Jacobson v. Skurka

Ontario Reports

Ontario Superior Court of Justice,

Perell J.

March 16, 2015

125 O.R. (3d) 279 | 2015 ONSC 1699

Case Summary

Civil procedure — Pleadings — Striking out — Plaintiff pleading that defendant criminal lawyer was negligent in advising him to enter into plea agreement with U.S. authorities — Defendant's statement of defence being struck with leave to amend as it pleaded evidence and argument and contained conclusory character assassination.

Torts — Abuse of process — Plaintiff pleading that defendant criminal lawyer was negligent in advising him to enter into plea agreement with U.S. authorities — Defendant counterclaiming for damages for abuse of process — Defendant alleging that plaintiff maliciously brought lawsuit in order to restore his own reputation and political connections while destroying plaintiff's reputation — Statement of claim unnecessarily making plaintiff's innocence material issue — Plaintiff's motion to strike out counterclaim for failure to plead reasonable cause of action dismissed — Plaintiff arguably using action to establish his own innocence and righteousness.

The plaintiff was charged with a number of criminal offences in the United States. The defendant was one of his criminal lawyers. The plaintiff brought an action against the defendant alleging that the defendant was negligent in advising him to enter into a plea agreement with U.S. authorities. The defendant delivered a statement of defence denying negligence and asserted a counterclaim for damages for abuse of process. He pleaded that the action was designed for ulterior purposes, including pleading to the media and the court of public opinion, and was maliciously designed to restore the plaintiff's own reputation and political connections at the expense of destroying the defendant's reputation. The plaintiff brought a motion to strike the statement of defence, with leave to amend, for non-compliance with the rules of pleading and to strike the counterclaim without leave to amend for failure to disclose a cause of action.

Held, the motion should be granted in part.

The statement of defence should be struck with leave to amend as it pleaded evidence and argument and contained conclusory character assassination.

It was not plain and obvious that the counterclaim for damages for abuse of process could not succeed. In his statement of claim, the plaintiff unnecessarily made his innocence a material issue. It was arguable that the plaintiff's dominant purpose in suing the defendant was to obtain a judicial determination of his own innocence and righteousness and to achieve favourable media attention for himself. It was not plain and obvious that the scope of the tort of abuse of process did not encompass the novel circumstances of the defendant's counterclaim.

Cases referred to

Beckingham v. Sparrow, [1977] O.J. No. 744, 2 C.C.L.T. 214 (H.C.J.); BMO Nesbitt Burns Inc. v. Wellington West Capital Inc., 2004 33776 (ON SC), [2004] O.J. No. 4194, 35 C.C.E.L. (3d) 82, 134 A.C.W.S. (3d) 401 (S.C.J.); Botiuk v. Toronto Free Press Publications Ltd., 1995 60 (SCC), [1995] 3 S.C.R. 3, [1995] S.C.J. No. 69, 126 D.L.R. (4th) 609, 186 N.R. 1, J.E. 95-1800, 85 O.A.C. 81, 26 C.C.L.T. (2d) 109, 57 A.C.W.S. (3d) 592; Canada (Attorney General) v. Inuit Tapirisat of Canada, 1980 21 (SCC), [1980] 2 S.C.R. 735, [1980] S.C.J. No. 99, 115 D.L.R. (3d) 1, 33 N.R. 304, 5 A.C.W.S. (2d) 255; [page280] Canadian Pacific International Freight Services Ltd. v. Starber International Inc., 1992 15412 (ON SC), [1992] O.J. No. 1547, 12 C.C.L.T. (2d) 321, 44 C.P.R. (3d) 17, 34 A.C.W.S. (3d) 935 (Gen. Div.); Cansulex Ltd. v. Perry, [1982] B.C.J. No. 369 (C.A.); Casses v. Canadian Broadcasting Corp., [2013] B.C.J. No. 859, 2013 BCCA 200, 337 B.C.A.C. 210, [2013] 8 W.W.R. 50, 44 B.C.L.R. 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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; Johnson v. Adamson (1981), 1981 1667 (ON CA), 34 O.R. (2d) 236, [1981] O.J. No. 3122, 128 D.L.R. (3d) 470, 18 C.C.L.T. 282, 11 A.C.W.S. (2d) 280 (C.A.) [Leave to appeal to S.C.C. refused (1982), 32 O.R. (2d) 64n, [1982] 1 S.C.R. v, [1982] S.C.C.A. No. 277]; Magno v. Lariviere, [2014] O.J. No. 1950, 2014 ONSC 705 (S.C.J.); Metrick v. Deeb, 2003 804 (ON CA), [2003] O.J. No. 2221, 172 O.A.C. 229, 16 C.C.L.T. (3d) 298, 123 A.C.W.S. (3d) 831 (C.A.), affg [2002] O.J. No. 3576, [2002] O.T.C. 676, 14 C.C.L.T. (3d) 297, 116 A.C.W.S. (3d) 653 (S.C.J.) [Leave to appeal to S.C.C. refused [2003] S.C.C.A. No. 378]; Metropolitan Separate School Board v. Taylor, [1994] O.J. No. 1870, 21 C.C.L.T. (2d) 316 (Gen. Div.); Mexican Northern Power Co. v. Pearson, [1913] O.J. No. 816, 5 O.W.N. 552, 25 O.W.R. 422 (S.C.); Nash v. Ontario (1995), 1995 2934 (ON CA), 27 O.R. (3d) 1, [1995] O.J. No. 4043, 59 A.C.W.S. (3d) 1083 (C.A.); Nelles v. Ontario, 1989 77 (SCC), [1989] 2 S.C.R. 170, [1989] S.C.J. No. 86, 60 D.L.R. (4th) 609, 98 N.R. 321, J.E. 89-1206, 35 O.A.C. 161, 41 Admin. L.R. 1, 49 C.C.L.T. 217, 37 C.P.C. (2d) 1, 71 C.R. (3d) 358, 42 C.R.R. 1, 16 A.C.W.S. (3d) 318; Phillips v. Phillips (1878), 4 Q.B.D. 127 (C.A.); Plato Films, Ltd. v. Speidel, [1961] A.C. 1090, [1961] 1 All E.R. 876, [1961] 2 W.L.R. 470 (H.L.); Poulos v. Matovic, [1989] O.J. No. 220, 47 C.C.L.T. 207, 14 A.C.W.S. (3d) 37 (H.C.J.); Proulx v. Quebec (Attorney General), [2001] 3 S.C.R. 9, [2001] S.C.J. No. 65, 2001 SCC 66, 206 D.L.R. (4th) 1, 276 N.R. 201, J.E. 2001-1975, 159 C.C.C. (3d) 225, 7 C.C.L.T. (3d) 157, 46 C.R. (5th) 1, REJB 2001-26159, 108 A.C.W.S. (3d) 927; Quizno's Canada Restaurant Corp. v. Kileel Developments Ltd. (2008), 92 O.R. (3d) 347, [2008] O.J. No. 3674, 2008 ONCA 644, 241 O.A.C. 148, 169 A.C.W.S. (3d) 986; R. v. Imperial Tobacco Canada Ltd., [2011] 3 S.C.R. 45, [2011] S.C.J. No. 42, 2011 SCC 42, 308 B.C.A.C. 1, 419 N.R. 1, 2011EXP-2380, J.E. 2011-1326, 335 D.L.R. (4th) 513, 21 B.C.L.R. (5th) 215, 25 Admin. L.R. (5th) 1, 86 C.C.L.T. (3d) 1, [2011] 11 W.W.R. 215, 83 C.B.R. (5th) 169, 205 A.C.W.S. (3d) 92; [page281] Scintilore Explorations Ltd. v. Larche, 1999 14948 (ON SC), [1999] O.J. No. 2847, 107 O.T.C. 161, 48 B.L.R. (2d) 248, 90 A.C.W.S. (3d) 109 (S.C.J.); Scott v. Sampson (1882), 8 Q.B.D. 491 (Div. Ct.); Steiner v. Lindzon (1976), 1976 760 (ON SC), 14 O.R. (2d) 122, [1976] O.J. No. 2301, 1 C.P.C. 237 (H.C.J.); Sun Life Assurance Co. of Canada v. 401700 Ontario Ltd. (1991), 1991 7050 (ON SC), 3 O.R. (3d) 684, [1991] O.J. No. 915, 27 A.C.W.S. (3d) 189 (Gen. Div.); Teledata Communications Inc. v. Westburne Industrial Enterprises Ltd. (1990), 1990 6887 (ON SC), 71 O.R. (2d) 466, [1990] O.J. No. 27, 65 D.L.R. (4th) 636, 18 A.C.W.S. (3d) 1365 (H.C.J.); Toronto (City) v. MFP Financial Services Ltd., [2005] O.J. No. 3214, [2005] O.T.C. 672, 17 C.P.C. (6th) 338, 141 A.C.W.S. (3d) 254 (Master); Tsiopoulos v. Commercial Union Assurance Co. (1986), 1986 2531 (ON SC), 57 O.R. (2d) 117, [1986] O.J. No. 1179, 32 D.L.R. (4th) 614, 21 C.C.L.I. 212, 13 C.P.C. (2d) 279, 2 A.C.W.S. (3d) 313 (H.C.J.); Westjet Airlines Ltd. v. Air Canada, [2005] O.J. No. 2310, 2005 CarswellOnt 2101 (S.C.J.)

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 21, 21.01(1)(b), 25.01, 25.06, (1), (7), (8), 25.07(1)-(4), 25.10, 25.11

Authorities referred to

Fridman, G.H.L., "Abuse of Legal Process" (1964), 114 L.J. 335

Irvine, J., "The Resurrection of Tortious Abuse of Process" (1989), 47 C.C.L.T. 217

Perell, P.M., "Tort Claims for Abuse of Process" (2007), 33 Adv. Q. 193

MOTION for an order striking out a statement of defence and a counterclaim.

Robert W. Trifts, for plaintiff.

William C. McDowell and Paul-Erik Veel, for defendant.

PERELL J.: —

A. Introduction

[1] Nathan Jacobson sues Steven Skurka, a criminal law lawyer, for professional negligence. Mr. Jacobson claims damages of $32 million. Mr. Skurka has delivered a statement of defence denying negligence, and he asserts a counterclaim claiming damages of $1.8 million for the tort of abuse of process.

[2] In the motion now before the court, pursuant to rule 25.01 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194], Mr. Jacobson moves to have Mr. Skurka's statement of defence struck with leave to amend for non-compliance with the rules of pleading, and pursuant to rule 21.01(1)(b), Mr. Jacobson moves to have Mr. Skurka's counterclaim struck without leave to amend for failure to disclose a cause of action.

B. Overview

[3] For the reasons that follow, I strike out the statement of defence in its entirety -- but with leave to amend as Mr. Skurka [page282] may be advised, but subject to (1) the directions found in these reasons for decision as to compliance with the rules of pleading; and (2) the timetable set out below for the delivery of his fresh as amended statement of defence and counterclaim and for the hearing of any motions to challenge the amended pleading.

[4] For the reasons that follow, I dismiss Mr. Jacobson's request to strike the counterclaim.

[5] Given the divided success, the costs of this motion should be in the cause. I shall remain seized of this matter until the completion of the timetable.

[6] By way of overview, as I will outline below, Mr. Jacobson and others were the target of an investigation and prosecution by the U.S. Government with respect to the illegal sale of pharmaceutical products in the United States. Mr. Jacobson and the others were charged with copious criminal charges, including drug trafficking, money laundering and racketeering. The U.S. Government sought to extradite Mr. Jacobson from Canada. To defend himself, Mr. Jacobson retained a team of lawyers in the United States and in Canada, including Mr. Skurka, who was to lead the defence team.

[7] After numerous interactions between his legal team and the U.S. prosecutors, Mr. Jacobson came to several plea bargain agreements. There are numerous controversies between Mr. Jacobson and Mr. Skurka about these agreements and the significance of them, but in his statement of claim alleging professional negligence, Mr. Jacobson makes some very serious allegations about the competence, professionalism and ethics of Mr. Skurka. Mr. Jacobson's pleading does so in a very provocative and polemical way that does not comply with the Rules of Civil Procedure.

[8] Mr. Skurka, however, did not challenge the propriety of the fresh as amended statement of claim, and rather, he responded with a provocative and polemical statement of defence of his own and he added a provocative and aggressive counterclaim.

[9] In his statement of defence and counterclaim, Mr. Skurka alleges that Mr. Jacobson was genuinely guilty of criminal offences and that Mr. Jacobson's action is an abuse of the court's process. Mr. Skurka pleads that Mr. Jacobson's action is designed for ulterior purposes, including pleading to the media and to the court of public opinion rather than to a court of law. Mr. Skurka submits that Mr. Jacobson's action is maliciously designed by him to restore his own reputation and his political connections at the expense of maliciously destroying Mr. Skurka's reputation. [page283]

[10] As noted above, Mr. Jacobson brings a motion to strike the counterclaim absolutely and a motion to strike the statement of defence with leave to amend. In particular, he submits that 57 paragraphs of the 132-paragraph statement of defence should be struck because these paragraphs plead evidence or irrelevant matters and/or are scandalous and prejudicial.

[11] Also as noted above, I disagree with the argument that the counterclaim should be struck, but I do agree that the statement of defence should be struck with leave to amend.

[12] It may be the situation that Mr. Skurka was baited by the provocative pleading of Mr. Jacobson to respond with a provocative and polemic pleading of his own, but Mr. Skurka ought not to have taken the bait. Two wrongs do not make a right, and provocation is not a reason to contravene the rules about pleading.

[13] As I shall explain below, Mr. Skurka cannot justify his statement of defence and counterclaim on the basis that he is just pleading material facts or particulars and that he is just responding to the serious allegations made against him. Rather, in my opinion, his pleading unnecessarily pleads evidence and argument. The needs of due process for the discovery phase of the action and for the trial of this action are not served by Mr. Skurka's pleading. In my opinion, there are numerous paragraphs that are unnecessary for Mr. Skurka to plead a full defence or claim of his own.

[14] It is now too late to do anything about the provocative pleading improprieties of Mr. Jacobson's fresh as amended statement of claim, but Mr. Skurka's pleading should be struck with leave to deliver a fresh as amended statement of claim within 30 days of the release of these reasons for decision. Mr. Jacobson shall have 20 days to move to challenge the amended pleading or to deliver a reply and defence to the counterclaim.

C. Factual Background

[15] I shall describe the factual background to Mr. Jacobson's action as it emerges from the statement of claim and the statement of defence and counterclaim, and for the purposes of this motion, I shall ignore the additional evidentiary information provided by Natalie Wilson, a law clerk at Lenczner Slaght Royce Smith Griffin LLP, the lawyers for Mr. Skurka. I shall confine the discussion and analysis to the parties' pleadings.

[16] Mr. Jacobson is a businessman and philanthropist with dual Canadian and Israeli citizenship. He resides in Toronto. He had a business relationship with an online pharmacy known as Affpower. Mr. Jacobson says that his relationship was solely limited to providing credit card processing services through [page284] a company known as RX-Payments. Mr. Skurka, however, pleads that Mr. Jacobson was a principal or the backer of Affpower.

[17] In the summer of 2007, Mr. Jacobson learned that the United States Department of Justice had named him and 17 others in a 333-count indictment in the United States District Court in the Southern District of California that concerned the activities of Affpower. The charges included racketeering, money laundering, mail fraud, wire fraud, distributing and dispensing of controlled substances and dispensing misbranded drugs.

[18] In 2007, Mr. Jacobson retained Mr. Skurka in connection with the charges and an extradition request from the U.S. Government. Mr. Jacobson pleads that Mr. Skurka knew him to be a respected businessman and philanthropist in Canada, the U.S. and Israel, and that it was critical to Mr. Jacobson to have his lawyers protect his reputation and standing in the community.

[19] Mr. Skurka put together a team of Canadian and American lawyers to act for Mr. Jacobson. These lawyers included David Elden, a California criminal law lawyer; Patricia Holmes, a former Assistant U.S. Attorney and judge; and Marie Henein, another Canadian criminal law lawyer.

[20] Mr. Jacobson's instructions were that he was innocent and that he would not voluntarily surrender to the U.S. Government and return to the United States. However, he instructed his international legal team to determine what the U.S. Government's position would be should Mr. Jacobson return voluntarily to the U.S.

[21] Inquiries were made by Mr. Jacobson's lawyers, and the initial position of the U.S. Department of Justice was that Mr. Jacobson must plead guilty and also agree to assist the prosecutors in pursuing the indictment against the others.

[22] On December 18, 2007, Mr. Jacobson, accompanied by Mr. Skurka and Ms. Henein, met with U.S. Government officials in the United States, and Mr. Jacobson was told that there would be no plea bargain unless he pleaded guilty to a money laundering offence.

[23] Mr. Skurka pleads that in January 2008, Mr. Jacobson instructed Mr. Skurka to enter into negotiations with the U.S. Government about a plea bargain. The negotiations followed with the participation of both the American and the Canadian lawyers acting for Mr. Jacobson. Mr. Skurka pleads that months were spent negotiating the plea bargain. He says that Mr. Elden and Ms. Holmes reviewed, commented on, and advised Mr. Jacobson about the plea agreement.

[24] The result was that on May 7, 2008, Mr. Jacobson admitted his guilt to conspiracy to commit the offence of money [page285] laundering and entered a plea of guilty to a single felony count. Under a plea agreement and a co-operation agreement, he agreed to forfeit $4.5 million as the proceeds of crime, but his sentencing was deferred during the currency of his co-operation. The court documents were sealed.

[25] Mr. Jacobson alleges that Mr. Skurka was negligent and in breach of fiduciary duties in advising him to enter into these agreements with the United States Government. He alleges that Mr. Skurka pressured him into agreeing to the plea bargain and but for Mr. Skurka's misconduct the prosecutors would never have proceeded or the charges would have been dismissed for prosecutorial misconduct. Mr. Jacobson pleads that Mr. Skurka knew or ought to have known that the United States Government could not prove that Mr. Jacobson was guilty of the various criminal charges, yet he advised Mr. Jacobson to plead guilty when he was not guilty. Mr. Jacobson pleads that notwithstanding a failure to obtain disclosure from the U.S. Government and a failure to understand the U.S. sentencing guidelines, Mr. Skurka coerced him and persuaded him that he had no choice but to plead guilty to conspiracy to engage in money laundering. Mr. Jacobson pleads that Mr. Skurka exhorted him to plead guilty when Mr. Skurka knew or ought to have known that he was not qualified to give such advice and that Mr. Skurka failed in his duty to withdraw from representing Mr. Jacobson at the outset by reason of Mr. Skurka's own predisposition to believe that the American criminal justice system would under no circumstances provide a fair trial for Mr. Jacobson. Mr. Jacobson says that Mr. Skurka overstated the risks, hazards and prospects of the case so as to exert undue influence on Mr. Jacobson to plead guilty to a serious felony.

[26] In paras. 28-39 of his fresh as amended statement of claim, Mr. Jacobson pleads:

28. The U.S. Government advanced the theory to Mr. Skurka in August 2007 and again in early November 2007 that Mr. Jacobson ought to be persuaded to plead guilty because he might otherwise be convicted of "strict liability offences" without having to prove the requisite element of mens rea. Mr. Skurka convinced Mr. Jacobson, without justification, that a conviction was a certainty on various strict liability offences and because there were hundreds of such counts, Mr. Jacobson could reasonably face a custodial sentence of 100 years without any proof of mens rea. In fact, no such conviction or custodial sentence was likely. Such advice to Mr. Jacobson was erroneous and unfounded as it is indeed rare that custodial sentences are imposed for strict liability offences and the facts required to prove such strict liability offences simply did not exist.

29. Without proper foundation and with a biased predisposition that no defendant could receive a fair trial in the U. S., Mr. Skurka presented a hopeless picture warning Mr. Jacobson that he could only escape harsh [page286] punishment by pleading guilty and cooperating with the U. S. state and federal government.

30. Mr. Jacobson protested a plea of guilty to an offence he did not commit but ultimately succumbed to the view of the Defendant Skurka (during a 2 hour midnight meeting) that if a trial were to be held that Jacobson would be "crushed like a walnut" and would go to jail for a very long time. Mr. Jacobson continually throughout his representation by Mr. Skurka affirmed his innocence.

31. The Defendant Skurka proceeded with the guilty plea without following the proper advice from a very experienced criminal defence attorney in the U.S. that proper disclosure from the Government ought to have been obtained before entering a plea of guilty.

32. Unbeknownst to Mr. Jacobson, very experienced U. S. counsel advised the Defendant Skurka that it would be "quite a leap of faith" to expect that Mr. Jacobson would get a non-custodial sentence based upon a plea to a felony of conspiring to engage in money laundering.

33. Very experienced U. S. counsel confirmed in writing to the Defendant Skurka that no plea to money laundering or to conspiracy was appropriate until the U.S. Government demonstrated that it had evidence of many of the necessary facts required to prove the commission of the alleged felonies and which would be convincing to a court adjudicating on the felony charges.

34. Very experienced U. S. counsel advised the Defendant Skurka that Mr. Jacobson could and should only admit facts within his personal knowledge as part of the Plea Agreement. In particular, Mr. Jacobson was required as part of the Plea Agreement to admit that he had knowledge of the practice of doctors and pharmacies violating regulations governing the dispensing of prescription pharmaceuticals when he had no such knowledge. Mr. Jacobson was required in the Plea Agreement to admit to an alleged fact that he had knowledge that the online pharmaceutical sales involved the dispensation of pharmaceuticals without a proper medical prescription. Mr. Jacobson could not have such knowledge because as a financial processing company for credit card payments both Mr. Jacobson and his company RX Payments were prohibited from receiving and did not receive any information in connection with the details of prescriptions supplied by online pharmacies.

35. Very experienced U. S. counsel advised the Defendant Skurka that there were many admissions of critical facts (required for a conviction) which Mr. Jacobson could not admit and which the Assistant United States Attorney did not provide and in all probability could not provide.

36. Further Skurka was advised by experienced U. S. counsel not to enter into a plea agreement and a co-operation agreement until the U. S. Government provided all of the evidence it had to support the charges against Mr. Jacobson. Further, the Defendant Skurka was advised not to enter into a Co-Operation Plea Agreement with the U.S. Government until further assurances were made by the Government so that Mr. Jacobson would then have more certainty as to the consequences of a plea of guilty and accordingly the advisability of going to trial.

37. The Defendant Skurka failed or refused to take account of the advice and concerns of the very experienced U. S. counsel who was experienced and knowledgeable in the practical legal and tactical dynamics of all aspects of the criminal justice system as administered in California. [page287]

38. When it became apparent to the Defendant Skurka that experienced U. S. counsel did not support a guilty plea and did not support many of the provisions contained in the Plea Agreement, the Defendant Skurka advised the very experienced U. S. counsel that his services were no longer required and that he would not be permitted to participate or advise on the matter of the charges against Mr. Jacobson.

39. Mr. Jacobson became aware of the advice of experienced U. S. counsel only after he engaged new counsel in August, 2012.

[27] I pause here to say that Mr. Jacobson professes his innocence in 26 paragraphs of his 68-paragraph fresh as amended statement of claim (paras. 9, 13-17, 19, 20, 26, 30, 34, 35, 38, 51, 53, 55-64, 65) and includes in the pleading the heading "Complete Vindication of Nathan Jacobson -- An Innocent Man". Paragraphs 28-39, above, are just a sample of the improper pleading of evidence and emotive grandstanding polemic that appears to have provoked Mr. Skurka to respond in kind in his statement of defence and counterclaim. Contrary to rule 25.06(1) of the Rules of Civil Procedure, these paragraphs of Mr. Jacobson's fresh as amended statement of claim are not a concise statement of the material facts without the evidence by which those facts are to be proved. The pleading is a pleading of evidence and argument. There are other examples in the statement of claim. As noted above, however, Mr. Jacobson's pleadings have never been challenged as non-compliant with the Rules of Civil Procedure.

[28] Returning to the narrative, after signing the co-operation agreement, until the end of 2011, Mr. Jacobson co-operated with the U.S. Government. Mr. Skurka alleges that starting in 2012, Mr. Jacobson became non-compliant, and as a result, the U.S. Government asked that Mr. Jacobson be sentenced for his guilty plea to money laundering. Mr. Jacobson's version is that after he co-operated with U.S. law enforcement agencies for more than three years, Mr. Skurka was unwilling or unable to complete a resolution of the criminal prosecution against him.

[29] On July 30, 2012, Mr. Jacobson failed to attend for sentencing and a warrant was issued for his arrest. He subsequently went to the United States, was arrested and released on bail.

[30] In 2013, Mr. Jacobson retained new counsel, and he moved to strike his guilty plea. After initial resistance, the U.S. Government ultimately did not oppose Mr. Jacobson's motion, and it was granted, and Mr. Jacobson and the United States Government signed a non-prosecution agreement.

[31] Mr. Jacobson pleads that Mr. Skurka refused to assist Mr. Jacobson in having his guilty plea withdrawn and instead engaged his own counsel and proceeded to communicate directly [page288] with the Assistant U.S. Attorney in San Diego who was resisting the application of Mr. Jacobson to withdraw his plea of guilty. Mr. Skurka's version is that he acted honourably and appropriately now as a witness in the United States criminal proceeding, providing evidence about the services he and the others provided to Mr. Jacobson.

[32] Mr. Jacobson pleads that he was vindicated by the outcome of the U.S. criminal proceedings. The bolded heading above paras. 55-64 of his fresh as amended statement of claim is "Complete Vindication of Nathan Jacobson -- An Innocent Man." In paras. 60 to 64, he pleads:

60. The Defendant Skurka in fact appeared in the United States District Court in San Diego and gave evidence on behalf of the U.S. Government revealing conversations and documents given to him in confidence which included correspondence from Nathan Jacobson to Steven Skurka wherein Mr. Jacobson professed his innocence.

61. The United States District Judge read the sworn declarations before the Court including Mr. Jacobson's sworn declaration confirming his innocence and heard the testimony of the Defendant Steven Skurka and specifically the evidence given on the cross-examination of Steven Skurka.

62. Nathan Jacobson brought the motion to withdraw the guilty plea on the basis that he was innocent and that he had ineffective counsel. The court granted the motion on that basis.

63. As a consequence, the Presiding Judge ordered that Nathan Jacobson's guilty plea be vacated, the plea agreement be declared null and void and that all charges be dismissed.

64. Mr. Jacobson states and the fact is that the damages suffered as set out in this Amended Statement of Claim arise out of the ineffective counsel as more particularly set out infra.

[33] Mr. Skurka pleads that there was no vindication and, moreover, there was never a finding that Mr. Jacobson suffered from improper or incompetent representation in the U.S. criminal proceedings. Mr. Skurka pleads that Mr. Jacobson did engage in criminal activities.

[34] In any event, under the non-prosecution agreement, the U.S. Government agreed not to proceed with charges against Mr. Jacobson provided that certain conditions were met. Mr. Jacobson agreed to waive all constitutional and statutory defences if any charges were reinstated. The agreement stipulated that the forfeiture of $4.5 million would not be returned, but would be retained as an administrative forfeiture.

[35] On May 2, 2014, Mr. Jacobson commenced his action against Mr. Skurka, and he filed a statement of claim. Mr. Jacobson filed an amended statement of claim on September 23, 2014. This amended claim was served on Mr. Skurka. [page289]

[36] On October 9, 2014, Mr. Skurka filed a notice of intent to defend.

[37] On October 16, 2014, Mr. Jacobson delivered a fresh as amended statement of claim.

[38] As may be noted above, Mr. Jacobson makes his innocence an issue in his civil proceedings against Mr. Skurka. For example, he pleads in para. 51 of his fresh as amended statement of claim that he engaged new counsel who brought an application to withdraw his guilty plea in San Diego District Court based on his actual innocence and the ineffective assistance of [Mr. Skurka]. He takes the outcome of the plea withdrawal motion as a vindication of his innocence. Mr. Skurka denies that Mr. Jacobson is an innocent man. I will return to this topic below.

[39] On November 26, 2014, Mr. Skurka delivered his statement of defence and counterclaim.

[40] On January 8, 2015, Mr. Jacobson brought this motion to strike the statement of defence and counterclaim.

D. Discussion and Analysis

1. The motion to strike the statement of defence

[41] In the following critique of the pleadings in this action, I mean no disrespect to the drafters of the pleadings, who are highly competent professionals acting pursuant to the instructions of their clients for whom the financial and non-financial stakes of this litigation are very high. I have no doubt that Mr. Jacobson and Mr. Skurka are or should be pleased with the work done by their lawyers, much of which is unobjectionable, but, that said, and with respect, too many of the paragraphs of the pleadings in this action are not compliant with the Rules of Civil Procedure, and the pleadings in this action are not concise statements of the material facts.

[42] The main rules about proper pleadings that are pertinent to the immediate case are rules 25.06(1), (7) and (8); rules 25.07(1)-(4); rule 25.10; and rule 25.11, which state:

Material Facts

25.06(1) 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.

Documents or Conversations

(7) The effect of a document or the purport of a conversation, if material, shall be pleaded as briefly as possible, but the precise words of the [page290] document or conversation need not be pleaded unless those words are themselves material.

Nature of Act or Condition of Mind

(8) Where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances from which it is to be inferred.

RULES OF PLEADING -- APPLICABLE TO DEFENCES

Admissions

25.07(1) In a defence, a party shall admit every allegation of fact in the opposite party's pleading that the party does not dispute.

Denials

(2) Subject to subrule (6), all allegations of fact that are not denied in a party's defence shall be deemed to be admitted unless the party pleads having no knowledge in respect of the fact.

Different Version of Facts

(3) Where a party intends to prove a version of the facts different from that pleaded by the opposite party, a denial of the version so pleaded is not sufficient, but the party shall plead the party's own version of the facts in the defence.

Affirmative Defences

(4) In a defence, a party shall plead any matter on which the party intends to rely to defeat the claim of the opposite party and which, if not specifically pleaded, might take the opposite party by surprise or raise an issue that has not been raised in the opposite party's pleading.

PARTICULARS

25.10 Where a party demands particulars of an allegation in the pleading of an opposite party, and the opposite party fails to supply them within seven days, the court may order particulars to be delivered within a specified time.

STRIKING OUT A PLEADING OR OTHER DOCUMENT

25.11 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.

[43] Rule 25.06(1) draws a distinction between the "material facts" and "the evidence by which those facts are to be proved". [page291] A material fact may itself be relevant evidence and particulars of material facts may also be relevant evidence, so the distinction drawn in the rule is not a litmus test clear differentiation, but the essence of the directive of rule 25.06 is clear enough that a pleading is not the place for a party to lead relevant evidence and to present argument to prove his claim or defence.

[44] A pleading should not describe the evidence that will prove a material fact; pleadings of evidence may be struck out: Sun Life Assurance Co. of Canada v. 401700 Ontario Ltd. (1991), 1991 7050 (ON SC), 3 O.R. (3d) 684, [1991] O.J. No. 915 (Gen. Div.). The difference between pleading material facts and pleading evidence is a difference in degree and not of kind: Toronto (City) v. MFP Financial Services Ltd., [2005] O.J. No. 3214, [2005] O.T.C. 672 (Master), at para. 15. What the prohibition against pleading evidence is designed to do is to restrain the pleading of facts that are subordinate and that merely tend toward proving the truth of the material facts: Grace v. Usalkas, [1959] O.W.N. 237 (H.C.J.); Phillips v. Phillips (1878), 4 Q.B.D. 127 (C.A.). Even a pleading of an admission, which is a type of evidence, may be struck out: Davy v. Garrett (1878), 7 Ch. D. 473 (C.A.); Sun Life Assurance Co. of Canada v. 401700 Ontario Ltd., supra.

[45] In most pleadings and for most pleaders, it is easy enough to differentiate what is compliant with the rule and what is a non-compliant pleading of evidence. Most lawyers are and should be able to understand the difference between a material fact and the evidence to prove the material fact. In the case at bar, however, much of Mr. Skurka's statement of defence and counterclaim is patently not compliant with rule 25.06(1).

[46] To demonstrate the last point, I shall first analyze paras. to 28 to 85 of the statement of defence and counterclaim (some 58 paragraphs, some with subparagraphs). I begin by noting that six of these paragraphs (paras. 33, 72, 77, 78, 79 and 83) are lengthy quotes from documentary evidence and they are not a proper way of pleading material facts.

[47] Turning to paras. 28 to 33, which are set out below, these paragraphs are under the heading "Discussion", and apart from the fact that a proper pleading is not a memorandum with a discussion section, and even accepting that para. 28 is a proper pleading of the material fact that Mr. Jacobson's legal team knew that there was incriminating evidence connecting Mr. Jacobson with Affpower, paras. 29 to 33 are not a pleading of material facts, but rather these paragraphs are overwhelmingly evidence and argument to prove that Mr. Jacobson was connected to Affpower's incriminating activity. [page292]

Discussion

28. In providing advice to Jacobson, all of Jacobson's lawyers, including Skurka, were aware that evidence existed that Jacobson was exposed to conviction for participating in an unlawful scheme to sell controlled substances.

29. Jacobson held a shareholding interest in, or otherwise financed, a company known as Affpower. Affpower operated as an online pharmacy. Customers could order a wide variety of discount pharmaceuticals from a menu posted on the worldwide web, and then enter a credit card number on the payment for it on the website. Significantly, "patients" could order narcotics and other dangerous drugs.

30. Jacobson incorporated a further company, RX, which acted as a credit card processor for Affpower.

31. Affpower represented that the drugs were "prescribed" for a therapeutic reason after evaluation of a questionnaire or other document furnished by the "patient" by a physician. In fact, clients of Affpower received drugs in the absence of any clinical evaluation of individual clients; 40% of the "prescriptions" were given in the absence of any involvement of a physician. This violated the governing law, regulatory requirements or policy in virtually all of the 50 states of the United States, each of which required a face-to-face meeting between physician and patient prior to the issuance of a prescription.

32. Affpower's prescribing practice was not only illegal; it was, to the knowledge of Jacobson, highly dangerous in instances where particular patients ordered drugs in the absence of any evaluation of the appropriateness or need for these drugs. There was at least one recorded instance of a person dying after having purchased drugs online.

33. Jacobson maintained to authorities that he was merely the owner of RX, a credit card processor for Affpower, and was not involved in the drug distribution scheme itself. He repeats this allegation in the Statement of Claim. This was false, as clearly acknowledged by Jacobson at the time of his plea, when he admitted to the following at pages 12 and 13 of the Plea Agreement:

The defendant Nathan Jacobson was, during all relevant times, and remains, the Executive Chairman of the Board, with managerial responsibility for the day-to-day operations of Rx Payments' business. The defendant personally authorized Rx Payments' participation in the Affpower enterprise's pharmaceutical sales; he consulted with Affpower principals concerning Affpower's business and sought to promote the business; and he visited Affpower's business facilities in Costa Rica, on behalf of Rx Payments, in 2005 specifically to familiarize himself and evaluate Affpower's pharmaceuticals sales business.

Jacobson initialed these pages of the Plea Agreement.

[48] Paragraphs 34 to 41, 52 to 54 and 85 are largely unobjectionable or tolerable.

[49] Paragraphs 42 to 50 concern the information that the American prosecutor, Assistant U.S. Attorney Corbin Weiss, was providing to Mr. Jacobson's lawyers about the case against [page293] Mr. Jacobson and what the U.S. Government's position was about a plea bargain.

[50] There are some material facts in these paragraphs, but in my opinion, for the most part, these nine paragraphs are evidence and argument about some material facts and some irrelevant matters that need not and ought not to have been included in the statement of defence and counterclaim. For the purposes of Mr. Skurka's defence and counterclaim, the only material facts in paras. 42 to 50, below, are (1) that Mr. Skurka met with the U.S. prosecutors and demanded to be told and was told about the nature of the incriminating evidence against Mr. Jacobson personally; (2) that there was incriminating evidence; and (3) that Mr. Skurka was told that a plea bargain for Mr. Jacobson would involve a guilty plea, an agreement to co-operate in the prosecution of others, and only the prospect that, with extensive co-operation, there would not be a prison term; visualize:

42. On October 26, 2007, Henein and Skurka met with Weiss at the Department of Justice in Washington, D.C. Weiss provided an overview of the Affpower scheme from the point of view of the Government. He outlined that a number of the offences with which Jacobson was charged were strict liability offences.

43. Weiss advised that two defendants had pleaded guilty and that four more named in the Indictment would plead on November 1 and 2, 2007.

44. Weiss also outlined what the Government was looking for in terms of co-operation. He advised that the Government would want a guilty plea from Jacobson personally.

45. Weiss introduced the outlines of a possible resolution of the charges. He explained that the Government wanted to identify others in the online pharmacy industry who might have engaged in illegal activity and be charged with offences. Jacobson's co-operation was important for these efforts. His co-operation might assist the Government on other matters as well. If Jacobson were prepared to co-operate extensively with the Government, it was conceivable that he would not have to serve a prison term, a position Weiss had advanced in earlier meetings with U.S. counsel and Skurka. He would be permitted to carry on business. The Government required only that those of Jacobson's businesses operating schemes like that of Affpower would be required to cease operations.

46. Although the Government had no obligation to make disclosure of its case, Skurka and Henein were concerned that the Government be required to give some indication of the strength of its case. They demanded to be provided with evidence demonstrating that the prosecution had a viable case to present against Jacobson, personally.

47. The Government does not ordinarily provide disclosure to fugitive offenders. Nevertheless, Weiss provided a preview to Skurka and Henein of some critical evidence which the United States Attorney had gathered concerning the activities of Affpower, and Jacobson's role. [page294]

48. On October 30, 2007 at the office of the Department of Justice in Washington, Weiss played critical portions of a recording of a discussion between Jacobson and an indicted co-conspirator David Glass ("Glass"). Glass operated the Affpower plant in Costa Rica, and was co-operating with the Government. Jacobson had been in Costa Rica for a site visit. The recording made it obvious that Jacobson knew that he was participating in an illegal scheme involving the distribution of controlled substances. Jacobson acknowledged in the discussion that prescriptions for consumers were being filled by Affpower without a physician having authorized them. Jacobson admitted to Glass that there was no "real prescription" but perhaps there was a "virtual prescription." Jacobson reasoned that "Okay, it's not the greatest but you've got back-up. If anything comes into question then the authorities will go after the doctors". [emphasis added]

49. The recording demonstrated that while Jacobson knew what he was doing was illegal, he took comfort from his position further up the chain that the physicians involved would be the first to face criminal charges and prosecution.

50. Through November 2007, Weiss and Skurka spoke several more times. Weiss provided further evidence from the Government's case. Weiss advised Skurka that the Government now had evidence to demonstrate that many Affpower "prescriptions" were being prepared and approved not by physicians but by persons impersonating doctors. Weiss also discussed with Skurka the magnitude of the money laundering in which Jacobson was involved.

[51] Paragraphs 48 to 50, above, which interpret the evidence from a tape recording (which I assume was a wiretap by U.S. authorities), disclose that Mr. Jacobson felt culpable but took comfort in knowing that others would be the first to face criminal charges. These are not material facts and they are not even the evidence to prove a material fact. They are an ad hominem argument to discredit Mr. Jacobson.

[52] Paragraph 52 is an example of a paragraph that contains a material fact, i.e., that pursuant to Mr. Jacobson's instructions, Mr. Skurka had received a legal opinion from American lawyers about the illegality of Affpower's activities, which opinion he discussed with Mr. Jacobson. However, this material fact is embellished by an argument about what Mr. Jacobson would know by reason of this opinion.

[53] Paragraphs 53 to 58 are essentially the minutes of a meeting in Niagara Falls, U.S.A. at which Mr. Jacobson had a direct conversation with Mr. Weiss, the American prosecutor. These paragraphs do not comply with rule 25.06(1) and (7). They are, in their essence, evidence and argument.

[54] Paragraphs 59 to 67 do not comply with rule 25.06(1). These paragraphs state:

59. Skurka met with Jacobson together with a Toronto lawyer and friend to Jacobson, Moishe Ronen ("Ronen"), on January 15, 2008 at Ronen's request (on behalf of Jacobson). Jacobson wanted Ronen's input and participation in a discussion surrounding the decision Jacobson had to make whether to enter a plea of guilty or to contest the extradition request which the [page295] Government intended to make; a meeting with Skurka and Henein had been scheduled for this purpose the following day. Contrary to the allegations contained in paragraph 30 of the Statement of Claim, this was not a "midnight meeting" held with Jacobson, but rather a meeting held during the evening of January 15, 2008 to discuss the options available to Jacobson in the presence of one of his most trusted advisors. Skurka provided no legal advice to Jacobson in the meeting but instead answered questions. By the conclusion of the meeting, it was clear to Skurka that Jacobson was considering pleading guilty. Jacobson was quite concerned that the U.S. authorities would name him in an Interpol "red notice".

60. Skurka reviewed these matters with Jacobson in the meeting with Ronen calmly and rationally without a hint of pressure or coercion. Jacobson's claim that Skurka warned that he would be "crushed like a walnut" is a complete fabrication, a fabrication which Jacobson repeats in companion litigation against Henein. (In that litigation, Henein is said to have uttered the "crushed like a walnut" threat.)

61. Jacobson came to the meeting with Skurka and Henein on January 16, 2008 to discuss the direction he wanted to pursue. The Government had established this date as the firm deadline by which Jacobson, through counsel, was to advise of his intentions. A broad-ranging discussion took place which Henein memorialized in a detailed memo. Specifically, the lawyers discussed the following with Jacobson:

(a) The plea of guilty would be to the felony charge of money laundering. Jacobson would consequently be a convicted felon;

(b) A plea to the charge of money laundering would likely have an impact on Jacobson's ability to travel, particularly to the United States, and he might be excluded from entry as a result of his conviction;

(c) A plea would likely also have significant consequences on his business. A conviction for money laundering could preclude Jacobson from taking his companies public, could impact on future business dealings, could impact on his future dealings with various governments, and could cause MasterCard, Visa or any bank to refuse to deal with him;

(d) Although the Plea Agreement and related records would be sealed pending his co-operation, at the end of his co-operation, the contents of the Plea Agreement would become public knowledge;

(e) Prior to the end of Jacobson's co-operation, were he to testify in a proceeding, the fact of his plea to the offence of money laundering could become public;

(f) Competitors might disseminate news of the Indictment and any other related rumours;

(g) It could not be guaranteed that the guilty plea or the Plea Agreement would remain confidential for any period of time;

(h) The nature and value of Jacobson's co-operation lay at the discretion of the Government;

(i) The length of Jacobson's co-operation was at the discretion of the Government; [page296]

(j) While the Government indicated that it was entirely possible as a result of Jacobson's co-operation that they would recommend that he face no incarceration, there was no guarantee of this result. Jacobson might face a period of incarceration at the end of his co-operation;

(k) The plea would involve monetary penalties which would be determined by the Government;

(l) He would have to work with the Government and other Federal law enforcement agencies and co-operate fully to their satisfaction.

62. Skurka and Henein advised Jacobson that the Plea Agreement would carry certain advantages. It provided certainty as to the outcome of the proceedings. There was a better likelihood that Jacobson would not face incarceration provided that the Government was prepared to make such a recommendation. The Government had indicated that it would advise financial institutions of Jacobson's co-operation in the hope that they might continue to deal with Jacobson.

63. Jacobson understood that he was giving up certain defences if he were to come to an agreement with the Government. Skurka and Henein advised him that based upon his prior assertions of innocence and the limited information which had been reviewed to date, the case was defensible as a matter of law. That said, Skurka and Henein emphasized that they came to this tentative conclusion based upon very limited information as well as Jacobson's own recollections. They raised the wiretapped conversation with Glass. Jacobson indicated that it was possible that he might have said something "reckless" which he could no longer recall.

64. Skurka also advised Jacobson of a conversation on January 15, 2008 with Weiss and Gaynor. Weiss and Gaynor had advised that there was an RCMP investigation underway in Canada, although they would not provide any further information.

65. Once Jacobson instructed Skurka and Henein that he wished to plead guilty, he never wavered. Between January 16, 2008 and the date of his plea several months later, Jacobson never suggested to Skurka, Henein or his U.S. counsel that he was innocent of the charge to which a plea would be entered. Indeed, he spent months reviewing successive drafts of the Plea Agreement documents.

66. At the conclusion of the meeting on January 16, 2008, Jacobson instructed Skurka and Henein that they communicate to the Government his desire to proceed with a plea of guilty to a single charge of money laundering. Henein noted, "Jacobson advised that he did not wish to consider the matter further. [Skurka] specifically advised [Jacobson] that he could not plead guilty to an offence unless he was in fact guilty and so acknowledged."

67. Given the direction provided by Jacobson, Skurka and Henein immediately contacted Elden. Elden agreed that he would review draft Plea Agreements as they became available.

[55] Paragraphs 59 to 67, above, comprise evidence and the interpretation of what occurred at a meeting attended by Mr. Jacobson, his friend Moishe Ronen, and Mr. Jacobson's lawyers in January 2008. These paragraphs plead what Ms. Henein [page297] memorialized in her detailed memo about the conversations. They plead evidence and argument, and these paragraphs are not a concise statement of material facts. A pleading is not the time for a witness statement.

[56] In my opinion, paras. 59 to 67 do not comply with rule 25.06(1) and (7). The excision of these paragraphs will not preclude Mr. Skurka from disclosing in his affidavit of documents the notes of the meeting, which he ought to do as part of the discovery phase of the action, nor will it preclude him from relying on what occurred at the meeting in defence of Mr. Jacobson's claim. Including evidence in a pleading may make it easier for the opponent to prepare for examinations for discovery, but it remains improper for a party to make a pleading a pre-emptive closing address.

[57] Paragraphs 68 to 81, which are set out below, describe the negotiation and drafting of the plea bargain documents between March 2008 and May 7, 2008, with a level of detailed evidence that one would not find in reasons for judgment after a trial, including evidence of the work arrangements of the lawyers; diary entries; summaries of the lawyers' contemporaneous memorandums; accounts of the ideas and thoughts of Mr. Jacobson's lawyers; memos to file about conversations between the lawyers; notes of commitments made by Mr. Weiss; notes of conversations with Mr. Jacobson; and Mr. Skurka's thought about the progress that had been made ("excellent progress"). The paragraphs are replete with congratulatory, self-serving, conclusions such as a "very solid plea agreement, really good plea; got him a better plea agreement because of our efforts".

[58] If there is a material fact that can be disinterred from these allegations in paras. 68 to 81, set out below, helpful in defending a solicitor's negligence action, then it is the material fact that Mr. Skurka denies the allegations of negligence and breach of fiduciary duty alleged in the fresh as amended statement of claim and pleads that he and his colleagues, acting for Mr. Jacobson, performed their services without negligence, diligently in accordance with fully informed instructions and in accordance with the standard of care of a senior specialist in criminal law. The rest is evidence and argument and ought not to have been included in the pleading of the statement of defence and counterclaim.

68. The Government presented successive drafts of the Plea Agreements through March and April 2008.

69. In February 2008, Patricia Holmes ("Holmes"), a former Assistant U.S. Attorney and judge, and member of a national law firm from Chicago, joined the defence team. Initially Holmes performed a "second opinion" function [page298] with Jacobson's approval, commenting on Elden's work and views concerning Federal sentencing and the difficult question of "downward departures", i.e. finding bases on which a Court could justify imposing a sentence less onerous than the guidelines ostensibly required. In April 2008, she assumed the role of lead counsel in the proceedings before the U.S. District Court, and Jacobson authorized Skurka to discharge Elden from the brief.

70. In early April 2008, Weiss prepared a draft Plea Agreement on behalf of the Government. The United States Attorney convened a meeting on April 4, 2008 to discuss the parameters of the current version of the draft Plea Agreement.

71. Skurka wrote to Weiss prior to the meeting and advised that Henein and he had "determined that it would be prudent to invite a lawyer familiar with the intricacies of the Federal sentencing guidelines to join us at our meeting in Washington". Skurka confirmed that Jacobson had instructed Holmes, who was a former Assistant U.S. Attorney and judge, to take carriage of the matter. He informed Weiss that she was familiar with the Plea Agreement, and had been fully briefed.

72. Skurka, Henein and Holmes attended this meeting. The defence lawyers suggested a number of changes to the agreement, which Weiss agreed to make. In particular, the facts which the Government wanted Jacobson to stipulate were changed substantially in Jacobson's favour, after consulting with Jacobson. Holmes also made suggestions with respect to the application of the U.S. Federal sentencing guidelines, and these changes were also accepted. Skurka recorded in his diary:

We reviewed the draft plea agreement and at our suggestion a number of changes to the agreement were made. The safety valve was included which reduced the number for the sentencing guidelines to 21. The facts changed and the forfeiture was reduced by approximately $1 million. The client was advised of the excellent progress we made at both meetings. We will review with the client the draft plea agreement and seek his approval. Patricia Holmes will review it with him as well.

73. Skurka further discussed the meeting and the Government's position with Jacobson on April 6, 2008. According to Skurka's diary, Jacobson reviewed the Plea Agreement paying particular attention to the facts which he was expected to accept in the Plea Agreement and indicated that he was "okay" with them, having reviewed that part of the agreement twice. Skurka emphasized that Jacobson would have to review the draft Plea Agreement, and in particular the U.S. sentencing guidelines, with Holmes before formally entering into the agreement. Jacobson advised Skurka that he was prepared to make a forfeiture payment of $4.6 million, although Skurka was instructed to attempt to negotiate the lower number. Eventually, Weiss agreed to Skurka's suggestion that the forfeiture payment be reduced by a further $100,000 to account for Jacobson's expenses during his co-operation.

74. Holmes negotiated further concessions and obtained clarification of the Plea Agreement from Weiss in a telephone conference on April 9, 2008. According to her contemporaneous memorandum, the two lawyers discussed the following:

(a) Weiss did not believe that Jacobson would have to make any restitution; [page299]

(b) Jacobson would have to make a "proffer" immediately following the plea of guilty. Jacobson would be expected to tell the complete truth regarding all matters covered in the proffer, and would have to answer all questions which various federal agencies might have. Failing co-operation, including during the proffer phase, Jacobson might face a longer sentence than contemplated in the Plea Agreement;

(c) Should Jacobson be sentenced to a custodial term, he might apply to transfer to Canada to serve the balance of his sentence there;

(d) With respect to bond pending sentencing (i.e. bail), Weiss acknowledged that he and Skurka had resolved the issue so that Jacobson would pay $1 million to be allotted towards forfeiture, but would then be released on his own recognizance without bond;

(e) Weiss indicated that he would take every precaution to preclude Jacobson's plea from becoming public. Holmes addressed the concern that if Jacobson's plea became public, he might be "rendered useless and therefore unable to work towards co-operation and a [sentencing guidelines] 5K 1.1 downward departure sufficient enough to earn a sentence of probation".

75. Holmes' memorandum confirmed that these matters were subsequently discussed in a teleconference with Jacobson and Skurka.

76. On March 31, 2008, Henein reviewed a draft Plea Agreement with Jacobson. Henein was also present at a meeting with Skurka and Jacobson where Jacobson was instructed to review the Plea Agreement.

77. On April 11, 2008, Skurka made a note in his diary concerning a conversation of April 10 with Jacobson. His entry reads:

I spoke to the client yesterday prior to leaving for his trip to Israel later in the day. He is still in agreement with proceeding with the plea agreement. [. . .]

78. On April 23, 2008, Skurka recorded the following in his diary:

On April 22/08 I reviewed Elden's memo (dated April 17/08) with P. Holmes as well as my notes of reservations. I am fully satisfied based on my discussions with P. Holmes that there is no need to change the draft plea agreement to incorporate Elden's "reservations" about it. I reviewed each of them with P. Holmes and it was her opinion that they did not have sufficient merit to warrant any changes to the plea agreement.

Holmes reiterated these views in a call on April 25, 2008 with Skurka and Henein. She advised (according to Skurka's diary entry) that this was a "very solid plea agreement, really good plea; got him a better plea agreement because of our efforts". Holmes identified the risk that once Jacobson pleaded guilty, he could not take it back, and that Jacobson must understand this.

79. On April 29, 2008, Holmes gave Skurka final confirmation that she was satisfied with the Plea Agreement. Skurka recorded in his diary:

I confirmed with Patricia Holmes that after listening to issues raised by David Elden about the client's plea agreement, she is fully satisfied [page300] that it is sound and favourable to client -- she is prepared to act on plea and sentencing hearing.

80. On April 30, 2008, Jacobson advised Henein in an email that he approved of the basis for the forfeiture calculation, which Henein had provided to him in an Excel spreadsheet.

81. Holmes provided final advice to Jacobson in the weeks immediately prior to May 7, 2008, and independently obtained instructions from him that he wished to plead guilty. Holmes was prepared to represent Jacobson on his plea with knowledge that limited disclosure had been made available by the Government. She was specifically aware that the defence did not know all of the evidence that the Government had in its possession against Jacobson.

[59] Paragraphs 82 to 84 of the "Discussion" section of the statement of defence and counterclaim are examples of useless padding, discussed below.

[60] Moving on to other paragraphs of the statement of defence and counterclaim, paras. 86 to 97 (12 paragraphs) are under the heading "Co-operation" and are about Mr. Jacobson's performance of the co-operation agreement. Paragraphs 98 to 109 (12 paragraphs) are under the heading "Answers to Specific Allegations of Negligence and Improper Conduct Not Otherwise Addressed". Paragraphs 110 to 119 (ten paragraphs) are under the heading "The Application to Strike the Plea". Paragraphs 120 to 127 (eight paragraphs) are under the heading "Jacobson's Supposed Exoneration", and paras. 128 to 132 (five paragraphs) are under the heading "Jacobson's Repudiation". Save for some references to them below, I will not set out these paragraphs in my reasons for decision, but a reading of them demonstrated to me the same types of pleading deficiencies noted above for paras. 28 to 85.

[61] Sometimes, with some problematic sentences and the inclusion of evidence, paras. 86, 88, 94-99, much of 106, 107-111, 113-120 and 123 are proper or tolerable pleadings, but the rest of paras. 86 to 132 largely plead evidence and argument, some of it just ad hominem that contravenes the rules for pleadings.

[62] Turning to some problems with the totality of the statement of defence and counterclaim, rule 25.06(1) directs that the pleading be a "concise statement of the material facts". This direction is designed to screen out irrelevant details that clutter the pleading with useless details. Paragraph 39 from the statement of defence and counterclaim is an example of a pleading that contravenes rule 25.06(1). The paragraph states:

39. Following the initial meeting, Skurka contacted Henein, a leading Toronto criminal lawyer with considerable expertise and experience. Henein was also out of the country. He arranged that the two would meet when each was back in Canada to discuss the strategy for dealing with the coming U.S. extradition request. [page301]

[63] With respect, nothing is added, not even interesting colour and narrative excitement or suspense, by knowing that Ms. Henein was out of the country and that Mr. Skurka arranged to meet with her upon her return to Canada. Mr. Skurka's statement of defence is cluttered with this sort of useless information. With some exceptions that are at least colourful curiosities, the following are more examples of the useless padding of the pleading for no apparent proper purpose:

In February 2008, Patricia Holmes ("Holmes"), a former Assistant U.S. Attorney and judge, and member of a national law firm from Chicago, joined the defence team. Initially Holmes performed a "second opinion" function with Jacobson's approval, commenting on Elden's work and views concerning Federal sentencing and the difficult question of "downward departures", i.e. finding bases on which a Court could justify imposing a sentence less onerous than the guidelines ostensibly required. In April 2008, she assumed the role of lead counsel in the proceedings before the U.S. District Court, and Jacobson authorized Skurka to discharge Elden from the brief. (para. 69)

In early April 2008, Weiss prepared a draft Plea Agreement on behalf of the Government. The United States Attorney convened a meeting on April 4, 2008 to discuss the parameters of the current version of the draft Plea Agreement. (para. 70)

Skurka wrote to Weiss prior to the meeting and advised that Henein and he had "determined that it would be prudent to invite a lawyer familiar with the intricacies of the Federal sentencing guidelines to join us at our meeting in Washington". Skurka confirmed that Jacobson had instructed Holmes, who was a former Assistant U.S. Attorney and judge, to take carriage of the matter. He informed Weiss that she was familiar with the Plea Agreement, and had been fully briefed. (para. 71)

Skurka, Henein and Holmes attended this meeting. The defence lawyers suggested a number of changes to the agreement, which Weiss agreed to make. In particular, the facts which the Government wanted Jacobson to stipulate were changed substantially in Jacobson's favour, after consulting with Jacobson. Holmes also made suggestions with respect to the application of the U.S. Federal sentencing guidelines, and these changes were also accepted. (para. 72).

On May 5, 2008, Jacobson transmitted US $1,000,000 to Holmes' trust account. He understood this amount was his initial forfeiture payment. Holmes sent the forfeiture payment to the IRS Asset Forfeiture Account for deposit. (para. 82)

On May 6, 2008, Skurka travelled with Jacobson to San Diego. They discussed the plea hearing to take place the next day during the flight. Skurka recorded in his diary:

May 6, 2008 Client reviewed plea agreement in my presence on the airplane to Denver (on route to San Diego); he reviewed it from beginning to end and took no issue with its contents. He had reviewed rough draft previously and was aware of changes. [page302]

They discussed who would appear with him at the plea hearing. Skurka recorded the following note:

I discussed change of counsel with him (he was made aware of it previously on the telephone) and he was content with change; he raised first conversation with Elden which he objected to, where Elden had suggested he return to Israel.

This conversation had been a continuing source of contention between Jacobson and Elden and was significant because it would have been more difficult to extradite Jacobson from Israel as opposed to Canada. (para. 83)

Holmes was unable to appear on the date set for the plea, but thoroughly briefed her partner, B. J. Pak ("Pak"). Jacobson approved of this arrangement and met in San Diego with Pak prior to the guilty plea and "allocution", to review the Plea Agreement and Co-operation Agreement. The allocution is that part of the trial in which the accused is to answer questions from the judge and (in this context) accepts guilt for the offences to which a plea is being entered. The judge must satisfy herself that the plea is free, informed and voluntary. Pak in turn presented Jacobson with detailed advice concerning the proceedings in San Diego and what would occur that day. (para. 84)

Through Skurka's efforts, the meetings were always arranged taking into account Jacobson's business activities, responsibilities and his observance of Jewish holidays. (para. 86)

On July 29, 2008, Jacobson advised Skurka in a meeting that senior personnel in Mossad, the Israeli intelligence agency, had requested that he become involved in an intelligence operation which sought to create an international network of people who could help Israel fight Iran and its sphere of influence. (para. 90)

Mossad, according to Jacobson, was particularly interested in having him assist in building intelligence capacity to address Iran's growing nuclear capability. Jacobson was asked by Mossad to help build a network of people who were connected to the nuclear program. He was travelling to Russia to meet with top oligarchs in the banking and industrial fields (oil, metallurgical, manufacturing plants, etc.) to appeal to them to join the network. Jacobson was regularly attending meetings with senior officials of the Mossad. In a follow-up meeting on October 24, 2008, Skurka met with Weiss at his office in Washington. During that meeting Weiss advised Skurka that he had some information that Jacobson was meeting with organized crime figures in Russia. With Jacobson's approval, Skurka briefed Weiss about Jacobson's involvement with the Mossad operation against Iran and his contacts with Russian oligarchs. Weiss was interested in the length of time Jacobson was involved with the operation. Skurka briefed Jacobson a couple of days later. An important purpose of the meeting was to ensure that Weiss and the Government were comfortable that Jacobson had taken on a second time-consuming co-operation role with a government other than the United States. (para. 91)

At the Bahamas meeting, Jacobson provided information to the Government concerning the Israel Discount Bank ("IDB"). The Bank was the third largest in the State of Israel. Jacobson advised agents that organized crime permeates IDB and that senior executives of the Bank working in Israel and New York were involved with organized crime. He also advised that IDB was operated by Israeli organized crime with a New York connection. [page303] He stated that money laundering was involved with the flow of money out of the United States and involved perhaps billions of dollars. The illegal enterprise also involved AOL for Pay, and involved Russian banks dealing with the United States. (para. 93)

[Mr. Skurka] harboured no bias or ill feeling towards the American criminal justice system, but was alive to relevant differences between criminal proceedings in the Federal Courts of the United States and those in superior courts of criminal jurisdiction in Canada. Skurka was aware that leading criminal lawyers in the United States had written commentaries and scholarly articles about shortcomings in the United States federal courts and procedures. (para. 106 (c))

As to the allegation in paragraph 53 (o) (inferior negotiating skills), Skurka pleads that Jacobson hired another senior American criminal lawyer and former Deputy U.S. Attorney, Dan Castleman ("Castleman"), in 2010 to provide his independent insight and expert assistance to the case. Skurka welcomed his participation. Castleman initially met with Skurka and Jacobson in Toronto. He thoroughly reviewed Skurka's work and negotiation strategy at that time and later advised Jacobson that Skurka had in his negotiations with the Government to date "done what I had originally thought was impossible". Significantly, Jacobson never suggested to Castleman that Skurka had in any way acted ineffectively in his representation, although Castleman continued to work for Jacobson throughout the criminal proceedings. (para. 106 (e))

[64] Staying with the entire statement of defence and counterclaim, where allegations are marginally relevant, if the probative value of facts pleaded is outweighed by their prejudicial effect, the court has the jurisdiction to strike those pleadings: Quizno's Canada Restaurant Corp. v. Kileel Developments Ltd. (2008), 92 O.R. (3d) 347, [2008] O.J. No. 3674, 2008 ONCA 644, at para. 15. However provoked a party may be, it is marginally relevant and not pleading a material fact to insult one's opponent and his or her pleadings with conclusory character assassination, which may have to wait a cross-examination at trial. That pleadings are absolutely privileged from being defamatory is not a licence for maligning one's opponent and even in defending himself or herself from allegations of negligence and breach of fiduciary duty a lawyer should exercise some restraint to not go farther than necessary to defend himself or herself.

[65] Mr. Skurka relies on the principle that where a plaintiff pleads damage to his or her reputation, the defendant may plead and prove that there was no damage because the plaintiff s reputation was already bad and if the defendant pleads the plaintiff's bad reputation, he or she must plead the particulars of that claim: Casses v. Canadian Broadcasting Corp., [2013] B.C.J. No. 859, 2013 BCCA 200, at para. 45; Scott v. Sampson (1882), 8 Q.B.D. 491 (Div. Ct.); Plato Films, Ltd. v. Speidel, [1961] 1 All E.R. 876, [1961] A.C. 1090 (H.L.). This principle might apply to the circumstances of this case but, once again, it must be applied with some restraint, and there is a difference in proving that [page304] a person has a bad reputation and proving that if the truth were known he should have a bad reputation.

[66] In my opinion, the following sentences, sometimes surrounded by an appropriate pleading of a material fact, are not proper pleadings and should not find their way back into Mr. Skurka's fresh as amended statement of defence and counterclaim:

He is a tough, fiercely independent, controlling figure who is prepared to act with a complete absence of conscience in the pursuit of his goals, as particularized herein. (from para. 2)

Jacobson's Statement of Claim, as amended by the Amended Statement of Claim and the Further Amended Statement of Claim, is a concoction of deliberate distortions and vicious fabrications. (from para. 24)

At [the time of withdrawing his guilty plea] motivated solely by malice, he made a number of lurid and bizarre allegations in letters to a probation officer and to Judge Gonzales, including the scurrilous allegation to the judge that his plea of guilty "was done through the manipulation and coercion created through the co-operation between my lawyer and the prosecutor" (para. 26)

Jacobson's disturbing and malevolent actions in writing to the Court began a pattern of abusive and dishonest behaviour which has continued since and has informed the entirety of the Statement of Claim (para. 27)

Jacobson's claim that Skurka warned that he would be "crushed like a walnut" is a complete fabrication, a fabrication which Jacobson repeats in companion litigation against Henein. (In that litigation, Henein is said to have uttered the "crushed like a walnut" threat.) (para. 60)

Jacobson did not advise any of these high state officials, including the Canadian Prime Minister, of his money laundering plea. (para. 87)

On July 26, 2012, Jacobson sent an email from Myanmar to Judge Gonzales repeating many of these outlandish falsehoods. (para. 97)

It is nonsensical to maintain (as Jacobson claims) that he only entered his plea and participated in the allocution hearing before Judge Gonzales "in accordance with the instructions of the defendant Skurka". At all times Jacobson was instructing Skurka rather than the other way around. (para. 103)

Jacobson's pleading to the contrary is an unvarnished falsehood. (para. 120)

In 2006, during the same period of time that the Affpower illegal enterprise was in operation, a lawyer at a major Toronto law firm approached Jacobson. That lawyer had a client with connections in Iran. The client had connections to members of the Revolutionary Guard in Iran who had appropriated some $500,000,000, which needed to be surreptitiously moved from Iran to a safe haven. Jacobson told the lawyer that he had the ability to move the money from Iran to Gibraltar where he had business interests. Jacobson offered the lawyer half a percentage point of the transaction, or $2,500,000, if the lawyer were prepared to provide legal documentation as "cover" for the scheme. Jacobson knew that movement of money in this way was illegal. The lawyer thought better of the idea and advised the client and Jacobson that he would not become involved in such a scheme. It is unknown whether Jacobson proceeded with the illegal scheme. (paras. 129-131) [page305]

[67] Finally, on the matter of the challenge to Mr. Skurka's statement of defence and counterclaim, Mr. Skurka justifies his pleading on the basis that he has just helpfully provided particulars of his serious allegations against Mr. Jacobson. I am sure that Mr. Jacobson, who did not ask for particulars but moved to have the allegations struck out, would have been happier to wait for the affidavit of documents and examination to discovery to obtain disclosure of the evidence upon which Mr. Skurka relies to prove his material facts. But more to the point, Mr. Skurka's unsolicited particularization of his defence abuses the notion of particulars.

[68] In between material facts and evidence is the concept of "particulars". Particulars are additional details that enhance the material facts, and particulars have a role to play different from just being evidence: Copland v. Commodore Business Machines Ltd. (1985), 1985 2190 (ON SC), 52 O.R. (2d) 586, [1985] O.J. No. 2675 (Master), affd (1985), 52 O.R. (2d) 586n, 3 C.P.C. (2d) 77n (H.C.J.). Particulars are ordered primarily to clarify a pleading sufficiently to enable the adverse party to frame his or her answer, and their secondary purpose is to prevent surprise at trial: Steiner v. Lindzon (1976), 1976 760 (ON SC), 14 O.R. (2d) 122, [1976] O.J. No. 2301 (H.C.J.). Particulars have the effect of providing information that narrows the generality of pleadings: Mexican Northern Power Co. v. Pearson, [1913] O.J. No. 816, 25 O.W.R. 422 (S.C.).

[69] In Cansulex Ltd. v. Perry, [1982] B.C.J. No. 369 (C.A.), at para. 15, the British Columbia Court of Appeal identified six functions for particulars: (1) to inform the other side of the nature of the case they have to meet as distinguished from the mode in which that case is to be proved; (2) to prevent the other side from being taken by surprise at the trial; (3) to enable the other side to know what evidence they ought to be prepared with and to prepare for trial; (4) to limit the generality of the pleadings; (5) to limit and decide the issues to be tried, and as to which discovery is required; and (6) to tie the hands of the party so that he or she cannot without leave go into any matters not included.

[70] In my opinion, most if not all of the evidentiary details provided by Mr. Skurka cannot be justified by the purposes of particulars. The evidentiary details are the means by which Mr. Skurka intends to prove his defence that he was not negligent or in breach of fiduciary duty and his allegation that Mr. Jacobson suffered no damages because he is not an innocent man. The above analysis reveals that much of the so-called particulars are just a responsive polemic that will just provoke a further polemic in the reply and defence to the counterclaim. [page306]

[71] For these reasons, I strike the statement of defence and counterclaim in its entirety with leave to deliver a fresh as amended statement of defence and counterclaim.

2. The motion to strike the counterclaim

[72] Mr. Jacobson moves pursuant to rule 21.01(1)(b) to have Mr. Skurka's counterclaim for the tort of abuse of process struck out for failure to plead a reasonable cause of action. As noted at the outset, I dismiss this aspect of Mr. Jacobson's pleadings motion.

[73] There is a very high test for success on a motion under Rule 21. The court must be satisfied that it is plain and obvious that the allegations pleaded are incapable of supporting a cause of action and that the claim cannot succeed: Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93; R. v. Imperial Tobacco Canada Ltd., [2011] 3 S.C.R. 45, [2011] S.C.J. No. 42, 2011 SCC 42. Matters of law that are not fully settled should not be disposed of on a motion to strike an action as not showing a reasonable cause of action: Nash v. Ontario (1995), 1995 2934 (ON CA), 27 O.R. (3d) 1, [1995] O.J. No. 4043 (C.A.); Folland v. Ontario (2003), 2003 52139 (ON CA), 64 O.R. (3d) 89, [2003] O.J. No. 1048 (C.A.), leave to appeal to S.C.C. refused [2003] S.C.C.A. No. 249. The law must be allowed to evolve and the novelty of a claim will not militate against a plaintiff: Johnson v. Adamson (1981), 1981 1667 (ON CA), 34 O.R. (2d) 236, [1981] O.J. No. 3122 (C.A.), leave to appeal to S.C.C. refused (1982), 32 O.R. (2d) 64n, [1982] 1 S.C.R. v, [1982] S.C.C.A. No. 277.

[74] In assessing the cause of action or the defence, the court accepts the pleaded allegations of fact as proven, unless they are patently ridiculous or incapable of proof: Canada (Attorney General) v. Inuit Tapirisat of Canada, 1980 21 (SCC), [1980] 2 S.C.R. 735, [1980] S.C.J. No. 99; Nash v. Ontario, supra; Folland v. Ontario, supra.

[75] There are four elements to the tort of abuse of process: (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 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 losses unique to him or her.

[76] See Beckingham v. Sparrow, [1977] O.J. No. 744, 2 C.C.L.T. 214 (H.C.J.); Tsiopoulos v. Commercial Union Assurance Co. (1986), 1986 2531 (ON SC), 57 O.R. (2d) 117, [1986] O.J. No. 1179 (H.C.J.); Teledata Communications Inc. v. Westburne Industrial Enterprises Ltd. (1990), 1990 6887 (ON SC), 71 O.R. (2d) 466, [1990] O.J. No. 27 (H.C.J.); [page307] Canadian Pacific International Freight Services Ltd. v. Starber International Inc., 1992 15412 (ON SC), [1992] O.J. No. 1547, 12 C.C.L.T. (2d) 321 (Gen. Div.); Metropolitan Separate School Board v. Taylor, [1994] O.J. No. 1870, 21 C.C.L.T. (2d) 316 (Gen. Div.); Dooley v. C.N. Weber Ltd. (1994), 1994 7300 (ON SC), 19 O.R. (3d) 779, [1994] O.J. No. 2328 (Gen. Div.); Scintilore Explorations Ltd. v. Larche, 1999 14948 (ON SC), [1999] O.J. No. 2847, 107 O.T.C. 161 (S.C.J.); Metrick v. Deeb, [2002] O.J. No. 3576, [2002] O.T.C. 676 (S.C.J.), affd 2003 804 (ON CA), [2003] O.J. No. 2221, 172 O.A.C. 229 (C.A.), leave to appeal to S.C.C. refused [2003] S.C.C.A. No. 378; BMO Nesbitt Burns Inc. v. Wellington West Capital Inc., 2004 33776 (ON SC), [2004] O.J. No. 4194, 35 C.C.E.L. (3d) 82 (S.C.J.); Hawley v. Bapoo (2005), 2005 36451 (ON SC), 76 O.R. (3d) 649, [2005] O.J. No. 4328 (S.C.J.), vard [2007] O.J. No. 2695, 2007 ONCA 503; Westjet Airlines Ltd. v. Air Canada, [2005] O.J. No. 2310, 2005 CarswellOnt 2101 (S.C.J.); Dionisio v. Lucas, [2006] O.J. No. 1212, 146 A.C.W.S. (3d) 962 (S.C.J.); Harris v. GlaxoSmith Kline Inc. (2010), 101 O.R. (3d) 665, [2010] O.J. No. 1710, 2010 ONSC 2326 (S.C.J.), affd (2010), 106 O.R. (3d) 661, [2010] O.J. No. 5546, 2010 ONCA 872; Magno v. Lariviere, [2014] O.J. No. 1950, 2014 ONSC 705 (S.C.J.).

[77] Although rare, the tort of abuse of process has an ancient lineage. The tort was recognized in 1883 in Grainger v. Hill (1838), 4 Bing. N.C. 212, 132 E.R. 769, where a mortgagee of an ocean vessel sued to enforce the mortgage debt. The mortgagee's lawsuit was brought to coerce the mortgagor to turn over the ship's register, which the mortgagee wished to have because of concerns about the value of the security for the loan. The mortgagee was liable for abusing the process of the law to achieve this improper purpose, which was extraneous to the enforcement of the mortgage. 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. See P.M. Perell, "Tort Claims for Abuse of Process" (2007), 33 Adv. Q. 193; J. Irvine, "The Resurrection of Tortious Abuse of Process" (1989), 47 C.C.L.T. 217; G.H.L. Fridman, "Abuse of Legal Process" (1964), 114 L.J. 335.

[78] An improper purpose is a fundamental element of the tort of abuse of process, and to be actionable, this improper purpose must be the dominant purpose of the lawsuit alleged to be an abuse of the court's process: Scintilore Explorations Ltd. v. Larche, supra. In order to establish the tort of abuse of process, the defendant's improper purpose must be to achieve an end or outcome that is outside the ambit of his or her lawsuit: Metropolitan Separate School Board v. Taylor, supra; Dooley v. C.N. Weber Ltd., supra; Hawley v. Bapoo, supra; Teledata Communications Inc. v. Westburne Industrial Enterprises Ltd., supra. [page308] A plaintiff is not liable for abuse of process for employing regular legal process albeit with bad intentions: Poulos v. Matovic, [1989] O.J. No. 220, 47 C.C.L.T. 207 (H.C.J.).

[79] Although he incorporates his statement of defence as material facts, Mr. Skurka's counterclaim for abuse of process, as such, is short, and I set it out below in full:

133. Skurka claims from Jacobson:

Damages in the amount of $1,800,000;

Pre-judgment and post-judgment interest in accordance with the Courts of Justice Act;

Costs of the action and the counterclaim on a substantial indemnity basis; and

Such further and other relief as this Honourable Court may deem just.

134. Skurka repeats and relies on the allegations in the Statement of Defence.

135. Jacobson initiated this action against Skurka for the predominant purposes of attracting favourable media attention for himself and for harming Skurka. In so doing, Jacobson initiated this action against Skurka for the predominant purpose of furthering indirect and collateral objectives.

136. He has issued his claim as part of a malevolent claim of defamation against Skurka. As a measure of his malice, Jacobson caused Skurka to be served with the Statement of Claim herein a few hours before Rosh Hashanah commenced. By serving process in this way, Jacobson intended to ruin Skurka's observance of the Jewish High Holidays.

137. Jacobson has publicly stated that he wishes to be nominated to the Senate of Canada. Jacobson has also stated that he wishes to receive, among other awards, the Order of Canada and the Israel Prize. Jacobson commenced this action against Skurka for the purpose of receiving favourable media attention, increasing his likelihood of receiving such nominations and/or awards, and resuming his access to high officials of state.

138. Moreover, Jacobson, or persons acting on behalf of Jacobson, provided the Statement of Claim and other materials relating to this matter to the Globe and Mail and other media organizations, in the hope and expectation that they would be republished by those media organizations. Jacobson did so for the predominant purpose of furthering the indirect and collateral objective described above.

139. Jacobson also made false and harmful allegations against Skurka in the Statement of Claim, the Amended Statement of Claim, and the Further Amended Statement of Claim, as described above in the Statement of Defence.

140. The commencement of this action has caused significant damage to Skurka. It has damaged his reputation in the legal community, which was indeed Jacobson's objective.

141. As a result of the commencement of this action against Skurka, and the other steps described above, Jacobson is liable to Skurka for abuse of process. [page309]

[80] Mr. Jacobson submits that Mr. Skurka's counterclaim does not plead the tort of abuse of process, because it conflates an improper motive with the legal requirement that there must be an improper purpose behind the plaintiff s lawsuit collateral or outside the ambit of the lawsuit. Mr. Jacobson submits that Mr. Skurka is attempting to avoid pleading the elements of a defamation claim that is the genuine nature of his grievance with him.

[81] I disagree with Mr. Jacobson's argument and dismiss his motion for two reasons. The first and simplest reason, in my opinion, it is not plain and obvious that Mr. Skurka has conflated the collateral purpose part of the tort.

[82] To use the double negative, it is not plain and obvious that Mr. Skurka has not pleaded an improper purpose that is collateral or outside the ambit of Mr. Jacobson's lawsuit. To use the positive, in my opinion, Mr. Skurka has pleaded material facts that, if proven, potentially establish that Mr. Jacobson was abusing the court's process to achieve objectives outside the ambit of his lawsuit.

[83] Second, and this is a more subtle and not simple point, to use the double negative, it is not plain and obvious that Mr. Skurka has not pleaded an improper purpose that is collateral or outside the proper ambit of Mr. Jacobson's lawsuit. To use the positive, in my opinion, Mr. Skurka has pleaded material facts that, if proven, potentially establish that Mr. Jacobson was abusing the court's process to achieve objectives outside the proper ambit of his lawsuit.

[84] Put somewhat differently, it is not plain and obvious that the scope of the tort of abuse of process will not accommodate Mr. Jacobson's alleged wrongful use of court proceedings beyond their proper purpose, which would be to compensate him for the damages he suffered from Mr. Skurka's alleged barrister's negligence.

[85] Here, it should be noted that it is Mr. Jacobson who infuses to the point of bloat his professional negligence claim against Mr. Skurka with the issues of Mr. Jacobson's innocence from any criminal activity and the sanctity and the importance to him of his reputation as a successful businessman and philanthropist.

[86] In the case at bar, it is not a necessary element of Mr. Jacobson's professional negligence suit to prove that he was innocent of the charges of money laundering, only that it was professionally negligent of Mr. Skurka to advise Mr. Jacobson to enter into a plea bargain including a guilty plea based on what Mr. Skurka and the team of defence lawyers knew or ought to have known about sentencing and the likelihood of a conviction in the United States. [page310]

[87] As noted above, Mr. Jacobson professes his innocence in 26 paragraphs of his 68-paragraph fresh as amended statement of claim and includes the heading "Complete Vindication of Nathan Jacobson -- An Innocent Man". However, civil proceedings, and even criminal proceedings for that matter, are not designed as a vehicle to establish a person's innocence or to re-establish a person's reputation. As famously demonstrated by the O.J. Simpson case in the United States, an acquittal does not establish that a person is innocent of wrongdoing only that the prosecution failed to meet the burden of proof. Even in a malicious prosecution suit, the plaintiff does not have to prove that he or she was innocent, only that the criminal proceedings failed to secure a conviction: Proulx v. Quebec (Attorney General), 2001 SCC 66, [2001] 3 S.C.R. 9, [2001] S.C.J. No. 65; Nelles v. Ontario, 1989 77 (SCC), [1989] 2 S.C.R. 170, [1989] S.C.J. No. 86. In a libel suit, the plaintiff does not have to establish his or her good reputation, and it is for the defendant to prove by way of defence that the defamatory remark was true. The elements of a claim of defamation are just: (1) the defendant makes a statement; (2) the statement is referable to the plaintiff; (3) the words of the statement are defamatory; and (4) the statement is published: Grant v. Torstar Corp., [2009] 3 S.C.R. 640, [2009] S.C.J. No. 61, 2009 SCC 61; Botiuk v. Toronto Free Press Publications Ltd., 1995 60 (SCC), [1995] 3 S.C.R. 3, [1995] S.C.J. No. 69; Hill v. Church of Scientology of Toronto (1995), 1995 59 (SCC), 24 O.R. (3d) 865, [1995] 2 S.C.R. 1130, [1995] S.C.J. No. 64. It was not necessary for the proper purposes of his professional negligence claim against Mr. Skurka for Mr. Jacobson to make an issue of his innocence and his pristine reputation.

[88] In Westjet Airlines Ltd. v. Air Canada, supra, Westjet alleged that Air Canada had brought a lawsuit against Westjet for misappropriation of confidential information for the improper purpose of eliminating Westjet as a competitor. Justice Nordheimer, however, stated that if there was some legitimate basis for a lawsuit, then it becomes difficult to characterize the lawsuit as having been instituted for an improper purpose just because a by-product of its success would be the elimination of a competitor. Justice Nordheimer discussed the policy reasons behind a narrow scope for the tort of abuse of process, and he stated, at para. 23:

I earlier noted the narrow scope of this particular tort. There are two matters of concern that argue strongly in favour of maintaining that narrow scope. One is the prospect that, if such claims are too easily advanced, it may lead to a proliferation of litigation with every action between competitors being met in response by an abuse of process action by the defendant competitor. It would, after all, be relatively easy for many defendants to allege that they are being sued for a purpose other than what is reflected in [page311] the statement of claim. Indeed, this concern need not necessarily be restricted just to actions between competitors. The other concern is the potential chilling effect on parties from having resort to the courts for the resolution of actual or perceived wrongs if they must fear routinely being subject to such claims with the attendant costs as well as the prospect, however remote, of damages being awarded. While I accept that the court must be vigilant in ensuring that its process is not misused, at the same time the court must not readily allow claims to be advanced that may only serve to impede access to its process.

[89] I agree with Justice Nordheimer's comments about a narrow ambit for the tort of abuse of process, but his comments may not be apt for the novel circumstances of the case at bar where it is arguable that Mr. Jacobson's dominant purpose in suing Mr. Skurka is beyond the incidental purpose of showing that Mr. Skurka was professionally negligent, which is its proper purpose, and rather is for the improper purpose of using a civil proceeding for a judicial determination of Mr. Jacobson's innocence and righteousness, which is what Mr. Skurka's means by pleading that Mr. Jacobson's improper purpose is to achieve favourable media attention for himself increasing his likelihood of receiving awards and resuming his access to high officials of state.

[90] Allowing Mr. Skurka's counterclaim would not discourage access to justice for plaintiffs suing their criminal defence lawyers, but it would discourage such plaintiffs from overreaching in their civil proceeding against their criminal lawyer and making their innocence in the criminal proceedings a material issue in the civil proceeding. In the different context of abuse of process as an aspect of the law of res judicata, the policy of the law is to discourage such relitigation as abusive to the administration of justice.

[91] In the case at bar, it is arguable that Mr. Jacobson is using his solicitor's negligence action for purposes beyond the normal purposes of a solicitor's negligence action, i.e., proving the lawyer's professional wrongdoing, not proving the client's innocence and righteousness, but more to the point, it is not plain and obvious that the scope of the tort of abuse of process does not encompass the novel circumstances of Mr. Skurka's counterclaim.

E. Conclusion

[92] For the above reasons, I grant the motion to strike the statement of defence but grant leave to deliver a fresh as amended statement of defence and counterclaim as aforesaid and in accordance with the above directions and the timetable [page312] described in the overview. I dismiss the motion to strike the counterclaim.

Motion granted in part.

End of Document