Following are this week's summaries of the civil decisions of the Court of Appeal for Ontario for the short week of September 6, 2022. There were only four decisions, two of them short.

In Hamilton-Wentworth District School Board v. Zizek, the Court allowed the appeal and struck yet another claim where the plaintiff had failed to immediately disclose a settlement with other defendants. The message is clear, disclosure settlement agreements that alter the litigation landscape immediately or face a stay of the remaining claim.

In PMC York Properties v Siudak, the Court applies the modern, flexible approach to defamation pleadings and allowed an appeal from a Divisional Court order striking a civil conspiracy claim.

CIVIL DECISIONS

PMC York Properties Inc v. Siudak, 2022 ONCA 635

Feldman, Roberts and Favreau JJ.A.

Counsel:

J. Diacur, for the appellant, Bill Siudak
M. A. Munro, for the respondents, PMC York Properties Inc., P.C. and M.C.

Keywords: Torts, Defamation, Civil Conspiracy, Civil Procedure, Striking Pleadings, Hunt v. Carey Canada Inc., [1990], 2 S.C.R. 959, The Catalyst Capital Group Inc. v. Veritas Investment Research Corporation, 2017 ONCA 85, Magnotta [Winery Ltd. v. Ziraldo, [1995] O.R. No. (3d) 575 (Ont. Gen. Div.)], Frank v. Legate, 2015 ONCA 631, Resolute Forest Products Inc. v. 2471256 Canada Inc., 2016 ONSC 5398, R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, Tran v. University of Western Ontario, 2015 ONCA 295, Abbasbayli v. Fiera Foods Company, 2021 ONCA 95, Paquette v. Cruji, (1979) 26 O.R. (2d) 294 (H.C.J.), Canada Cement Lafarge v. B.C. Lightweight Aggregate, [1983] 1 S.C.R. 452, Agribrands Purina Canada Inc. v. Kasamekas, 2011 ONCA 460, Roach v. Random House of Canada Ltd., [2000] O.J. No. 2585 (Ont. S.C.), Avalon Rare Metals Inc. v. Hykawy, 2011 ONSC 5569, A.I. Enterprise Ltd. v. Bram Enterprises Ltd., 2014 SCC 12, Young v. Bella, 2006 SCC 3, [2006] 1 S.C.R. 108, Bai [v. Sing Tao Daily Ltd. (2003), 226 D.L.R. (4th) 477 (Ont. C.A.)], Elliott v. Canadian Broadcasting Corp. (1993), 16 O.R. (3d) 677 (Ct.J.(Gen.Div.)

facts:

In 2018, Mr. S. purchased a condominium unit at Bentley Place. Mr. S. was concerned about the management of Bentley Place by the board of directors ("the Board") and the negative influence on Board decisions that he perceived was wielded by PMC York and its principal, Mr. C. As a result, Mr. S. ran and was elected to the Board. Once elected to the Board, Mr. S. set up a newsletter to provide information to the owners about the financial dealings of the condominium corporation and its relationship with PMC York and Mr. C. On June 25, 2019, Mr. S. received a letter from legal counsel to the Board warning that he had "continually dismissed [his] duties to the Condominium", "[d]isclose[ed] confidential and privileged information discussed at board meetings", and "[i]nterfer[ed] with ongoing repair and maintenance projects." At the July 2, 2019 meeting of the owners, Mr. C. stated that he would resign as property manager and take the long-term superintendent with him if Mr. S was not removed from the Board.

Another owner-board member asked at the meeting how Mr. S could be removed from the Board and then produced at the same meeting a pre-prepared document that stated that the owners who signed it were requesting a meeting to remove Mr. S. from the Board for two reasons: 1) loss of confidence; and 2) breaching the confidentiality of the Board. The meeting called to vote and Mr. S. was to be removed from the Board.

Mr. S. pleaded that he received another letter from the Board's legal counsel stating, among other things, that it contained further false and defamatory statements about him and purported to tell him that he could not contact other members of the Board and other Owners, and threatened legal action against him. Mr. S. sold his unit and moved out of Bentley Place.

PMC York and its directing principals, Mr. C and M.C. (collectively "the plaintiffs"), sued Mr. S. for damages for defamation. Mr. S. counterclaimed in defamation and civil conspiracy against Mr. C. and certain owners and members of the condominium corporation's board of directors. The plaintiffs moved to strike out Mr. S's counterclaim. The motion judge refused to do so. However, the Divisional Court, to which the plaintiffs successfully appealed, subsequently struck out and dismissed Mr. S's counterclaim, without leave to amend. The Divisional Court concluded that the motion judge erred in failing to strike out and dismiss the counterclaim because Mr. S. had not pleaded his claim for defamation with the requisite particularity. According to the Divisional Court, as the claim for civil conspiracy depended on the claim for defamation, it also fell. Mr. S. obtained leave to appeal to the Court of Appeal.

issues:

(1) Did the Divisional Court misstate the correct test on a motion to strike where defamation is pleaded and misapply the correct test by failing to treat the allegations in Mr. S's pleadings as true, to read them generously, and to grant leave to amend to correct any pleading deficiencies?

(2) Did the Divisional Court err by failing to consider the "predominant purpose to injure" version of the tort of civil conspiracy Mr. S had pleaded and by dismissing his claim in civil conspiracy as duplicative of the defamation claim at the early pleadings stage?

holding:

Appeal allowed.

reasoning:

(1) Yes.

The Divisional Court erred in its interpretation of the modern, flexible approach to defamation pleadings, and instead required that a claimant plead with strict precision a claim of defamation against at least one defendant. The Court iterated that the facts pleaded are treated as true unless they are manifestly incapable of being proven. The pleadings should be read generously, accommodating any drafting deficiencies because cases should be determined on their merits based on the evidence presented before judges at trial. The Court held that courts should always consider whether the deficiency can be addressed through an amendment to the pleadings and leave to amend should be denied only in the clearest of cases.

Further, the principle behind the modern, flexible approach to pleadings is that a claimant must plead in good faith and with sufficient particularity the constituent elements of the tort of defamation so that the defendant is not left in the dark as to the case to be met. In applying the modern, flexible approach in an assessment of defamation pleadings, the real question is whether the pleadings disclose a "coherent body of fact" about the elements of a claim for defamation, such as the gist of the statement, time, place, speaker and audience. Proper pleadings are not to be replete with bald allegations such that they amount to no more than "a fishing expedition", with the result that the defendant is left in the dark about the claim to be met.

(2) Yes.

The Divisional Court erred in its approach to Mr. S's pleading of civil conspiracy. In applying a more rigid standard, the Divisional Court failed to read the pleadings with a generous lens and to accommodate pleading deficiencies, which is the required approach on a motion to strike.

Mr. S. asserted that Mr. C and the other defendants by counterclaim conspired with one another, and mutually agreed, to engage in this smear campaign with the predominant purpose of causing injury to Mr. S. and he suffered damage as a result. Accordingly, Mr. S. submitted that the Divisional Court erred in striking out his alternative claim for civil conspiracy because the court (1) misconstrued his conspiracy claim as one carried out by "unlawful means" rather than for the "predominant purpose" of causing him injury; (2) failed to recognize that his claim for civil conspiracy was not duplicative of, but could be pleaded alongside, his claim for defamation.

In determining whether an actionable conspiracy will exist, both the Divisional Court and the motion judge referenced Hunt v. Carey Canada Inc., [1990], 2 S.C.R. 959, where referencing Canada Cement Lafarge v. B.C. Lightweight Aggregate, [1983] 1 S.C.R. 452, Wilson J. for the court instructed that an actionable conspiracy will exist in the following situations: Whether the means used by the defendants are lawful or unlawful, the predominant purpose of the defendants' conduct is to cause injury to the plaintiff; or where the conduct of the defendants is unlawful, the conduct is directed towards the plaintiff (alone or together with others), and the defendants should know in the circumstances that injury to the plaintiff is likely to and does result. The Court reasoned that in the latter situation, it is not necessary that the predominant purpose of the defendants' conduct is to cause injury to the plaintiff. In both situations, however, there must be actual damage suffered by the plaintiff.

The Court held that this was not a case like Hunt where the tort of conspiracy was separate from the defamation, rather, it was like Bai v. Sing Tao Daily Ltd. (2003), 226 D.L.R. (4th) 477 (Ont. C.A.) and Elliott v. Canadian Broadcasting Corp. (1993), 16 O.R. (3d) 677 (Ct.J.(Gen.Div.), where the unlawful means used in the conspiracy was Mr. C. or others making defamatory statements. Since those pleadings were struck, there were no other unlawful means pleaded with respect to the conspiracy and, therefore, it too was struck. The Divisional Court took an overly narrow approach focused on the first scenario discussed in Hunt. The Divisional Court did not consider whether Mr. S's pleadings gave rise to the other situation of predominant purpose articulated in Hunt and Lafarge. The Court concluded that when read generously, the pleadings do not limit the allegations to civil conspiracy by unlawful means but included that the alleged conspiracy was for the predominant purpose of injuring Mr. S.


Hamilton-Wentworth District School Board v. Zizek, 2022 ONCA 638

Miller, Nordheimer and Sossin JJ.A.

Counsel:

R. MacGregor, for the appellant
M.J. Zega and L.J. Freitag, for the respondent, Hamilton-Wentworth District School Board
J. Vrancic, for the defendants, F. J.E., F.E. operating as FJE Contracting and B.A.E

Keywords: Civil Procedure, Settlements, Mary Carter Agreement, Pierringer Agreement, Duty of Disclosure, Stay Proceedings, Aecon Buildings v. Stephenson Engineering Limited, 2010 ONCA 898, CHU de Québec-Université Laval v. Tree of Knowledge International Corp., 2022 ONCA 467

facts:

The underlying action involved a claim between the respondent and the defendants arising out of an alleged fraud committed by the defendants against the respondent. On September 4, 2019, the respondent settled its claim against all of the defendants to the underlying action, save for the appellant in this action. The settlement required, among other things, that the settling defendants provide evidence for the respondent's claim against the appellant. The appellant only became aware of this settlement when the respondent served a motion for directions to implement the settlement on December 6, 2019, returnable on December 19, 2019. In response, the appellant brought a motion to stay the proceeding. The motion judge dismissed the motion, concluding that there was no abuse of process and that it would not be just to grant a stay.

issues:

(1) Did the motion judge err in dismissing the motion to stay?

holding:

Appeal allowed.

reasoning:

(1) Yes.

The motion judge failed to apply the principle that settlement agreements must be immediately disclosed to other parties in an ongoing litigation, as set out in Aecon.
Instead, the motion judge engaged in a detailed and separate analysis of the concept of abuse of process and its origins. The Court found that this was not necessary to address the issue before her. Instead, what was required was for the motion judge to follow and apply the directions of the Court regarding the requirements that flow when these types of agreements are entered into, and the consequences that arise when those requirements are not met. The Court held that the motion judge had failed to understand and apply that central principle and, thus, erred in her conclusion not to grant a stay.


SHORT CIVIL DECISIONS

Grewal v. 102095 P.E.I. Inc., 2022 ONCA 636

Miller, Nordheimer and Sossin JJ.A.

Counsel:

E. Nadler, for the appellants
M. Suria, for the respondent

Keywords: Contracts, Debtor-Creditor, Promissory Notes, Real Property, Collateral Mortgages, Civil Procedure, Summary Judgment, Mortgage Insurance Co. of Canada v. Grant Estate, 2009 ONCA 655

Reiche v., Reiche, 2022 ONCA 637

Miller, Nordheimer and Sossin JJ.A.

Counsel:

M.J. Stangarone and S.P. Kirby, for the appellant
S. Cocieru, for the respondent

Keywords: Family Law, Parenting, Variation, Civil Procedure, Family Law Rules, Motions to Change, Consent Orders, Fresh Evidence, Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.)

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