E.O.E. GROUP INC., PLAINTIFF
v.
KONICA MINOLTA BUSINESS SOLUTIONS (CANADA) LTD. AND DOCUCOMM BUSINESS SYSTEMS INC., DEFENDANTS
CV-11-423236
2012 ONSC 197
MOTION HEARD: DECEMBER 23, 2011
David Rubin for the plaintiff
Ronald B. Moldaver Q.C. for the defendant Docucomm Business Systems Inc.
ENDORSEMENT
Master R.A. Muir -
[ 1 ] The plaintiff brings this motion pursuant to Rule 25.11 of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194 (the “Rules”) for an order striking out certain paragraphs of the statement of defence of the defendant Docucomm Business Systems Inc. (“Docucomm”).
[ 2 ] In its statement of claim, the plaintiff alleges that for more than 25 years it had a business relationship with the defendant Konica Minolta Business Solutions (Canada) Ltd. (“Konica”) and its predecessors. The plaintiff alleges that it entered into an agreement with Konica whereby the plaintiff would sell and maintain Minolta business equipment within the greater Toronto area. The plaintiff further alleges that this agreement was improperly terminated by Konica on or about January 2, 2011, resulting in damages to the plaintiff.
[ 3 ] It appears that Docucomm was appointed to replace the plaintiff as a Konica dealer in early 2011. The plaintiff alleges, among other things, that Docucomm used confidential information belonging to the plaintiff to embark on a systematic plan to contact the plaintiff’s customers in an effort to persuade them to switch their contracts to Docucomm. In so doing, the plaintiff alleges that Docucomm made false and defamatory statements about the plaintiff. In its statement of claim, the plaintiff is claiming damages from Docucomm for intentional interference with contractual relations, slander, libel and conversion, along with punitive damages.
[ 4 ] The statement of claim in this action was issued on March 29, 2011. It appears that Docucomm delivered its statement of defence on or about May 31, 2011. In its statement of defence, Docucomm either denies the plaintiff’s allegations or states that it has no knowledge of such allegations. Docucomm takes the position that it always acted in its own best interest and that it owed no duty to the plaintiff. Docucomm also takes the position that any allegedly defamatory statements were either true or fairly stated.
[ 5 ] The impugned paragraphs of Docucomm’s statement of defence read as follows:
Plaintiff is willful, reckless and malicious in this claim.
The allegations herein of plaintiff merits dismissal with full indemnity costs reflecting what is actually charged to this defendant to defend this action.
Moreover, this action is commenced against this defendant with malice towards this defendant and with the deliberate intention of disparaging the integrity, honesty and business methods of this defendant and to cause this defendant loss of business reputation and financial loss.
In the event that the plaintiff is unable to pay such costs, then its officers and directors ought to pay same and this defendant relies upon the Ontario Business Corporations Act, sections 247 and 248.
[ 6 ] Rule 25.11 provides as follows:
The court may strike out or expunge all or part of a pleading or other document, with or without leave to amend, on the ground that the pleading or other document,
(a) may prejudice or delay the fair trial of the action;
(b) is scandalous, frivolous or vexatious; or
(c) is an abuse of the process of the court.
[ 7 ] In my view, paragraph 58 can only be interpreted as going to the plaintiff’s allegedly improper motivation in bringing this claim against Docucomm or to the issue of costs. In either case, such a pleading cannot constitute a defence to the plaintiff’s action and is improper. As was stated by Master Peppiatt in Collier v. Warren Shepell Consultants Corp. , [1994] O.J. No. 2115 (G.D. – Master) at paragraph 9 :
[t]he motive of a plaintiff in bringing an action, however improper, is not a defence.
[ 8 ] Collier involved an attack on a pleading that also included a counterclaim. Despite this, Master Peppiatt nevertheless found that it was improper for the defendants to make allegations in their statement of defence with respect to the plaintiff’s motivation in bringing the action. Master Peppiatt did, however, allow the defendants in Collier to plead such allegations in their counterclaim, apparently in support of the tort of abuse of process.
[ 9 ] Unlike the situation in Collier , Docucomm has not advanced a counterclaim for abuse of process as part of this proceeding. In my view, to the extent that paragraph 58 is included for the purpose of demonstrating improper motivation on the part of the plaintiff in bringing this action as a whole, or in making any particular allegations in the statement of claim, such a pleading is not permitted.
[ 10 ] The only other possible interpretation of paragraph 58 is that the allegations contained in that paragraph are being made for the purpose of seeking an elevated costs award at the conclusion of the trial. Again, such a pleading is improper. As Justice McRae stated in A.I. MacFarlane & Associates Ltd. v. Delong , 1986 2512 (ON SC) , [1986] O.J. No. 605 (H.C.J.) at paragraph 6 :
It seems to me that to permit a pleading which is only relevant to the issue of costs, whether it be solicitor-and-client costs, or party-and-party costs, would be a dangerous precedent. Costs are not an issue and are not part of the lis between the parties but are a separate matter to be decided after all of the issues have been settled. If a party is allowed to plead factors which are only relevant to the issue of costs pleadings could conceivably become, to a large degree, involved with that issue. As examples, a litigant could plead that the complexity of the proceedings entitles it to solicitor-and-client costs or a litigant could plead that the importance of the issues entitles it to such costs. These are factors relevant to the cost issue which could find their way into the pleadings if Master Donkin's ruling is allowed to stand.
[ 11 ] See also Ludmer v. Ludmer , 2011 ONSC 4448 , [2011] O.J. No. 3421 (S.C.J.) at paragraphs 31 to 38 and Arthur Andersen LLP v. Premier Fitness Clubs Inc. , 2010 ONSC 3686 , [2010] O.J. No. 2825 (S.C.J. – Master) at paragraphs 15 to 20 . Allowing a party to make allegations in a pleading that only go to the issue of costs would undoubtedly expand the ambit of discovery and only lead to added expense and delay.
[ 12 ] I have therefore concluded that paragraph 58 should be struck out of the statement of defence.
[ 13 ] The plaintiff argues that paragraph 60 of Docucomm’s statement of defence should also be struck out on the basis that it only goes to the issue of costs. In my view, this paragraph should not be struck from the defence. Paragraph 60 simply amounts to a summing up of Docucomm’s position as set out in the preceding paragraphs of its statement of defence. It simply requests that the action be dismissed with full indemnity costs payable to Docucomm. I do not interpret the use of the word “allegations” in paragraph 60 as suggesting that costs should be awarded on an elevated scale due to the nature of the allegations pleaded. Rather, I view that request as arising simply from Docucomm’s position that the plaintiff’s claim is without merit and costs should follow the event.
[ 14 ] Paragraph 61 should be struck from the statement of defence for the same reasons as paragraph 58. In my view, paragraph 61 can only be interpreted as going to the plaintiff’s allegedly improper motivation in bringing this claim against Docucomm or to the issue of costs. Either way, such a pleading is improper.
[ 15 ] It is also my view that paragraph 62 should be struck from the statement of defence. That paragraph appears to be notice of a potential claim for the payment of costs from non-parties in the event that the plaintiff is unable to satisfy a costs award in favour of Docucomm. In my view, that paragraph is also only relevant to the issue of costs, albeit with somewhat of a twist. Nevertheless, the same principles apply. Such a pleading is improper.
[ 16 ] This is not a situation where paragraphs from a pleading have been struck because they are poorly drafted or not supported by the necessary facts. The paragraphs I have ordered to be struck simply amount to improper pleading. It is therefore not appropriate that leave to amend be granted. However, this finding should not be taken as a bar to Docucomm making similar allegations in respect of the plaintiff’s motivation should it choose to advance a counterclaim at some point in the future.
[ 17 ] I therefore order as follows:
(a) paragraphs 58, 61 and 62 of Docucomm’s statement of defence are hereby struck out, without leave to amend;
(b) the balance of the relief sought on this motion is dismissed; and,
(c) if the parties are unable to agree on the issue of costs, they may make brief submissions in writing by no later than January 20, 2012.
Master R.A. Muir
DATE: January 6, 2012