Sleep Clinic London Inc. v. Merchea
110 O.R. (3d) 657
2012 ONSC 3004
Ontario Superior Court of Justice,
Flynn J.
May 22, 2012
Civil procedure -- Pleadings -- Statement of claim -- Striking out -- Owner of plaintiff in Kitchener action was defendant and plaintiff by counterclaim in London action -- Defendant in Kitchener action serving demand for particulars before filing statement of defence and then moving to strike claim or for order requiring plaintiff to provide further and better particulars -- Part of statement of claim struck and London action transferred to Kitchener -- Defendant mostly knowing how he intended to plead his defence -- Paragraphs of statement of claim struck which duplicated counterclaim in London action and which had nothing to do with dispute between parties in Kitchener action.
B owned Sleep Clinic and was the principal of P Inc. Sleep Clinic was a tenant of the defendant, M, until P Inc. bought the plaza in which the clinic was situated. M then became a tenant of P Inc. M and his wife sued B and P Inc. in London for payment in respect of the purchase agreement for the plaza. B and P Inc. defended and counterclaimed for damages for breach of contract, fraud, negligent misrepresentation, negligence and breach of fiduciary duty and for other remedies. Sleep Clinic subsequently commenced an action against M in Kitchener for damages for breach of contract, breach of the common law duty of good faith, negligence, fraud, fraudulent and negligent misrepresentation, breach of fiduciary duty, conversion and for other remedies. M had not yet defended that claim. He served a demand for particulars. Sleep Clinic served responses. M was not satisfied and brought a motion to strike the claim or an order requiring Sleep Clinic to provide further and better particulars. M also sought to have the Kitchener action transferred to London.
Held, the motion should be granted in part.
Through these motions, the parties were attempting to hurt each other financially without much concern for the merits, practical realities, the expense of litigation and proportionality.
It was clear that M mostly knew how he intended to plead his defence. There was some duplication between the Sleep Clinic claim and the counterclaim in the London action. Paragraphs of the statement of claim in which parties were confused or elements of the counterclaim were introduced which had nothing to do with the dispute between Sleep Clinic and M were struck, with leave to amend. The best way to deal with the disputes between the parties was to transfer the Kitchener action to London, where the court could entertain a motion to have them joined, heard together or tried one after the other.
MOTION to strike a statement of claim or for further and better particulars and for an order transferring the action from Kitchener to London.
Cases referred to
International Nickel Co. of Canada v. Travelers Indemnity Co., [1962] O.J. No. 56, [1962] O.W.N. 109 (C.A.)
Rules and regulations referred to
Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 21.01(1) (a), (b), 21.01(3) , (e), 25.06(1) , 25.11
[page658]
David A. Sloane, for plaintiff.
Daniel J. MacKeigan, for defendant.
Background
[1] The plaintiff ("Sleep Clinic" or "tenant") became the tenant of the defendant, Mohan Merchea ("landlord" or "defendant"), by a lease made on or about May 29, 2002 for the purpose of operating its Sleep Clinic business in London, Ontario. The plaintiff remained a tenant of the defendant for five years, when the tenant's principle, Dr. Wagdy Botros ("Botros"), caused a company he had incorporated, namely, Paner House III Inc. ("Paner House"), to purchase the plaza in which the clinic was situated from the landlord and his wife, Kanta Merchea, effective December 1, 2007.
[2] The tenant paid its last month of rent to the landlord in November 2007, then the defendant entered into an oral lease and became the tenant of the new landlord, Paner House.
[3] The defendant also entered into a written Management Agreement with Paner House at that time. Paner House terminated the Management Agreement and the lease on September 30, 2009.
[4] On or about January 19, 2010, the defendant and his wife sued Paner House and Dr. Botros in London for payment of $72,000 in respect of the purchase agreement for the plaza and ancillary promissory note and guarantee. They also sought punitive damages.
[5] Botros and Paner House defended and counterclaimed for breach of contract, fraud, negligent misrepresentation, negligence simpliciter, breach of fiduciary duty, an accounting, a declaration and for punitive damages.
[6] Then, in June 2010, Sleep Clinic brought the within action in Kitchener, claiming damages of $108,000 on the basis of one or more of these heads: breach of contract, breach of common law duty of good faith, negligence, fraud, fraudulent misrepresentation, negligent misrepresentation, breach of fiduciary duty, conversion and/or unjust enrichment, as well as an accounting for certain improvement expenditures, a declaration of trust and, of course, punitive damages. The defendant has not yet defended that claim. [page659]
[7] Instead, on September 1, 2010, he served a demand for particulars. Sleep Clinic served responses to that demand on November 23, 2010 and April 15, 2011.
[8] But the defendant is not satisfied with those answers and now seeks to strike Sleep Clinic's entire claim, or at least obtain an order requiring Sleep Clinic to provide further and better particulars in respect of these paragraphs of the Statement of Claim: 1a, 7, 8, 9, 10, 18, 19, 20, 22 and 23. He also seeks to have the Kitchener action transferred to London. The defendant brings this motion on the basis that without these particulars he cannot defend Sleep Clinic's action.
[9] Sleep Clinic not only defends Merchea's motion, but also brings its own motion seeking leave to amend its Statement of Claim and requesting that the London action be transferred to Kitchener and tried together with the Kitchener action.
[10] After spending most of two days on the Merchea motion in the Kitchen action, the court and the parties agreed to defer the hearing of the Sleep Clinic motion to another day, if necessary.
Meandering analysis
[11] It occurred to me as the defendant developed his argument that he was unveiling the fact that he mostly knew how he would plead his defence. And in many respects much of his motion is premature. He should be required to defend the Sleep Clinic action, discoveries should be held and then, if advised, appropriate motions could be brought whether to strike or to dismiss and so forth.
[12] The trouble is that the defendant is trying in many instances, in his demands for particulars and by this motion, to cause the plaintiff to plead not just so that the plaintiff's pleadings define the parameters of the action, but so as to cause the plaintiff's to ignore the rule about pleadings containing material facts but not evidence.
[13] Moreover, the refusal to accept the answers to the demand for particulars means that what the defendant seeks here is something more than pleadings and much more like discovery. So, for example, when he complains about the answer that Sleep Clinic provided in respect of para. 1(a) of the Statement of Claim, he misses the clear indication that the plaintiff's pleadings at the very least imply "in the alternative", and if the parties are not satisfied that that is clear enough from these pleadings then the plaintiff ought to be given leave to amend that paragraph to reflect that.
[14] In many ways, this scrambled mess of litigation is a contest of sabre-rattling stratagems meant to cause the party [page660] opposite the most hurt financially, without much concern for the righteousness of a cause or the practical realities and expense of litigation in the Superior Court.
[15] As often happens in disputes between former business partners, landlords and tenants and family law partners, the expression "more money than brains" silently screams in the background.
[16] At the beginning of the hearing, the defendant sought leave to file an amended notice of motion for which there was late service. Not surprisingly, Sleep Clinic objected to that because it injected new rule considerations into this mess. The new rule sought to be argued was 21.01(1)(a) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 ]. There had been no Statement of Defence filed and nor was any leave granted to lead evidence.
[17] The plaintiff Sleep Clinic argued that had it been aware that such a rule was going to be argued it could have insisted on the filing of a Statement of Defence and entered into a contest as to whether or not leave ought to be granted for the delivery of evidence.
[18] In para. 56 of the defendant's factum, reference is made to a rule 21.01(1) (b) motion. That rule permits a party to move to strike out a pleading on the ground that it discloses no reasonable cause of action or defence and pursuant to that rule no evidence is admissible on such a motion. So in the circumstances, because there is evidence before me the defendant's motion here cannot be a motion under 21.01(1)(b), and I recognize that the plaintiff could have tailored his submissions differently because of the request to permit the filing of the defendant's amended notice of motion rather than adjourn this matter for Sleep Clinic to prepare itself on the new basis of the motion or to immediately require the filing of a Statement of Defence, I rejected the amended notice of motion. That notice of motion, also at its thrust, sought to strike, under rule 25.11, the Sleep Clinic claim as being frivolous and vexatious. As I said, it was served late, in fact the day before the motion hearing commenced, and I rejected it.
[19] I should just like to point out that whether what is at stake in the actions themselves is $72,000 or $108,000, the pleadings motion brought by one of the parties generated a factum of some 126 paragraphs. That is over the top.
[20] As to the defendant's request to strike the Statement of Claim, in essence staying the action or dismissing it under rule 21.01(3) (e), the court should stay or dismiss an action under this rule only in the clearest of cases, where it is plain and obvious that the action cannot succeed. Here we have no Statement of [page661] Defence, nor have any discoveries been conducted, and in motions under rules 21.01(3) and 25.11 the court must assume that the allegations in the pleading at issue are true, or at least capable of proof.
[21] Moreover, rule 25.11 permits the court to surgically excise all or part of an offending pleading. Claims that are doubtful in law or factually weak should not be foreclosed by such a motion and allowance must be made for inadequacy in the drafting of pleadings.
[22] Long gone are the days when pleadings motions could be approached in an overly technical manner. Generally speaking, a party should be at liberty to craft a pleading in the manner it chooses, providing that the rules of pleadings are not violently offended and there is no prejudice to the other side.
[23] I agree with Sleep Clinic that pleadings are not the appropriate stage in an action to engage at large in what is essentially a trial judge's exercise for determining the admissibility of evidence at trial, that is, weighing the probative value versus the prejudice of facts. That exercise is not well suited to defining issues for trial, something which is for the parties to decide.
[24] Subject to what I later say about individual paragraphs in the Statement of Claim, when I review that document and the plaintiff's replies to the defendant's request to inspect and demand for particulars along with the motion record and the Botros responding affidavit, it seems that the plaintiff has adequately provided particulars of its breach of contract claim. After all, pleadings are meant to contain a concise statement of material fact and not the evidence upon which the parties rely.
[25] My chief concern is that there may be exhibited in the drafting of the Statement of Claim by Sleep Clinic a marked confusion as to the parties to the various actions. I would agree in part with counsel for the defendant that there is some duplication between the Sleep Clinic claim and the Botros and Paner House counterclaim in the London action.
[26] This is not an unusual occurrence in business dealings where the guiding mind and force behind a particular corporation confuses it with himself, and one has to remember that Wagdy Botros is behind both Sleep Clinic and Paner House. It's one thing for a layperson to ignore the legal nicety of the separate existence of the corporation that he created, but it's quite another thing for counsel to perpetuate that confusion in the pleadings.
[27] I should now like to deal with the individual paragraphs of which the defendant complains. [page662]
(Motion reasons continue exactly as in the source…)
Motion granted in part.