ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 10-17764
DATE: 2014/05/27
RE: JOEY BOUDREAU, LINA BOUDREAU, JESSICA BOUDREAU
AND JUSTIN BOUDREAU
Plaintiffs
and
ONTARIO SOCCER ASSOCIATION, HKMB INTERNATIONAL INSURANCE BROKERS LTD. AND CHUBB INSURANCE COMPANY OF CANADA
Defendants
BEFORE: Turnbull, RSJ.
COUNSEL:
Sean Oostdyk for Ferro Lawyers, Counsel, for the Plaintiffs
Kurt K. Pereira, Counsel, for the defendant Ontario Soccer Association and for the individuals proposed to be added as defendants.
HEARD: March 7, 2014
ENDORSEMENT
Nature of the Motion
- The plaintiffs have brought a motion under Rules 5.04(2) and 26.01 of the Rules of Civil Procedure for an order adding directors and officers and employees of the defendant Ontario Soccer Association (hereinafter “OSA”) as party defendants to this proceeding. They also seek leave to add a claim of breach of fiduciary duty against the OSA and the proposed personal defendants.
Overview of the Facts
In 2006, the OSA issued a request for proposal (“RFP”) to provide the Association with risk and insurance services. In response to the RFP, HKMB submitted a proposal, and following a lengthy selection process, was selected over several other potential providers to provide risk and insurance services to the OSA. In its pleading, the OSA asserts that it relied on the advice of HKMB in selecting the policy and it has cross claimed against HKMB.
The OSA asserts that the policy was intended to provide an additional layer of insurance coverage for medical and rehabilitation costs to participants in its sanctioned soccer events over and above, or in conjunction with, other available policies. At the time of Mr. Boudreau’s accident in February, 2008, the policy provided coverage of $47,000.00 for injuries of the nature he has sustained
In February 2008, the plaintiff Joey Boudreau was rendered a partial quadriplegic while playing in a soccer game at Soccerworld in Hamilton. The game was sanctioned by the Ontario Soccer Association (OSA) and the plaintiff was a member of the OSA.
The OSA mandate includes the promotion, development, participation in and governance of the game of soccer in Ontario. The OSA had, at the time of this tragic accident, approximately 450,000 members who each paid a registration fee as a pre-condition to their membership.
Mr. Boudreau and his family members brought an action against the OSA on several grounds, one of which alleges negligence for failing to have sufficient health and medical insurance available for members who might suffer injuries during OSA sanctioned games or tournaments. They also sued the insurance broker (the defendant HKMB International) for negligence in its duty to recommend and bind appropriate health and medical coverage in the policy issued to the OSA. HKMB did not participate in this motion, though served with the materials.
The plaintiffs wish to amend their statement of claim to add three individuals as defendants in this action. John Knox (Knox) and Guy Bradbury (Bradbury) were OSA directors during the period of time material to these proceedings. Specifically, Knox was a Vice-President and Acting OSA President, and Bradbury was the OSA Chief Executive Officer. Andrew Backer (Backer) was an OSA Program Coordinator and an employee of the OSA.
Backer was a member of the Insurance Review Committee established by the Board of Directors of the OSA. That committee was charged with reviewing the insurance carried by the OSA for its members and to make recommendations on the appropriate coverage and the appropriate broker to represent the OSA in obtaining binding coverage.
Position of the Plaintiffs
The plaintiffs argue that the OSA Board of Directors appointed an executive committee made up of Bradbury, Knox and Backer. The Board then appointed an OSA Insurance Review Task Force to provide recommendations to the Board of Directors and Executive Committee on appropriate insurance coverage for the OSA. Andrew Backer, who was a staff employee of OSA and a member of the Insurance Review Task Force is alleged to have spearheaded all communications between the OSA and the broker.
He also sat at the first meeting of the Insurance committee (ITFC) where the mandate was set by OSA to govern its conduct. In paragraph 1.1 of the notes of the first meeting of the Insurance Task Force held May 24, 2006, it was noted that “this exercise is not necessarily to lower premium costs but more to insure that The Association has the proper and adequate coverage for its needs”.
In essence, the plaintiffs allege that the proposed defendants, while participating in the OSA’s insurance review, were negligent or alternatively, breached their fiduciary duty owed to members of the OSA such as Mr. Boudreau, by acting outside the specific mandate of the insurance review committee.
In particular they are alleged to have allowed premium cost rather than insurance coverage to govern their recommendations to the Board of Directors. They are also alleged to have negligently recommended a change of brokers because the previous brokers had made recommendations for a proposed insurance coverage which would have provided the members with higher but more expensive coverage for health and medical expenses.
It is further alleged that because these proposed defendants and the OSA were choosing the appropriate coverage for the OSA members who were essentially dependant on their judgment, they owed a fiduciary duty to the members which has been breached.
Position of the Proposed Defendants
The OSA alleges that it was not legally required to have such an insurance policy in place and it contends that the policy was appropriate and provided sufficient coverage. It was noted that no player participating in an organized soccer event in Canada had ever suffered a devastating injury resulting in paraplegia or quadriplegia prior to this incident.
The OSA contends that the proposed amendments to the statement of claim do not constitute any claim which is tenable in law.
On this motion, Mr. Pereira very fairly agreed that the OSA will not oppose the Plaintiffs’ submissions in respect of discoverability (in respect of the proposed Defendants only) subject expressly to the granting of leave to plead a limitations defence should some or all of the amendments be permitted.
The proposed defendants resist the motion essentially on the grounds that they owed no duty of care to the plaintiff as there was no proximity of relationship between them and Mr. Boudreau. Their counsel has emphasized that directors and officers of corporations have most often been immune from being sued in their personal capacities except in exceptional cases where fraud, dishonesty or other malicious conduct has occurred, none of which is alleged here. Furthermore, there was no direct relationship between the plaintiff Mr. Boudreau and any of the proposed defendants which could have established a fiduciary relationship as asserted by the plaintiffs. The only relationship was between him and the OSA through his membership registration.
The Law
- Rule 5.04(2) of the Rules of Civil Procedure, RRO 1990, Reg. 194 provides:
(2) At any stage of a proceeding the Court may by order add, delete or substitute a party or correct the name of a party incorrectly named, on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.
- Rule 26.01 states:
On motion at any stage of an action the Court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.
- Rule 25.06(1) of the Rules of Civil Procedure additionally provides:
Every pleading shall contain a concise statement of the material facts on which the party relies for the claim or defence, but not the evidence by which those facts are to be proved.
In his able submissions on behalf of the proposed defendants, Mr. Pereira very fairly acknowledged that there was no prejudice which would be caused his clients if the order was granted which could not be compensated for by costs or by reserving the right to plead the limitation period defence later in the proceedings.
The essence of a properly drafted pleading is clarity and disclosure. The function of the pleading is to define the issues in controversy in the litigation. Mazzeo v. Kingston (City), [1996] O.J. No. 1738 (Gen. Div.) at para. 14. The proposed pleading is anything but a concise statement of the facts but upon careful reading and ignoring the waft of evidence improperly pleaded, it does ultimately disclose the basis upon which the plaintiffs wish to find liability against the proposed defendants. The issue is whether the claims ultimately fleshed out in the proposed pleading are tenable in law.
The Court may refuse to grant an amendment under Rule 5.04 if the proposed amendment is not tenable at law. However, the right to amend a pleading is not dependent upon evidence to support the proposed amendments. The Court must assume that all of the allegations in the proposed amendments are true and should not concern itself with the credibility of the case set forth by the party seeking the amendment. Berehowsky v. 217083 Ontario Ltd., 2012 ONSC 1227at paras. 10 and 12; Financialinx Corporation v. K & D Auto Ventures Inc. (Oakville Mitsubishi), 2009 55320 (ONSC), para 24.
Rule 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”) governs motions to strike a pleading on the ground that it discloses no reasonable cause of action. The application of Rule 21.01(1)(b) is governed by the test established by the Supreme Court of Canada in Hunt v. Carey, 1990 90 (SCC), [1990] S.C.J. No. 93 (Q.L.) at para. 33:
[A]ssuming that the facts as stated in the statement of claim can be proved, is it "plain and obvious" that the plaintiff's statement of claim discloses no reasonable cause of action? As in England, if there is a chance that the plaintiff might succeed, then the plaintiff should not be "driven from the judgment seat". Neither the length and complexity of the issues, the novelty of the cause of action, nor the potential for the defendant to present a strong defence should prevent the plaintiff from proceeding with his or her case.
On a motion under Rule 21.01(1)(b), the material facts contained within the pleadings are presumed to be proven unless they are speculative or incapable of proof. The pleadings must be read as generously as possible with a view to accommodating any drafting deficiencies. So long as the facts, taken as proven, disclose a reasonable cause of action then the action may proceed. Jane Doe v. Metropolitan Toronto (Municipality) Commissioners of Police, 1990 6611 (ON SC), [1990] O.J. No. 1584 (Q.L.) at para. 10 (Div. Ct.); leave to appeal to C.A. refused, 1991 7565 (ON CA), [1991] O.J. No. 3673 (Q.L) (C.A.), citing Operation Dismantle v. R., 1985 74 (SCC), [1985] 1 S.C.R. 441.
The “plain and obvious” test from Hunt v. Carey, supra is equally applicable to motions to amend pleadings under Rule 26.01. If a proposed amended pleading discloses no reasonable cause of action or lacks a legal foundation, the amendment should be refused. Carom v. Bre-X Minerals Ltd., 1998 14705 (ON SC), [1998] O.J. No. 4496 (Q.L.) at para. 10 (Gen. Div.), citing Atlantic Steel Industries Inc. v. CIGNA Insurance Co. of Canada (1997), 1997 12125 (ON SC), 33 O.R. (3d) 12 (Gen. Div.); Keneber Inc. v. Midland (Town) (1994), 1994 7221 (ON SC), 16 O.R. (3d) 753 (Gen. Div.); Mastercraft Group Inc. v. Confederation Trust Co., [1997] O.J. No. 3451 (Q.L.) (Gen. Div.).
(Decision continues exactly as provided in the source text.)
Turnbull, J.
Date: May 27, 2014
[^1]: My insertion for clarification.
[^2]: This summary is largely “cut and pasted” from the Plaintiff’s factum. Some have said that imitation is the most sincere form of compliment. Others have said that brevity and clarity are the spice of life. I think that both are true.
[^3]: Hodgkinson v Simms, supra at para 33.