Court File and Parties
OSHAWA COURT FILE NOS.: CV-18-1351, CV-18-1352 DATE: 20180914 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Darren Donohue, Plaintiff AND: Chris McAuley, Edward Osmond, McAuley Financial Corp (Ontario Corporation Number 2148272), Chris McAuley in his capacity as Director of McAuley Financial Corp, Right At Home Realty Inc., and Right At Home Realty Inc. Brokerage, Defendants
AND RE: Juliette Betts and Grace Wanyura, Plaintiffs AND: Chris McAuley, McAuley Financial Corp (Ontario Corporation Number 2148272), Edward Osmond, Right At Home Realty Inc., and Right At Home Realty Inc. Brokerage, Defendants
BEFORE: The Honourable Mr. Justice R.E. Charney
COUNSEL: Fiona Heald, Counsel for the Plaintiffs/Responding Parties Joseph Juda, Counsel for the Defendants/Moving Parties
HEARD: August 24, 2018
Endorsement
Introduction
[1] This motion relates to two separate but related actions. The first action relates to a Statement of Claim brought by the vendors of a property against the real estate agent (Chris McAuley) and his real estate agency, and another client and business partner of the real estate agent named Edward Osmond (Osmond).
[2] The second action relates to a Statement of Claim brought by the purchasers of the same property against the same defendants.
[3] It is alleged that Mr. McAuley was acting as the agent for both the vendors and the purchasers.
[4] The vendors’ claim alleges that the real estate agent knew that the vendors would sell the property for as low as $280,000, and arranged to have Osmond purchase the property for that price, even though he knew that there were prospective purchasers who were prepared to purchase the property for as much as $325,000. The Statement of Claim further alleges that the agent persuaded the vendors to permit Osmond to purchase the property without a down payment and with a vendor take-back mortgage of $270,000, so that the vendors received no money on closing. The agent then arranged to have Osmond sell the property to the purchasers for $325,000.
[5] The purchasers’ claim alleges that the real estate agent knew that they were prepared to purchase the property for as much as $325,000. The agent also knew that the property could be purchased for as low as $280,000. The agent told the purchasers that their offer to purchase the property for $310,000 had been rejected so he could arrange to have Osmond purchase the property for the lower price. The agent then arranged to have Osmond sell the property to the purchasers at the higher price.
[6] Both claims allege that the real estate agent profited from this real estate flip at the expense of his clients.
[7] Each claim alleges fraud, breach of fiduciary duty, conversion, unjust enrichment, breach of confidence, breach of contract and negligence. Each claims approximately $700,000 in damages, including $500,000 punitive damages.
[8] The plaintiffs in both cases are represented by the same lawyer. The Statements of Claim are 52 pages (354 paragraphs) and 51 pages (335 paragraphs) respectively.
Nature of the Motion
[9] The defendants have brought these motions to strike out each of the Statements of Claim with leave to amend. They argue that the Statements of Claim do not comply with Rule 25.06(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which provides:
25.06 (1) Every pleading shall contain a concise statement of the material facts on which the party relies for the claim or defence, but not the evidence by which those facts are to be proved.
[10] The defendants argue that the Statements of Claim, as drafted, are almost incomprehensible. At 52 and 51 pages, neither Statement of Claim can be described as “concise”, and each claim is filled with superfluous paragraphs, facts, and information that are unrelated to the claim or simply plead evidence to support the claim.
[11] While the defendant acknowledges that each claim presents a serious cause of action, they argue that the claims as drafted are almost impossible to respond to and will delay the fair trial of the action.
Analysis
[12] Having reviewed each of the Statements of Claim, I understand counsel for the defendants’ difficulty in trying to decipher the pleadings. While the foundational elements of each allegation are somewhere in each claim, the claims are so cluttered with extraneous or redundant verbiage as to be confusing and almost unintelligible.
[13] Courts have often emphasized the importance of clearly drafted pleadings. In Guillaume v. Toronto (City), 2010 ONSC 5045, Allen J. stated, at para. 54:
The importance of clearly drafted and structured pleadings does not require much explanation. Pleadings should be drafted with sufficient clarity and precision so as to give the other party fair notice of the case they are required to meet and of the remedies being sought. The role of pleadings is to assist the court in its quest for the truth. Clearly, confusing, run on and poorly organized pleadings cannot accomplish those goals. Courts have held a pleading may be struck out on the grounds it is unintelligible and lacks clarity (citations omitted).
[14] In Balanyk v. University of Toronto, Cameron J. stated, at para. 46:
Neither the opposite party nor the court should be forced to nit-pick their way through a long, complex and sometimes redundant and split pleading, parsing each paragraph and each sentence with a view to extracting the claims and related material facts and redrafting them into a clear and precise pleading. It is the responsibility of the party pleading to plead in accordance with the requirements of our law and the purposes of pleading.
[15] In Jacobson v. Skurka, 2015 ONSC 1699, Perell J. states, at para. 61:
[R]ule 25.06 (1) directs that the pleading be a “concise statement of the material facts.” This direction is designed to screen out irrelevant details that clutter the pleading with useless details.
[16] A brief review of the Statements of Claim provides some examples of the drafting problems presented by the claims as drafted. For ease of reference I will refer only to the paragraphs in the vendors’ claim (#CV-18-1351), although most of the same paragraphs are found in both claims:
i) The paragraphs identifying the defendants also include their addresses and the various sources the plaintiffs’ counsel used to find their address. This takes three full pages of pleadings. The defendants’ address is not relevant to the causes of action pleaded, and the source for the address – websites, documents and corporate profiles – is even less relevant.
ii) The Statements of Claim include paragraphs outlining the role of the Real Estate Council of Ontario (RECO) (para. 15), and information obtained from the RECO website (paras. 34 and 262 – 267). RECO is not a party to this proceeding. At best, information found on the RECO website is evidence by which facts pleaded elsewhere in the Statement of Claim may be proved, and have no place in the Statement of Claim.
iii) Several paragraphs in the Statement of Claim, for example, paras. 124 – 130 (under the heading “Other Oddities in EO Paperwork) and paras. 323 – 328 (under the heading “Remoteness”) are nothing more than argument. While these paragraphs would not be out of place in a factum, they should not be in a Statement of Claim.
iv) Other paragraphs include a detailed narrative of the evidence that the plaintiffs intend to rely on to support their claim. For example, paras. 131 – 215 either repeat material facts or provide details of the evidence (conversations and documents) that the plaintiffs rely on to support the causes of action set out in paras. 41 – 123 of the Statement of Claim.
v) Paragraphs 279 – 282, 287, 288 set out documents and disclosure that the plaintiffs want to obtain from the defendants. This is a matter for discovery and not something that should be included in a Statement of Claim.
[17] One of the dangers of bringing a motion to strike a pleading with leave to amend is that it gives the opposing party an opportunity to improve their pleading. As the editors of Carthy, Millar and Cowan, Ontario Annual Practice, Thompson Reuters, 2017-18, state at p. 1084: “When the opponent files a defective pleading, consider leaving it to stand as permanent bad advocacy”. While a cluttered and confusing pleading is difficult to respond to, it ultimately disadvantages no one more than the party who relies on it.
[18] Distilled from all the excess verbiage, the allegations in the statements of claim are serious. Each statement of claim could be twice as effective if it were half the length.
Conclusion
[19] For these reasons the defendants’ motion is allowed, the Statements of Claim are struck, and the plaintiffs in each action will have leave to deliver a fresh as amended statement of claim that complies with Rule 25.06(1), within thirty days of the release of this endorsement.
[20] The defendants are entitled to their costs of this motion on a partial indemnity basis. Since the motions were argued together, the costs ($900) will be divided between the two groups of plaintiffs. Costs payable by the plaintiffs in the Donohue action (CV-18-1351) fixed at $450 and payable within 45 days. Costs payable by the plaintiffs in the Betts and Wanyura action (CV-18-1352) fixed at $450 and payable within 45 days.