Court File and Parties

COURT FILE NO.: CV-15-10906-00CL DATE: 20150717

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: EMILY MURRAY and 2327342 ONTARIO INC., Plaintiffs AND: DAVID STAR, PIER 21 ASSET MANAGEMENT INC. and 8165246 CANADA INC., Defendants

BEFORE: Justice T. McEwen

COUNSEL: Edward J. Babin, for the Plaintiffs Allison Taylor, for the Defendants

HEARD: June 18, 2015

ENDORSEMENT

[1] The plaintiffs have brought an action claiming, among other things, damages for oppression pursuant to the provisions of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, and for breach of fiduciary duties allegedly owed by the defendants to the plaintiffs, particularly those fiduciary duties owed by the defendant David Star (“Star”) to Emily Murray (“Murray”).

[2] The defendants have brought this motion to strike various paragraphs of the Statement of Claim. This motion was first before me on May 21, 2015. At that time, the parties attempted to resolve various issues they had with respect to the Statement of Claim. They were unable to work out all of their differences and I heard the motion on its return on June 18, 2015.

[3] In the interim, the plaintiffs have agreed to remove certain portions of the Statement of Claim and have delivered a proposed Further Amended Statement of Claim. For the sake of convenience, and to reflect the fact that the plaintiffs have made certain concessions, I will refer to the draft Further Amended Statement of Claim in the body of these reasons.

Orders Sought

[4] The defendants first seek an order striking numerous paragraphs on the grounds that they are irrelevant, plead evidence, constitute conclusions and argument rather than facts, will unnecessarily lengthen the trial and/or are scandalous.

[5] The defendants further seek an order striking paragraphs 59-70 and 107-116 (of the draft Further Amended Statement of Claim) on the basis that they do not disclose a cause of action under Rule 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990 Reg. 194, or in the alternative under Rule 25.11(b) on the grounds that they are frivolous.

[6] In the further alternative, the defendants seek a determination of two questions of law pursuant to Rule 21.01(1)(a), i.e., in the case of paragraph 59-70 whether an “attempt” to oppress can constitute oppression, and in the case of paragraphs 107-116 whether adding a “termination on reasonable notice” clause to an employment contract, which is silent on the subject, can constitute oppression.

Motion to Strike

[7] Having heard the submissions of counsel and reviewed the draft Further Amended Statement of Claim and the evidence filed on the consent of the parties, I am of the view that various sections of the draft Further Amended Statement of Claim should be struck for the reasons that follow.

[8] Much of the claim surrounds the personal relationship of Murray and the defendant Star who, for several years, were involved in both professional and personal relationships that for some time involved a sexual relationship.

[9] Primarily, due to the nature of their relationship, Murray alleges that the defendants owed the plaintiffs additional duties as fiduciaries. Given this pleading (the defendants did not bring a motion to strike out the claim for fiduciary duty), the plaintiffs are entitled to plead the allegations concerning the alleged unfair shareholders agreement and the termination clause (paras. 50-70 and 107-116) since I cannot conclude at this stage that such pleadings are not relevant, or that they are of marginal probative value. Even though I am of the view that the pleadings concerning the attempt to oppress and termination can remain, for the reasons below, I am striking these paragraphs with leave to amend.

[10] I agree with the defendants that many of the paragraphs contained in the draft Further Amended Statement of Claim are irrelevant, plead evidence and constitute conclusions and argument rather than facts. I further agree that overall the pleading is prolix and repetitive.

[11] In conducting this analysis I have kept in mind the words of the Court of Appeal in Quizno’s Canada Restaurant Corp. v. Kileel Developments Ltd., 2008 ONCA 644, 92 O.R. (3d) 347 at para. 16 where the court stated that, “pleadings are not the appropriate stage in an action to engage at large in what is essentially a trial judge’s exercise for determining the admissibility of evidence at trial.” Rather, at the pleadings stage, the consideration is whether pleadings should be struck if it might prejudice the fair trial of the action. In this regard, I appreciate that I am not to “prune the case at this stage” and limit the allegations.

[12] That being said, as I have noted, the draft Further Amended Statement of Claim is replete with repetition and evidence. As a result, with leave to amend, I would strike the paragraphs as outlined below.

[13] First, I would strike out the “Overview” section, paragraphs 9 through 30. It is difficult to pick and choose which portions of each paragraph I find offensive but, overall, it is repetitious. All of the Overview section is repeated later in the draft Further Amended Statement of Claim in detail and as well includes argument, evidence and irrelevant information. The Overview section also contains Murray’s beliefs, appreciations, hindsight observations and perspective, none of which are appropriate.

[14] With respect to the “Detailed Background” section, I would strike out all of the paragraphs that the defendants deem offensive, paragraphs 31-36, 38, 40, 45-47. They include irrelevant information such as Star’s relocation with his family, Murray’s marital struggles and the age difference between them. Further, once again, many of the paragraphs are comprised of evidence and argument. While some background information is relevant given the pleading of the fiduciary relationship, the allegations are of marginal probative value and are outweighed by their prejudicial effect.

[15] The next pleadings that the defendants find offensive fall under the heading “Star Initiates Oppression Plan”. Paragraph 48 ought to be struck. I do not find fault with proposed paragraph 49. With respect to this heading and all of the remaining headings that set out the various “Steps” of the “Oppression Plan”, I do not find the headings to be of any probative value. They do not enhance the quality of the pleading and, in my view, are designed to unduly colour the pleading and create prejudice in the mind of the reader against the defendants. This wording prejudices the fair trial of the action and all such headings ought to be struck.

[16] The pleadings that follow with respect to the nine-step “Oppression Plan” paragraphs 59-70, 107-116 are replete with evidence and irrelevancies. These paragraphs too, must be struck.

[17] In my view, the provisions of Rule 25.06(1) have not been met and the pleading goes beyond containing a concise statement of the material facts. I echo the comments of Master Haberman in Mudrick v. Mississauga Oakville Veterinary Emergency Professional Corp. [2008] O.J. No. 4512 (S.C.), wherein she held at para. 20:

Thus, while it [is] important to “tell the story” in a pleading, such that the material facts are related chronologically or in some other rational way, a pleading is intended to provide a reader with the skeleton, rather than a fully fleshed out body detailing the events. Details are generally evidence and should be avoided unless otherwise specifically required by the Rules.

[18] Those comments resonate in this case. I do not propose to itemize each and every problem with the offending paragraphs, since there are many, but rather urge plaintiffs’ counsel to review the pleading and redraft it in a way that the story is told setting out the material facts without detailed evidence and irrelevant statements.

Disposition

[19] Based on my comments above, the following offending paragraphs: 9-30, 31-36, 38, 40, 45-47, 48, 59-70, 107-116 and the headings under the “Oppression Plan” section are struck on the grounds that they are irrelevant, plead evidence, constitute conclusions and/or argument, with leave to amend. The plaintiffs are allowed to continue to plead allegations with respect to the alleged preparation of the unfair shareholders agreement and unreasonable termination clause as they relate to the claim of breach of a fiduciary duty.

[20] Success on the motion was split although the defendants did enjoy greater success and I award them costs in the amount of $3,500 inclusive.

Justice T. McEwen

Date: July 17, 2015