Goska Nowak Professional Corporation v. Robinson, 2011 ABQB 385

Court of Queen ’ s Bench of Alberta Citation: Goska Nowak Professional Corporation v. Robinson, 2011 ABQB 385 Date: 20110621 Docket: 0801 12193 Registry: Calgary Between: Goska Nowak Professional Corporation and Goska J. Nowak Professional Corporation Plaintiffs(Respondents) - and - Robbie Robinson, R. Robinson Professional Corporation and James E. Reid Professional Corporation Defendants(Appellants) _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice T.F. McMahon _______________________________________________________ [ 1 ] This is an appeal from a Master’s Order permitting amendments to a Statement of Claim. Background

[ 2 ] The parties are the professional corporations of dentists practising in Calgary. One of the dentists is named as a Defendant personally. [ 3 ] The Defendant Robbie Robinson (“Robinson”) practised dentistry pursuant to an agreement dated November 1, 2001 between his professional corporation R. Robinson Professional Corporation (“Robinson PC”) and a body corporate called Robbie Robinson Professional Corporation (“Robbie Robinson PC”). [ 4 ] That agreement is called “the Associate Agreement” in the pleadings. [ 5 ] Goska Nowak is a dentist.

She practised dentistry through her professional corporation, the Plaintiff Goska Nowak Professional Corporation (“Nowak PC”). [ 6 ] On or about September 1, 2002, Nowak PC purchased all the shares of Robbie Robinson PC. [ 7 ] In 2005, Robbie Robinson PC was dissolved. [ 8 ] The Associate Agreement was terminated on May 7, 2008. That then was the last day that Robinson practised dentistry under that agreement. [ 9 ] It is alleged that sometime in September 2008, Robinson began practising dentistry with the Defendant James E.

Reid Professional Corporation (“Reid PC”). [ 10 ] Soon thereafter, Nowak PC alleges it learned of Robinson’s new practise being carried out in the same building. [ 11 ] On or about October 1, 2008, the Plaintiff Goska J. Nowak Professional Corporation (“GJ Nowak PC”) purchased all the assets of Nowak PC. GJ Nowak PC continues to carry on the former dental practice of Nowak PC. [ 12 ] On October 3, 2008, this action was commenced with both Nowak PC and GJ Nowak PC named as Plaintiffs.

Named as Defendants were Robinson personally, Reid PC and Robinson PC. [ 13 ] It is alleged that the Associate Agreement contained a non-competition clause restricting Robinson from practising dentistry within five kilometres of his former practice and for a period of two years. [ 14 ] In January 2009, both Plaintiffs brought an injunction application alleging a breach of the Associate Agreement. That application was heard and dismissed in October 2009.

The reasons for the dismissal were that the Plaintiffs had not shown a strong prima facie case as to the enforceability of the non-competition clause in view of the purported novation or assignment of the Associate Agreement without the knowledge or consent of Robinson: unreported decision of Strekaf, J dated October 20, 2009, Action No. 0801- 12193. [ 15 ] At some point, Nowak PC changed its name to 943349 Alberta Ltd. [ 16 ] On May 20, 2010, Robbie Robinson PC was revived and its name changed to 111571 Alberta Corporation.

[ 17 ] On September 1, 2010, 943349 Alberta Ltd. and 111571 Alberta Corporation were amalgamated with GJ Nowak PC under the latter’s name. [ 18 ] It is acknowledged that the amalgamation was done in order to deal with the notice issue raised on the injunction application. Amendment Motion [ 19 ] After the amalgamation, this amendment application was successfully brought before a Master by the Plaintiffs Nowak PC and GJ Nowak PC.

The Amended Statement of Claim would plead the amalgamation of the former Nowak PC and the former Robbie Robinson PC into GJ Nowak PC and remove Nowak PC as one of the Plaintiffs. [ 20 ] The Amendment would also plead additional particulars of the allegations against Reid PC. [ 21 ] Several other paragraphs in the Statement of Claim would be slightly reworded. [ 22 ] On this appeal, Robinson, Robinson PC and Reid PC argue that the Master erred in allowing the amendments in that: 1.

Robinson and Robinson PC acquired certain rights upon the dissolution of Robbie Robinson PC and so could invoke section 208(4) of the Business Corporations Act , RSA 2000, c B-9. 2. The proposed amendments suggest new facts which must be supported by evidence and which were not so supported. 3. The amalgamation was an improper attempt to circumvent or answer a perceived issue arising from Robinson’s non-consent to the assignment of the Associate Agreement. 4.

Costs should have been awarded against the parties seeking the amendment notwithstanding the outcome of the amendment motion. [ 23 ] All parties agree that no limitations issues arise. [ 24 ] There was no dispute as to the standard of review based upon Dickey v. Pep Homes Ltd. , 2006 ABCA 402 .

Statutory Provisions [ 25 ] Relating to the corporate restructuring, the parties cite the following provisions of the Business Corporations Act : 208(4) A corporation is revived on the date shown in the certificate of revival and, subject to any reasonable terms that the Registrar may impose and to rights acquired by any person prior to the revival, the corporation is deemed to have continued in existence as if it had not been dissolved. 181 Two or more corporations, including holding and subsidiary corporations, may amalgamate and continue as one corporation. 186 Subject to

section 15.6, on the date shown in a certificate of amalgamation

(

a) the amalgamation of the amalgamating corporations and their continuance as one corporation become effective, (

b) the property of each amalgamating corporation continues to be the property of the amalgamated corporation, (

c) the amalgamated corporation continues to be liable for the obligations of each amalgamating corporation, (

d) an existing cause of action, claim or liability to prosecution is unaffected, (

e) a civil, criminal or administrative action or proceeding pending by or against an amalgamating corporation may be continued to beprosecuted by or against the amalgamated corporation, (

f) a conviction against, or ruling, order or judgment in favour of or against, an amalgamating corporation may be enforced by or againstthe amalgamated corporation, and (

g) the articles of amalgamation are deemed to be the articles of incorporation of the amalgamated corporation and the certificate ofamalgamation is deemed to be the certificate of incorporation of the amalgamated corporation. [26] Reference was also made to Rule 3.66: 3.66 The costs, if any, as a result of an amendment to a pleading are to be borne by the party filing the amendment unless (

a) the amendment is a response to an amended pleading, or (

b) the Court otherwise orders. Analysis [27] Section 208(4) protects “rights acquired by any person prior to the revival”.

The “rights” to which the Appellants refer is thefact that the corporate bodies named as Plaintiffs in the original Statement of Claim faced a defence that neither of them were a party tothe Associate Agreement and neither of them had the consent of Robinson to an assignment of that agreement from Robbie Robinson PCto either of them. [28] The revival of Robbie Robinson PC, which was a party to the Associate Agreement, and its amalgamation into the PlaintiffGJ Nowak PC was intended to answer that issue. Whether it does or not is for a trial judge to decide.

However, the potential of thatdefence is not an acquired right contemplated by Section 208(4) such as to preclude an amendment. GJ Nowak PC is entitled to plead therevival and the amalgamation and rely upon

Section 186. The success of that plea is for a trial judge to determine. [29] The Appellants here also argue that the fact of the revival and the amalgamation was insufficiently evidenced only by theaffidavit of a legal assistant who had no additional relevant knowledge. They rely upon authorities such as Crown Life Assurance Co v.A.E. Lepage (Ont.) Ltd., 1989 CarsellAlta 800 and Firemaster Oilfield Services Ltd. v. Safety Boss (Canada)

(1993) Ltd., (AB KB), 183 A.R. 155. [30] Those cases, however, dealt with amendments that required evidence, such as the introduction of new parties or the allegationof new facts of substance. Not all amendments must be supported by evidence. Here the fact of the revival and the amalgamation isevidenced by the corporate searches obtained from Alberta Corporate Registration System. They get into evidence as an exhibit to theaffidavit of a legal assistant but they carry their own weight as official records.

Why the revival and amalgamation was done may be asubject for questioning but it is not a prerequisite to the amendment. In any event, the reason for the revival and amalgamation isobvious, and admitted, that is, to bring the proper party before the Court.

[31] The proposed amendments to paragraph 6 and 7 of the Statement of Claim are not substantially different from the originalStatement of Claim. [32] The proposed amendments to paragraph 10 and 12 regarding the relationship between Robinson and Reid PC are based uponthe answers on questioning and undertakings of Robinson himself and the affidavit of Dr. Reid. Costs on the Amendment Motion [33] The Master awarded costs of the Amendment Application to the parties applying for the amendment on the basis that theyhad been successful.

The Appellants here argue that Rule 3.66 should have applied. [34] The Master seemed to interpret Rule 3.66 as applying only to steps subsequent to the amendment application (page 45, line24-29 of the transcript) and not to the amendment motion itself. Indeed, he seems to say at page 49, line 27-34, that if the defendantunsuccessfully resists an amendment application then the defendant must pay the costs of that application. With respect to the learnedMaster, that negates the purpose of Rule 3.66 which is to encourage litigants to get their pleadings right the first time.

The Master did notpurport to exercise his discretion pursuant to Rule 3.66(b). [35] I am therefore of the view that the Master erred in his

interpretation of Rule 3.66. My conclusion is supported by twodecisions of this Court which awarded costs against the successful amending party: Trimway Wear Plate v. Way,2008 CarsellAlta 1793and 869120 Alberta Ltd. v. B&G Energy Ltd., 2011 ABQB 209 , 2011 CarswellAlta 512. [36] Accordingly Robinson and Robinson PC will have one set of costs against GJ Nowak PC for the amended application,contested with briefs, in the same column of

Schedule C as awarded by the Master. [37] There will be no costs for the unnecessary cross-examination on the affidavit of the Respondent’s legal assistant. [38] Reid PC was properly separated represented at the amendment motion and some of the amendments were directedspecifically towards that party. Accordingly, Reid PC will also have costs against GJ Nowak PC on the same terms as above. Costs of the Appeal [39] Rule 3.66 does not extend to an unsuccessful appeal by a non-amending party. That party, subject to Rule 3.66(

b) may getone cost-free opportunity to resist the amendment but not two. [40] On this appeal, the non-amending party was unsuccessful on the substance of the appeal but successful on the costs appeal.The costs appeal was not insignificant. Given the divided success, there will be no costs to any party on the appeal. Conclusion [41] The appeal from the Master’s Order permitting the amendments to the Statement of Claim is dismissed. [42] The appeal from the Master’s Order as to costs is allowed on the terms above described.

Heard on the 14 th day of June, 2011. Dated at the City of Calgary, Alberta this 20 th day of June, 2011. T.F. McMahon J.C.Q.B.A. Appearances: P. Peacock, Q.C. G. Stephen Panunto Peacock Linder & Halt LLP for the Plaintiffs (Respondents) Mr. B. Adam E. Brener Leon Bickman Brener for the Defendant (Appellant) Robbie Robinson Mr. Peter J. Major McMillan LLP for the Defendant (Appellant) James E. Reid Professional Corporation