



COURT OF APPEAL FOR ONTARIO

CITATION: Klassen v. Beausoleil, 2019 ONCA 407

DATE: 20190517

DOCKET: C65963

van Rensburg, Benotto and Harvison Young JJ.A.

BETWEEN

Henry Klassen

Plaintiff
(Appellant)

and

Robert Beausoleil and 1117726 Ontario Inc. o/a
    Roberts Boxed Meats

Defendants
(Respondents)

Rohit Kumar, for the appellant

J. Sebastian Winny, for the respondents

Heard: March 14, 2019

On appeal from the order of
    Justice David A. Broad of the Superior Court of Justice, dated September 6,
    2018, with reasons reported at 2018 ONSC 5237.

Harvison Young J.A.:

[1]

This is an appeal from an order denying the appellant leave to amend his
    Statement of Claim pursuant to r. 26.01 of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194. The central issue is whether the appellants proposed
    amendments to his Statement of Claim constitute a new cause of action that is
    statute-barred or whether the amendments seek alternate relief based on material
    facts that already form part of the claim. For the reasons that follow, I
    conclude that the proposed amendments do not constitute a new cause of action,
    and that the appeal should be allowed.

The background facts

[2]

The appellant Henry Klassen was a 33% shareholder (holding 100 shares)
    of the respondent corporation. In 1996, he agreed to sell his shares pursuant
    to a Share Purchase Agreement (the 1996 SPA) in exchange for: a) the
    repayment of certain back wages owing in the amount of approximately $25,000;
    and b) amounts owed pursuant to a promissory note in the amount of
    approximately $20,000.

[3]

The 1996 SPA provided that the appellants shares would be held in
    escrow pursuant to an Escrow Agreement (the 1996 Escrow Agreement) pending
    repayment of the back wages and the amounts owing under the promissory note. Upon
    satisfaction of these escrow release conditions, the purchasers would be
    entitled to seek the release of the shares and would gain legal title to the
    shares.

[4]

The respondent Robert Beausoleil is the ultimate purchaser of the shares
    sold by Mr. Klassen in 1996, having purchased all of the outstanding shares of
    the company in 1997. The Share Purchase Agreement entered into at that time
    (the 1997 SPA) provided that Mr. Beausoleil, in purchasing the shares, also
    assumed responsibility for payment of the back wages and amounts owing on the
    promissory note. The appellants 100 shares would continue to be held in escrow
    pending satisfaction of the escrow release conditions. To this end the
    appellant, Mr. Beausoleil and the two other shareholders executed an Amended
    Escrow Agreement (the 1997 Escrow Agreement), which, in effect, continued the
    terms of the 1996 Escrow Agreement.

[5]

What happened over the next 18 years is very much in issue between the
    parties. The heart of the appellants claim is that, shortly after Mr.
    Beausoleil purchased the shares in the corporation in 1997, they entered into
    an oral agreement under which he and Mr. Beausoleil would each become 50% co-equal
    shareholders in the corporation. The appellant also alleges that, for various
    reasons, Mr. Beausoleil and the corporation did not pay the back wages owing or
    the amounts owed under the promissory note.

[6]

The dispute allegedly came to a head in late 2014, when Mr. Beausoleil
    denied that the appellant was a shareholder of the corporation. For his part,
    Mr. Beausoleil maintains that he has been the sole shareholder, director and
    officer of the corporation since purchasing all outstanding shares in 1997.

[7]

In 2015, the appellant commenced this action against the corporation and
    Mr. Beausoleil, as the ultimate purchaser of his shares, for breach of
    contract, breach of trust, unjust enrichment and seeking relief under s. 248 of
    the
Business Corporations Act
, R.S.O., c. B.16 for the respondents
    allegedly oppressive conduct.

[8]

In August 2017, the respondents brought a motion for summary judgment,
    seeking the dismissal of the appellants action in its entirety or, in the
    alternative, dismissing the appellants claim to a 50% ownership interest,
    claim for amounts owing on the promissory note, and claim for back wages. One
    of the core arguments raised by the respondents was that the appellants
    various claims were time-barred. The appellant responded, seeking the dismissal
    of the respondents summary judgment motion or, in the alternative, judgment in
    his favor.

[9]

The motion judge, Sloan J., granted summary judgment to the respondents
    on the promissory note, based on the respondents payment of the amount owing.
[1]
He determined that the appellant did not have any further claim for interest
    owing on the promissory note. The motion judge also dismissed the appellants
    claims in relation to certain other debts.

[10]

However,
    the motion judge declined to grant summary judgment on the appellants claims
    relating to the back wages and oral agreement for a 50% ownership interest in
    the corporation. It is clear from the motion judges endorsement that he viewed
    the respondents limitation defence to both claims as a live issue for trial. In
    particular, he found that since both claims and limitations defences turned on
    issues of credibility (and the alleged existence of numerous oral agreements),
    it was necessary to direct the claims to proceed to trial.

[11]

In
    the course of the summary judgment motion, counsel for the appellant argued that
    the appellant remained a 33% shareholder by virtue of the respondents failure
    to satisfy the escrow conditions. Counsel for the respondents objected on the
    basis that this theory was not pled in the appellants Statement of Claim. The
    motion judge did not deal with this issue in his endorsement. Counsel for the
    appellant advised at the hearing of the appeal that this exchange between
    counsel at the summary judgment hearing was an important impetus for the
    subsequent r. 26.01 motion.

[12]

Significantly,
    for the purpose of this appeal, the appellants 100 shares remain in escrow. In
    October 2017, following the summary judgment motion, the appellants counsel
    wrote to the escrow agent requesting the return of the appellants shares, on
    the basis that the escrow release conditions under the 1996 Escrow Agreement
    and 1997 Escrow Agreement had not been satisfied. The respondents counsel
    objected. The escrow agent refused to release the shares in light of the ongoing
    litigation between the parties.

[13]

In
    January 2018, the appellant brought a motion (now the subject of this appeal)
    pursuant to r. 26.01 of the
Rules
for leave to amend his Statement of
    Claim. In particular, the appellant sought to amend his Statement of Claim to
    plead, in the alternative to his request for a declaration of a 50% ownership
    interest in the corporation, a request for a declaration that he had a 33%
    ownership interest in the corporation. This requested alternative relief is
    premised on the theory that the escrow release conditions in the 1996 Escrow
    Agreement and 1997 Escrow Agreement remain unsatisfied and the appellants
    shares remain in escrow. If the appellants shares remain in escrow, and he is
    entitled to seek their return, he remains a 33% shareholder in the corporation
    (assuming the corporation has not issued any additional shares). The appellant
    also sought to make certain other minor amendments to his Statement of Claim,
    which are not at issue in this appeal.

The motion judges decision

[14]

The
    motion judge granted leave to the appellant to make most of the amendments
    sought, but refused to grant leave for the appellant to assert the alternative
    claim for a 33% ownership interest in the corporation. In this vein, he
    rejected the appellants submission that the claim for a 33% legal ownership
    interest (based on the 1996 SPA, 1996 Escrow Agreement, 1997 SPA, and 1997
    Escrow Agreement) was merely a claim for alternative relief, or the assertion
    of a different legal conclusion, based on no new facts and not going beyond the
    factual matrix of the original claims. The motion judge stated that the
    appellant had conceded that, if the alternative claim to a 33% ownership
    interest was the assertion of a new cause of action, it was statute-barred by
    the expiration of the relevant limitation period. As a result, he refused to
    allow the amendments relating to that claim.

[15]

In
    the motion judges view, the appellants claim to a 50% ownership interest in
    the corporation rested squarely on the alleged oral agreement between the
    appellant and the respondents. The factual basis for this was a series of
    alleged representations made by the respondents: see paras. 16-19. Thus, as
    currently constituted, the appellants claim to an ownership interest in the
    corporation was
not
premised on the 1997 SPA or
    any other written document: at para. 19.

[16]

The
    motion judge was also of the view that the sole cause of action relating to the
    assertion of an ownership interest in the corporation was the claim for breach
    of the oral agreement: at para. 20. By contrast, the claim to a 33% ownership
    interest in the corporation was based upon an entirely different set of written
    agreements, such that the amendment did not consist of an alternative claim for
    relief, or a statement of a different legal conclusion based on no new facts,
    and went far beyond the factual matrix from which the original claim to
    ownership arose: at para. 21. While the 1996 SPA, 1996 Escrow Agreement and
    1997 SPA were referred to in the Statement of Claim in order to provide background
    facts preceding the oral agreement, those written agreements did not provide
    any necessary support for the claim to a 50% ownership interest: at para. 22.

[17]

As
    a result, the motion judge denied the appellant leave to amend his Statement of
    Claim to assert the alternative claim to a 33% ownership interest. However, the
    motion judge, with only limited analysis, allowed the appellant to make the
    balance of the amendments sought on the motion. This included an amendment to
    plead that the conditions precedent for the transfer of the Klassen Escrow
    Shares have not been satisfied [and as] a result, Beausoleil has not acquired,
    and the Plaintiff is entitled to a return of, the Klassen Escrow Shares.

The arguments on appeal

[18]

The
    appellant raises three core arguments on appeal. First, he argues that the
    trial judge erred in concluding that the alternative pleading of a 33%
    ownership interest was a new cause of action, rather than a claim for
    alternative relief or a different legal conclusion drawn from the same set of
    facts. He submits that the claim to a 33% ownership interest is a legal
    conclusion which flows from the respondents failure to satisfy the applicable
    release escrow conditions. He argues that the Statement of Claim clearly pled
    that the escrow release conditions (payment of the back wages and amounts owed
    on the promissory note) had not been satisfied.

[19]

Similarly,
    the appellant argues that the motion judge erred in requiring the alternative
    pleading of a 33% ownership interest to be grounded in the purported oral
    agreement, rather than in the broader factual matrix, in order to be a
    non-statute-barred amendment. Further, an amendment allowed by the motion judge
     namely, permitting the appellant to seek the return of his shares in escrow 
    is inconsistent with his order denying leave to assert a claim to a 33%
    ownership interest.

[20]

Second,
    the appellant argues that the motion judge erred in attributing to the
    appellant an admission that the applicable limitation periods had expired, such
    that the amendment would only be permissible if it was a claim for alternative
    relief based on an existing cause of action. The appellant argues that the applicable
    limitation period did not begin to run until October 2017, when the appellants
    request that his shares be released from escrow was refused.

[21]

Third,
    the appellant asserts that the respondents would not suffer any presumed or
    actual non-compensable prejudice  apart from the alleged expiry of a
    limitation period  as a consequence of the amendment. As a result, the amendment
    must be allowed pursuant to r. 26.01 of the
Rules
.

[22]

In
    response, the respondents argue that to allow the appellant leave to plead the
    alternative claim to a 33% ownership interest would fundamentally change the
    nature of the litigation, some 22 years after the relevant events in question.
    They argue, in substance, that the underlying claim to a 33% ownership interest
    and request for the return of the appellants shares currently held in escrow
    is incurably time-barred. In this vein, they argue that the appellant
    discovered his claim for breach of the 1996 SPA, 1996 Escrow Agreement and 1997
    SPA when the corporation defaulted on payment in 1997. Thus, any claim in
    relation to the breach of those agreements is statute-barred by the expiration
    of the six-year limitation period provided by s. 45(1)(g) of the
Limitations
    Act,
R.S.O. 1990, c. L. 15 or alternatively by the transitional provisions
    under the
Limitations Act, 2002,
S.O. 2002, c. 24, Sched. B.

[23]

The
    respondents also argue that there has been extraordinary delay in seeking the
    amendments, such that a presumption of non-compensable prejudice arises. They
    point to the some 22 years that have elapsed since default in payment under the
    1996 SPA, 1996 Escrow Agreement and 1997 SPA as evincing extraordinary delay.
    In any event, the respondents argue that they will suffer actual
    non-compensable prejudice as a consequence of the amendments because, among
    other things, they made a unilateral payment to the appellant on the promissory
    note in 2016 and because a material witness has died.

Analysis

(1)

The test to be applied

[24]

I
    begin with the text of r. 26.01 of the
Rules
. It provides:

On motion at any stage
    of an action the court
shall
grant leave to amend a pleading on such
    terms as are just,
unless
prejudice would result that could not be
    compensated for by costs or an adjournment. [Emphasis added.]

[25]

The
    rule is framed in mandatory terms: the court must allow the amendment, unless
    the responding party would suffer non-compensable prejudice, the proposed
    pleading is scandalous, frivolous or vexatious, or the proposed pleading fails
    to disclose a reasonable cause of action:
158844 Ontario Ltd v. State Farm
    Fire and Casualty Co.
, 2017 ONCA 42, 135 O.R. (3d) 681, at para. 25;
Iroquois
    Falls Power Corp. v. Jacobs Canada Inc
., 2009 ONCA 517, 264 O.A.C. 220, at
    paras. 15-16.

[26]

The
    expiry of a limitation period is one form of non-compensable prejudice. A party
    cannot circumvent the operation of a limitation period by amending their
    pleadings to add additional claims after the expiry of the relevant limitation
    period:
Frohlick v. Pinkerton Canada Ltd
, 2008 ONCA 3, 88 O.R. (3d)
    401, at para. 24;
1100997 Ontario Ltd. v. North Elgin Centre Inc.
, 2016 ONCA 848, 409 D.L.R. (4th) 382,
at
    paras. 21-23;
United Food and Commercial Workers Canada, Local 175 Region 6
    v. Quality Meat Packers Holdings Limited,
2018 ONCA 671,
    at paras. 64;
Davis v. East Side Marios Barrie
, 2018 ONCA 410, at paras. 31-32
. In this regard, the
    addition of
new
statute-barred claims by way of
    an amendment is conceptually no different than issuing a new and separate Statement
    of Claim that advances a statute-barred claim (emphasis added)
:
Quality Meat Packers,
at para.
    64; citing
Frohlick
, at para. 24.

[27]

An
    amendment will be statute-barred if it seeks to assert a new cause of action
    after the expiry of the applicable limitation period:
North Elgin
, at
    paras. 19-23, 33;
Quality Meat Packers
, at para. 65. In this regard, the
    case law discloses a factually oriented approach to the concept of a cause
    of action  namely, a factual situation the existence of which entitles one
    person to obtain from the court a remedy against another person:
North
    Elgin
, at para. 19;
Quality Meat Packers
, at para. 65.

[28]

An
    amendment does not assert a new cause of action  and therefore is not impermissibly
    statute-barred  if the original pleading  contains all the facts necessary
    to support the amendments  [such that] the amendments simply claim additional
    forms of relief, or clarify the relief sought, based on the same facts as
    originally pleaded:
Dee Ferraro,
at paras. 4, 13-14;
North Elgin
    Centre Inc
., at paras. 20-21;
East Side Marios Barrie
, at paras.
    31-32;
Quality Meat Packers
, at para. 65. Put somewhat differently, 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:
North Elgin
, at para. 23.

[29]

The
    relevant principle is summarized in Paul M. Perell & John W. Morden,
The
    Law of Civil Procedure in Ontario
, 3rd ed. (Toronto: LexisNexis, 2017), at
    p. 186:

A new cause of action is not
    asserted if the amendment pleads an alternative claim for relief out of the
    same facts previously pleaded and no new facts are relied upon, or amount
    simply to different legal conclusions drawn from the same set of facts, or
    simply provide particulars of an allegation already pled or additional facts
    upon [which] the original right of action is based.
[2]

[30]

In
    the course of this exercise, it is important to bear in mind the general
    principle that, on this type of pleadings motion, it is necessary to read the
    original Statement of Claim generously and with some allowance for drafting
    deficiencies:
Farmers Oil and Gas Inc. v. Ontario (Ministry of Natural
    Resources)
, 2016 ONSC 6359, 134 O.R. (3d) 390 (Div. Ct.), at para. 23.

[31]

Finally,
    the court may refuse an amendment where it would cause non-compensable
    prejudice. The prejudice must flow from the amendment and not some other source:
Iroquois Falls,
at para. 20. At some point the delay in seeking an
    amendment will be so lengthy, and the justification so inadequate, that
    prejudice to the responding party is presumed. In this event, the onus to rebut
    the presumed prejudice lies with the moving party:
State Farm
, at para.
    25.

[32]

Alternatively,
    the responding party may resist the amendment by proving actual prejudice 
    i.e. by leading evidence that the responding party has lost an opportunity in
    the litigation that cannot be compensated by an adjournment or an award of costs
    as a consequence of the amendment. It is incumbent on the responding party to
    provide specific details of the alleged prejudice:
State Farm
, at
    para. 25.

[33]

Irrespective
    of the form of prejudice alleged, there must be a causal connection between the
    non-compensable prejudice and the amendment. The prejudice must flow from the
    amendment and not from some other source:
State Farm
, at para. 25.

[34]

Bearing
    in mind these principles, the framework to determine the issues raised by this
    appeal is as follows:

·

Are the proposed amendments to assert a claim to a 33% ownership
    interest the assertion of a new cause of action? If the proposed amendments are
    the assertion of a new cause of action, are the amendments statute-barred?

·

Irrespective of the above, is this a case where non-compensable
    prejudice will arise as a consequence of the amendments?

(2)

The proposed amendments do not assert a new cause of action

[35]

The
    first issue is whether the proposed amendments to assert an alternative claim
    to a 33% ownership interest is the assertion of a new cause of action and statute-barred
    by the expiration of a limitation period. In my view, the proposed amendments
    do not assert a new cause of action.

[36]

With
    respect, the motion judge erred in principle in his approach to the motion for
    leave to amend under r. 26.01 of the
Rules
. In suggesting that the
    1996 SPA, 1996 Escrow Agreement and 1997 SPA were pled solely as background
    to the 50% ownership interest claim, the motion judge failed to appreciate that
    the appellant had explicitly asserted claims for breach of contract and breach
    of trust in relation to the those agreements. Reading the appellants Statement
    of Claim generously, the proposed amendments do not amount to the assertion of
    a new cause of action; rather, the alternative claim to a 33% ownership
    interest is an alternative claim for relief, or an alternative legal
    conclusion, flowing from the material facts as original pled.

[37]

I
    turn now to the content of the appellants Statement of Claim and the material
    facts pled therein. Reading the Statement of Claim generously and as a whole,
    the essential factual matrix giving rise to the appellants action is his
    decision to sell his shares in 1996, the respondents failure to pay him for
    his shares, and the oral agreements allegedly made between the parties,
    including the oral agreement that he would become a 50% shareholder. As pled,
    these issues are all interwoven.

[38]

While
    the allegation that the appellant is a 50% shareholder of the corporation has,
    for obvious reasons, been the predominant focus of the litigation to date, it
    is not the exclusive claim set out in the original Statement of Claim. The
    appellant has also expressly pled claims for breach of contract relating to the
    1996 SPA, the 1996 Escrow Agreement and 1997 SPA,
in addition
to the
    purported breach of the oral agreement. Thus, the various written agreements
    referred to in the Statement of Claim not only provide the necessary material
    facts and background relating to the alleged breach of the oral agreement, but
    also the material facts necessary to ground a claim for breach of the written
    agreements themselves.

[39]

In
    this vein, the appellants original Statement of Claim expressly pleads and
    relies on the 1996 SPA and 1996 Escrow Agreement, and sets out the material
    terms in respect of both agreements (see Statement of Claim, at paras. 9-11).
    The Statement of Claim similarly expressly pleads and relies on the terms of
    the 1997 SPA, under which Mr. Beausoleil is said to have assumed the rights and
    obligations relating to the 1996 SPA and 1996 Escrow Agreement (see Statement
    of Claim, at paras. 15-16).

[40]

The
    appellant then expressly pleads that the respondents have breached their
    obligations under the 1996 SPA, 1996 Escrow Agreement, 1997 SPA, and oral
    agreement, in that, among other things:

·

The respondents failed, neglected and/or refused to pay the back
    wages (Statement of Claim, at para. 29(b));

·

The respondents have failed, neglected and/or refused to pay back
    the promissory note (Statement of Claim, at para. 29(c));

·

The respondents have sold, assigned, hypothecated, alienated,
    released from escrow or dealt with the Klassen Escrow Shares (i.e. the
    appellants 100 shares) in a manner contrary to the 1996 Escrow Agreement (Statement
    of Claim, at para. 29(d));

·

The respondents have failed, neglected and/or refused to pay the
    appellant for the Klassen Escrow Shares when it was due and payable, or at
    all (Statement of Claim, at para. 29(g));

·

The respondents have failed, neglected and/or refused to make
    good faith efforts to satisfy their obligations under the 1996 SPA, 1996 Escrow
    Agreement, 1997 SPA and/or the alleged oral agreement (Statement of Claim, at
    para. 29(j)); and

·

In the alternative, the appellant pleads that the foregoing
    breaches amounted to the frustration of the 1996 SPA, 1996 Escrow Agreement,
    1997 SPA or alleged oral agreement (Statement of Claim, at para. 30).

[41]

The
    appellant further pleads that the respondents are liable for breach of trust
    because the respondents appropriated or converted all or part of the Klassen
    Escrow Shares to their own use or to a use inconsistent with the 1996 Escrow
    Agreement and 1997 SPA: Statement of Claim, at para. 31.

[42]

The
    claim for relief in the original Statement of Claim expressly requests damages
    in respect of the non-payment of the promissory note and back wages, as well as
    $2 million in general damages for breach of contract and/or breach of trust.
    This relief can only be claimed in respect of the alleged breaches of the 1996
    SPA, 1996 Escrow Agreement and 1997 SPA.

[43]

In
    light of these material facts expressly set out in the Statement of Claim, the
    appellants requested amendments do not assert a new cause of action, but
    rather request alternative relief flowing from the respondents alleged breach
    of the 1996 SPA, 1996 Escrow Agreement and 1997 SPA. In the appellants
    original Statement of Claim, he expressly alleges that the respondents breached
    their contractual obligations by failing to satisfy the escrow release
    conditions  i.e. by paying the back wages and amounts owing under the
    promissory note  and sought damages in that regard. The proposed amendments do
    not seek to introduce
any
new material facts.
    Rather, the amendments seek to introduce, wherever a pleading of a 50%
    ownership interest is particularized, language to the effect of or in the
    alternative a 33% ownership interest. In effect, the appellant seeks the
    return of his shares held in escrow and a declaration that he remains a 33%
    shareholder as a consequence of the respondents breach of the 1996 SPA, 1996
    Escrow Agreement and 1997 SPA, rather than an award of damages. This is a
    quintessential example of a request for additional forms of relief, or [a
    clarification of] the relief sought, based on the same facts as originally
    pleaded:
Dee Ferraro,
at para. 4.

[44]

I
    also agree with the appellants submission that it is inconsistent for the
    motion judge to have granted leave to allow the appellant to plead an
    entitlement to the return of the shares in escrow, while denying the amendment
    to plead that he remains a 33% shareholder. These pleadings are fundamentally
    interrelated.

[45]

During
    oral argument on the appeal, counsel for the respondent forcefully argued that
    the underlying claim to the return of the shares in escrow or claim to a 33%
    ownership interest, however framed, is incurably time-barred. In this vein, the
    respondents argue that the failure to make payment on the promissory note and
    back wages in 1997 triggered the start of the applicable limitation period,
    such that any claim for breach of the 1996 SPA, 1996 Escrow Agreement and 1997
    SPA, and corresponding request for the return of the shares, is now
    statute-barred.

[46]

Whatever
    the merits of the respondents limitations arguments, it is only necessary to
    determine whether a limitation period has expired in respect of the proposed
    amendments
if
the amendments assert a new cause of
    action. I have concluded that the proposed amendments do not do so. For this
    reason, it is unnecessary to address the parties various limitation arguments arising
    from the original pleadings at this stage. It is clear that whether any or all
    of the appellants claims are time-barred will be a central issue at the
    eventual trial of this matter.

(3)

The amendments would not cause prejudice to the respondents

[47]

The
    next issue is whether the appellants delay in seeking the amendment raises a
    presumption of non-compensable prejudice or whether the respondents have
    demonstrated actual, non-compensable prejudice. For the reasons that follow, I
    conclude that the delay in seeking leave to amend, in these circumstances, does
    not raise a presumption of prejudice and that the respondents have not
    established they would otherwise suffer actual, non-compensable prejudice as a
    result of the amendments.

(4)

Presumed prejudice

[48]

The
    respondents argue that the appellants delay in seeking the amendment raises a
    presumption of non-compensable prejudice. They focus on the fact that 22 years
    have elapsed between the events giving rise to the 33% ownership claim and the
    appellant seeking leave to amend his Statement of Claim.

[49]

I
    disagree. The focus is properly on the period of delay between commencing the
    proceedings and seeking leave to amend,
not
the
    period between the underlying events in question and seeking leave to amend:
State
    Farm
, at para. 44. Here, the delay of approximately 2 years and 7 months
    between commencing the action (April 2015) and formally seeking leave to amend was
    short. Moreover, the appellant moved fairly promptly to amend his Statement of
    Claim following the summary judgment motion, when the respondents counsel
    object to the appellants position that the 33% ownership claim was
    sufficiently pled in the original Statement of Claim.

[50]

Most
    significantly, as discussed earlier in these reasons, the amendment claims
    alternative relief based on the same material facts as were originally pleaded.
    It is integrally related to the existing claim. These circumstances cannot give
    rise to any presumed prejudice.

(5)

Actual Prejudice

[51]

The
    respondents also argue that they will suffer actual, non-compensable prejudice
    as a consequence of the amendments. They point to four sources of actual
    prejudice:

·

In January 2016, the corporation made what was described by the
    respondents as a unilateral payment of approximately $46,000 on the
    promissory note. The payment was also stated to be without prejudice to the
    appellants other claims, and the respondents defence of those other claims.
    The respondents argue that if the amendments are allowed, the appellant may
    take the position that this payment is an acknowledgment and has restarted the
    limitation period to reclaim his escrowed shares. A material witness  Robert
    Detzler  has passed away. Mr. Detzler was briefly employed by the corporation.
    He was also involved in some negotiations over the course 1997-1998, along with
    Mr. Beausoleil and the appellant, with a view to combining the corporation with
    another meat supplier. The appellant argues that Mr. Detzler is a witness to
    anything that the appellant said about his ownership interest in the
    corporation during the period of 1997-1998. Mr. Detzler was examined by both
    parties in May 2017 before the summary judgment motion.

·

Relevant evidence from the corporations business records and
    corporate files have been lost, as the corporations practice is only to retain
    records for seven years.

·

The respondents have already examined the appellant for discovery
    and, as a consequence, did not have the opportunity to examine the appellant on
    the alternative claim to a 33% ownership interest.

[52]

I
    do not agree that the respondents have established that the amendments will
    cause them actual, non-compensable prejudice.

[53]

First,
    the payment on the promissory note in January 2016 was tendered on an
    unconditional basis and without prejudice to the appellants other claims. On
    the strength of that payment, the respondents were able to obtain summary
    judgment on the appellants claim for payment on the promissory note. The
    respondents made a strategic choice to make a payment on the promissory note,
    and cannot now point to that payment as establishing actual prejudice.

[54]

Second,
    I do not agree that allowing the amendments will cause the respondents to
    suffer prejudice as a consequence of Mr. Detzlers death. Mr. Detzler was not a
    party to the 1996 SPA, 1996 Escrow Agreement or 1997 SPA, nor privy to the
    negotiations leading up to the execution of those agreements. It is upon these
    agreements that the appellants alternative claim to a 33% ownership interest
    is premised. While the respondents argue that Mr. Detzler might be able to give
    evidence about anything the appellant said regarding his ownership interest in
    the corporation during 1997-1998, presumably this would have been fully
    canvassed when the parties examined Mr. Detzler prior to respondents summary
    judgment motion because the appellants ownership in the corporation was
    squarely in issue at that time.

[55]

Third,
    the alleged prejudice resulting from the destruction or loss of the business
    records does not arise as a consequence of the amendments. The evidence is that
    certain corporate records were destroyed by the corporations solicitor in the
    ordinary course prior to the commencement of the action in 2015. Mr. Beausoleil
    similarly deposes that he suspended his practice of destroying business records
    after 7 years when the action was commenced. The respondents do not suggest
    that any further records have been lost or destroyed since the action was
    commenced. Thus, the alleged prejudice does not flow from the amendments; it
    flows from the historic nature of the allegations as originally particularized
    in the Statement of Claim.

[56]

Fourth,
    any prejudice resulting from the fact that the appellant has already been
    examined for discovery can be cured by allowing for additional examinations.

[57]

As
    a result, I conclude that the respondents have not discharged their onus of
    proving actual, non-compensable prejudice.

Disposition

[58]

For
    the forgoing reasons, the appeal is allowed. The appellant is granted leave to
    amend his Statement of Claim in accordance with the draft amended Statement of
    Claim filed on the motion below. The appellant is entitled to his costs of the
    appeal in the agreed upon amount of $10,000, inclusive of HST and
    disbursements, and the costs of the motion below in the agreed upon amount of
    $6,000, inclusive of HST and disbursements.

[59]

In
    these circumstances, the respondents shall be entitled to deliver an amended statement
    of defence to address the amendments made by the appellant. The parties shall
    be entitled to conduct further examinations for discovery on matters arising
    out of the amendments. The costs of any such further examinations shall be
    determined by the ultimate trier, in the ordinary course.

Released: May 17, 2019

MLB

A. Harvison Young J.A.

I agree K. van Rensburg J.A.

I agree M.L. Benotto J.A.





[1]
In January 2016, the corporation made what was described by the respondents as
    a unilateral payment of approximately $46,000 on the promissory note. The
    payment was also stated to be without prejudice to the appellants other
    claims, and the respondents defence of those other claims.



[2]
This statement of the law has been adopted by this court
in
East
    Side Marios
, at para. 32, and in
North Elgin
, at para. 20.


