Economical v. Fairview, 2011 ONSC 7535
CITATION: Economical v. Fairview, 2011 ONSC 7535
DIVISIONAL COURT FILE NO.: 422/11
DATE: 20111219
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
ECONOMICAL INSURANCE COMPANY, PERTH INSURANCE COMPANY AND WATERLOO INSURANCE COMPANY Plaintiffs
– and –
FAIRVIEW ASSESSMENT CENTRE INC., PACIFIC ASSESSMENT CENTRE INC., DANNY GROSSI, YAN TAM, ALEXANDRE LOBATCH AND VITALI TOURKOV Defendants
COUNSEL:
S. Smith, for the Plaintiffs
Melvyn L. Solmon and James McReynolds, for the Defendants Fairview Assessment Centre Inc., Pacific Assessment Cerntre Inc., Yan Tam, Alexandre Lobatch and Vitali Tourkov
HEARD: December 15, 2011
REASONS FOR JUDGMENT
PENNY J.
[1] This is a motion for leave to appeal the interlocutory decision of Hainey J. In that decision, Hainey J granted partial relief on the defendant's motion to strike portions of the statement of claim under rule 21 but declined to strike the pleadings of conspiracy and the pleadings of personal liability and negligence against the individual defendants in their entirety.
[2] This is an action for damages, in essence, for fraudulent billing for insurance-related medical assessments and treatment. The claim alleges (all references to the contents of the claim are to allegations in the claim) that the corporate defendants are in the business of providing medical assessments and treatment for insurance purposes. The individual defendants are the owners and or officers, directors and employees of the corporate defendants.
[3] The causes of action sound in conspiracy, negligent misrepresentation, deceit and fraudulent misrepresentation. The claim also seeks to “pierce the corporate veil.”
[4] The grounds for the original motion included:
(a) the conspiracy claim did not allege special damages attributable to each conspiracy;
(b) the conspiracy claim related to events which it already taken place and was therefore “merged” with the alleged torts of negligence and fraud; and
(c) the claims against the individuals did not disclose separate or independent causes of action from those claimed against the corporations.
[5] Hainey J. agreed with the defendants that the conspiracy allegations were deficient because they did not allege that the plaintiffs suffered special damage by reason of the alleged conspiracies. Accordingly, Hainey J. held that it was plain and obvious that the conspiracy allegations did not disclose a reasonable cause of action and should be struck with leave to amend.
[6] With respect to the issue of merger, Hainey J., relying in part on Hunt v. Carey, found that it was not plain and obvious that the conspiracy allegations merged with the other torts for essentially two related reasons:
(1) conspiracy is only one of the torts pleaded and the determination of which tort has been established rests with the trial judge. Only then might the doctrine of merger apply; and
(2) the conspiracy claim is founded upon an unlawful act that is itself non-tortious. Breach of section 438 of the Ontario Insurance Act is alleged as the unlawful act in the conspiracy; breach of statute is not of itself tortious or actionable. This makes the conspiracy claim different from the allegations of negligence and fraud such that the conspiracy claim is not merged.
[7] With respect to the claims against the individual defendants in negligence, Hainey J., having carefully reviewed the allegations against the individual defendants, was satisfied that they allege separate tortious conduct which is independent of the allegations against the corporate defendants.
[8] Under Rule 62.02, leave to appeal to the Divisional Court under clause 19(1)(b) of the Courts of Justice Act (from the interlocutory order of a Judge of the Superior Court of Justice) shall not be granted unless:
(a) there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or
(b) be there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.
[9] For the purposes of rule 62.02(4) of the Rules of Civil Procedure, an exercise of discretion which has led to a different result because of different circumstances does not meet the requirement for a conflicting decision. It is necessary to demonstrate a difference in the principles chosen as a guide to the exercise of such discretion.
Merger
[10] There is a considerable body of law on the issue of merger although, in my view, it is reasonably well settled. The principle is well described in the decision of Ground J. in Graye v. Filliter,[^1] where he said:
The facts pleaded on which the conspiracy is based are the same as those pleaded with respect to the specific torts and no special injury or special damages arising from the conspiracy are pleaded. Accordingly, it does not appear to me that, in our case, the trial judge could find that the specific torts are not established on the facts pleaded but that the conspiracy or agreement to commit those torts is established and the defendants liable for injury or damage occasioned to the plaintiff as a result of the conspiracy even though, on the same facts the court has found that the defendants are not liable to the plaintiff on the basis of the specific torts pleaded.
Ground J's decision, I note, specifically took account of the decision of the Supreme Court of Canada in Hunt v. Carey, referred to by Hainey J. in his endorsement on the present motion.
[11] I do not think Hainey J.’s endorsement could be said to conflict, in the relevant legal sense, with the well established of body of law dealing with merger. Rather, Hainey J. simply applied the principles to the particular circumstances of this case and, in the exercise of his discretion, agreed in part with the defendants in striking out portions of the claim and agreed in part with the plaintiffs in declining to strike out portions of the statement of claim. Accordingly, I do not think the defendants have shown that the decision of Hainey J. falls within branch one of the test for leave.
[12] The defendants, however, argue that Hainey J. applied the wrong test and that, as a result, there is good reason to doubt the correctness of his decision. The defendants say the test is whether the allegations relating to the claim of conspiracy and the ensuing damages are substantially the same as those of the allegations relating to the causes of action for negligent misstatement, deceit and fraudulent misrepresentation such that the conspiracy and the other causes of action relate to the same underlying factual foundation and no significant differences between the two causes of action emerge.
[13] The defendants say that the underlying allegations relating to all the causes of action are substantially the same such that there are no significant differences between them. The defendants argue that the distinction relied on by Hainey J – that the conspiracy claim is founded upon an unlawful act, i.e., breach of section 438 of the Insurance Act, which is itself not tortious and not actionable – is a distinction without a difference.
[14] However, even if I were persuaded that there is good reason to doubt the correctness of Hainey J's order, the defendants must still show that the proposed appeal involves matters of such importance that leave to appeal should be granted. For a matter to be of “such importance” under rule 62.02(4)(b), it must transcend the interests of the immediate parties to the litigation and contemplate issues of broad significance or general application that are felt to warrant resolution by a higher level of judicial authority. Where the motions judge was not required or asked to establish or expand any new proposition of law or practice, or modify or overturn an established one, and simply applied existing propositions of law to the circumstances as he analyzed them, the matter would not appear to be of such importance as to satisfy this aspect of the test for leave.[^2] I agree in general with Corbett J. in Silver v. Imax Corp[^3] that discrete pleadings issues do not transcend the interests of the parties and do not constitute matters of such importance under Rule 62.02 that leave to be should be granted.
[15] The matter in issue here is a discrete pleading issue and does not dispose of anyone's final rights. It does not involve any important issue of principle. A relevant factor in the determination of whether the original motion ought to have been granted on this issue is whether the damages are the same. In this case, portions of the pleading relating to conspiracy were struck out with leave to amend to deal with the issue of special damages attributable to the alleged conspiracy. Those amendments have not yet been made. Finally, while I agree wholeheartedly with the sentiment that a complex allegation of conspiracy might potentially add to the length of pretrial disclosure and, indeed, to the trial, there is nothing about the particular allegations in this case which suggest that might be so. I am not persuaded that the matter in issue is of such importance that leave should be granted. In my view, leave should not be granted.
The Negligence Allegations Against The Individuals
[16] In my view, the defendants’ arguments concerning the negligence allegations against the individual defendants fall into exactly the same categories.
[17] I do not think Hainey J.'s decision could be said to conflict with any other decision of the court in the relevant legal sense required by Rule 62.02. And, even if I were convinced that there was good reason to doubt the correctness of Hainey J's disposition of the pleadings motion on this issue, for the reasons outlined above, I am not persuaded that the matter is of such importance that leave to appeal should be granted.
Costs
[18] The parties at the end of oral argument agreed that if leave was granted, costs should be left to the panel of the Divisional Court hearing the appeal. However, no submissions were made on the disposition of costs if leave was not granted. Accordingly, I encourage the parties to reach agreement on an appropriate disposition of costs. If they are unable to do so, the plaintiffs may deliver brief written submissions, not to exceed two typed pages together with a bill of costs, within ten days of the release of these Reasons. The defendants shall have seven days thereafter to deliver responding submissions, subject to the same to page limit.
Penny J.
Date: December 19, 2011
CITATION: Economical v. Fairview, 2011 ONSC 7535
DIVISIONAL COURT FILE NO.: 422/11
DATE: 20111219
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
PENNY J.
BETWEEN:
Economical Insurance Company, Perth Insurance Company and Waterloo Insurance Company Plaintiffs
– and –
Fairview Assessment Centre Inc., Pacific Assessment Centre Inc., Danny Grossi, Yan Tam, Alexandre Lobatch and Vitali Tourkov Defendants
REASONS FOR JUDGMENT
Penny J.
Released: December 19, 2011
[^1]: 1997 CarswellOnt 5335 [^2]: Rankin v. MacLeod, Young Weir Ltd. (1986), 1986 2749 (ON SC), 57 O.R. (2d) 569 (Ont. H.C.J.) [^3]: 2011 ONSC 1035, 2011 O.J. No. 656 (S.C.J.)