Court of Appeal Upholds Summary Judgment Dismissing $60M Claim

The Ontario Court of Appeal upheld the decision of Justice Anne Marie Molloy of the Ontario Superior Court of Justice, who granted a defendant’s motion for partial summary judgment in an economic tort conspiracy claim by Meditrust Healthcare Inc. The decision was rendered on October 18, 2002.

Meditrust’s essential claim in the action is that a group of defendants in the retail pharmacy industry, including Shoppers Drug Mart, conspired to put Meditrust out of business as a mail-order pharmacy. Meditrust was the parent company of a number of subsidiaries that actually carried on the business of mail order pharmacy. The Shoppers Drug Mart group of defendants brought a motion for partial summary judgment on the basis that most of the claims asserted by Meditrust were claims that could be brought, if at all, only by the Meditrust subsidiaries, because of the rule in Foss v. Harbottle, which establishes that a shareholder cannot sue for harm done to the corporation.

The alleged value of the claims dismissed by Justice Molloy was approximately $60 million. The Court of Appeal’s order dismissed Meditrust’s appeal on all grounds except for, a claim for damages for loss of goodwill was permitted to stand, although this was distinguished from a claim for diminution in the value of shares. The question of the value of the remaining goodwill claim is to be resolved.

Ronald Manes, David Golden and Duncan Embury of Torkin Manes Cohen Arbus LLP acted for Meditrust. Mark Gelowitz and Lindsay Hill of Osler, Hoskin & Harcourt LLP represented the Shoppers group of defendants.