Meditrust Healthcare v. Shoppers, (2002) 165 O.A.C. 147 (CA)

• Judge: Carthy, Weiler and Laskin, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: October 18, 2002
• Jurisdiction: Ontario
• Citations: (2002), 165 O.A.C. 147 (CA);2002 CanLII 41710 (ON CA);61 OR (3d) 786;220 DLR (4th) 611;28 BLR (3d) 163;[2002] CarswellOnt 3380;[2002] OJ No 3891 (QL);165 OAC 147

Meditrust Healthcare v. Shoppers (2002), 165 O.A.C. 147 (CA)

MLB headnote and full text

Temp. Cite: [2002] O.A.C. TBEd. OC.060

Meditrust Healthcare Inc. (plaintiff/appellant) v. Shoppers Drug Mart, a Division of Imasco Retail Inc., Shoppers Drug Mart Limited, David Bloom, Arthur Konviser, Lawrence Rosen, The Society for Concerned Pharmacists, Gloria Anderson, Caroline Bedard Smith, The Metropolitan Toronto Pharmacists' Association, Ruth Mallon, Sam Hirsch, Canadian Pharmaceutical Association, Leroy Fevang, Ontario Pharmacists' Association and Canadian Association of Chain Drug Stores (defendants/respondents)

(C36688)

Indexed As: Meditrust Healthcare Inc. v. Shoppers Drug Mart et al.

Ontario Court of Appeal

Carthy, Weiler and Laskin, JJ.A.

October 18, 2002.

Summary:

Meditrust Healthcare owned a national mail-order pharmacy business which, in order to comply with provincial laws, it operated through subsidiaries and a licensee. Meditrust sued Shoppers Drug Mart and others, alleging that they conspired to destroy its mail-order business. The defendants moved for partial summary judgment to dismiss most of Meditrust's claims.

The Ontario Superior Court, in a decision reported at [2001] O.T.C. Uned. 724, granted the motion. The court held that, for the claims in question, any damages suffered by Meditrust were not suffered by it directly, but were derivative of damages suffered by the subsidiaries and licensee. The claims were barred by the rule in Foss v. Harbottle that a shareholder did not have a cause of action for a wrong done to the corporation. Meditrust appealed.

The Ontario Court of Appeal allowed the appeal in part, and ordered that Meditrust's claim for loss of goodwill could proceed to trial.

Agency - Topic 5123

Relations between agent and third parties - Torts - Principal's right to sue for torts against agent - Meditrust owned a national mail-order pharmacy business which, in order to comply with provincial laws, it operated through subsidiaries and a licensee - Meditrust sued the defendants alleging that they conspired to destroy its mail-order business - A motions judge held that Meditrust was not the proper plaintiff - On appeal, Meditrust submitted that: it had a principal and agent relationship with its subsidiaries and licensee; where an agent entered into a contract on behalf of a principal, the principal could sue for its breach; and this proposition could be applied to tort - The Ontario Court of Appeal rejected the submissions - Meditrust cited no authority for the proposition that a principal had the right to sue in tort for harm done to its agent - See paragraphs 32 to 33.

Company Law - Topic 313

Nature of corporations - Lifting the corporate veil - Related companies - Meditrust owned a national mail-order pharmacy business which, in order to comply with provincial laws, it operated through subsidiaries and a licensee - Meditrust sued the defendants, alleging that they conspired to destroy its mail-order business - The Ontario Court of Appeal affirmed that, apart from a claim for loss of goodwill, Meditrust was not the proper plaintiff - Meditrust had to be held to the corporate structure that it had created - In rare cases, a court might disregard separate corporate entities for the benefit of innocent third parties - The court could "pierce the corporate veil" when the corporate structure had been used by it principals as a sham or to perpetrate a fraud - Meditrust could not pierce its own corporate veil - See paragraphs 29 to 31.

Company Law - Topic 320

Nature of corporations - Lifting the corporate veil - Persons entitled to - [See Company Law - Topic 313 ].

Company Law - Topic 9415

Actions by corporations - Parties - Proper plaintiff - [See both Practice - Topic 230 ].

Practice - Topic 230

Persons who can sue and be sued - Individuals and corporations - Status or standing - Shareholders - Meditrust owned a national mail-order pharmacy business which, in order to comply with provincial laws, it operated through subsidiaries and a licensee - Meditrust sued the defendants, alleging that they conspired to destroy its mail-order business - The Ontario Court of Appeal affirmed that, apart from a claim for loss of goodwill, Meditrust was not the proper plaintiff - Meditrust was known publicly as the corporate face of the mail-order business it owned - Damage to reputation would be damage to it personally - The rule in Foss v. Harbottle, that a shareholder did not have a cause of action for a wrong done to the corporation, otherwise applied - See paragraphs 35 to 51.

Practice - Topic 230

Persons who can sue and be sued - Individuals and corporations - Status or standing - Shareholders - The rule in Foss v. Harbottle was that a shareholder did not have a cause of action for a wrong done to the corporation - The Ontario Court of Appeal affirmed that the Foss v. Harbottle rule applied to a conspiracy claim - See paragraphs 52 to 54.

Practice - Topic 5702

Judgments and orders - Summary judgments - Jurisdiction or when available - The Ontario Court of Appeal stated that "A responding party to a Rule 20 motion does not automatically avoid summary judgment by raising mixed questions of fact and law. Where the facts are not disputed ... a motions judge may, in a proper case, grant summary judgment on these questions." - See paragraph 24.

Cases Noticed:

Foss v. Harbottle (1843), 2 Hare 461; 67 E.R. 189 (H.L.), appld. [para. 1].

Salomon v. Salomon, [1897] A.C. 22; 66 L.J. Ch. 35 (H.L.), refd to. [para. 12].

Hercules Managements Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241, refd to. [para. 14].

Martin v. Goldfarb et al. (1998), 112 O.A.C. 138; 163 D.L.R.(4th) 639 (C.A.), refd to. [para. 14].

Canada Cement LaFarge Ltd. et al. v. British Columbia Lightweight Aggregate Ltd. et al., [1983] 1 S.C.R. 452; 47 N.R. 191; 145 D.L.R.(3d) 385, refd to. [para. 18].

Hi-Tech Group Inc. v. Sears Canada Inc. (2001), 141 O.A.C. 56; 52 O.R.(3d) 97 (C.A.), refd to. [para. 23].

Guarantee Co. of North America v. Gordon Capital Corp. (1999), 247 N.R. 97; 126 O.A.C. 1; 178 D.L.R.(4th) 1 (S.C.C.), refd to. [para. 24].

642947 Ontario Ltd. v. Fleisher et al. (2001), 152 O.A.C. 313; 56 O.R.(3d) 417 (C.A.), refd to. [para. 31].

Rogers v. Bank of Montreal, [1985] 5 W.W.R. 193 (B.C.S.C.), affd. [1987] 2 W.W.R. 364 (B.C.C.A.), refd to. [para. 42].

Johnson v. Gore Wood & Co., [2001] 1 All E.R. 481 (H.L.), refd to. [para. 43].

DiFlorio et al. v. Con Structural Steel Ltd. et al., [2000] O.T.C. 73 (Sup. Ct.), refd to. [para. 45].

Walters v. Royal Bank of Canada (2000), 130 O.A.C. 188 (C.A.), refd to. [para. 54].

Counsel:

Ronald D. Manes, David M. Golden and Duncan N. Embury, for the appellant;

Mark A. Gelowitz, for the respondent, Shoppers Drug Mart;

Ed Morgan, for the respondent, Lawrence Rosen;

Rochelle Fox, for the respondent, Sam Hirsch;

Cheryl M. Woodin, for the respondent, Canadian Pharmaceutical Association.

This appeal was heard on January 11 and 14, 2002, by Carthy, Weiler and Laskin, JJ.A., of the Ontario Court of Appeal. Laskin, J.A., delivered the following decision for the court on October 18, 2002.