Court File and Parties

COURT FILE NO.: CV-10-416648 DATE: 2014-02-25 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Frank Magno, Carlo Magno and JFC Properties Inc., Plaintiffs AND: Tim Lariviere and Greta Lariviere, Defendants

Tim Lariviere and Greta Lariviere, Plaintiffs by Counterclaim John Magno, Frank Magno, Carlo Magno, and JFC properties Inc., Defendants by Counterclaim

BEFORE: Carole J. Brown J.

COUNSEL: Gregory Dimitriou, for the Moving Party, John Magno Howard Crosner, for the Responding Parties and, Tim Lariviere and Greta Lariviere

HEARD: January 7, 2014

ENDORSEMENT

[1] The defendant by counterclaim, John Magno, brings this motion pursuant to Rule 21.01(1)(b) for an Order dismissing the counterclaim of Tim Lariviere and Greta Lariviere against him, or in the alternative, an Order striking the counterclaim of the Larivieres as against him without leave to file a fresh pleading in this action.

[2] The plaintiffs in this action, Frank Magno, Carlo Magno and JFC Properties Inc., are suing the defendants, Tim and Greta Lariviere, for defamation. The defendants filed a statement of defence and counterclaim and added John Magno, the brother of the plaintiffs, as a defendant by counterclaim. The Larivieres allege that the Magno brothers, including John, and JFC Properties Inc. are liable to them in tort for abuse of process.

Background

[3] Although the issue to be decided on this motion is a narrow one, the events that eventually gave rise to the present litigation are both complex and tragic and require some explanation. I quote from the reasons of Ducharme J. of this Court in R v. Magno 2011 ONSC 5552 at para. 1:

There was no Silent Night on Christmas 2001 in Toronto's Danforth and Woodbine neighbourhood. At 12:34 a.m., the tranquility of the night was shattered by an enormous explosion that ripped apart Woodbine Building Supplies at 2055 Danforth and the resulting fire, a six-alarm blaze, was one of the biggest in the history of Toronto. The fire and explosion damaged adjoining commercial buildings, nearby residential homes and automobiles parked in the area. Debris was scattered across Danforth Avenue to the north as well as behind some of the adjoining buildings. Tony Jarcevic, one of the arsonists in the building, was killed, and his accomplice, Jonathan "Sam" Paskalis, was badly burned. As a result of his injuries, Mr. Paskalis spent several months in a medically-induced coma, and has been left permanently and horribly disfigured. Incredibly, despite the magnitude of the explosion and the fire, no one else was injured. But many of the residents in the surrounding homes were evacuated from their homes early on Christmas morning. It took 43 fire trucks and 171 firefighters to fight the fire, which was not fully extinguished for two days.

[4] A subsequent investigation led to a number of criminal charges and convictions. After a trial by jury in June 2011, John Magno was acquitted of second degree murder, but convicted of manslaughter, conspiracy to commit arson, arson causing bodily harm and arson for fraudulent purposes. Frank and Carlo Magno were never charged with any crime in connection with the fire.

The Present Action

[5] Unsurprisingly, the conflagration inconvenienced many local residents. Anger mounted when it was discovered that it had been the result of arson. Tim and Greta Lariviere lived in the neighbourhood and, apparently, became vocal critics of the Magno’s and their family company JFC Properties Inc. In 2009, JFC proposed development of a 12-storey condominium on the vacant lot at 2055 Danforth, the site of the 2001 fire. To that end, JFC applied to the City for an amendment to the applicable zoning by-law and received a favourable recommendation from City staff.

[6] The Larivieres and other local residents vigorously opposed the development. In an article published in the Toronto Sun newspaper on February 5, 2010, Tim Lariviere is quoted as stating “They torched the place so they could build a condo and make lots of money… And that’s exactly what they’ll do.” In the same article, Greta Lariviere is quoted as stating, “The building isn’t as much of a concern as the people building the building… We’re worried about the promises they make. They always cut corners, why would this be any different.”

[7] In September 2010, Tim Lariviere appealed the City of Toronto’s zoning approval for JFC’s condominium development to the Ontario Municipal Board. In his appeal letter to the OMB, Mr. Lariviere allegedly made the following statements in reference to the plaintiffs in this action:

i. “Harassment of the owners to the neighbouring residents”;

ii. Frank Mango “allowed continuous dumping of hazardous material on the site and presently the site is the centre of an ongoing criminal investigation”;

iii. “The owners also allowed this property to be used as a construction waste dump after that explosion”.

[8] In November 2010, the OMB appeal was unilaterally withdrawn by Mr. Lariviere.

[9] In December 2010, Frank Magno, Carlo Magno and JFC Properties Inc. sued the Larivieres for defamation. In February 2011, the Larivieres filed a statement of defence and counterclaim and added John Magno as a defendant to the counterclaim.

Rule 21.01(1)(b)

[10] The only question to be resolved on this motion is whether the pleadings in the counterclaim found a reasonable cause of action as against John Magno.

[11] The purpose of a Rule 21 motion is to enable a judge to strike from the pleadings claims and defences that do not, in law, have a chance of succeeding. No evidence is admissible on a Rule 21 motion. The test to be applied in determining whether a pleading should be struck is whether, assuming the facts as stated in the counterclaim can be proven, it is plain and obvious that no reasonable cause of action is disclosed. If the facts, taken as proven, disclose a reasonable cause of action, i.e. a cause of action with some chance of success, then the action must proceed. The threshold for sustaining a pleading is not high and a pleading must be read generously to allow for drafting deficiencies.

[12] The substance of the counterclaim can be found at paragraphs 42-45 of the Larivieres’ statement of defence and counterclaim:

43. The Larivieres plead that the Plaintiffs commenced this action without reasonable or proper cause, in bad faith and maliciously, to pervert the course of justice and misuse the judicial process, with the ulterior motive and collateral purpose of:

a. Intimidating, embarrassing or humiliating or otherwise pressuring or influencing the testimony of the Larivieres, who were both material witnesses in the pending criminal trial of John Magno;

b. Promoting and furthering accomplishment of the purpose, which the Crown has alleged for the arson and murder of Jarcevic, namely, to redevelop condominium units at the Property;

c. Reversing or obscuring the public’s impression that the Plaintiff’s redevelopment of the Property is the fruit of his crime, committed by one or several other persons for the Plaintiff’s benefit, contrary to public policy;

d. To deter or punish any fair comment or publicity of the relationship between John Magno and his brothers Frank and Carlo respecting the arson, murder and insurance litigation by threatening or punishing individuals;

e. To obscure and suppress the relationship between John Magno and his brothers as beneficiaries of a policy to insure the Business, building and contents at the Property;

f. Such further and other motives or collateral purposes, full particulars of which will be delivered before trial.

44. Particulars of the threats or actions taken in furtherance of the said collateral purpose are as follows:

a. The Plaintiffs are all within arm’s length of John Magno;

b. The Direct ownership, interest or control by John Magno of any interest in the Property or Business, including, but not restricted to JFC Inc., has been transferred from John Magno to one or several of the Plaintiffs since the date of the incident;

c. The Magno’s have all been joint defendants in litigation with the insurer of the Property and Business;

d. Paskalis, Regaldo and Roks have all been convicted of charges arising from the fire at the Property and/or the murder of Jarcevic;

e. John Magno is the only remaining individual who was charged criminally and the timing of the issuance of this action occurs on the eve of his scheduled trial;

f. The Plaintiffs have not sued the publisher, the Toronto Sun, or sought any remedy whatsoever to remove the allegedly defamatory publication from the internet or public exposure;

g. Such further and other threats or actions, full particulars of which will be delivered on or before trial.

45. As a result of these threats or actions, the Larivieres have sustained the following damages:

a. Special and general damages, full particulars of which will be provided on or before trial;

b. Anguish, embarrassment, grief, humiliation, damage to feelings and dignity, wounded pride, damaged self-confidence or self-esteem and all other similar consequences and effects which are sufficiently significant in depth or duration to have a lasting impact on the Larivieres’ lives;

c. Malicious, oppressive and high-handed conduct of the Magnos, that offends decency and is deserving of denunciation and deterrence such that the combined award of general and aggravated damages would be inadequate to achieve the goal of punishment and deterrence.

46. The Larivieres submit that this Counterclaim be allowed with costs on a substantial indemnity basis.

[13] Although the actual term “abuse of process” does not appear in the counterclaim, it was generally accepted among counsel that the pleadings communicate the essential elements of the tort of abuse of process.

The Positions of the Parties

[14] The Plaintiffs in the main action did not take a position on this motion and did not make submissions.

[15] Counsel for the moving party, John Magno, submits that it is plain and obvious that the counterclaim discloses no reasonable cause of action against him and should be struck. He notes that the pleadings make allegations against ‘the Plaintiffs’ and that he is not a plaintiff in the main action. Indeed, he has not initiated any ‘process’ against the Larivieres whatsoever. The only references to his name in the counterclaim are descriptive. He submits that it is improper to add him as a defendant to a counterclaim that is grounded in an action brought by other individuals. If the Larivieres believe that John Magno should be held liable for the actions of the corporate plaintiff, JFC Properties Inc. the proper approach would have been to attempt to pierce the corporate veil, which they have not done. In any event, for a corporate director to be held personally liable in tort, he or she must have engaged in conduct that is independently tortious, and no such conduct has been pled.

[16] John Magno further asserts that, in any event, the pleadings do not satisfy the constituent elements of the tort of abuse of process. He submits that the Larivieres have failed to plead particulars with respect to their allegation that the action against them is motivated by an improper or collateral purpose. Neither have they identified any definite acts or threats perpetrated by John Magno in furtherance of that illegitimate purpose. John Magno asserts that he has not had any direct or indirect contact with Tim Lariviere since before his arrest in August 2002 and that being subpoenaed by the Crown to testify in John Magno’s criminal trial cannot constitute intimidation perpetrated by John Magno.

[17] During submissions, counsel for John Magno averred that counsel for the Larivieres had conflated the concept of the tort of abuse of process, and the doctrine of abuse of process, the latter of which is closely related to the doctrines of issue estoppel and res judicata. For this reason, it was submitted, the arguments made with respect to the re-litigation of facts are irrelevant on this motion.

[18] The moving party also sought relief in the form of Summary Judgment in its factum. However, these arguments were withdrawn at the time of the motion and it was conceded that properly framed, the issue falls under Rule 21.

[19] The respondents on this motion, the Larivieres, state that “the Plaintiffs” are re-litigating facts that have already been proven in previous criminal proceedings. They submit that the attempt to re-litigate these facts evidences an improper and collateral purpose, which falls within the meaning of abuse of process as discussed by the Supreme Court of Canada in Toronto (City) v. Canadian Union of Public Employees, Local 79 2003 SCC 63, [2003] S.C.J. No. 64 (“Toronto”). In their counterclaim, as outlined above, the Larivieres plead that the purpose of the defamation suit is to harass and intimidate them, among other things.

[20] The respondents additionally claim that it does not matter that John Magno was not a plaintiff in the main action because Toronto, supra, determined that there was no mutuality requirement as between the parties in order to apply the doctrine of abuse of process. During submissions, counsel for the Larivieres argued that the tort of abuse of process is closely related to the doctrine of abuse of process, or that the tort is subsumed by the overarching doctrine. In their factum, they argue that “it is irrelevant that the Magnos avoided naming John as a Plaintiff, given John’s share transfer, combined with the Magnos’ title-juggling and their denials of proven facts.”

[21] The respondents claim that John Magno has taken steps outside the ambit of the litigation in furtherance of re-litigation, including transferring his ownership of JFC Inc. to his brother, Frank. During submissions, counsel for the Larivieres submitted that John Magno’s hearsay statement to Sam Aquaviva - that he believed Tim Lariviere would “burn him” when he testified at his criminal trial - is evidence of a definite act in furtherance of an improper motive.

The Law

The Doctrine of Abuse of Process and the Tort of Abuse of Process

[22] Perhaps at the most theoretical level, the tort of abuse of process and the doctrine of abuse of process can be viewed as both aiming to ensure that an individual cannot cloak an injustice in the guise of legitimate legal process. However, the similarities end there. They are distinct concepts that address different issues in law.

[23] The tort of abuse of process exposes a litigant to liability for damages if he or she abuses the process of the law by using it to extort property or to achieve a collateral purpose outside the ambit of his or her lawsuit: Klar, Tort Law, 5th ed, Toronto: Carswell p. 76; Perell J. “Tort Claims for Abuse of Process” 33 Advoc. Q. 193 2007. The gravamen of the tort of abuse of process is that the defendant has resorted to the process of the court, not to obtain a remedy for a wrong, but to obtain some improper purpose outside the ambit of the lawsuit, and the defendant has taken some step in furtherance of that improper purpose. Merrick v Deeb (2003), 2003 CanLII 804 (ON CA), 172 O.A.C. 229 (C.A).

[24] Four elements must be present to establish the tort of abuse of process, as follows: (1) the plaintiff is or was the subject of a lawsuit initiated by the defendant; (2) the defendant’s predominant purpose in initiating the lawsuit was to further some improper purpose collateral to or outside the ambit of the legal process; (3) the defendant performed a definite act or threat in furtherance of that improper purpose; and (4) the plaintiff was caused to suffer some special damages or loss unique to him or her. Metropolitan Separate School Board v. Taylor (1994), 21 C.C.L.T. (2d) 316 (Ont. Ct. (Gen. Div)) ["Taylor"].

[25] The doctrine of abuse of process, on the other hand, is not a cause of action. It is a discretionary doctrine that aims to promote certainty and finality in the law by preventing the re-litigation of issues that have finally been disposed of by a court of competent jurisdiction. As Abella J., writing for the Supreme Court of Canada, stated in Toronto, supra, at para. 43:

[T]he primary focus of the doctrine of abuse of process is the integrity of the adjudicative functions of courts. Whether it serves to disentitle the Crown from proceeding because of undue delays or whether it prevents a civil party from using the courts for an improper purpose the focus is less on the interest of parties and more on the integrity of judicial decision making as a branch of the administration of justice. [Emphasis Added, Citations Omitted]

[26] A party cannot claim damages for the discretionary doctrine of abuse of process. Instead, where it is properly pled, the remedy is a stay of proceedings. Although it is a common law doctrine, it has been codified in the rules of civil procedure of the various provincial superior courts, including Rule 20.01(3)(d) in Ontario.

[27] Unlike the related common law concept of issue estoppel, abuse of process does not require mutuality of parties for it to be invoked. In fact, because judges have an inherent and residual discretion to prevent an abuse of the court’s processes, they have a duty to consider the doctrine even if the parties do not raise an estoppel argument. Gough v Newfoundland and Labrador, [2006] N.J. No. 6 (C.A.) at para. 50.

Analysis

[28] As indicated above, the question to be decided on this motion is a narrow one: Do the pleadings, taken to be true and given a generous interpretation, disclose a reasonable cause of action as against John Magno? I conclude that they do not.

[29] First and foremost, as set forth above at para. 24, in order to attract liability in tort for abuse of process, the alleged tortfeasor must have initiated a process. Counsel relied on Bentham v Rothbart 1989, 36 O.A.C 13 and Beckingham v. Sparrow 1977 2 C.C.L.T 214 (Ont. H.C.) for the proposition that the tort of abuse of process has two elements, namely, a collateral purpose beyond the ambit of the action, and a definitive act or threat in furtherance of that purpose. While this is a correct statement of the law, implicit in the first criterion is that an action has been initiated. The tortfeasor can hardly have a purpose collateral to an action without an action.

[30] In this case, John Magno is not a plaintiff in the defamation action brought by his brothers and the corporate plaintiff, JFC Inc., against the Larivieres. Indeed, he has never been involved in any litigation with the defendants, nor have the Larivieres ever claimed against John Magno for his involvement in the arson. No matter how close John Magno is with his brothers, there is no legal doctrine that would allow a trier of fact to infer that he is actually a plaintiff by proxy or implication.

[31] Counsel for the Larivieres stressed that Toronto, supra, did away with the mutuality requirement in abuse of process cases. While that is true with respect to the doctrine of abuse of process, Toronto was not a tort case. And there are several important policy reasons for maintaining the mutuality criterion in the tort of abuse of process.

[32] In Harris v GlaxoSmithKline Inc. (2010), 2010 ONSC 2326, 101 O.R. (3d) 665, aff’d 2010 ONCA 872, 106 O.R. (3d) 661 (C.A.), leave to appeal to S.C.C. refused, [2011] S.C.C.A No. 85, the plaintiff attempted to sue the defendant for abuse of process notwithstanding the fact that GSK had not brought an action against her. She similarly relied on Toronto to argue that mutuality was not required. However, Perell J. struck her claim, stating at para. 55: “The real thrust of Ms. Harris's first argument is that because she cannot satisfy the tort's first constituent element, she wishes to eliminate it and, in effect, have recognized a new tort that I shall call "derivative abuse of process" or "foreseeable bystander abuse of process." This new tort would provide compensation for those who are allegedly injured by somebody else's litigation.” Perell went on to note that allowing this argument to succeed would potentially create indeterminate liability to an indeterminate number of claimants.

[33] In the present case it is the defendant by counterclaim, John Magno, who is a non-party to the main action, however I find that the principles articulated by Perell J. apply with equal force. The law is settled that an individual cannot sue or be sued for abuse of a legal process that they are not involved in. John Magno has not initiated a proceeding against the defendants, and the defendants have not, and cannot, plead that he has.

[34] Although the pleadings as against John Magno can be struck on this basis alone, for the sake of completeness and clarity, I will briefly discuss the other elements of the tort as they apply in this case.

[35] The Larivieres plead that this action was brought with the ulterior motive of, variously, intimidating and embarrassing them, promoting the development of condominiums, and punishing fair comment and publicity about the arson.

[36] In order be actionable, the authorities indicate that the collateral improper purpose must also be the dominant purpose for bringing the action. As Justice Perell has written, “so long as it is not the predominant purpose, it may be quite proper for a litigant to bring a lawsuit for spite and for the purpose of making his or her opponent silent, miserable, weak or incapable.” Perell J. “Tort Claims for Abuse of Process” 33 Advoc. Q. 193 2007. In Westjet Airlines Ltd. v. Air Canada [2005] O.J. No. 2310, Justice Nordheimer found it helpful to differentiate between purpose and motive in the context of an abuse of process claim. He wrote, at para. 19:

Many actions may result in the extinguishment of a defendant because the defendant does not have the resources available to answer any judgment that may ultimately be rendered. It may also be the case that actions are commenced by one competitor against another with the view to not only obtaining the relief sought in the claim but also the possible elimination of that competitor, whether directly or indirectly. While that may be an improper motive, that is not necessarily the same thing as being an improper purpose. If the action itself is trumped up or completely spurious, the institution of the action for the goal of driving a competitor out of business might well be found to be instituted for an improper purpose since there would be no associated valid basis for the claim. However, if there is some basis for the claim, it seems to me that it then becomes difficult to characterize the action as having been instituted for an improper purpose just because a by-product of its successful prosecution may be the elimination of the defendant as a competitor.

[37] The court’s focus must be on the merits of the claim itself and not on the nature of the relationship between the litigants. Whether they are old friends or fierce enemies says nothing about legal principles and the facts before the court.

[38] It should also be noted that in an action for defamation, ‘silencing a critic’ cannot be considered a collateral purpose, since it is the very reason for initiating such a claim. In Taylor, supra, the defendant had alleged that a school board was mishandling cases of child abuse and neglect. The school board sued for defamation, and Taylor counterclaimed for abuse of process. On a similar Rule 21 motion, Spence J. observed that silencing a defendant is the natural consequence of a suit in defamation and, on that basis, struck the claim.

[39] In this case, the Larivieres have not pled any facts regarding improper purpose with respect to John Magno. Paragraph 43 of the Counterclaim refers to ‘the plaintiffs’, which does not include John Magno. Their claim against him should be struck on this ground as well.

[40] Turning now to the next element of the tort - the extraneous act in furtherance of the collateral purpose - the Larivieres have not pled anything that can be seen to satisfy this criterion, especially as it relates to the moving party. Again, assuming everything to be true, merely being the brother of the named plaintiffs is not an act in furtherance of a collateral purpose. Neither is alienating shares in a privately held corporation or being a defendant in insurance litigation.

[41] During submissions, counsel for the Larivieres suggested that John Magno’s statement that Tim Lariviere was going to “burn him” was an act in furtherance of an improper motive. Taking this statement to be true, it is difficult to see how John Magno’s subjective belief that Tim Lariviere’s testimony would be damaging to him amounts to a ‘threat or act’ in furtherance of an improper purpose. There is nothing in the pleading to indicate that John Magno did anything personally in order to intimidate the Larivieres. The counterclaim against him must be struck on this basis as well.

Conclusion

[42] Based on the foregoing, I conclude that it is plain and obvious the Larivieres’ counterclaim as against John Magno for the tort of abuse of process has no chance of success and must be struck as against John Magno, without leave to amend or file a fresh pleading.

Costs

[43] I would urge the parties to agree upon costs, failing which I would invite the parties to provide any costs submissions in writing, to be limited to three pages, including the costs outline. The submissions may be forwarded to my attention, through Judges’ Administration at 361 University Avenue, within thirty days of the release of this Endorsement.

Carole J. Brown J.

Date: February 25, 2014