COURT FILE NO.: CV-16-00550104

DATE: 2018-03-05

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ONTARIO PROFESSIONAL FIRE FIGHTER’S ASSOCIATION

Plaintiff

– and –

PAUL ATKINSON, COLIN GRIEVE, PROFESSIONAL FIREFIGHTERS ADVOCATES INC., SHERWIN H. SHAPIRO, SHAPIRO LAWYERS PROFESSIONAL CORPORATION, FRANCES FURMANOV and FRANCES FURMANOV PARALEGAL SERVICES

Defendants

A N D B E T W E E N

PAUL ATKINSON, COLIN GRIEVE and PROFESSIONAL FIREFIGHTERS ADVOCATES INC.

Plaintiffs by Counterclaim

– and –

ONTARIO PROFESSIONAL FIRE FIGHTER’S ASSOCIATION and CARMEN SANTORO

Defendants to the Counterclaim

Rahool Agarwal and Andrew McCoomb for the Plaintiff

Gavin J. Tighe and Anna Husa, for the Defendants, Paul Atkinson, Professional Firefighters’ Advocates Inc. and Colin Grieve

Sandra L. Secord for the Defendant, Sherwin H. Shapiro

HEARD: October 26 & November 22, 2017

REASONS FOR DECISION

DIAMOND J.:

Overview

[1] Pursuant to the Order dated May 1, 2017 of Justice McEwen, I have since been acting as the case management judge for this proceeding.

[2] On October 26 and November 22, 2017, a total of six motions were argued before me. These motions were as follows:

a) joint motions brought by the defendants, Paul Atkinson, Colin Grieve and Professional Firefighters’ Advocates Inc. (“the Atkinson defendants”) and Sherwin H. Shapiro (“Shapiro”) to dismiss this proceeding on the grounds that the plaintiff lacks legal standing to bring this proceeding (“the standing motions”);

b) in the event the standing motions are granted, a motion by the plaintiff seeking leave pursuant to Rule 12.08 appointing Robert Hyndman (“Hyndman”, the current president of the plaintiff) as a representative plaintiff (“the Rule 12.08 motion”);

c) the Atkinson defendants’ motion to stay this proceeding on the grounds of a pending, contemporaneous criminal proceeding (“the stay motion”); and,

d) joint motions on behalf of Atkinson defendants and Shapiro for an order under Rule 21.01(1)(d), or the alternative Rules 21.01(3)(b) and (d), striking the statement of claim without leave to amend (“the Rule 21 motions”).

[3] At the conclusion of oral submissions, I took my decisions under reserve.

[4] These are my Reasons.

The Parties

[5] The plaintiff is an unincorporated professional association representing 82 local firefighters’ unions (and, in turn, approximately 11,000 firefighters) across Ontario.

[6] The defendants, Paul Atkinson (“Atkinson”) and Colin Grieve (“Grieve”) are members of the Toronto and Hamilton fire departments respectively. Atkinson and Grieve are both officers, directors and shareholders of the co-defendant Professional Firefighters Advocates Incorporated (“PFAI”).

[7] At the relevant times, Atkinson and Grieve were also members of the plaintiff’s Occupational Disease Committee (“ODC”) which, as explained in greater detail below, was formed by the plaintiff to deal with active, retired and deceased firefighters’ occupational disease claims.

[8] Shapiro is a lawyer licensed by the Law Society of Upper Canada carrying on business in the City of Concord, Ontario.

The Plaintiff’s Claim

[9] In this proceeding, the plaintiff seeks recovery of $3,000,000.00, joint and severally against all defendants, for numerous causes of action: breach of fiduciary duty, breach of trust, false misrepresentation, conspiracy, inducing breach of contract, intentional interference with economic relations, unjust enrichment and passing off.

[10] In summary, the plaintiff alleges that the defendants misappropriated funds that deceased firefighters’ family members intended to donate to the plaintiff. The subject funds were allegedly paid either (a) out of proceeds from Workplace Safety and Insurance Board (“WSIB”) awards granted as compensation for the premature deaths of those firefighters, or (b) for the purpose of assisting other families seeking WSIB benefits. These alleged voluntary donations were given to and/or earmarked for the plaintiff pursuant to Letters of Agreement signed by the family members, but not signed by the plaintiff.

[11] The payments were ultimately to be used to fund the plaintiff’s Retiree’s Cancer Claim Fund (“the RCCF”). The plaintiff states that the RCCF was used to support the pursuit of retiree claims, as well as research, education and lobbying with respect to the recognition of occupational diseases for compensation purposes.

[12] For his part, Shapiro is alleged to have provided the use of his trust account serving as the financial vehicle through which Atkinson and Grieve misappropriated the payments. It is further alleged that Shapiro allowed Atkinson and Grieve to use his status as a licensed lawyer to lend legitimacy to the scheme.

[13] According to an investigation carried out by the plaintiff, the misappropriated donated funds were either provided by the families to Atkinson or Grieve directly, or pursuant to a signed direction in favour of Shapiro. The alleged scheme resulted in substantial funds intended for the plaintiff but directed to and received by the defendants.

The Standing Motions

[14] The standing motions are premised upon two principal arguments:

a) as an unincorporated entity, the plaintiff lacks standing and does not meet the legal definition of a “trade union”, and

b) the plaintiff has no standing to claim damages on behalf of the families, who are not members of the plaintiff and have not assigned any rights of action to the plaintiff.

[15] There is no dispute that the plaintiff is an unincorporated association. It is trite to state that in order to sue or be sued, a party must be a natural person, a corporation or a body which has been granted standing to sue by way of legislation. Traditionally, unions and unincorporated associations fell within the excluded category of parties who could not sue or be sued.

[16] In response to the standing motions, the plaintiff takes the position that it is a trade union, and as such has the legal capacity to commence and maintain this proceeding. The traditional approach to the legal standing of trade unions was modified in both the Supreme Court of Canada’s decision in Berry v. Pulley 2002 SCC 40 and the Court of Appeal for Ontario’s subsequent decision Public Service Alliance of Canada v. Canada (Attorney General) 2002 ONCA 19258 (“PSAC”).

[17] In Berry, trade unions were held to be legal entities that could sue in their own name, but explicitly “for the purpose of discharging their function and performing their role in the field of labour relations.”

[18] In PSAC, the Court of Appeal for Ontario found it to be “beyond question” that, absent clear contrary legislation, trade unions have legal status to assert their rights (including common law rights) in court. However, those asserted rights must relate to “their labour relations functions and operations.”

[19] Accordingly, in order to dispose of the standing motions, I must examine the relevant, governing legislation, and the record before me, all with a view to determining whether (a) the plaintiff is a trade union, and (b) whether commencing this proceeding is for the purpose of discharging the plaintiff’s purported labour relations functions and operations.

What is a trade union?

[20] The term “trade union” is defined in the Labour Relations Act, 1995 S.O. 1995 c.1 (the “LRA”). Section 1(1) of the LRA defines “trade union” as follows:

“…an organization of employees formed for purposes that include the regulations of relations between employees and employers and includes a provincial, national, or international trade union, a certified council of trade unions or a designated or certified employee bargaining agency.”

[21] Under the Rights of Labour Act R.S.O. 1990 c. R33, a trade union is defined as:

“a combination, whether temporary or permanent, having among its objects the regulating of relations between employees or employers or between employees and employees or between employers and employers.”

[22] The plaintiff relies upon section 41(1) of the Fire Protection and Prevention Act, S.O. 1997 c.4 (“the FPPA”), which defines trade union by explicit reference to the definition set out in section 1(1) of the LRA. This definition, quoted above, appears to be quite broad, and includes the regulation of relations between employees and employers generally.

What is the OPFFA?

[23] The plaintiff was established in 1997 as a chartered provincial member of the International Association of Firefighters (“IAFF”, an international trade union with 300,000 members representing firefighters across Canada and the United States of America). The plaintiff does not mandate membership, as members join voluntarily.

[24] According to Hyndman’s evidence, the plaintiff plays a “critical role” in the relationship between Ontario firefighters and their employers. Specifically, the plaintiff:

● provides training and education on various topics relating to labour relations (collective bargaining, grievances, etc.);

● disburses information for use during collective bargaining agreement negotiations between local union and their employers;

● “assists” with collective bargaining including providing support for local unions at hearings before the Ontario Labour Relations Board and arbitrations;

● lobbies the Ontario government to improve benefits; and

● assists with pension benefits and workplace safety compensation.

[25] The moving defendants point to the plaintiff’s own Constitution and Hyndman’s cross-examination in support of their position that the plaintiff is no more than an advocacy organization designed to lobby the Ontario government for the purpose of, inter alia, influencing legislation. In the plaintiff’s Constitution, its objectives are listed as follows:

● to place all members on a higher plane of skill and efficiency;

● to encourage the formation of sick and health benefit funds;

● to encourage the establishment of schools of instruction for fire and emergency services and fire prevention;

● to encourage seminars to impart knowledge of labour relations and related matters;

● to cultivate friendship and a fellowship of its members; and,

● to sponsor legislation so that proper, efficient and humane working conditions may be obtained and retained.

[26] While each local union negotiates bargaining agreements with their respective employer, Hyndman stated on cross-examination that none of the plaintiff’s executive are involved in collective bargaining negotiations save and except for when they are specifically invited by the local union to attend in a secondary capacity. What is clear is that the plaintiff is never a party to any collective bargaining agreements as contracts are entered into between the employer and the local union.

Is the plaintiff a trade union?

[27] Was the plaintiff formed for a purpose that includes the regulation of relations between employees and employers? In my view, it was and it still is.

[28] The moving defendants submit that, at most, the plaintiff offers no more than a supportive or assisting role towards other, certified local unions. The plaintiff is not a certified bargaining agency, but fulfills an advocacy role including lobbying efforts with governments. According to the moving defendants, it is “too much of a stretch” to grant the plaintiff legal standing as the plaintiff is at least one step removed from local unions acting as certified bargaining agents.

[29] I disagree. While the plaintiff’s predominate purpose may not be to regulate relations between employees and employers, I find it to be one of its purposes. The support offered by the plaintiff to local unions via assisting with collective bargaining, lobbying towards improving working conditions and employment standards, and encouraging the formation of sick and health benefit funds satisfy the requirement of “regulation of relations between employees and employers.”

[30] While local unions may serve as the certified bargaining agents for their membership, local unions also rely upon the plaintiff for information to ensure that they and their members are being treated fairly and equitably. If necessary, the plaintiff typically appoints an advocate to act on behalf of local unions when collective bargaining negotiations break down and result in an arbitration process.

[31] Local unions may draw upon the plaintiff for resources, knowledge and general capacity building, all services which each local union may not possess or have access to on their own. Voluntary membership in the plaintiff is evidence itself of a desire on the part of local unions to avail themselves of the plaintiff’s services, including assistance with labour relations issues.

[32] Accordingly, for the purpose of this proceeding, I am satisfied that the plaintiff qualifies as a trade union. However, that does not end the inquiry into its legal standing.

Is this proceeding connected to the field of labour relations?

[33] As stated above, for the purpose of commencing a legal proceeding, the legal status of a trade union is confined to cases where the trade union discharges its functions and performs its role in the field of labour relations. Is the object of this proceeding a labour relations matter?

[34] The plaintiff submits that the Courts in both Berry and Public Service Alliance held that trade unions have legal standing “at least” with respect to their labour relations functions. The plaintiff argues that those cases do not restrict the granting of legal status to a trade union performing “only” labour relations functions. I am not prepared to accept the plaintiff’s submission in this regard. Absent clear appellate authority that expands the criteria for granting legal status to trade unions into non-labour relations areas, I believe that the core of an underlining legal proceeding must relate, at least in part, to a trade union’s labour relations functions and operations.

[35] While I will have more substantive comments to say about the plaintiff’s pleading and causes of action when I deal with the Rule 21 motions, a review of the Statement of Claim discloses that, at its core, the plaintiff is suing the defendants for recovery of what the plaintiff claims to be misappropriated union funds.

[36] According to the plaintiff, if a retiree, beneficiary or other family member agreed to make a contribution to the plaintiff, they would execute the Letter of Agreement under which the plaintiff agreed to provide representation. The Letter of Agreement is drafted on the plaintiff’s letterhead, but is not signed by the plaintiff (other than perhaps in the capacity of witness). The only signatory to the Letter of Agreement is the donor. Although there was no obligation upon the donor to sign a Letter of Agreement as a pre-condition for representation, once the document was signed the plaintiff submits it became an enforceable agreement. I do not have sufficient evidence in the record before me to decide that specific issue.

[37] The plaintiff alleges that Atkinson and Grieve persuaded donors to pay portions of their WSIB awards directly to Atkinson and Grieve instead of to the plaintiff notwithstanding the existence of Letters of Agreements requiring payment to the plaintiff. The plaintiff further alleges that Atkinson and Grieve used their own version of a Letter of Agreement to secure unlawful payments to themselves, and that the voluntary contributions never made their way to the plaintiff, but were diverted and misappropriated by Atkinson and Grieve over time.

[38] The plaintiff’s evidence discloses that RCCF funds are reported on the plaintiff’s financial statements and held in the plaintiff’s bank accounts. If this action succeeds, any damages award will be paid to the plaintiff to be held and used as directed by the plaintiff’s membership.

[39] The moving defendants submit that any causes of action properly rest with the donors, and not with the plaintiff. The moving defendants specifically focused their submissions upon the plaintiff’s claims for misrepresentation, as no representations were allegedly made by Atkinson and Grieve to the plaintiff (only to the WSIB claimants and donors). Again, I intend to address that issue when dealing with the Rule 21 motions.

[40] I agree with the plaintiff that, subject to the issues raised by the Rule 21 motions, the crux of this action is for the recovery of funds due and payable to the plaintiff. While it is true that the Letters of Agreement were not irrevocable, by signing them and then making voluntary payments, the donors arguably parted title to the funds, and the plaintiff became a party akin to a beneficiary in a trust relationship.

[41] A legal proceeding to recover funds intended to the RCCF falls within the plaintiff’s labour relations function, namely, the funding of efforts to compensate workers and their survivors for workplace injuries and occupational diseases caused by working conditions. As stated by the plaintiff, without the RCCF and the ODC, many firefighters could never obtain compensation to which they were entitled from the WSIB. Using the RCCF, the plaintiff is able to represent retired firefighters before the WSIB, and reduce the financial burden on its members.

[42] I therefore find the subject matter of this proceeding to be connected to the field of labour relations. Accordingly, the standing motions are dismissed.

The Rule 12.08 Motion

[43] The dismissal of the standing motions has rendered the disposition of the Rule 12.08 motion moot. Nevertheless, for the sake of completeness in these Reasons, I will decide the plaintiff’s Rule 12.08 Motion.

[44] In the event the standing motions were granted, the Rule 12.08 motion sought an order authorizing Hyndman to continue this action on behalf of and for the benefit of the membership of the OPFFA. The provisions of Rule 12.08 are as follows:

“Where numerous persons are members of an unincorporated association or trade union and a proceeding under the Class Proceedings Act, 1992 would be an unduly expensive or inconvenient means for determining their claims, one or more of them may be authorized by the court to bring a proceeding on behalf of or for the benefit of all.

[45] As held by the Divisional Court in Ottawa Police Association v. Ottawa Police Services Board 2014 ONSC 1584, a party moving for an order under Rule 12.08 must satisfy three criteria:

(a) there must be numerous persons who are members of a trade union or unincorporated association;

(b) the numerous persons must assert a claim that would be unduly expensive or inconvenient to pursue under the Class Proceedings Act, 1992; and,

(c) the claim must be on behalf of or for the benefit of all of the persons on whose behalf the representative order is made.

[46] As recently held by Justice Perell in Brown v. Hanley 2018 ONSC 1112, to meet the test for a representative capacity, a moving party must establish that:

(a) there is a proper cause of action;

(b) the claims to be advanced raise common issues;

(c) a representative action is the preferable procedure for the determination of the common issues; and

(d) the proposed representative plaintiff would fairly represent the interests of the members of the unincorporated association or trade union, and does not have any interest that is in conflict with those interests.

Hyndman’s Evidence

[47] Hyndman is the plaintiff’s president, elected at the plaintiff’s 2016 convention without opposition, for a two year term. He has been a member of the OPFFA since commencing his firefighting career in 2000.

[48] After the plaintiff’s investigation into the matters giving rise to this proceeding, the OPFFA’s executive committee met to consider and discuss its prospective courses of action against the defendants, and ultimately passed a resolution dated March 16, 2016 to pursue this civil proceeding, which was commenced approximately two weeks later. According to Hyndman, the executive committee has regularly reported to the OPFFA membership about the investigation and the ongoing legal proceeding.

[49] Most of the facts supporting the merits of the plaintiff’s position in this proceeding are not within Hyndman’s personal knowledge. He was not a member of the OPFFA executive committee during the period of the events giving rise to this proceeding. Hyndman was never present when any Letters of Agreement were presented to the donor families, with the exception of one single meeting. He has no personal knowledge of any discussions which may have taken place between Atkinson, Grieve or Shapiro and the donor families.

[50] Accordingly to Hyndman, this proceeding benefits the entire OPFFA membership (and not just, as the plaintiff originally contended, the donor families) as any member of the plaintiff could one day experience job-related disease, and their families may need to access resources available through the ODC and RCCF.

[51] Hyndman also maintains that individual firefighters or local unions would have a difficult time pursuing their own claims against the defendants as such proceedings would be expensive, and no one local union or firefighter “has an entitlement to any specific portion of the RCCF.”

Has Hyndman satisfied the Rule 12.08 test?

[52] The plaintiff clearly satisfies the first element of the test. There are 11,000 members in the OPFFA drawn from 82 local unions throughout the province of Ontario. The plaintiff clearly has “numerous persons who are members.”

[53] I have little difficulty in concluding that claims asserted by the numerous persons would be unduly expensive or inconvenient to pursue under the Class Proceedings Act. There is obvious uncertainty surrounding whether any individual OPFFA member would require actual access to the funds in the future. As previously stated, any monies recovered from the defendants will not necessarily be remitted directly to the plaintiff’s members, but be held in the RCCF for the members’ long term benefit. I agree with the plaintiff that the right of action in this proceeding is collective, and not individual.

[54] While I will once again have more to say about the adequacy of the pleaded causes of action in my disposition in the Rule 21 motions, for the purpose of the Rule 12.08 test, I find there to be sufficient, proper causes of action. The defendants take significant issue with the plaintiff’s position that this proceeding has been brought “on behalf of or for the benefit of” the plaintiff’s individual members. The defendants submit that the causes of action advanced in this proceeding do not raise common issues, and as such a Rule 12.08 representative action is not the preferable procedure.

[55] The defendants submit that there is no evidence that the plaintiff’s membership is expressly in favour of a representative action. I disagree. The plaintiff’s executive committee conducted a unanimous vote in favour of this proceeding, and that vote represents the will of the OPFFA members. There is no evidence of any dissent among the plaintiff’s membership with respect to proceeding with this litigation.

[56] It is true that no local union or individual firefighter has a specific entitlement to any specific portion of the RCCF. Contemporaneous with commencing this action, the plaintiff advised its local union members that funds recovered from the defendants will be issued “to make widows and families whole” as opposed to benefit the plaintiff’s members. I agree with the defendants that the plaintiff does not seem to possess a legal ability to advance a claim on behalf of the donor families themselves. While the plaintiff may have “changed its tune” as this proceeding unfolded, the question is still whether, in law, this proceeding can be for the benefit of the plaintiff’s membership.

[57] In my view, it can. The plaintiff’s executive committee is representative of the entire OPFFA membership, and the executive committee voted unanimously to pursue this proceeding. In Ottawa Police Association, the Divisional Court held that Rule 12.08 is not limited “to actions brought in the name of or in respect of the collective…but claims on behalf of a ‘definable class’.” Through this proceeding, the plaintiff is pursuing the collective right to the RCCF funds for its membership.

[58] Representative proceedings must be for the benefit of “numerous persons”, and not necessarily all members of an incorporated association or trade union. I find the plaintiff’s claims to be for the benefit of its membership, and the fact that such a benefit(s) may be long term should not prevent Hyndman from being appointed a representative plaintiff. The RCCF is a resource that is of value for its members. The RCCF exists, with the will and approval of the plaintiff’s membership, to provide resources and assistance to the plaintiff’s members in the event they contract an occupational disease after they have retired.

[59] For all these reasons, had the standing motions been dismissed, I would have granted the Rule 12.08 motion.

The Stay Motion

[60] The stay motion seeks an order staying this action pursuant to section 106 of the Courts of Justice Act, RSO 1990 c.C43 pending (a) the disposition of the criminal charges laid against Atkinson and Grieve, or in the alternative (b) the conclusion of the preliminary inquiry in the criminal proceeding.

[61] All parties agree that a party who seeks to stay a civil proceeding pending the outcome of a criminal prosecution against him/her must demonstrate that his/her case is an extraordinary and exceptional one. There is a presumption against the granting of such a stay, and the threshold test is certainly a high one. As held by the Court of Appeal for Ontario in Nash v. Ontario 1995 ONCA 2934, “the mere fact that criminal proceedings are pending at the same time as civil proceedings is not a sufficient ground for a stay of the latter … an applicant, whether it is the Crown or the accused, must meet the same burden of proving extraordinary or exceptional circumstances.”

[62] As held in Nash, the high threshold is not met where a civil proceeding may potentially disclose the nature of an accused’s defence or self-incriminating evidence. A moving party must demonstrate something more to show that his/her right to a fair criminal trial will be impacted by the continuation of the civil proceeding.

[63] The Atkinson defendants submit that this proceeding should be stayed on two principal grounds:

a) the criminal proceeding against them is substantially the same, if not identical, and if they are convicted than their defence to this proceeding (and their counterclaim) will be devoid of merit; and

b) the actions taken on behalf of the plaintiff’s lawyers (“OPFFA counsel”), namely

i) actively lobbying the police to have criminal charges laid, and

ii) aggressively conducting the criminal investigation to gather and present evidence to the police

all amount to extraordinary circumstances warranting a stay of the civil proceeding.

The History of the Stay Motion

[64] Atkinson and Grieve were criminally charged by the Halton Regional Police Services (“Halton Police”) on February 28, 2007, 10 months after the statement of claim in this proceeding was issued. The Information alleges that Atkinson and Grieve (a) defrauded the OPFFA of a sum of money exceeding $5,000.00, (b) willfully attempted to disrupt the course of justice by destroying evidence that could be used against them in court, and (c) transferred possession of proceeds of crime knowing that those proceeds were obtained as a result of a commission of a crime.

[65] Shortly after the criminal charges were laid, the Atkinson defendants expressed a desire to bring the stay motion. At that time, Atkinson and Grieve had only received partial disclosure in the criminal proceeding, and scheduled a Wagg motion in this proceeding for full production of disclosure in the criminal proceeding.

[66] The Wagg motion was scheduled to proceed before me in advance of the within motions, but the Atkinson defendants ended up resolving their Wagg motion with the Crown. The settlement of the Wagg motion resulted in the Crown delivering an Affidavit appending the Information, Crown Synopsis and an index to the Disclosure Brief from the criminal proceeding.

[67] Many of the documents listed in that Index were already in the possession of the Atkinson defendants. That said, the entire disclosure from the criminal proceeding has not been produced on this stay motion.

OPFFA Counsel’s Involvement

[68] A review of the criminal disclosure obtained by the Atkinson defendants confirms that the OPFFA counsel were rather involved in various investigatory steps and the contacting of Halton Police. OPFFA counsel did conduct an investigation into the defendants, and shared the results of that investigation with Halton Police.

[69] That involvement does appear to have been somewhat aggressive on occasion, especially when Halton Police initially took the position in April 2016 that there was insufficient evidence to support a criminal investigation. Subsequent to Halton Police taking that position, OPFFA counsel provided factual summaries to Halton Police of the interviews and information that OPFFA counsel collected to “assist” in investigating Atkinson and Grieve.

[70] OPFFA counsel conducted interviews with several witnesses, and forwarded those witness statements to the Halton Police. OPFFA counsel also had numerous discussions and meetings with Halton Police, all undertaken with a view to furthering the investigation and the potential laying of criminal charges against Atkinson and Grieve.

[71] The Atkinson defendants take the position that OPFFA counsel may indeed be called as witnesses in the criminal proceeding, including at the preliminary inquiry, as it was OPFFA’s counsel who interviewed the witnesses and obtained the witness statements. As put by the Atkinson defendants, “given that OPFFA counsel appear to have largely conducted the investigation, it is difficult to imagine how they will not be witnesses in any criminal trial.”

Decision

[72] The Atkinson defendants submit that if Atkinson and Grieve are convicted of the three charges on the criminal standard of proof, they will have no liability defence to the allegations in this proceeding, which the Atkinson defendants claim are the same. They rely upon the Divisional Court’s decision in Samuels v. Attorney General (Canada) 2016 ONSC 7937, and in particular the following passage:

“The second consideration relates to the extent of the overlap between the criminal and civil proceedings. Again, the fundamental issue in the civil claim is the lawfulness of an authorization to intercept private communications. That is precisely in issue in the criminal proceeding. Unlike in Schreiber, this is not a case where it could be said that the same facts and law would be considered in both the criminal and civil case. This is a case where the fundamental issue in the civil proceeding is identical to a key issue in the criminal case. The civil action is the reciprocal of the criminal prosecution.”

[73] In Samuels, one of the elements considered by the Court in granting a stay of a civil proceeding was that the civil action was the reciprocal of the criminal prosecution. In other words, Mr. Samuels issued his civil action for negligence, abuse of privacy and other torts after he had been criminally charged and detained in custody. Apart from the Atkinson defendants’ counterclaim launched as part of their defence to this proceeding, I do not see this proceeding and the criminal proceeding as reciprocal as was the case in Samuels. It is difficult to conduct a full analysis of the extent of all facts which overlap in both proceedings in the absence of the complete criminal disclosure. While I agree with the Atkinson defendants that there are some obvious overlapping facts in both proceedings, the record produced by the Atkinson defendants (which, as stated, does not include the entire criminal disclosure) is simply not strong enough to conclude that a potential criminal conviction would be fully dispositive of the Atkinson defendants’ liability defence (and, for that matter, their counterclaim).

[74] This proceeding involves numerous parties that have not been criminally charged, and the nature of the criminal charges against Atkinson and Grieve include money laundering, and allegations that they used personal holding companies to divert funds received from donor families for their personal use.

[75] Subject to my disposition of the Rule 21 motions, there are several causes of action over and above fraud being pursued in this proceeding. In addition, the criminal charges relate to an alleged diversion of approximately $255,000.00, while the damages in this proceeding ($3,000,000.00) have yet to be truly quantified, and may be different depending upon whether the Atkinson defendants are found liable for various different causes of actions being pursued by the plaintiff.

[76] This proceeding pre-dates the criminal proceeding. Despite the Atkinson defendants’ attempts to undermine OPFFA counsel and the independence of the Halton Police investigation, I do not believe that there is sufficient evidence to conclude that any abuse of process has occurred. The steps taken by OPFFA counsel, while arguably aggressive and persistent, do not amount to interference with either the civil or criminal process.

[77] The Atkinson defendants rely upon the decision of Justice Chapnik in Bour v. Manraj 1995 ONSC 7072. In Bour, a stay of a civil action pending a criminal proceeding “arising out of the same facts” was sought in order to “maintain the necessary separation of the proceedings and ensure a fair trial in the criminal action”. In granting the stay, Justice Chapnik relied heavily upon (at the time) the absence of any implied undertaking rule in Ontario prohibiting disclosure of discovery information for other collateral purposes. As well, Justice Chapnik found that counsel for Bour had “sufficient involvement in the criminal matter to be named as a witness in the criminal proceedings.”

[78] As the Divisional Court recently held in West Nipissing (Municipality) v. MX Constructors Inc. 2017 ONSC 6108, the Bour decision preceded the introduction of the deemed undertaking rule (Rule 30.1) in the Rules of Civil Procedure. It is doubtful that the rationale undermining Justice Chapnik’s decision in Bour still applies today.

[79] The Atkinson defendants further submit that given the Supreme Court of Canada’s decision in R. v Jordan 2016 SCC 27, as the presumptive ceiling for criminal prosecutions in the Ontario Superior Court of Justice is 30 months, a stay will not cause undue delay to the OPFFA’s prosecution of this proceeding or prejudice the OPFFA from obtaining a timely civil remedy. However, in West Nipissing, the Divisional Court held:

“… (the motion judge) erred in law by inferring that the ceilings established in criminal proceedings as a result of R. v. Jordan ought to be a factor in the determination of whether there would be delay in the related civil action. The institutional changes required in response to Jordan are irrelevant to the question of a stay of civil proceedings in the wake of related criminal proceedings.”

[80] The evidentiary record before me does not provide sufficient evidence that the OPFFA’s lawyers will be called as witnesses in the criminal proceeding. There is evidence that the Halton Police did conduct their own, independent investigation, although some of it appears to be confirmatory of the summaries and witness statements provided by OPFFA’s counsel. Even if OPFFA counsel were potential witnesses in the criminal proceeding (and I would assume that the OPFFA itself would be called as the main witness being the alleged victim of a fraud), there is no support for the proposition that such a risk amounts to the exceptional circumstances necessary to warrant a stay.

[81] Accordingly, for the reasons given, the stay motion is dismissed.

The Rule 21 Motions

[82] As held by the Court of Appeal in Addison Chevrolet Dealer GMC Limited v. General Motors of Canada Limited 2016 ONCA 324, it is trite to state that the test under Rule 21.01 requires a moving party too show that it is plain and obvious that the pleading discloses no reasonable cause of action, or that the claim has no reasonable prospect of success. Pleadings may be defective when they fail to allege the necessary elements of a claim that, if properly pleaded, would constitute a reasonable cause of action.

[83] The test to be employed on a motion to strike is well known. As held by the Supreme Court of Canada in Hunt v. Carey Canada Inc., 1990 SCC 90, assuming that the facts as stated in the statement of claim can be proven, I must decide whether it is “plain and obvious” that the claim discloses no reasonable cause of action. As the pleaded facts are presumed to be true, I can only strike out a claim which has no reasonable prospect of success.

[84] As held by Justice Myers in Salehi v. Professional Engineers Ontario 2014 ONSC 3816, a claim is to be read generously with allowance for mere drafting deficiencies. The test on a motion to strike is no doubt a stringent one as I must be satisfied that the claim, or a radical defect therein, is certain to fail.

[85] A concise and helpful summary of the principles to be applied on a motion to strike is set out in the decision of the Ontario Divisional Court in Resolute Forest Products Inc. et al v. 2471256 Canada Inc. 2014 ONSC 3996. Those principles are as follows:

a) The words of the statement of claim relating to the cause of action in question should be read generously in favour of a plaintiff so as not to unfairly deny that party the benefit of the pleading. This is particularly so with the tort of intentional interference with economic relations, having regard to Cromwell J.’s comment in A.I. Enterprises Ltd. v. Bram Enterprises Ltd. 2014 SCC 12 at para. 2, that the scope of this tort has been unsettled.

b) Rule 25.06(8) states that full particulars are required when “fraud, misrepresentation, breach of trust, malice or intent is alleged.” Its purpose is to ensure that bald allegations of this nature, totally devoid of any detail, should not be permitted even at this early stage of the action. However, the rule was never meant to stand in the place of discovery but only to ensure that a defendant knows the case it has to meet with respect to such allegations, and is able to plead over. In our view, “full” means sufficient material facts to permit a defendant to respond in a meaningful way at the pleading stage.

c) The “plain and obvious” test sets a high hurdle for a Rule 21.01(1)(b) motion to be successful. It is only in the clearest of cases – where a claim is certain to fail – that a claim should be struck out.

d) Rule 1.04(1) sets out the general principle that should be taken into account in interpreting and applying the Rules of Practice. It provides that “these rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.” Thus, Rule 21 motions should not become a battleground for highly technical complaints about the form of pleadings for tactical reasons to preclude issues from being heard on their merits, and

e) Parties should not be faced with procedural motions right out of the litigation gate, as such motions only serve to frustrate the advancement of the litigation and result in the building up of unnecessary costs and delay. The purpose of a statement of claim is essentially to frame the issues in controversy and set out the material facts of the claim to allow a defendant to respond by way of a statement of defence. The recent emphasis on access to justice (see for example, Hyrniak v. Mauldin, 2014 SCC 7 at paragraphs 23-24 in respect of Rule 20 motions) supports the view that parties and counsel should engage less in disputing pleading details and move as expeditiously and as cost effectively as possible to a resolution on the merits.

[86] I will now address each impugned cause of action raised by both the Atkinson defendants and Shapiro in their respective Rule 21 motions.

Breach of Fiduciary Duty

[87] The elements of a claim for breach of fiduciary duty are:

a) the existence of a fiduciary relationship;

b) a fiduciary duty; and

c) a breach of that fiduciary duty.

[88] As held by Justice Dunphy in Lam v. The University of Western Ontario Board of Governors et al 2015 ONSC 1642:

“In my view a fiduciary relationship requires, in addition to the existence of power and the presence of vulnerability, the assumption by the more powerful fiduciary of a duty to act in the best interests of the vulnerable claimed beneficiary. That assumption may arise from a number of sources: it can be an express or implied agreement, it can be a duty imposed by law. However, the relationship arises from more than the mere fact that the actions of X may affect Y in some important way.”

[89] It was admitted by the plaintiff that the claim for fiduciary duty against Shapiro simply does not exist on the facts as pleaded, and therefore cannot stand. Accepting all the facts as pleaded in the Statement of Claim as true, I agree with the plaintiff’s concession, and order that the claim for breach of fiduciary duty against Shapiro be struck out without leave to amend.

[90] The claim for breach of fiduciary duty against the Atkinson defendants is summarized at paragraphs 48-50 of the Statement of Claim. In those paragraphs, the plaintiff alleges that the Atkinson defendants’ fiduciary duties arose out of their roles as OPFFA’s agents and appointments to the ODC. There are very little, if any, particulars as to how or why the Atkinson defendants were fiduciaries of the plaintiff, other than a bald statement that they were, and as such were obligated to act in the plaintiff’s best interests. There is no mention of an alleged imbalance of power, a presence of vulnerability, or an assumption on the part of the Atkinson defendants to act in the plaintiff’s best interests.

[91] In accepting the facts in the Statement of Claim, I cannot conclude that there is a fiduciary relationship existing generally between the Atkinson defendants and the plaintiff. There are no facts pleaded which give rise to a special relationship that would impose fiduciary duties upon the Atkinson defendants. In the absence of those facts, and in particular the Atkinson defendants’ alleged duties to prefer the plaintiff’s interests to their own, the claim for breach of fiduciary duty against the Atkinson defendants is struck with leave to amend.

Breach of Trust

[92] The essential elements of a claim for breach of trust are the existence of a trust relationship, and an act or omission in breach of the trust.

[93] As stated in paragraph 40 herein, I have found on the record before me that the plaintiff stood in a position akin to a beneficiary in a trust relationship with respect to the funds paid by the donor families. Ultimately, the Statement of Claim alleges that the donor families provided funds to the Atkinson defendants with the intention that those funds would find their way to the OCD and the OPFFA. In breach of those obligations, the Atkinson defendants are alleged to have diverted and retained those funds for their personal benefit.

[94] I am satisfied that the Statement of Claim pleads a tenable cause of action for breach of trust against the Atkinson defendants.

[95] I cannot come to the same conclusion with respect to the plaintiff’s claim for breach of trust against Shapiro, who is “lumped in” together with the Atkinson defendants at paragraphs 51- 52 of the Statement of Claim. There is no allegation setting out how Shapiro stood in a trustee - beneficiary relationship with the plaintiff, other than allegations that funds obtained from the donor families found their way into his firm’s trust account. There is no claim against Shapiro for knowing receipt or knowing assistance. Even accepting all the plaintiff’s allegations as true, Shapiro stood in a very different position than the Atkinson defendants in the alleged misappropriation scheme. The mere allegation that Shapiro acted as agent for the Atkinson defendants does not translate into a tenable cause of action for breach of trust. At its simplest, Shapiro seems to be described as the “getaway driver”, but this contention in and of itself is simply insufficient to support a cause of action in breach of trust.

[96] Accordingly, the plaintiff’s claim for breach of trust against Shapiro is struck with leave to amend.

False Misrepresentation

[97] As held by Justice Patillo in Liquid Rubber v. Bilbija 2012 ONSC 4203, the essential elements of false/fraudulent misrepresentation are:

a) the defendant made a false misrepresentation of fact;

b) the defendant knew that the statement was false, or was reckless as to its truth;

c) the defendant made the representation with the intention that it would be relied and acted upon by the plaintiff;

d) the plaintiff relied upon the representation; and

e) the plaintiff suffered damage as a result.

[98] The Statement of Claim is replete with statements allegedly made by the Atkinson defendants to the donor families. These statements are said to be false. I agree with the Atkinson defendants and Shapiro that these statements allegedly made to the donor families cannot qualify as representations that were intended to be, could have been, or were, acted upon by the plaintiff.

[99] The plaintiff submits that the Atkinson defendants’ false representations made to the donor families were nevertheless made with the intention that the plaintiff would rely upon them. That does not satisfy the fourth element of the tort of false/fraudulent misrepresentation. How can the plaintiff rely upon allegedly false representations not made to the plaintiff, and only discovered by the plaintiff well after the representations were allegedly made? I cannot see how the plaintiff could have relied upon the alleged false representations made to the donor families on the facts as pleaded in the Statement of Claim.

[100] With respect to Shapiro, he is once again lumped in with the Atkinson defendants, although it is unclear what representations he in fact allegedly made to the donor families. In any event, even if he had made such representations, the claim for false/fraudulent misrepresentation fails for the reasons set out above.

[101] Accordingly, the plaintiff’s claim for false misrepresentation against the Atkinson defendants and Shapiro is struck without leave to amend.

Unlawful Act Conspiracy

[102] The plaintiffs have sued the defendants for the specific tort of unlawful act conspiracy. As held by the Court of Appeal for Ontario in Agribrands Purina Canada Inc. v. Kasamekas 2011 ONCA 460, unlawful act conspiracy requires the following five elements to be pleaded:

a) the defendants acted in combination, that is, in concert, by agreement or with a common design;

b) the defendants’ conduct is unlawful;

c) the defendants’ conduct is directed towards the plaintiff;

d) the defendants should know that, in the circumstances, injury to the plaintiff is likely to result; and

e) the defendants cause injury to the plaintiff.

[103] The Atkinson defendants and Shapiro submit that the Statement of Claim refers only to unlawful act conspiracy in paragraphs 56-58 therein, and the brief contents of those paragraphs simply include “boilerplate language” conforming with the required elements above and do not provide any material facts or particulars.

[104] In my view, the allegations set out in paragraphs 37-45 of the Statement of Claim properly plead the necessary elements of unlawful act conspiracy against the Atkinson defendants. While the alleged false statements made to the donor families cannot support a cause of action for false/fraudulent misrepresentation, those same misrepresentations can substantiate the unlawful conduct needed for unlawful act conspiracy. The particulars set out in paragraphs 37-45 explain how the Atkinson defendants’ conduct was directed towards the plaintiff from whom donor contributions were misappropriated. As such, I am satisfied that the Statement of Claim pleads a tenable cause of action for unlawful act conspiracy against the Atkinson defendants.

[105] With respect to Shapiro, he is once again lumped in with the unlawful conduct of the Atkinson defendants, and the pleading fails to explain what specific actions he carried out as part of the conspiracy. More importantly, there are no true particulars provided that explain how Shapiro acted in combination with the Atkinson defendants (i.e. there are no “terms” or details of the alleged agreement between Shapiro and the Atkinson defendants).

[106] The only specific allegations against Shapiro are that he provided his trust account as the financial vehicle in which the Atkinson defendants retained the donations, and allowed the Atkinson defendants to use his status as a lawyer to lend legitimacy to the alleged scheme. In my view, these allegations are insufficient, especially in light of the provisions of Rule 25.06(8) of the Rules of Civil Procedure. If Shapiro is truly the getaway driver, the Statement of Claim does not specify the nature of the agreement he reached with the Atkinson defendants to even act as the getaway driver. Further, it is unclear whether Shapiro had full knowledge, or was a full participant, in all aspects of the misappropriation scheme.

[107] Accordingly, the plaintiff’s claim for unlawful lack conspiracy against Shapiro is struck with leave to amend.

Inducing Breach of Contract

[108] To maintain a cause of action for inducing breach of contract, a plaintiff must plead the following elements:

a) the existence of a valid and enforceable contract between the plaintiff and a third party;

b) knowledge on the part of the defendant(s) of the existence of the contract;

c) an intentional act on the part of the defendant(s) to cause a breach of the contract;

d) wrongful interference on the part of the defendant(s) that resulted in the breach of the contract; and

e) resulting damage to the plaintiff.

[109] The crux of the dispute between the parties is whether the Letters of Agreement are valid and enforceable contracts in law. As those Letters of Agreement are specifically referenced in the body of the Statement of Claim, the Rule 21.01 jurisprudence permits me to review the Letters of Agreement themselves.

[110] The Atkinson defendants and Shapiro argue that the plaintiff admits in its pleading that payments made by donor families were purely voluntary, and thus gratuitous. As such, any payments made by a donor family is revocable, and the Letters of Agreement are merely pledges by donor families for which no consideration passes from the plaintiff.

[111] The plaintiff argues that once the donor family executed the Letter of Agreement, it became a “valid, enforceable agreement.” While I am mandated to presume that allegation to be true under the relevant Rule 21.01 jurisprudence, as stated above I am also able to review the contents of the Letter of Agreement itself.

[112] Paragraph 2 of the Letter of Agreement provides as follows:

“The signing party who seeks benefits from the WSIB for an occupational disease and requests the authorized assistance from the Local designated WCB Representative in the claim process will … “

[113] In my view, at the pleadings stage of this proceeding I am simply unable to determine whether the plaintiff’s performance of services as set out above qualifies a sufficient consideration to render the Letter of Agreement a valid, enforceable contract. It will be a matter for the trial judge to determine whether the donor families’ agreement to make the payment entitled them in turn to enforce the plaintiff’s stated obligation to provide services. Accordingly, at this time I am not prepared to find that there is no cause of action for inducing breach of contract against the Atkinson defendants.

[114] That said, the claim for inducing breach of contract against Shapiro is simply lacking in material facts and particulars. I agree with Shapiro that the peading fails to even state whether he was aware of the existence of the Letters of Agreement between the donor families and the plaintiff. The claim further fails to set out whether or how Shapiro intended to cause a breach the Letters of Agreement, and what conduct on his part resulted in such a breach.

[115] Accordingly, the plaintiff’s claim for inducing breach of contract against Shapiro is struck with leave to amend.

Intentional Interference with Economic Relations

[116] In Grand Financial Management Inc. v. Solemio Transportation Inc. 2016 ONCA 175, the Court of Appeal for Ontario held that the tort of intentional interference with economic relations should be “kept with a narrow bounds”, and viewed “as one of narrow scope.” A plaintiff alleging intentional interference with economic relations must plead three essential elements:

a) the defendant must have intended to injure the plaintiff’s economics interests;

b) the interference must have been by illegal or unlawful means; and

c) the plaintiff must have suffered economic harm or loss as a result.

[117] As set out in Grand Financial, in assessing the “illegal or unlawful means”, the Court must find conduct that “would be actionable by a third party, or would have been actionable if the third party had suffered a loss as a result of it.”

[118] The plaintiff relies upon the following passage from the Supreme Court of Canada’s decision in A.I. Enterprises Ltd. v. Bram Enterprises Ltd. 2014 SCC 12:

“…the defendant’s means are ‘unlawful’ if they support a civil action for damages or compensation by the third party, or would do so except for the fact that a third party did not suffer any losses as a result of the defendant’s acts.”

[119] The Atkinson defendants and Shapiro submit that the donor families directed voluntary payments to the defendants, which voluntary payments would have been donated to the OPFFA, and as such, none of the donor families have in fact suffered any loss. In my view, this is too simple an analysis. Assuming the allegations in the Statement of Claim to be true, the donor families intended the payments to reach the ODC, and in turn the OPFFA, for a specific purpose. That purpose was certainly not to fund the Atkinson defendants personally as alleged.

[120] The Statement of Claim provides sufficient particulars as against the Atkinson defendants to substantiate their unlawful conduct intended to interfere with the plaintiff’s economic interests. Accepting the allegations as true, the donor families could have a cause of action for, inter alia, misrepresentation, deceit or fraud. While I make no comment whatsoever on the merits of such potential actions, the facts as pleaded could nevertheless support a civil action for damages by the donor families.

[121] I am satisfied that the Statement of Claim pleads a tenable cause of action for intentional interference with economic relations against the Atkinson defendants.

[122] Once again, Shapiro is lumped in with the Atkinson defendants. There are no material facts to support what alleged misrepresentations were made by Shapiro to the donor families or how his conduct is alleged to have deprived the donor families of their voluntary payments. I need not repeat my comments with respect to Shapiro being simply the getaway driver. It is simply unclear how Shapiro intended to injure the plaintiff’s economic interests.

[123] Accordingly, the plaintiff’s claim for intentional interference with economic relations as against Shapiro is therefore struck with leave to amend.

Unjust Enrichment

[124] As held by Justice Newbold in The Catalyst Capital Group Inc. v. Dundee Kilmer Developments Limited et al 2016 ONSC 7365, to plead a claim in unjust enrichment a plaintiff must set out the following elements:

a) the defendant has been enriched;

b) there has been a corresponding deprivation of the plaintiff; and

c) the absence of a juristic reason for the enrichment.

[125] The Atkinson defendants and Shapiro argue, once again, that the parties who suffered the detriment are the donor families, and not the plaintiff. Similarly, they also argue that the donor families’ “donative intent” to part with the funds can amount to a juristic reason for the alleged enrichment.

[126] For reasons already expressed herein, at the pleading stage I am prepared to accept that the funds procured by the Atkinson defendants under the misappropriation scheme were funds which should have been governed by the Letters of Agreement and paid to the ODC/OPFFA.

[127] While I find that the cause of action for unjust enrichment is tenable against the Atkinson defendants, I fail to see how Shapiro was unjustly enriched according to the Statement of Claim. The stated purpose of the misappropriation was to divert the donated funds, inter alia, through Shapiro’s trust account to pay and support the Atkinson defendants. There are no particulars supporting a theory that Shapiro himself was unjustly enriched, only an allegation that the funds were paid to his firm in trust (i.e. not to himself).

[128] Accordingly, the plaintiff’s claim for unjust enrichment against Shapiro is therefore struck out with leave to amend.

Passing off

[129] The tort of passing off requires a party to prove three elements:

a) the existence of goodwill or reputation in respect of a distinctiveness of a product;

b) deception of the public due to a misrepresentation; and

c) actual or potential damage to the plaintiff.

[130] At paragraphs 63-70 of the Statement of Claim, the plaintiff pleads that the Atkinson defendants caused donor families to sign a Letter of Agreement using and naming the acronym “PFFA” (ie. the defendant Professional Firefighters Advocates Inc.) as the recipient of the WSIB award. The plaintiff claims the similarity between “OPFFA” and “PFFA” was not accidental, and the revised Letters of Agreement were created for the purpose of misleading donor families into believing that the funds they provided were destined for the ODC/OPFFA.

[131] With respect to the Atkinson defendants, the plaintiff has pleaded that the OPFFA has significant goodwill within the firefighting community and the public at large, and the defendants misused the OPFFA’s reputation to mislead donor families into making payments (some larger than what was necessary), all for the Atkinson defendants’ personal gain.

[132] The plaintiff alleges that the donor families (i.e. members of the public) were deceived due to misrepresentations on the part of the Atkinson defendants, namely the creation of the revised Letter of Agreement, to direct payments to be made to the defendant Professional Firefighters Advocates Inc., and not the plaintiff. I am thus satisfied that the Statement of Claim pleads a tenable cause of action for passing off against the Atkinson defendants.

[133] There is no mention whatsoever of Shapiro in paragraphs 63-70 of the Statement of Claim. It is not alleged that Shapiro did anything in particular to pass PFFA off as the OPFFA. Accordingly, the plaintiff’s claim for passing off against Shapiro is struck with leave to amend.

Costs

[134] In my view, it is arguable that success has been divided on these motions. If the parties take a different view, I would first urge them to exert the necessary efforts and try and resolve the costs of these motions, including all of the interim steps and attendances leading up to the hearing dates.

[135] If those efforts prove unsuccessful, they may exchange and file written costs submissions (totaling no more than 5 pages including a Costs Outline) pursuant to the following schedule:

a) the Atkinson defendants and Shapiro shall serve and file their costs submissions within 14 business days after the release of these Reasons.

b) the plaintiff shall thereafter have an additional 14 business days from the receipt of the Atkinson defendants’ and Shapiro’s costs submissions to deliver its responding costs submissions.

Diamond J.

Released: March 5, 2018