Ontario Superior Court of Justice – Divisional Court

Toronto-Dominion Bank v. Kopman

Date: 2000-01-31

Glen Ackerley, for the plaintiff/appellant; Stephen M. Turk, for Elayne Kopman, defendant/respondent.

(Court File No. 27/99)

[1] O'Leary, J. [orally]: We are dealing in this appeal with two actions. In the one action, The Toronto-Dominion Bank asks for judgment on three mortgages it holds on property now registered in the sole name of the defendant Elayne Kopman, now deceased. In that action the bank asks as well that the court declare to be invalid the second mortgage on the property held in trust by certain named individuals, or a declaration as to the proper amount owing on that mortgage.

[2] In a second action the bank asks for a declaration that the transfer by Stanley Kopman on July 3, 1990 to Elayne Kopman of his interests in the said property, was a fraudulent conveyance and void as against the bank and other creditors of Stanley Kopman.

[3] The two actions relate to the same property and have been ordered tried together. For the purpose of the plea by Elayne Kopman of abuse of process, the two actions must be considered to be one action.

[4] As to the ingredients required for a valid plea of abuse of process I refer to Fleming on Torts (4th Ed. 1971), pp. 547-548:

"The gist of this tort lies … in the misuse of process, no matter how properly obtained, for any purpose other than that which it was designed to serve. (Rest. §682) It involves the notion that the proceedings were merely … to coerce the defendant in some way entirely outside the ambit of the legal claim upon which the court is asked to adjudicate. … The essential elements of abuse of process are first, a collateral and improper purpose such as extortion, and secondly, a definite act or threat, in furtherance of a purpose not legitimate in the use of the process. Some such overt conduct is essential, because there is clearly no liability when the defendant merely employs regular legal process to its proper conclusion, albeit with bad intentions."

It should be noted the last sentence of this quotation applies as well to the claim for intentional infliction of mental suffering.

[5] Accepting as true everything pleaded in the statement of defence and counterclaim of Elayne Kopman in the two actions, including the allegations that the plaintiff's mortgages were part of a scheme wherein she was provided little or no information or misinformation as to the dealings between the bank and Stanley Kopman and the risks she was placing herself under; that her knowledge with respect to any bank transactions was extremely limited; that the mortgages were arranged without regard for her interests; that the bank was a fiduciary of hers; that she did not receive independent legal advice; that she was tricked by the bank; that the third mortgage has been repaid in full; that the value of the property does not justify all the claims brought by the bank; that by pressing ahead with additional claims the bank is trying to pressure her into a settlement of the claim on the first mortgage; that the bank has known of her serious illness and hopes she will simply cave in; that the action has caused her tremendous emotional distress hampering her ability to battle cancer - all that does not support her counterclaim that the plaintiff is using the process of the court for an improper purpose or is abusing the court process.

[6] Elayne Kopman does not allege the actions against her or any part of them, is to coerce her in regard to something outside the two actions, but to coerce her by the piling on of claims to cave in to the claim on the first mortgage which is a part of the actions. Neither does she allege an act or threat outside the action in furtherance of the collateral purpose.

[7] Accordingly then her counterclaim for intentional infliction of mental suffering and for abuse of the court process by the piling on of claims cannot stand, for no such cause of action has been pleaded.

[8] Counsel for Elayne Kopman submits that even if abuse of process has not been properly pleaded, the pleading should be allowed to stand because the bank did not move promptly to strike it out. The counterclaim which contains the pleading of abuse of process was delivered on January 21, 1998. The bank did not move to strike it out until the day before a motion to require a better affidavit on production and to require answers to questions refused on discovery of the bank was to be heard.

[9] Rule 21.02 reads: a motion under rule 21.02 (to strike out a pleading on the ground that it discloses no reasonable cause of action) shall be made promptly and a failure to do so may be taken into account by the court in awarding costs.

[10] Counsel for Kopman concedes that the only prejudice Kopman has suffered by the delay in bringing the motion, is the costs incurred on the motion she brought for a better affidavit on production and to require questions be answered.

[11] Rule 21.02 seems to indicate that the penalty for failing to move promptly may in some cases be an award of costs to compensate for delay.

[12] In this case however there are reasons why the court should strike out the pleading of abuse of process and intentional infliction of mental injury. (1) There is no reason why the trial judge should be left to deal with a pleading of abuse of process that is a nullity in law. The same holds for the plea of intentional infliction of mental injury. (2) On the motion by Kopman to be heard by the master, the master should know whether or not he is dealing with a sound pleading of abuse of process. Indeed it is the position of counsel for Kopman that if abuse of process has been properly pleaded, he is entitled to production of documents and the answer to questions otherwise protected by solicitor client or litigation privilege in an effort to find out the purpose or intention the bank had in adding further causes of action to the original action on the first mortgage.

[13] It is in the interest of the court to avoid unnecessary time being spent by judges and masters on pleadings that are invalid, that is to say that raise no cause of action. Accordingly the matter of delay should not deter us from holding that the pleadings of abuse of process and intentional infliction of mental suffering disclose no cause of action.

[14] As for the claim by Elayne Kopman for general damages for breach of fiduciary duty owed her by the bank, neither counsel for the bank nor counsel for Kopman were able to help us with any law as to whether or not if a claim for breach of fiduciary duty be established there can be an award of general damages. We are not content then to dispose of the issues as to whether or not such a claim can be made and allow the plea of breach of fiduciary duty to stand. The balance of the counterclaim is however struck out. This means of course that the appeal is allowed save for the pleas relating to fiduciary duty and the claim for damages for breach of fiduciary duty.

[15] Southey, J. [dissenting] [orally]: I regret that I am unable to agree with the conclusion reached by my brother O'Leary, J., on this appeal.

[16] As he points out, the motion is one under rule 21.01(1). It is well settled that on such a motion the facts as alleged in the attached pleading must be taken as being correct with certain exceptions that are not applicable to the case at bar. I shall set out the allegations which to me are of particular significance in determining, not whether the counterclaimant has a valid counterclaim, but whether it is plain and obvious that the counterclaim must fail.