COURT FILE NO.: CV-17-574525
DATE: 20180205
SUPERIOR COURT OF JUSTICE - ONTARIO
B E T W E E N:
Laurie Currie, Plaintiff/Respondent
- and -
GLEDHILL AVENUE CHILD CARE CENTER and CITY OF TORONTO, Defendants/Moving Party
BEFORE: J. Copeland, J.
HEARD: January 24, 2018
COUNSEL: Jeffrey Pariag, appearing for the Plaintiff/Respondent on motion to strike/Moving Party on motion to amend
Zoya. Trofmenko for Defendant/Moving Party on motion to strike/Respondent on motion to amend – City of Toronto
No one appearing for Defendant/Respondent – Gledhill
ENDORSEMENT
Overview
[1] The defendant, City of Toronto brings a motion under rule 21 to strike out the plaintiff’s statement of claim as against the City as disclosing no reasonable cause of action, without leave to amend, and to dismiss the action as against the City. The co-defendant Gledhill Avenue Child Care Centre (“Gledhill”) is unopposed to the City’s motion to strike.
[2] The plaintiff brings a motion under rule 26 seeking leave to amend the statement of claim to plead that Toronto was her common employer with Gledhill.[^1] The defendant Gledhill consents to the motion to amend.
[3] At this stage, a summary outline of the nature of the claim is sufficient. The plaintiff worked for 27 years at the Gledhill, for the last 12 years as Executive Director. Her employment was terminated on or about August 11, 2016. She has brought an action claiming wrongful dismissal against both Gledhill and the City of Toronto.
[4] Gledhill admits in its statement of defence that it was the plaintiff’s employer at all times relevant to the claim. Gledhill defends the action on the basis that the plaintiff was terminated for cause.
[5] The City denies that it was the plaintiff’s employer. The City of Toronto has filed only a pro forma defence, pending the outcome of these motions.
[6] The central issue on these motions is whether it is plain and obvious that there is no reasonable cause of action in wrongful dismissal against the City of Toronto on the basis (the City argues) that there is no reasonable prospect of the plaintiff succeeding in its claim that the City of Toronto was her common employer with Gledhill.
Procedural History
[7] The City’s motion to strike was first returnable October 4, 2017. At that time the motion was adjourned to allow the plaintiff to bring a motion to amend the statement of claim. Both motions were returnable on November 3, 2017, before Justice Cavanagh. At that time the motions were again adjourned to allow the plaintiffs to file a new proposed amended statement of claim, because Justice Cavanagh was of the opinion that the proposed amended statement of claim filed before him still consisted of “bald, conclusory pleadings against the City, which does not contain sufficient pleadings of material facts that, if true, support the conclusion that the City was a common employer of the plaintiff.”
[8] As a technical matter it is the plaintiff’s original statement of claim that is the object of the motion to strike, as leave has not yet been granted to file either of the two subsequent proposed amended statements of claim: see discussion in Robson v. LSUC, 2016 ONSC 5579 at paragraphs 17-20; affirmed 2017 ONSC 468. However, counsel for the City and the plaintiff argued the motion to strike based on the plaintiff’s second proposed amended statement of claim, which was included in the plaintiff’s supplementary motion record.
[9] As the motion to strike and the motion to amend raise closely related issues, I will address both motions together in these reasons.
Applicable law regarding motions to strike for no reasonable cause of action, and amending a claim
[10] On a motion to strike out a claim on the basis that it discloses no reasonable cause of action, the moving party must show that it is “plain and obvious”, assuming the facts pleaded to be true, that the claim discloses no reasonable cause of action, or put differently, has no reasonable prospect of success. The test on a motion to strike is a stringent one. The pleadings must be read generously in favour of the plaintiff, with allowances for drafting deficiencies: R. v. Imperial Tobacco, 2011 SCC 42, [2011] 3 S.C.R. 45 at paragraph 17.
[11] The Court will accept the allegations in the statement of claim as true, unless they are manifestly incapable of being proven: Imperial Tobacco at paragraph 22. However, allegations which are vague, or take the form of assumptions or speculation are not taken as true because by their very nature they are incapable of proof by the adduction of evidence: Hunter v. Bravener, [2003] O.J. No. 1613 at paragraph 5 (ONCA).
[12] In considering whether a claim discloses a reasonable cause of action, a court must bear in mind that the law is not static. New developments in the law may first arise on preliminary motions such as a motion to strike. Thus, in considering a motion to strike, the court must ask whether, assuming the facts pleaded to be true, the claim has a reasonable prospect of success, taking into account that the process of development of the law may allow a novel but arguable claim to prevail at trial: Imperial Tobacco at paragraph 21.
[13] With respect to amending a claim, rule 26.01 provides that: “On a motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.”
[14] Rule 26 has been interpreted as creating a general rule that amendments are presumptively approved, but that amending is not an absolute right. The court has a residual right to deny amendments where appropriate: Marks v. Ottawa (City), 2011 ONCA 248 at paragraphs 19. In Marks, the Court of Appeal summarized the proper factors a court should consider in deciding whether to allow an amendment to pleadings:
• An amendment should be allowed unless it would cause an injustice not compensable in costs.
• The proposed amendment must be shown to be an issue worthy of trial and prima facie meritorious.
• No amendment should be allowed which, if originally pleaded, would have been struck.
• The proposed amendment must contain sufficient particulars.
Law in relation to being a “common employer”
[15] In her claim that the City of Toronto was her common employer the plaintiff relies on both the common law, and the Employment Standards Act, 2000, S.O. 2000 c. 41, as amended, s. 4. I will thus consider the issue of common employer, both as a matter of common law, and under the Employment Standards Act, 2000.
[16] At common law, a claim for wrongful dismissal requires that the plaintiff plead material facts that she was in an employment contract with the defendant, that the defendant wrongly breached the employment contract, and that damages flowed from the defendant’s wrongful actions: Reddy v. Freightliner Canada Inc., 2015 ONSC 1811 at paragraph 10; affirmed, 2015 ONCA 797; Brown v. BCE, 2015 ONSC 873 at paragraphs 8-9.
[17] In the context of common law claims for wrongful dismissal, the doctrine of common employer has developed to recognize that in some situations where different legal entities are involved in a person’s employment, more than one legal entity may be found to be a person’s employer: Downtown Eatery (1993) Ltd. v. Ontario (2001), 2001 8538 (ON CA), 54 O.R. (3d) 161 (CA); Sinclair v. Dover Engineering Services Ltd., 1987 2692 (BCSC); De Kever v. Nemato, 2014 ONSC 6576 at paragraphs 6, 7, 14; affirmed 2015 ONSC 6273 (Div. Ct.).
[18] Various formulations have been used to describe the type of relationship necessary to make a person or legal entity a common employer:
• “As long as there exists a sufficient degree of relationship between the different legal entities who apparently compete for the role of employer, there is no reason in law or in equity why they ought not all to be regarded as one for the purpose of determining liability for obligations owed to those employees who, in effect, have served all without regard for any precise notion of to whom they were bound in contract. What will constitute a sufficient degree of relationship will depend, in each case, on the details of such relationship, including such factors as individual shareholdings, corporate shareholdings, and interlocking business directorships. The essence of that relationship will be the element of common control.” (Sinclair, supra at paragraph 18)
• “… although an employer is entitled to establish complex corporate structures and relationships, the law should be vigilant to ensure that permissible complexity in corporate arrangements does not work an injustice in the realm of employment law. At the end of the day, [the employee’s] situation is a simple, common and important one – he is a man who had a job, with a salary, benefits and duties. He was fired – wrongfully. The definition of ‘employer’ in this simple and common scenario should be one that recognizes the complexity of modern corporate structures, but does not permit that complexity to defeat the legitimate entitlements of wrongfully dismissed employees.” (Downtown Eatery, supra at paragraph 36)
• “Recognizing the intricacies of modern business and the modern employment relationship, the common employer doctrine imposes joint and several liability for breaches of an employment contract on legal entities who had a meaningful role to play in the employment relationship. The doctrine recognizes that an employee may have a collective as employer.” (De Kever, supra at paragraph 7)
[19] Turning to the concept of common employment under the Employment Standards Act, 2000, s. 4 of the Act provides that separate persons are treated as one employer if associated or related activities or businesses are carried on by or through an employer and one or more other persons, and the activities of the alleged common employers are done with the intent or effect of directly or indirectly defeating the intent and purpose of the Act.
Application to the motions before the court
The motion to strike
[20] The plaintiff’s initial statement of claim did not contain any pleading that the City was her employer. The only reference to the City was a description of the legal status of the City in paragraph 4.
[21] In the second proposed amended statement of claim, the plaintiff added a request for a declaration that “she was employed by the Defendants as common employers”, and following allegations were added:
“5) The Plaintiff pleads that Gledhill and the City are common employers as defined in section 4 of the Employment Standards Act, 2000, c. 41, and per common law. In this regard the Plaintiff pleads and relies on, inter alia:
a) The fact that, at all material times, the City of Toronto exercised significant control over the financial affairs of Gledhill Avenue Childcare Center, and shared such responsibilities; and
b) The fact that, at all material times, the City of Toronto exercised significant control over the staffing affairs of Gledhill Avenue Child Care Center, and shared such responsibilities.
- As common employers, the Plaintiff pleads that the Defendants are jointly and severally liable to the Plaintiff for the remedies sought in paragraph 1 above as a result of the Defendants’ failure to grant the Plaintiff reasonable notice of her termination or pay in lieu of such notice.”
[22] In addition, it is proposed to add the words “and the City” to paragraph 7 of the statement of claim in relation to who the plaintiff was employed by.
[23] Although the plaintiff has added a few lines to the statement of claim since the motion was last returnable on November 3, 2017, the common employer claim against the City of Toronto is still in substance made up of bald and conclusory allegations, and lacking material facts to support the conclusions pleaded. No material facts are pleaded connecting the City of Toronto to the plaintiff’s hiring or employment with Gledhill. No material facts are pleaded that the City of Toronto had any involvement in the termination of the plaintiff’s employment.
[24] It is notable that the cases relied on by the plaintiff for her common employer claim (Sinclair, Downtown Eatery, and De Kever) all involve factual situations involving related corporations with an aspect of “piercing the corporate veil”. These cases are thus factually distinct from the claim put forward by the plaintiff.
[25] I do not mean to suggest that the common employer doctrine is limited to the context of inter-related corporations. As was noted in the Divisional Court decision in De Kever at paragraph 2, this is a developing area of law. However, the plaintiff has not pleaded material facts that support the type of inter-relationship and commonality of operations between Gledhill and the City of Toronto to support a common employer claim against the City. By way of comparison, I note that the pleading which was found in De Kever to be “bare-boned” but sufficient, pleaded at least some detail regarding the inter-relationships between the various corporate entities in that case (De Kever at paragraphs 5 and 14). By contrast, the pleadings of the plaintiff in this case about the relationship between Gledhill and the City of Toronto as it relates to her employment are bald and conclusory, and lacking in any material facts to support the legal conclusions.
[26] I agree with the City of Toronto’s submission that an organization which funds a plaintiff’s employer, but has no active day to day management role, and who is not a party to the employment contract, is not an employer: Bernal v. Centre for Spanish Speaking Peoples, 2016 ONSC 7981 at paragraphs 15.
[27] The plaintiff put forward the position in argument that she is unable to provide greater specificity to her claim that the City of Toronto was her common employer with Gledhill, but that she expects she could obtain documents in discovery from the City that would show its funding relationship with Gledhill to support her common employer claim. With respect, the plaintiff is not entitled to use discovery as a fishing expedition to find her claim if she is unable to plead material facts to support the cause of action against Toronto: Bilotta v. Barrie Police Services Board, 2010 ONSC 622 at paragraphs 25-26; Dyce v. Ontario, 2007 20098 at paragraphs 14-16 (ONSC). In this case, the area where the claim lacks sufficient material facts is the issue of who employed the plaintiff. Given that her last position was Executive Director of Gledhill, one would expect the plaintiff would be in a position to put forward the specific material facts that form the basis for her claim that the City of Toronto was her employer, if such facts existed.
[28] For these reasons, I find that the plaintiff’s common law common employer claim against the City of Toronto does not disclose a reasonable cause of action.
[29] With respect to the plaintiff’s claim based on s. 4 of the Employment Standards Act, 2000, there are no material facts pleaded suggesting that any actions taken by Gledhill or the City of Toronto had the intent or effect of directly or indirectly defeating the intent or purpose of the Act, as is required by s. 4(1)(b). Indeed, Gledhill admits in its statement of defence that it was the plaintiff’s employer. It defends, at it is entitled to, on the basis that the termination of employment was for cause. There is nothing pleaded and nothing in the motion materials before me that, if believed, would allow a court to conclude that Gledhill or the City acted with the intent or effect of defeating the purpose of the Act. I find that the claim based on s. 4 of the Employment Standards Act has no reasonable prospect of success.
Leave to amend
[30] The issue then is whether I should grant the plaintiff leave to serve and file a further amended statement of claim. I have already outlined the reasons that I find that the plaintiff’s second proposed amended statement of claim fails to state a cause of action against the City, and is not sufficient, if accepted as true, to ground a claim that the City was the plaintiff’s employer. Considering the approach set out in Marks, supra, at paragraph 19, I find that leave to amend should not be granted, as the claim that the City of Toronto was the plaintiff’s employer would inevitably fail.
[31] In considering whether the plaintiff’s claim would still end up being struck if leave to amend is granted, I have considered the substance of the plaintiff’s affidavit filed on the motions. This affidavit contains some detail and documents about the City’s relationship with Gledhill that the plaintiff has not incorporated into the second proposed amended statement of claim. I consider the information in the affidavit in order to assess whether, if it was incorporated into the statement of claim, the plaintiff’s claim would have a reasonable prospect of success. If I were to find that the affidavit contains material facts which if incorporated into the statement of claim, and assumed to be true, could reasonably support the common employer claim, then using the analysis in Marks, leave to amend should be granted.
[32] Considering the content of the plaintiff’s affidavit, I find that even if the plaintiff were granted leave to amend the claim, her claim that the City of Toronto was her common employer with Gledhill would inevitably fail. At best, the affidavit sets out a material facts to support that the City of Toronto is a funder of Gledhill, and has some regulatory relationship with Gledhill due to regulated environment of child care centre. But it does not provide a basis to plead that the City was the plaintiff’s employer. Like the statement of claim, the affidavit makes conclusory statements that the City of Toronto was her employer, without pleading material facts to support the conclusions.
[33] As outlined above at above, on October 4, the City’s motion to strike was adjourned to allow the plaintiff to move to amend the statement of claim to properly plead against the City. On November 3, 2017, the City’s motion to strike and the plaintiff’s motion to amend were both adjourned for the plaintiff to propose a new amended statement of claim, because Justice Cavanagh was of the opinion that the proposed amended statement of claim was still bald and conclusory as it related to the claim that the City of Toronto was the plaintiff’s employer.
[34] Despite these opportunities to amend the statement of claim to plead material facts to support the legal conclusion that the City was the plaintiff’s employer, the plaintiff has failed to do so, and still relies on bald, conclusory assertions. Nothing in the motion materials, or this history of proceedings persuades me that if the plaintiff were given leave to amend the claim, she could plead material facts that, if accepted as true, would support the legal conclusion that Toronto was her employer.
[35] For the reasons given, I grant the City of Toronto’s motion to strike the plaintiff’s claim as disclosing no reasonable cause of action, and deny the plaintiff’s motion to amend the claim. The action is dismissed as against the City of Toronto.
Costs
[36] Both the plaintiff and the City of Toronto agreed not to seek costs against Gledhill Avenue Child Care Centre in relation to these motions.
[37] The City of Toronto seeks costs from the plaintiff in the amount of $2,000 for the plaintiff’s motion to amend, and $18,500 for the motion to strike and the action. The City’s costs outline in relation to the motion to strike and the action includes an extensive number of hours claimed by counsel and a law clerk for “drafting statement of defence, communication, meetings, attendance at CPC, review materials, research” and “preparation of pleadings, communication, research, court filings.”
[38] In her submissions with respect to costs, counsel for the City indicated that substantial time was spent on research on the common employer issue, and on communication with counsel about this issue. Counsel for the City candidly noted in the costs outline and submissions that the common employer issue raised in this case is “highly significant to the City given wide range of statutory and other relationships the City has with various service providers within its boundaries.”
[39] I note that although the City seeks costs in relation to the action, apart from the time spent on the motion, the City has filed only a pro forma defence to the claim, pending the outcome of these motions.
[40] The City’s understandable interest in the law in relation to being a common employer may explain the amount of time the City spent on research and response in relation to the common employer issue. But the plaintiff should only bear reasonable costs in relation to the City’s response to her case, not costs generated because the City has a broader interest in the issue of common employer.
[41] Pursuant to the Courts of Justice Act, s.131 (1), the Court has a broad discretion when determining the issue of costs. Rule 57.01 (1) sets out the factors to be considered by the court when determining the issue of costs.
[42] The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Counsel for Ontario, 2004 14579 (ON CA), 2004 14579 (Ont. C.A.). I have considered these factors, as well as the principle of proportionality (R. 1.01(1.1)), keeping in mind that the court should seek to balance the indemnity principle with the fundamental objective of access to justice.
[43] In all the circumstances, in particular considering the principle of proportionality, I find that an appropriate costs award from the plaintiff to the City of Toronto is $9,000.00 as costs of the City’s motion to strike and the action. I make no order for costs on the motion to amend, as in substance it covered the same ground as the motion to strike.
Justice J. Copeland
Released: February 5, 2018
[^1]: The plaintiff’s motion was framed as a motion to add the City of Toronto as a defendant. The City is a defendant in the claim as originally served and filed. At the hearing of the motion the plaintiff agreed (and the City did not contest), that the relief actually being sought is to amend the statement of claim to address the sufficiency of the pleading in relation to the City being a common employer of the plaintiff.