Court File and Parties
Court File No.: CV-23-00000899-0000
Date: 2025-03-10
Ontario Superior Court of Justice
Between:
Soneri Investments Inc. and Quick Stop Ontario Inc.
Plaintiffs/Responding Parties
- and -
Shell Canada Products and Tosh Skalosky
Defendants/Moving Parties
Before: Susan J. Woodley
Counsel:
Ted Brook and Shanika Gordon, for the Defendants/Moving Parties
Meaghan Coker, for the Plaintiffs/Responding Parties
Heard: February 21, 2025
Reasons for Decision Regarding Rule 21 Motion to Strike Claim Against Defendant Skalosky
Overview
This is a motion brought by the Defendants, Shell Canada Products ("Shell") and Tosh Skalosky ("Skalosky") (the "Defendants"), to strike the Plaintiff's Statement of Claim against Skalosky personally, without leave to amend under Rules 21.01(1)(b) and 25.11 of the Rules of Civil Procedure.
The Defendants submit that Skalosky is an employee of Shell, the real target in this multi-million-dollar claim, and the Plaintiffs have failed to plead a reasonable cause of action against Skalosky personally. Instead, the Plaintiffs have pleaded conclusory and undifferentiated allegations against Skalosky in his capacity as an employee of Shell, for tactical or discovery reasons.
The Defendants submit that the Court of Appeal held in Tran v. University of Western Ontario, 2015 ONCA 295, that such pleadings are improper. In the absence of specific material facts supporting personal liability, claims against employees, officers, and directors of corporate defendants must be struck for failing to disclose a reasonable cause of action and for being vexatious and an abuse of the court’s process.
As for any need for leave to amend the pleadings, the Defendants advised that Shell Canada has and/or will provide a written undertaking with respect to any damages that may flow from any alleged misrepresentations made by Skalosky, even if such misrepresentations were made recklessly, negligently, or outside the scope of his employment. In these circumstances, the Defendants assert that there is no practical or juristic reason to require Skalosky to remain as a Defendant in this proceeding, except for collateral purposes.
The Plaintiffs submit that contrary to the Defendants’ position, the Court of Appeal held in Sataur v. Starbucks Coffee Canada Inc., 2017 ONCA 1017, that the Plaintiffs can claim against a corporate employee in their personal capacity for their own negligence or wrongdoing, even when the employee’s conduct was done in the course of their employment.
With respect to the Rule 21 motion to strike, the Plaintiffs claim that the law is clear that pleadings must be read generously in favour of the responding party with allowances for drafting deficiencies: Wellington v. Ontario, 2011 ONCA 274, at para 14.
The Plaintiffs submit that they have particularized their Statement of Claim through a Response to a Demand for Particulars which identifies the actions of Skalosky and the dates and content of the communications that amount to misrepresentations. In the circumstances, the Plaintiffs deny that the Defendants have met the burden of demonstrating that there is no reasonable cause of action pleaded.
Determination of Motion
For the following reasons, I find that the Defendants have demonstrated pursuant to Rule 21.01(1)(b) that there is no reasonable cause of action currently pleaded against Skalosky.
In the circumstances, the claim against Skalosky is struck, with leave granted to the Plaintiffs under Rule 26.01 to amend the Statement of Claim against Skalosky, if after consideration, the Plaintiffs deem such amendments appropriate.
Facts: The Statement of Claim and Response to Demand for Particulars
Statement of Claim
- Paragraph 1 of the Statement of Claim contains the prayer for relief and seeks the following:
a. Damages of $3,000, for misrepresentation pursuant to the common law or s. 7 of the Arthur Wishart Act (Franchise Disclosure), the “AWA”;
b. In the alternative,
i. Declarations that:
1. Shell waived certain terms of the RSA signed June 6, 2021 and the RSA includes terms not properly reflected in the RSA; and
2. Shell breached the RSA including duties of honesty, good faith, performance, and fair dealing in its actions, the following relief: and
ii. A declaration interpreting and setting out the enforceable terms of the RSA in accordance with the parties’ actions and communications, and a mandatory order that Shell comply with those provisions of the RSA going forward.
iii. Damages of $3,000,000 for breach of the RSA.
c. In the further alternative, damages for unjust enrichment against Shell in an amount to be proven at trial following a full accounting from Shell.
d. In the further alternative, rescission of the RSA and damages to compensate the Plaintiffs for their lost opportunity in dealing with Shell.
e. A full accounting of Shell’s dealings with the Plaintiffs including but not limited to accountings of Shell’s distribution charges for fuel (the “Distribution Charges”), charges for the loyalty scheme and Air Miles reward program under the RSA (the “Loyalty Scheme Charges”), credit card processing fees and fuel pricing, under both the First RSA (as defined below) and the RSA.
f. A declaration that the Defendants have been unjustly enriched by improperly collecting revenue from the Plaintiffs through fees and pricing, including, but not limited to Distribution Charges, Loyalty Scheme Charges, credit card processing fees, and fuel pricing generally.
g. Prejudgment and post-judgment interest, costs, and such further and other relief.
As is apparent on a plain reading of the relief sought, the Plaintiffs do not identify any conduct by Skalosky that manifests a separate identity or interest from Shell that is tortious by itself.
As for the body of the claim, again upon a plain reading, the Plaintiffs do not identify any conduct by Skalosky that manifests a separate identity or interest from Shell that is tortious by itself, nor do the Plaintiffs allege that Skalosky acted in a manner that was outside of his employment or his duties as an employee of Shell.
Response to Demand for Particulars
The Defendants sought Particulars of the Plaintiffs’ claim and the Plaintiffs provided a Response to the Demand which particulars may be considered on a Rule 21 motion.
The details provided by the Response for Particulars primarily relate to the claim for damages, and identification of the party alleged to have made the representations to the Plaintiffs.
The Defendants also sought particulars with respect to the Plaintiffs’ claim that Skalosky was a “franchisor’s associate” under the AWA. The Plaintiffs provided the following particulars relating to this query:
a. As explained in paragraph 9 of the Statement of Claim, during the relevant time period from 2019–2022, Skalosky was known by the Plaintiffs to be employed by and a representative of Shell and held the position of “Territory Manager”. The Plaintiffs were directed to deal with Skalosky and understood that Skalosky’s decisions and representations were made for and on behalf of Shell. Skalosky held himself out as someone who was involved in the granting and negotiation of the RSA and someone who exercised control over Shell to make these decisions. Alternatively, Shell controlled and directed Skalosky in these matters.
The Law and Analysis Relating to Rule 21.01(b)
- Rule 21.01(b) states:
A party may move before a judge,
(b) to strike out a pleading on the ground that it discloses no reasonable cause of action or defence.
On a motion under Rule 21.01(b) the only issue is the sufficiency in law of the pleading attacked; as such, no evidence is admissible.
A pleading will be struck out only in those cases where it is “plain and obvious” that the pleading discloses no reasonable cause of action or defence, assuming the facts pleaded to be true: see Hunt v. T & N plc, [1990] 2 S.C.R. 959.
The guiding principles to consider under Rule 21.01(b) are:
a. A claim will not be struck unless it is plain and obvious.
b. The facts pleaded are to be assumed to be true unless they are patently ridiculous.
c. A claim must be read with a forgiving eye for drafting deficiencies.
d. The novelty of a cause of action is not determinative.
e. The court is not precluded from striking a negligence claim simply because it asserts a novel duty of care.
f. A critical analysis is required in order to prevent untenable claims from proceeding.
g. No evidence is available on the motion, though documents referenced in the statement of claim can be considered.
See Darmar Farms Inc. v. Syngenta Canada Inc., 2018 ONSC 7129, reversed in part 2019 ONCA 789.
Further, while the court must accept as true the material facts as pleaded, this obligation does not include statements of law or conclusory statements of fact in the pleading that are unsupported by material facts. If allegations in a pleading are based on assumptions or speculation, they will not be assumed to be true on a Rule 21 motion to strike. This is because plaintiffs must plead the specific facts necessary to support the allegations in their claim, or otherwise refrain from making allegations where they lack the necessary knowledge: Lim v. Khan, 2024 ONSC 2628 at para 6, citing Trillium Power Wind Corp. v. Ontario (Ministry of Natural Resources), 2013 ONCA 683 at para 31.
The court will not strike a claim where there is at least a germ or scintilla of a cause of action and will allow an amendment of a statement of claim if the failure to plead an essential element was the result of an oversight: Golden Oaks Enterprise Inc. v. Lalonde, 2016 ONSC 5313.
The purpose of the rule is to eliminate hopeless claims and should be used with care: Paton Estate v. Ontario Lottery and Gaming Corp., 2016 ONCA 458.
Application to the Pleadings
Having carefully reviewed and considered the entirety of the Statement of Claim and the Response to the Demand for Particulars, I am struck by the fact that nowhere within the Claim or the Response to the Demand for Particulars do the Plaintiffs allege that Skalosky acted outside the scope of his employment or that he acted without due authority. Nor does the Claim or the Response to Demand for Particulars allege conduct that manifests a separate identity or interest by Skalosky from that of the Defendant Shell.
Skalosky is repeatedly referred to throughout the Claim as an employee of Shell. There is no allegation that Skalosky acted outside the scope of his employment or that he acted without due authority. The only allegation that may define Skalosky as something other than an employee is the Plaintiffs’ reference to Skalosky at paragraph 38 of the Statement of Claim as a “franchisor’s associate”.
With respect to this allegation, I find that the attempt to define Skalosky as a “franchisor’s associate” in the Claim and in the Response to Demand for Particulars constitutes merely a conclusory statement of fact unsupported by material facts that is based on assumptions or speculation. As such, as discussed by the Court in Lim, I do not assume the statement that Skalosky was a “franchisor’s associate” to be true, and do not therefore assume a separate cause of action under the AWA that may otherwise be available to the Plaintiffs.
It is my view that the Plaintiffs lack specific facts and/or the necessary knowledge to support the allegation that Skalosky was a “franchisor’s associate” and the Particulars provided do not save the claim against him.
I accept the Defendants' submissions regarding the state of the law that applies where a plaintiff alleges personal liability of an individual defendant. Without repeating the whole of the Defendants’ Factum, in summary, as noted by Justice Morgan in Tran v. University of Western Ontario:
Despite the fact that the onus in a Rule 21 motion is on the moving party to demonstrate that it is “plain and obvious” the claim must fail, Hunt v. T & N PLC, [1990] 2 SCR 959, at para 36, a party who pleads personal liability against the employees of a corporate defendant with which he has had dealings must satisfy a rather stringent test…the minimum level of material facts in a statement of claim founded on causes of action against an officer, director, or employee of a corporation with whom the plaintiff has contracted is very high.
- Justice Morgan’s decision to strike the plaintiff’s claim against the individual defendants in Tran was upheld by a unanimous panel of the Court of Appeal who wrote:
“…it is undisputed that when a plaintiff purports to sue both a corporation and individuals with that corporation (whether officers, directors, or employees), the plaintiff must plead sufficient particulars which disclose a basis for attaching liability to the individuals in their personal capacities”.
Undifferentiated allegations against employees are not enough. Personal liability must be specifically pleaded, and a separate claim must be stated against the individual in his personal capacity: 460635 Ontario Limited v. 1002953 Ontario Inc., 1999 ONCA 6.
I reject the Plaintiffs’ submission that an injured party has a right to sue another party’s employee, in their personal capacity, for conduct which is alleged to have caused harm in the course of their employment and prefer and accept the submissions of the Defendants that employees can only be held personally liable if their conduct (a) manifests a separate identity or interest from their employer, and (b) is tortious in itself: Burns v. RBC Life Insurance Company, 2019 ONSC 6977 at para 22, aff’d 2020 ONCA 347.
I specifically find that neither the Claim nor the Response to the Demand for Particulars provided sufficient facts to support a claim that Skalosky’s conduct manifested a separate identity or interest from Shell or was tortious in itself. As such, the Claim in its present form does not establish personal liability against Skalosky.
Determination of Motion and Costs
For the foregoing reasons, the Plaintiff’s claim against Skalosky is struck.
With respect to the issue of leave to amend, Rule 26.01 requires the court to grant leave to amend a pleading unless the other party would suffer non-compensable prejudice.
In the present case, despite urging the court to strike the claim without allowing for an amendment, the Defendants have not presented any evidence that the Defendants would suffer non-compensable prejudice if an amendment were granted.
Accordingly, the claim against Skalosky is struck, and the Plaintiffs are granted leave to amend their claim, if following review and consideration they deem such an amendment appropriate.
Subject to any offer to settle that may affect costs, as the results of the motion were mixed, each party shall bear their own costs.
Susan J. Woodley
March 10, 2025