COURT FILE NO.: CV-19-00628186-0000
DATE: 20210201
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
BAYER INC. Plaintiff
– and –
HANY BISKALY, ONSIGHT PHARMACY GROUP INC., ASPIRE PHARMACY INC. and AFFINITY HEALTHCARE INC. Defendants
COUNSEL: Matthew Fleming, Dina Awad and Susan Fridlyand, lawyers for the Plaintiff Matthew B. Lerner and Mitchell C. Brown, lawyers for the Defendants
HEARD: January 27, 2021
ENDORSEMENT
DIAMOND J.:
Overview
[1] On January 27, 2021, I heard two motions to strike brought by both the plaintiff and the individual defendant Hany Biskaly (“Biskaly”) respectively.
[2] Biskaly’s motion sought an order striking out the plaintiff’s Amended Statement of Claim as against him personally.
[3] The plaintiff’s motion sought an order striking out a certain passage contained in paragraph 15 of the defendants’ Amended Statement of Defence (described in more detailed hereinafter).
[4] At the conclusion of the hearing of both motions, which lasted a total of half a day, I took my decision under reserve.
The Plaintiff’s Theory of its Case
[5] The plaintiff manufactures various drug products, and is the manufacturer of a specialty ophthalmic drug commercially known as “Eylea”.
[6] Biskaly is a pharmacist registered with the Ontario College of Pharmacists (“the College”), and was at all material times the sole director of the corporate defendants. Under the provisions of the Drug and Pharmacy Regulation Act R.S.O. 1990 c. H4 (the “DPRA”), Biskaly was the pharmacist and designated manager for each of the corporate defendants.
[7] The plaintiff manufacturers and supplies Eylea pursuant to a product monograph approved by Health Canada (“the monograph”) which mandates Eylea to be sold in single use vials for injections and treatment of one eye. Each single dosage is administered via an intravitreal injection by a qualified physician. The monograph dictates that any unused product in the vial must be discarded after the single dose is drawn and injected.
[8] The plaintiff states that in circumstances where the remaining product in the vial is not discarded, and additional doses are then extracted from the vial, such actions are unauthorized and known as “vial-splitting”. According to the plaintiff, both Health Canada and the College consider vial-splitting to be a documented risk to patient safety and outside the limits of the practice of pharmaceutical medicine.
[9] The monograph contains express prohibitions against vial-splitting, and each vial of Eylea is sold with an insert containing product instructions which indicate to all pharmacists that the vial is for single use only with a prescribed dose, and any unused product remaining in the vial must be discarded after a single dose is drawn.
[10] The plaintiff alleges that the defendants, including Biskaly, engaged in vial-splitting when dispensing Eylea to patients and/or physicians. The plaintiff alleges that the vial-splitting was conducted with a view to, inter alia, (a) submitting excessive claims for reimbursement to OHIP in order to enrich Biskaly and the corporate defendants by charging patients and/or physicians for more than one dose in each vial of Eylea, and (b) causing the plaintiff to suffer damages in the form of lost sales and unwarranted rebates for each vial.
[11] While there were never any direct commercial or contractual dealings between the plaintiff and any of the defendants, the plaintiff commenced this action in late September 2019 against all defendants seeking damages for negligence, inducing breach of contract, intentional interference with economic relations, conspiracy to injure, and unjust enrichment.
The Pleadings
[12] In the plaintiff’s original Statement of Claim, apart from describing Biskaly as a pharmacist registered with the College and the sole director and directing mind of the corporate defendants, all of the allegations advanced by the plaintiff simply lumped Biskaly and the corporate defendants together. In other words, all of the allegations in the original Statement of Claim were made collectively against all defendants without much, if any, distinction between them.
[13] The plaintiff subsequently delivered an Amended Statement of Claim, and sought to advance separate allegations against Biskaly personally. The plaintiff is pursuing all of the same causes of actions against both Biskaly and the corporate defendants, but has now sought to expand its allegations to set out those causes of actions against Biskaly personally.
[14] Without reciting all of the new amendments to the plaintiff’s claim, a summary of those amendments is that Biskaly’s action were undertaken “in his capacity as a pharmacist and designated manager for the corporate defendants or otherwise in his personal capacity.” In other words, in addition to acting at all material times as the corporate defendants’ sole director and directing mind, Biskaly is alleged to have also acted in his personal capacity as the pharmacist and designated manager for the corporate defendants, and as a result exposed himself to personal liability.
[15] In particular, the plaintiff alleges that Biskaly in his capacity as pharmacist and designated manager (or otherwise in his personal capacity), inter alia,
• engaged in vial-splitting;
• received unlawful financial proceeds, compensation and benefits from the corporate defendants for his role in the vial-splitting;
• assisted the corporate defendants or persons under their direction or control in concealing the vial-splitting from the plaintiff and the plaintiff’s customers; and,
• promoted and/or orchestrated the scheme by the corporate defendants or persons under their respective direction and control to carry out vial-splitting and then submit excessive claims for reimbursement to OHIP to enrich both himself and the corporate defendants.
The Plaintiff’s Complaints to the College
[16] In September 2017, the plaintiff lodged a complaint with the College regarding Biskaly. The plaintiff states in its Reply that the complaint was made in order to determine whether Biskaly (a) had lawfully acquired Eylea product vials, and (b) was complying with his obligations not to participate in vial-splitting.
[17] In their Amended Statement of Defence, the defendants included the following allegation at paragraph 15 therein:
“On September 21, 2017, Bayer sent a complaint letter to the Ontario College of Pharmacists regarding the Distributor’s dispensing practices which included complaints that the Defendants were engaged in ‘vial-splitting’”.
[18] The second half of paragraph 15 (i.e. from the word “regarding” onward) is the subject matter of the plaintiff’s motion to strike.
Rule 21 - Motions to Strike
[19] The test to be employed on a motion to strike is well known. As held by the Supreme Court of Canada in Hunt v. Carey Canada Inc. 1990 90 (S.C.C.), assuming that the facts as stated in the Amended Statement of Claim can be proven, I must decide whether it is “plain and obvious” that the claim discloses no reasonable cause of action as against Biskaly. As the pleaded facts are presumed to be true, I can only strike out a claim which has no reasonable prospect of success.
[20] As held by the Court of Appeal in Addison Chevrolet Dealer GMC Limited v. General Motors of Canada Limited 2016 ONCA 324, the test under Rule 21.01 requires a moving party to show that it is plain and obvious that the pleading discloses no reasonable cause of action, or that the claim has no reasonable prospect of success. Pleadings may be defective when they fail to allege the necessary elements of a claim that, if properly pleaded, would constitute a reasonable cause of action.
[21] In Salehi v. Professional Engineers Ontario 2014 ONSC 3816, Justice Myers held that a claim is to be read generously with allowance for mere drafting deficiencies. The test on a motion to strike is no doubt a stringent one as I must be satisfied that the claim, or a radical defect therein, is certain to fail.
Claims against Corporate Officers and Directors
[22] A corporation only operates through the actions of its individual officers, directors and/or employees. As held by the Court of Appeal in Normart Management Ltd. v. Westhill Re-Development Co. 1998 2447 (ONCA), absent allegations of fraud, deceit, dishonesty or want of authority on the part of officers, directors or employees of a corporation, those individuals will be protected from personal liability unless a pleading properly sets out the actions or omissions of the individuals (a) to be themselves tortious, or (b) exhibit a separate identity of interest from that of the corporation so as to make the impugned act or conduct their own. Simply put, there must be some activity that takes the individuals out of their role of directing minds of a corporation.
[23] In the absence of a factual underpinning to support allegations that individuals acted outside their capacity as officers, directors or employees of a corporation, those individuals cannot be held personally liable for the actions of corporations they can control, direct or work for at the relevant time. That factual underpinning must relate to the actions or omissions of an individual that fall outside of his/her authority, exhibit a separate identity of interest, or were independently tortious and actionable.
[24] As held by Justice Dietrich in Libfeld v. Patica Corporation 2018 ONSC 3373, latitude for drafting deficiencies is less liberal when the Court assesses the adequacy of claims against corporate representatives. This approach finds support in the Court of Appeal for Ontario’s decision in Piedra v. Copper Mesa Mining Corp, 2011 ONCA 191 where the Court concluded that allegations in a pleading that the acts and omissions of a director are allegedly tortious must withstand a high degree of scrutiny.
Decision – Biskaly’s Motion to Strike
[25] To begin, I agree with Biskaly that the original Statement of Claim drew no distinction between the acts and omissions on the part of Biskaly and the corporate defendants. The plaintiff painted Biskaly and the corporate defendants with the same proverbial brush, and only referred to Biskaly in his capacity as director and directing mind of the corporate defendants.
[26] A review of the Amended Statement of Claim discloses that, for the most part, the identical acts and omissions on the part of the corporate defendants are raised for a second time as against Biskaly (although there are some minor differences). Even reading the Amended Statement of Claim generously and liberally, the underlying factual matrix supporting the alleged causes of action appears to be duplicative, and cannot be said to demonstrate the necessary “sufficient uniqueness” of the claims advanced against Biskaly.
[27] The plaintiff has not established a sufficient separate identity of interest with respect to its claims against Biskaly for inducing breach of contract, interference with economical relations and conspiracy to injure. I agree with Biskaly that there are truly no differentiating facts as between the corporate defendants and Biskaly, and none of the allegedly unlawful conduct can be said to have been carried out by Biskaly in his personal capacity. The acts complained of by the plaintiff to support these causes of action are those of the corporate defendants. The plaintiff’s efforts to separate Biskaly from the acts and omissions of the corporate defendants are distinctions without a difference.
[28] In particular, with respect to the plaintiff’s cause of action for conspiracy to injure, the Amended Statement of Claim does no more than allege that Biskaly essentially conspired with himself, ie. as a director and directing mind of the corporate defendant.
[29] The plaintiff argues strenuously that Biskaly’s acts and omissions were not just undertaken in his role as director and directing mind of the corporate defendants, but as “pharmacist and designated manager” of the corporate defendants. Much of the plaintiff’s argument during the hearing of the motions was focused upon Biskaly holding those titles as a result of being designated as such under the provisions of the DPRA. I note that the Amended Statement of Claim does not allege that Biskaly breached any obligation(s) conferred upon him by the DPRA. As well, to my review there is nothing in the DPRA which creates any private law duty upon Biskaly owed to the plaintiff or anyone in the position of the plaintiff.
[30] Biskaly argues that the fact that he is a pharmacist and designated manager for regulatory purposes makes no difference to his status as an individual defendant in this proceeding. At most, Biskaly owes duties to his regulator.
[31] I agree with Biskaly that his status as a pharmacist and designated manager under the DPRA does not in and of itself create a separate identity of interest which could support the various causes of action being advanced against him. However, in my view that does not end the inquiry. Assuming the facts as pleaded in the Amendment Statement of Claim to be true (as I am mandated to do), Biskaly could only have learned of (a) the Eylea monograph, (b) the Eylea prohibitions, (c) the Eylea distribution terms and conditions of sale, (d) the Ontario Drug Benefit Program, (e) the rebate requirements owed to the government and (f) the potential financial benefits of vial-splitting, all through his role as a pharmacist proper (as opposed to a pharmacist registered with the College).
[32] Someone had to carry out the alleged vial-splitting by, inter alia, withdrawing more than one dose from each vial, and then submitting multiple, additional claims for reimbursement which would then result in (allegedly) increased income, dividends or other compensation to Biskaly through the corporate defendants. As held by the Court of Appeal for Ontario in Sataur v. Starbucks Coffee Canada Inc. 2017 ONCA 1017, an employee can still be personally liable for his/her own negligence while acting in the scope of his/her employment.
[33] As a pharmacist with the alleged requisite knowledge and experience, Biskaly is alleged to have personally, or in a supervisory capacity, removed more than one dose from each Eylea vial. While the existence of a private duty of care owed by Biskaly to the plaintiff may be novel, I am not prepared to foreclose that possibility at the pleadings stage.
[34] While I agree with Biskaly that the claims as against him personally as a pharmacist cannot all be reconciled with the claims as against him as a director and directing mind of the corporate defendants, in my view the plaintiff’s claims in negligence and unjust enrichment cannot, at this early stage, be held to be doomed to fail. It is possible that for the purpose of carrying out the alleged scheme, Biskaly undertook certain acts and/or omissions by reason as a pharmacist as opposed to simply the corporate defendants’ director or directing mind. I find that the plaintiff has established a sufficient separate identity of interest to survive Biskaly’s Rule 21 motion in respect of the causes of action in negligence and unjust enrichment.
[35] For these reasons, the causes of action against Biskaly for inducing breach of contract, intentional interference with economic relations and conspiracy are struck out without leave to amend (as this was the plaintiff’s third attempt to establish a separate identity of interest). The balance of Biskaly’s motion is dismissed, and the plaintiff’s claims against Biskaly for negligence and unjust enrichment shall remain.
Decision - Plaintiff’s Motion to Strike
[36] The parties agree that the Ontario Court of Appeal’s decision in F.(M.) v. S.(N.) 2000 16840 (ONCA) remains the leading case with respect to the application of section 36(3) of the Regulated Health Professional Act, S.O. 1991 c.18 (the “RHPA”). That section provides as follows:
“No record of a proceeding under this Act, a health profession Act or the Drug and Pharmacies Regulation Act, no report, document or thing prepared for or statement given at such a proceeding and no order or decision made in such a proceeding is admissible in a civil proceeding other than a proceeding under this Act, a health profession Act or the Drug and Pharmacies Regulation Act or a proceeding relating to an order under section 11.1 or 11.2 of the Ontario Drug Benefit Act..”
[37] In F.(M.), Justice Laskin held that given the Court’s ability and responsibility to strike out any part of a pleading that may prejudice or delay the fair trial of an action, the pleading of documents that are inadmissible under section 36(3) of the RHPA would prejudice or delay the fair trial of an action and should be struck out. It is clear that since the contents of a complaint are inadmissible in a civil proceeding, those contents cannot form part of a pleading. That said, the fact that a complaint was made need not be struck out from a pleading as that fact alone may be admissible.
[38] The wording of paragraph 15 is designed to support the defendants’ position that this proceeding was commenced outside of the two year period prescribed by the Limitations Act 2002, S.O. 2002 C 24. It is the defendants’ position that the plaintiff was in possession of sufficient material facts leading up to the filing of its complaint with the College to ground the causes of action subsequently advanced in this proceeding. The defendants argue that the contents of paragraph 15 are necessary to show (a) the fact of the complaint having been made by the plaintiff, (b) the date that the plaintiff’s complaint was filed, and (c) the knowledge possessed by the plaintiff at the time that it made the complaint.
[39] With respect, while I see how the wording of paragraph 15 can inform the plaintiff’s knowledge at the time of filing its complaint, in my view the chosen wording goes too far as it describes, albeit generally, the contents of the plaintiff’s complaint in that the defendants were engaged in vial-splitting. While I can appreciate the defendants’ reasoning behind the wording set out in paragraph 15, given the governing jurisprudence, while the fact of the complaint and the College’s investigation can be proved at trial through other means, the impugned wording of paragraph 15 runs contrary to the explicit prohibitions in section 36(3) of the RHPA and must be struck out.
[40] The defendants are granted leave to amend if they choose to try and reword paragraph 15 to tie the fact of the making of the complaint with the alleged knowledge possessed by the plaintiff at that time, although no reference to the complaint’s contents (either expressly or impliedly) are permissible.
Costs
[41] In my view, it is arguable that success was divided on these motions. If the parties take a different view, absent an agreement between them, they may serve and file written costs submissions (totalling no more than five pages including a Costs Outline) in accordance with the following schedule:
a) the plaintiff shall serve and file its costs submissions within ten (10) business days of the release of this Endorsement; and,
b) Biskaly shall thereafter have an additional ten (10) business days from the receipt of the plaintiff’s costs submissions to serve and file his responding costs submissions.
Diamond J.
Released: February 1, 2021
COURT FILE NO.: CV-19-00628186-0000 DATE: 20210201
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
BAYER INC. Plaintiff
– and –
HANY BISKALY, ONSIGHT PHARMACY GROUP INC., ASPIRE PHARMACY INC. and AFFINITY HEALTHCARE INC. Defendants
ENDORSEMENT
Diamond J.
Released: February 1, 2021