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits: De La Rocha at para 5.

[13] From the evidentiary record, it is clear that Glyco's directors have given their approval for Mr. Drizen to represent the corporation in this matter.

[14] Mr. Drizen is connected to Glyco. He is a director and +50% shareholder of this closely­ held company, for which he serves as its president and sole officer. There are no other employees. The record does not mention any creditors or other stakeholders with an interest in the corporation.

[15] I find that Mr. Drizen is reasonably able to comprehend the issues in this litigation and advocate for this closely-held company while protecting its various interests that arise. Since his father's death in June 2007, Mr. Drizen has operated Glyco's business affairs. He was involved with the matters that gave rise to the dispute between the parties, and is familiar with the issues in this proceeding.

[16] Mr. Drizen is no stranger to litigation. Over the past several years, he has started several actions on behalf of Glyco, including a number in Central West Region, in which he successfully moved (i.e., on consent or unopposed) under Rule 15.01(2) for leave to represent the company. In this case, I did have some concerns with the excessive repetition in the stream of materials that Mr. Drizen delivered for Glyco on this Rule 15.01(2) motion, and the lack of organization to his materials and submissions. As I explained during the hearing, it would assist the court for written and oral submissions to be structured and cross-referenced to relevant portions of the supporting record and authorities. That being said, Mr. Drizen was prepared for the motions, has complied with the court's directions, and has some familiarity with the conduct of litigation.

[17] Although Glyco did not bring its Rule 15.01(2) leave motion until several months after it had started the action (i.e., during which Mr. Drizen purportedly represented the company in the litigation), I am persuaded that this oversight was not intended to disrespect the court process.

[18] Finally, I note from Mr. Drizen's supporting affidavit sworn February 21, 2018 that Glyco is without funds and cannot afford a lawyer. Company financial records attached to the affidavit show that Glyco had very modest balances in its bank accounts (i.e., being $128.74 and $285.71,

respectively) around the time that it filed this leave motion. Impecuniosity may be one reason for granting leave under Rule 15.01(2), albeit not a necessary reason. The ability to afford a lawyer is not always a relevant factor, particularly in respect of a closely-held company and in light of the current frequency of self-represented litigants appearing before the court to access justice: De La Rocha at para 4; Lamond v. Smith, [2004] OJ No 3225 (SCJ) at paras 10-13. I add that the legal representation concerns that may arise in the case of a larger corporation with many shareholders, employees, creditors and other stakeholders do not arise on the facts of this case in light of Glyco's closely-held nature.

[19] The Defendants submit that Glyco is a shell company without assets that will continue to pursue meritless or frivolous litigation with impunity if allowed to continue without a lawyer. In my view, this is a separate and discrete issue for which the appropriate recourse is security for costs, as discussed later in these reasons.

[20] For all of these reasons, I have found that the interests of justice warrant leave to be granted,

nunc pro tune, for Mr. Drizen to represent Glyco in this action.

Glyco's Motion for Mandatory'

Injunctive Relief

[21] In my view, Glyco's second motion (i.e., to require the Defendants to destroy Glyco's confidential proprietary information in their possession, or enter into a confidentiality disclosure agreement with Glyco) is without merit and should be dismissed.

[22] Glyco provided AmoSey with confidential proprietary information (i.e., described broadly as intellectual property consisting of manufacturing and/or regulatory records) pursuant to a confidentiality agreement that the parties signed on February 25, 2014. AmoSey required and used this information to deliver regulatory consulting services under its February 26, 2014 consulting agreement with Glyco.

[23] On several occasions, Glyco sought assurances from AmoSey that the subject confidential proprietary information was safe. AmoSey repeatedly gave these assurances and consistently informed Glyco that it had abided by the terms of their confidentiality agreement and had not inappropriately transferred any confidential information or otherwise breached the non-disclosure terms of their confidentiality agreement.

[24] On September 18, 2016, Mr. Drizen sent Mr. Velusamy (i.e., AmoSey's principal) a proposed new draft confidentiality agreement. Between September 18, 2016 and October 5, 2016, Mr. Drizen and Mr. Velusamy exchanged various edits to the proposed draft agreement. They also discussed Glyco's failure to pay AmoSey's overdue invoices. In the end, a new confidentiality agreement was not executed.

[25] On August 15, 2017, Glyco demanded that AmoSey promptly destroy all of its proprietary information, and threatened to sue if AmoSey did not comply.

[26] On August 30, 2017, AmoSey advised Glyco that it was willing to destroy the subject records but found itself unable to do so because Glyco had given notice of a potential lawsuit that triggered AmoSey's obligation to preserve records that were relevant to the potential claim. In the circumstances, AmoSey advised Glyco that it would require a full and final release from the claim before it could destroy the records.

[27] On November 7, 2017, Glyco served the Defendants with its Statement of Claim. Subsequently, on or about April 23, 2018, Glyco served its Amended Statement of Claim. Neither version of the claim seeks the destruction of records or pleads any injunctive relief.

[28] On this motion, Glyco seeks an order requiring the Defendants to permanently delete or destroy the subject confidential proprietary information or, in the alternative, to enter into an indefinite non-disclosure agreement with Glyco. The injunctive relief sought is for the Defendants to take positive actions, which is in the nature of mandatory injunctive relief.

[29] A mandatory injunction directs a defendant to undertake a positive course of action, essentially to restore the status quo or to enable the situation to revert back to what it should be:

R. v. Canadian Broadcasting Corporation, 2018 SCC 5 at para 15. As this may impose a

significant burden or cost on the defendant, there is a reluctance to compel this relief on an interlocutory basis since restorative relief may typically be granted at trial. The potentially severe consequences of a mandatory injunction further call for the court to undertake an "extensive review of the merits" at the interlocutory stage. Mandatory injunctions are rarely ordered and must by contrasted with the usual type of injunctive relief which prohibits specified acts: 1711811 Ontario. Ltd v. Buckley Insurance Brokers Ltd, 2014 ONCA 125 at paras 57-58.

[30] To obtain a mandatory interlocutory injunction, an applicant must meet the following test:

(i) The applicant must demonstrate a strong prima facie case that it will succeed at trial. This entails showing a strong likelihood on the law and the evidence presented that, at trial, the applicant will be ultimately successful in proving the allegations set out in the originating notice;

(ii) The applicant must demonstrate that irreparable harm will result if the relief is not granted; and

(iii) The applicant must show that the balance of convenience favours granting the injunction.

CBC at para 18.

[31] Interlocutory mandatory injunctions are especially difficult to obtain as an applicant must not only satisfy the court that there is a serious issue to be tried, but also show that it is "clearly right and almost certain to be successful at trial:" 2424155 Ontario Ltd v King (Township), 2017 ONSC 1406 at para 17; R.J. Sharpe, Injunctions and Specific Performance (4^th 2012) at para 2.640, Barton-Read Canada Ltd. y. Al.fresh Beverages Canada Co., 2002 ONSC 34862, [2002] OJ No 4116 (SCJ) at para 9.

[32] As mentioned earlier, Glyco did not plead injunctive relief in its Amended Statement of Claim. Accordingly, there is no underlying basis for it to seek this relief in this action. An injunction is a remedy that is ancillary to a cause of action to preserve or maintain the status quo pending the disposition of the trial so that relief ultimately granted in not rendered moot or ineffective: CBC at para 24: Celenza v. Remax Premier Inc., 2017 ONSC 7334 at paras 26-27.

[33] Regardless, and given the record on this motion, there is simply no evidence to show a strong prima facie case on the first prong of the CBC test. Glyco has proffered no evidence that any of the Defendants breached any non-disclosure obligations or compromised the confidentiality of Glyco's proprietary information. Although the amended claim alleges that AmoSey fraudulently transferred Glyco's confidential propriety information to a third-party pharmaceutical, this simply raises an unparticularized bald assertion for which no actual or independent evidence has been adduced to appropriately substantiate the allegation. In essence,

the supporting evidence on this motion does not go beyond Glyco's bare assertions and conclusory statements. As such, there is an insufficient basis on which to find a strongprimafacie case. This is not to say that Glyco' s case is without merit, but rather to reflect my finding at this time that there is no strong prime facie case based on the evidentiary record on this motion.

[34] Similarly, on the second prong of the CBC test, Glyco has adduced no evidence of "irreparable harm," being harm that cannot be quantified in monetary terms: [RJR MacDonald Inc.

v. Canada (A.G.), 1994 SCC 117](https://www.canlii.org/en/ca/scc/doc/1994/1994canlii117/1994canlii117.html), [1994] 1 SCR 311 at 341. Evidence of irreparable harm must be clear and not speculative; merely asserting irreparable harm in submissions without supporting evidence does not meet this threshold: Loan Away Inc. v. Western Life Assurance Company, 2018 ONSC 7229 at para 57. Glyco's assertion that it would likely suffer irreparable harm is not supported by any evidence that it actually or would have suffered irreparable harm, and is not sufficient to meet this prong of the test. Moreover, Glyco did not adduce any evidence that damages at trial would not be adequate compensation for losses it may suffer prior to the conclusion of this proceeding. In contrast, the unchallenged evidence of the Defendants on this motion is that Glyco's confidential proprietary information continues to be held in confidence, that the terms of AmoSey's non­ disclosure agreement with Glyco have not been breached, and that none of the Defendants have

done anything improper with this ·confidential proprietary information to_ cause Glyco any harm.

On this record, it would seem that an injunction is not required to preserve the status quo.

[35] On the final prong of the CBC test, I find that the balance of convenience weighs against granting mandatory injunctive relief. As Glyco did not adduce evidence of irreparable harm, it is difficult to conclude that the balance of convenience favours granting the injunctive relief: Loan Away at para 59. Importantly, the Defendants have an ongoing obligation to preserve records and produce those which are relevant to the claim, until the lawsuit is completed: Viele v. -G argan Investments Ltd, 2019 ONSC 2112 at paras 43 and 45; Fox v. Fox, 2017 ONSC 6509 at para 231; Schmidt v. City of Hamilton, 2010 ONSC 542 at para 35. It follows that the destruction injunction sought by Glyco would directly conflict with the Defendants' ongoing document preservation obligation. Moreover, directing the Defendants to enter into a confidentiality agreement would be unnecessarily and duplicative in view of the existing confidentiality disclosure agreement that Glyco and AmoSey executed on February 25, 2014.

[36] Accordingly, Glyco's motion for mandatory injunctive relief is denied.

Defendants' Motion to Strike

[37] The Defendants seek to strike Glyco's amended claim on the basis of a failure to plead sufficient material facts for every cause of action alleged.

[38] Under Rule 21.0l(l)(b), the court may strike out all or part of a claim where it is ''plain and obvious" that the claim discloses no reasonable cause of action: Hunt v. Carey Canada Inc., 1990 SCC 90, [1990] 2 S.C.R. 959 at para 33; R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 at para 17. The test is met if the claim has one or more of the following fatal deficiencies:

(a) it fails to set out all of the necessary elements of the asserted claims;

(b) it fails to set out material facts sufficient to support the asserted causes of action; or

(c) the pleaded allegations are simply conjecture, assumptions or speculation unsupported by material facts, or mere conclusions of law are asserted.

Hunter v. Bravener, [2003] OJ No 1613 (CA), paras 3 to 5; leave to appeal denied, [2003] SCCANo 306.

[39] On a Rule 21.01(1) motion, a claim is to be read generously, pleaded facts are presumed to be true (n.b., unless they are patently ridiculous or incapable of proof), and the claim is to be struck in only the clearest of cases: Khursheed v. Venedig Capital SAS, 2019 ONSC 5190 at para 14; Folland v. Ontario (2003), 2003 ONCA 52139, 64 OR (3d) 89 (CA) at para 10, leave to appeal to S.C.C. refused [2003] SCCA No 249. No evidence is admissible on the motion: Rule 21.01(2)(b).

[40] When in doubt, the court should err on the side of allowing an arguable claim to proceed to trial: Rauschv. Pickering(City), 2013 ONCA 740 at para 34. OnaRule21 motion, the threshold to sustain a pleading is not high: Asghar v. Toronto Police Services Board, 2019 ONCA 479 at para 8.

[41] The focus in deciding whether a claim discloses a cause of action is on the substance of the pleading, not its form: Rausch v. Pickering (City), 2013 ONCA 740, 2013ONCA 740 at para 95. Even if all elements

of a cause of action are not specifically pleaded in a claim, courts will deny a motion to strike so long as those elements are implicit in the rest of the pleadings: Ibid, citing [1309489 Ontario Inc.

v. BMO Bank of Montreal, 2011 ONSC 5505](https://www.canlii.org/en/on/onsc/doc/2011/2011onsc5505/2011onsc5505.html) at paras 26-27. Provided that the claim raises the factual matrix in which a defendant's alleged liability is grounded, a claim will successfully assert a cause of action for the purpose of a Rule 21.0l(l)(b) motion; BMO at para 27. Even if the claim does not explicitly set out the technical cause of action on which it relies, the court should not strike the claim if the pleaded facts implicitly advance the cause of action: Rausch at para 95.

[42] When a pleading is struck, the usual result is to grant leave to amend given the generous approach to amending pleadings: Asghar at para 9. Leave to amend should only be denied in the clearest of cases where it is plain and obvious that no tenable cause of action is possible on the facts as alleged, and no reason exists to believe that the party could improve its case by an amendment: Mitchell v. Lewis, 2016 ONCA 903 at para 21; South Holly Holdings Ltd. v. Toronto­ Dominion Bank (c.o.b. TD Canada Trust), 2007 ONCA 456 at para 6. Only where it is clear that the plaintiff cannot allege further material facts known to be true to support a claim will leave to amend be refused: Miguna v. Ontario (Attorney General), 2005 ONCA 46385 (ONCA) at para 22.

a. Breach of Contract Claim

[43] To properly plead a breach of contract, a claim must contain sufficient particulars to identify the following basic elements: a) that there was a contract between the plaintiff and defendant; and b) that the defendant breached the contract: Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239 at para 32, citing A. Swan and J. Adamski, Canadian Contract Law, 3rd ed. (Markham: LexisNexis Canada Inc., 2012), at §2.16.1.

[44] In cases where a corporation breaches a contract, its directors, officers or representatives who operate the company will typically act for the corporation in the events giving rise to the breach. This alone is insufficient to ground a separate cause of action for inducing a breach of contract against directors, officers or representatives: Horfil Holding Corp. v. Queens Walk Inc., 2019 ONSC 1381 at para 20, citing Gulfoiew Contracting Ltd. v. Liquid Rubber Engineered Coatings Ltd., 2011 ONSC 7103 at paras 8-9, 17 and 20-21. It is not enough to allege that they caused the corporation to breach the contract unless they do so while acting outside the scope of their authority. A breach of contract claim cannot proceed against a director or representative

where such a claim lies against the corporation: Knox v. Niagara Falls Taxi Ltd., 2014 ONCA 140 at para 2.

[45] As explained below, I find that Glyco's amended claim sufficiently pleads a breach of contract claim against the corporate Defendant, AmoSey, but not in respect of the individual Defendants, Mr. Velusamy and Ms. Ponnuswamy.

[46] The amended claim identifies two (2) contracts that Glyco had with AmoSey (namely, its confidentiality and consulting agreements of February 25 and 26, 2014, respectively), and claims that AmoSey breached the contracts by not providing services and by improperly disclosing Glyco's confidential proprietary information. The Defendants submit that it is unclear which contract is alleged to have been breached, and what specific conduct allegedly constituted the breach. But the February 26, 2014 consulting agreement clearly called for AmoSey to provide regulatory consulting services, and the confidentiality agreement clearly required AmoSey to preserve Glyco's confidential proprietary information in the course of providing the consulting services: see paras 1-7 of the February 25, 2014 confidentiality agreement. The amended claim pleads that AmoSey failed to advise Glyco of regulatory issues, namely unauthorized changes to a regulatory filing, and also pleads that AmoSey transferred confidential proprietary information to an unauthorized third-party. In this way, Glyco claims that AmoSey failed to satisfy its consulting and confidentiality obligations under the agreements, which gave rise to its breaches of contract. Both agreements are referred to in the claim and, therefore, form part of the pleading: Web Offset Publications Ltd. v. Vickery (1999), 1999 ONCA 4462, 43 O.R. (3d) 802 (C.A.) at para 3.

[47] The amended claim does not specify the contractual term(s) that Glyco relies upon for its breach of contact claim. But the nondisclosure, protection and restricted use terms in the confidentiality agreement are apparent and rather obvious: see paras 3-5 of the February 25, 2014 agreement. Similarly, the general nature and scope of the consulting services that AmoSey was to provide under the consulting agreement is clearly and concisely set out in the February 26, 2014 agreement.

[48] From the foregoing, I am not persuaded that the contractual or factual basis of Glyco's breach of contract claim against AmoSey is unclear. To this end, the Defendants' demand for

particulars dated February 2, 2018 did not seek particulars for the breach of contract claim although it sought particulars with respect to Glyco's other causes of action.

[49] Glyco's claim makes no mention of Ms. Ponnuswamy, and makes only brief mention of Mr. Velusamy in describing a request that Glyco purportedly made to AmoSey through him in early 2016. The claim does not identify any personal contract(s) that these individual Defendants had with Glyco, or set out how either purportedly breached any such personal agreement(s).

[50] On a generous reading of the amended claim (i.e., together with both agreements that form part of the pleading) with allowances for drafting deficiencies, and for the reasons given earlier, I am not persuaded that it is plain and obvious that the claim discloses no reasonable cause of action for breach of contract against AmoSey. However, I find that the breach of contract claims against Mr. Velusamy and Ms. Ponnuswamy, which do not allege that they acted outside the scope of their authority to work for AmoSey, should be struck for clearly disclosing no reasonable cause of action. I will say more about Glyco's claim against the personal Defendants later in these reasons.

b. Negligence Claim

[51] To successfully bring a cause of action in negligence, a plaintiff must plead the following elements:

(a) that the defendant owed him a duty of care;

(b) that the defendant's behaviour breached the standard of care;

(c) that the plaintiff sustained damage; and

(d) that the damage was caused, in fact and in law, by the defendant's breach.

Mustapha V. Culligan of Canada Ltd., 2008 sec 27 at para 3.

[52] For the following reasons, I find that Glyco sufficiently has pleaded its negligence claim against AmoSey, but not in respect of Mr. Velusamy and Ms. Ponnuswamy.

[53] From a generous and liberal reading of the amended claim, I accept that Glyco sufficiently pleads that AmoSey owed it a duty of care after being engaged under the consulting agreement of

February 26, 2014. Glyco claims that AmoSey negligently performed its contractual duties by failing to verify the absence of unauthorized changes to its FDA 510(k) registration for Glyco's 1PM Wound Gel Bio product, which implicitly breached its standard of care and caused damages to Glyco. But like its claim for breach of contract, Glyco's amended claim does not plead any facts to support a personal claim against Mr. Valusamy or Ms. Ponnuswamy in negligence, despite purportedly seeking damages in negligence in its prayer for relief. The amended claim does not allege facts to support a duty of care between Glyco and the personal Defendants, or allege how they failed to meet the requisite standard of care. It also does not allege that they acted outside the scope of their authority to work for AmoSey. The pleading does not allege any facts to support separate allegations of negligence by Mr. Valusamy or Ms. Ponnuswamy to ground an independent negligence claim against them personally.

[54] As a result, I find that it is not plain and obvious that Glyco's claim in negligence discloses no reasonable cause of action against AmoSey. I also find that the negligence claims brought personally against Mr. Velusamy and Ms. Ponnuswamy should be struck for plainly disclosing no reasonable cause of action against them.

c. Misuse of Information Claim

[55] The elements for a misuse of information or breach of confidence claim are as follows:

(a) the plaintiff imparts information having a quality of confidence (confidential information);

(b) the information was imparted in circumstances m which an obligation of confidentiality arises (communication in confidence); and

(c) the defendant makes an unauthorized use of the information

2298679 Ontario Inc. et al. v. Northern Homecare Solutions Inc., 2019 ONSC 3055 at para 28, citing Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 SCC 34, [1989] 2 S.C.R. 574; Cadbury Schweppes Inc. v. FBI Foods Ltd., 1999 SCC 705, [1999], 1 S.C.R. 142.

[56] In my view, the amended claim adequately pleads an alleged misuse of information or breach of confidence claim against AmoSey. The claim asserts that Glyco gave confidential

proprietary information to AmoSey through its consulting engagement, that was subject to a confidentiality agreement. It then alleges that AmoSey gave this information to a pharmaceutical competitor, which constituted an unauthorized use. However, the amended claim does not plead allegations or facts to support a misuse of information claim personally against Mr. Valusamy or Ms. Ponnuswamy despite mentioning this cause of action as a head of damages in its prayer for relief. The amended claim does not allege that either individual Defendant engaged in any acts or conduct to support an alleged unauthorized use of Glyco's confidential information, or otherwise allege that either acted outside the scope of their corporate authority to work for AmoSey.

[57] For these reasons, I find that it is not plain and obvious that Glyco's claim for misuse of information does not disclose a reasonable cause of action against AmoSey, although I find that the personal misuse of information claims against Mr. Velusamy and Ms. Ponnuswamy should be struck for clearly not disclosing a reasonable cause of action against them.

d. Claim for Unlawful Interference in Business Relationships

[58] The tort of unlawful interference in business relationships, also known as the ." unlawful means" tort (i.e., formerly known as tortious interference, among other terms), arises in three-party situations when the defendant commits an unlawful act against a third-party that intentionally causes economic harm to the plaintiff: A.I Enterprises v. Bram, 2014 SCC 12 at para 5. The unlawful means tort does not require a contract or formal dealings between the plaintiff and the third-party so long as the defendant's conduct is unlawful and intentionally harms the plaintiffs interests: Bram at para 93. Also, under general principles of tort liability, a defendant may be concurrently liable for other overlapping causes of action for distinct wrongs suffered by a plaintiff arising from the same incident: Bram at para 78.

[59] Applying a generous and liberal reading of the amended claim, I find that it adequately pleads the unlawful means tort against AmoSey. The claim refers to Shanghai Tenry Pharmaceutical Co. Ltd., a third-party, that is alleged to have unlawfully received Glyco's proprietary and confidential produce information from AmoSey, which purportedly stole the information and caused harm to Glyco's commercial interests. Although Glyco does not explicitly allege in its claim that AmoSey's conduct was intentional, a fair and contextual reading of the claim leads me to find that it reasonably asserts that AmoSey intended to harm its commercial

interests by unlawfully transferring the information to the third-party in a fraudulent way that resulted in theft. With that said, I will return to Glyco's allegation of fraud later in these reasons.

[60] As with its other causes of action, Glyco's amended claim does not expressly refer to either Mr. Velusamy or Ms. Ponnuswamy in raising the unlawful means tort. The amended claim does not plead any allegations that either individual Defendant engaged in any unlawful acts or conduct to intentionally cause Glyco economic harm. Glyco's claim also lacks any mention of either personal Defendant going outside the scope of their authority to act for AmoSey, or exhibiting any separate conduct or personal interests beyond their roles for the corporate Defendant.

[61] Accordingly, on a generous reading of Glyco's amended claim with allowances for drafting deficiencies, I find that a triable issue arises on Glyco's unlawful means claim against AmoSey. However, as Glyco's claim is entirely silent in respect of any unlawful means tort claim against Mr. Velusamy and Ms. Ponnuswamy personally, I find that this claim against them should be struck as it is plain and obvious that it discloses no reasonable cause of action.

e. Claim for Fraudulent Misrepresentation

[62] Although the facts pleaded are taken to be true on a Rule 21 motion, this principle is necessarily modified by the principle that fraud must be pleaded with particularity: Wilfert v. McCallum, 2017 ONCA 895 at para 12, citing Balanyk v. University of Toronto (1999), 1999 ONSC 14918, 1 CPR (4^th) 300 (ONSC) at para 28 and South Holly Holdings Limited v. The Toronto-Dominion Bank, 2007 ONCA 456 at para 2. In alleging fraud or fraudulent misrepresentation, a pleading must contain full particulars that set out precisely what each alleged wrongful act is, and the when, what, by whom and to whom of the relevant circumstances: Rule 25.06(8); Balanyk at para 28.

[63] The essential elements of fraudulent misrepresentation are as follows:

(a) that the defendant made a false representation of fact·;

(b) that the defendant knew that the statement was false or was reckless as to its truth;

(c) that the defendant made the representation with the intention that it would be acted upon by the plaintiff;

(d) that the plaintiff relied upon the statement; and

(e) that the plaintiff suffered damage as a result.

Midland Resources Holding Limited v. Shtaif, 2017 ONCA 320 at para 162, leave to appeal refused, [2017] SCCA No 246; Parna v. G&S Properties Limited, 1970 SCC 25, [1971] SCR 306 (SCC) at paras 22-26.

[64] After receiving Glyco's initial Statement of Claim, the Defendants served a demand for particulars dated February 2, 2018 that specifically asked Glyco for particulars of its fraud and fraudulent misrepresentation allegations in paras 1(c) and 1(d) of the claim, along with other particulars. Glyco delivered its response to the Defendants' demand for particulars on March 26, 2018 and served its Amended Statement of Claim on April 23, 2018.

[65] In my view, Glyco's particulars and amended claim do not give sufficient particulars to ground its claim of fraudulent misrepresentation. Its particulars and amended claim do not assert any material facts to establish the requisite essential elements (i.e., that the Defendants made any false representation(s) of fact, knowing the falsehood or being reckless with its truth, with an intent that Glyco act on the falsehood, which it did and suffered damages). Glyco's particulars allude to a purported sale of its proprietary manufacturing file to a third-party, but only in vague and cryptic fashion. Its amended claim discloses the third-party as Shanghai Tenry Pharmaceutical Co. Ltd., but gives no further details to particularize its fraudulent misrepresentation claim.

[66] Glyco has not specified with any particularity the relevant circumstances of any alleged wrongful acts done by any of the Defendants, when or how they occurred, what they consisted of, who purportedly did them, to whom they were made, or any other details to identify the alleged fraudulent misrepresentations that form the basis of this cause of action. Effectively, Glyco's cause of action in fraudulent misrepresentation consists of bald assertions without any particulars of any representations that it claims the Defendants made. Glyco has failed to plead any of the required elements for a fraudulent misrepresentation claim.

[67] Accordingly, I find it to be plain and obvious that Glyco's fraudulent misrepresentation claim against all of the Defendants should be struck as it is plain and obvious that it discloses no reasonable cause of action.

f. Claim Against the Individual Defendants

[68] As set out below, I find that Glyco's claims against the personally-named Defendants, Jai Velusamy and Sharavarthi Ponnuswamy, clearly disclose no reasonable cause of action and should be struck.

[69] The Defendants submit that Glyco's claims against Mr. Velusamy and Ms. Ponnuswamy should be struck on the basis that Glyco has no basis to pierce the corporate veil to hold them personally liable for any claims arising from AmoSey's business activities. Both Mr. Velusamy and Ms. Ponnuswamy are directors of AmoSey and worked for the corporate Defendant.

[70] Mr. Velusamy is briefly mentioned once in the amended claim, in a paragraph that purports to explain how Glyco asked Amosey to monitor a product registration that Glyco had filed for its 1PM Wound Gel Bio product with the U.S. Food & Drug Administration. The amended claim alleges that Amosey: a) failed to note an unauthorized change to Glyco's product registration, and

b) fraudulently transferred confidential proprietary information to a competing pharmaceutical company that caused Glyco to incur business losses.

[71] Ms. Ponnuswamy is not mentioned in the amended claim.

[72] When a plaintiff sues both a corporation and individuals within that corporation, including directors or employees, the plaintiff must plead sufficient particulars that disclose a basis for attaching liability to the individuals in their personal capacities: 460635 Ontario Limited v. 1002953 Ontario Inc., 1999 ONCA 789, [1999] OJ No 4071 (CA) at para 8.

[73] Directors and officers are responsible for their tortious conduct even where their conduct was directed in a bona fide manner to the best interests of the company, subject to an exception for procuring a breach of contract: Khursheed v. Venedig Capital SAS, 2019 ONSC 5190 at para 28, citing Adga Systems International Ltd. v. Va/com Ltd. (1999), 1999 ONCA 1527, 43 OR (3d) 101 (CA) at para 18. To plead a cause of action against directors or officers of a corporation, a separate claim against them in their personal capacity must be brought that alleges tortious conduct by the individuals or conduct that exhibits a separate identity of interest from the corporation to make the alleged conduct their own: Scotia McLeod at 491. This principle is set out as follows:

It is well established that the directing minds of corporations cannot be held civilly liable for the actions of the corporations they control and direct unless there is some conduct on the part of those directing minds that is either tortious in itself or exhibits a separate identity or interest from that of the corporations such as to make the acts or conduct complained of those of the directing minds.

Normart Management Ltd v. West Hill Redevelopment Co. (1998) 1998 ONCA 2447, 37 OR (3d) 97 (CA) at para 18, citing ScotiaMcLeod Inc. v. Peoples Jewellers Ltd (1995), 1995 ONCA 1301, 26 OR (3d) 481 (CA) at 491.

[74] The amended claim does not assert any claims against Mr. Velusamy or Ms. Ponnuswamy that are independent of Glyco's claims against AmoSey. Both personal Defendants appear to have been named in Glyco's amended claim only by virtue of being directors of AmoSey who signed its confidentiality and consulting agreements with Glyco, and later performed other functions on AmoSey's behalf. This is not a sufficient basis for Glyco to bring proceedings against them in their personal capacities, as there is no alleged conduct on their part that is independently tortious or reflects a separate interest from AmoSey.

[75] Directors and officers are not personally liable for the actions of their corporation unless they individually engage in conduct that is tortious in itself or exhibits a separate interest from the corporation to make such act their own: Balanyk at para 56. Absent any suggestion that they did anything other than act in the normal course of their employment in the ordinary business of the corporation, they cannot be held personally liable: Ibid at para 57, citing Aspiotis v. Coffee Time Donuts Inc., [1995] OJ No 419 (Gen Div) at paras 10 and 12.

[76] Glyco did not plead specific torts against the personal Defendants by specifying material facts to trigger personal liability that is independent from AmoSey. The amended claim- does not allege that Mr. Velusamy or Ms. Ponnuswamy acted outside their capacity as directors or employees of AmoSey, or otherwise acted in any capacity other than on behalf of the company

and in its interests. Without more, liability does not personally attach to the individual Defendants

simply because they stood to gain from Amosey's business activities by having a financial position with the company: Normart at para 18. As a result, I find it to be plain and obvious that Glyco's claims against Mr. Velusamy and Ms. Ponnuswamy do not disclose a reasonable cause of action and should be struck.

g. Leave to Amend

[77] Leave to amend a pleading that is struck is normally granted. Pleadings should not lightly be struck without leave to amend, which should only be denied in the clearest of cases when it is plain and obvious that no tenable cause of action exists on the alleged facts and there is no reason to expect that deficiencies with the pleading may be cured by an appropriate amendment: Burns v. RBC Life Insurance Co., 2019 ONSC 6977 at para 21, citing Mitchell v. Lewis, 2016 ONCA 903 at para 21. A lack of prejudice to an opposing party is a factor in deciding whether to grant leave to amend a pleading: South Holly Holdings Limited v. The Toronto-Dominion Bank, 2007 ONCA 456 at para 6.

[78] Glyco did not plead a cause of action against Mr. Valusamy or Ms. Ponnuswamy that alleges a separate identity or interest from AmoSey that attracts individual liability against them in their personal capacity. In fact, its amended claim is entirely silent towards Ms. Ponnuswamy, and is largely silent in respect of Mr. Valusamy (i.e., apart from one paragraph which indicates that he acted for AmoSey) without pleading a personal cause of action against him. I add that Glyco delivered its amended statement of claim on April 23, 2018 after the Defendants delivered their initial factum dated February 21, 2018 on their motion to strike which (at para 17) expressly raised Glyco's failure to plead any personal causes of action against the individual Defendants in its original Statement of Claim issued November 2, 2017. Despite having clear notice of the asserted deficiencies with its original claim against the individual Defendants, Glyco still failed to plead any personal claims against them in its Amended Statement of Claim.

[79] In these circumstances, I find it plain and obvious that Glyco is unable to plead a tenable personal claim against Mr. Valusamy or Ms. Ponnuswamy. At this stage in the litigation, I find no reason to expect Glyco to cure the deficiency in its pleading by an amendment. Even after the Defendants flagged and explained the deficiency, Glyco did not or could not cure its deficient pleading in its amended claim. Both personal Defendants were prejudiced by the time and cost of addressing Glyco' s failure to plead a proper cause of action against them.

[80] In arriving at my decision to deny Glyco leave to amend its amended claim, I was mindful that the two (2) year limitation period for bringing a claim against the individual Defendants has expired under of the Limitations Act, 2002, SO 2002, c.24, Sch. B. When a proposed amendment

to a claim raises a new cause of action after a limitation period has expired, the constituent elements of the proposed new cause of action are considered to see if the new cause of action is supported by the facts as originally pleaded, or as better particularized in the proposed amendment: 1309489 Ontario Inc. v. BMO Bank of Montreal, 2011 ONSC 5505 at para 24, citing Morden and Perell, Law of Civil Procedure in Ontario (Markham: LexisNexis, 2010) at 307-308. Where the new cause of action simply pleads an alternative claim for relief arising from the same facts previously pleaded (i.e., without relying on new facts), or better particularizes an allegation already pleaded, the proposed amendment will not constitute a new cause of action that is statute-barred: BMO at para 24, citing Thompson v. Zeldin [2008] OJ No 3591 (SCJ) at para 14. A proposed amendment to a claim that relies on facts that already have been substantially pleaded will not give rise to a new cause of action that is barred by the expiry of a limitation period.

[81] Applying these principles, I find that Glyco would be unable to successfully bring a proper fraud claim against any of the Defendants as the facts pleaded in its amended claim, even if better particularized, simply are unable to ground a cause of action in fraud given Glyco's earlier material failure to substantially plead necessary facts to support any such claim. Similarly, I find that Glyco would be unable to succeed in bringing proper claims against the individual Defendants due to its earlier failure to plead any alleged facts that would support a personal cause of action against either of them. Glyco's amended claim is largely, if not wholly, silent in respect of any factual allegations that would ground a fraud claim against the Defendants.

[82] Accordingly, the fraud claims against all of the Defendants, and the other claims against the individual Defendants, Mr. Velusame and Ms. Ponnuswamy, are struck without leave to amend

Terms for the Action - Security for Costs

[83] The Defendants also seek security for costs, largely on the basis that Glyco is a corporation with insufficient assets to satisfy any order for costs that is made against it. Given the facts of this case, I am persuaded that an order for security for costs is just and reasonable to make.

[84] Rule 56.0l(l)(d) provides:

56.01(1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,

(d) the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; [Emphasis added]

[85] The test and principles for security for costs are well-established:

[89) On a motion for an order for security for costs, the initial onus is on the party moving for security to show that the other party falls within one of the circumstances for which an order may be made; then the responding party may avoid the order by showing that security is unnecessary because it has sufficient exigible assets in Ontario or that it should be permitted to proceed to trial despite its inability to pay costs.

[90) In determining whether to order security for costs, the overarching principle is whether in all the circumstances, the order is in the interests of justice and even if the requirements of the rule have been met, the court has discretion to refuse to make the order. The rule is not to be used as a litigation tactic to prevent a case from being heard on its merits. The correct approach is for the court to consider the justness of the order holistically, examining all the circumstances of the case and guided by the overriding interests of justice to determine whether it is just that the order be made.

[91] If the plaintiff does not have sufficient assets to meet a costs order but cannot establish that he or she is impecunious, then the plaintiff must satisfy the court that his or her claim has a good chance of success on the merits. [Endnote citations omitted]

Fulop v. Corrigan, 2020 ONSC 1648 at paras 89-91.

[86] On a security for costs motion, the court has broad discretion in determining whether an order for security for costs is just, having regard to the evidence filed on the motion with careful scrutiny as to the quality and sufficiency of the plaintiffs assets: Fulop at paras 92-93.

[87] In this case, the Defendants clearly have shown that Glyco is a corporation that is largely without funds. Notably, Mr. Drizen's affidavit sworn February 21, 2018 attached copies of bank records showing that Glyco had only a couple hundred dollars on cash deposit when it brought its

Rule 15.01 leave motion.

[88] In its responding submissions, Glyco claimed that it has access to substantially more funds because it settled a major case that dramatically changed its financial circumstances. However, Glyco led no evidence of this, and only adopted this position late on the day of the hearing after it had argued its Rule 15.01 leave motion by asserting that it had no real assets as evidenced by its

leave record. As well, Glyco did not file evidence to show its other assets or holdings, such as they may be, which leaves no credible evidence before the court to support Glyco's claim that it has sufficient exigible assets to pay an adverse order of costs. As such, and based on the evidence before the court, I accept that Glyco has been shown to have insufficient assets to satisfy a costs order that is made against it in this litigation.

[89] In the alternative, Glyco took the position that it is impl!cunious and that an order for security would be unjust. But in responding to this motion for security, Mr. Drizen clearly stated otherwise by claiming that Glyco now has immediate access to significant funds after it had settled a matter. In these rather unique circumstances, I find that it would not be just or appropriate for the court to consider impecuniosity as a relevant factor on this motion. As such, Glyco must show a high chance of success in the action: Fulop at para 91.

[90] Glyco claims to have a compelling case. Although the merits of a case are to be considered on a Rule 56.01 motion, the court is not to embark on the kind of analysis that it would apply on a summary judgment motion: Fulop at para 92.

[91] In this action, Glyco alleges that AmoSey took advantage of a consulting engagement to misappropriate and transfer Glyco's confidential and proprietary product information to a third­ party pharmaceutical competitor. AmoSey flatly denies the allegations. In all likelihood, a trial will be needed in which the credibility of witnesses will clearly be a central issue. The parties have not led evidence to suggest that either side has a clear or significant prospect for success. As this action will turn on credibility, it would not be appropriate to make any decisive assessment of the merits on this interlocutory motion: AAD Investments v. Casboro Industries Limited, 2017 ONSC 3041 (Master) at para 19, citing Wallv. Horn Abbott Ltd, 1999 NSCA 7240, [1999] NSJNo 124 (CA) at para

83. I simply observe that Glyco's likelihood of success in this action is not obvious at this time.

[92] From AmoSey's draft costs outline and submissions, I find that it is fair and in the interests of justice to require Glyco to post security for costs in the amount of $35,000.00 before proceeding further with its action. This amount of security reflects AmySey's partial indemnity costs of defending this action to date and its anticipated further costs up to the completion of discoveries. After answering its undertakings, AmoSey may move for further security with respect to any subsequent steps in this litigation, should it wish to do so.

Outcome

[93] Based on the foregoing, Glyco's leave motion for Mr. Drizen to represent the corporation is granted. The Defendants' motion to strike Glyco's fraud claim and the other claims against the individual Defendants is granted without leave to amend, and Glyco is ordered to pay security for costs of $35,000.00 to reflect AmoSey's partial indemnity costs to the completion of discoveries.[^1]

Costs

[94] At the conclusion of the hearing, the parties made submissions on costs for these motions.

[95] On September 5, 2018, the Defendants served Glyco with an offer to settle these motions, on a without costs basis on terms that were as favourable as the decided outcome. Glyco did not accept the offer. In the circumstances of this case, I see no conduct that would cause me to depart from the cost mechanism under Rule 49.10(2): Iannarella v. Corbett, 2015 ONCA 110 at paras 138-139.[^2] It follows that Glyco is entitled to its partial indemnity costs to September 5, 2018 (i.e., the date of the offer), and the Defendants are entitled to their partial indemnity costs from that date.

[96] This was a relatively complex matter that returned as a long motion which raised a number of discrete issues. As the claim in this action seeks $2.65 million in damages, the issues raised on these motions were important given their potential to impact the action significantly (i.e., by

directing carriage of the claim, by addressing the preservation of records to defend the action, and by eliminating some or all of the action).

[97] Although neither side delivered detailed dockets to indicate when specific work on the case was performed, the Defendants' offer to settle was delivered on September 5, 2018 when both sides had largely prepared and delivered most of their materials on the motions. I add that Glyco served a series ofrecords on its Rule 15.01(2) motion that excessively and unnecessarily repeated content and, in my view, placed undue burden on the Defendants in responding to the motion.

[98] In the circumstances, I find that Glyco should have its partial indemnity costs prior to September 5, 2018 in the fixed amount of $5,000.00, and the Defendants should have their partial indemnity costs after that date in the fixed amount of $8,800.00. In my view, these amounts are fair and proportional to the nature and complexity of the issues: Boucher v. Public Accountants Council (Ontario), 2009 ONCA 722 at para 24. After offsetting them, Glyco shall pay costs to the Defendants of $3,800.00, inclusive of taxes and disbursements.

Orders

[99] Accordingly, the following are ordered:

1. Leave is granted, nunc pro tune for Mr. Drizen, a non-lawyer, to represent the Plaintiff, Glycobiosciences Inc., in this action;

2. Glycobiosciences Inc.'s motion for mandatory injunctive relief is dismissed;

3. Glycobiosciences Inc.'s claims of fraudulent misrepresentation against all of the Defendants, Amosey Inc., Jai Velusamy and Sharavarthi Ponnuswamy, in the Amended Statement of Claim are struck without leave to amend;

4. Glycobiosciences Inc.'s other claims against the personal Defendants, Jai Velusamy and Sharavarathi Ponnuswamy, in the Amended Statement of Claim are struck without leave to amend;

5. Glycobiosciences Inc. shall pay into court $35,000.00 as security for the partial indemnity costs of AmoSey Inc. up to and including the completion of discoveries, including answering undertakings;

6. Until the above-mentioned security has been given, Glycobiosciences Inc. may not take any step in this proceeding, except an appeal from this order;

7. AmoSey Inc. may move for further security for costs with respect to any subsequent steps in this litigation, but not before answering all of their undertakings;

8. The balance of the Defendants' motion to strike is dismissed; and

9. Glycobiosciences Inc. shall pay costs to the Defendants of $3,800, inclusive of taxes and disbursements, within 30 days.

[100] In the circumstances of the current COVID-19 pandemic emergency, these reasons are deemed to be an order of the court that is operative and enforceable from the date of release without a signed or entered formal order.[^3] Should they wish, the parties may later submit a formal order for entry once court operations resume, although these reasons remain an effective and binding order from the date of release.

Doi J.

Date: April 24, 2020

[^1]: Security for costs are payable to the Accountant of the Superior Court of Justice at 595 Bay Street, Toronto, Ontario, MSG 2M6, tel: (416) 314-2477. Funds are held until an order is issued to release the security.

[^2]: Rule 49.10(2) sets out the cost consequences of a plaintiffs failure to accept a defendant's offer to settle, by providing as follows: (2) Where an offer to settle, (a) is made by a defendant at least seven days before the commencement of the hearing; (b) is not withdrawn and does not expire before the com_mencement of the hearing; and (c) is not accepted by the plaintiff, and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise. [Emphasis added]

[^3]: Given the serious health risks posed by the COVID-19 pandemic, the regular operations of the Superior Court of Justice have been suspended since March 15, 2020: Notice to the Profession for Civil and Family Matters by the Chief Justice of the Superior Court of Justice dated April 2, 2020, at https://www.ontariocourts.ca/scj/notice­ profession-civil-family/.

COURT FILE NO.: CV-17-199

DATE: 2020 04 24

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Glycobiosciences Inc., Plaintiff AND:

Amosey Inc., Jai Velusamy and Sharavarthi Ponnuswamy, Defendants

BEFORE: DOI J.

COUNSEL: Kevin Drizen, for the Plaintiff

Zohar Levy, for the Defendants

ENDORSEMENT

DoiJ.

DATE: April 24, 2020