Court File and Parties

Court File No.: 140/14 Date: 2016-08-26

Superior Court of Justice - Ontario

Re: The Toronto-Dominion Bank, Plaintiff And: Pomer & Boccia Professional Corporation, David Michael Pomer and Douglas LaFramboise

Before: Fragomeni, J.

Heard: August 22, 2016

Counsel: S. Balpataky, for the Plaintiff Douglas LaFramboise, In Person

Endorsement

Fragomeni J.

[1] Mr. Douglas LaFramboise seeks an order granting him leave to amend his Statement of Defence to Cross-Claim and add a Counter-claim. The Toronto-Dominion Bank has no difficulty with the amendment to the Statement of Defence to Cross-claim. The Toronto-Dominion Bank takes issue with the Counter-claim.

[2] The proposed Amended Pleading is set out at Tab D of the Motion Record of Mr. LaFramboise dated July 26, 2016. The Counter-Claim commences at paragraph 69 and seeks the following relief:

69. The Defendant LaFramboise claims against the Plaintiff TD Bank the sum of $500,000.00; a. General damages owed the Defendant Douglas LaFramboise for negligence by TD Bank and its counsel in the amount of $400,000 which defamed LaFramboise and his reputation; b. Punitive damages in the amount of $100,000; c. costs of this action on a substantial indemnity basis, plus the applicable HST; and d. such further and other relief as this Honourable Court may deem just.

[3] The specific allegation made by Mr. LaFramboise is at paragraph 71 as it relates to defamation:

71. TD Bank and Latimer defamed LaFramboise by commencing a meritless action and citing untruths about the character and abilities of LaFramboise in a public document and forum. This has caused undo damage to LaFramboise’s credibility.

[4] The balance of the paragraphs in his counter-claim relate to the actions or inactions of The Toronto-Dominion Bank or its counsel and sets out Mr. LaFramboise’s defence to the action.

Position of the Toronto-Dominion Bank

[5] The Toronto-Dominion Bank submits that the amendment allowing the counter-claim should not be permitted on the following basis:

1. The counter-claim for defamation lacks a legal foundation and discloses no reasonable cause of action. Legal soundness is required when an amendment is sought under Rule 26.10.
2. Had the counter-claim been pleaded in the original pleadings, it would have been the subject matter of a Motion to Strike for disclosing no cause of action.
3. The defence of absolute privilege applies to the Statement of Claim issued by The Toronto-Dominion Bank.

Governing Legal Principles: Rule 26: Amendment of Pleadings:

[6] Rule 26.01 states: On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment. R.R.O. 1990, Reg. 194, r. 26.01.

[7] Rules 27.01(1) states: A defendant may assert, by way of counterclaim in the main action, any right or claim against the plaintiff including a claim for contribution or indemnity under the Negligence Act in respect of another party’s claim against the defendant. R.R.O. 1990, Reg. 194, r. 27.01 (1); O. Reg. 396/91, s. 4.

Re: Amending Pleadings:

[8] In Carom v. Bre-X Minerals Ltd., 1998 CarswellOnt 4285, Winkler, J. set out the following at paragraph 10:

10. The proper approach on a motion of this nature is to grant the amendment unless there is prejudice which cannot be compensated for by costs or an adjournment. However, where the amendment would merely result in another proceeding to strike it out as being "plain and obvious" that it discloses no reasonable cause of action, or lacks a legal foundation, the amendment should be refused. Lax J., relying on Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, 74 D.L.R. (4th) 321 stated the appropriate criteria in Atlantic Steel Industries Inc. v. CIGNA Insurance Co. of Canada (1997), 33 O.R. (3d) 12 (Gen. Div.) at pp. 17-18:

    There are numerous cases which have considered the test to be applied under Rule 21.01(1)(b) . . . and notably, Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, 74 D.L.R. (4th) 321. There, Madam Justice Wilson, speaking for a unanimous court and considering British Columbia's equivalent to Ontario Rule 21.01(1)(b), stated at p. 980:

    Thus, the test in Canada governing the application of provisions like Rule 19(24)(a) is . . .: assuming that the facts as stated in the statement of claim can be proved, is it "plain and obvious" that the plaintiff's statement of claim discloses no reasonable cause of action? As in England, if there is a chance that the plaintiff might succeed, then the plaintiff "should not be driven from the judgment seat". Neither the length and complexity of the issues, the novelty of the cause of action, nor the potential for the defendant to present a strong defence should prevent the plaintiff from proceeding with his or her case. Only if the action is certain to fail because it contains a radical defect ranking with the others listed in Rule 19(24) of the British Columbia Rules of Court should the relevant portions of a plaintiff's statement of claim be struck out under Rule 19(24)(a).

    The authorities establish that in applying the test, caution and prudence are to govern the exercise of the court's discretion. It is a power which must be used sparingly. The statement of claim must be read generously with allowance for deficiencies due to drafting and only in the clearest of cases should a party be deprived of the opportunity of persuading a trial judge that the evidence and the law entitle it to a remedy or defence . . . In my view the combined effect of the tests which have been propounded under rules 26.01 and 21.01(1)(b) require that the amendments in this case be granted unless it is shown that it is beyond all doubt that the claim is one that is clearly impossible of success. (emphasis added)

    In Keneber Inc. v. Midland (Town) (1994), 16 O.R. (3d) 753 (Gen. Div.), Howden J. held that "legal soundness" was required when an amendment was sought under rule 26.01. He stated at p. 758:

    In other words, amendments, like any other pleading, are subject to the normal rules as to form, relevance and basis in law. Therefore it is not only proper but in the interests of sound judicial process that leave to amend under rule 26.01 not be granted unless the amendment sought is tenable in law.

    The approaches taken by Lax J. in Atlantic Steel and by Howden J. in Keneber were followed in Mastercraft Group Inc. v. Confederation Trust Co. (1997), 15 C.P.C. (4th) 48, [1997] O.J. 3451 (Gen. Div.) (QL). Swinton J. states at para. 7:

    . . . if an amendment would violate the rules of pleading, or if it raises an issue that would not constitute a reasonable cause of action within Rule 21.01(b), the amendment should not be allowed.

[9] In Marks v. Ottawa (City), 2011 ONCA 248, H.S. LaForme JA., discussed Rule 26.01 at paragraphs 18 and 19 as follows:

[18] Rule 26.01 provides that:

On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

[19] Although the general rule is that amendments are presumptively approved, there is no absolute right to amend pleadings. The court has a residual right to deny amendments where appropriate: Daniele v. Johnson (1999), 45 O.R. (3d) 498 (Div. Ct.) at paras. 11 -15. [2] Further, I would agree that the proper factors to be considered are those first set out in Simrod v. Cooper, [1952] O.W.N. 720 (H.C.J. Master) at p. 721, aff’d at p. 723 (H.C.J.), and quoted with approval in Vaiman v. Yates (1987), 60 O.R. (2d) 696 (H.C.J.) at p. 698, which can be summarized as follows:

• An amendment should be allowed unless it would cause an injustice not compensable in costs.
• The proposed amendment must be shown to be an issue worthy of trial and prima facie meritorious.
• No amendment should be allowed which, if originally pleaded, would have been struck.
• The proposed amendment must contain sufficient particulars.

[10] In Keneber Inc. v. Midland (Town), 1994 CarswellOnt 4192, Howden, J. also dealt with the parameters of leave to amend at paragraphs 11 to 16 as follows:

11. The argument concerning the mandatory quality of rule 26.01 flared up in the mid-1980s as the revised rules were being introduced. The cases relied upon by Mr. Bremer, National Gypsum Co. and Barker, say that Rule 26.01 is mandatory and that the only discretion arises in considering whether there is non-compensable prejudice. However, the issue of legal soundness of the proposed pleading simply did not appear in either case. However, Rosenberg J., in Vaiman v. Yates (1987), 60 O.R. (2d) 696, 41 D.L.R. (4th) 186 (H.C.J.), had to face this issue and, in doing so, he called four pleading principles developed under the former rules:

12. An amendment should be allowed unless it would cause an injustice not compensable in costs.

13. The proposed amendment must be shown to be an issue worthy of trial and prima facie meritorious.

14. No amendment should be allowed which, if originally pleaded, would have been struck.

15. The proposed amendment must contain sufficient particulars.

16. These principles came out of the following cases decided under the former rules: Jennings v. Cumming Signs of Canada Ltd. (1983) 35 C.P.C. 83 (Ont. S.C.); Simrod v. Cooper, [1952] O.W.N. 720 (H.C.J.); 385925 Ontario Ltd. v. American Life Insurance Co. (1984), 48 O.R. (2d) 142, 45 C.P.C. 288 (S.C.); Ellis v. Pelton, [1933] O.W.N. 191 (C.A.); Young v. Young, [1952] O.W.N. 297 (H.C.J.).

17. Rosenberg J. simply rejected the notion that a proposed pleading amendment was immune from attack as not being tenable in law, and held that an amendment purporting to raise a new claim should not be allowed if it discloses no cause of action in law.

18. It would indeed be ironic if it were now held that a court had no control over frivolous or legally baseless pleading amendments on a motion to amend, given the aims of more coherence and practicality and expeditious justice in the revised rules and the express principle of interpretation inserted in rule 1.04(1):

    1.04(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding...

19. There would be nothing just, expeditious or less expensive about a literal, mandatory, non-contextual interpretation of rule 26.01, whereby further proceedings would be required to strike amendments lacking any basis in law to which leave had been blithely given.

20. It appears to me that as rule 26.01 is a rule regarding pleading, it is referring to amendments which meet the normal rules governing pleadings in rules 25.06 and 25.07. In addition, such an amendment should not be allowed where to do so would merely result in another proceeding to strike it as frivolous, vexatious or an abuse of the court process (rule 25.11) or as disclosing no reasonable cause of action or defence (rule 21.11). In other words, amendments, like any other pleading, are subject to the normal rules as to form, relevance and basis in law. Therefore it is not only proper but in the interests of sound judicial process that leave to amend under rule 26.01 not be granted unless the amendment sought is tenable in law. If the unsuccessful party is not satisfied, the reasons are available and the order is subject to the usual righ-ts of appeal. This in no way means any lengthy inquiry into ultimate chances of success or testimonial credibility, and thus there is no undermining of the simplifying purpose of rule 26.01.

Re: Privilege and Statements in Pleadings

[11] In Big Pond Communications 2000 Inc. v. Kennedy, [2004] O.J. No. 820, Pierce, J. dealt with the issue of privilege at paragraphs 11 to 13 as follows:

[11] The application of the rule in Ontario was extended to cover statements made in pleadings. In Hall v. Baxter, [1922] O.J. No. 525 (QL); 22 O.W.N. 207 (H.C.), the plaintiff sued for a libel alleged to have been published in statements made in the writ of summons and statement of claim in a pending action brought by Baxter, as well as in an affidavit sworn by Baxter in the proceeding. Orde J. stated at para. 10:

The alleged libels were contained in a writ, a statement of claim, and an affidavit in an action now pending before this Court. Apart altogether from [page119] the inexpediency of proceeding with such an action while the other action was pending, there was this obstacle in Hall's way -- "No action will lie for defamatory statements made or sworn in the course of a judicial proceeding before any court of competent jurisdiction." Odgers on Libel and Slander, 5th ed., p. 233. This defence of absolute privilege applies to statements in the writ, in the pleadings, and in the affidavits, as well as to statements by the Judge, counsel, and witnesses in open court. And the privilege is extended to statements though made falsely and maliciously . . . .

[12] This privilege against suit for allegations in pleadings is not qualified in any way. It is not necessary that there be any foundation in fact for such statements before they enjoy protection. In Dooley v. C.N. Weber Ltd., supra, the employee, Dooley, sued his former employer, C.N. Weber, for wrongful dismissal. The company defended on the basis that there was cause for dismissal, the employee having engaged in sexual harassment of other staff. At trial, this allegation was shown to be entirely without foundation. The trial judge invited submissions on the scale of costs in light of the defendant's false allegations.

[13] Dooley subsequently sued his former employer for abuse of process and other intentional torts. The court held the privilege against suit was absolute. At p. 788 O.R., Reilly J. applied the principle of privilege to allegations contained in documents filed in judicial or quasi-judicial proceedings:

In my view, the same principles apply to the case at bar. It matters not whether the action is framed in libel or slander, in defamation, intentional infliction of mental suffering, intentional interference with economic interest, or abuse of process. To the extent that any action is based upon statements in a pleading, the claim will disclose no reasonable cause of action. Otherwise expressed, the action has no reasonable chance of success in law, and to permit it to continue would constitute an abuse of the process of the court.

[12] Justice Pierce sets the factual context of the issue at paragraphs 3 and 4:

[3] The defendant has counterclaimed against the plaintiff in damages for defamation. He alleges the word "theft" following his name in the pathname or footer at the bottom of the computer-generated statement of claim damages his personal and business reputation. He has also issued a third party claim in defamation against the law firm that issued the statement of claim, and the lawyer responsible for the file.

[4] The third parties move for a determination of a question of law before trial pursuant to rule 21.01(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and for an order under rule 21.01(1)(b) dismissing the third party claim as disclosing no reasonable cause of action. The plaintiff has brought a similar motion, but it was not argued. Counsel have agreed that the disposition of this motion will apply to the plaintiff's motion concerning the counterclaim.

[13] In Sauve v. Merovitz, 2006 ONSC 6500, [2006] O.J. No. 4266, R. Smith, J. sets out the facts at paragraphs 17 to 19, in part, as follows:

[17] On or about January 11, 2006, Sauvé issued a Statement of Claim claiming damages for defamation against Merovitz for making defamatory statements as well as against Grenier and Côtes for conspiring with Merovitz to make the defamatory statements.

[18] In the claim against Merovitz, Sauvé alleged that Merovitz made libelous, slanderous and defamatory comments against him in the affidavit and factum that were served on him, and filed with the court and also during oral submissions at the motions before Justice Pelletier, which were heard on November 24 and December 7, 2005.

[19] Sauvé alleges that the statements made by Merovitz during the motion to set aside the Noting of Default and also in the documents filed for the motion were made maliciously. In particular, Sauvé alleges that in submissions to the Court, Merovitz wrongly alleged that Sauvé had failed to comply with the terms of his probation order, which required that Sauvé submit any written communications he intended to send to Grenier or Côtes, to a probation officer or to legal counsel for prior review.

[14] At paragraphs 36 to 40, R. Smith, J. states:

[36] Similar conclusions were reached in Ontario in the cases of Web Offset Publications Ltd v. Vickery (1998); aff’d , 43 O.R. (3d) 802 n (C.A.) and in Hall v. Baxter (1922), 22 O.W.N. 207 (H.C.J.), where Orde J. made the following statement:

No action will lie for defamatory statements made or sworn in the course of a judicial proceeding before any Court of competent jurisdiction:" Odgers on Libel and Slander, 5th ed., p. 233. This defence of absolute privilege applies to statements in the writ, in the pleadings, and in affidavits, as well as to statements by the Judge, counsel, and witnesses in open Court. And the privilege is extended to statements though made falsely and maliciously.

[37] In the Law of Defamation, second edition, Volume I, by Raymond E. Brown, Carswell Thompson professional publisher, at page 1-34, the author states:

There is also an absolute privilege for all those communications made in the course of, or incidental to, the processing of and furtherance of judicial and quasi-judicial proceedings.

[38] Mr. Sauvé argues that a claim for absolute privilege is defeated by malice, but I find that this is clearly not the case for statements made by counsel at a motion or in affidavits or in facta filed with the court based on the case law cited above.

[39] In the case of Marrinan v. Vibart, [1963] Q.B. 528, [1962] 3 All E.R. 380, the Court stated that it did not draw a distinction between actions framed in libel and slander or actions framed in defamation or conspiracy to defame. Sellers J.J. made the following statement at p. 535:

It has been sought in this case to draw a difference between the action of libel and slander, the action of defamation, and that which is set up in this case, one of conspiracy. I can see no difference in the principles of the matter at all. Whatever form of action is sought to be derived from what was said or done in the course of judicial proceedings must suffer the same fate of being barred by the rule which protects witnesses in their evidence before the Court and in the preparation of the evidence which is to be so given.

I find that same principles apply to the statements, made orally by a solicitor for a party in a courtroom or in documents filed in the course of a judicial proceeding, and any alleged conspiracy between the solicitor and his own client or other party for defamation based on the solicitor’s statements would also have no chance of success, as the solicitor’s statements are protected by absolute privilege.

[40] In Dooley v. C.N. Weber Ltd., supra, the Court also stated:

In my view, the same principles apply to the case at bar. It matters not whether the action is framed in libel or slander, in defamation, intentional infliction of mental suffering, intentional interference with economic interest, or abuse of process. To the extent that any action is based upon statements in a pleading, the claim will disclose no reasonable cause of action. Otherwise expressed, the action has no reasonable chance of success in law, and to permit it to continue would constitute an abuse of the process of the Court.

Analysis and Conclusion:

[15] The claim for general damages in the proposed counter-claim filed by Mr. LaFramboise is based on The Toronto-Dominion Bank and Mr. Latimer commencing a meritless action and citing untruths about the character and abilities of Mr. LaFramboise in a public document and forum.

[16] The Statement of Claim issued by The Toronto-Dominion Bank sets out the basis for liability as against the Defendant’s at paragraph 6 as follows:

The Basis for Liability

6. The liability of Pomer & Boccia, Pomer, and LaFramboise, to TD arises from the breach of an undertaking (the “Undertaking”) to pay to TD’s lawyers, Speigel Nichols Fox LLP (“SNF), the amount of $150,000.00 in trust.

[17] At paragraph 26 of the Statement of Claim, The Toronto-Dominion Bank alleges the following:

26. If LaFramboise did not have actual or apparent authority from Pomer & Boccia to give the Undertaking, then (a) LaFramboise gave the Undertaking in his personal capacity and is liable for the breach of the Undertaking;` (b) he signed the Undertaking negligently, owed a duty of care to TD not to do so, breached that duty of care, and foresaw that TD would incur damages arising out of that breach; and, (c) he represented that he had authority to sign the Undertaking, had a special relationship in dealing with TD’s counsel on a lawyer to lawyer basis, and knew that TD, through its counsel, would rely on that representation. In that regard, the representation was false and TD suffered damages as a consequence. The representation was either made negligently or recklessly, without consideration whether it was correct.

[18] As set out in the jurisprudence reviewed in these reasons, the statements and allegations made by The Toronto-Dominion Bank are protected by absolute privilege. As Justice Pierce noted in Big Pond, “this privilege against suit for allegations in pleadings is not qualified in any.” The defence of absolute privilege applies to statements in pleadings.

[19] In these circumstances the amendment does not fall within the doctrine requiring legal soundness. The amendment would not constitute a reasonable cause of action and had it been originally pleaded it would have been subject to a successful motion to strike on the basis of the defence of absolute privilege in statements made in pleadings.

[20] The motion to amend the Statement of Defence to Cross-Claim is allowed on consent.

[21] The motion to add the Counter-Claim is dismissed.

[22] The parties shall file written submissions on costs within10 days.

Fragomeni, J. Date: August 26, 2016