COURT OF APPEAL FOR ONTARIO

CITATION: Reeves v. Eddy, 2014 ONCA 91

DATE: 20140203

DOCKET: C57064

Hoy A.C.J.O., Cronk and Epstein JJ.A.

BETWEEN

John Reeves

Appellant (Plaintiff)

and

Warren Eddy, Conversion Internet Marketing Services,

Conversion Marketing Communication Inc. and KYP Canada Inc.

Respondents (Defendants)

David E. Greenwood, for the appellant

Rahool P. Agarwal and Lauren Posloski, for the respondents

Heard: January 17, 2014

On appeal from the order of Justice Sydney N. Lederman of the Superior Court of Justice, dated April 19, 2013.

ENDORSEMENT

A. Introduction

[1] The appellant appeals from the motion judge’s ruling on the respondents’ motion under rules 21.01(b) and 25.06(1) of the Rules of Civil Procedure: (1) striking all the appellant’s claims and dismissing his action as against the individual respondent, Warren Eddy (“Eddy”); and (2) striking the appellant’s unjust enrichment claim as against all the respondents.

[2] For the reasons that follow, we conclude that the appeal must be allowed in part.

B. Claims As Against Eddy

[3] In his Fresh as Amended Statement of Claim, the appellant claimed damages as against Eddy for breach of contract, misrepresentation, quantum meruit and unjust enrichment. He also alleged that Eddy was jointly and severally liable with the remaining respondents under s. 131 of the Ontario Business Corporations Act (the “OBCA”) for the accrued wages and expenses claimed by him and under s. 10 of the Partnerships Act (Ontario) for the damages he claimed, in general. As pleaded, the appellant’s wrongful dismissal claim did not implicate Eddy in his personal capacity.

[4] The respondents moved to strike all the claims as against Eddy on various grounds. The motion judge held, at para. 6 of his reasons, that the appellant’s pleading, “as it stands does not reasonably support any of the causes of action asserted as against Eddy personally as being independent from the causes of action that the plaintiff is asserting as against the corporate defendants”. The motion judge therefore struck all the appellant’s claims and dismissed his action as against Eddy.

[5] We will consider the appellant’s proposed claims as against Eddy in turn.

(1) Statutory Claims

[6] The respondents concede that the motion judge erred by striking the appellant’s claim as against Eddy under s. 131 of the OBCA. We agree.

[7] Based on his reasons, it appears that the motion judge did not turn his mind specifically to the statutory claims advanced as against Eddy. Nonetheless, by the terms of his order, these claims were struck.

[8] Yet, in their Amended Notice of Motion, dated February 15, 2013, the respondents did not seek to strike the appellant’s claims under the OBCA and the Partnerships Act. On this ground alone, these claims ought not to have been struck by the motion judge.

[9] In addition, in our view, it is not plain and obvious that these claims could not succeed as against Eddy. To the contrary, the facts pleaded (for example, at paras. 5, 7, 19, 21 and 30 of the appellant’s pleading) are sufficient to support these claims at the pleadings stage. In respect of the appellant’s claim under the Partnerships Act, the respondents’ counsel acknowledged as much, provided that the appellant’s pleading is read as advancing this claim only as against Eddy in his personal capacity and the respondent, Conversion Internet Marketing Services, an alleged partnership, and not as against the other respondents. During oral argument, the appellant’s counsel accepted this interpretation of the pleading and confirmed that this is the intended scope of this claim.

[10] In these circumstances, the appellant’s claims under the OBCA and the Partnerships Act should be permitted to proceed.

(2) Breach of Contract Claim

[11] We also respectfully conclude that the motion judge erred by holding that the appellant had failed to plead the material facts necessary to ground his proposed breach of contract claim as against Eddy.

[12] Read generously, as it must be, the appellant’s pleading includes the allegation that Eddy himself undertook to pay the appellant a retroactive salary of $250,000 in consideration for the appellant’s continued provision of services to the other respondents and knowing that the appellant was relying on Eddy’s commitment: see in particular, paras. 14 – 17 of the Fresh as Amended Statement of Claim. The appellant further pleads that although he continued to provide the services in question, Eddy failed to honour this commitment.

[13] These allegations, in our opinion, are sufficient to support a breach of contract claim as against Eddy in his personal capacity at the pleadings stage.

(3) Quantum Meruit Claim

[14] In addition or in the alternative to his breach of contract claim, the appellant also seeks to advance a quantum meruit claim as against Eddy. The motion judge also struck this claim. In our view, he was correct to do so. Simply put, as pleaded, the appellant’s alleged services were not provided to Eddy but, rather, to one or more of the other respondents. In other words, the appellant does not plead that Eddy, in his personal capacity, received goods and services for which the appellant was not paid. Accordingly, in our view, it is plain and obvious that a quantum meruit claim as against Eddy in his personal capacity cannot succeed.

(4) Misrepresentation Claim

[15] We reach a different conclusion concerning the appellant’s mis-representation claim as against Eddy.

[16] Paragraph 17 of the appellant’s pleading may be read as alleging that Eddy promised the appellant that he would personally pay the appellant a retroactive salary, knowing that the appellant would rely on this commitment as the basis for his continued provision of services to the other respondents. In addition, paragraph 22(b) of the pleading alleges that at the time Eddy made this commitment, he did not intend to honour it.

[17] Before this court, the appellant argues that by telling the appellant that he would pay him the retroactive salary, Eddy represented that he intended to honour his promise to do so. This, the appellant says, was an actionable misrepresentation because, at the time of making this statement, Eddy, in fact, had no intention of doing so.

[18] The facts pleaded in support of this misrepresentation claim are thin. However, if the facts pleaded are proven, they arguably could establish misrepresentation on the authority of Queen v. Cognos Inc., 1993 146 (SCC), [1993] 1 S.C.R. 87; Moin v. Blue Mountains (Town) (2000), 2000 16816 (ON CA), 135 O.A.C. 278 (C.A.); and Calvin Forest Products v. Tembec Inc. (2006), 2006 12291 (ON CA), 208 O.A.C. 336 (C.A.).

[19] Accordingly, in our opinion, the appellant’s misrepresentation claim as against Eddy should also be allowed to proceed.

C. Claims As Against All the Respondents

[20] It remains to consider the appellant’s unjust enrichment claim as against all the respondents.

[21] The respondents argued before the motion judge that this claim must fail because the appellant did not plead any tangible benefit gained by any of the respondents as a result of the appellant’s alleged deprivation.

[22] The motion judge agreed and struck this claim in its entirety. On this appeal, the appellant argues that, in so doing, the motion judge erred by misconstruing Peel (Regional Municipality) v. Canada; Peel (Regional Municipality v. Ontario, 1992 21 (SCC), [1992] 3 S.C.R. 762. We agree.

[23] Peel holds, at para. 46, that the benefit required to support an unjust enrichment claim may involve the positive conferral of a benefit upon the defendant. However, Peel also recognizes that a benefit may be negative “in the sense that the benefit conferred upon the defendant is that he or she was spared an expense which he or she would have been required to undertake, i.e. the discharge of a legal liability” (emphasis added).

[24] The appellant argues that Eddy was unjustly enriched because he was spared the necessity of being compelled to hire someone in the appellant’s stead to perform the services rendered by the appellant. This, the appellant submits, is a “negative benefit” within the meaning of Peel.

[25] There are two difficulties with this argument. First, the appellant pleads that his services were provided, not to Eddy, but to the other respondents and that his employment agreement was with those respondents, not Eddy. Thus, on the appellant’s own pleading, the benefit of the services he provided flowed to the other respondents.

[26] Second, the appellant’s pleading contains no material facts regarding the nature of any tangible benefit allegedly realized by Eddy in his personal capacity by reason of the appellant’s provision of services to the other respondents. For example, as the appellant’s counsel candidly acknowledged on this appeal hearing, the appellant does not in fact plead that Eddy benefited personally from the appellant’s continued provision of services by reason of being relieved of the obligation to fund the other respondents to permit their payment of the appellant for his services.

[27] The omission of such material facts in connection with Eddy is fatal to a claim of unjust enrichment as against him personally. We therefore conclude that the motion judge was correct to strike this claim.

[28] In contrast, at para. 22(c) of his pleading, the appellant expressly alleges as against the other respondents that they were unjustly enriched because they received: (1) the appellant’s services without paying for them; and (2) “the benefit of goods and services (the business expenses)” that the appellant paid for.

[29] In our view, it is not plain and obvious that this unjust enrichment claim will fail. The facts pleaded against the respondents other than Eddy are tantamount to a claim that they received a tangible, negative benefit from the appellant because he provided services and made business expenditures, without compensation, that these respondents would otherwise have been required to undertake or incur. Read in this fashion, this claim potentially satisfies the ‘benefit requirement’ discussed in Peel.

D. Disposition

[30] For the reasons given, the appeal is allowed, in part, by: (1) setting aside the motion judge’s order striking all claims and dismissing the action as against Eddy; (2) reinstating the appellant’s statutory claims under the OBCA and the Partnerships Act and his breach of contract and misrepresentation claims as against Eddy; and (3) reinstating his unjust enrichment claim as against the respondents other than Eddy. In all other respects, the appeal is dismissed.

[31] The appellant has been largely successful on appeal. In our view, he is entitled to some costs of the appeal, fixed in the total amount of $3,000, inclusive of disbursements and all applicable taxes.

[32] The motion judge awarded the respondents their costs, fixed in the amount of $5,000. Based on our disposition of this appeal and as agreed by the parties, the motion judge’s costs award is set aside and the appellant is granted costs of the motion below, in the total amount of $5,000, as fixed by the motion judge.

“Alexandra Hoy A.C.J.O.”

“E.A. Cronk J.A.”

“Gloria Epstein J.A.”