Court File and Parties
CITATION: Globe POS Systems v. Visual Information Products Inc., 2022 ONSC 5932
DIVISIONAL COURT FILE NO.: 820/21
DATE: 20221019
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D.L. Corbett J.
BETWEEN:
GLOBE POS SYSTEMS INC. and TONY
ROSSI
Julien Bonniere, for the
Appellant
Mr Rossi, not appearing
Defendants/Appellant
– and –
VISUAL SYSTEMS INFORMATION INC.
Daria Chyc, for the Respondent
Plaintiff/Respondent
HEARD at Toronto (by videoconference):
April 5, 2022
REASONS FOR DECISION
D.L. Corbett J.
[1] This is an appeal from the final order of La Horey A.J., dismissing a motion by the defendant Globe to amend its statement of defence to add a counterclaim. For the reasons that follow, the appeal is dismissed.
[2] The Associate Justice correctly set out the permissive test for amendment of pleadings and identified the sole issue on the motion before her: the plaintiff/respondent Visual defended the motion on the basis that the proposed amendments, being the crossclaim, are not tenable in law (Decision, para. 9). Globe devotes a considerable portion of its written argument to the correct principles on a motion to amend pleadings, but, in my view, they are not engaged in this appeal. The Associate Justice was correct in finding that she should not grant the motion for leave to amend if the proposed pleadings are, on their face, not tenable in law. The Associate Justice also correctly stated the breadth of this principle, quoting from a recent decision of the Court of Appeal as follows: “leave to amend should be denied only in the clearest of cases, especially where deficiencies in the pleading can be cured by an appropriate amendment and the other party would not suffer prejudice if leave to amend was granted.” (Burns v. RBC Insurance Co., 2020 ONCA 347 at para. 22, quoted at Decision, para. 8).
[3] The Associate Justice quoted the proposed crossclaim and characterized it as follows:
In essence, Globe seeks to bring a counterclaim against Visual for commencing this action.
[4] This characterization is accurate. The claim in the main action is summarized accurately at para. 2 of the Decision.
Visual commenced this action on August 21, 2019 against its former employee, Tony Rossi… and Rossi’s subsequent employer, Globe. Visual alleges that Rossi has breached non-competition and confidentiality clauses in his employment contract, appropriated corporate opportunities, violated the plaintiff’s intellectual property rights and breached his fiduciary duty to the plaintiff. As against Globe, Visual alleges that Globe is liable for inducing Rossi to breach his contract with it.
[5] The proposed counterclaim is for “intentional and wrongful interference with the contractual and economic relations and business opportunities” (Decision, para. 4) arising from Visual “commencing [this action]… to intimidate… Rossi… and to further their own economic pursuits by extinguishing the potential success of parties that they perceive as competitors….” (para. 3 of the proposed counterclaim, quoted at para. 10 of the Decision). In other words, Globe alleges that Visual committed a legal wrong by suing Rossi.
[6] In paragraph 4 of the proposed counterclaim, Globe alleges that, faced with the claims against him in the main action, Rossi resigned his subsequent employment with Globe, as a result of the “unwanted stress and mental anguish caused” by Visual’s lawsuit against him. In paragraph 5 of the proposed counterclaim, Globe alleges that Visual “knew or ought to have known” that the lawsuit would cause Rossi “emotional distress and suffering” and that the “outcome” was “deliberately orchestrated” as a way to “maliciously interfere” with Globe’s “contractual and economic relations” and “future business opportunities.” In other words, Globe alleges that, as a result of Visual suing Rossi, Rossi resigned his employment with Globe, causing Globe damage for which Visual is liable in law.
What are the Alleged Causes of Action?
[7] The Associate Justice notes as follows at para. 12 of the Decision:
At the hearing of the motion counsel for Globe confirmed that the counterclaim asserts two causes of action: 1) intentional interference with economic relations (now known as the unlawful means tort); and 2) inducing breach of contract.
[8] The Associate Justice quoted leading authority from the Supreme Court of Canada on the elements of the “unlawful means tort” (paras. 13 and 14 of the Decision). As held by Cromwell J., “for conduct to constitute “unlawful means” for this tort, the conduct must give rise to a civil cause of action by the third party or would do so if the third party had suffered loss as a result of that conduct” (A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12, para. 76, quoted in the Decision, para. 14).
[9] The “third party” in the context of this appeal is Rossi. The alleged “unlawful means” is Visual’s bringing a lawsuit against Rossi. As held by the Associate Justice, “[i]t is beyond clear that this proposed pleading is not legally tenable…. Issuing a civil claim is not an unlawful act, and it cannot give rise to civil liability.” I agree.
[10] The Associate Justice quoted leading authority from the Court of Appeal for the test for the tort of inducing breach of contract and then correctly stated as follows (Decision, paras. 17 and 18, following Drouillard v. Cogeco Cable Inc., 2007 ONCA 322, para. 26):
If Globe is able to make out these four elements [the test for inducing breach of contract], the action may nonetheless fail if the defence of justification is available.
[11] The Associate Justice then found that “[i]t is a tenet of our legal system that any person may issue a civil action to seek redress of their rights.” On this basis, the Associate Justice concluded, “Visual is certain to be able to make out the defence of justification” (Decision, para. 19). Again, I agree.
[12] On the basis on which the motion was argued before the Associate Justice, she was correct in dismissing the motion. The claims of intentional interference with economic relations (the “unlawful means” tort) and inducing breach of contract are not tenable in law.
Argument on Appeal
[13] On appeal, Globe now asserts a third cause of action, one upon which it did not rely before the Associate Justice: the tort of abuse of civil process. Globe acknowledges that “the tort of ‘abuse of process’ is not plead verbatim within Globe’s proposed counterclaim” but argues that “all of the components of the test for abuse of process are noted in its claim for damages under the tort of intentional and wrongful interference….” First, Globe fails to address the confirmation it provided to the Associate Justice of the nature of its proposed claims, quoted above. The Associate Justice was entitled to decide the motion before her on the basis on which it was argued. She made no error in failing to consider and decide whether Globe might have a tenable claim for the tort of abuse of civil process.
[14] In its factum, Globe argues that the Associate Justice erred in law in making the following statement:
Commencing a lawsuit does not give rise to a civil cause of action. Issuing a civil claim is not an unlawful act, and it cannot give rise to civil liability. (Decision, para. 16)
This statement, plucked from the context in which it was made, is not consistent with the test for the tort of abuse of civil process, which carves out a narrow exception to the general principle stated by the Associate Justice. The context in which this statement arises, however, was an analysis of the tort of unlawful interference with economic relations. Bringing a lawsuit, in that context, is not an “unlawful means”. It is a lawful means for seeking redress.
(a) No New Arguments on Appeal
[15] The appeal rests on an argument not made at first instance. The parties are represented by counsel, and the context in which the case arises is a “departing employee case’ that arises in our courts regularly. Extended interlocutory proceedings delay the timely and cost-efficient adjudication of disputes and permitting parties to raise entirely new arguments on appeal can only have the effect of encouraging extended interlocutory proceedings. Only in exceptional circumstances should this court entertain issues on appeal that were not raised below: Perez v. Governing Council of the Salvation Army of Canada (1998), 1998 7197 (ON CA), 42 OR (3d) 229 at 233 (CA).
(b) No Tenable Claim for Abuse of Civil Process in this Case
[16] In any event, the proposed counterclaim cannot meet the test for the tort of abuse of civil process. That test, as held by the Ontario Court of Appeal in Smith v. GlaxoSmithKline Inc., 2010 ONCA 872, para. 27, is as follows:
i. the plaintiff is a party to a legal process initiated by the defendant;
ii. the legal process was initiated for the predominant purpose of furthering some indirect, collateral and improper objective;
iii. the defendant took or made a definite act or threat in furtherance of the improper purpose; and
iv. some measure of special damage has resulted.
[17] The proposed counterclaim cannot meet branches (ii) and (iii) of the test. No “indirect, collateral or improper objective” is pleaded. Inducing Rossi to leave his subsequent employment is not an “indirect, collateral or improper objective.” That was one of the direct goals of the lawsuit – to preclude Rossi from working for Globe in alleged breach of his employment contract and fiduciary duty. The propriety of Rossi’s employment with Globe was the very essence of the claims asserted by Visual, and cannot be characterized as an “indirect, collateral and improper objective.” If Visual’s allegations are devoid of merit – as seems to be the premise of the counterclaim – then the course available to Globe and Rossi is to defend those claims and seek costs.
[18] The proposed counterclaim does not plead “a definite act or threat in furtherance of the improper purpose.” Instead, Globe argues that “the essence of [Visual’s] legal proceeding was to threaten the business and economic prospects of Globe. In other words, the alleged “definite act” is the bringing of the lawsuit – there is no “conduct” alleged other than the lawsuit. To quote from Teledata Communications Inc. v. Westburne Industrial Enterprises Ltd., 1990 CarswellOnt 812, para. 9:
… the bringing of an action, even if factually groundless, together with wrongful motives for bringing the action, are not sufficient to constitute the tort of abuse of process. What lies at the heart of the cause of action is an act, or threat of an act, outside the ambit of the action. The essence of the action therefore is the use of legal process to gain an end which the legal process does not entitle the plaintiff to obtain.
No “act or threat of an act outside the ambit of the action” is pleaded. What is relied upon instead are alleged consequences of the lawsuit itself – Rossi’s resignation and Globe’s alleged losses as a result. Malicious use of the litigation process itself is not actionable; that kind of conduct is addressed in the exercise of the court’s discretion as to costs: P.H. Osborne, The Law of Torts (5th ed., 2015), pp. 278-279.
(c) The Practical Assessment
[19] Departing employee Rossi resigned his subsequent employment when he was sued in connection with it. That was one of the results the plaintiff, Visual, sought in the lawsuit. Visual was entitled to pursue its claims, and it was for Globe and Rossi to defend against those claims if they wished to do so. There is no tenable claim by Globe against Visual in these circumstances. The facts, as pleaded, do not meet the test for civil abuse of process. No additional facts were suggested in argument or put in evidence which could render the claim tenable by further amendment.
Disposition and Costs
[20] For these reasons the appeal is dismissed, with costs payable by Globe to Visual in the amount of $10,000, inclusive, payable within thirty days.
D.L. Corbett J.
Released: October 19, 2022
CITATION: Globe POS Systems v. Visual Information Products Inc., 2022 ONSC 5932
DIVISIONAL COURT FILE NO.: 820/21
DATE: 20221019
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D.L. Corbett J.
BETWEEN:
Globe POS Systems Inc. and Tony
Rossi
Defendants/Appellant
- and -
Visual Systems Information Inc.
Plaintiff/Responding Party
REASONS FOR DECISION
D.L. Corbett J.
Released: October 19, 2022