COURT OF APPEAL FOR ONTARIO

CITATION: Gaur v. Datta, 2015 ONCA 151

DATE: 20150312

DOCKET: C59142

Rouleau, van Rensburg and Pardu JJ.A.

BETWEEN

Pradeep Gaur, Apt Flow Technologies Inc.

and 2081706 Ontario Inc.

Plaintiffs (Appellants)

and

Dipti Datta, Utpal Datta, Inge Datta

and M&I Power Technology Inc.

Defendants (Respondents)

J. David Keith and Evan Moore, for the appellants

Constance Olsheski, for the respondents

Heard: February 6, 2015

On appeal from the order of Justice Michael G. Emery of the Superior Court of Justice, dated June 26, 2014.

van Rensburg J.A.:

[1] This is an appeal from an order dismissing an action against the respondents under rule 21.01(1)(b) of the Rules of Civil Procedure. For the reasons that follow I would allow the appeal. In my view, the motion judge erred in dismissing the action against the respondents. I would permit the appellants to proceed with their action against the respondents, claiming both defamation and intentional interference with economic relations, with leave to amend their pleadings as set out below.

A. Background

[2] The appellants – Pradeep Gaur and two companies of which he is a principal – are defendants to an action in the Superior Court commenced by M&I Power Technology Inc. (“M&I Power”) in 2012 (the “First Action”). That action, alleging breach of contract and breach of fiduciary duty, was commenced after the termination of Pradeep Gaur’s employment with M&I Power.

[3] In 2013, the appellants commenced Action No. CV-13-1230-00 in the Superior Court against Dipti Datta and the respondents (the “Second Action”). The respondent M&I Power is the plaintiff in the First Action. The respondents Utpal Datta and Inge Datta are current directors of M&I Power. Dipti Datta (who did not move to dismiss the action, and is therefore not a respondent to this appeal) is a former director and officer of M&I Power.

[4] In the Second Action the appellants claim damages for defamation and intentional interference with economic relations. Central to the action are three emails. The first two (dated July 5, 2012 and July 11, 2012) were authored by Dipti Datta. The third (dated March 22, 2013) was authored by Utpal Datta. It is the motion judge’s dismissal of the Second Action against the respondents under rule 21.01(1)(b) that forms the subject of this appeal.

[5] The motion judge correctly identified the legal principles applicable to a motion to strike under rule 21.01(1)(b). No evidence is admissible, and the facts pleaded are assumed to be true unless patently ridiculous or incapable of proof: Lysko v. Braley, 2006 CanLII 11846 (ON CA), [2006] O.J. No. 1137 (C.A.), 79 O.R. (3d) 721, at para. 3; McCreight v. Canada, 2013 ONCA 483, 116 O.R. (3d) 42, at para. 29. In determining whether a cause of action is disclosed, particulars can be considered as part of the pleading. In assessing the substantive adequacy of the claims, the court is entitled to review the documents referred to in the pleadings: McCreight, at para. 32.

[6] The appellants contend that the motion judge erred by dismissing the claim against the respondents after making findings of fact. They assert that the amended statement of claim, when read with the particulars and the emails (which are incorporated by reference in the pleadings), discloses proper claims against the respondents sounding in defamation and intentional interference with economic relations.

[7] I consider the appellants’ submissions regarding each cause of action in turn.

B. The defamation claims

[8] The tort of defamation requires the plaintiff to prove three elements: (1) the defendant made a defamatory statement, in the sense that the impugned words would tend to lower the plaintiff’s reputation in the eyes of a reasonable person; (2) the words in fact refer to the plaintiff; and (3) the words were communicated to at least one person other than the plaintiff: Guergis v. Novak, 2013 ONCA 449, 116 O.R. (3d) 280, at para. 39; Grant v. Torstar Corp., 2009 SCC 61, [2009] 3 S.C.R. 640, at para. 28; see also Lysko, at para. 91.

[9] In Lysko, at para. 90, this court noted that “publication by the defendant is an essential element of a defamation action and any person who participates in the publication of the defamatory expression in furtherance of a common design will be liable to the plaintiff”. As Raymond E. Brown stated in The Law of Defamation in Canada, loose-leaf (2012-Rel. 3),2nd ed. (Scarborough: Carswell, 1999), at pp. 7-30 – 7-31:

The defamatory material may be published indirectly through the action of some intermediary for whose publication a defendant may be held to share responsibility. This may be because the defendant authorized, incited or encouraged another to publish it…A defendant may be responsible for the acts of others by encouraging, instructing or authorizing them to publish defamatory information, or providing them with information intending or knowing that it will be published.

[10] Pleadings in defamation cases are more important than in any other class of action, and require a concise statement of the material facts: Lysko,at para. 91.

[11] In this case, the alleged defamation occurred in the three emails referred to above: two authored by Dipti Datta and a third by Utpal Datta. The amended statement of claim pleads the following:

• all of the defendants (including the respondents) falsely and maliciously published the words set out in the paragraph (defined as the “Defamatory Words”) (para. 7);

• the Defamatory Words were published by email correspondence to certain named third parties (para. 8). It is acknowledged that this pleading refers to the two emails authored by Dipti Datta;

• Utpal Datta published additional Defamatory Words in a third email and sent the email to certain named third parties, associated with potential clients of the plaintiffs (paras. 8a and 8b);

• the meaning of the Defamatory Words (para. 10);

• the defendants published the Defamatory Words knowing they were false or with careless disregard for their truth (para. 11); and

• “the plaintiff” (presumably, Pradeep Gaur) has been injured and suffered damages for which the defendants are liable (paras. 12-14).

[12] Paragraph 15 of the amended statement of claim asserts that the respondents acted in concert with Dipti Datta to publish the Defamatory Words, and that Utpal Datta published some of the Defamatory Words directly. Paragraph 17 pleads, in the alternative, that Dipti Datta, when he published the Defamatory Words, was acting as Utpal and Inge Datta’s agent. Paragraph 18 pleads, in the further alternative, that Dipti Datta acted on behalf of M&I Power when he published the Defamatory Words.

[13] Although these paragraphs appear in the pleading under the heading “Intentional Interference with Economic Relations”, the respondents acknowledge that, reading the amended claim broadly, the pleadings of agency and “acting in concert” also apply to the defamation claims.

(1) Dipti Datta’s Emails

[14] The respondents accept that the pleading is sufficient to disclose a defamation claim against Dipti Datta. The principal issue is whether the action regarding Dipti Datta’s emails can proceed against the respondents. This depends on whether the pleading is sufficient with respect to their participation, authorization or otherwise, to make them liable for the publication of the emails.

[15] The allegations that the respondents acted in concert with Dipti Datta and that he was their agent, are bald. These are conclusions of law, not supported by material facts: Williams v. Canon Canada Inc., 2011 ONSC 6571, [2011] O.J. No. 5049, at paras. 217-220, aff’d 2012 ONCS 4692, 2012 ONSC 4692, [2012] O.J. No. 3120 (Div. Ct.); Durling v. Sunrise Propane Energy Group Inc., 2012 ONSC 4196, [2012] O.J. No. 3408, at para. 75.

[16] However, this is not the end of the analysis. One must turn to the particulars to see whether material facts have been pleaded. The respondents’ counsel made a number of demands for particulars over the course of several months, which included increasingly more pointed requests for particulars as to how the respondents acted in concert. Eventually, in particulars provided on July 26, 2013, the appellants stated as follows:

Dipti Datta wrote the words in an email in or around July 2012. In addition, Utpal Datta told a contractor (Ilia) that Mr. Gaur was incompetent. Mr. Utpal Datta, at an M&I Power Technology Inc. meeting with Inge Datta present, told Mr. Gaur that should he leave the company, they would do what they could to blacklist him in the industry. Utpal Datta and Inge Datta requested the involvement of Dipti Datta who uttered the Defamatory Words. Utpal Datta also provided Dipti Datta with the contact information of business associates in order that Dipti Datta might contact them to undermine Mr. Gaur’s reputation.

The threats to litigate were made by Dipti Datta in or around July 2012 via email to Triton Synergies. M&I Power and Utpal Datta provided the information to Dipti Datta in order that he act on behalf of them in respect to Mr. Gaur.

[17] These particulars provide additional material facts relevant to the respondents’ participation in the publication of the Dipti Datta emails: Utpal Datta, at an M&I Power meeting with Inge Datta present, told Pradeep Gaur that should he leave the company, they would do what they could to blacklist him in the industry; Utpal and Inge Datta requested the involvement of Dipti Datta, who uttered the Defamatory Words; Utpal Datta provided Dipti Datta with the contact information of business associates in order that Dipti Datta might contact them to undermine Pradeep Gaur’s reputation; and M&I Power and Utpal Datta provided Dipti Datta information in order for him to threaten litigation in an email to Triton Synergies on their behalf.

[18] Further, paragraphs 8a and 8b of the amended claim plead that Utpal Datta sent his own, similarly defamatory email and that the consistency in words used in the emails “indicate[s] a concerted and collective effort by the defendants”. I disagree with the motion judge’s observation that the third email, written by Utpal Datta, must be considered in isolation from the emails written by Dipti Datta. Reading the pleading generously, the inclusion of consistent Defamatory Words in Utpal Datta’s email is a material fact supporting the allegation that the respondents acted in concert with respect to the Dipti Datta emails.

[19] The motion judge was entitled to review the emails to determine whether what was pleaded (as enhanced by the particulars) was “patently ridiculous or incapable of proof”. Instead, he appears to have examined the emails as evidence, weighing the inferences that could be drawn from their contents and then concluding there was no allegation or fact to support the pleadings that the respondents acted “in concert” with Dipti Datta (para. 29) and that the respondents could not be held accountable for the Defamatory Words in the Dipti Datta emails (para. 32).

[20] In my view, the allegations in the particulars, which are based on the words contained in the emails, are capable of an interpretation that the respondents acted in concert with Dipti Datta. The facts pleaded are neither patently ridiculous nor incapable of proof. This of course does not mean that they will necessarily be proven, only that on a Rule 21 motion sufficient material facts have been pleaded to support an action in defamation against the respondents in relation to the Dipti Datta emails.

(2) Utpal Datta’s Email

[21] The appellants allege that Utpal Datta sent a similarly defamatory email on March 22, 2013. The motion judge concluded that since only Utpal Datta sent the email, it gives rise to no claim against Inge Datta or M&I Power. He also concluded that the amended statement of claim did not contain sufficient material facts to support this pleading. He dismissed the claim, but without prejudice to its being asserted against Utpal Datta by way of counterclaim in the First Action. I disagree with the motion judge. In my view, the pleading is sufficient.

[22] Paragraphs 8a and 8b of the amended statement of claim plead all of the necessary elements of the tort of defamation. The paragraphs plead the words that are alleged to have been defamatory, their publication in an email by Utpal Datta, and specifically identify two recipients of the email. It is alleged that the consistent use of the Defamatory Words indicates a concerted and collective effort by the respondents. With respect to the claim against M&I Power and Inge Datta, the pleading is sufficient, when considered in the context of the entire pleading as well as the particulars provided.

C. the intentional interference with economic relations claim

[23] The motion judge’s reasons suggest he struck the appellants’ claim against the respondents for intentional interference with economic relations under rule 21.01(1)(b), and that he did so for two reasons. First, the amended statement of claim failed to disclose material facts addressing the tort’s requisite elements. Second, as with the defamation claims, the pleading disclosed insufficient material facts to assert a claim premised on concerted action between the respondents and Dipti Datta.

[24] For the reasons already discussed, I do not agree with the second conclusion. I turn to consider whether all of the required elements of the tort have been pleaded.

[25] In A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12, [2014] 1 S.C.R. 177, a recent decision of the Supreme Court of Canada, Cromwell J. clarified the elements of unlawful interference with economic relations, which he indicated is also referred to as intentional interference with economic relations: at para. 2. The tort requires the defendant to have committed an actionable wrong against a third party that intentionally caused the plaintiff economic harm. Conduct is unlawful if it is actionable by the third party, or would be actionable if the third party had suffered a resulting loss: A.I. Enterprises Ltd., at para. 5.

[26] The amended statement of claim asserts the following with respect to the tort of intentional interference with economic relations. It alleges that, by undermining Pradeep Gaur’s professional reputation, the defendants sought to, and did, interfere with the plaintiffs’ ability to maintain existing contracts, secure additional contracts and develop business opportunities (para. 20). The claim also alleges that this interference was unlawful and induced a breach of contract (para. 21). Finally, the claim alleges that the defendants’ conduct aggravated the damages caused to the plaintiffs by, among other things, “sending the plaintiffs’ third party business associates threats to send ‘quasi legal letters’ to potential customers implicating the third party business associates and threatening legal action” (para. 22d), and “attempting to induce potential third-party business associates of the plaintiffs to either break their contracts with the plaintiff or not enter into contracts with the plaintiff” (para. 22e).

[27] This pleading alone does not address each of the essential elements of the tort of intentional interference with economic relations. In particular, there is no allegation that would amount to “unlawful means”. The reference to third parties here is confusing and there is no clear allegation of an actionable wrong against any third party.

[28] However, the appellants urge the court to consider, together with the amended statement of claim, the particulars and what is stated in the July 5, 2012 email.

[29] With respect to the unlawful means element, the particulars assert that the respondents, through Dipti Datta, offered to pay Triton (a third party) a portion of an acknowledged debt owed by M&I Power if Triton would cease doing business with Pradeep Gaur. The appellants contend that, when considered with reference to the July 5, 2012 email, the allegation is that Dipti Datta (on behalf of himself and the respondents) threatened that Triton would not receive payment of a debt owed by M&I Power unless it provided its “full cooperation” in the respondents’ campaign against Pradeep Gaur by ending its business relationship with Gaur. In A.I. Enterprises Inc., at para. 80, Cromwell J. acknowledges that threatening to breach a contract with a third party can satisfy the unlawful means element of the tort of intentional interference with economic relations.

[30] Regarding the intention element, the amended statement of claim only alleges that the respondents, by undermining Pradeep Gaur’s reputation, sought to interfere with the appellants’ ability to maintain existing contracts, secure additional contracts and develop business opportunities (para. 20). This allegation is not explicitly pleaded as the respondents’ reason for inducing third parties to either break or not enter into contracts with the appellants (para. 22e). However, on a generous reading of the pleading together with the particulars and the July 5, 2012 email, it appears that the appellants are alleging that the respondents’ threats to withhold monies from Triton was targeted at inflicting economic harm on the appellants, as the condition for receiving payment was for Triton to cease its business relationship with Gaur.

[31] Regarding the requirement that the unlawful means caused the plaintiffs economic harm, the particulars assert that the appellants have lost $1.5 million as a result of third party business associates – who pursued contracts on their behalf and provided them access to contract opportunities – discontinuing their relationship with the appellants. The particulars also attribute $32 million in losses to the withdrawal of third parties from proposed contracts and joint venture opportunities. Although Triton is not explicitly named in these particulars, given the similarity between the relationship between the appellants and Triton and the intermediary relationship described, on a generous reading this element of the tort is disclosed.

[32] In my view, when the particulars and the July 5 email are considered, intentional interference with economic relations is raised in this action against the respondents. The appellants allege an actionable wrong by the respondents (a threat to continue an ongoing breach of contract) against a third party (Triton Synergies) that was aimed at causing, and did in fact cause, the appellants economic harm: A.I. Enterprises Inc., at paras. 5, 23. These allegations are neither incapable of proof nor patently ridiculous. Taking them as true, and adopting a broad and generous reading of the pleading together with the particulars and the July 5, 2012 email, it is not “plain and obvious” that the pleading discloses no reasonable cause of action for intentional interference with economic relations: Hunt v. T & N plc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93, at paras. 33, 36; Knight v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45, at para. 17. Accordingly, I would set aside the motion judge’s order under rule 21.01(1)(b) striking the appellants’ claim for intentional interference with economic relations, subject to what I say below respecting the need to amend the pleading.

D. Alternative Bases for Relief

[33] The motion judge indicated that, while it was unnecessary to address the other bases for the relief sought by the respondents under rules 25.11, 25.06(1) and 21.01(3)(d), he would have struck certain paragraphs of the amended statement of claim as frivolous, vexatious or an abuse of process.

[34] The motion judge referred to authority that “in the absence of material fact, an action can be dismissed as frivolous, vexatious or an abuse of process of the court”: see, for example, George v. Harris, [2000] O.J. No. 1762 (S.C.), at para. 20. Given his finding that the pleading was bald and lacked sufficient material facts to establish concerted action between the respondents and Dipti Datta, the motion judge would have struck any claims for defamation and intentional interference with economic relations premised on such allegations as frivolous, vexatious or an abuse of process.

[35] As already explained, I disagree with this characterization. Accordingly, I also disagree with the conclusion that the pleadings should be struck on this alternative basis.

E. leave to amend

[36] While not strictly necessary for the survival of the action in defamation against the respondents at the pleadings stage, I would grant the appellants leave to amend the amended statement of claim to incorporate the material facts set out in the particulars in relation to agency and acting in concert.

[37] With respect to the elements of intentional interference with economic relations, as I have indicated, the pleading is deficient, but the particulars provide the necessary elements of the cause of action. It is therefore necessary for the appellants to amend the claim for intentional interference with economic relations so that the various facts contained in the particulars are brought into the pleading and the elements of the tort are clearly set out. An amended pleading shall be delivered within 30 days, and the respondents shall have 30 days thereafter to deliver their statement of defence.

F. conclusion

[38] For these reasons I would allow the appeal, set aside the order dismissing the action against the respondents, and grant leave to amend the amended statement of claim.

[39] Since the appellants were successful in the appeal, I would set aside the motion judge’s order for costs and award the appellants costs of the motion in the sum of $10,000, as well as costs of the appeal in the further sum of $10,000, with both amounts inclusive of disbursements and applicable taxes.

Released: (KMvR) MARCH 12, 2015

“K. van Rensburg J.A.”

“I agree Paul Rouleau J.A.”

“I agree G. Pardu J.A.”