Court File and Parties

COURT FILE NO.: 18-75697 DATE: December 21, 2018 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Nesrallah v. Trigon Insurance Brokers, Kemptville Insurance Brokers Ltd., Joseph Ha, Trigon Financial Services, 2400907 Ontario Inc., 146796 Canada Ltd.

BEFORE: Master Fortier

COUNSEL: David Contant for the plaintiff Christopher McLeod for the defendants

HEARD: August 28, 2018

Endorsement

[1] This is the defendant’s motion for an order requiring the plaintiff to answer a Demand for Particulars. The particulars the defendants seek relate to, among other things, the plaintiff’s allegations pertaining to the defendants’ alleged breach of the duty of good faith and fair dealing.

Background

[2] This action arises out of the termination of a business relationship between the plaintiff, Patricia Nesrallah (“Ms. Nesrallah”) and the defendants in July 2017.

[3] The plaintiff was an employee and minority shareholder of some of the named defendants, who operate licensed insurance brokerages in and around the Ottawa area.

[4] The individual defendant, Joseph Ha (“Mr. Ha”) is a director, officer, and principal of the defendants.

[5] The relationship between Ms. Nesrallah and Mr. Ha began to deteriorate in late 2014. According to the plaintiff, this culminated in Mr. Ha ending their business relationship in July 2017. Ms. Nesrallah commenced this action claiming among other heads of damages, breach of contract and breach of the implied duty of good faith and fair dealing.

[6] The defendants are seeking particulars of certain allegations made in the statement of claim. Of particular concern are the allegations of bad faith in relation to Mr. Ha’s conduct. It is Mr. Ha’s position that Ms. Nesrallah has not provided sufficient particulars in respect of the allegations of bad faith.

[7] The statement of claim was issued on March 1, 2018. On April 9, 2018 and April 19, 2018 the defendants served Demands for Particulars. Although the plaintiff took the position that she was under no obligation to provide further particulars, on April 23, 2018, Ms. Nesrallah responded to the Demand for Particulars and clarified that her allegations bad faith were based upon the defendants conduct in:

a) Failing to accommodate her health issues as requested; b) Accepting her involuntary resignation on June 30th, 2017 despite her obvious emotional distress; c) Ending the business relationship with the intent to deprive her of the ability to liquidate her equity in the business in a timely fashion; and d) Refusing to purchase her shares at the time that the business relationship came to an end. [1]

[8] In May, 2018 the plaintiff served the defendants with her affidavit of documents. She has also attempted to schedule examinations for discovery. The statement of defence has not yet been served, pending the outcome of this motion.

Position of the parties

The Defendants

[9] The defendants take the position that the plaintiff’s response to their Demand for Particulars is inadequate and fails to meet the plaintiff’s obligations pursuant to the rules. Notably, the rules and case law require full particulars to be pleaded in a claim where a plaintiff alleges misrepresentation and/or acts of intent or malice, including bad faith. The defendants argue that in a pleading captured by this requirement, “full particulars” includes particulars which describe the dates of meetings, the dates when representations were made, where made, how made, to whom made, and what was said. [2]

[10] According to the defendants, the lack of particulars in this case would lead to unwieldy and unnecessary disputes over documentary production and the scope of discovery – furthermore, the defendants allege that the plaintiff is on a “fishing expedition” of sorts in that she has pled facts from which she has no proof in order to obtain production and discovery. [3]

The Plaintiff

[11] The plaintiff argues that there is no affidavit evidence provided by the defendant Ha as to why he cannot plead to the allegations contained in the statement of claim. Rather, the defendants simply rely on an affidavit of a law clerk from their lawyer’s office in support of the motion. The law clerk’s affidavit attaches a copy of the statement of claim, the Demand for Particulars and correspondence between counsel for the parties. The plaintiff relies on the decision of Perell J. in Pennyfeather v. Timminco, at para. 62:

“A motion for particulars usually will not be granted unless the moving party deposes that the particulars are not within his or her knowledge and that they are needed to plead; however, a supporting affidavit is not required if the allegations are so general and bald that it is clear that particulars of them are necessary." [4]

[12] According to the plaintiff, the statement of claim contains sufficient details and is not bald, vague, or confusing and most of the requested particulars are within the defendant’s knowledge. In addition, the plaintiff served the defendants with her affidavit of documents and brief of documents where details of the allegations against the defendants can be found in the correspondence, financial information, and medical information.

[13] As a final point, the plaintiff argues that defendants can obtain further information at the examinations for discovery stating that in more recent cases the overall approach is “to limit particulars as to what a party requires in order to respond to a pleading and to flesh out the story at oral discoveries.” [5]

Issues

[14] Has the plaintiff complied with her obligations under Rule 25 to plead with sufficient particularity?

[15] Is a supporting affidavit from the defendant Ha required in the circumstances of this case?

The Law – General Principles

[16] In determining the merits of the defendants’ Demand for Particulars, the following principals are relevant.

[17] Rule 25.06(1) requires that a statement of claim “contain a concise statement of the material facts on which the party relies for the claim”. This is to provide the defendants with a summary of the factual allegations it will have to meet and which the plaintiff intends to prove [6]. The court may order particulars under rule 25.10 where a party fails to supply the requested particulars within seven days.

[18] It is well established that the function of particulars is to limit the generality of pleadings, define the issues which have to be tried, allow each party to know that case to be made against them and to prevent surprise. [7]

[19] Particulars of a pleading are usually ordered only if they are not within the knowledge of the party demanding them and they are necessary for the party to plead. [8]

[20] Of significance in this case is rule 25.06(8) which provides “[w]here fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances from which it is to be inferred.” This rule, which adds an additional degree of required particularity, is of particular relevance because four of the defendants’ demands for particulars rely on rule 25.06(8) and its requirement of “full particulars”.

[21] Finally, the granting of particulars is in the discretion of the Court “to be exercised in the circumstances of the case to do justice to all parties” [9].

Analysis and Disposition

[22] As stated above, the purpose of particulars is to define the issues in the case. Broadly speaking, I agree that where oral discovery is available, the general way to deal with particulars is to limit them to what a party requires in order to respond to a pleading and to “flesh out the story at oral discoveries” [10]. However, in my view, that does not include situations where full particulars are required pursuant to rule 25.06(8) where there are allegations of bad faith. In addition, in my opinion, a balance must be struck between particulars that are sufficient to allow a party to respond to a pleading and the role of particulars in limiting the issues to which discovery is required [11].

[23] Bad faith is a legal conclusion and can be made out in a wide variety of circumstances. Where, as here, a plaintiff’s claim includes allegations of bad faith, the pleading must be supported by sufficient particulars that support a conclusion of bad faith and identify the conduct on which this conclusion is put forward. Using the words “bad faith” or “unfair” in a pleading is not enough [12]. Although the Statement of Claim in the present case is in general a carefully drafted document which strives to comply with the requirements of R. 25.06(1), in my view, particulars, as detailed in my rulings below, are required with respect to certain allegations in the Statement of Claim. Notably, in my opinion, neither the statement of claim nor the plaintiff’s clarification of her bad faith allegations on April 23, 2018 go far enough in providing particulars of the alleged bad faith.

[24] I next consider the matter of the law clerk’s affidavit in support of this motion. This very issue was addressed dealt with in Van-Rob Inc. v. Rapid Metals [13]. In Van-Rob, Douglas J. found that a supporting affidavit from the party pleading is not required where it is alleged that the party has failed to clearly identify its position in regard to the material facts. As stated at para. 12:

“12. As to whether it is necessary for the Defendant to advance this motion supported by an affidavit from someone other than a law clerk with its lawyer's office, I consider the excerpt from Pennyfeather outlined above. In my view, the circumstances identified in Pennyfeather where a supporting affidavit is not required are sufficiently broad to embrace circumstances where it is alleged that a Plaintiff has failed to clearly identify its position on material facts.”

[25] In my view, a supporting affidavit from Mr. Ha is not strictly required on this motion because the plaintiff has failed to identify her position on material facts relating to her allegations of bad faith and other related paragraphs in her Statement of Claim, as outlined below.

[26] For the sake of brevity, my rulings on the various particulars sought by the defendants are made with reference to the defendants’ chart as follows:

Pleading Reference	Particulars Requested
Para. 27 - “Trish states that Ha’s mismanagement of the Meridian acquisition has resulted in the diminution of her securities.”	Particulars of the actions or alleged actions by Ha that the Plaintiff is asserting constituted mismanagement.
(a) Ruling para. 27: The plaintiff shall answer the particulars demanded. The defendant Ha requires particulars of his alleged “mismanagement of the Meridian acquisition” in order to plead and to limit the issues to be covered at discovery [14].
Para. 30 – “Beginning in or about December 2014, Trish’s relationship with Ha began to deteriorate. Trish’s personal health was seriously and adversely affected. The workplace became toxic.”	Particulars of how the Plaintiff’s health was allegedly seriously and adversely affected, including the particular affects allegedly suffered and the timing of the alleged affects. Particulars of how the workplace allegedly became toxic.
Para. 31 – “On June 29, 2017, Trish had a particularly difficult day at the office. Ha was openly critical of Trish’s efforts to deal with necessary human resources issues an6, 13d refused to accommodate Trish’s health issues as requested. Ha was aggressive and threatening.”	Particulars of Ha’s alleged refusal to accommodate the Plaintiff’s health issues, including the particulars of the request allegedly made. Particulars of Ha’s allegedly aggressive and threatening conduct.
Para. 33 – “Ha's conduct and toxicity of the work environment left Trish feeling desperate. On June 30th, 2017, emotional and overwrought, Trish met with Ha and offered her resignation as she felt that she had no other option.”	Particulars of Ha’s alleged conduct.
Para. 38 – “(c) Ceased being transparent with respect to accounting decisions and began acting in Secrecy” “(d) Mishandled his negotiations with Norman without consulting Trish for her input;” “(e) Created a toxic work environment which made it impossible for Trish to effectively manage the corporate defendants and set a strategic direction for the business.”	Particulars of how Ha allegedly ceased being transparent with respect to accounting decisions and acted in secrecy. Particulars of how Ha allegedly mishandled the negotiations with Norman. Particulars of how Ha allegedly created a toxic work environment.
(b) Rulings paragraphs 30, 31, 33 and 38:
i- No particulars are required regarding the plaintiff’s personal health in paragraph 30 because details can be elicited at examination for discovery and does not make it impossible for the defendants to plead. As held by Master Peppiatt in Phillips v Incol Ltd. [15]:
“Mental suffering, like physical suffering and personal injury actions, is extremely difficult to describe within a pleading. Necessary details can be elicited on examination for discovery. It would not be improper for a plaintiff to go into some detail on such matters in his statement of claim if so advised but I do not think that the lack of detail in the context of this particular action makes it impossible for the defendant to plead”.
ii- Allegations of a “toxic work environment” are found in paragraphs 30, 33 and 38 (e) of the Statement of Claim without providing any facts in support of the allegations. In my view, particulars of the alleged toxic work environment and Ha’s part in creating this toxic environment are required to enable the defendant Ha to plead.
Para. 40 – “Trish states that the defendants have failed to act in accordance with her reasonable expectations and, in doing so, caused detrimental consequences that amount to oppression or unfair prejudice or unfair disregard of her interests.”	Particulars of the alleged detrimental consequences.
(c) Ruling para. 40: Particulars are required of the alleged detrimental consequences that amount to oppression or unfair prejudice or unfair disregard of her interests are required. There lacks the particularity necessary to enable the defendant to understand the case it has to meet.
Para. 49 – “The Defendants acted in bad faith and in an unfair and insensitive manner in the course of ending their business relationship with Trish.”	Full particulars of the allegations of bad faith.
Para. 50 – “Trish states that after her business relationship with Ha came to an end, Ha: (a) encouraged his contacts in the Ottawa insurance industry to sever ties with Trish and advised them not to speak to her; and (b) made statements to players in the insurance industry which have damaged Trish's reputation.”	Full particulars with respect to the allegation that Ha encouraged his contacts to sever ties with the Plaintiff and advised them not to speak with her.
Para. 52 – “The actions of the defendants have caused Trish injury to her dignity, sense of self-worth, and competitive position in the insurance industry as a potential business partner.”	Full particulars of the injury alleged to have been incurred by the Plaintiff.
Para. 53 – “Trish states that the defendants have acted callously, and in an egregious, highhanded, and wrongful manner.”	Full particulars of the alleged callous, egregious, highhanded and wrongful conduct.
(d) Rulings paragraphs 49, 52 and 53:
Full particulars of the allegations of bad faith are required. Bad faith is a legal conclusion and the pleading must be supported by sufficient particulars to support such a conclusion. Accordingly, the plaintiff shall answer the full particulars demanded.
(e) Ruling paragraph 50:
This paragraph provides the minimum level of material facts. However, the plaintiff shall provide particulars as follows:
a) Identify the contacts that were encouraged to sever ties with the plaintiff and advised not to speak to her;
b) Identify the statements that were made and to which “players in the insurance industry” the statements were made.

[27] For the foregoing reasons, an order will issue as follows:

a) The plaintiff shall respond to the Demand for Particulars as set out above within 30 days. b) The defendant shall deliver its Statement of Defence within 45 days thereafter. c) As the defendants have been substantially successful on the motion and they are entitled to costs. Accordingly, costs to the defendants fixed at the sum of $2,300.00 inclusive of HST and disbursements, payable within 30 days.

Master Fortier

[1] Responding party’s factum at para. 12. [2] SAP Canada Inc. v. Bata Industries Ltd. at paras. 13, 14, 21. [3] Cadieux (Litigation Guardian of) v. Cadieux, 2016 ONSC 4446, 2016 CarswellOnt 10910 at para. 24. [4] Pennyfeather v. Timminco Ltd., 2011 ONSC 4257, 107 O.R. (3d) 201 at para. 62. [5] Maki v. Intact Financial Corp., 2018 ONSC 1599 at para. 5. [6] Cadieux at para. 20. [7] Gabriel v. Canada (Attorney General) at para. 9. [8] Pennyfeather at para. 64. [9] Steiner v. Lindzon (1976), 14 O.R. (2d) 122 (H.C.J.) at p. 129. [10] Maki at para. 5. [11] Cansulex Ltd. v. Perry, [1982] B.C.J. No. 369 (C.A.) at para. 15. [12] Gabriel at para. 24. [13] Van-Rob Inc. v. Rapid Metals LLC, 2016 ONSC 1321, 2016 CarswellOnt 2661 at para. 12. [14] Cansulex at para. 15. [15] Phillips v. Inco Ltd., [1983] O.J. No. 2105 (H.C.J.) at para. 9.