Enviro-Tex Products Inc. v. Fibrex Insulations Inc. et al.

[Indexed as: Enviro-Tex Products Inc. v. Fibrex Insulations Inc.]

80 O.R. (3d) 641

Court of Appeal for Ontario,

McMurtry C.J.O., Weiler and Blair JJ.A.

May 23, 2006

Limitations -- Action upon the case for words -- Plaintiff bringing action for damages for slander, inducement of breach of contract and interference with economic relations after competitor allegedly told customers that plaintiff's product was dangerous -- Claim for slander struck as two-year limitation period had expired -- Two-year limitation period in s. 45(1)(i) not applying to claims for inducement of breach of contract and interference with economic relations -- Plaintiff not attempting to do indirectly what it could not do directly by making those claims -- Limitations Act, R.S.O. 1990, c. L.15, s. 45(1)(i).

The plaintiff brought an action for damages for slander, inducement of breach of contract and interference with economic relations after an employee of a competitor allegedly told customers that the plaintiff's product was dangerous. The plaintiff subsequently agreed to withdraw its claim for slander as the action was not commenced within the two-year limitation period set out in the Limitations Act. The defendants brought a motion to strike the other claims on the basis that those claims were in pith and substance an "action upon the case for words" and that they fell within the two-year limitation period in s. 45(1)(i) of the Act. The motion judge found that the claims were really an attempt to dress up a slander claim and to do directly what the plaintiff could not do indirectly. The motion was granted. The plaintiff appealed.

Held, the appeal should be allowed.

The motion judge erred in holding that the actions for inducement of breach of contract and interference with economic relations were governed by the two-year limitation period. An action in slander would not provide a remedy in damages to the plaintiff for economic loss to its commercial enterprise. Furthermore, the same underlying set of facts may give rise to more than one cause of action. Clearer wording than that contained in the Act would be required to bar any civil cause of action based on the words in issue here. Finally, there were no persuasive policy reasons that militated in favour of the action being struck at this stage. Insofar as the harm pleaded clearly related to the economic losses of a commercial enterprise, the plaintiff could not be said to be doing indirectly what it could not do directly.

APPEAL from a judgment of Festeryga J. of the Superior Court of Justice, dated September 26, 2005, dismissing claims for inducing a breach of contract and interference with economic relations.

Cases referred to Dundee Bancorp Inc. v. Fairvest Corp., [2005] O.J. No. 2699, 140 A.C.W.S. (3d) 280 (S.C.J.), apld Bai v. Sing Tao Daily Ltd., 2003 24013 (ON CA), [2003] O.J. No. 1917, 226 D.L.R. (4th) 477, 171 O.A.C. 385, 22 A.C.W.S. (3d) 1172 (C.A.), distd Other cases referred to Haskett v. Equifax Canada Inc. (2003), 2003 32896 (ON CA), 63 O.R. (3d) 577, [2003] O.J. No. 771, 224 D.L.R. (4th) 419, 15 C.C.L.T. (3d) 194 (C.A.), supp. reasons [2003] O.J. No. 1214 (C.A.) Statutes referred to Limitations Act, R.S.O. 1990, c. L.15, s. 45(1)(g), (i). [page642] Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 20.01(3)

Louis A. Frapporti and Vicky Choy, for appellant. Jack F. Fitch and Marc H. Spector, for respondents.

BY THE COURT: --

Nature of Appeal

[1] The appellant appeals the dismissal of its claims for inducing breach of contract and interference with economic relations and the consequent striking of the paragraphs related to these claims in its statement of claim without leave to amend.

Facts

[2] The appellant, Enviro-Tex Products Inc. ("Enviro-Tex"), manufactures a product called rockwool for sale to hyrdroponic vegetable growers. The respondent Devaere was an employee of the respondent MGS Horticultural Inc. ("MGS"), a competitor of the appellant. The appellant alleges that on or about October 15, 1999, the respondent Kelly Devaere ("Devaere") told the appellant's customers that EnerGro contained arsenic and could kill people. As a result, Enviro-Tex alleges that its customers cancelled their orders of EnerGro and additional sales have also been precluded.

[3] On February 17, 2005, the appellant claimed against the respondents for slander, malicious falsehood, inducement of breach of contract and interference with economic relations. The appellant sought general damages of $5,000,000 and punitive damages of $1,000,000, in addition to interest and costs.

[4] The respondents filed an amended statement of defence and cross-claim on May 13, 2005 and then, on June 1, 2005, served a notice of motion, striking the appellant's claim for slander on the basis that the two-year period for bringing such an action pursuant to the Limitations Act, R.S.O. 1990, c. L.15 had expired. The appellant agreed to withdraw its claim for slander.

[5] On September 20, 2005, the respondents amended their notice of motion to argue that the two-year limitation period set out in s. 45(1)(i) of the Limitations Act, also applied to the three [page643] other causes of action pleaded -- i.e., malicious falsehood, inducement of breach of contract and interference with economic relations pursuant to rule 20.01(3) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] -- and sought an order for summary judgment dismissing the claims. The respondents submitted that the other claims against them were in pith and substance an "action upon the case for words" and that they fell within the two-year limitation period in s. 45(1)(i) of the Limitations Act.

[6] After noting that no special damages were claimed and rejecting the appellant's argument that the claims fell within s. 45(1)(g) of the Limitations Act, which permits an action "upon the case other than for slander" within six years, the motion judge agreed with the respondent's contention and struck the claims. [See Note 1 below] In other words, the motion judge held the claims in issue were really an attempt to dress up a slander claim and to do indirectly what they could not do directly.

Analysis

[7] In our opinion, the motion judge erred in holding that the actions for inducement of breach of contract and interference with economic relations were governed by the two- year limitation period for three reasons.

[8] First, an action in slander would not provide a remedy in damages to the appellant for economic loss to its commercial enterprise. The appellant has provided particulars of its claim by listing the companies with whom it had orders and providing copies of the orders. These particulars form part of the pleadings. The fact that the appellant did not specifically plead that the appellant sustained specific losses due to the cancellation of the orders is a defect in the pleading that could be cured by granting leave to amend. See e.g. Haskett v. Equifax Canada Inc. (2003), 2003 32896 (ON CA), 63 O.R. (3d) 577, [2003] O.J. No. 771 (C.A.), at para. 58 where Feldman J. A. granted an opportunity to amend the pleading to properly plead the negligence claim.

[9] Second, it is trite law that the same underlying set of facts may give rise to more than one cause of action. Clearer wording than that contained in the statute would be required to bar any civil cause of action based on the words in issue here. Indeed, the appellant is entitled to bring, as it has done, an action in defamation for the publication of these same words. [page644]

[10] Third, there are no persuasive policy reasons that militate in favour of the action being struck at this stage. The respondent submits that the appellant cannot do indirectly what it cannot do directly and, in support of its submission, it relies on the decision of this court in Bai v. Sing Tao Daily Ltd., 2003 24013 (ON CA), [2003] O.J. No. 1917, 226 D.L.R. (4th) 477 (C.A.). In that case, after the appellants' claim for libel had been struck, McMurtry C.J.O. upheld an order striking out the appellants' claims for "incitement of hatred""crimes against humanity" and "negligent research" as disclosing no reasonable cause of action. We agree with, and adopt the distinction made by McMahon J. in Dundee Bancorp Inc. v. Fairvest Corp., [2005] O.J. No. 2699, 140 A.C.W.S. (3d) 280 (S.C.J.), at para. 52 that in Bai, supra, the plaintiff failed to seek any damages beyond those for loss of reputation. That is not the situation here. Insofar as the harm pleaded in this action clearly relates to the economic losses of a commercial enterprise, the appellant cannot be said to be doing indirectly what it cannot do directly.

[11] For these reasons, we therefore allow the appeal and set aside the order of the motion judge insofar as it dismisses the claims for inducement of breach of contract and interference with economic relations as well as the striking of the paragraphs related to those claims. We further grant leave to the appellant to amend its statement of claim if so advised.

[12] Costs of the motion are to the appellant fixed at $16,000 all inclusive. Costs of the appeal fixed in the amount of $13,000 all inclusive are also awarded to the appellant.

Appeal allowed.

Notes

Note 1: The appellant does not appeal the striking of the paragraphs relating to malicious falsehood. We are therefore concerned only with the claims for inducement of breach of contract and interference with economic relations.