ACI Brands Inc. v. Aviva Insurance Company of Canada et al.

[Indexed as: ACI Brands Inc. v. Aviva Insurance Co. of Canada]

Ontario Reports

Ontario Superior Court of Justice,

E.M. Morgan J.

August 1, 2014

122 O.R. (3d) 796 | 2014 ONSC 4559

Case Summary

Civil procedure — Statement of claim — Striking out — Plaintiff suing insurance company, brokerage firm and individual employee of that firm for negligence, breach of fiduciary duty, misrepresentation and breach of contract arising out of failure to provide plaintiff with adequate insurance coverage — Allegations against brokerage firm and employee undifferentiated — Claim against employee struck out.

The plaintiff brought an action against an insurance company, an insurance brokerage firm, and an individual broker, S, for damages for negligence, breach of fiduciary duty, misrepresentation and breach of contract. Essentially, the plaintiff claimed that the defendants failed to provide him with adequate insurance coverage. S brought a motion to strike out the pleading as against him.

Held, the motion should be granted.

Employees are generally protected from personal liability unless it can be shown that their actions are themselves tortious or exhibit a separate identity or interest from that of the employer so as to make the act or conduct complained of their own. In this case, virtually all of the allegations were levelled against "the Broker and/or S". The allegations were undifferentiated. The [page797] broker and S were so thoroughly integrated with each other that there was no particular act of S that was said to be the act that breached a duty or that fell below the requisite standard of care. The claim against S was not sufficiently pleaded.

Cases referred to

1355632 Ontario Ltd. v. Brister Group (2012), 111 O.R. (3d) 74, [2012] O.J. No. 2787, 2012 ONSC 2089 (S.C.J.); Alper Development, Inc. v. Harrowston Corp. (1998), 1998 2237 (ON CA), 38 O.R. (3d) 785, [1998] O.J. No. 1199, 107 O.A.C. 318, 36 C.C.E.L. (2d) 173, 78 A.C.W.S. (3d) 255 (C.A.); Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93, 74 D.L.R. (4th) 321, 117 N.R. 321, [1990] 6 W.W.R. 385, J.E. 90-1436, 49 B.C.L.R. (2d) 273, 4 C.C.L.T. (2d) 1, 43 C.P.C. (2d) 105, 23 A.C.W.S. (3d) 101; Lobo v. Carleton University, [2012] O.J. No. 63, 2012 ONSC 254 (S.C.J.); London Drugs Ltd. v. Kuehne & Nagel International Ltd., 1992 41 (SCC), [1992] 3 S.C.R. 299, [1992] S.C.J. No. 84, 97 D.L.R. (4th) 261, 143 N.R. 1, [1993] 1 W.W.R. 1, J.E. 92-1650, 18 B.C.A.C. 1, 73 B.C.L.R. (2d) 1, 43 C.C.E.L. 1, 13 C.C.L.T. (2d) 1, 36 A.C.W.S. (3d) 669; ScotiaMcLeod Inc. v. Peoples Jewellers Ltd. (1995), 1995 1301 (ON CA), 26 O.R. (3d) 481, [1995] O.J. No. 3556, 129 D.L.R. (4th) 711, 87 O.A.C. 129, 23 B.L.R. (2d) 165, 9 C.C.L.S. 97, 59 A.C.W.S. (3d) 213 (C.A.); Strata Plan No. VIS3578 v. John A. Neilson Architects Inc., [2010] B.C.J. No. 1280, 2010 BCCA 329, 295 B.C.A.C. 132, 6 B.C.L.R. (5th) 31, 323 D.L.R. (4th) 482, 90 C.L.R. (3d) 4

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 21, 57.01(1)

MOTION to strike a statement of claim as against a moving party.

Christopher N. Valente, for plaintiff.

Catherine Keyes, for defendant.

[1] Endorsement of E.M. MORGAN J.: — The statement of claim in this action names three defendants: an insurance company, an insurance brokerage firm and an individual broker. The gist of the claim is that the defendants failed to provide the plaintiff with adequate insurance coverage.

[2] The defendant Stephen Smith ("Smith") is the individual broker named in the statement of claim. He brings this motion under Rule 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to strike out the pleading as against him.

[3] The defendant Aviva Insurance Company of Canada is the insurance company named in the statement of claim. It takes no part in the motion.

[4] The defendant Jones Brown Inc. (the "broker") is the brokerage firm named in the statement of claim. The broker is Smith's employer and is represented by the same counsel as Smith. In their factum, the broker and Smith state: "The corporate defendant, Jones Brown Inc., admits that it would be vicariously liable for any negligence of Mr. Smith." [page798]

[5] The statement of claim pleads four causes of action: negligence, breach of fiduciary duty, misrepresentation and breach of contract. In order for the Rule 21 test to be met, the pleading must disclose no reasonable prospect of success (Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93, at p. 980 S.C.R.).

[6] The first five paragraphs of the statement of claim introduce the parties to the action. Paragraph 5 of the pleading, which is one sentence in length, introduces Smith. It states: "The Defendant, Stephen Smith ('Smith'), is an individual who was, at all material times, employed by the Broker, licensed to secure insurance coverage and, in fact, secured insurance coverage for ACI."

[7] Beyond that introduction, it is difficult, if not impossible, to tell from the rest of the 82-paragraph pleading just what it is that Smith did. One does not know from the statement of claim whether Smith was the primary contact with the plaintiff or simply a name that the plaintiff came across in examining a list of the broker's staff. No conversation between Smith and the plaintiff is described, no instance of interaction between them is pleaded and no explanation as to why Smith, as opposed to any other staff person at the broker, is named as a defendant.

[8] Counsel for the plaintiff has compiled a helpful schedule that he has appended to his factum, in which the pleading is broken down and grouped with respect to the several causes of action. A perusal of that schedule confirms the difficulty in identifying Smith's role. Virtually all of the allegations are levelled against "the Broker and/or Smith". The allegations are undifferentiated; indeed, the broker and Smith are so thoroughly integrated with each other that there is no particular act of Smith that is said to be the act that breached a duty or that fell below the requisite standard of care.

[9] In London Drugs Ltd. v. Kuehne & Nagel International Ltd., 1992 41 (SCC), [1992] 3 S.C.R. 299, [1992] S.C.J. No. 84, Iacobucci J. noted [at para. 185] that "[t]here is no general rule in Canada to the effect that an employee acting in the course of his or her employment and performing the 'very essence' of his or her employer's contractual obligations with a customer, does not owe a duty of care . . . to the customer". That said, it is also the case that "it is not enough that the employee has made a mistake acting within the scope of his employment and that the employer has breached the standard of conduct it owes to the plaintiff. Personal liability of the employee requires actions of that employee that are themselves tortious" [page799] (Alper Development, Inc. v. Harrowston Corp. (1998), 1998 2237 (ON CA), 38 O.R. (3d) 785, [1998] O.J. No. 1199 (C.A.), at para. 7).

[10] As the British Columbia Court of Appeal observed in Strata Plan No V1S3578 v. John A. Neilson Architects Inc., [2010] B.C.J. No. 1280, 2010 BCCA 329, at para. 66, "[t]he material facts that support that personal claim in tort must be specifically pleaded to establish a possible cause of action". Individuals do not attract liability where "[t]he allegations made against each in pith and substance relate to decisions made within their ostensible authority as [defendant's] employees" (Lobo v. Carleton University, [2012] O.J. No. 63, 2012 ONSC 254 (S.C.J.), at para. 32). Simply stated, it is "not enough to plead undifferentiated allegations against the corporation and its directors and employees" (Neilson, at para. 71).

[11] It is certainly the case that a professional such as an insurance broker can be held personally liable for acts done in the course of his employment with a professional firm like an insurance brokerage. For example, in 1355632 Ontario Ltd. v. Brister Group (2012), 111 O.R. (3d) 74, [2012] O.J. No. 2787, 2012 ONSC 2089 (S.C.J.), at para. 27, the court noted that "the pleadings of the case at bar specifically plead the existence of an ongoing relationship between the Plaintiff and Mr. Hawn, that it was longstanding, and that they relied on Mr. Hawn as their agent". For that reason, the case could not be dismissed on a Rule 21 motion.

[12] That said, the Court of Appeal made it clear in ScotiaMcLeod Inc. v. Peoples Jewellers Ltd. (1995), 1995 1301 (ON CA), 26 O.R. (3d) 481, [1995] O.J. No. 3556 (C.A.), at p. 491 O.R., that "officers or employees of limited companies are protected from personal liability unless it can be shown that their actions are themselves tortious or exhibit a separate identity or interest from that of the company so as to make the act or conduct complained of their own". It is not sufficient to simply add the individual employee's name, or to combine it with the phrase "and/or" with every claim made against the corporate defendant. With respect, that form of pleading "does little more than 'window dress' the suggestion of a separate identity or interest of the named [individual] from that of [the corporation ]" (Lobo, at para. 35).

[13] The claim against Smith is hereby struck out. The plaintiff shall be at liberty to amend the statement of claim in order to eliminate the claim against Smith or to plead additional facts that can sustain a claim against Smith.

[14] Smith shall have his costs of the motion. His counsel has submitted a costs outline requesting a total of $7,003.33 on a [page800] partial indemnity basis. Counsel for the plaintiff has submitted a costs outline that sets out costs on a partial indemnity basis that are roughly double those request by Smith's counsel.

[15] Rule 57.01(1)(0.b) provides that one of the criteria to be taken into account in exercising my discretion to award costs is the expectations of the unsuccessful party. Given that the plaintiff would request twice as much as Smith is requesting, it is safe to assume that the amount requested by Smith does not surpass the plaintiff's expectations.

[16] The plaintiff shall forthwith pay Smith $7,003.33 on account of costs, inclusive of all disbursements and HST.

Motion granted.

End of Document