Court File and Parties
Court File No.: CV-16-548804 Date: 2016-09-30 Superior Court of Justice - Ontario
Re: Enercare Inc., Plaintiff And: Energy Canada Home Services Inc., Defendant
Before: Justice M.D. Faieta
Counsel: Brendan Brammall, for the Plaintiff Enercare Inc. Hashim Syed, for the Defendant Energy Canada Home Services Inc.
Heard: September 15, 2016
Endorsement
[1] The pleadings disclose that both the Plaintiff and the Defendant are competitors in the business of renting water heaters and “HVAC” equipment to homeowners.
[2] Amongst other things, the Plaintiff alleges that the Defendant has interfered in the contractual or business relationships between the Plaintiff and its customers.
[3] The Defendant, in its Statement of Defence and Counterclaim (“SDC”), makes similar allegations.
[4] The Plaintiff brings this motion to strike out parts of the SDC pursuant to Rule 21.01(1)(b), Rule 21.01(3)(d), Rule 25.06 and Rule 25.11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
Allegations of Anticompetitive Conduct
[5] The Statement of Defence is found in paragraphs 1-15 of the SDC. The Counterclaim is found in paragraphs 16-31 of the SDC.
[6] The SDC denies all allegations made by the Plaintiff other than those found in paragraphs 2 and 3 of the Statement of Claim. Paragraphs 7-11 and 13 of the SDC allege anticompetitive conduct by the Plaintiff.
[7] In paragraph 13, the Defendant relies upon the statutory cause of action found in s. 36 of the Competition Act, R.S.C. 1985, c. C-34. However, this cause of action is not asserted in the Counterclaim section of the SDC.
[8] In my view, paragraphs 7-11 and 13 of the SDC should be struck on the basis they are frivolous and vexatious, as they can have no effect on the outcome of the Defendant’s defence to the Plaintiff’s Statement of Claim.
[9] However, leave is granted to the Defendant to amend the SDC in order to plead facts in relation to the claim that it seeks to advance under s. 36 of the Competition Act. The Defendant shall plead sufficient particulars so that a person reviewing the SDC can reasonably be expected to understand the basis of the claim, whether advanced under s. 36(1)(a) or s. 36(1)(b), or both, of the Competition Act.
Fraudulent Misrepresentation
[10] A claim of fraudulent misrepresentation requires proof of five elements:
- A false statement was made by the Defendant;
- The Defendant knew that the statement was false or was indifferent as to its truth or falsity;
- The Defendant had an intent to deceive the Plaintiff;
- The false statement was material and the Plaintiff was induced to act; and
- As a result, the Plaintiff suffered damages.
See Queen v. Cognos Inc., [1993] 1 S.C.R. 87, at para. 33.
[11] Rule 25.06(8) requires full particulars of such allegations.
[12] The Plaintiff submits that the Defendant has not pleaded the fourth and fifth elements.
[13] The Plaintiff submits that the Defendant has not pleaded that the false statement was material and that the Defendant was induced to act on it. In a nutshell, paragraph 26 of the SDC alleges that the Plaintiff, posing as a client of the Defendant, contacted the Defendant on numerous occasions to request that the client’s water heater be returned to the Defendant. Paragraph 26 also alleges that as a result of such telephone calls, the Defendant contacted its customers only to learn that they had not made any such inquiry. I am satisfied that the pleading alleges a false statement made to the Defendant.
[14] The Defendant submits that it was induced to act on such misrepresentation by making a telephone call to its customer. However, such pleading is not specifically advanced.
[15] The fifth element is that the pleading must allege that the Defendant suffered damages as a result of such fraudulent representation. At paragraph 20, the Defendant alleges certain damages; however, there is no allegation that those damages were suffered as a result of the alleged fraudulent misrepresentation.
[16] Accordingly, the claim in fraudulent misrepresentation is struck with leave to amend.
Negligent Misrepresentation
[17] A claim of negligent misrepresentation requires proof of five elements:
- There must be a duty of care based on a “special relationship” between the representor and representee;
- The representation in question must be untrue, inaccurate or misleading;
- The representor must have acted negligently in making the misrepresentation;
- The representee must have relied, in a reasonable manner, on the negligent misrepresentation; and
- The reliance must have been detrimental to the representee in the sense that damages resulted.
See EnerWorks, at para. 35.
[18] The Plaintiff alleges that the Defendant has not pleaded the first, fourth and fifth elements described above.
[19] Further, in my view the Defendant failed to plead the third element as it has not pleaded that the Plaintiff acted negligently in making the representation. Instead, it merely asserts that the Plaintiff lied to customers.
[20] The Defendant relies on the same allegations at paragraph 26 of the SDC as the basis of its claim in negligent misrepresentation.
[21] The Defendant has not pleaded that the Plaintiff owed the Defendant a duty of care as a result of a special relationship between them. In any event, there are recognized indicia of proximity that ground a duty of care in negligent misrepresentation. See Allen M. Linden & Bruce Feldthusen, Canadian Tort Law, 10th ed (Toronto: LexisNexis Canada, 2015), at p. 479 ff.
[22] The Defendant was unable to provide me with any case law to support the view that a competitor owes a duty of care to another competitor or that would otherwise suggest that a duty of care might be found in the circumstances described in this pleading. In my view, the claim in negligent misrepresentation has no reasonable chance of success and shall be struck without leave to amend.
Unjust Enrichment
[23] The Defendant advances a claim for unjust enrichment.
[24] The Defendant alleges that it was deprived of payments from its customers as a result of its customers who were thwarted by the Plaintiff from doing business with the Defendant.
[25] A claim of unjust enrichment requires proof of three elements: (1) an enrichment of the defendant, (2) a corresponding deprivation of the plaintiff, and (3) an absence of juristic reason for the enrichment. See Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at para. 30.
[26] In my view, the SDC does not adequately plead the second (corresponding deprivation) and third elements (absence of juristic reason) of a claim in unjust enrichment. This pleading deficiency makes it difficult to determine whether the claim is tenable.
[27] Accordingly, the claim in unjust enrichment is struck with leave to amend.
Conclusion
[28] The underlined portions of the SDC shown at Tab 7 of the Motion Record are struck with leave to amend within 60 days of today’s date, with the exception that leave to amend is not granted in respect of the claim for negligent misrepresentation.
[29] The Plaintiff claims costs of $5,000. The Defendant submits that it would have claimed costs of $1,000. In my view, it is fair and reasonable for costs in the amount of $4,000 to be paid by the Defendant to the Plaintiff forthwith.
Faieta J. Date: September 30, 2016