COURT FILE AND PARTIES
COURT FILE NO.: 13-56693
Date: 2015/11/16
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: YVON LARGESS personally, LOUISE PRONOVOST, ALEXANDRE LARGESS and ANTOINE LARGESS by his litigation guardian YVON LARGESS – Plaintiffs
v.
CAPITAL CITY CHURCH WORD OF LIFE CHURCH (OTTAWA/HULL) and MICHAEL WELCH – Defendants (moving parties)
BEFORE: Madam Justice Liza Sheard
COUNSEL: Sophie C. Reintano, for the Plaintiffs
Sean Van Helden, for the Defendants
HEARD: August 21, 2015
ENDORSEMENT
[1] This motion is brought by the defendants under Rule 21.01(1) (b) and (d) of the Rules of Civil Procedure[^1]. The defendants seek an order dismissing the action as against the defendant, Michael Welch (“Welch”) on the basis that the statement of claim does not disclose a reasonable cause of action.
[2] On a motion brought under Rule 21, no evidence is admissible and the facts pleaded are assumed to be true unless they are patently ridiculous or incapable of proof.
[3] The basis for the motion is fairly straightforward: this action is brought against a corporation and against Welch, who is an employee and a Director of the corporation. In this case, the defendant corporation is a church and Welch is its pastor.
[4] The defendants argue that directors of corporations cannot be held civilly liable for the actions of the corporations they control unless the plaintiff can show conduct on the part of the individual director that is tortious in itself or exhibits a separate identity or interest from that of the corporation, so as to make the act or conduct complained of, those of the individual.
[5] The plaintiffs argue that the pleadings set out that they have a separate cause of action against Welch.
Facts as Pleaded
[6] The facts as set out in the statement of claim, statement of defence and reply are summarized below.
The Parties
[7] The plaintiffs, Yvon Largess (“Yvon”) and Louise Provonost (“Louise”), are the parents of Alexandre Largess (“Alexandre”) and Antoine Largess (“Antoine”). Alexandre sues in his own name and Yvon is Antoine’s Litigation Guardian.
[8] The defendant, Word of Life Church (Ottawa/Hull) (“the Church”) is a not-for-profit corporation and registered charity. The plaintiffs assert that Welch is the Reverend/Pastor, Director and operating mind of the Church.
The DCA Program
[9] Beginning September 2001, the Church offered its members the opportunity to enrol their children in a “self-directed, homeschooling learning program.” The Church called this ministry the Dominion Christian Academy (“DCA”).
[10] Students attended DCA Monday to Friday to complete their homeschooling and were supervised by ministry leaders of the Church.
[11] The plaintiffs assert that the Church promised that DCA’s program met Ontario educational standards and would prepare students for college and university. In fact, DCA was not recognized by the Ontario Ministry of Education (the “OME”). Ontario colleges and universities did not recognize DCA secondary school credits.
The Plaintiff’s Involvement in DCA
[12] In November 2005 Louise began attending the Church and developed a mutual relationship of trust and confidence with Welch who ran DCA.
[13] In early 2006, Yvon and their children also began attending the Church. They all developed a mutual relationship of trust and confidence with Welch, and trusted in him. The plaintiffs say that throughout the years that they attended the Church, the plaintiffs built a mutual relationship of trust and confidence with Welch and with his wife, Pastor Linda Welch (“Linda”).
[14] In September 2007, Yvon and Louise decided to enrol Alexandre and Antoine at DCA. They believed it to be a private elementary and secondary school operated by the Church; that it met Ontario educational standards and would prepare their children for college and university.
[15] Yvon and Louise paid $495 per month for the enrolment of Alexandre and Antoine in DCA.
[16] In 2011 Alexandre spoke to Welch about his intention to apply for the Canadian Army Reserve. Welch told Alexander that he should avoid mentioning that he attended DCA as its students were not the type of candidates looked for by the military.
[17] In February 2011 Alexander applied for the Canadian Army Reserve. It required a transcript of his secondary education, something that is a usual requirement of most or all post-secondary school programs. Alexander provided his DCA transcript. He was informed by the Canadian Army that the courses he completed at DCA were not recognized and his credits did not satisfy their requirements. His application was refused.
[18] Louise then contacted the OME. She was told that DCA was operating illegally as it was not registered with OME and was not recognized as a private school or any form of school under the Education Act[^2]. Yvon and Louise assert that they believed that they could trust Welch and that they were misled and betrayed.
[19] To qualify for entry in a post-secondary program, Alexander had to enroll in a high school for adults and complete 3 years of high school credits, which he did.
[20] The plaintiffs assert that Louise told Linda that the OME had told her DCA was operating illegally. Linda’s response was to instruct the plaintiffs not to discuss this with any other parents or parishioners and that Welch would fix the problem shortly.
[21] In June 2011 DCA stopped operating the program for students in grade 6 to grade 12.
[22] The plaintiffs sue for damages. They seek out-of-pocket losses for the monies they paid for Alexander and Antoine to attend DCA and general damages associated with the loss of three years of Alexandre’s schooling life, which he had to repeat.
[23] In part, the defendants defend the claim on the basis that the Church is operated by a Board of Directors and that Yvon is a Director. They state that Yvon had full knowledge of all aspects of DCA and, further, as a Director, he is not capable of maintaining an action as against the corporate defendant. The defendants assert that in law, Yvon would be suing himself.
[24] The defendants deny that any representations were ever made that DCA was a private school or a program registered with OME. The defendants further deny that they were at any time a fiduciary in respect of the plaintiffs. In the alternative, if they were, then they fulfilled any duties owed to the plaintiffs.
Claim Against Welch
[25] In their reply, the plaintiffs assert that the Board of Directors was only the directing mind of the Church to the extent that information, recommendations and input were given to the Board by Welch. The plaintiffs assert that Welch was at all times the directing and operating mind of the Church and that the Board simply “rubber-stamped” his decisions.
[26] The plaintiffs further assert that the only knowledge they had of DCA was that provided to them by Welch, the other Board members, employees, agents, contractors, volunteers or servants of the Church.
[27] Yvon states that when he joined the Board, DCA had been operating for seven years and that he was never told that it was a “home-schooling learning program”.
[28] In response to the motion, the plaintiffs rely particularly on the following paragraphs in their statement of claim or reply:
Statement of Claim:
(i) Paragraph 17, in which they assert that there was a promise made that Welch would fix the problem;
(ii) Paragraph 18, in which the plaintiffs assert that they believed they could “first and foremost trust the Word of Life Church and their Reverend, Michael Welch above all people”;
(iii) Paragraph 23, in which they assert that that the defendants, and specifically Welch, owed them a fiduciary duty to act in good faith and to ensure that the education provided by the Church was the best interests of Alexandra and Antoine;
(iv) Paragraph 24, which asserts that the defendants failed to comply with their fiduciary duty. In his argument on this motion, the plaintiffs’ counsel stated that this paragraph was addressed only at Welch; and
Reply:
(v) Paragraph 15, in which Welch is specifically named, as an individual who had knowledge that the DCA program was not registered with OME and misrepresented to the plaintiffs that it met Ontario educational standards that would prepare the students for college and university.
The Law
[29] In their Factum, the moving parties refer to the 2010 decision of Portuguese Canadian Credit Union v. CUMIS[^3] adopting the principles relating to Rule 21 as set out by Borins, J. in Montreal Trust Co. of Canada v. Toronto- Dominion Bank (1992).[^4] Those principles include that Rule 21 is not intended to answer questions of law where there are material facts in dispute or where there is no agreement on the material facts.
[30] The plaintiffs argue that there are material facts in dispute in this case. They note that in their statement of defence, the defendants have denied a number of allegations set out in the statement of claim. The plaintiffs state that there are important facts in dispute including:
(1) Whether or not Welch used his relationship with the plaintiffs to mislead them or cause them harm;
(2) Whether Welch is the “directing mind” of the Church (denied by the defendants); and,
(3) Whether Welch knew that DCA would not meet OME requirements, which is why he recommended that Alexander not mention that he attended DCA when he applied to the Canadian Army Reserve.
[31] The defendants argue that, while Welch is a pastor, this claim is not one in which he has committed a separate tort which would take him out of his capacity as an employee of the Church, or a Director of the corporation. The defendants state that at all times Welch was acting within the bounds of the authority given to him by the Church and its Board of Directors.
[32] The defendants further argue that there are no allegations of fraud or deceit against Welch and that the plaintiffs have deliberately refrained from alleging fraud.
[33] The defendants rely on the decision of Lussier v. Windsor-Essex Catholic District School Board[^5]. In Lussier the plaintiff had been fired from his job with the School Board. He sued the Board for constructive dismissal and he also sued the trustees of the Board on the basis that they had conspired to cause damage to him by inducing the board to terminate his contract. The motion to strike the pleadings was brought by the trustees, which was dismissed. On an appeal to the Divisional Court, the court held that the pleadings were insufficient to establish an independent cause of action against the individual defendants and the action was dismissed.
[34] In reaching its decision, the court determined that the individual defendants were acting within the scope of their authority as the agents are the operating mind of the Board; that they had no interests other than the interest of the Board in pursuing the action (i.e. the dismissal of the plaintiff); and that it could not be said that the procedures that they followed were outside the scope of their employment. Finally, the factual basis for the damages flowing from the breach of contract and the alleged tortious acts of the individual appeared to be one and the same: the pleading did not set out facts respecting the tortious acts of the individual defendants, separate and independent of the breach of contract claim.
[35] The facts in the case before me are less clear-cut than in Lussier. Here, the pleadings as drafted describe Welch as the only operating mind of the Church corporation: its Board simply rubberstamps his decisions. Although it is an incorporated entity, the facts as pleaded suggest that Welch is the Church.
[36] The court in Lussier[^6] referred to the test set out by the Supreme Court of Canada in Canada in Hunt v. T & N plc[^7] that on a motion to strike a pleading it must be “plain and obvious” that the claim reveals no cause of action. The court also referred to the Supreme Court of Canada decision in Operation Dismantle Inc. v. R.[^8].
[37] In Operation Dismantle the Court stated that when determining whether or not a cause of action exists:
the material facts are to be taken as proved;
if the facts disclose a reasonable cause of action, i.e. or one that has some chance of success, then the action may proceed; and
the statement of claim must be read as generously as possible with a view to accommodating any inadequacies in the form of the allegations due to drafting deficiencies.
[38] In this case, if the statement of claim is read as generously as possible, there is a chance that the plaintiffs could succeed as against Welch. While the operation of DCA may have been a Church operation or ministry, the plaintiffs allege that they were led into the Church by Welch. They assert that they trusted Welch and, their entire involvement with the Church appears to have been because or as a result of their dealings with Welch.
[39] The statement of claim clearly infers that Welch knew that the education offered by DCA would not be approved by the Canadian Army Reserve, a fact which does not appear to have been known by the members of the Board or by the Church itself. The plaintiffs’ assertion about how Linda responded to the news that DCA was not approved by OME and was operating illegally would form the basis of an allegation against Welch of tortious conduct and/or conduct that is separate from the corporation/Church: it is alleged that Linda told them not to discuss this with the parents, students or parishioners and that Welch would fix the problem.
[40] The plaintiffs’ pleadings include assertions that Welch was acting independently of the Board of Directors and outside of his obligations as an employee or as a Director of a corporation, which would have required him to report to its Board of Directors something as significant as the inability of DCA to confer secondary school credits on its students.
[41] The plaintiffs argued that only an individual, not a corporation, can owe a fiduciary duty. In a case such as this, it is difficult to conceive of the religious leader of a church not owing a fiduciary duty to his parishioners. For the same reason, the losses suffered by the plaintiffs go well beyond financial loss. As set out in paragraph 32 of the claim, the plaintiffs have suffered damage to their “feelings, self-esteem, and emotional well-being.” Those losses appear to flow from their relationship of trust with Welch, as their pastor.
[42] The plaintiffs referred the court to the Saskatchewan Court of Queen’s Bench decision of Melnyk v. Wiwchar[^9]. In that case an action had been commenced by a priest as against the church corporation and against the Bishop. As with this case, the claim was framed in contract and tort. The Bishop sought to strike the claim on the basis that the church and the Bishop were a “corporation sole”: a type of corporation consisting of only one person and his successors in some particular station. Although the facts in Melnyk are unique, the decision provides a helpful overview of the law of actions in which officers and/or employees are found liable for tortious conduct, even when acting in the course of duty. In Melnyk, the court concluded that, as he was the acting mind and will of the corporation, the Bishop could be found personally liable. The claim against him was not struck.
[43] The defendants argued that it is relevant that Welch is a pastor but not a “priest”. For the purposes of this motion, it is not necessary for me to determine the distinction. The facts as pleaded are clear that the plaintiffs looked to him for spiritual and religious guidance. Priest or Pastor, the pleadings support a finding that Welch was in a fiduciary position and owed a fiduciary duty to the plaintiffs. The pleadings as drafted make a claim against Welch personally for misleading and misrepresenting to the plaintiffs the nature of the schooling in which they were enrolling their children. Further, it makes that a claim that Welch, alone, may have known of the deficiencies in the DCA education.
[44] For the reasons set out above, I dismiss the motion.
[45] The plaintiffs also asked for leave to amend their claim, should the court find deficiencies in the pleading. Had I not dismissed this motion, I would have granted the plaintiffs leave to amend their claim.
[46] If costs are sought, I would invite counsel to provide me with cost submissions no longer than 3 pages within 2 weeks of the date of this endorsement.
Madam Justice Liza Sheard
Date: November 16, 2015
COURT FILE NO.: 13-56693
Date: 2015/11/16
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: YVON LARGESS personally,LOUISE PRONOVOST, ALEXANDRE LARGESS and ANTOINE LARGESS by this litigation guardian, YVON LARGESS
AND
BEFORE: CAPITAL CITY CHURCH (CANADA) WORD OF LIFE CHURCH (OTTAWA/HULL) and MICHAEL WELCH
COUNSEL: Sophie C. Reintano, for the Plaintiffs
Sean Van Helden, for the Defendants
ENDORSEMENT
Sheard J.
Released: November 16, 2015
[^1]: R.R.O. 1990, Reg.194
[^2]: R.S.O. 1990, c. E.2
[^3]: 2010 ONSC 6107, 104 O.R. (3d) 16
[^4]: (1992), 40 C.P.C. (3d) 389 (Ont. Ct. J. (Gen. Div.)).
[^5]: 1999 CarswellOnt 3632
[^6]: Lussier at para. 15
[^7]: 1993 43 (SCC), [1993] 4 S.C.R. 289
[^8]: 1985 74 (SCC), [1985] 1 S.C.R. 441
[^9]: 2007 CarswellSask 173