SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 520-2013
DATE: 2014/03/11
RE: Jean-Luc Brisson
AND
6342581 Canada Inc., Marc-André Labelle, Dominic Labelle, Gray Hawk(1991) and IMI International Manufacturing Inc.
BEFORE: The Honourable Justice M.Z. Charbonneau
COUNSEL: Jean-Francois Laberge for the Plaintiff
Jenna Anne de Jong for the Defendants
HEARD: January 17, 2014
ENDORSEMENT
[1] The defendants bring a motion to strike out paragraphs 63, 64, 65, 66, 67, 69, 72, 75, 80, 82, 83, 89, 90, 91, 92, 104 and 105 of the plaintiff’s statement.
[2] In this action the plaintiff alleges that the defendants have conducted the affairs of 6432581 Canada Inc. in a manner that is oppressive and unfairly prejudicially to his minority interest in the corporation. Some of the particulars of this conduct consist of a large inventory of tactics to undermine his minority interest including: failure to call shareholders, taking major decision without informing the plaintiff, obtaining profits in contravention of an oral shareholder agreement, making controversial decisions as directors where the individual defendants were in conflict of interest, obtaining loans from their father at a very high cost to the corporation, starting frivolous court actions against the plaintiff and making frivolous complaints to the police to undermine his morale and resolve to pursue this action.
[3] The defendants rely on various provisions of Rule 25 in support of their motion. I will deal with each group of impugned paragraphs under the applicable provision of Rule 25 relied on by the defendants:
Rule 25.06(8): Full Particulars
[4] The defendants submit that paragraphs 63, 64, 65, 66, 67, 80 and 82 must be struck because they fail to provide full particulars. The use of the phrase “despite numerous requests” is said to be not permissible because the plaintiff must specify the details of the demands and or requests which were ignored by them. The defendants rely on the decision of Master Egan in Malik v. Nikolic reported at 2003 Carswell Ont. 2307.
[5] Malik was a case for damages for defamation. In that context the Master struck out certain paragraphs of the statement of claim which alleged that “on numerous occasions…”, he (the defendant) told his parishioners in public”. The gist of that paragraph in the context of the allegation of defamation was that the defendant made certain defamatory statements in public.
[6] Here the gist of the impugned paragraphs are not that there was numerous demands but that the defendants failed to provide accurate reports (63), the defendants have engaged in a pattern of behaviour designed to prevent the plaintiff to have access to accurate records (64), the defendants have failed to convene shareholder meetings and did not declare their conflict of interest at directors’ meetings (65), the defendants have not implemented any corporate governance or financial administration reforms (66), the defendants have refused to adopt a shareholder agreement (67), the defendants have refused to rectify these oppressive acts (80), the defendants have entered into contracts without convening the necessary meetings (82).
[7] In the context of the overall statement of claim, the defendants know exactly what are the allegations of oppression they face. The exact particulars of the demands are not crucial to the plaintiff’s claim. In any event if some of the particulars are required they may be obtained by other means. This is not a defect which warrants striking the paragraphs as claimed by the defendants.
Rule 28.06(1): Evidence
[8] The defendants submit that paragraphs 75, 83, 89, 90, 92 and 104 should be struck because they plead evidence in contravention of Rule 25.06(1),
[9] As has been said by this court in many cases, there is no bright line distinguishing material facts from evidence. As long as references to evidence are kept to a minimum and are for the purpose of providing context or a narrative background to the claim, the court will not strike the pleading.
[10] The defendants submit that paragraphs 83, 89, 92, 104 and 105 should be struck because they contravene Rule 25.06 (1) by pleading evidence. I will deal separately with paragraphs 75 and 91 as the defendants attack them on basis as pleading evidence, opinion and argument.
[11] Paragraph 83 is a follow-up to the allegations made in paragraph 82 that the defendants have made credit arrangements without proper corporate meetings and resolutions. I agree with the defendants that the paragraph’s only purpose is to provide evidence of the allegations in paragraph 82. As such paragraph 83 contravenes Rule 25.01 and should be struck.
[12] Although paragraphs 89, 90 and 92 plead evidence to a certain extent they also provide context and a narrative background. I will not strike them.
[13] Paragraphs 104 and 105 clearly contravene Rule 25.01. The result of the audit, paragraph 105, is pure opinion evidence. Without paragraph 105, paragraph 104 becomes an irrelevant fact. Both paragraphs must be struck.
[14] The defendants submit that paragraphs 75 and 90 must be struck because they plead evidence, opinion and argument.
[15] I am of the view that paragraph 69 in stating “have refused to adopt the most basic financial controls” is for intent and purposes a statement of fact. It could have been said differently but it is simply a statement that the defendants have not put in place financial controls. It need not be struck.
[16] The reference in paragraph 75 to “given the poor state of corporate governance” is an expression of opinion or argument and as such those words should be struck.
[17] However, pleading that the corporation has been found to be in default of its tax obligations is a statement of fact which gives context and narrative to the plaintiff’s allegations that the individual defendants mismanaged the corporation.
[18] Finally, paragraph 90 pleads that the individual defendants provided “contradictory financial statements”. Contradictory may simple mean contradictory on their face and as such is merely a statement of fact. Reading that paragraph generously, I am of the view it should not be struck.
Rule 25.11: Abuse of process
[19] The defendants submit that paragraph 72 must be struck because it is a pre-emptive collateral attack on other proceedings brought by the defendants against the plaintiff and as such is an abuse of process. They rely on the decision of this Court in Power Tax Corporation V. Millar 2013 ONSC 135. In that case, the applicant Power Tax Corporation brought an application for a declaration that it had legally dismissed the respondent Millar. The judge found the applicant had instituted the application in response to Millar’s application to the Human Rights Tribunal alleging that she was dismissed because she took her full maternity leave. As such Goldstein J. found the application in Superior Court was an abuse of process.
[20] This is not the case here. What is being alleged here by the plaintiff is that one of the oppressive conducts deployed against him by the defendants was the institution of frivolous court actions and criminal complaints. To prove this allegation the plaintiff will have to show the actions were totally devoid of merit on their face. There should then be no need to go further in the merits of the actions. As such it is not an abuse of process. In fact, in circumstances where a defendant is alleged to have undertaken frivolous actions to oppress a plaintiff, the plaintiff must be allowed to allege that fact.
CONCLUSION
[21] For the above reasons, paragraphs 83, 104 and 105 are struck. The words “given the poor state of governance” in paragraph 75 are also struck. All are struck with leave to amend the statement of claim, if need be.
[22] The defendants’ motion is otherwise dismissed.
[23] Although success has been divided, the plaintiffs have been successful to a much larger extent. Interestingly, both cost outline submitted provide very similar claim for partial indemnity costs. The plaintiff sets those costs at $9,077.25 and the defendants at $9,791.07.
[24] I grant costs to the plaintiff in the amount of $6,500.00 all inclusive.
Charbonneau, J
Date: March 11, 2014
COURT FILE NO.: 520-2013
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Jean-Luc Brisson, Plaintiff
AND
6342581 Canada Inc., Marc-André Labelle, Dominic Labelle, Gray Hawk(1991) and IMI International Manufacturing Inc., Defendants
BEFORE: The Honourable Justice M.Z. Charbonneau
COUNSEL: Jean-Francois Laberge for the Plaintiff
Jenna Anne de Jong for the Defendants
ENDORSEMENT
Charbonneau, J.
Released: March 11, 2014