Court File and Parties
COURT FILE NO.: CV-11-00432182
MOTION HEARD: 20220516
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Anthony Colenbrander, Karen Colenbrander and Colenbrander Enterprises Canada Inc., Plaintiffs, Defendants to the Counterclaim
AND:
Savaria Corporation, Defendant, Plaintiff by Counterclaim
BEFORE: Associate Justice B. McAfee
COUNSEL: H. Richard Bennett, Counsel, for the Moving Parties, the Plaintiffs, Defendants to the Counterclaim
Ryan A. Morris, Counsel, for the Responding Party, the Defendant, Plaintiff by Counterclaim
HEARD: May 16, 2022
REASONS FOR DECISION
[1] This is a motion brought by the plaintiffs, defendants to the counterclaim Anthony Colenbrander (Anthony) and Karen Colenbrander (Karen) and their company Colenbrander Enterprises Canada Inc. (Colenbrander Enterprises) (collectively Colenbrander) for leave to amend the amended amended statement of claim in the form of the proposed amended amended amended statement of claim attached as schedule “A” to the amended notice of motion.
[2] The defendant, plaintiff by counterclaim Savaria Corporation (Savaria) does not oppose the proposed amendments at paragraphs 1(a), 3, 10, 11, 15 (the date of 2011 only) and 17 of the proposed amended amended amended statement of claim. On an unopposed basis, leave is granted with respect to these proposed amendments.
[3] The remaining proposed amendments are opposed on the basis of res judicata, expiry of applicable limitation period, pleadings of evidence, frivolous and vexatious pleadings and/or inexplicable delay, as summarized in an agreed upon chart provided during the hearing.
[4] Colenbrander claim against Savaria in respect of an unpaid promissory note dated August 3, 2010 (the Promissory Note). On August 4, 2011, the statement of claim was issued. Colenbrander allege that Savaria owes $420,817.00 on the Promissory Note. The Promissory Note was executed as part of the consideration for Savaria’s purchase of Colenbrander’s wheelchair van conversion business, Freedom Motors Inc. (Freedom), pursuant to a written share purchase agreement dated August 3, 2010 (the SPA).
[5] By way of statement of defence and counterclaim dated September 22, 2011, Savaria defended the action and counterclaimed for indemnification in the amount of $693,088.00 for alleged breaches of representations and warranties under the SPA.
[6] On October 20, 2011, Colenbrander delivered a reply and defence to counterclaim denying any liability to Savaria.
[7] On May 24, 2013, the statement of claim was amended. The amendment added a claim by Anthony for breach of an option agreement with Savaria dated August 3, 2010 (the Option Agreement).
[8] On July 30, 2013, the statement of defence and counterclaim was amended denying any breach of the Option Agreement.
[9] On August 8, 2013, the reply and defence to counterclaim was amended.
[10] In 2013, affidavits of documents were exchanged. In 2013 and 2014, examinations for discovery took place.
[11] On July 15, 2014, the amended statement of claim was further amended. The further amendment increased the amount claimed in respect of the Option Agreement. On July 15, 2014, the amended reply and defence to counterclaim was also further amended. On August 13, 2014, the amended defence and counterclaim was further amended.
[12] On or about February 24, 2015, the action was first set down for trial.
[13] In 2015, Savaria moved for partial summary judgment in respect of the Option Agreement. The motion was heard on November 9, 2015, and further submissions were made in writing in January 2016. In a decision dated February 2, 2016, Justice J. Wilson granted partial summary judgment to Anthony, finding that Savaria was in breach of the Option Agreement. Justice J. Wilson appointed an expert, the Honourable Louis Le Bel, to assist with the determination of the appropriate remedy applying Quebec law. In the further decision dated June 29, 2018, Justice J. Wilson adopted the conclusions of the Honourable Le Bel and ordered specific performance of the Option Agreement and payment of dividends on the shares subject to the Option Agreement, together with partial indemnity costs. Savaria’s appeal to the Court of Appeal was dismissed on December 19, 2018.
[14] By consent order dated April 8, 2019, leave was granted to restore the action to the trial list, the action having been struck from the trial list in or about April 2016. On or about May 2, 2019, steps were taken to restore the action to the trial list in accordance with the leave granted on consent. The parties confirm that no trial date is currently set.
[15] On August 1, 2019, counsel for Colenbrander advised of the intention to seek amendments to the amended amended statement of claim. On September 20, 2019, Savaria’s counsel requested a copy of the proposed amended amended amended statement of claim. On December 3, 2019, counsel for Colenbrander provided a copy of the proposed amended amended amended statement of claim. The motion, originally scheduled as a short motion returnable March 31, 2020, did not proceed due to COVID. Colenbrander sought to have the motion heard in person and did not take steps to reschedule the motion until April 2021. In May of 2021 the motion was scheduled for a virtual hearing returnable November 22, 2021. The motion was then adjourned to proceed by way of long motion.
[16] The parties agree that there is no issue of any requirement to seek leave to bring this motion pursuant to Rule 48.
[17] Rule 26.01 of the Rules of Civil Procedure provides:
26.01 On a 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.
[18] As stated by Associate Justice Muir in 1520658 Ontario Inc. v. Ontario (Transportation), 2012 ONSC 539 (Ont. S.C.J.) at paragraph 29:
[29] …as a general proposition, proposed amendments under Rule 26.01 are presumptively approved, unless prejudice would result that could not be compensated for by costs or an adjournment. However, there is no absolute right to amend pleadings. The test to be applied is set out in Marks v. Ottawa (City), 2011 ONCA 248 at paragraph 19, where the Court of Appeal stated as follows:
19 Although the general rule is that amendments are presumptively approved, there is no absolute right to amend pleadings. The court has a residual right to deny amendments where appropriate: Daniele v. Johnson (1999), 1999 CanLII 19921 (ON SCDC), 45 O.R. (3d) 498 (Div.Ct.) at paras. 11-15. Further, I would agree that the proper factors to be considered are those first set out in Simrod v. Cooper, [1952] O.W.N. 720 (H.C.J. Master) at p. 721, aff’d at p. 723 (H.C.J.), and quoted with approval in Vaiman v. Yates (1987), 1987 CanLII 4345 (ON SC), 60 O.R. (2d) 696 (H.C.J.) at p. 698, which can be summarized as follows:
*An amendment should be allowed unless it would cause an injustice not compensable in costs.
*The proposed amendment must be shown to be an issue worthy of trial and prima facie meritorious.
*No amendment should be allowed which, if originally pleaded, would have been struck.
*The proposed amendment must contain sufficient particulars.
[19] Savaria opposes the proposed amendments paragraphs 4(a), 18(f), 18(g), 18(h), 18(j), 22(a), 22(b), 22(c) and 22(d) on the basis that they are res judicata.
[20] Savaria argues that these proposed amendments relate to the issue of the Option Agreement, an issue that has been finally determined by way of summary judgment as upheld on appeal to the Court of Appeal.
[21] In oral submissions counsel for Colenbrander confirmed that no further relief relating to the Option Agreement is being pursued in the action, including in the proposed amendments at issue on this motion.
[22] Any claim for relief relating to the Option Agreement is res judicata having been finally determined as noted above (see Seelster Farms Inc. v. Ontario, 2021 ONSC 152 (Ont. S.C.J.) at paras. 23-38 and 1520658 Ontario at para. 33).
[23] Paragraph 4(a) is an overview of the transaction entered into between Colenbrander and Savaria. Colenbrander submits that the amendment provides further particulars of the transaction. Although paragraph 4(a) is objected to on the basis of res judicata, only the words “…and c) 200,000 irrevocable options to purchase common shares in Savaria at a specific strike price” relate to the Option Agreement. The proposed amendment at paragraph 4(a) as it relates to the Option Agreement shall only be permitted if a pleading is included at paragraph 4(a) confirming that that all issues concerning the Option Agreement have been finally determined with reference to the citations of the decisions. The additional reference would provide an accurate overview of the transaction together with an overview of the matters remaining at issue. The balance of the proposed amendment at paragraph 4(a) does not relate to the Option Agreement and is not res judicata.
[24] The proposed amendments at paragraphs 18(f), 22(b) and 22(d) relate to the Option Agreement and are res judicata.
[25] The second sentence of the proposed amendment at paragraph 18(g) relates to the Option Agreement and is res judicata.
[26] The words “…and to deny him his 200,000 share options” of the proposed amendment at paragraph 18(j) relate to the Option Agreement and are res judicata.
[27] The proposed amendment at paragraph 22(a) does not specifically refer to the Option Agreement, and, as noted above, Colenbrander’s counsel confirms that no further relief in the action is sought with respect to the Option Agreement. On the motion, counsel confirmed that Quebec law was only applicable with respect to the Option Agreement. The words “…Quebec law and…” are only applicable with respect to the Option Agreement, which is res judicata.
[28] The proposed amendments at paragraphs 18(h) and 22(c) do not specifically refer only to the Option Agreement and are not res judicata.
[29] Leave is not granted with respect to the proposed amendments at paragraphs 18(f), 18(g) (second sentence only), 18(j) (only the words “…and to deny him his 200,000 share options), 22(a) (only the words “…Quebec law and…”), 22(b), 22(d) on the basis of the doctrine of res judicata.
[30] Savaria opposes the proposed amendments at paragraphs 1(b), 1(c), 1(f), 15(a)18(a), 18(b), 18(c), 18(d), 18(e), 18(i), 22 and 23 on the basis of being made beyond the applicable limitation period. Savaria argues that these proposed amendments seek to advance fundamentally new and different claims based on facts not originally pleaded and they are statute barred.
[31] At paragraphs 1(b), 18(a), 18(b), 18(c), 18(d), 18(e), 18(i), 22 and 23 Colenbrander seeks to allege a breach of the duty of honest contractual performance of the SPA relying on Bhasin v. Hyrnew, 2014 SCC 17. At paragraphs 1(c), 15(a), 18, 22 and 23 Colenbrander seeks punitive damages as a result of the alleged breach of duty of honest contractual performance relying on Whiten v. Pilot Insurance Co., 2002 SCC 18 and Agribrands Purina Canada Inc. v. Kasamekas, 2010 ONSC 166 (Ont. S.C.J.); aff’d 2011 ONCA 460. At paragraphs 1(f) and 23 Colenbrander seeks to specify a claim for full indemnity costs.
[32] In Farmers Oil and Gas Inc. v. Ontario (Natural Resources), 2016 ONSC 6359 (Ont. Div.Ct.) at paragraphs 13-31, Justice Nordheimer reviews the applicable law concerning whether proposed amendments advance new claims. At paragraph 22, Justice Nordheimer states as follows:
[22] As may be obvious from the above, the distinction between the authorities relied upon by the appellant, and those relied on by the respondent, turns on whether the proposed amendments do, or do not, arise out of the same facts, or the factual matrix, that was pleaded in the original statement of claim. If they do, then the amendments should be permitted. If they do not, and the limitations period has expired, then the amendments should be refused.
[33] In 1100997 Ontario Limited v. North Elgin Centre Inc., 2016 ONCA 848 Justice van Rensberg reviews the applicable legal principles regarding the amendment of pleadings and states as follows at paragraph 23:
[23] Based on the foregoing, an amendment will be refused when it seeks to advance, after the expiry of a limitation period, a “fundamentally different claim” based on facts not originally pleaded.
[34] Reading the original statement of claim generously with due allowance for drafting deficiencies as I am required to do (Farmers Oil at para. 23 citing Operation Dismantle Inc. v. Canada, 1985 CanLII 74 (SCC), [1985] 1 S.C.R. 441), in my view the proposed amendments all arise out of the claim for amounts owing under the SPA and the calculation of those amounts and Savaria’s alleged breach of the SPA including payment of the Promissory Note as pleaded in the original claim. They do not advance a fundamentally different claim.
[35] Paragraphs 5 to 17 of the original statement of claim (paragraphs 6 to 18 of the existing amended amended statement of claim) are pleadings concerning the calculation of the adjustments and the amount owing, with references to specific sections of the SPA. The proposed amendments plead further particulars concerning the alleged breaches of the SPA and payment of the Promissory Note. At paragraph 21 of the original statement of claim (paragraph 22 of the existing amended amended statement of claim) Colenbrander pleads that Savaria has not paid the amount owing and is in breach of their contractual obligation to do so.
[36] In addition, at paragraph 13 of the original reply and defend to counterclaim dated October 20, 2011 (also paragraph 13 of the amended amended reply and defence to counterclaim) Colenbrander pleads that Savaria’s alleged notification of their claims was unsupported and nothing more than an attempt to avoid paying the Promissory Note.
[37] Costs of the proceeding were sought in the original statement of claim at paragraph 1(d). The proposed amendments provide further specifics of the scale and basis for the costs of the proceeding sought.
[38] In my view all of these proposed amendments are “part and parcel” of the alleged breach of the SPA including the payment of the Promissory Note as originally pleaded. They do not allege a new and distinct claim unrelated to the original claim for breach of the SPA. They do not advance a fundamentally different claim. They are intertwined with the existing allegations. I am satisfied that these proposed amendments are not statute barred.
[39] Savaria opposes the proposed amendments at paragraphs 13, 14, 15, 18(a), 18(b), 18(c), 18(e), 18(f), 18(g), 18(h), 18(i) on the basis of pleadings of evidence.
[40] Rule 25.06(1) provides:
25.06(1) Every pleading shall contain a concise statement of the material facts on which the party relies for the claim or defence, but not the evidence by which those facts are to be proved.
[41] The distinction between material facts, evidence and particulars is not always a bright line and often an allegation can be all three.
[42] In my view, while some portions of the impugned pleadings may also be characterized as evidence, such as the references to emails, statements and letters, they are all further particulars in support of the claim. I am not satisfied that these impugned pleadings ought to be denied on the basis of pleading evidence.
[43] Savaria opposes the proposed amendments at paragraphs 18(a), 18(c), 18(d), 18(i), 18(j), 22(c), 22(e), 22(f) and 22(g) on the basis of being frivolous and vexatious. The impugned portion of these proposed amendments are set out at paragraph 45 of Savaria’s factum.
[44] Savaria argues that these pleadings are not material facts, but Colenbrander’s characterizations or arguments couched in inflammatory language without sufficient factual basis for the purpose of casting Savaria in a negative light and impugning the character of its principals. Savaria relies on Stedfasts Inc. v. Dynacare Laboratories, 2020 ONSC 8008 (Ont. S.C.J.) at paragraph 34.
[45] As stated in Stedfasts at paragraph 34, parties are to be allowed a great deal of latitude in how they plead, but there are limits. In my view this is not the clearest of cases where those limits have been exceeded.
[46] Savaria opposes all impugned proposed amendments on the basis of inexplicable delay.
[47] Savaria argues that Colenbrander could have sought leave to seek the proposed amendments at issue on this motion at anytime in the past decade including in the last two rounds of amendments in 2013 and 2014. Savaria argues that Colenbrander has provided no explanation for the delay in bringing this motion.
[48] Savaria relies on 1588444 Ontario Ltd. v. State Farm Fire and Casualty Co., 2017 ONCA 42 wherein Justice Hourigan states at paragraphs. 36-39:
[36] The seminal case in Ontario considering the concept of presumed prejudice in the context of a rule 26.01 motion is the Family Delicatessen decision [Family Delicatessen Ltd. v. London (City), 2006 CanLII 5135 (ON CA), [2006] O.J. No. 669]. In that case, this court observed that at a certain point after an exceptional delay, non-compensable prejudice will be presumed absent evidence to the contrary. In other words, after inordinate delay, the presumption in favour of granting leave shifts to a presumption that non-compensable prejudice will result if leave is granted. This makes sense as a matter of fairness. It would be very difficult for a responding party to prove, for example, the generalized prejudice that witnesses’ memories will be diminished after a lengthy passage of time.
[37] The presumption of prejudice is rebuttable. Where the moving party provides an adequate explanation for the delay or tenders evidence that there is no non-compensable prejudice, the presumption will be rebutted.
[38] The court in Family Delicatessen did not elaborate on when the shift in onus takes place, i.e., the point at which the delay will be so lengthy that prejudice will be presumed. It also did not explain what evidence would need to be led by the moving party to rebut the onus.
[39] The Divisional Court elaborated on the concept of presumed prejudice in Ontario Securities Commission v. McLaughlin, [2009] O.J. No. 1993, 2009 CarswellOnt 2694 (Div.Ct.). There the court stated, at para. 6, that to rebut the presumption of prejudice, a moving party needs to provide “some explanation [page 691] of the delay in seeking the amendments and the presence or absence of prejudice to the opposite party and the need to show a nexus between the proposed amendments and the facts or evidence said to be recently discovered.”
[49] Savaria also relies on the decision in Toronto Standard Condominium Corp. No. 1786 v. Fernbrook Homes (Wilson) Ltd., 2021 ONSC 6652 (Ont. S.C.J.). In Fernbrook Homes the court dismissed the motion for leave to amend on the basis that the disputed proposed amendments were a new cause of action and statute barred. The court went on to state that even if the court had not concluded that the proposed amendments did not constitute a new cause of action, leave to amend would have been denied on the basis of unexplained inordinate delay giving rise to a presumption of prejudice. The court found that the plaintiff had not rebutted the presumption of prejudice and found actual prejudice due to the death of a witness.
[50] I am satisfied that the delay has been explained. From 2015 to December 2018 the parties were dealing with Savaria’s motion for summary judgment and Savaria’s appeal to the Court of Appeal. I am also satisfied that any presumed prejudice has been rebutted. Unlike the circumstances in Fernbrook Homes there is evidence before me that Savaria will not suffer any prejudice that cannot be compensated for by costs or an adjournment (Anthony and Karen affidavit at para. 20), and I was not referred to any evidence of actual prejudice.
[51] For these reasons, leave is not granted with respect to the proposed amendments at paragraphs 18(f), 18(g) (second sentence only), 18(j) (only the words “…and to deny him his 200,000 share options), 22(a) (only the words “…Quebec law and…”), 22(b) and 22(d). Leave is granted with respect to the words at paragraph 4(a) “…and c) 200,000 irrevocable options to purchase common shares in Savaria at a specific strike price” on the condition that a pleading is included at paragraph 4(a) confirming that that all issues concerning the options to purchase have been finally determined with reference to the citations of the decisions. Leave is granted with respect to the balance of the proposed amendments.
[52] If successful, Colenbrander sought costs of the motion on a partial indemnity basis in the all-inclusive amount of $14,037.50. If successful, Savaria sought costs of the motion on a partial indemnity basis in the all-inclusive amount of $6,441.00. Colenbrander also submitted that any costs awarded should be awarded in the cause.
[53] Colenbrander was successful on the majority of the impugned proposed amendments. Recognizing that Colenbrander was not entirely successful and having regard to all of the circumstances of this motion, including a fair and reasonable amount that Savaria could expect to pay for costs, I exercise my discretion to fix costs of the motion in the all-inclusive amount of $5,000.00, payable by Savaria to Colenbrander in the cause.
[54] Order to go as follows:
On an unopposed basis, leave to amend the amended amended statement of claim is granted with respect to paragraphs 1(a), 3, 10, 11, 15 (the date of 2011 only) and 17 of the proposed amended amended amended statement of claim found at schedule “A” to the amended notice of motion.
Leave to amend the amended amended statement of claim is not granted with respect to the proposed amendments at paragraphs 18(f), 18(g) (second sentence only), 18(j) (only the words “…and to deny him his 200,000 share options), 22(a) (only the words “…Quebec law and…”), 22(b), 22(d).
Leave to amend the amended amended statement of claim is granted with respect to the words at paragraph 4(a) “…and c) 200,000 irrevocable options to purchase common shares in Savaria at a specific strike price” on the condition that a pleading is included at paragraph 4(a) confirming that that all issues concerning the options to purchase have been finally determined with reference to the citations of the decisions.
Leave to amend the amended amended statement of claim is granted with respect to the balance of the proposed amendments.
Costs of the motion are fixed in the all-inclusive amount of $5,000.00 payable by Savaria to Colenbrander in the cause.
Associate Justice B. McAfee
Date: August 16, 2022