Innocon v Daro, 2018 ONSC 659

COURT FILE NO.: CV-12-461795

DATE: 20180305

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

INNOCON AND LAFARGE CANADA INC.

Plaintiffs/Defendants by Counterclaim (Appellants)

– and –

DARO FLOORING CONSTRUCTIONS INC. AND ROBERT DANNINGER

Defendants/Plaintiff by Counterclaim (Respondents)

Anthony Cole, for the Plaintiffs/Appellants

Angela Assuras, for the Defendants/Respondents

HEARD: January 25, 2018

G. DOW, J.

REASONS FOR DECISION

1The plaintiffs/appellants seek to set aside portions of the Endorsement of Master Abrams, February 17, 2017. Surprisingly, with regard to how this appeal was permitted to be filed, Master Abrams’ Endorsement was never reduced to a signed and entered order. Had such occurred, it would have become apparent to both parties that Master Abrams apparently only adjudicated on the motion by the defendant, Daro Flooring Constructions Inc. (“Daro”) to amend its Statement of Defence and not to the separately filed Statement of Defence of the defendant, Robert Danninger (“Danniger”). This later pleading was served and filed on or after September 28, 2015 and was not challenged based on the material originally before me.

2Fortunately, the defendant, Danninger admits in his pleading he is the president and chief executive officer of the defendant, Daro. His counsel also acts for Daro and acknowledged to me Danninger remains integrally involved with the defendant, Daro. As part of the factual matrix, there was a subrogated counterclaim to be advanced by the defendants which is to be consolidated into this action.

3The six paragraphs (numbers 5, 6, 7, 8, 22 and 25) of the defendant, Daro’s pleading which the plaintiffs are appealing, are identical to those paragraphs in the previously served and filed Statement of Defence by Danninger. This did not become apparent until the conclusion of submissions. I concluded the most efficient way to proceed was to determine this appeal and guide the parties as to what should occur to the form of the pleading by the defendant, Danninger.

4Subsequent to submissions, counsel for the plaintiffs wrote to my assistant requesting I be notified of earlier activity in the action. In particular, a letter from his firm dated September 17, 2016 to Master Abrams was enclosed which raised their motion applying to both pleadings given the identical nature of the paragraphs being challenged. It appears the communication to me was sent without consideration of Rule 1.09 which requires the consent of counsel for the other parties. Counsel for the defendants confirmed she had not consented by an email copied to my assistant. A different lawyer at the firm representing the plaintiffs responded with an apology and explanation of how the oversight occurred. Counsel for the defendants then emailed that she did not agree with the statements made in the letter that enclosed the September 16, 2016 letter but declined to make any further submissions without invitation to do so. I shall ignore the submissions made in the letter enclosing the September 16, 2016 letter to Master Abrams. Should the parties not agree to what should be done with the pleading of the defendant, Danninger following receipt of these Reasons, they shall contact the Civil Motions Co-ordinator, Michelle Chen and arrange a chamber’s appointment before me to make further submissions.

5The parties agree the standard of review of Master Abrams’ endorsement is correctness. The paragraphs in dispute can be broken down into three groups. Paragraphs 5, 6, 7 and 8 are the first group. Paragraph 22 is the second pleading to be reviewed, and paragraph 25 is the final pleading to be reviewed.

6This action includes claims for unpaid invoices, damages including punitive damages for defamation, and damages for breach of contract in negligence (in the counterclaim).

7The issue is whether or not the Master made a clear and palpable error in her interpretation of Rule 25.06 which mandates a party to plead “a concise statement of the material facts on which the parties relies” but does not permit a party to plead “the evidence by which those facts are to be proved”.

8With regard to paragraphs 5, 6, 7 and 8 allowed by the Master, they are contained under a subheading “Alleged Defamation”. The central complaint by the plaintiffs is the quotation in paragraphs 6 and 7 of emails sent on November 22, 2012. The first email in paragraph 6 was to the defendant, Danninger in his capacity with Daro. Paragraph 7, quotes his response. Neither is lengthy. Both can easily have been described in a manner that would fit within the mandated primary portion of Rule 25.06. However, by quoting them, the plaintiffs’ counsel submits they became evidence which is not permitted. I disagree. The pleading is a clear and full response to paragraph 14 of the Amended Statement of Claim where portions of the entire responding email are quoted and relied on to set out the claim the defendants defamed the plaintiffs. I conclude the Master made no error in allowing these pleadings to remain. I am reinforced by this conclusion by reference to Professor Raymond Brown’s book “Brown on Defamation” to which I was referred by defendants’ counsel and the requirement to plead defences to defamation in a particular and specific manner as opposed to in a vague or general fashion.

9However, with regard to paragraph 22, it falls under the subheading of “Defence of Justification”. This is a defence Professor Brown also notes from the case law must be pleaded expressly and specifically. Paragraph 22 of the Statement of Defence under appeal is divided into eight subparagraphs. The defendant Daro pleads details about the product that it purchased, it used, and it had to remediate on the project giving rise to the subrogated claim. It identifies the authors of reports by their name and employer being an engineering firm, a doctor (presumably non-medical) and “renown screed expert”. The names of the experts are sub-subheadings. The pleading references the date of their reports. The pleading appears to repeat, verbatim, conclusions from these reports. In my view, this clearly falls within the prohibited portion of Rule 25.06 as evidence by which facts are to be proven and cannot remain. I rely on the summary of this area of the law and provided by Justice Perell in Jacobson v. Skurka, 2015 ONSC 1699, 2015 ONSC1699 where he concluded (at paragraph 46) “lengthy quotes from documentary evidence “ is “not a proper way of pleading materials facts”.

10As a result, I conclude an error in law as occurred and paragraph 22 of the Daro’s Statement of Defence ought not to have been allowed. This paragraph is struck with leave to amend and plead the material facts it attempted to set out. Specifically, no reference is to be made to an individual to be tendered as expert witness at trial, their reports or their conclusions.

11With regard to paragraph 25, it falls under the subheading “Fair Comment”. It contains 11 subparagraphs which detail facts this defendant will attempt to prove in this action. It does not reference the source of the allegation it pleads are true. As stated by Master Abrams in her Reasons “The technical and detailed nature of the plea is a fact of/results from the technical nature of the underlined claim”. As a result it falls within the “concise statement” portion of Rule 25.06 as opposed to “the evidence” portion of the rule which is not permitted. The appeal to set aside this portion of Master Abrams’ Order is dismissed.

Costs

12The plaintiffs has had limited but not complete success. At the conclusion of submissions, counsel provided to me (and exchanged between themselves) Costs Outlines. The plaintiffs sought $9,408.17 in partial indemnity costs including HST and disbursements for its efforts. Defendants’ counsel sought more than $19,000.00 in partial indemnity fees, plus HST and disbursements. The counsel for the defendants explained the discrepancy on the basis of greater experience and a higher hourly rate. This, in my view, does not explain the discrepancy in its entirety.

13Given the partial success of the plaintiffs, I conclude they should recover some portion of the fees they sought which I would fix at $5,000.00, inclusive of fees, HST and disbursements payable within 30 days

14Defendants’ counsel advised they made an Offer to Settle prior to the hearing of the motion. Should they wish to make submissions about my proposed disposition of costs, they may do so in writing, not to exceed three double space pages in a readable size font. The Offer to Settle shall be attached. The submissions shall be received within 15 days of the date of these Reasons.

15The plaintiffs’ counsel shall have a further 15 days from the deadline for written submissions from defendants’ counsel, identically limited.

16I would urge the parties to resolve the issues of costs between themselves.

Mr. Justice G. Dow

Released: March 5, 2018

COURT FILE NO.: CV-12-461795

DATE: 20180305

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

INNOCON AND LAFARGE CANADA INC.

Plaintiffs/Defendants by Counterclaim (Appellants)

– and –