Court File and Parties

COURT FILE NO.: CV-17-587463-00CL DATE: 20241122 SUPERIOR COURT OF JUSTICE – ONTARIO COMMERCIAL LIST

RE: THE CATALYST CAPITAL GROUP INC. and CALLIDUS CAPITAL CORPORATION, Plaintiffs AND: WEST FACE CAPITAL INC., GREGORY BOLAND, M5V ADVISORS INC. C.O.B. ANSON GROUP CANADA, ADMIRALTY ADVISORS LLC, FRIGATE VENTURES LP, ANSON INVESTMENTS LP, ANSON CAPITAL LP, ANSON INVESTMENTS MASTER FUND LP, AIMF GP, ANSON CATALYST MASTER FUND LP, ACF GP, MOEZ KASSAM, ADAM SPEARS, SUNNY PURI, CLARITYSPRING INC., NATHAN ANDERSON, BRUCE LANGSTAFF, ROB COPELAND, KEVIN BAUMANN, JEFFREY MCFARLANE, DARRYL LEVITT, RICHARD MOLYNEUX, GERALD DUHAMEL, GEORGE WESLEY VOORHEIS, BRUCE LIVESEY and JOHN DOES #4-10, Defendants AND CANACCORD GENUITY CORP., Third Party AND WEST FACE CAPITAL INC. and GREGORY BOLAND Plaintiffs by Counterclaim AND THE CATALYST CAPITAL GROUP INC., CALLIDUS CAPITAL CORPORATION, NEWTON GLASSMAN, GABRIEL DE ALBA, JAMES RILEY, VIRGINIA JAMIESON, EMMANUEL ROSEN, B.C. STRATEGY LTD. D/B/A BLACK CUBE, B.C. STRATEGY UK LTD. D/B/A BLACK CUBE and INVOP LTD. D/B/A PSY GROUP, Defendants to the Counterclaim AND BRUCE LANGSTAFF, Plaintiff by Counterclaim AND THE CATALYST CAPITAL GROUP INC. and CALLIDUS CAPITAL CORPORATION, Defendants by Counterclaim

BEFORE: Penny J.

COUNSEL: Richard G. Dearden, Matthew Karabus and Jenny Zhou for the Plaintiffs Catalyst Capital Group Inc., Callidus Capital Corporation, Newton Glassman, James Riley and Gabriele De Alba Devin Jarcaig for the Defendant Bruce Langstaff/Plaintiff by Counterclaim

HEARD: October 25, 2024

Endorsement

[1] Mr. Langstaff is a defendant and plaintiff by counterclaim. He moves to amend his counterclaim to include:

(a) a claim for damages against three senior managers of the corporate plaintiffs, Messrs. Glassman, Riley and De Alba (Senior Management);

(b) increased exemplary damages; and

(c) damages for defamation, the tort of unlawful means and the tort of intrusion upon seclusion.

[2] The motion is opposed by the defendants by counterclaim on one basis only – that the essential facts which underpin the allegations against Senior Management and the three new causes of action were known to Mr. Langstaff in January 2018, when his counterclaim was first delivered, or at least by September 25, 2019, when the counterclaim was substantially amended. Thus, Catalyst argues the proposed amendments are out of time.

[3] For reasons I will explain below, the motion is granted in part. Leave to amend is denied with respect to adding Senior Management as parties. Leave is granted to increase the claim for punitive damages and to advance theories of liability based on defamation, unlawful means and intrusion upon seclusion.

Background

[4] Mr. Langstaff was employed by Canaccord Genuity Corp. His employment was terminated in September 2017. Mr. Langstaff alleges in his counterclaim that his employment at Canaccord was terminated because of a campaign by The Catalyst Capital Group Inc. and Callidus Capital Corporation (Catalyst) to punish and embarrass him for his alleged participation in a scheme to “short” Catalyst stock and otherwise cause harm to Catalyst in the marketplace.

[5] The counterclaim seeks damages against Catalyst for: inducing breach of contract; intentional interference with economic relations; loss of competitive advantage; and intentional or negligent infliction of emotional distress. There is also a claim for punitive and aggravated damages.

[6] Mr. Langstaff is but one of many parties involved in this complex, highly acrimonious litigation arising out of the alleged scheme. The full extent of the allegations and counter-allegations, and the tortuous course of this litigation to date, are set out in several decisions previously rendered by the court. I will not recount them all here. For present purposes, the key events are as follows.

[7] After the Catalyst claim was commenced in August 2017, Catalyst produced documents. Privilege claims were made over thousands of documents. In November 2019 several co-defendants (not Mr. Langstaff) commenced motions to dismiss the claims against them on the basis that the Catalyst action was a strategic lawsuit against public participation (SLAPP). In the course of those proceedings, there was a production motion against Catalyst. Justice Boswell ordered Catalyst to produce many documents over which privilege, he found, had been improperly claimed. Those documents were not produced until March 2021.

[8] Mr. Langstaff takes the position that the documents in March 2021 disclosed, for the first time, material facts that were necessary for him to know before the allegations contained in the amendments now sought to be approved by this motion could be made. Specifically, Mr. Langstaff says that while he knew Messrs. Glassman, Riley and De Alba constituted Catalyst’s senior management and that they were the individuals through which Catalyst carried out the acts and omissions Mr. Langstaff alleged as the basis for his counterclaim in 2018, he did not know the extent to which Senior Management “knew” there was absolutely no reliable support for their allegations until after the SLAPP-related production was made by Catalyst in March 2021. Mr. Langstaff submits that it was only after the March 2021 productions were received that he was in a position to make allegations that would engage the personal liability of Senior Management.

[9] The parties entered into a tolling agreement on June 20, 2022, with an effective date of June 15, 2022.

[10] The evidence is that Catalyst was advised of Mr. Langstaff’s intention to bring a motion to amend his counterclaim to add Senior Management as parties in March 2022. Mr. Langstaff says in his affidavit that because of the stay imposed under the SLAPP rules (s. 137.1 of the Courts of Justice Act), he could not bring his motion until that litigation was dealt with. This issue was not raised in Mr. Langstaff’s factum. Mr. Langstaff was not a respondent in the SLAPP motions. He was, therefore, not caught by the SLAPP-related prohibition in s. 137.1(6) against amendment of pleadings.

[11] No motion to amend was brought by Mr. Langstaff prior to motions for a Mareva injunction being brought against Mr. Glassman by several parties, including by Mr. Langstaff, in April 2024. These motions were based on an apprehension that Mr. Glassman was leaving Ontario and moving assets offshore. The motions were dismissed with reasons by Black J. (2024 ONSC 2430). It appears Mr. Langstaff also requested, at the time of his motion for a Mareva order, leave to amend his defence and counterclaim to add Senior Management (including, of course, Mr. Glassman) as parties to his counterclaim. Justice Black’s initial did not deal with this request.

[12] Mr. Langstaff’s request to amend his counterclaim became the subject of a further endorsement of Justice Black. Justice Black pointed out in his subsequent endorsement that it was somewhat unusual to seek leave to amend pleadings without a motion record being delivered containing, at the very least, a draft of the proposed amendments being sought. Justice Black declined to make any ruling on this request and ordered that Mr. Langstaff’s motion for leave to amend must proceed on a full record before the court.

[13] This is what brought the parties before the court on October 25, 2024.

Analysis

Legal Framework

[14] Rule 26.01 provides that “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.” Numerous cases have established that an amendment which discloses no reasonable cause of action will not be granted: Fram Elgin Mills 90 Inc. v. Romandale Farms Ltd., 2016 ONCA 404. Further, an amendment will cause non-compensable prejudice where a party is sought to be added after the expiry of a limitation period: 1588444 Ontario Ltd v State Farm Fire and Casualty Co, 2017 ONCA 42 at para 25.

[15] The Limitations Act provides that a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was “discovered”.

[16] Section 5(1) of the Limitations Act provides that a claim is discovered on the earlier of:

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred.

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[17] A presumption arises under s. 5(2) that a person with a claim shall be presumed to have known of the matters referred to in 5(1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[18] Both sides agree that the critical factor regarding the disputed amendment in relation to Senior Management is the requirement under s. 5(1)(a)(iii), i.e., whether Mr. Langstaff “knew the act or omission was that of the person against whom the claim is made”. The issue regarding the proposed new claims is under s. 5(1)(a)(ii), whether the injury, loss or damage was caused by or contributed to by an act or omission.

[19] The prohibition in section 21(1) of the Limitations Act is of central importance in this case. Section 21(1) provides:

If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.

[20] In Arcari v. Dawson (2016), 2016 ONCA 715, at para. 7, leave to appeal refused [2016] S.C.C.A. No. 522, the Court of Appeal observed that the effect of s. 21(1) is that “the clear expiration of a limitation period is an absolute bar to the addition of a party to an already existing action”.

[21] Thus, where a party seeks to add an individual to an action after the expiry of a limitation period, that party bears the burden to establish the claim was not discoverable at the presumptive date and a “reasonable explanation on proper evidence” as to why the claim could not have been discovered through the exercise of reasonable diligence: Morrison v. Barzo, 2018 ONCA 979 at paras 32.

Discoverability

Senior Management

[22] The principal question raised on this motion, amending the counterclaim to add Senior Management, is a subtle one for a number of reasons.

[23] Given the mandatory language of Rule 26, the only opposition to the amendments being sought involves the question of discoverability under section 5(1)(iii) of the Act. The counterclaim was issued in January 2018 and substantially amended in September. 2019. The events giving rise to the counterclaim (including those reflected in the proposed amendments) took place prior to January 2018. The main issue involves the addition of Senior Management as parties. Section 21(1) of the Act prohibits adding the Senior Managers as parties if a limitation period has expired.

[24] By any measure, two years has elapsed since the acts or omissions upon which the claims advanced in the proposed amendments took place. Section 5(2) creates a presumption that Mr. Langstaff knew of the acts or omissions alleged on the day they took place “unless the contrary is proved”. In the circumstances of this case, therefore, s. 5(2) places an onus on Mr Langstaff to prove he did not know about the acts or omissions alleged in the proposed amendments until March 2021.

[25] A further subtlety arises out of the fact that while corporations are separate legal entities from the persons who own, manage (as officers and directors) or are employed by them, there are circumstances in which the acts of managers and employees may attract personal liability as well. Personal liability may arise in various ways. It may arise by virtue of the relationship between the plaintiff and the individual representing the corporation (duty of care, fiduciary duty or personally authorizing torts such as assault, trespass to property, nuisance and the like). It may also arise when an individual representing the corporation has exceeded the bounds of his or her responsibilities to the corporation (such as a decision made in bad faith or with an ulterior motive). Or it may arise where the corporation is dominated and controlled by individuals and, through this control and domination, the individuals use the corporation as a front for the individuals’ own fraudulent or improper conduct or to shield the individuals from liability for these actions. When an employee, officer or director crosses these lines is often a difficult question to answer.

[26] The main issue on this motion turns on whether, in January 2018, Mr. Langstaff had knowledge of material facts capable of supporting the pleading of a claim against Senior Management personally.

[27] In George v. 2411363 Ontario Inc. (Ontario Health Clinics Brantford FHO Inc.), 2024 ONCA 752 at para. 7, the Court of Appeal stated that determining when a claim was discoverable against an individual defendant depends on the day that the plaintiff could first make a “plausible inference of liability” that the act or omission was that of the individual defendants. The plaintiff need not be certain nor need the plaintiff have knowledge of all the material facts. It is sufficient, to set the limitation period running, that they knew enough to make a “plausible inference of liability”: see also Levac v. James, 2023 ONCA 73.

[28] Mr. Langstaff relies heavily on the fact that Catalyst withheld thousands on documents on a “spurious” claim of privilege. That privilege claim was later found by Justice Boswell to be improper and unsupported. Mr. Langstaff says that the improper withholding of these documents prevented him from discovering the true nature of the campaign Catalyst mounted against him and the utter paucity of evidence upon which its allegations against him were based.

[29] A central example of this relied on by Mr. Langstaff arises out of the so-called “Hanna email”. The Hanna email was produced early on in the Catalyst litigation; it was not withheld on the basis of a privilege claim. The Hanna email came from an anonymous source using the pseudonym, Vincent Hanna. The Hanna email was the sole piece of evidence relied upon by Catalyst to corroborate its allegations to Canaccord against Mr. Langstaff.

[30] Mr. Langstaff argues that the facts about the true identity of Vincent Hanna (and the assessment of his credibility by Catalyst at the time) were only discoverable following the delivery of the new documents produced in March 2021. As noted by Justice McEwen in his decision dated December 2, 2021:

Glassman’s fears were exacerbated, at least initially, on August 11, 2017, when he received an email from someone named “Vincent Hannah”. Mr. “Hannah” advised Glassman, amongst other things, that a “cabal of conspirators” caused the publication of the WSJ Article and that a group of investment funds were targeting Callidus and Glassman. The cabal reportedly included the West Face Parties, as well as some of the other defendants in the Wolfpack Action. Of interest, however, is that the Catalyst Parties immediately knew that “Vincent. Hannah” was a pseudonym and, within a few weeks, knew that the true author of the email was an investor by the name of Danny Guy (“Guy”). Although Guy later told the Catalyst Parties that an investigator Derrick Snowdy (“Snowdy”) could substantiate the allegations he made in his email, the Catalyst Parties determined that neither Guy nor Snowdy possessed any substantiating documentation. In a now infamous email, dated October 7, 2017, Glassman wrote that the information provided by Snowdy was “less valuable than what my dogs left for me on our lawn this [morning].”

[31] Mr. Langstaff argues that the October 7, 2017 email, which not produced until March 2021, shows that Catalyst and Senior Management relied on the Hanna email when it contacted Canaccord to exert pressure about terminating Langstaff’s employment at a time when Senior Management knew the Hanna email was unsubstantiated by any credible evidence or documentation.

Paragraph 16 of Mr. Langstaff’s factum submits, in summary form, that:

16. Once the Catalyst Parties were compelled by this Honourable Court to deliver copies of the New Documents, Langstaff learned additional particulars in respect of the Catalyst Parties’ unlawful conduct and specifically its nefarious campaign of espionage, defamation, and harassment targeting him personally. That is, Langstaff discovered that, among other things: (a) Despite knowing at the time that the allegations in the Hanna Email were unsubstantiated and that its author was not a credible source, the individual defendants nonetheless repeatedly contacted Canaccord beginning in or around August 2017 in order to exert pressure upon them to terminate Langstaff; (b) The Catalyst Parties conducted an extensive and illegal campaign of espionage against Langstaff for the improper purpose of gathering intelligence they could use to defame and discredit him, extract information that could be used against Langstaff and his co-defendants in this litigation, or otherwise cause him harm; and (c) Black Cube, at the direction of Glassman and/or the Catalyst Parties, conducted extensive surveillance on Langstaff and his family, including a strategy whereby an individual purporting to be an executive recruiter contacted Langstaff in a nefarious attempt to obtain information from him. That same individual has been revealed by the New Documents to be an agent of Black Cube.

[32] Notwithstanding Ms. Jarcaig’s able submissions, I am unable to accept Mr. Langstaff’s argument on this issue.

[33] If the question of when Mr. Langstaff knew facts from which a plausible inference of the personal liability of Senior Management could be drawn turned on a disputed issue of fact which could not be resolved on a paper record, the correct procedure would, it seems to me (by analogy to a motion for summary judgment), be to allow the amendments on a provisional basis and refer the matter of discoverability to the trial judge as one of the issues to be determined at trial.

[34] However, as it turns out, the motion was not argued on the basis of disputed facts about Mr. Langstaff’s knowledge of Senior Management’s motivations or knowledge at the time. The motion was argued on the basis of Mr. Langstaff’s own 2018 and 2019 pleadings and admissions with respect to those pleadings made on his cross examination for this motion.

[35] The Catalyst argument is that the counterclaim from 2018 and the amendments to the counterclaim in 2019 both reveal that Mr. Langstaff had a fully articulated basis for a claim of personal liability against Senior Management but failed name the individuals as defendants in the counterclaim. Thus, Catalyst argues that the relevant limitation period for adding parties expired in January 2020 or September 2021 (subject to a limited COVID adjustment). These limitations expired before the tolling agreement in June 2022. There is, as Catalyst points out, barely any change in the substance of the pleaded amendments. In most cases, Mr. Langstaff has simply added Senior Management, along with the already-named Catalyst entities, as the perpetrators of the alleged acts or omissions already pleaded.

[36] A full comparison of the three pleadings (that is, 2018, 2019 and 2024) was prepared by counsel for Catalyst and filed at B-1-761 of the October 25, 2024 bundle in Case Center. That detailed analysis shows the full extent to which the pleaded allegations of acts or omissions carried out by Senior Management, involving deceit, bad faith, ulterior motive, false pretences, misuse of corporate control, baseless and meritless allegations made for an improper purpose, and conduct which was vindictive, vexatious, unlawful and an abuse of process, were embedded in Mr. Langstaff’s pleadings from the outset. These allegations are capable of supporting the further allegation that Senior Management were directly implicated in independent tortious conduct and thus personally liable. All this leads me to the conclusion that, while the 2021 productions arising out of the SLAPP litigation may have provided additional evidence of the tortious or other improper conduct of Senior Management, they were not necessary to draw a plausible inference of personal liability, which was present in Mr. Langstaff’s pleadings from the beginning. To demonstrate this point, I will set out the main allegations below.

[37] Mr. Langstaff’s original pleading in response to the Catalyst action included his counterclaim for $3,350,000 in damages against Catalyst. The counterclaim specifically alleges, as of January 15, 2018, that Mr. Langstaff believed that it was the acts or omissions of Senior Management which gave rise to his claim against Catalyst:

(a) “Mr. Langstaff was employed by Canaccord until his employment was terminated without cause on or about September 26, 2017”;

(b) “his employment at Canaccord was terminated in whole or in part as the result of pressure exerted by representatives of [Catalyst], or one of them, on Canaccord”;

(c) “Newton Glassman is the Chief Executive Officer of each of the plaintiff corporations and their controlling shareholder. James Riley is a lawyer and currently holds the title of Managing Director and Chief Operating Officer of Catalyst and the Corporate Secretary of Callidus. Gabriel de Alba is a Managing Director and Partner of Catalyst”;

(d) “Mr. Glassman, Mr. Riley, Mr. de Alba or one or some combination of them pressured Canaccord to end Mr. Langstaff s employment under threat of negative consequences to Canaccord if it failed to do so”;

(e) several representatives of the plaintiffs, including but not limited to Mr. Riley and Mr. Glassman, had alleged that [Mr.] Langstaff was part of the group they called the “Wolfpack” which allegedly conspired to conduct a short-selling attack as against Callidus”;

(f) “the plaintiffs, acting through members of their senior management described above, threatened Canaccord with inclusion in litigation and/or loss of further business and/or other negative consequences known to the plaintiffs and Canaccord but not Mr. Langstaff, if Canaccord did not fire Mr. Langstaff”;

(g) “the plaintiffs knew he had a contract of employment with Canaccord and the plaintiffs, through its employees and agents, deliberately and willfully contacted members of Canaccord’s senior management team for the improper purpose of causing harm to Mr. Langstaff and in order to pressure Canaccord to terminate his employment”;

(h) “The plaintiffs directly or indirectly engaged the private investigation and/or litigation support firm, Black Cube, and possibly others to contact Mr. Langstaff under false pretenses and claim it was interested in interviewing him for a job. The individual contacting him purported to represent a search firm looking for a financial services professional to assist a European-based family office. However, Mr. Langstaff was not satisfied the firm could be adequately verified and aspects of the communications were odd and inconsistent with other recruitment processes he had experienced so he ended the communications at a fairly early stage. Mr. Langstaff subsequently discovered that the individual who had contacted him was in fact a representative of Black Cube, a private investigative firm staffed with former Mossad and Israeli Defence Force intelligence operatives. Mr. Langstaff pleads that the plaintiffs retained Black Cube to use false pretenses to elicit confidential information that could be used to their advantage in the course of the litigation; intimidate or discredit the defendants, including Mr. Langstaff; and for other improper purposes”;

(i) “Mr. Langstaff pleads that the plaintiffs knew or ought to have known that the allegations against him were baseless and were made in part as an overall strategy to detract attention from the plaintiffs’ other business problems”;

(j) “The plaintiffs’ conduct is planned, deliberate, and designed to allow the plaintiffs to profit or otherwise obtain some benefit at the expense of the defendants, including Mr. Langstaff”; and

(k) “Mr. Langstaff pleads that the plaintiffs' conduct was flagrant, outrageous, reprehensible, and calculated to cause him harm.”

[38] In his September 2019 Fresh as Amended Statement of Defence and Counterclaim Mr. Langstaff alleged, among other things, the following additional facts:

(a) “Although the Plaintiffs have pleaded that Mr. Langstaff is part of a conspiracy with the other Defendants to defame the Plaintiffs, these allegations are meritless, vexatious, and have been made in bad faith”; and

(b) “The Plaintiffs have brought this action, in whole or in part, to deter the Defendants, the media, participants in the capital markets, and the public at large from commenting or scrutinizing the Plaintiffs’ business activities and performance…. Mr. Langstaff pleads that the Plaintiffs’ conduct is unlawful and amounts to an abuse of process”.

[39] On cross-examination, Mr. Langstaff admitted that, as of January 15, 2018, he believed or understood that:

(a) Glassman was the Chief Executive Officer and a controlling shareholder of Catalyst, and the Chief Executive Officer and an indirectly controlling shareholder of Callidus;

(b) Riley was the Managing Director and Chief Operating Officer of Catalyst, and a Corporate Secretary of Callidus;

(c) De Alba was a Managing Director and Partner of Catalyst;

(d) Canaccord’s decision to terminate Mr. Langstaff was in whole or in part as the result of pressure placed on members of its senior management or any one of them by representatives of Catalyst and Callidus (Glassman, De Alba, and Riley), who were also clients of Canaccord;

(e) At a meeting with Jason Melbourne (Head of Institutional Equity Sales at Canaccord), on August 16, 2017, Mr. Langstaff was advised of a meeting between De Alba and Chris Blackwell (Head of Investment Banking at Canaccord), and during the meeting, De Alba told Blackwell that: (i) Catalyst had made a complaint to the OSC regarding an alleged short-selling attack on the stock of Callidus; (ii) Langstaff was currently under investigation by the OSC for his alleged role in the short-selling attack; and (iii) there was a piece of business that Canaccord was hoping to do with Catalyst and that Mr. Langstaff’s continued employment would be an impediment to Catalyst awarding that business to Canaccord;

(f) At a meeting on September 6, 2017, Melbourne advised Mr. Langstaff of a meeting between Glassman and Dan Daviau (President and CEO of Canaccord), and during the meeting, Glassman alleged that Mr. Langstaff had engaged in “improper conduct in relation to Callidus”. During the same meeting, Patrick Burke (President of Capital Markets at Canaccord) advised Mr. Langstaff that several representatives of the plaintiffs, including but not limited to Riley and Glassman, alleged to Daviau and Canaccord’s internal legal counsel and possibly others that Mr. Langstaff was part of the group they called the “Wolfpack” which allegedly conspired to conduct a short-selling attack as against Callidus;

(g) After Mr. Langstaff’s termination, Melbourne told Langstaff that, among other things: (i) his employment was terminated to insulate Canaccord from the litigation that Glassman, De Alba, and Riley had threatened to commence against Canaccord; (ii) Glassman had induced Daviau to terminate Mr. Langstaff’s employment; (iii) Melbourne and Burke had strenuously objected to the decision to terminate Mr. Langstaff’s employment; and (iv) there was no evidence of any wrongdoing by Mr. Langstaff in the internal investigation Canaccord conducted;

(h) After Mr. Langstaff’s termination, Burke told Langstaff that Daviau had directed Mr. Langstaff’s termination because Daviau “had a gun to his head.” (i.e., Daviau was aware that this action was pending and that Canaccord would be named as a party to the main action unless it took steps to terminate Mr. Langstaff’s employment);

(i) The course of conduct by Catalyst and Callidus continued even after they succeeded in securing Mr. Langstaff’s termination. Catalyst and Callidus directly or indirectly engaged the private investigation and/or litigation support firm, Black Cube, and possibly others to contact Langstaff under false pretenses and claim it was interested in interviewing him for a job. Mr. Langstaff subsequently discovered that the individual who had contacted him was in fact a representative of Black Cube, a private investigative firm staffed with former Mossad and Israeli Defence Force intelligence operatives. Catalyst and Callidus retained Black Cube to use false pretenses to elicit confidential information that could be used to their advantage during litigation; intimidate or discredit the defendants, including Mr. Langstaff; and for other improper purposes; and

(j) Mr. Langstaff’s stress, anxiety, loss of sleep, and other physical manifestations of stress were the direct result of Catalyst and Callidus’ conduct, which included the use of Black Cube.

[40] I am conscious of the fact that crossing the line from allegations of corporate wrongdoing to allegations of wrongdoing by individual employees, officers and directors requires a particular level of conduct which, quite properly, parties should be cautious about alleging without a proper foundation. Among other things one could ask, if Senior Management had been added as parties in the first instance, would that pleading have been struck out as overreach or insufficiently supported by allegations of particular fact going to the personal liability of Senior Management?

[41] This case does not involve a close call. As set out above, almost nothing has changed in the nature of the substantive allegations. The pleaded allegations made in the first counterclaim are a sufficient basis to support the proposed allegations against Senior Management personally. The problem is not that the proposed amendments involve insufficient particularity to plead a claim of personal liability. The problem is that Mr. Langstaff is seeking to add Senior Management as parties after the expiry of the two year limitation period. This is, on its face, prohibited by s. 21(1) of the Act. The original pleading in 2018 and as amended in 2019 contained sufficient allegations to support a claim against Senior Management personally. In the circumstances, I am compelled to conclude that Mr. Langstaff had knowledge of material facts from which a plausible inference of personal liability of Senior Management could be drawn in 2018, or at least by September 2019. This is apparent from the allegations that were expressly made in the 2018 counterclaim and in the September 2019 amendments. The limitation period for adding Senior Management as parties expired in January 2020 (or September 2021). The tolling agreement expressly provides that it does not toll any limitation period which had already expired as of June 15, 2022.

[42] For these reasons, the motion for leave to amend to add Senior Management as parties to Mr. Langstaff’s counterclaim is dismissed.

Increased Exemplary Damages

[43] There was no serious opposition to this aspect of the motion for leave to amend. There is no suggestion that an increase in the quantum of damages is barred by the Limitations Act or otherwise imposes irremediable prejudice on the defendants by counterclaim. Leave is granted for this amendment.

Defamation, Unlawful Means and Intrusion on Seclusion

[44] Apart from the question of adding Senior Management (who would be subject to these claims), Catalyst opposes the proposed amendments to add these “new” causes of action on the basis that they are being added to the counterclaim after the limitation period for making a claim has expired.

[45] These claims, unlike the proposal to add new parties, are not subject to s. 21(1) of the Limitations Act.

[46] Under the Limitations Act, a “claim” is defined to mean “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”. This is consistent with the concept of a cause of action, which does not turn on labels, such as “negligence” or “nuisance” but on the pleading of material facts which give rise to a claim or remedy known to the law. Thus, courts have consistently held that if the necessary material facts are pleaded within the limitation period, the adding of a new theory of liability based on these facts is not barred by the Act.

[47] Mr. Langstaff’s existing amended counterclaim as of September 2019 pleads material facts (i.e., a claim to remedy an injury, loss or damage that occurred as a result of an act or omission) capable of supporting claims based on defamation, unlawful means and intrusion on seclusion. Amending the counterclaim to plead these three specific theories of liability does not, in the circumstances, fall afoul of the Limitations Act. The motion for leave to amend to add these additional theories of liability is granted.

Conclusion

[48] The motion for leave to amend is granted in part. Leave to add Senior Management as party defendants is denied. Leave to amend to increase exemplary damages and to plead defamation, unlawful means and intrusion on seclusion is granted.

Costs

[49] If successful, Mr. Langstaff would have sought $12,000 in partial indemnity costs. The cost summary filed by Catalyst seeks $45,000 in partial indemnity costs.

[50] There was divided success, although the bulk of the time and effort, before and during oral argument, was devoted to the issue of adding Senior Management as party defendants.

[51] I find that $12,000 (all inclusive partial indemnity) costs payable by Mr. Langstaff to Catalyst is an appropriate award in all of the circumstances.

Penny J. Date: November 22, 2024