Executive Summary: Key Legal and Evidentiary Issues

• Bifurcation limited the first trial to Ayub Chishti’s alleged oral 40% ownership agreement, which was rejected after a lengthy trial.
• Plaintiffs later sought to add new claims about a “bonus payment strategy” and a “management fee tax savings strategy,” greatly increasing potential monetary exposure.
• The court held these new claims were, in principle, “related to the conduct, transaction or events” in the original pleadings under s. 21 of the Limitation of Actions Act.
• Despite this, the motion turned on non-compensable prejudice arising from the very late attempt to amend after discoveries and a 15-day trial.
• The proposed amendments would require renewed discovery, further production, and recalling witnesses, significantly complicating already protracted litigation.
• Leave to amend was refused, and the defendants obtained a $1,500 costs award on the motion.

Facts and procedural background

The case arises from a long-running dispute between pharmacist Ayub Chishti and several related companies and individuals involved in pharmacy and medical-clinic operations in Fredericton, New Brunswick. The plaintiffs are Ayub Chishti and Laughlin Drug Co. Ltd.; the defendants are Northside Pharmacy Ltd., N.N.Y. Holdings Ltd., Fahim Chishti, and Southside Medical Clinic Ltd. The action, commenced in July 2015, alleged a broad range of claims including an oral agreement granting Ayub Chishti a 40% ownership interest in the defendants’ businesses, breach of contract, unjust enrichment, wrongful dismissal, breach of fiduciary duty, negligent misrepresentation, and related equitable and employment-based causes of action. In July 2019, the court ordered that the case be bifurcated. The first trial would address only the plaintiffs’ “ownership interests” in the defendants’ businesses, specifically the alleged oral agreement and related unjust enrichment theory, while other claims such as breach of fiduciary duty, conversion, negligent misrepresentation, detrimental reliance, unjust enrichment on other grounds, and wrongful dismissal would be left for a later stage. After a lengthy trial consuming almost 15 days of court time, Justice Morrison delivered a decision on February 24, 2021. He found that Ayub Chishti had not proven any binding oral agreement for a 40% ownership stake and dismissed the related unjust enrichment claim based on ownership. Those ownership-based causes were therefore resolved in the defendants’ favour, leaving only the non-ownership claims potentially to be tried later. The plaintiffs did not immediately pursue that second phase.

The proposed amendments and new compensation theories

Years later, on June 11, 2024, the plaintiffs moved for leave to amend their statement of claim under Rules 27.10(1) and 27.10(2)(c) of the Rules of Court. They argued that amendments were necessary to put the “real questions” in issue before the court. The core of the proposed amendments was the introduction of two new compensation-related theories. First, the plaintiffs pleaded a “bonus payment strategy,” alleging that bonuses were to form part of how Ayub Chishti was to be rewarded and asserting that he was not properly paid under this arrangement. Second, they alleged a “management fee tax savings strategy,” in which management fees and dividends were used for tax-efficient compensation in lieu of straightforward salary or bonuses, and claimed additional amounts for services rendered under that structure. These new allegations reframed parts of the relationship as involving unpaid or underpaid compensation channelled through bonuses and tax-driven management fee arrangements. The plaintiffs said these amendments better reflected their true position, tying Ayub Chishti’s work and contributions to specific bonus and tax-planning mechanisms rather than only to the failed ownership theory and general employment claims.

The defendants’ opposition: new causes, limitation, and prejudice

The defendants opposed only the new paragraphs introducing the bonus and tax-strategy allegations. They argued that these were entirely new causes of action, raised far too late and now statute-barred by the two-year limitation period in section 5 of the Limitation of Actions Act, SNB 2009, c. L-8.5. They noted that no earlier version of the statement of claim mentioned these theories, and that they had not been raised in the extensive examinations for discovery conducted in 2016 and 2018 or during the first trial. They emphasized that the amendments could add more than $1,528,992.00 to the plaintiffs’ claimed compensation, dramatically increasing their potential exposure. Beyond limitation, they stressed prejudice. The case was already about ten years old, and the plaintiffs had first floated these new claims by correspondence in July 2022 yet waited nearly two more years to bring the motion without adequate explanation. Allowing the amendments would require new rounds of discovery, additional productions, and likely recalling witnesses such as the accountant who had already testified. The defendants characterized this as non-compensable prejudice that could not be cured with costs or an adjournment.

Limitation analysis and the “related to” requirement

The plaintiffs acknowledged they had been aware of the factual basis for the new claims within the limitation period but relied on section 21 of the Limitation of Actions Act. That provision permits adding a claim by amended pleading after expiry of the limitation period if the new claim is “related to the conduct, transaction or events described in the original pleadings” and, among other things, is between the same parties without changing their capacities. Their affidavit did little to explain the connection but invited the court to infer it from the pleadings and litigation history. The defendants contended section 21 did not apply because the new claims lay outside the “four corners” of the original pleading and would require proof of new factual and legal contexts, some involving events years after Ayub Chishti’s termination. Justice Petrie reviewed the principles governing amendments, noting that courts generally allow them—even late—where they promote resolution of the real dispute without non-compensable prejudice, and that amendments should be refused only in clear cases. He then examined section 21, drawing on New Brunswick and Alberta cases and Supreme Court authority that give a broad interpretation to phrases such as “relating to” and “in respect of.” Applying that approach, he held that the new bonus and management fee tax-strategy claims were, at least in principle, related to the original conduct, transactions, and events: they dealt with alleged non-payment for services, bonuses, and dividends in lieu of salary, all tied to Ayub Chishti’s work, termination, and claims for wrongful dismissal, unjust enrichment, and quantum meruit. They were not inconsistent with the original pleading but extended its core theme that he had not been properly compensated for his contributions. On that basis, the court found the requirements of section 21(a) were met and rejected the argument that the amendments had to be refused solely on limitation grounds.

Prejudice, delay, and the refusal of leave to amend

The limitation analysis did not, however, end the matter. Justice Petrie turned to prejudice and the interests of justice, which ultimately controlled the outcome. He stressed that the motion came very late: six years after the bifurcation order, five years after the major discoveries, and more than three years after the ownership trial decision. The plaintiffs had known of the underlying facts and had flagged these potential claims by 2022 yet failed to move promptly. Their affidavit offered virtually no explanation for the delay. In these circumstances, the court accepted that serious, non-compensable prejudice to the defendants could be presumed. Allowing the amendments would significantly complicate an already complex and protracted case, require renewed discovery and productions, and likely force the defendants to recall witnesses who had already undergone the burdens of a long trial. Some of the underlying events went back decades, further compounding evidentiary difficulties. The plaintiffs did not contend that the remaining issues from the original claim and bifurcation order could not fairly proceed to trial without these new theories. Justice Petrie concluded that to permit the impugned amendments would unfairly complicate and delay the action and would amount to a circumvention of the judicial process. He held that this was one of the exceptional situations in which an amendment should be refused despite the generally generous approach to amending pleadings.

Outcome and monetary consequences

The court therefore dismissed the plaintiffs’ motion to amend their statement of claim to add the bonus payment and management fee tax savings strategy allegations. While the proposed claims were found to be, in principle, “related to” the original conduct for limitation purposes, the decisive factors were extreme delay and non-compensable prejudice to the defendants. The existing non-ownership claims remain confined to the scope of the original pleadings and bifurcation order. In this motion, the defendants were the successful party. Justice Petrie awarded them one set of costs fixed at $1,500.00 inclusive of disbursements, payable by the plaintiffs. On the available record, no additional quantified damages or costs orders in their favour can be clearly identified, so the only determinable monetary amount ordered for the successful party in this decision is the $1,500.00 costs award.