DATE: 20051007

DOCKET: C42946

COURT OF APPEAL FOR ONTARIO

RE:

728654 ONTARIO INC. o/a LOCOMOTION TAVERN, 972101 ONTARIO LTD. o/a CABARET CANNONBALL, 1210436 ONTARIO LTD. o/a MILLION DOLLAR RESTAURANT, CAFÉ AT THE PART INC. AND PAK HON SIT (Plaintiffs (Appellants)) – and HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO, TORONTO POLICE SERVICES BOARD, REGIONAL MUNICIPALITY OF DURHAM POLICE SERVICES BOARD, CITY OF BARRIE POLICE SERVICES BOARD, REGIONAL MUNICIPALITY OF PEEL POLICE SERVICES BOARD and THE ALCOHOL AND GAMING COMMISSION OF ONTARIO (Defendants (Respondents))

BEFORE:

MOLDAVER, SHARPE and GILLESE JJ.A.

COUNSEL:

Joseph W. Irving and Neil C. Searles

for the plaintiffs/appellants

Kevin A. McGivney and Kathryn E. Kirkpatrick

for the respondent, Metropolitan Toronto

Police Services Board

John P. Zarudny and James Kendik

for the respondents, Her Majesty The Queen

and The Alcohol and Gaming Commission of Ontario

Eugene G. Mazzuca

for the respondents Peel Police Services Board

Siobhan McClelland

for the respondent Durham Police Services Board

Jeff LeRoy

for the respondent Barrie Police Services Board

HEARD & RELEASED ORALLY:

SEPTEMBER 28, 2005

On appeal from the judgment of Justice Gloria Epsetin of the Superior Court of Justice, dated December 21, 2004.

E N D O R S E M E N T

[1] The appellants appeal from the order of Epstein J. striking out their statement of claim (without leave to amend) on the grounds that the claim failed to disclose a reasonable cause of action and that it was frivolous, vexatious and not in compliance with the Rules of Civil Procedure. For reasons that follow, we would allow the appeal and re-instate the claim.

[2] With respect, we believe that the learned motion judge took an overly technical approach to the pleading in issue.

[3] On a motion to strike, the claim must be read as generously as possible. Any inadequacies in the form of the allegations which are merely the result of drafting deficiencies are to be accommodated: see Operation Dismantle Inc. v. The Queen (1985), 1985 74 (SCC), 18 D.L.R. (4th) 481 at 488 (S.C.C.). In addition, material facts are to be taken as proved, unless it is plain and obvious that they are based on assumptive or speculative conclusions that are incapable of belief: see Operation Dismantle, supra, at pp. 490-491.

[4] Applying those principles to the claim at hand, we are satisfied that the material facts pleaded are reasonably capable of supporting the causes of action (conspiracy to injure and abuse of process) alleged against the various defendants. In this regard, we note that the following material facts have been pleaded:

• the defendants conspired together to harm the plaintiffs through the creation and execution of Project Almonzo (paragraph 15);

• the Solicitor General and the Attorney General both had personal knowledge and provided their personal approvals for Project Almonzo (paragraph 23(b);

• particulars of how the defendants obtained funding for Project Almonzo are included in the claim (paragraph 23(a));

• Project Almonzo was not created for any proper law enforcement purpose but rather, it was created to cause financial harm to the adult entertainment industry and to put the plaintiffs out of business (paragraph 15);

• the defendants conspired to intimidate the plaintiffs’ staff and to damage the plaintiffs’ reputation by improperly portraying the plaintiffs as brothels (paragraph 15);

• through the use of police officers, the defendants sought and obtained search warrant authorizations for the express purpose of harming the plaintiffs (paragraph 17);

• the police were disingenuous before Justices of the Peace by purporting to need the warrants to obtain corporate records when, in reality, they were being sought to enter the plaintiffs’ businesses at their busiest time (paragraph 17);

• the police withheld evidence from Justices of the Peace regarding an appearance before a Justice of the Peace who denied search warrants (paragraph 18);

• the police used tactical units to execute the warrants in the absence of evidence that those attending to execute the search warrants would be met with resistance (paragraph 23(f));

• the defendants contravened federal legislation by improperly requiring foreign performers to stay in or return to Canada to appear in criminal prosecutions that arose as a result of Project Almonzo (paragraph 20);

• as a consequence of Project Almonzo, the plaintiffs were charged criminally, the businesses’ liquor licenses were suspended and the principal of the businesses was incarcerated for two days (paragraph 21);

• the criminal proceedings were withdrawn and the liquor licenses suspension was quashed by the Divisional Court (paragraph 21); and

• the above described actions caused economic loss to the businesses and emotional and mental distress to their principals (paragraph 22).

[5] We are further satisfied that the allegations made, and the facts pleaded in support of them, are sufficiently precise to enable the opposing parties to reply to them. By no means can it be said that the pleadings are frivolous and vexatious, or that they are simply a compilation of bare allegations and thus scandalous. On the contrary, the material facts pleaded outline in some detail the various forms of improper and unlawful conduct that the defendants engaged in with a view to causing the appellants economic harm, destroying their reputation and putting them out of business. Nothing more was required at this stage of the proceedings.

[6] Contrary to the view expressed by the motion judge, the respondents concede, and we agree, that the doctrine of merger is not applicable at this stage. It is open for the appellants to plead conspiracy to injure and abuse of process even though the material facts pleaded may overlap and eventually result in a finding of liability on one or the other, but not both.

[7] In the end, while we acknowledge that the pleadings are not a model of clarity, we are nonetheless satisfied that they are sufficient to pass the threshold test on a motion to strike out the entire statement of claim.

[8] Accordingly, the appeal is allowed, the judgment below is set aside and the motion to strike out the statement of claim is dismissed.

[9] The appellants are entitled to their costs here and below, which we fix in the total amount of $15,000, inclusive of G.S.T. and disbursements.

Signed: “M. Moldaver J.A.”

“Robert J. Sharpe J.A.”

“E.E. Gillese J.A.”