COURT FILE NO.: CV-18-1527-00 DATE: 2019 04 29 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: BIRDSEYE SECURITY INC. v. DANILO MILOSEVIC also known as DANNY MILOSEVIC carrying on business as VCMS SECURITY SERVICES and VCMS SECURITY
- and - DANILO MILOSEVIC also known as DANNY MILOSEVIC carrying on business as VCMS SECURITY SERVICES and VCMS SECURITY v. BIRDSEYE SECURITY INC. and MILE GRABOVICA
BEFORE: Kumaranayake J.
COUNSEL: Tyler H. McLean, for the Plaintiff/Defendants by Counterclaim Rocco Galati, for the Defendants/Plaintiffs by Counterclaim
Endorsement
[1] The Plaintiff/Defendants by Counterclaim (“the moving party”) have brought a motion to strike certain paragraphs of the Amended Amended Counterclaim, dated July 31, 2018 and relies on rr. 21 and 25 of the Rules of Civil Procedure, and also seek an extension of time to serve and file a Statement of Defence to the Amended Amended Counterclaim. For the reasons set out below, I grant some of the requested relief.
Position of the Parties
[2] By a Notice of Motion dated, August 1, 2018, the moving party, Birdseye Security Inc. and Mile Grabovica, who are the Defendants by Counterclaim (“the moving party”), seek an Order to strike the following portions of the Amended Amended Counterclaim (“Counterclaim”): paragraph 12(c); paragraphs 15 to 38; paragraph 43(a); paragraph 44(b); and the last 13 words of paragraph 45(c). The moving party also seeks to strike the phrase “as he has stated” found within paragraph 44 although this is not specifically requested in the relief sought in the paragraph 1(A) of the Notice of Motion. It is, however, referred to in the grounds for the motion.
[3] The moving party submits that the identified portions of the Counterclaim should be struck on the basis that no reasonable cause of action is disclosed; or alternatively, if there is a cause of action, it is frivolous and vexatious; or, with respect to the phrase “as he has stated” in paragraph 44, evidence is pleaded. The moving party also submits that the Counterclaim does not include a concise statement of material facts. The moving party submits that if the requested relief is granted, the responding party should be given an opportunity to further amend the Counterclaim. The moving party is essentially saying that the Counterclaim needs to be “cleaned up.”
[4] The moving party also sought an extension of time to serve a Statement of Defence to the Counterclaim.
[5] The Defendants/Plaintiffs by Counterclaim (“the responding party”) oppose the request to strike the identified portions of the Counterclaim. However, the responding party does not oppose the request for an extension of time for the moving party to serve a defence to the Counterclaim.
[6] In addition to filing its motion record, the moving party also filed a factum and book of authorities. The responding party filed a responding motion record, factum and book of authorities. Within the responding motion record, there is an affidavit of Samantha Coomara, sworn on September 14, 2018. The affidavit attaches nine letters exchanged between counsel between June 11, 2018, and July 31, 2018, setting out requests for clarification regarding the causes of action pleaded in the Counterclaim and the responses to these requests. The moving party does not object to this affidavit. Mr. McLean further indicated that he would be referring to this affidavit during his submissions. I have reviewed all of the filed material.
Brief Background
[7] The parties are in the security business. Milos (Mile) Grabovica is the principal of the plaintiff, Birdseye Security Inc. Danilo Milosevic is the principal of VCMS Security Services and VCMS Security. Mr. Milosevic is married to Mr. Grabovica’s sister.
[8] In the Statement of Claim, Birdseye Security alleges that one of their employees, Bennett Mullen stole confidential information, and solicited clients from Birdseye Security at the direction of and for the benefit of Mr. Milosevic.
[9] In the Statement of Defence, Mr. Milosevic asserts that the Statement of Claim is statute barred by the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, and that it is an abuse of process.
[10] In the Amended Amended Counterclaim, the responding party counters that Mr. Milosevic invited Mr. Grabovica to join him in partnership in the security business and that Mr. Milosevic shared his knowledge and expertise with Mr. Grabovica. The responding party alleges that Birdseye Security and Mr. Grabovica took this opportunity to take clients from VCMS Security with Bennett Mullen’s involvement. The responding party argues that Bennett Mullen represented that he was no longer working for Mr. Grabovica’s company and started to work for Mr. Milosevic’s company, but in fact Mr. Mullen continued to work for Mr. Grabovica while he was working for Mr. Milosevic’s company. Mr. Mullen is not a party to this action.
Analysis and Discussion
[11] The relevant rules are rr. 21.01, 21.02, 25.06, and 25.11 of the Rules of Civil Procedure.
[12] Rules 21.01 and 21.02 state:
WHERE AVAILABLE
To Any Party on a Question of Law
21.01 (1) A party may move before a judge,
(a) for the determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs; or
(b) to strike out a pleading on the ground that it discloses no reasonable cause of action or defence,
and the judge may make an order or grant judgment accordingly.
(2) No evidence is admissible on a motion,
(a) under clause (1) (a), except with leave of a judge or on consent of the parties;
(b) under clause (1) (b).
To Defendant
(3) A defendant may move before a judge to have an action stayed or dismissed on the ground that,
Jurisdiction
(a) the court has no jurisdiction over the subject matter of the action;
Capacity
(b) the plaintiff is without legal capacity to commence or continue the action or the defendant does not have the legal capacity to be sued;
Another Proceeding Pending
(c) another proceeding is pending in Ontario or another jurisdiction between the same parties in respect of the same subject matter; or
Action Frivolous, Vexatious or Abuse of Process
(d) the action is frivolous or vexatious or is otherwise an abuse of the process of the court,
and the judge may make an order or grant judgment accordingly.
MOTION TO BE MADE PROMPTLY
21.02 A motion under rule 21.01 shall be made promptly and a failure to do so may be taken into account by the court in awarding costs.
[13] The moving party specifically relies upon rr. 21.01(1)(b) and 21.01(3)(d). However, the moving party is not requesting that the Counterclaim be dismissed or stayed. As stated above, the request is for the Counterclaim to “cleaned up.”
[14] Further, Rule 25.06 specifically addresses the contents of pleadings:
RULES OF PLEADING — APPLICABLE TO ALL PLEADINGS
Material Facts
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.
Pleading Law
(2) A party may raise any point of law in a pleading, but conclusions of law may be pleaded only if the material facts supporting them are pleaded.
Condition Precedent
(3) Allegations of the performance or occurrence of all conditions precedent to the assertion of a claim or defence of a party are implied in the party’s pleading and need not be set out, and an opposite party who intends to contest the performance or occurrence of a condition precedent shall specify in the opposite party’s pleading the condition and its non-performance or non-occurrence.
Inconsistent Pleading
(4) A party may make inconsistent allegations in a pleading where the pleading makes it clear that they are being pleaded in the alternative.
(5) An allegation that is inconsistent with an allegation made in a party’s previous pleading or that raises a new ground of claim shall not be made in a subsequent pleading but by way of amendment to the previous pleading.
Notice
(6) Where notice to a person is alleged, it is sufficient to allege notice as a fact unless the form or a precise term of the notice is material.
Documents or Conversations
(7) The effect of a document or the purport of a conversation, if material, shall be pleaded as briefly as possible, but the precise words of the document or conversation need not be pleaded unless those words are themselves material.
Nature of Act or Condition of Mind
(8) Where 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.
Claim for Relief
(9) Where a pleading contains a claim for relief, the nature of the relief claimed shall be specified and, where damages are claimed,
(a) the amount claimed for each claimant in respect of each claim shall be stated; and
(b) (b) the amounts and particulars of special damages need only be pleaded to the extent that they are known at the date of the pleading, but notice of any further amounts and particulars shall be delivered forthwith after they become known and, in any event, not less than ten days before trial.
[15] The moving party specifically relies on Rule 25.06(1) and Rule 25.06(8).
[16] Rule 25.11 governs motions to strike:
STRIKING OUT A PLEADING OR OTHER DOCUMENT
25.11 The court may strike out or expunge all or part of a pleading or other document, with or without leave to amend, on the ground that the pleading or other document,
(a) may prejudice or delay the fair trial of the action;
(b) is scandalous, frivolous or vexatious; or
(c) is an abuse of the process of the court.
General Principles
[17] Counsel generally agreed on the test to apply on a motion to strike. First, the pleadings must be taken as if they are true or could be proven; that is, the pleadings are deemed to have been proven unless they are patently unreasonable or incapable of proof. Second, a pleading or portion of a pleading will be struck if it is plain and obvious that the claim would not be successful – see Canada (Attorney General) v. Inuit Tapirisat of Canada et al., [1980] 2 S.C.R. 735, at p. 740; Taylor v. Canada Cartage Systems Diversified GP Inc., 2018 ONSC 617, at para. 9; and Jacobsen v. Skurka, 2015 ONSC 1699, at para. 74.
[18] If the only purpose of the pleading is to cast the opposing party in a negative light, the pleading must be struck: see Canadian National Railway v. Brant (2009), 96 O.R. (3d) 734 (Sup. Ct.), at para. 28.
[19] With respect to pleading material facts and evidence and r. 25.06(1), “[a] material fact may itself be relevant evidence and particulars of material facts may also be relevant evidence, so the distinction drawn in the rule is not a litmus test clear differentiation, but the essence of the directive of rule 25.06 is clear enough that a pleading is not the place for a party to lead relevant evidence and to present argument to prove his claim or defence.”: Jacobsen, at para. 43.
(i) Paragraph 12(c)
[20] The moving party seeks to strike the claim for punitive damages and asserts that the responding party does not set out in the Counterclaim why the responding party is entitled to punitive damages. As set out in McNairn v. Murphy, 2017 ONSC 1678, at para. 46, punitive damages may be awarded in situations:
… where the defendant’s misconduct is so malicious, oppressive and high-handed that it offends the Court’s sense of decency. Punitive damages bear no relation to what the plaintiff should receive by way of compensation. Their aim is not compensate the plaintiff, but rather to punish the defendant. Punitive damages are the means by which the court expresses its outrage for the egregious conduct of the defendant.
[21] The claim for punitive damages is predicated on the claim for abuse of process and defamation. If I apply the definition of punitive damages as outlined above, I find it is not plain and obvious that the moving party would not succeed with a claim for punitive damages. Therefore, I decline to strike paragraph 12(c).
(ii) Paragraphs 15 to 38
[22] Mr. McLean argues that these paragraphs are not relevant to the Counterclaim. The objections also include that this will unnecessarily expand the amount of documents that need to be produced and expand the scope of disclosure.
[23] Mr. Galati, however, argues that these paragraphs are part of the narrative. Further, he argues that these paragraphs form part of his client’s Statement of Defence as paragraph 9 of the Statement of Defence incorporates the Counterclaim. Mr. Galati argues that these paragraphs explain that the moving party has brought four different actions based on the same subject matter.
[24] While there are elements of these paragraphs that provide context of the parties’ relationships, and which are relevant to the claim for abuse of process and punitive damages, these paragraphs, in general, do not plead the material facts in a concise manner. Therefore, paragraphs 15 to 38 of the Counterclaim are struck with leave to amend.
(iii) Paragraph 43(a)
[25] The moving party objects to this on the basis that it is not relevant nor material to the cause of action pleaded, or in the alternative it is frivolous and vexatious. I disagree. This is relevant to the tort of abuse of process and the claim for punitive damages. I therefore decline to strike paragraph 43(a) of the Counterclaim.
(iv) Paragraph 44(b)
[26] The moving party submits that the torts of interference with economic interest(s) and interference with contractual relations have not been properly pleaded. The moving party asserts that the Plaintiffs by Counterclaim have pleaded these as separate causes of action to the abuse of process cause of action. Mr. Galati, on behalf of the responding party, clarified that these are not separate causes of action and that the responding party has only pleaded two causes of action in the Counterclaim: abuse of process and defamation. However, later in his submissions, Mr. Galati indicated that only the tort of abuse of process is being pleaded in the Counterclaim. Mr. Galati submits that the responding party is alleging that the moving party interfered in the economic interests and contractual relations of the responding party and that it is this conduct which underlies the claim for the tort of abuse of process.
[27] With respect to the tort of abuse of process, there are four elements: (1) the plaintiff must be a party to a legal process initiated by the defendant; (2) the legal process must have been initiated for the predominant purpose of furthering some indirect, collateral and improper objective; (3) the defendant took or made a definite act or threat in furtherance of the improper purpose; and (4) some measure of special damage has resulted: Harris v. GlaxoSmithKline Inc., 2010 ONCA 872, at paras. 27-28; Jacobsen, at para. 75.
[28] In paragraph 44(d), the responding party does plead the four elements of the tort of abuse of process. However, a plain reading of paragraphs 44 (a) to 44(c) suggests, in my view, that the responding party is also pleading three other discrete causes of action: interference with economic interest(s) and contractual relations; damage to reputation; and impeding the ability to (re)finance his business. This clearly is contrary to Mr. Galati’s submissions and this must be clarified.
[29] Therefore, the following paragraphs are struck with leave to amend: paragraph 44(b), paragraph 44(c), and the first part of paragraph 44(d), specifically “ impeded his ability to (re) finance his business; which abuse of process is maliciously intentional and manifest in that: ”
(v) The last 13 words of Paragraph 45(c)
[30] The moving party submits that the phrase “as well as their interference with the Plaintiffs’ contractual obligations and economic interests” should be struck as the torts of interference with economic interest(s) and interference with contractual relations have not been properly pleaded. However, given that the responding party has now clarified that neither of these causes of action are being plead, and given that I have found that paragraph 44(c) must be struck with leave to amend in order to clarify the causes of action for the Counterclaim, I grant the moving party’s request to strike this phrase and grant the responding party leave to amend.
(vi) The phrase “as he has stated” within paragraph 44
[31] The moving party objects to the inclusion of “as he has stated” on the basis that it is evidence. The responding party submits that this is a fact and is permissible. I note that the moving party has no objection to the first sentence of paragraph 43 of the Counterclaim, which reads as follows: “Grabovica has stated to Milosevic that his intention in launching these abusive law suits is to drain Milosevic’s funds and ruin Milosevic’s business.”
[32] I see no real difference in the wording which is being objected to and the wording which is not being objected to. Therefore, the moving party’s request to strike the phrase “as he has stated” from the last sentence of paragraph 44 is dismissed.
Costs
[33] With respect to costs, at the end of argument, counsel filed their bills of costs. Further, both counsel advised that each was seeking costs on a partial indemnity basis. However, there was mixed success on the motion. If counsel cannot agree on the issue of costs, then they may file written submissions in accordance with the timeline set out below in paragraph 34(e).
Order
[34] After considering the material filed by each party, the submissions of counsel and for the reasons outlined above, I make the following Order:
a) The motion with respect to paragraphs 12(c), 43(a), and the phrase “as he has stated” within paragraph 44 of the Amended Amended Counterclaim is dismissed.
b) The motion with respect to paragraphs 15 to 38, 44(b), 44(c), the first part of paragraph 44(d), specifically “ impeded his ability to (re) finance his business; which abuse of process is maliciously intentional and manifest in that: ”, and 45(c) is granted and those portions of the Amended Amended Counterclaim are struck.
c) The Defendants/Plaintiffs by Counterclaim have leave to further amend the Amended Amended Counterclaim and shall serve and file a Statement of Defence and Fresh as Amended Counterclaim on or before May 31, 2019.
d) The Plaintiff/Defendants by Counterclaim shall serve and file a Statement of Defence to the Fresh as Amended Counterclaim within 30 days of being served with the Fresh as Amended Counterclaim.
e) With respect to costs, if counsel cannot agree on costs, then
i) Any party seeking costs shall, on or before June 7, 2019, serve and file, written submissions, and any offer(s) to settle which was/were served. The written submissions shall be no more than three pages and double spaced, exclusive of a bill of costs and any offer(s) to settle. As counsel have already filed their respective bills of costs, it is not necessary to file a further copy.
ii) The opposite party shall, on or before June 21, 2019, serve and file, responding written submissions of no more than three pages, double spaced, exclusive of a bill of costs and any offer(s) to settle.
iii) There shall be no reply written submissions unless I request them.
iv) If neither party serves and files written submissions seeking costs on or before June 7, 2019, then I shall make an Order that there are no costs for this motion.