2016 ONSC 4040
Court File and Parties
Newmarket Court File No.: CV-15-123193-00 Date: 20160620 Ontario Superior Court of Justice
Between: Regal Windows & Doors Systems Inc., High Performance Glazing Inc., London Towers Investments Inc., 1276126 Ontario Limited, Progress Doors Limited and Cobra Doors (2000) Ltd. Plaintiffs – and – March Canada Limited, David Lindsay, Bradley Vooren and Curtis Sadler Defendants
Counsel: S. David Hwang, for the Plaintiffs Matthew B. Lerner and Danielle Glatt, for the Defendants
Heard: June 15, 2016
Endorsement on Motion
SUTHERLAND J.:
Introduction
[1] This is a motion brought by the Defendants for an order striking out, without leave to amend, the Statement of Claim as against the Defendants, David Lindsay, Bradley Vooren and Curtis Sadler (“the Individual defendants”) pursuant to Rule 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
Factual Background
[2] The Defendant, Marsh Canada Limited (“Marsh”) is an insurance brokerage firm and the Individual defendants are employees of Marsh.
[3] The Plaintiffs obtained a commercial insurance policy through Marsh with Intact Insurance Company (“Intact”). The insured premises municipally known as 388-394 Dundas Street, London, Ontario (“the premises”) were subject to a theft and /or vandalism which resulted in significant damages to the premises.
[4] The Plaintiffs claimed these damages from Intact and Intact denied coverage alleging numerous breaches of the terms of the policy.
[5] The Plaintiffs commenced this action for breach of contract, negligence and breach of fiduciary duty and/or professional duty.
[6] The Plaintiffs also commenced a separate action against Intact.
Positions of the Parties
[7] The Defendants submit that the Plaintiffs have not pleaded a cause of action against the Individual defendants. The Individual defendants, at all material times, were employees of Marsh. Their actions with respect to the obtaining and renewal of the insurance with Intact were performed as employees of Marsh. There are no allegations put forth by the Plaintiffs that the actions of the Individual defendants were outside of their employee relationship with Marsh or that the Individual defendants had a relationship with the Plaintiffs to create a duty of care. Further, the Individual defendants argue that given that the Plaintiffs knew about the Individual defendants' intention to bring this motion for several months, the Plaintiffs took no steps to amend their Statement of Claim or provide a draft Amended Statement of Claim to the court. The Individual defendants submit that the court can infer that the reason the Plaintiffs did not seek to amend their Statement of Claim or prepare an Amended Statement of Claim to allege specific allegations against the Individual defendants is because there is no factual basis to make such allegations. The Plaintiffs submit that there is no reasonable cause of action against the Individual defendants in negligence and breach of duty they owed to the Plaintiffs. Thus, the action should be struck against the Individual defendants without leave to amend.
[8] The Plaintiffs argue that the allegations in the Statement of Claim reveal a valid cause of action as against the Individual defendants and should not be struck. If the court is predisposed to strike the claims against the Individual defendants, then the Plaintiffs should be given the opportunity to amend the Statement of Claim to better plead a cause of action as against the Individual defendants. The Plaintiffs request 60 days to amend their Statement of Claim.
Law and Analysis
[9] Rule 21.01 (b) of the Rules of Civil Procedure permits a party to move before a judge to strike out a pleading on the ground that it discloses no reasonable cause of action.
[10] To strike out a pleading, it must be plain and obvious that the Statement of Claim is devoid of material facts that are sufficient to establish a reasonable cause of action: Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959.
[11] Allegations in pleadings that do not provide a factual basis that the employee acted beyond the scope of their employment and where the employer is vicariously liable for the actions of their employees have been struck with leave to amend and claims dismissed against individual employees sued in their personal capacity: London Drugs Ltd. v. Kuehne & Nagel International Ltd., [1992] 3 S.C.R. 299; Montreal Trust Co. of Canada v. ScotiaMcLeod Inc.; Laurentian Bank of Canada v. Lau, 2004 CarswellOnt 8789 (SCJ); Sanford v. Kipp, 1994 CarswellOnt 3355 (SCJ), aff’d 1996 CarswellOnt 1933 (CA); Islington Village Inc. v. Canadian Imperial Bank of Commerce, 1992 CarswellOnt 368 (Ont. Gen. Div.); Nguyen v. Economical Mutual Insurance Co., 2015 ONSC 2646.
[12] The Plaintiffs need to plead sufficient facts that the Individual defendants specifically owed a duty to the Plaintiffs beyond the actions of the Individual defendants as employees: ACI Brands Inc. v. Aviva Insurance Co. of Canada, 2014 ONSC 4559. Facts need to be plead that establish personal liability as against the Individual defendants.
[13] As Finlayson J.A. stated in ScotiaMcLeod: Montreal Trust Co. of Canada v. ScotiaMcLeod Inc., supra, para. 25:
The decided cases in which the employees and officers of companies have been found personally liable for actions carried out under a corporate name are fact-specific. In the absence of findings of fraud, deceit, dishonesty or want of authority on the part of employees or officers, they are also rare…In every case, however, the facts giving rise to personal liability were specifically pleaded. Absent allegations which fit within the categories above, officers or employees of limited companies are protected from personal liability unless it can be shown that their actions are themselves tortious or exhibit a separate identity or interest from that of the company so as to make the act or conduct complained of their own.
[14] The striking of pleadings, however, should be exercised with great care and reluctance. The allegations alleged in the Statement of Claim must be taken as correct: Islington Village Inc. v. Canadian Imperial Bank of Commerce, 1992 CarswellOnt 368 (Ont. Gen. Div.), supra, para.4; Nguyen v. Economical Mutual Insurance Co., 2015 ONSC 2646, supra, para 9.
[15] I will now turn to the Statement of Claim. The Statement of Claim is a seven page, 26 paragraph document. The Individual defendants are mentioned in paragraphs 4, 7, 19, 21, 22, 23 and 24. In reviewing these paragraphs, no allegations are made specifically against the Individual defendants as to fraud, deceit, dishonesty or want of authority on their part. Further, no allegations are contained in the Statement of Claim that indicates that the Individual defendants had a relationship/proximity with the Plaintiffs that formed a basis of a duty owed by the Individual defendants.
[16] Paragraph 4 of the Statement of Claim states that the Individual defendants: “…at all material times were employed by the Defendant Marsh as licensed agents…”
[17] The Statement of Claim makes it clear that the Individual defendants were employees of Marsh as licensed insurance agents. In reviewing the Statement of Claim as a whole, there are no allegations that take the Individual defendants outside their role as employees for Marsh. There are no facts plead that the actions of the Individual defendants are themselves tortious or exhibit conduct separate that are their own.
[18] I agree and adopt the following statement of E.M. Morgan J. in ACI Brands Inc.: ACI Brands Inc. v. Aviva Insurance Co. of Canada, 2014 ONSC 4559, supra, para 12:
…It is not sufficient to simply add the individual employees’ name, or to combine it with the phrase “and/or” with every claim made against the corporate Defendant. With respect, that form of pleading does little more than ’window dress’ the suggestion of a separate identity or interest of the named [individual] from that of [the corporation].”
[19] I would add that the Plaintiffs, in order to substantiate a claim against the Individual defendants in this action, needed to set out specific allegations that separate the actions of the Individual defendants from those of the Marsh or plead how each Individual defendant have a proximity with the Plaintiffs to support that each of the Individual defendants owe a duty to the Plaintiffs.
[20] The Statement of Claim is completely devoid of separate factual allegations or proximity between the Individual defendants and the Plaintiffs to substantiate a reasonable cause of action against the Individual defendants.
Should the plaintiffs be granted leave to amend their Statement of Claim?
[21] Counsel for the Individual defendants forcefully argued that the Plaintiffs should not be granted leave to amend their Statement of Claim. The Individual defendants rely on Laurentian Bank, Sanford, Nguyen, Islington Village, and Ledingham to support their request that the Statement of Claim should be struck against the Individual defendants without leave to amend. The Individual defendants directed the court to paragraphs 6 and 7 of the Statement of Defence of Marsh. These paragraphs state:
- The services provided to the Plaintiffs by the Individual Defendants were part of their duties as employees of Marsh Canada. The Individual Defendants were acting on behalf of and with authority of Marsh Canada.
- If the Individual Defendants were negligent or in breach of contract in the manner specifically alleged in the Statement of Claim, which is not admitted but expressly denies, Marsh Canada is vicariously liable for the conduct of the Individual Defendants as employees.
[22] The Individual defendants repeat that the Plaintiffs’ failure to move to amend the Statement of Claim or provide a draft Statement of Claim infers that there are no allegation in fact against the Individual defendants that takes them outside their employee role.
[23] The Plaintiffs contest this submission and argue that the Plaintiffs should be able to amend their Statement of Claim because not to do so would cause irreparable prejudice to the Plaintiffs. The Plaintiffs may have facts to support a cause of action against the Individual defendants.
[24] Sanford is a Rule 21 motion where the court reviewed the Amended Statement of Claim before dismissing the action of breach of contract and negligent misrepresentation against a personal defendant.
[25] Nguyen is a Rule 21 motion where the court dismissed the action against the Individual defendants who were employees of the defendant insurer. Given their status as employees and the admission of the defendant, insurer that the Individual defendants were acting as employees, the court found no reasonable cause of action and dismissed the action.
[26] Islington Village is a Rule 21 motion where the court dismissed the action against the Individual defendants where they were employees of CIBC.
[27] Ledingham is a Rule 21 motion where the court struck the Statement of Claim in its entirety. The action was for damages for a number of birth deformities from use of a drug to control epilepsy, prescribed by the defendant physicians.
[28] ACI Brands is a case similar in facts to this case where the court struck the claim against the Individual defendant, Smith who was an insurance agent employed by the defendant, insurance broker, with leave to amend the Statement of Claim “to lead additional facts that can sustain a claim against Smith.” However, in ACI Brands there was no admission made by the defendant broker accepting vicarious liability.
[29] Even though there is an admission by Marsh that it is vicariously liable for the conduct of the Individual defendants and notwithstanding the compelling submission of the Individual defendants’ counsel, I am not persuaded to not grant leave to allow the plaintiffs to amend their Statement of Claim. The Plaintiffs may have a factual basis to support a reasonable cause of action against the Individual defendants. The court should be cautious to prevent a plaintiff to make a factually supportable cause of action.
[30] Therefore, I am exercising my discretion to grant the Plaintiffs leave to amend their Statement of Claim to plead facts that can sustain a viable claim against the Individual defendants.
Disposition
[34] I make the following order: (a) The allegations and claims against the Individual defendants are hereby struck. (b) The Plaintiffs have 30 days from the date of this decision to amend their Statement of Claim to plead facts that can sustain a viable claim against the Individual defendants, failing which the Defendants may move, on notice, to have the action dismissed against the Individual defendants. (c) If the parties cannot agree on costs, the Defendants to serve and file their submissions of costs within 21 days from the date of this decision, and the Plaintiffs will have 14 days thereafter to serve and file their submissions. The submission to be no more than three pages, double spaced, exclusive of any bill of cost, case law and offers to settle. Submissions are to be filed with the court. If no submissions are received within the time period set out herein, an order will be made that there will be no costs.