Court File and Parties

COURT FILE NO.: CV-14-509765 DATE: 20160531 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

RAJESH JOSHI Plaintiff/Responding Party – and – NATIONAL BANK OF CANADA Defendant/Moving Party

Counsel: Priya Sarin for the Plaintiff/Responding Party Alex Cameron/Nicholas Robar for the Defendant/Moving Party

HEARD: May 26, 2016

Endorsement

DIAMOND J.:

Overview

[1] Despite this proceeding having been commenced in early August 2014, this matter is still at the pleadings stage. The defendant brings a motion to strike portions of the Amended Fresh as Amended Statement of Claim issued on March 8, 2016. The pleading under attack is the plaintiff’s third attempt to address alleged deficiencies raised by the defendant.

[2] The Amended Fresh as Amended Statement of Claim raises three causes of action: defamation, intentional interference with economic relations and breach of the duty of good faith. The defendant seeks to strike out (without leave to amend) the plaintiff’s claims for intentional interference with economic relations and breach of the duty of good faith.

The Amended Fresh as Amended Statement of Claim

[3] In his pleading, the plaintiff alleges that he was employed by the defendant since 2009 as a Mortgage Development Manager. In May 2014, the Bank of Montreal (“BMO”) offered the plaintiff a job which he ultimately accepted. On June 3, 2014, the plaintiff tendered his resignation to the defendant with his last day of work being June 6, 2014. The plaintiff commenced employment with BMO on June 9, 2014.

[4] The plaintiff alleges that the defendant contacted the Canadian Bankers Association Bank Crime Prevention and Investigation Office (“BCPIO”) and added the plaintiff’s name to that database. The BCPIO database is intended for member banks to report individuals found guilty of serious banking crimes. The plaintiff claims that as a result of, inter alia, his name being registered with the BCPIO database, his employment with BMO was cut short and he suffered resulting damages.

[5] The plaintiff’s claim for intentional interference with economic relations is set out in paragraphs 19-24 of the pleading. In summary, the plaintiff alleges:

• Prior to his resignation, the defendant did not notify the plaintiff of: a) any allegations of misconduct on his part, or b) any ongoing investigation into any such allegation of misconduct against him.
• In response to an inquiry from BMO, the defendant advised BMO that the plaintiff had “resigned before being met by an investigator” and “falsified documents relating to mortgage application files”.
• The defendant further advised a CIBC corporate security representative that the plaintiff had committed mortgage fraud “or words to that effect”.
• By adding the plaintiff to the BCPIO database without proper justification and making the above representations, the defendant intended to cause an economic loss and/or mental and emotional suffering to the plaintiff causing him to lose employment opportunities.

[6] The plaintiff’s claim for breach of a duty of good faith is set out in paragraph 34-36 of the pleading. In summary, the plaintiff alleges:

• The plaintiff was owed a duty of good faith from the defendant to act honestly in the performance of contractual obligations owed to the plaintiff.
• The defendant violated its duty of good faith by: a) adding the plaintiff to the BCPIO database without proper reason or investigation; b) making the representations to other member banks to support its decision to place the plaintiff in the BCPIO database; and c) maintaining the plaintiff’s name in the BCPIO database despite not having information to support that decision.

Motions to Strike

[7] The test to be employed on a motion to strike is well known and arguably trite. As held by the Supreme Court of Canada in Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, assuming that the facts as stated in the Statement of Claim can be proven, I must decide whether it is “plain and obvious” that the claim discloses no reasonable cause of action. As the pleaded facts are presumed to be true, I can only strike out a claim which has no reasonable prospect of success.

[8] As held by Justice Myers in Salehi v. Professional Engineers Ontario, 2014 ONSC 3816, a claim is to be read generously with allowance for mere drafting deficiencies. The test on a motion to strike is no doubt a stringent one as I must be satisfied that the claim, or a radical defect therein, is certain to fail.

[9] A concise and helpful summary of the principles to be applied on a motion to strike, and in particular a motion to strike a claim for intentional interference with economic relations, is set out in the decision of the Ontario Divisional Court in Resolute Forest Products Inc. et al v. 2471256 Canada Inc., 2014 ONSC 3996. Those principles are as follows:

a) The words of the statement of claim relating to the cause of action in question should be read generously in favour of a plaintiff so as not to unfairly deny that party the benefit of the pleading. This is particularly so with the tort of intentional interference with economic relations, having regard to Cromwell J.’s comment in A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12 at para. 2, that the scope of this tort has been unsettled. b) Rule 25.06(8) of the Rules of Civil Procedure states that full particulars are required when “fraud, misrepresentation, breach of trust, malice or intent is alleged”. Its purpose is to ensure that bald allegations of this nature, totally devoid of any detail, should not be permitted even at this early stage of the action. However, the rule was never meant to stand in the place of discovery but only to ensure that a defendant knows the case to meet with respect to such allegations and is able to plead over. In our view, “full” means sufficient material facts to permit a defendant to respond in a meaningful way at the pleading stage; c) The “plain and obvious” test sets a high hurdle for a Rule 21.01(1)(b) motion of the Rules of Civil Procedure to be successful. It is only in the clearest of cases – where a claim is certain to fail – that a claim should be struck out; d) Rule 1.04(1) of the Rules of Civil Procedure sets out the general principle that should be taken into account in interpreting and applying the Rules of Practice. It provides that “these rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.” Thus, Rule 21 motions should not become a battleground for highly technical complaints about the form of pleadings for tactical reasons to preclude issues from being heard on their merits. e) Parties should not be faced with procedural motions right out of the litigation gate, as such motions only serve to frustrate the advancement of the litigation and result in the building up of unnecessary costs and delay. The purpose of a statement of claim is essentially to frame the issues in controversy and set out the material facts of the claim to allow a defendant to respond by way of a statement of defence. The recent emphasis on access to justice (see for example, Hyrniak v. Mauldin, 2014 SCC 7 at paragraphs 23-24 in respect of Rule 20 motions) supports the view that parties and counsel should engage less in disputing pleading details and move as expeditiously and as cost effectively as possible to a resolution on the merits. f) The Supreme Court of Canada in A.I. Enterprises Ltd. v. Bram Enterprises Ltd., at paragraphs 77-82, has stated that a defamation claim and an intentional interference with economic relations claim can be concurrently asserted in respect of the same incident. In the instant case, the underlying facts which support Resolute’s defamation allegation and its claim for punitive damages, are similar in substance as the facts in relation to its claim for intentional interference with economic relations. There would be little or no savings of costs or judicial economy to sever the claim for intentional interference with economic relations from the defamation claim.

Intentional Interference with Economic Relations

[10] The tort of intentional interference with economic relations allows a plaintiff to sue a defendant for losses resulting from a defendant’s unlawful act against a third party. In A.I. Enterprises v. Bram Enterprises, 2014 SCC 12, [2014] 1 S.C.R. 177, the Supreme Court of Canada identified three essential elements of the tort of intentional interference with economic relations:

a) the defendant must have intended to injure the plaintiff’s economic interest; b) the interference must have been made by illegal and unlawful means; and c) the plaintiff must have suffered economic harm as a result.

[11] As stated, the unlawful means must be directed at a third party who has an actual claim against the defendants (or an actual claim but for the absence of having suffered a loss). A plaintiff’s pleading of intentional interference with economic relations must show that a defendant committed a wrong against a third party, and set out the material facts upon which a Court could find misconduct on the part of that defendant directed towards a third party.

[12] As the tort is intentional by definition, the provisions of Rule 25.06(8) of the Rules of Civil Procedure mandate the plaintiff to plead full particulars of the material facts in support of the cause of action.

[13] From my review of the Amended Fresh as Amended Statement of Claim, I find that the plaintiff has failed to plead: (a) any unlawful act on the part of the defendant committed against the other member banks, and (b) that any such unlawful act(s) would be actionable by the member banks.

[14] The plaintiff has described the BCPIO database to be for the benefit of member banks to know the identity of individuals associated with serious banking crimes. The only acts complained of by the plaintiff in his pleading are the insertion of his name in the BCPIO database and the alleged representations made by the defendant to member banks (which form the basis of his claim for defamation). The addition of the plaintiff’s name to the BCPIO database could amount to an unlawful act insofar as its impact upon the plaintiff’s interests, but I fail to see how such an act could be actionable by the member banks, who all voluntarily participate in the sharing of information on the BCPIO database.

[15] No claim of misrepresentation on the part of the defendant has been advanced in the pleading, and in any event a duty of care would have to exist between the defendant and other member banks to support such an allegation.

[16] In argument, the plaintiff attempted to convince me that the pleading ought to be read liberally and generously enough to infer that the defendant committed the tort of intimidation against the member banks by reason of inserting the plaintiff’s name into the BCPIO database and making the representations as set out above. Apart from a passing reference to the defendant “attempting to influence his perspective employers not to hire the plaintiff”, there are no further material facts raised in support of intimidation. Unlike the result in the Resolute Forest decision, the pleading does not allege that the defendant intimidated (an unlawful means) a third party (a member bank) in an attempt to harm the plaintiff.

[17] As held by the Court of Appeal for Ontario in McIlvenna v. 1887401 Ontario Ltd., 2015 ONCA 830, there are four elements comprising the tort of intimidation: (a) a threat; (b) an intent to injure; (c) some act taken or foregone by the plaintiff as a result of a threat; (d) damages suffered as a result of the act.

[18] The Amended Fresh as Amended Statement of Claim does not contain any allegation that the defendant threatened or intended to injure the member banks. As such, it is plain and obvious that the plaintiff’s claim for intentional interference with economic relations, as currently pleaded, cannot succeed and ought to be struck.

[19] I therefore grant the defendant’s motion to strike out paragraphs 1(a) and 19-24 of the Amended Fresh as Amended Statement of Claim, albeit with leave to amend as I am not prepared to foreclose the plaintiff from delivering a further amended pleading in whatever manner he sees fit to support a tenable cause of action in intentional interference with economic relations, a task which may nevertheless prove difficult given my findings in this Endorsement.

[20] The plaintiff shall have 30 days from the date of the release of this Endorsement to serve and file a further amended pleading if he chooses to do so.

Breach of the Duty of Good Faith

[21] The defendant submits that the plaintiff’s claim for breach of the duty of good faith is not legally tenable. The duty of good faith was recognized and discussed by the Supreme Court of Canada in Bhasin v. Hrynew, 2014 SCC 71. I echo the comments of my colleague Justice Myers in Empire Communities Ltd. v. Ontario, 2015 ONSC 4355 where he stated as follows:

”That is, the Supreme Court has rationalized, renamed, and provided an overall framework for understanding several pre-existing aspects of duties of good faith that have been recognized by the law. In addition, it added one arguably new (arguably not new) duty not to lie to one’s contractual counterparty. Nothing in Bhasin eliminated the pre-existing law of latent defects or the contractual interpretation principles enunciated just a few months earlier in Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 SCR 633, 2014 SCC 53. Neither did it create a freestanding, ill-defined, and potentially arbitrary duty of good faith against which to measure all aspects of contractual performance. ”

[22] There is no fiduciary component to the duty of good faith, and it is not to be confused with any duty of loyalty or disclosure. The defendant submits that as the duty of good faith is only engaged in the context of the contractual relationship (i.e. the performance of contractual obligations and duties), it is not to be considered an implied term in any such contract. The defendant thus submits that the plaintiff has failed to identify and plead any alleged contractual duty between itself and the plaintiff which it allegedly failed to perform in good faith and honestly.

[23] The plaintiff resigned from his employment with the defendant on June 3, 2014, and the defendant submits that any contractual obligations between the parties ended on or about that day.

[24] The plaintiff submits that there are several contractual obligations which continue after an employment contract ends, such as non-solicitation and non-disclosure obligations. Such obligations (which were apparently included in the plaintiff’s employment contract with the defendant) can be both express or implied depending upon the facts of each case.

[25] The contents of paragraph 12 of the Amended Fresh as Amended Statement of Claim state as follows:

“12. Prior to his resignation, the Defendant did not accuse or notify the Plaintiff of any allegation or any kind of misconduct. Furthermore, the Plaintiff was not made aware of any investigation into any allegation of misconduct against him.”

[26] While not explicitly clear, I understood the plaintiff to be alleging that an investigation into his alleged misconduct was commenced before he resigned, and that he was not made aware of that investigation nor given an opportunity to respond. While the contents of paragraph 12 ought to be expanded with further particulars, in my view I find that it is not plain and obvious that the plaintiff’s claim for breach of the duty of good faith cannot possibly succeed. There is no doubt that the defendant owed a duty to perform employment contractual obligations and without misrepresentation. If an investigation into alleged misconduct on the part of the plaintiff was ongoing during his employment, it was, at a minimum, an implied contractual obligation to afford the plaintiff due process and allow him to respond and/or refute such allegations.

[27] If the defendant was not afforded such an opportunity, this could qualify as a breach of the duty of good faith. The defendant’s subsequent acts as alleged in the pleading (adding the plaintiff to the BCPIO database without a proper investigation and making the representations to member banks) would be premised upon a potential breach of the duty of good faith and carried out in furtherance of that alleged breach.

[28] Accordingly, I dismiss the defendant’s motion to strike out paragraphs 1(c) and 34-36 of the Amended Fresh as Amended Statement of Claim, but order the plaintiff to provide further particulars of paragraphs 12 and 34-36 to address the above concerns.

Costs

[29] Given the mixed success achieved on this motion, I would strongly recommend that the parties exert the necessary efforts to try and resolve the costs of this motion. If they are unable to do so, the defendant may serve and file written costs submissions (totaling no more than four pages including a Costs Outline) within 10 business days of the release of this endorsement.

[30] The plaintiff shall thereafter serve and file its responding costs submissions (also totaling no more than four pages including a Costs Outline) within 10 business days of the receipt of the plaintiff’s costs submissions.

Diamond J. Released: May 31, 2016