Court File and Parties

Court File No.: 341/04 Released: 2006-01-23

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Re: Dr. Albert Ross Deep v. M.D. Management, The Canadian Medical Association, Nortel Networks Corporation and Mr. John Roth

Before: Métivier R.S.J., Gravely and Swinton JJ.

Counsel: Peter Griffin and Seana Carson Dr. Deep in person

Heard at Toronto: January 20, 2006

Endorsement

[1] In this appeal, with leave, from an interlocutory order striking out portions of the Statement of Claim, the defendants Nortel and Roth ask that the entire Statement of Claim as against them be struck on the basis that it discloses no reasonable cause of action and is frivolous and vexatious.

[2] Before a statement of claim can be struck out, it must be plain and obvious that it discloses no cause of action.

[3] With respect to the claim for damages for negligent misrepresentation, the plaintiff has failed to plead the essential elements of the tort. Rule 25.06(1) of the Rules of Civil Procedure requires that every pleading shall contain a concise statement of the material facts on which the party relies for the claim or defence, but not the evidence by which those facts are to proved. Rule 25.06(8) mandates that full particulars be pleaded in respect of any allegation of misrepresentation.

[4] The particulars that must be pleaded in respect of any allegation of misrepresentation include: the alleged misrepresentation; when, where, how, by whom and to whom it was made; its falsity; the inducement; the intention that the plaintiff should rely upon it; the alteration by the plaintiff of his or her position relying on the misrepresentation and the resulting loss or damage to the plaintiff (Lana International Ltd. v. Menasco Aerospace Ltd. (1996), 28 O.R. (3d) 343 (Gen. Div.) at 348-50).

[5] In order to sustain a claim for negligent misrepresentation, material facts must be pleaded to establish: a special relationship between Nortel, Roth and the plaintiff so as to give rise to a duty of care; representations were made which were untrue, inaccurate or misleading; the representor acted negligently in making the representations; Dr. Deep relied, in a reasonable manner, on the misrepresentations; and the reliance must be detrimental to him in the sense that damages resulted (Queen v. Cognos Inc., [1993] 1 S.C.R. 87 at p.110).

[6] No material facts have been pleaded by the plaintiff to show that Roth intended the alleged statements made at a conference or otherwise to be relied upon so as to give rise to a duty of care. Nor has he pleaded the falsity or inaccuracy of the impugned statements, his reliance on the statements, or how the drop in value of his portfolio is attributable to those statements.

[7] Therefore, the motions judge erred in concluding that “if it is necessary to set out material facts supporting the constituent elements of a negligent misrepresentation claim, it is not plain and obvious that the Plaintiff has not done so”.

[8] Paragraph 22 contains a bald assertion of business mismanagement. No material facts are pleaded to demonstrate an alleged case of Nortel’s directors and Roth having exercised no judgment, wilfully failing to inform themselves or bad faith in their management of the company to potentially give rise to any claim in respect of Nortel’s management decisions. There is no allegation of any contraventions of legislation. In the absence of such material facts, the business judgment rule applies to foreclose claims seeking to second guess Nortel’s or Roth’s business decisions (Maple Leaf Foods Inc. v. Schneider Corp. (1998), 42 O.R.(3d) 177 (Ont. C.A.) at 192). This paragraph should be struck.

[9] With respect to the claims for conversion of company property and conflict of interest in paragraph 25, it is plain and obvious that the plaintiff has no cause of action. Any such claims against Roth would be a claim of the corporation and not of an individual shareholder. The plaintiff has no standing to bring such a claim. Therefore, the motions judge erred in not striking this paragraph.

[10] In conclusion, there is no reasonable cause of action disclosed in the Statement of Claim. The appeal is allowed and the balance of the Statement of Claim is struck out as it pertains to Nortel and Roth, with leave to amend within 30 days of the release of this decision. If the parties can not agree on costs, the appellants may make written submissions within 21 days, with the respondent to respond within 14 days thereafter.

Métivier R.S.J.

Gravely J.

Swinton J.

Released: January 23, 2006