DONALD MERRITHEW PLAINTIFF v. RBC DOMINION SECURITIES INC., 2022 NBKB 241

SJC-283-2016 IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF SAINT JOHN CITATION: 2022 NBKB 241 BETWEEN: DONALD MERRITHEW PLAINTIFF -and- RBC DOMINION SECURITIES INC. DEFENDANT D E C I S I O N BEFORE: Justice William Grant HEARING HELD: Saint John, New Brunswick DATE OF HEARING: November 14, 2022 DATE OF DECISION: December 12, 2022 SUBJECT MATTER: Leave to Amend Pleading COUNSEL: Abigail Herrington for the Plaintiff James F. LeMesurier, K.C., and Erica Chestnut for the Defendant Grant, J.

BACKGROUND [1] In this action the Plaintiff, Donald Merrithew, claims damages in lieu of notice for wrongful dismissal from the Defendant, RBC Dominion Securities Inc. where he worked as an investment advisor for more than 31 years. RBC denies that he was dismissed and alleges that he resigned on or about July 4 th , 2014 or, in the alternative, that he was dismissed for cause. In either case, RBC denies that

he is entitled to any compensation and asks that the action be dismissed with costs. [2] The notice of action was issued on June 17 th , 2016 and the statement of defence was filed on August 25 th , 2016. The Plaintiff provided drafts of his affidavit of documents in January and March of 2017 and on April 3 rd , 2017 the Defendant asked for copies of the Plaintiff’s

Schedule “A” documents.

The Plaintiff didn’t provide these documents but in January of 2018 set a date for discovery on February 20 th , 2018. [3] On February 14 th , 2018 RBC advised it would not be attending the discovery as its witness was unavailable and it hadn’t received the documents it requested from the Plaintiff. [4] On February 17 th , 2018 the Plaintiff replied that he had previously advised RBC that he would send the documents once he received RBC’s draft affidavit of documents, which he had yet to receive. [5] On March 12 th , 2018 RBC sent the Plaintiff its sworn Affidavit of Documents and simultaneously requested disclosure of, among other things, any documents in Mr.

Merrithew’s action against his subsequent employer, CIBC Wood Gundy related to his becoming employed at Wood Gundy and his departure. [6] RBC also notified the Plaintiff that it would not proceed with the discovery scheduled for April 16-17 th , 2018 until it was satisfied that the Plaintiff had disclosed all documents relevant to this action. [7] Mr.

Merrithew’s action against Wood Gundy was for, among other things, breach of an implied term of his employment contract with them which he alleges required Wood Gundy to purchase his book of business when he retired. [8] In September 2020 the Plaintiff made a further attempt to

schedule Discovery but RBC replied that it was still waiting for the relevant documents from the Wood Gundy action and demanded particulars of Mr. Merrithew’s special damages which, it alleged, could mean the action should proceed under Rule 79 without Discovery. [9] On October 12 th , 2021 RBC repeated the demand for particulars and requested a transcript of Mr. Merrithew’s Discovery evidence in the Wood Gundy action. [10] On October 18 th , 2021 Mr.

Merrithew refused RBC’s request for both the documents produced by Wood Gundy in the Wood Gundy action and the transcript of his Discovery evidence in that case. [11] To date there has been no Examination for Discovery in this action. [12] On May 13 th , 2022 the Plaintiff provided particulars of his special damages and requested RBC’s consent to him amending his Statement of Claim by adding, inter alia, the following paragraph: 21. Furthermore, following his dismissal, RBC retained several of Mr. Merrithew’s clients. RBC’s retention of Mr.

Merrithew’s clients resulted in a loss of the value of his book of business. [13] He also proposes to add the following claim for relief to paragraph 22: c. special damages in an amount to be determined representing the loss of value of Mr. Merrithew’s book of business.

[14] On May 25, 2022 RBC refused to consent to the proposed amendments on the grounds that it was eight years since the terminationof Mr. Merrithew’s employment with RBC; RBC has a document retention policy of seven years; and all the facts needed to assess anyclaims the Plaintiff had against RBC were known to him when he started this action in 2016. [15] Mr. Merrithew now brings this motion requesting leave to amend his Statement of Claim pursuant to Rule 27.10(2)(

c) of the Rulesof Court based on the following grounds: 1. The pleadings in this matter were closed as of August 24, 2016; 2. The Plaintiff has requested the consent of the Defendant, RBC Dominion Securities Inc., to file an Amended Notice of Actionwith Statement of Claim, but to date the Defendant has not consented; 3. The proposed amendments are necessary for the purpose of determining the real questions in issue; 4. The pleadings have closed but the parties have not yet conducted Examinations for Discovery; and 5.

There exists no prejudice in permitting the Plaintiff to file a Notice of Action with Amended Statement of Claim attachedwhich cannot be compensated for by costs. LAW [16] Rule 27.10(2)(

c) provides that where it’s too late to amend a pleading as of right and the consent of the other parties is notforthcoming, a plaintiff may amend his pleading with leave of the Court. [17] Also relevant to this motion is Rule 27.10(1) which states: General Power of the Court

(1) Unless prejudice will result which cannot be compensated for by costs or an adjournment, the court may, at any stage of anaction, grant leave to amend any pleading on such terms as may be just and all such amendments shall be made which arenecessary for the purpose of determining the real questions in issue. [18] In ALGO Enterprises and NBP Enterprises v. REPAP New Brunswick Inc., 2013 NBQB 176 Walsh J. stated at paragraphs 18-19: [18] A leading case in the modern era is Triathlon Leasing Inc. v. Juniberry Corp., (1995) (NB CA), 157 N.B.R.(2d) 217 (C.A.). The Court of Appeal’s

interpretation of Rule 27.10 is found in the following passage: These are rules of procedure as opposed to the substantive law which defines substantial legal rights and claims. The rules arethe vehicle that enables rights to be delivered and claims to be enforced. As such, a Court should interpret and apply the rules toensure to the greatest extent possible, that there is a determination of the substantive law unless the application of the ruleswould result in serious prejudice or injustice. Accordingly, amendments to pleadings are generally allowed. ...

As a generalprinciple, therefore, the rules of procedure should not be used to prevent the delivery of rights; nor should they be used topreclude the enforcement of claims which are derived from the substantive law. … (Emphasis added by Walsh J.)

[19] This

interpretation reflects that earlier found in Moore v. State Farm Fire & Casualty Company: While leave to amend is a discretionary right, the practice is for the court to allow adjustments to pleadings whenever it can bedone without injustice to the other side and where it is necessary to determine the issues between the parties.

Generally speaking,an amendment should be allowed, however, negligent or careless may have been the first omission and however late the proposedamendment, if it can be done without injustice to the other side; and there is no injustice to the other side, if it can becompensated by costs. … (1982) (NB CA), 42 N.B.R. (2d) 667 (C.A.) at para. 10) (Emphasis added by Walsh J.) [19] In Enbridge Gas New Brunswick Inc. v. Modern Construction

(1983) Ltd., 2003 NBCA 78 Drapeau (C.J.N.B., as he then was)stated in part at paragraph 15: [15] Rule 27.10 of the Rules of Court provides that unless prejudice will result that cannot be compensated by costs or anadjournment, the court may, in its discretion, grant leave to amend any pleading on such terms as may be just. The rule inquestion goes on to obligate the court to allow any amendment that is necessary for the purpose of determining the real questionsin issue.

The jurisprudence on point supports the view that amendments to pleadings that comply with the rules of pleadingsfound in Rule 27 should be only very rarely refused. That approach is shaped by the direction articulated in Rule 1.03, namelythat the rules are to be liberally construed to secure the just, least expensive and most expeditious determination of everyproceeding on the merits. … PREJUDICE TO THE DEFENDANT [20] On the question of prejudice, RBC submits that after a long delay such as there is here, prejudice to the party opposing anamendment can be presumed.

It submits that case law suggests that a presumption arises where an amendment is sought 7-10 years afterthe events upon which the action is based. No such presumption has been cited in any New Brunswick cases so, in my view, the lengthof the delay is but one factor to be considered in this fact-specific analysis. [21] The actual prejudice alleged by RBC is found in paragraphs 8-10 of the affidavit of Thomas Gribbons where he deposes: 8.

It is my understanding and experience that RBC DS does not retain correspondence with clients and monthly client statementsfor more than seven (7) years; similarly, it is my understanding and experience internal emails are deleted or archived on aregular basis and are not retained for more than seven (7) years. 9. As more than eight years have elapsed since the events giving rise to this action, many of the documents which the Plaintiffhad requested in his counsel’s letter dated May 13, 2022 (Exhibit “F” to the Affidavit of Abigail J. Herrington sworn October 8,2022) likely no longer exist. 10.

Further, certain RBC DS personnel involved in the circumstances leading to the Plaintiff’s departure from the employ ofRBC DS are no longer with the organization and are no longer available to RBC DS, including Paul Balthazard, RBC DS’sRegional Manager at the time who provided me with input and direction in dealing with the Plaintiff.

There has also been someturn-over in the personnel in the Branch, including both administrative personnel and Investment Advisors. [22] The success or failure of the Plaintiff’s proposed new claim is more likely, in my view, to depend on the documentary evidencethan the credibility of witnesses so the fact that some persons no longer work for RBC is not, in my view, a major factor, particularly

since any such witnesses can be summonsed to Court if necessary. [23] As for RBC’s documentary retention policy, Mr. Gribbons does not assert in his affidavit that any relevant documents have beendestroyed and presumably RBC’s policy complies with the obligation in the Sedona Canada Principles to maintain a litigation hold ondocuments which are potentially relevant to ongoing litigation. Consequently, I am not satisfied that RBC will suffer any actualprejudice as a result of the proposed amendments. THE LIMITATION PERIOD [24] RBC also raises as a defence to this motion the Limitation of Actions Act, SNB 2009 c.

L-8.5 (the “LAA”) which states that noclaim shall be brought after 2 years from the day on which it is discovered. RBC says that the Plaintiff had all the information he neededto discover this proposed claim when he started this action in 2016 so he is barred from asserting it by Section 5 (1)(

a) of the LAA. Italso submits that the proposed claim is not saved by

Section 21 of the LAA, the relevant portion of which, states: 21. Despite the expiry of the relevant limitation period established by this Act, a claim may be added, through a new or anamended pleading, to a proceeding previously commenced if the added claim is related to the conduct, transaction or eventsdescribed in the original pleadings and the conditions set out in one of the following paragraphs are satisfied: (

a) the added claim is made by a party to the proceeding against another party to the proceeding and does not change thecapacity in which either party sues or is sued. [25] RBC submits that

Section 21 doesn’t apply here because the proposed added claim is not related to the conduct, transaction orevents described in the original pleadings and that a new factual and legal context would have to be pleaded. It submits that the test iswhether the factual basis of the amendment is within the four corners of the pleadings already filed and that the proposed amendmentdoes not satisfy that test because it would require evidence of events subsequent and unrelated to the Plaintiff’s termination. [26] In Farm Credit Corporation v. Pickel, 2016 NBQB 115 Glennie, J., in considering

Section 21 of the LAA stated at paragraphs113-114: [113] In Caisse Populaire Beauséjour Ltée v. Wry, 2012 NBQB 335 CanLII, the plaintiff relied on s. 21 to argue against ananticipated defence that its proposed amendments raised claims that were statute barred. Justice Rideout referenced thedecision in Lévesque v.

New Brunswick (2011) 2011 NBCA 48 where Chief Justice Drapeau acknowledged that section21 of the Limitation of Actions Act, provides for the accommodation of claims after the expiry of a limitation period. [114] Justice Rideout concluded that the New Brunswick Limitation Act was patterned after similar legislation in Alberta and,from jurisprudence arising out of the Alberta Courts, it is settled that the new claim must be related to the conduct, transactionor events described in the original pleading.

At paragraph 19, the Court cited the case of Bow Valley Insurance Servers (1992) v.Shah 2005 ABCA 304 CanLII as follows; [14] The first requirement is that the new claim be “related to the conduct, transaction or events described in the originalpleading”. The phrase “related to” has a very broad meaning: Slattery v. Slattery. For reasons given above when describing thestatement of claim here, and chain contracts, the new claim is plainly “related to the conduct, transaction or events” pleaded inthe statement of claim. [27] He then quotes from Slattery (Trustee of) v.

Slattery (SCC) where Iacobucci, J. followed the Court’s decision inNowegijick v. The Queen (SCC); [1983] 1 S.C.R. 29 at p. 39 where Dickson, J. (as he then was) stated: The words “in respect of” are, in my opinion, words of the widest possible scope. They import such meanings as ”in referenceto”, “with reference to” or “in connection with”. The phrase “in respect of” is probably the widest of any expression intended toconvey some connection between two related subject matters.

[28] Iacobucci, J. continued: In my view these comments are equally applicable to the phrase “relating to”. … [29] In this case the Plaintiff, at paragraph 17 of his Statement of Claim, refers to the method of calculating his compensation, the valueof his book business and his average annual earnings. In the proposed amendment to the Statement of Claim he claims the Defendanthas caused a loss in value to his book of business by retaining several of his clients after his termination.

I find that the allegationsconcerning the loss in value of his book of business clearly flow from his termination and are therefore “related to” the events describedin the original pleadings, particularly when that phrase is given the broad meaning adopted by the Supreme Court in the Nowegijick andSlattery cases, supra. [30] I further find that the proposed amendment falls within the four corners of the pleadings already filed and that it is saved bySection 21 (

a) of the LAA because it is related to the conduct, transaction or events described in the original pleadings, it is made by aparty to the proceeding - the Plaintiff - against another party to the proceeding - the Defendant - and it does not change the capacity inwhich either party sues or is sued. TENABILITY OF PROPOSED AMENDMENT [31] RBC also submits that the proposed amendment advances a claim that is not tenable at law, i.e. compensation for loss in value ofMr. Merrithew’s book of business. It relies on the case of Merrill Lynch Canada Inv. v.

Soost, 2010 ABCA 251 where thatCourt overturned the trial judge’s award to a dismissed investment advisor of $1.6 million for his claim for loss in the value of his bookof business. The Court of Appeal said that the award was “inextricably tied to lack of notice” for which the Plaintiff had already beencompensated by the trial judge’s award of one year’s salary for dismissal without notice. Leave to appeal to the Supreme Court ofCanada in that case was denied.

RBC submits that the proposed amendment in this case is on all fours with the Merrill Lynch decisionand should therefore not be permitted. [32] I find that the Merrill Lynch case is distinguishable from this motion because it did not involve a claim based on unjust enrichmentwhich, the Plaintiff says, is the basis of his amended claim. Furthermore, it would not be appropriate in my view for the Court, on amotion for leave to amend pleadings – which is a procedural motion – to assess the merits of the proposed new claim. That should bereserved for either a

summary judgment motion or the trial of this action. [33] RBC also refers the Court to the comments of Drapeau, C.J.N.B. (as he then was) in the Enbridge Gas case, supra., where, afterdiscussing the fact that the jurisprudence on granting leave to amend pleadings supports the view that leave should rarely be refused,stated at paragraph 16: [16] That said, an amendment to a pleading designed to bring into the mix a clearly irrelevant fact or inapplicable statutoryprovision must be denied. See Braid Estate v. Whistler River Adventures Ltd., [2000] B.C.J.

No. 2442 (S.C.; Dorgan J.)(Q.L.).While there is no specific New Brunswick rule of court on point, that proposition flows logically, inter alia, from the following:

(1) Rule 27.06(1), which requires that every pleading contain a concise statement of the material facts relied upon by the partypleading for his or her claim or defence;

(2) Rule 23.01(1)(

b) that empowers the court to strike out any pleading that does notdisclose a reasonable cause of action or defence;

(3) Rule 27.09, which permits the striking out of any pleading, or otherdocument, or any part thereof on the ground that it is frivolous or may prejudice, embarrass or delay the fair trial of the action;and

(4) Rule 27.06(14) that obligates a party to plead the specific

section that he or she is relying upon when the cause of actionor defence is founded upon

an Act. It would make no sense to allow an amendment that would then be struck out pursuant toany of those rules. (Emphasis in the original) [34] RBC therefore submits, and I agree, that the proposed amendment should be viewed through the lens of Rule 23.01(

b) whichstates:

(1) The plaintiff or a defendant may, at any time before the action is set down for trial, apply to the Court (a) … (

b) to strike out a pleading which does not disclose a reasonable cause of action or defence.

[35] In the case of Sewell v. ING Insurance Company of Canada Inc ., 2007 NBCA 42 Chief Justice Drapeau stated at paragraph 26: [26] The principles that inform the determination of a defendant’s motion to strike under Rule 23.01(1)(

b) are well settled and can be summarized as follows: (1) the only question for judicial resolution is whether it is plain and obvious that the Statement of Claim fails to disclose the essential elements of a cause of action tenable at law. That conclusion should be reached only in the clearest of cases; (2) correlatively, absent exceptional circumstances, the court must accept as proved all facts asserted in the Statement of Claim and abstain from looking beyond the pleading itself and any documents referred to therein (see Hogan v. Doiron et al. (2001), 243 N.B.R. (2d) 263 , [2001] N.B.J.

No. 382 (QL) , 2001 NBCA 97 , para. 38 and Boisvert v. LeBlanc (2005), 294 N.B.R. (2d) 325 , [2005] N.B.J. No. 561 (QL) , 2005 NBCA 115 , para. 21 ). To expand the exercise beyond those limits would operate to morph the motion under Rule 23.01(1)(

b) into an application for

summary judgment under Rule 22, the appropriate vehicle to determine prior to trial whether there is factual merit to a claim; (3) the Statement of Claim is to be read generously to accommodate drafting deficiencies; and (4) where a generous reading of its provisions fails to breath life into a pleading, all suitable amendments should be allowed (see Rule 27.10(1) and LeDrew et al. v. Conception Bay South (Town) (2003), 231 Nfld. & P.E.I.R. 61 , [2003] N.J. No. 276 (QL) , 2003 NLCA 56 ).

Those principles reflect the Legislature’s injunction that the Rules be “liberally construed to secure the just, least expensive and most expeditious determination of every proceeding on its merits”: Rule 1.03. [36] Applying the principles articulated by the Court of Appeal in Sewell , supra., I find that the proposed amended pleading discloses a reasonable cause of action on its face, i.e. a claim for damages suffered by the plaintiff due to the defendant retaining some of his clients. [37] Based on the foregoing, I hereby allow the Plaintiff’s motion and grant leave to the Plaintiff to amend his Statement of Claim as proposed in the motion. [38] As noted earlier, the Plaintiff submits that the amended claim is based on the principle of unjust enrichment which is not asserted in the draft amendment.

Following the direction of the Court of Appeal in Sewell supra., I hereby grant leave to the Plaintiff to further revise the amendment if he deems it necessary or desirable. [39] If he wishes to make further amendments to clarify that his amended claim is based on unjust enrichment he can seek the consent of the Defendant to the wording of the revised amendment, failing which he can request a resumption of this motion to resolve the final wording of the amendment. [40] Costs of this motion will be costs in the cause. [41] This motion is adjourned sine die . ________________________________ William Grant Judge of the Court King’s Bench of New Brunswick