SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-11-433981
DATE: 20120810

RE: John Markandu Satkunan

and

Theepajothy Gnanatheepam and 1167957 O/A SGS Enterprises Inc.

BEFORE: Justice E.M. Morgan

COUNSEL: Gary Shortliffe, for the Plaintiff/Responding party

Caroline Ursulak, for the Defendants/Moving parties

DATE HEARD: August 10, 2012

E N D O R S E M E N T

[ 1 ] This is a pleadings motion brought by the Defendants under Rules 21.01 and 25.11 for a determination of law and/or to strike out the Statement of Claim either as showing no cause of action or as being frivolous and vexatious.

[ 2 ] At the outset I expressed surprise that the motion was brought by the Defendants with supporting affidavit evidence, and that it was responded to by the Plaintiff with affidavit evidence as well. I inquired of both counsel whether they had consented to the use of affidavit evidence, and they indicated that although they had not expressly discussed the question there was a mutual understanding that each would submit supporting affidavits and that that understanding amounted to consent.

[ 3 ] Accordingly, I have allowed the affidavit evidence to be submitted. This means that the Rule 21 portion of the motion is proceeding under Rule 21.01(a) for determination of a question of law which may dispose of part or all of the claim, since under that sub-rule the court can grant leave to introduce affidavit evidence. The motion is not proceeding under Rule 21.01(b) to strike out the Statement of Claim as disclosing no cause of action, since that sub-rule gives no discretion to the court to allow evidence to be introduced. Both counsel have agreed that sub-rule 21.01(a) is the only applicable part of Rule 21 for present purposes.

[ 4 ] The Defendants have also moved under Rule 25.11 to strike out the Statement of Claim for being vexatious, although counsel did not push that ground strenuously at the hearing. In my view, this entire motion turns on whether the Statement of Claim contains viable legal positions. It raises employment and defamation law issues which need to be considered here, but it is not frivolous nor is it written in a vexatious manner.

[ 5 ] The dispute arises from an employment relationship in which the Plaintiff is the former employee of the Defendants (or, more precisely, of the corporate Defendant, of which the individual Defendant is the principal).

[ 6 ] The Defendants contend that two legal issues arise from the Statement of Claim dated August 30, 2011: (a) are the employment-related claims barred as having already been made by the Plaintiff, and resolved, under the Employment Standards Act (“ESA”); and (b) is the defamation claim barred as relating to words spoken during a quasi-judicial proceeding that is covered by an absolute privilege?

[ 7 ] The Plaintiff worked for the Defendants from January 2002 to October 2010. In May 2010 he filed a claim under the ESA with the Ministry of Labour alleging the Defendants’ failure to pay public holiday and overtime pay in the amount of $8,752.12 during his period of employment. The Ministry issued a decision on the ESA claim on July 19, 2011, requiring the Defendants to pay the Plaintiff $2,790.24 as compensation for overtime and public holiday pay. That ruling has been complied with and the funds have been paid by the Defendants to the Plaintiff.

[ 8 ] The identical claim for overtime and public holiday pay is made by the Plaintiff in his Statement of Claim. The only difference is that while the ESA decision compensated him for these payments from January 2002 until April 2010, the Statement of Claim seeks compensation from January 2002 until October 2010. In paragraph 7 of the Statement of Claim, the Plaintiff requests that the court “grant him full indemnity for the period of loss not covered by the Order of the Ministry of Labour”.

[ 9 ] Section 97(1) of the ESA provides that a person who files a complaint under that Act “may not commence a civil proceeding with respect to the same matter.” Section 97(3) goes on to specify that the prohibition applies even if

(a) the amount alleged to be owing to the employee is greater than the amount for which an order can be issued under this Act; or

(b) in the civil proceeding, the employee is claiming only that part of the amount alleged to be owing that is in excess of the amount for which an order can be issued under this Act.

[ 10 ] The employment-related claims that are set out in paragraphs 3 through 7 of the Statement of Claim are thus specifically prohibited under sections 97(1) and (3) of the ESA. They cannot be sustained as a matter of law.

[ 11 ] The other claim contained in the Statement of Claim is defamation. The Plaintiff pleads that defamatory allegations of fraud and dishonesty were made by the Defendants to the Employment Standards officer, and that these statements made during the course of the ESA proceeding were injurious to the Plaintiff’s emotional and psychological health.

[ 12 ] The Defendants argue that ESA officers exercise a quasi-judicial function in investigating the statutory rights and duties of employers and employees and adjudicating in the first instance the employee complaints filed under the ESA. Indeed, I deduce from section 97(1) that an ESA proceeding is the administrative equivalent to a litigation proceeding; otherwise, a civil claim would not be barred as being repetitive of an ESA claim. Counsel for the Defendants makes the point that the very same policy reasons for applying a rule of absolute privilege in the litigation context – encouraging forthrightness and a full airing of all issues and claims by the parties – applies to an ESA investigation and proceeding.

[ 13 ] The case law makes it clear that for “statements made in the course of a judicial proceeding or a statutory Board or Tribunal, absolute immunity applies even if the words are spoken maliciously, without justification or excuse from ill will or anger.” Muir v. McRoberts, 2008 CarswellOnt 8562, at paras 38-39 (Ont. SCJ). The Divisional Court has confirmed that statements during a quasi-judicial investigation are subject to absolute privilege and are not actionable. 1522491 Ontario Inc. v. Stewart, Esten Professional Corp., 2010 ONSC 727, 2010 CarswellOnt 1063, at para. 45 (Ont. Div. Ct.).

[ 14 ] The defamation claims that are set out in paragraphs 8 through 12 of the Statement of Claim are thus specifically barred as relating to communications subject to an absolute privilege. The statements are alleged to have taken place in an adjudicative context which makes them not actionable. They cannot be sustained as a matter of law.

[ 15 ] Accordingly, both of the legal claims made in the Statement of Claim must fail.

[ 16 ] This should dispense with the entire action. However, the Plaintiff has indicated in his affidavit that he intends to amend the Statement of Claim. I am not in a position to adjudicate legal issues with respect to the proposed Amended Statement of Claim since it has not been served or filed, but an amended pleading could keep the action alive if any new and sustainable claims – not just new labels for substantively the same old claims – are added. I would point out that the Defendants have never served and filed a Statement of Defense. Therefore, pleadings have not yet closed and the Plaintiff can still amend his claim.

[ 17 ] Although the Defendants were not able to strike the Statement of Claim in its entirety as they did not structure their motion under Rule 21.01(b), they have been successful in challenging under Rule 21.01(a) the legal validity of the two issues raised by the Statement of Claim. Defendants’ counsel has asked for costs in the amount of $3,000.00, while Plaintiff’s counsel has proposed $2,000.00. Since the two proposals are close to each other and both are relatively modest, I conclude that the mid-way point between them is the most proper level of costs. I order that the Plaintiff pay the Defendants costs in the amount of $2,500.00, payable forthwith.

DATE: August 13, 2012 ___________________________

Morgan J.