Pincente et al. v. Schincaglia et al., 2015 ONSC 3035

COURT FILE NO.: CV-14-500856

DATE: 20150601

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Guiseppe Pincente and Diana Sarkis, Plaintiffs

AND:

Nick Schincaglia, Naida Giuntoli and 1458573 Ontario Ltd operating as New Roots Studio, Defendants

AND BETWEEN:

Nick Schincaglia, Naida Giuntoli and 1458573 Ontario Ltd operating as New Roots Studio, Plaintiffs by Counterclaim

AND:

Guiseppe Pincente, Diana Sarkis, Gregory Proctor, 2325637 Ontario Incorporated operating as 3rd Dimension Studios and Jane and John Doe, Defendants by Counterclaim

BEFORE: Carole J. Brown, J.

COUNSEL: Jeremy Sacks, for the Plaintiffs/Defendants by Counterclaim

Jan D. Weir, for the Defendants/Plaintiffs by Counterclaim

HEARD: April 24, 2015

ENDORSEMENT

[1] The defendants to the counterclaim bring this motion for summary judgment pursuant to Rule 20 for an order dismissing the counterclaim.

[2] The defendant, plaintiff by counterclaim, Nick Schincaglia ("Nick"), was the officer, director and principal of New Roots Studio, along with his mother, Naida Giuntoli , ("Naida"). New Roots was in the business of supplying custom hair systems for men, and had operated from 2001. Prior to opening New Roots, Nick was employed by Hair Club For Men for five years until he left and started his competing salon.

[3] The plaintiff, defendant by counterclaim, Guiseppe Pincente ("Joe") was an apprentice hairstylist at New Roots from 2011 to January 2014, when he left the Salon. Diana Sarkis ("Diana") was the receptionist at New Roots from 2006 until January 2014, when she left. In February of 2014, both Joe and Diana became employed at 3rdDimension Studios, a competitive custom hair systems studio for men which was owned by Gregory Proctor, defendant to the counterclaim.

[4] The plaintiffs, defendants by counterclaim, commenced an action against the defendants, plaintiffs by counterclaim, on March 25, 2014, for defamation, libel, slander, copyright infringement and breach of privacy, alleging that the defendants had, after the plaintiffs/defendants by counterclaim left New Roots, begun to defame the plaintiffs and tarnish their reputations, alleging that they had unlawfully competed with and solicited patrons of New Roots, and had stolen private and confidential information from New Roots.

[5] The defendants/plaintiffs by counterclaim, thereafter served their statement of defence and counterclaim, alleging that the plaintiffs/defendants by counterclaim had breached their duties of confidentiality, their fiduciary duties, had breached their employment agreement with New Roots and had induced a breach of contract. They alleged that the defendants by counterclaim, Joe and Diana, had unlawfully competed with and solicited clients of New Roots, and had stolen private and confidential information from New Roots. Many of the allegations as against Diana and Joe in the counterclaim essentially mirror the allegations as framed in the statement of claim.

[6] It is clear from the evidence that there were no written employment contracts between Joe and New Roots or between Diana and New Roots. There were no non-solicitation agreements, non-compete agreements or non-disclosure agreements between New Roots and Joe and Diana Neither Joe nor Diana had signing authority at New Roots other than for an account that was opened in their names, at Nick's request, to facilitate the purchase of supplies for New Roots from a manufacturer that would not deal directly with New Roots or Nick.

[7] Diana's duties as receptionist included answering the phone, scheduling appointments, placing orders to suppliers, coloring hair and washing hair systems. Joe's main responsibilities as an apprentice hairstylist included creating original templates for hairpieces and then styling, coloring, and fitting the hairpieces for the customers.

[8] It is the evidence of Diana and Joe that in March of 2013, Naida began to work at New Roots, answering the phones, entering orders into the computer and doing general supervisory work. Diana stated in her affidavit that she felt that her job was becoming redundant. It was the evidence of both Joe and Diana that Naida was rude to customers as well as to Joe and Diana. It is Diana's evidence that she told Nick in June of 2013 that if things did not improve she would have to leave the business and, in fact, as things did not improve, she left in January of 2014. Joe left thereafter, after giving one week's notice.

[9] In February of 2014, both Joe and Diana began to work at 3rd Dimension, and each assumed essentially the same duties as they had had at New Roots, Diana as a receptionist and Joe as an apprentice hairstylist, who is now a hairstylist.

[10] The counterclaim alleges, against the defendants, Joe and Diana, that they took confidential client information and solicited clients away from New Roots. (It is of note that, in the statement of claim, the plaintiffs claim that the defendants are harming their reputations by making these statements about them.) These allegations are denied by the defendants by counterclaim, Joe and Diana. They deny that they ever solicited customers while working at New Roots. They state that their new employer was not in existence at the time they were contemplating leaving New Roots.

[11] It is the position of both Diana and Joe that they developed close relationships with many of the customers at New Roots. While at New Roots, they advised the customers prior to leaving that they were going to leave. Some of the customers asked to be notified once they had new employment and gave their telephone numbers, and came to 3rd Dimension once Joe and Diana had started employment there. Some indicated that they felt more comfortable dealing with Joe and Diana than with Nick and Naida. Other customers who used to go to New Roots now go to 3rd Dimension, although Joe and Diana state in their evidence that they do not know how or why they chose to leave New Roots.

[12] It is the position of the defendants/plaintiffs by counterclaim, that after Joe and Diana left, Nick received complaints from clients that Joe and Diana were attempting to contact them to solicit their business. It is further Nick’s position that, as regards client numbers, Diana should not have been receiving client calls on her cell phone but rather on the business phone, and that there was no reason for her to have client numbers on her cell phone, and when she had been taken them, as alleged in the counterclaim.

[13] The counterclaim further alleges that Joe and Diana removed confidential information, trade secrets and supplier lists from New Roots. There is no evidence of this.

The Law

Rule 20 and Summary Judgment

[14] Rule 20 provides for summary judgment where there is no genuine issue requiring a trial with respect to a claim or defence.

[15] The Supreme Court of Canada, in Hyrniak v Mauldin, 2014, SCC 7 and Bruno Appliances and Furniture Inc.. v Hyrniak, 2014 SCC 8, has recently reinterpreted Rule 20, taking into account the recognized need for access to justice for the majority of Canadians. The Supreme Court held that summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims. It found that the Court of Appeal, in Combined Air Mechanical Services Inc. et al v. Flesch et al, 2011 ONCA 764, placed too high a premium on the "full appreciation " of evidence that can be gained in a conventional trial, given that such a trial is not a realistic alternative for most litigants. It held that a trial is not required if a summary judgment motion can achieve a fair and just adjudication, if it provides a process that allows the judge to make the necessary findings of fact, apply the law to those facts and is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial.

[16] On a motion for summary judgment, the judge must first determine if there is a genuine issue requiring trial based only on the evidence before the judge without using the judge's new fact-finding powers.

[17] There will be no genuine issue requiring a trial if the summary judgment process provides the motion judge with the evidence required to fairly and justly adjudicate the dispute on the merits within the meaning of Rule 20.04(2)(a) and is a proportionate, more expeditious and less expensive means to achieve a just result. Where a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceedings at trial would generally not be proportionate, timely or cost-effective. However, a process that does not give the judge confidence in conclusions to be drawn can never be the proportionate way to resolve the dispute.

[18] Madam Justice Karakatsansis, writing for the Court, observed as follows in the companion case, Bruno Appliances, supra, at paragraph 22:

The motion judge should ask whether the matter can be resolved in a fair and just manner on a summary judgment motion. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is the proportionate, more expeditious and less expensive means to achieve a just result. If there appears to be a genuine issue requiring a trial, based only on the record before her, the judge should then ask if the need for a trial can be avoided by using the new powers provided under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice.

[19] To grant summary judgment, on a review of the record, the motions judge must be "of the view that sufficient evidence has been presented on all relevant points to allow him/her to draw the inferences necessary to make dispositive findings under Rule 20.

[20] The Supreme Court recognized that concerns about credibility or clarification of evidence can often be addressed by calling oral evidence on the motion itself, using the powers given to the court pursuant to Rule 20.04(2.1). However, it also recognized that there may be cases where, given the nature of the issues and the evidence required, the judge cannot make the necessary findings of fact, or apply the legal principles to reach a just and fair determination.

[21] The enhanced fact-finding powers granted to motion judges in Rule 20.04(1.1) may be employed on a motion for summary judgment unless it is in the "interest of justice" for them to be exercised only at trial. The Supreme Court observed that inquiry into the interest of justice to be served by summary judgment must be assessed in relation to the full trial and the relative efficiencies of proceeding by way of summary judgment as opposed to trial, including the cost and speed of both procedures, the evidence available at trial versus that on the motion, as well as the opportunity to fairly evaluate such evidence.

[22] The Supreme Court further commented that the interest of justice inquiry goes further and also considers the consequences of the motion in the context of the litigation as a whole. In cases where some claims against the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against a single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest of justice.

[23] The parties must each "put their best foot forward". A party is not entitled to sit back and rely on the possibility that more favorable facts may develop at trial. The court is entitled to assume that all of the evidence the parties intend to rely on at trial is before the court.

Analysis

[24] Based on the motion materials and evidence before me, the submissions of counsel and the case law, I do not find that this is an appropriate case for summary judgment. I am not satisfied that, on a review of the record, sufficient evidence has been presented on all relevant points to allow me to draw the inferences necessary to make dispositive findings pursuant to Rule 20.

[25] I am not satisfied that I am able to make the necessary findings of fact or apply the legal principles to reach a fair and just determination given the issues involved and the evidence required. I do not find that I am able to make dispositive findings of fact on the record before me.

[26] The enhanced fact-finding powers granted to motion judges in Rule 20.04(1.1) may be employed on a motion for summary judgment unless it is in the "interest of justice" for them to be exercised only at trial. The Supreme Court observed that inquiry into the interest of justice to be served by summary judgment must be assessed in relation to the full trial and the relative efficiencies of proceeding by way of summary judgment as opposed to trial, including the cost and speed of both procedures, the evidence available at trial versus that on the motion, as well as the opportunity to fairly evaluate such evidence.

[27] The Supreme Court further commented that the interest of justice inquiry goes further and also considers the consequences of the motion in the context of the litigation as a whole. In cases where some claims against the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against a single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest of justice. I do not find this to be proportionate, more expeditious and less expensive means to achieve a just result.

[28] There are key facts in dispute, and the parties have raised issues of credibility, which will require evidence from potentially numerous witnesses and will not be able to be determined by using the powers granted to this Court pursuant to Rule 20.04 (2.2).

[29] Further, given that the issues raised in the counterclaim are similar to, and in some cases the same as the issues raised in the statement of claim, much of the relevant evidence on the claim and counterclaim will be similar and many of the same witnesses will be called to give evidence, I do not find it in the interest of justice to determine a portion of the overall claims by the parties against one another in a summary judgment motion. The claims should be considered as a whole on a full evidentiary basis before a judge.

[30] However, as regards the claim for breach of fiduciary duty brought in the counterclaim by the plaintiffs by counterclaim as against the defendants, I do not find any basis for a claim for breach of fiduciary duty as against the receptionist, Diana, nor against the apprentice hairstylist, Joe. Neither of these parties was an officer or director of New Roots, neither of them had any supervisory responsibilities, neither was involved in corporate decision-making or had the power or ability to guide the affairs of the company, and neither had authority to hire or fire employees. Neither had any power to influence management decisions or set corporate policy. I have taken into account the cases relied on by the defendants by counterclaim in this regard, including Crystal Tile and Marble Limited v Dixie Marble & Granite Inc., 2007 ONCA 566; and Imperial Sheet Metal Ltd. v Landry, 2007 NBCA 51

[31] Accordingly, as regards breach of fiduciary duty, I grant summary judgment to the defendants by counterclaim, Joe and Diana, and dismiss this claim as against them.

[32] I order that this action proceed to trial expeditiously. It appears that additional disclosure may be required by both parties and that should also be done forthwith.

Costs

[33] Given all of the foregoing, I leave the costs of this motion to the trial judge.

Carole J. Brown, J.

Date: June 1, 2015