Court File and Parties
COURT FILE NO.: CV-14-4847-00 DATE: 2017 06 19
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
ROBERT CARDUCCI Plaintiff
Evan Moore, for the Plaintiff
- and -
VICTORIA CARDUCCI and MARK CARDUCCI Defendants
Nancy Tourgis, Symon Zucker for the Defendants
HEARD: June 7, 2017
Endorsement on Plaintiff’s Motion to Amend Claim
Justice Thomas A. Bielby
[1] The plaintiff has a motion before the court requesting leave to amend the Statement of Claim with a proposed, “Fresh as Amended” Statement of Claim. The proposed amendment includes the addition of a corporate plaintiff, Northeast Engineering & Development Ltd (“Northeast”).
[2] Northeast has consented to be added as a plaintiff.
[3] The proposed causes of action for Northeast are the intentional interference with economic relations and breach of fiduciary duty.
[4] The motion is opposed by the defendants.
[5] The draft Fresh Statement of Claim is located at Tab L of the original motion record.
Background Facts
[6] The current plaintiff, Robert Carducci (“Robert”), is the father of the defendant Mark Carducci (“Mark”) and the estranged husband of the defendant Victoria Carducci (“Victoria”).
[7] Robert is a professional engineer and incorporated Northeast. He owns 60% of the shares of the company and Victoria owns the remaining 40%. Both are officers of the company. Victoria is or was an employee of Northeast.
[8] Mark, who is also an engineer, was the General Manager of Northeast but resigned from that position in July, 2012, after, it is alleged, his demand for a greater ownership interest in Northeast was denied.
[9] On or about August 28, 2012, Mark filed a report with the Ontario Provincial Police (“OPP”) stating that he feared for Victoria’s safety at the hands of Robert. The OPP, by August 30th had closed their investigation on this complaint.
[10] On December 1, 2012, Mark filed a further report with the OPP alleging Robert had physically and mentally abused Victoria. The police interviewed Victoria after which they again closed their file.
[11] It is alleged that in October, 2013, Mark met with Mr. Chafe, the CEO of PALS, an important customer of Northeast. It is alleged that Mark advised Mr. Chafe that Northeast was struggling and looking to be acquired. Mark asked Mr. Chafe if PALS was interested in purchasing Northeast.
[12] Allegedly Mr. Chafe made this information known to Robert and expressed concern whether Northeast’s difficulties would impact on PALS. Ultimately PALS significantly reduced its level of business with Northeast.
[13] Another customer of Northeast, the RCMP, also failed to renew its contract with Northeast as a result of Robert being criminally charged as discussed below.
[14] On January 13, 2013, Robert was arrested for assaulting Victoria. On the same date the OPP attended at the Carducci home and after a search of a locked gun cabinet, removed two guns, one of which was unregistered. As a result Robert was charged with a number of gun offences.
[15] On November 8, 2013, just prior to the date of Robert’s trial, Mark and Victoria advised the OPP that they had found in the same gun locker, a magazine for the unregistered gun.
[16] As a result of this the firearms offences were dropped. It is alleged the Crown was of the opinion that the finding of the magazine, after the police search, was evidence that someone else may have had access to the gun cabinet.
[17] Nevertheless, on January 28, 2014, as noted above, the RCMP advised Robert that they would not be renewing their contract with Northeast.
[18] On February 20, 2014, Mark sent an email to all of the Northeast employees on behalf of himself and his mother. The email referred to a number of abusive actions on the part of Robert and asked the employees, to come forward and tell what they knew (plaintiff’s supplementary motion record, Tab B).
[19] On June 19, 2014, Robert was acquitted of the assault charges although the trial judge found Victoria completely credible and found her to be the victim of Robert’s physical and emotional abuse.
[20] In July, 2014, Robert met with another important client Calm Air which had learned of the personal issues between Robert and his wife and son. Calm Air has since reduced the amount of its work with Northeast.
[21] It should be noted that it was not until November 18, 2013, that Robert, through his counsel for the criminal matters, learned of Mark’s two earlier reports to the OPP and the fact that his wife and son had contacted the OPP to advise that they had found a magazine for one of the seized guns.
[22] On October 28, 2014, Robert commenced this action claiming damages for various causes of relief including defamation, intentional infliction of mental suffering, conspiracy and malicious prosecution.
[23] In December, 2014, the defendants put before court a motion to strike the Statement of Claim, in its entirety. The motion was adjourned and ultimately the motion was settled on the basis that the plaintiff would deliver a, Fresh as Amended Statement of Claim addressing the issues raised by the defendants in their motion to strike.
[24] On June 1, 2015, the plaintiff delivered a draft, Fresh Statement of Claim and delivered another revised version on June 23, 2015, both times seeking the comments of counsel for the defendants.
[25] On August 26, 2015, the plaintiff delivered a further draft, Fresh Statement of Claim but, for the first time, included Northeast as a plaintiff.
[26] Consent to add Northeast as a plaintiff was not forthcoming and the plaintiff brought this motion, originally returnable on September 15, 2015. I was not advised by either counsel why the matter was not argued until June 7, 2017.
The Rules
Rule 26.01
[27] 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.
[28] It is submitted that the use of the word ‘shall’, the section is deemed to be mandatory.
Rule 5.04(2)
[29] At any stage of a proceeding the court may by order add, delete or substitute a party or correct the name of a party incorrectly named, on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.
[30] The use of the word ‘may” makes the relief discretionary.
Position of the Parties
The Plaintiff and the Proposed Plaintiff
[31] For the purposes of this ruling I will refer to the current plaintiff and the proposed plaintiff, collectively, as the plaintiffs.
[32] The plaintiffs wish to claim damages on behalf of Northeast for the unlawful interference of economic relations (the unlawful means tort) and for the breach of fiduciary duty.
[33] The matter is still at the pleading stage, and the defendants have yet to file a Statement of Defence.
[34] The plaintiffs’ counsel relies on the case, Ryan v. Kaukab [2005] O.J. No. 5053, a decision of Master Egan.
[35] Therein at paragraph 8, the principles to be applied on a Rule 26 motion are set out as follows:
(1) The facts alleged in the pleading, unless patently ridiculous or incapable of proof, must be accepted as proven and the court should not look beyond the pleading to determine whether the action can succeed.
(2) The amendments must be legally tenable, that is, disclose a cause of action. Amendments are to be granted unless it is shown that it is beyond all doubt that the claim or defence is one which is impossible of success.
(3) Caution and prudence are to govern the exercise of the court’s discretion. It is a power to be used sparingly and amendments are to be read generously with allowance for deficiencies in drafting.
(4) The proposed amendments must comply with the rules of pleading.
[36] Plante v. Industrial Alliance Life Insurance Company, [2003] O.J. No. 3034, is a decision of Mater MacLeod. Commencing at paragraph 25, the Master compares Rule 26.01 and Rule 5.04(2), noting one mandatory and the other discretionary.
[37] From paragraph 27 I quote,
“The tests for adding a party under rule 5.04(2) may therefore be stated as follows:
(a) The proposed amendment must meet all the tests under Rule 26.01.
(b) Joinder should be appropriate under Rule 5.02(2) or required under rule 5.03. The addition of the parties should arise out of the same transaction or occurrence (rule 5.02(2)(a)), should have a question of law or fact in common (rule 5.02(2)(b) ), or the addition of the party should promote the convenient administration of justice (rule 5.02(2)(e). Adding a party will be particularly appropriate if it is unclear which of the original defendant or the proposed defendant may be liable (rules 5.02(2)(c) or (d), or if it is necessary that the proposed defendant be bound by the outcome of the proceeding or his or her participation is otherwise necessary to allow the court to adjudicate effectively (rule 5.03(1)).
(c) Joinder should not be inappropriate under rule 5.03(6) or 5.05. The addition of a party should not unduly delay or complicate a hearing or cause undue delay or complicate a hearing or cause undue prejudice to the other party. In a case-managed proceeding, it may also be appropriate to withhold consent if it will cause significant disruption to the court-ordered schedule;
(d) Addition of a party will not be permitted if it is shown to be an abuse of process. Abuse of process will exist where the addition of a party is for an improper purpose such as soley to obtain discovery from them, to put unfair pressure on the other side to settle, to harass the other party or for purely tactical reasons.”
[38] The plaintiffs submit that the torts of unlawful interference and breach of fiduciary duty as they relate to Northeast, satisfy the principles set out in Ryan and Plante.
[39] The plaintiffs also rely on, Hanson v. Bank of Nova Scotia, [1994] O.J. No. 1250, wherein, at paragraph 8, Finlayson J. of the Ontario Court of Appeal states,
“It is accepted that the fact that a cause of action could be a novel one is not a bar to its proceeding to trial.”
[40] In A. I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12, [2014] S.C.J. No. 12, the judgment of the Supreme Court of Canada was delivered by Cromwell J. who discussed at length, the scope of the tort of causing loss by unlawful means, also known as the tort of unlawful interference with economic relations. The tort allows a plaintiff to sue a defendant for economic loss resulting from the defendant’s unlawful act against a third party.
[41] From paragraph 5, I quote,
“It will be available in three-party situations in which the defendant commits an unlawful act against a third party and the act intentionally caused economic harm to the plaintiff.
Conduct is unlawful if it would be actionable by the third party or would have been actionable if the third party had suffered loss as a result of it.”
[42] At paragraph 23 the court states,
“While the elements of the tort have been described I a number of ways, its core captures the intentional infliction of economic injury on C (the plaintiff) by A (the defendant)’s use of unlawful means against B (the third Party).”
[43] From paragraph 76 I quote,
“I conclude that in order for conduct to constitute “unlawful means” for this tort, the conduct must give rise to a civil cause of action by the third party or would do so if the third party had suffered a loss as a result of that conduct.”
[44] Counsel for the plaintiffs submits that Northeast had an employment contract with Robert. The defendants targeted Robert through unlawful means in an effort to interfere with the employment contract. The actionable wrongs alleged and pleaded by Robert represent the unlawful means.
[45] It is submitted that the intention of the defendants was to harm Northeast.
[46] The plaintiffs rely on the allegations of Northeast’s loss of business with Calm Air, PALS and the RCMP and the damages Northeast suffered internally as a result of the emails sent to the employees of Northeast by Mark.
[47] Counsel for the plaintiffs submits that the plaintiffs are separate legal entities and have separate causes of action against the defendants.
[48] It is submitted that in regards to the relationship between Northeast and Robert, the issue of whether or not for the purposes of pleading unlawful interference on behalf of Northeast, Robert can be the necessary third party, is, at least, a novel point and not a ground to deny the amendments.
[49] In regards to the allegation of breach of fiduciary duty the Plaintiff submits that both defendants had such a duty to Northeast and that their actions were in breach of their duty. The breach included their interference with customers of Northeast.
[50] It is alleged that the defendants worked together to undermine the interests of Northeast.
[51] It is submitted that whether or not there was a breach of fiduciary duty is a matter of law and at this pleading stage an issue of law should not be dealt with unless completely obvious.
[52] Counsel for the plaintiffs advised the court that the motion before me was served on September 10, 2015 and that the claims advanced by both plaintiffs are within the two years limitation period. It is submitted that it was not until November 15, 2013, that the facts were discovered upon which the claim for unlawful interference were discovered by the plaintiffs.
[53] Counsel relies on the decision, Computer Enhancement Corp. v. J.C. options [2013] O.J. No. 3097, paragraph 15 which notes that a party’s rights should be determined as of the date of the service of the motion, not the date of the hearing of the motion.
[54] This point was conceded by counsel for the defendants as was any argument in relation to a breach of the Limitation Act.
[55] In regards to the defendants’ submissions that to allow the amendment sought would be an abuse of process and prejudicial to the defendants, counsel for the plaintiffs submits that Northeast could have started an independent action in its own name and such action would be more prejudicial and abusive.
[56] Further, it is submitted on behalf of the plaintiffs that there is no evidence submitted on the motion of any prejudice which would result from adding Northeast.
Position of the Defendants
[57] Counsel for the defendants submits that the amendment would be prejudicial to their clients and would constitute an abuse of process. It is submitted that Maud J. of the OCJ, while acquitting Robert of assault, found that he had been abusive and described Robert as arrogant and insensitive to a point of cruelty.
[58] As part of a conversation recorded between Robert and Victoria in 2012, Robert demeans Victoria and expresses his hate for Mark.
[59] It is noted that counsel accepted service on behalf of Mark.
[60] Counsels for the defendants suggest that this motion, brought shortly before the expiration of the limitation period was done out of spite knowing the emotional and mental health impact it would have on the defendants.
[61] It is submitted that Mark suffers from mental illness and that the plaintiff tried to serve Mark with the original Statement of Claim at a time when Mark had just gotten out of the hospital and was vulnerable.
[62] Counsel for the defendants submit that the proposed Fresh Statement of Claim, at paragraph 1, does not comply with the rule of pleadings. Subparagraph 1(a) lumps the two plaintiffs together and includes claims not proposed by Northeast (see the Plante case, para. 31).
[63] It is submitted that the court ought to exercise its discretion and not allow the amendments. The plaintiffs were aware of all the facts that Northeast will be relying on at the time the original claim was issued.
[64] As a further element of abuse counsel submits that it was not until the third draft of a Fresh Statement of Claim was delivered was it disclosed that the plaintiffs wanted to add Northeast as a plaintiff. The proposal to add Northeast came after the parties agreed to settle the motion to strike the claim.
[65] The plaintiffs provided no explanation as to why the delay in making Northeast a party to these proceedings.
[66] It is submitted that, from a discretionary point of view, all of these facts and circumstances represent an abuse of process.
[67] In regards to the tort on unlawful interference, counsel for the defendants submits that Robert is not a third party who suffered from unlawful acts. It is submitted that the unlawful acts were directed at the customers and employees of Northeast and not at Robert.
[68] The defendants rely on Kaptor Financial Inc. v. Alexander, 2014 ONSC 2185, a decision of H.J. Wilton-Siegel J., paragraphs 15 and 16. In that case the wrongful conduct was directed toward the plaintiff rather than third parties, Disney and Nickelodeon, and did not satisfy the requirements of the tort of unlawful interference.
[69] Further, paragraph 28 of the Kaptor case is also relied on as authority that once Mark resigned as the general manager he no longer had a fiduciary duty to Northeast.
Analysis
[70] Having regard to the Rule 26 test I find as follows.
[71] The facts alleged are not patently ridiculous or incapable of proof. They raise triable issues.
[72] In regard to the tort of unlawful interference the submission of counsel for the Plaintiffs that Robert can be considered the third party, the point is arguable, albeit, perhaps novel.
[73] Certainly it cannot be said that the claim is impossible of success.
[74] The power to deny such amendment is to be used sparingly and the proposed pleadings are to be read generously.
[75] The proposed amendments, for the most part, comply with the rules of pleading. The issue raised by counsel for the defendants with respect to paragraph 1 of the proposed Statement of Claim can easily be rectified as allowances are to be made for deficiencies in drafting.
[76] Turning now to Rule 5, the addition of Northeast arises out of the same set of facts as relied upon by Robert. Certain causes of action are shared. This point was essentially conceded by counsel for the defendants. The addition of Northeast as a plaintiff will not complicate the proceedings.
[77] I disagree with the submissions of defence counsel that I should exercise my discretion and not allow the addition of Northeast as a party. I find that such an addition does not rise to the level of prejudice and abuse of process necessary to deny the pleading amendment.
[78] I am hard pressed to identify any more prejudice than set out in the original claim. The proposed amendments rely on the same set of circumstances which gave rise to this action. The facts relied upon by Northeast are included in the facts relied upon by Robert.
[79] The addition of Northeast is not for the purpose of improper discovery nor do I see it putting undue pressure on the defendants to settle. I do not believe it does not rise to the level of harassment for purely tactical reasons.
[80] It can be said that Robert and Northeast are one and the same in that Robert controls the company and is the directing mind.
[81] Clearly, as it was when the proceeding was commenced, the claim, in part, is for the loss of business.
[82] The matter remains in the pleading stage.
[83] As of the date this motion was served Northeast could have commenced its own independent action against the defendants. The limitation period had yet to expire. The defendants in such circumstances could not raise the issues of prejudice and abuse of process.
[84] From a purely procedural point of view it is preferable to have the claims of the plaintiffs tried within one action. A separate action would likely result in a motion to have the actions tried together. The impact would be the same.
[85] I cannot say why Northeast was not an original plaintiff. Counsel for the defendants questions the motives of the plaintiffs in not moving to add Northeast until a short time before the limitation period had expired. No such evidence was provided on that point and I will not speculate.
[86] Parties are free to commence actions within the appropriate limitation periods. I do not believe that prejudice arises when a party seeks to be added just before the expiry of a limitation period. The same can be said for the submission that adding Northeast amounts to an abuse of process.
[87] As noted previously, the issue of whether Robert is the third party necessary to argue the tort of unlawful interference, while perhaps novel, is not obviously untenable.
[88] In regards to the issue of fiduciary duty it would seem to me if Victoria is an officer of Northeast, as such she likely would have such a duty. Whether she breached it or not is for the trial judge.
[89] As for Mark, on the authority provided to me, I am not prepared to say categorically there is no such duty once he resigned. The duty may change or be limited but, for example, what if a manager who resigns takes with him his ex-employers client list or research and uses them for his own purposes? Does his duty to his ex-employer make it actionable that he did so?
[90] If the facts as alleged by the plaintiffs are true, it is arguable that Mark took certain steps which would affect the financial well-being of Northeast, and by extension, Robert.
[91] I can only imagine the emotional and stressful overlay of an action commenced by a plaintiff against his wife and son. Such an overlay exists regardless of the proposed amendments.
[92] The relief requested by the plaintiffs is not, from a procedural point of view, at this point in the proceedings, an abuse or not prejudicial to the point that I would exercise my discretion and not allow the addition of Northeast.
[93] Any prejudice and/or abuse of process arising from undue delay may be a consideration in regards to the costs of this motion.
[94] I order,
- Leave is granted to add Northeast Engineering and Development Ltd as a plaintiff in this action.
- Leave is granted to the plaintiffs to serve and file the Fresh Statement of Claim set out at Tab L of the plaintiff’s original motion record subject to the plaintiffs amending the prayer for relief at paragraph 1 therein by separating the claims for each plaintiff.
- If the parties cannot agree on costs, I will accept written submissions of no more than four pages double spaced together will the bill of costs. These submissions must be filed within 21 days of the delivery of this ruling.
Bielby J. Released: June 19, 2017