ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-12-0438
DATE: 2013-04-26
B E T W E E N:
Allan Curle, Bruce Johnson, Jeanette Johnson, Norall Group Inc., and Norall Group Contracting Inc.,
Christopher Hacio, for the Plaintiffs
Plaintiffs
- and -
Gina Gustafson, Juanita Curle, Holly LeBrun, Carl Gustafson, and D.J. Gustafson Engineering Ltd. c.o.b. as Aegus Contracting,
Morris J. Holervich, for the Defendants
Defendants
HEARD: April 24, 2013,
in Thunder Bay, Ontario
McCartney J.
Decision On Motion
[1] This is a motion by the Defendants herein, Gina Gustafson and Juanita Curle, to either strike out the Plaintiffs’ Statement of Claim as disclosing no reasonable cause of action under Rule 21.01(1)(b) of the Rules of Civil Procedure – or strike those parts of the Claim which are found to be scandalous, frivolous, or vexatious under Rule 25.11.
[2] The law is clear that a pleading will only be struck if it is plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action. Another way of putting the test is the claim has no reasonable prospect of success”. (see R. v. Imperial Tobacco Canada Ltd. 2011 S.C.C. p.42.)
[3] Furthermore parts of a pleading may be struck if it is scandalous, frivolous, or vexatious – meaning that the offending parts are irrelevant, argumentative, or inserted for colour – or that constitute bare allegations”. (See George v. Harris 2000 O.J. No. 1762)
[4] Finally, Rule 25.06 (1) indicates every pleading is to contain a concise statement of the material facts on which the party relies, but not the evidence by which the facts are to be proved.
The Facts – An Overview
[5] Allan Curle, Bruce Johnson and Carl Gustafson are all engineers. Allan incorporated a company (Norall Group Inc.) (NGI). Later Bruce joined the company. Eventually Allan, Bruce and Carl became sole directors and shareholders. For business reasons they decided to transfer their shares in NGI to their wives in trust. Juanita Curle, Allan’s wife, received 25, 000 shares, Gina Gustafson, Carl’s wife, received 17,000 shares, and Jeanette Johnson, Bruce’s wife, received 8,000 shares.
[6] Allan, Bruce and Carl then incorporated Norall Group Contracting Inc. (NGCI) in which they were the sole officers and directors, but again they agreed to transfer their shares to their wives in trust as they had done with NGI in the following proportions: Juanita Curle - 49% of the shares, Gina Gustafson – 35% of the shares, Jeanette Johnson – 16% of the shares.
[7] Thereafter, both companies did well, but unfortunately in 2010 there was a falling out among the parties. Thereafter, according to the Plaintiffs’ the Defendants conspired to remove the Plaintiffs from involvement in both NGI and NGCI, which they did, and move the business of these companies over to the Defendants and in particularly to D.J. Gustafson Engineering Ltd. c.o.b. as Agesus Contracting.
Discussion
[8] In their Statement of Claim the Plaintiffs allege several heads of damage as set out in paragraph 1(a). The Defendants claim that there are not sufficient facts pleaded so that the Defendants do not know how to respond to the Statement of Claim. In that regard I will go through each of the heads of damage, to see whether there is merit to the Defendants’ argument.
1. Damages for Breach of Contract
[9] Plaintiffs’ counsel refers to paragraphs 5, 13, 36, and 39 of the Statement of Claim, which indicate that the Defendant, Juanita Curle, took the shares of NGI and NGCI in trust, and then conspired with the other Defendants to destroy the Plaintiffs’ business and transfer it to the Gustafson group.
2. Breach of Fiduciary Duty and Duty to Act in Good Faith
[10] Plaintiffs’ counsel refers to paragraphs 7, 11, 15, 18, 19, 21, 22, 23, 24, 26, 27, 28, 33, 34, 36, 37, 38 and 39 to 47 of the Statement of Claim which appear to demonstrate the facts on which the allegation is based that the “new directors who clearly were fiduciaries of the Plaintiffs, did not act in their best interest nor act in good faith”.
3. Damages for Unjust Enrichment
[11] Plaintiffs’ counsel refers to paragraphs 41 and 45 of the Statement of Claim. Here the Claim made makes it clear that the basis for this claim is that the business interest of NGI and NGIC were taken over by the Defendants who profited thereby.
4. Damages for Inducing Breach of Contract
[12] Plaintiffs’ counsel refers to paragraphs 41 (e), (h), (n), (u) and (v) and paragraph 43. These paragraphs clearly set out the facts in which this claim is based, i.e. the transfer of business that should have gone to either NGI or NGIC to the Defendants.
5. Intentional Inference with Contractual Relationships
[13] Plaintiffs’ counsel refers to paragraphs 41 (e), (h), (n), (r) and (u) as well as paragraphs 42, 43, 44, 45 and 47 setting out the facts relating to the business being transferred from the Plaintiffs to the Defendants.
6. Misappropriation of Business Opportunities
[14] Plaintiffs’ counsel refers to paragraphs 41 (c), (g), (e), (h), (n), (r), (t), (u), (v) and paragraphs 42 to 47 to show the effect of the Defendants taking the Plaintiffs’ business.
7. Breach of Trust and Confidence
[15] Plaintiffs’ counsel points out paragraphs 41 (e), (g), (t), (u), (v) and paragraphs 42 to 47 to show how the breach of trust alleged occurred in transferring the business from the Plaintiffs to the Defendants and the resulting damages.
8. Civil Conspiracy
[16] Plaintiffs’ counsel points out paragraphs 18 to 26, 27, 38, 39, 41, 42 to 45 and 47 which demonstrates the basis of the allegation of civil conspiracy and the damages caused.
9. Breach of the [Ontario Corporations Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-c38/latest/rso-1990-c-c38.html)
[17] The Ontario Corporations Act requires directors and officers of the corporation to act honestly, in good faith and with care, diligence and skill. Plaintiffs’ counsel points out paragraphs 17 to 47 as a basis for their allegation that the Defendants directors breached this Act.
10. Unlawful Interference With the Plaintiffs’ Economic and Other Interests
[18] Plaintiffs’ counsel points out paragraphs 26, 27, 28, 32, 37, 39, 41 to 43 and 45 to 47 where it is demonstrated how, and the effect of, the Defendants’ destruction of NGI and NGCI and the taking of the business of the corporation by the Defendants.
[19] So, taking into account the fact that the basic allegation of the Plaintiffs is that there was a conspiracy by the Defendants to take over the Plaintiffs’ business, the facts of which are clearly laid out throughout the Statement of Claim, and having regard to what is pleaded in the Statement of Claim, the Statement Claim discloses a reasonable cause of action, and there is no need to have it stricken.
[20] Regarding what counsel for the Defendants object to as atmosphere, i.e. things put into the pleadings which are immaterial but just for “effect” I agree with counsel for the Plaintiffs that what is complained of here, i.e. the reference to the Curle-Gustafson marital affair – the reference to Mr. Arnone, as well as the pre-action offer to settle - is just a part of the “narrative”, and is not so egregious as to be stricken from the pleadings.
[21] Finally, in my opinion, what the Defendants should have been asking for were particulars set out in a Demand For Particulars rather than setting down a motion to strike the Plaintiffs’ pleadings and destroy it in its entirety.
[22] For all of the above reasons, the motion is dismissed.
[23] Counsel has jointly requested that if costs submissions are required that they be made after my decision is released and I have agreed. However, if costs are to be argued, arrangements are to be made with the trial co-ordinator within the next 30 days.
The Hon. Mr. Justice J. F. McCartney
Released: April 26, 2013
COURT FILE NO.: CV-12-0438
DATE: 2013-04-26
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Allan Curle, Bruce Johnson, Jeanette Johnson, Norall Group Inc., and Norall Group Contracting Inc.,
Plaintiffs
- and –
Gina Gustafson, Juanita Curle, Holly LeBrun, Carl Gustafson, and D.J. Gustafson Engineering Ltd. c.o.b. as Aegus Contracting,
Defendants
DECISION ON MOTION
McCartney J.
Released: April 26, 2013
/mls