SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-13-489104
MOTION HEARD: JULY 18, 2014

RE: James J. Lawson v. Westerkirk Capital Inc.

BEFORE: MASTER R.A. MUIR

COUNSEL:
Howard A. Levitt and Sean J. O’Donnell for the defendant/moving party
Moya J. Graham for the plaintiff/responding party

REASONS FOR DECISION

[1] This is a motion brought by the defendant for an order striking out and expunging numerous paragraphs of the plaintiff’s statement of claim. The motion is brought pursuant to Rule 25.11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”). The defendant argues that the impugned paragraphs do not comply with the rules of pleading as set out in Rule 25.06(1) and are otherwise scandalous, frivolous or vexatious and an abuse of the process of this court. The plaintiff opposes the relief sought by the defendant.

BACKGROUND

[2] This action involves a claim by the plaintiff against his former employer. The claim is primarily based on what the plaintiff alleges was the defendant’s breach of his employment agreement and other related compensation arrangements. In addition, the statement of claim alleges bad faith and seeks punitive damages. However, it is clear that all of the plaintiff’s claims arise and flow from the plaintiff’s contractual employment relationship with the defendant. The plaintiff’s claims primarily involve the plaintiff’s compensation entitlements pursuant to his agreements with the defendant.

[3] The plaintiff was the chief executive officer of the defendant from August 2004 to November 2012. The plaintiff alleges that on November 27, 2012 he was terminated by the defendant without cause and in breach of his employment agreement with the defendant. The plaintiff alleges that his termination was a result of certain disagreements between him and the principal of the defendant, Sherry Brydson (“Brydson”). The plaintiff alleges that following his termination, the defendant failed to honour its financial obligations to him pursuant to his employment agreement and pursuant to the defendant’s so-called Long Term Incentive Plan (“LTIP”).

ANALYSIS

[4] Rule 25.11 provides as follows:

The court may strike out or expunge all or part of a pleading or other document, with or without leave to amend, on the ground that the pleading or other document,

(a) may prejudice or delay the fair trial of the action;

(b) is scandalous, frivolous or vexatious; or

(c) is an abuse of the process of the court.

[5] Rule 25.06(1) provides that every pleading shall contain a concise statement of the material facts upon which a party intends to rely in support of its claim or defence.

[6] The principles applicable to this motion can be summarized as follows:

● a pleading cannot be scandalous if it is relevant to a matter in issue;[^1]

● a court may strike out portions of a pleading, even where the allegations are relevant, if the moving party can establish that the portion in question is of marginal probative value which is outweighed by the pleading’s prejudicial effect;[^2]

● the power of the court to strike out a portion of a relevant pleading should be exercised with considerable caution;[^3]

● portions of a pleading that are irrelevant, argumentative or inserted for colour should be struck as scandalous;[^4]

● portions of a pleading that amount to bare allegations should be struck out as scandalous;[^5] and,

● portions of a pleading that contain only argument or include unfounded and inflammatory attacks on the integrity of a party should be struck out as scandalous and vexatious.[^6]

[7] These are the principles I have applied in determining the issues on this motion. I have carefully reviewed each of the paragraphs to which the defendant objects and considered the arguments of the parties. In my view, most of the impugned paragraphs should be struck from the statement of claim.

THE IMPUGNED PARAGRAPHS

[8] In its amended notice of motion, the defendant seeks an order striking the following paragraphs: the second sentence of paragraph 2; the second sentence of paragraph 5; the entirety of paragraphs 3, 4, 6 to 69, 71, 72, 74, 75 and 77; and, the last three sentences of paragraph 70.

[9] The second sentence of paragraph 2 simply provides basic background with respect to how the plaintiff came to be employed by the defendant and his prior work history. In my view, this sentence is simply introductory and is also of some marginal relevance to the plaintiff’s claim for punitive damages. It shall not be struck.

[10] Paragraphs 3 and 4 of the statement of claim contain various allegations relating to the background, purpose and formation of the defendant corporation and the individuals who control the defendant and other related corporations. In my view, these allegations are simply not relevant to the plaintiff’s claim for breach of his contract of employment and his claim pursuant to the defendant’s LTIP. It is possible that these allegations may become relevant depending on the nature of the defences that may be pleaded by the defendant but they are clearly not material facts relevant to the claims as set out in the statement of claim. Paragraphs 3 and 4 are hereby struck out.

[11] The second sentence of paragraph 5 makes allegations about the plaintiff’s overall accomplishments and job performance while he was employed by the defendant. In my view, these statements are not relevant to the claims as framed by the plaintiff. As with the allegations in paragraphs 3 and 4, the plaintiff’s job performance may become relevant depending on what is pleaded by the defendant in its statement of defence. As such, the statements in the second sentence of paragraph 5 may properly form part of a reply, but it is my view that they are not relevant to the plaintiff’s claim as currently framed in the statement of claim. The second sentence of paragraph 5 is hereby struck out.

[12] In my view, the vast majority of the remaining impugned paragraphs should also be struck out. These paragraphs contain lengthy and detailed allegations with respect to the formation of the defendant corporation and its purpose, the family background of the principal of the defendant, the activities of other corporations controlled by the same family as the principal of the defendant, various examples of conflict between family members, specifics of the structure and operation of the defendant and its various investments and financial transactions and finally allegations of misconduct by Brydson to the detriment of the defendant. In my view, very little of this extensive factual detail is relevant to the claims being advanced by the plaintiff.

[13] I do accept that some limited background and introductory facts may be pleaded by a party for the purpose of providing context to a claim or defence, but certainly not to the extent that the plaintiff has set out in this statement of claim. The plaintiff’s claim is for breach of his contract of employment and for payment of the compensation he is allegedly owed pursuant to the LTIP. Very little of the extremely detailed background that has been pleaded is relevant to those claims. These lengthy and complex allegations of fact will simply prolong and complicate an action that at its core appears to be a simple breach of contract claim. In my view, these paragraphs, for the most part, have been inserted for the purpose of colour and to cast Brydson and her family in a poor light. Again, to the extent that the defence makes some or all of these paragraphs relevant, they can be properly pleaded in a reply.[^7]

[14] For these reasons, I am ordering that paragraphs 6 to 69, 71, 72, 74, 75, 77 and the last three sentences of paragraph 70 be struck out subject to the following exceptions.

[15] Paragraph 20 deals with the plaintiff’s recruitment and hiring by the defendant. This paragraph provides limited and relevant background and context to the plaintiff’s employment relationship with the defendant. Paragraph 20 shall not be struck out.

[16] The first two sentences and the last sentence of paragraph 21 shall not be struck out. Those sentences deal with the plaintiff’s background and employment history and, in my view, are marginally relevant to the plaintiff’s claim for punitive damages as well as providing limited and relevant background and context to the plaintiff’s employment relationship with the defendant.

[17] Paragraphs 22 and 23 also provide relevant background factual detail with respect to the plaintiff’s employment with the defendant. Those paragraphs shall not be struck out for the same reasons.

[18] Paragraphs 43 and 46 to 48 provide relevant factual detail with respect to the plaintiff’s compensation agreements with the defendant. In my view, those paragraphs are relevant to the plaintiff’s claims for breach of the employment contract and for compensation allegedly owing under the LTIP. They shall not be struck out.

[19] Given that I have identified relevance as the basis for striking out these paragraphs, the plaintiff will not be granted leave to amend. In my view, this is not a situation where a faulty pleading can be remedied to bring it within the applicable rules.

[20] I have determined that many paragraphs of the statement of claim should be struck out. It is therefore appropriate that the plaintiff file and serve a fresh as amended statement of claim.

ORDER

[21] I therefore order as follows:

(a) paragraphs 3, 4, the second sentence of paragraph 5, paragraphs 6-19, the third and fourth sentences of paragraph 21, paragraphs 24-42, paragraphs 44 and 45, paragraphs 49-69, paragraphs 71, 72, 74, 75, 77 and the last three sentences of paragraph 70 are hereby struck out and expunged, without leave to amend;

(b) the plaintiff shall file and serve a fresh as amended statement of claim in accordance with these reasons;

(c) the balance of the relief sought on this motion is dismissed; and,

(d) if the parties are unable to agree on the issue of the costs of this motion, they may make brief submissions in writing by no later than November 7, 2014.

Master R.A. Muir

DATE: October 6, 2014

[^1]: Quizno’s Canada Restaurant Corporation v. Kileel Developments Ltd., 2008 ONCA 644 at paragraph 14.

[^2]: Quizno’s at paragraph 15.

[^3]: Quizno’s at paragraph 15.

[^4]: George v. Harris, [2000] O.J. No. 1762 (S.C.J.) at paragraph 20.

[^5]: George at paragraph 20.

[^6]: George at paragraph 20.

[^7]: It may be theoretically possible for the court to review each of the so-called introductory or background paragraphs to determine if a sentence here or a phrase there might be an acceptable form of pleading. However, I find that the sheer volume of these background facts makes such a task impractical and unproductive.