Court File and Parties

COURT FILE NO.: CV-18-596368 DATE: 2019-06-21 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: AVIVA CANADA INC, Plaintiff AND: 1843538 ONTARIO INC., c.o.b. MISSISSAUGA COLLISION CENTRE, and/or MCLAREN COLLISION, FADY RONY WARDA, RONY AMANUEL WARDA, and MICHAEL WETZEL, Defendants

AND

1843538 ONTARIO INC., c.o.b. MISSISSAUGA COLLISION CENTRE, and/or MCLAREN COLLISION, FADY RONY WARDA, RONY AMANUEL WARDA, and MICHAEL WETZEL, Plaintiffs by Counterclaim

AND:

AVIVA CANADA INC, Defendant by Counterclaim

BEFORE: Sossin J.

COUNSEL: Daniel Reisler and Richard Tapp, for the Plaintiff/Defendant by Counterclaim Terry Corsianos, for the Defendant and Plaintiff by Counterclaim, Michael Wetzel Lou Ciotoli, Counsel for the Defendants and Plaintiffs by Counterclaim, 1843538 Ontario Inc., c.o.b. Mississauga Collision Centre and/or McLaren Collision, Fady Rony Warda and Rony Amanuel Warda

HEARD: March 28, 2019

REASONS FOR DECISION

OVERVIEW

[1] This proceeding involves three motions being brought concurrently, pursuant to an order of Justice Glustein, dated October 12, 2018. All parties to this action bring motions for relief which, if granted, would bring the claim and counterclaims to a conclusion or substantially closer to a conclusion.

[2] First, the plaintiff, Aviva Canada Inc. (“Aviva”) brings a motion under Rules 21.01, 25.06 and 25.11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules of Civil Procedure”), seeking to strike paragraphs 4, 8, 9, 10 and 17-23 of the statement of defence and counterclaim of the defendant, Michael Wetzel (“Wetzel”). Aviva also seeks to strike paragraphs 6, 7, 14, 15 and 20 of the statement of defence and counterclaim of the defendants, 1843538 Ontario Inc. c.o.b. Mississauga Collision Centre, and/or McLaren Collision, Fady Warda and Rony Amanuel Warda (collectively, the “Warda defendants”).

[3] Second, the Warda defendants, bring a motion under Rules 21.01(1)(a) and 21.01(1)(b) of the Rules of Civil Procedure to dismiss Aviva’s statement of claim as disclosing no reasonable cause of action and/or as an abuse of process of the Court.

[4] Third, Wetzel brings a motion for summary judgment under Rule 20.01(3) dismissing Aviva’s statement of claim as against him, as well as under Rules 21.01(1)(a), 21.01(1)(b) and/or 21.01(3)(d) striking and/or dismissing Aviva’s statement of claim as disclosing no reasonable cause of action and/or as an abuse of process of the Court.

[5] For the reasons that follow, the defendants’ motions are dismissed, and Aviva’s motion is granted, in part, and dismissed, in part.

BACKGROUND

[6] This litigation arose as a result of an investigation undertaken by Aviva in 2017 to study the auto collision industry based on suspicion of fraudulent activity. The investigation took place in several phases.

[7] First, Aviva incorporated a numbered company, 2526895 Ontario Inc. (“252”) on July 11, 2016. Aviva was the only shareholder of the numbered company and had complete control of this company.

[8] Second, between May and October of 2017, 252 purchased and intentionally damaged two vehicles – a 2010 Ford Fusion and a 2016 Chrysler 200 (the “subject vehicles”). Aviva insured the subject vehicles and entered into a contract with 252 for this purpose.

[9] Third, Aviva’s own independent appraisal conducted an appraisal of the damage to the two vehicles.

[10] Fourth, the two damaged vehicles were towed to the Warda Defendants’ body shop, McLaren Collision Centre, which had been randomly selected among body shops who had in the past repaired vehicles insured by Aviva. The subject vehicles were equipped with hidden, video recording devices.

[11] At the Warda Defendants’ body shop, Wetzel, who was at the time a Senior Auto Damage Appraiser, completed routine appraisals on each of the subject vehicles. Neither Wetzel nor the Warda defendants were aware of the independent appraisal of the subject vehicles, or the nature of the investigation initiated by Aviva.

[12] Fifth, after the subject vehicles were repaired at the Warda defendants’ body shop, Aviva arranged for further, independent appraisals to inspect the work after the subject vehicles were returned. The completed repair work was compared with the appraisals and invoices submitted to Aviva as the insurer of the subject vehicles.

[13] Aviva alleges that, on the basis of this investigation, it discovered that Wetzel included parts on his appraisal as required to be replaced which in fact were not damaged and did not need to be replaced. Other parts were included by Wetzel as required to be refinished which in fact had not been damaged.

[14] Aviva also alleges that the Warda defendants completed repairs which were not necessary and deliberately damaged the subject vehicles while at the body shop in order to require further repairs. Wetzel included these damaged parts as requiring repair in his appraisal.

[15] Following its investigation, Aviva issued its statement of claim against the defendants on April 23, 2018 to recover damages for fraudulent misrepresentation, breach of duty of honest performance of a contract, unjust enrichment, and conspiracy to commit fraud. Additionally, the plaintiff sought to recover damages for trespass to property (against the Warda defendants), investigative costs and punitive and exemplary damages.

[16] Aviva seeks special damages in the amount of $10,017.86 against the Warda defendants and Wetzel, damages for trespass to property in the amount of $20,000.00 against the Warda defendants, punitive damages against the Warda defendants and Wetzel in the amount of $100,000.00, and investigative costs in the amount of $200,000.00.

[17] Wetzel delivered his statement of defence and counterclaim on July 16, 2018, alleging wrongful dismissal, and seeking compensatory and punitive damages.

[18] The Warda defendants delivered their statement of defence and counterclaim on October 15, 2018, seeking punitive damages.

[19] Aviva has not yet filed its statement of defence to counterclaim, as it is seeking through this motion first to strike certain parts of the Wetzel and Warda defendants’ pleadings.

ANALYSIS

[20] Given the three concurrent motions brought, this analysis is organized around the following issues:

(1) Should Aviva’s statement of claim be struck against the Warda Defendants and/or Wetzel under Rule 21? (2) If not, is Wetzel entitled to summary judgment under Rule 20? (3) If not, has Aviva established that the paragraphs it has identified in the statements of defence and counterclaim of the Warda Defendants and/or Wetzel should be struck under Rules 21 and/or 25?

[21] I consider each of these questions in turn, though some of the issues are necessarily overlapping.

Should Aviva’s statement of claim be struck against the Warda Defendants and/or Wetzel under Rule 21?

[22] Wetzel brings its motion under Rules 21.01(1)(a), 21.01(1)(b) and/or 21.01(3)(d) of the Rules of Civil Procedure to strike or dismiss Aviva’s statement of claim on the basis that it discloses no reasonable cause of action and is otherwise an abuse of process.

[23] The Warda defendants bring their motion under Rules 21.01(1)(a) and 21.01(1)(b) disposing of all or part of Aviva’s statement of claim on the basis that it discloses no reasonable cause of action and/or is an abuse of process.

[24] Rule 21.01 of the Rules of Civil Procedure provides:

RULE 21 Determination of an Issue Before Trial

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. R.R.O. 1990, Reg. 194, r. 21.01 (1).

(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). R.R.O. 1990, Reg. 194, r. 21.01 (2).

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. R.R.O. 1990, Reg. 194, r. 21.01 (3).

[25] In R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 (“Imperial Tobacco”), at para, 17, the Supreme Court confirmed that the test under Rule 21.01(1)(b) to strike a pleading is whether the moving party can establish that it is “plain and obvious” that the responding party’s claim or defence cannot succeed. The same “plain and obvious” standard applies where, under Rule 21.01(1)(a), a party seeks to determine a question of law which may dispose of all or part of an action.

[26] For purposes of the Rule 21 analysis, the motions judge must assume all facts alleged by the responding party’s pleadings are true, as long as they are not manifestly incapable of proof.

[27] Additionally, no evidence can be accepted on a Rule 21 motion, nor can a party rely on what evidence proffered at some future date might or might not show. As Chief Justice McLachlin emphasized in Imperial Tobacco (at para. 22):

It is incumbent on the claimant to clearly plead the facts upon which it relies in making its claim. A claimant is not entitled to rely on the possibility that new facts may turn up as the case progresses. The claimant may not be in a position to prove the facts pleaded at the time of the motion. It may only hope to be able to prove them. But plead them it must. The facts pleaded are the firm basis upon which the possibility of success of the claim must be evaluated. If they are not pleaded, the exercise cannot be properly conducted.

[28] Before moving to an analysis of the Rule 21 aspects of the motions, it is first necessary to address Aviva’s argument that a Rule 21 analysis is premature, as pleadings have not yet closed. Aviva is seeking to strike certain parts of the Wetzel and Warda defendants’ pleadings, and therefore has not yet filed a statement of defence to the defendants’ counterclaims.

[29] While prematurity can be an issue where motions under Rule 21 and/or 25 are brought while a pleading or pleadings remain outstanding, it does not follow that in every circumstance where this is so such motions are precluded.

[30] In this case, the issue of prematurity could have been raised before Justice Glustein prior to the consolidation of these three motions into one hearing. Aviva could have argued that its motion to strike under Rule 25 had to be heard prior to the defendants’ motions under Rule 20 and Rule 21. It was also open to Aviva to file a statement of defence to the counterclaims while still preserving its ability to move to strike portions of the claim. At this stage, I do not see why Aviva’s decision not to file a defence pending the outcome of its motion to strike certain parts of the pleading should preclude the defendants’ from proceeding with their motions under Rule 20 and Rule 21.

[31] For this reason, I find that the Rule 21 motions brought by Wetzel and the Warda defendants are not premature.

[32] The Warda defendants assert that, under Rule 21, Aviva should be prevented at law from pursuing this action for two reasons (set out at para. 23 of their factum):

i) By founding its claim on acts of mischief and the fraudulent activity of staging accidents, Aviva cannot engage the Court’s assistance in recovering any resulting damages on the basis of the legal doctrine of ex turpi causa non oritur actio; and ii) By knowingly creating fictitious claims for insurance coverage, Aviva would be abusing the Court’s process and cannot now seek the Court’s assistance in recovering damages based on a set of circumstances that would render any contract of insurance invalid by virtue of the fraudulent act of staging accidents.

[33] Wetzel also argues that Aviva’s action should be precluded on these grounds, and adds its own, broader elaboration of the abuse of process ground for the motion including a civil equivalent of entrapment (set out in Wetzel’s factum at para. 10):

iii) Notwithstanding any federal criminal or provincial insurance legislation, should Aviva’s claim be dismissed, pursuant to the Court’s inherent jurisdiction, as an abuse of the process of the Court in that Aviva has instituted an action arising solely from its own fictitious “accidents”. In other words, should Aviva be prevented from pursuing this action on account of having engaged in what amounts to the civil equivalent of entrapment?

[34] Below, I consider each of these questions of law within the context of Rule 21.

Ex Turpi Causa

[35] The primary issue raised by Wetzel and the Warda Defendants in relation to its Rule 21 motions is the doctrine of ex turpi causa. Under this tort doctrine, a party cannot rely on its own wrongdoing to ground a claim.

[36] Justice McLachlin (as she then was) describes the origin of ex turpi causa in the Supreme Court’s leading case on the topic: Hall v. Hebert, [1993] 2 S.C.R. 159 (“Hall”) (at pp.170-71):

The power expressed in the maxim ex turpi causa non oritur actio finds its roots in the insistence of the courts that the judicial process not be used for abusive, illegal purposes. Thus Professor Gibson, in "Comment: Illegality of Plaintiff's Conduct as a Defence" (1969), 47 Can. Bar Rev. 89, at p. 89, writes:

Few would quarrel with the proposition that a man who murders his wealthy aunt should not be allowed to receive the proceeds of her life insurance as beneficiary, or that two robbers who disagree over the division of the spoils would not be allowed to settle their dispute in a court of law. It was to deal with flagrant abuses like these that English courts developed the principle expressed in the maxim: ex turpi causa non oritur actio ‑‑ no right of action arises from a base cause. [Emphasis added.]

The use of the doctrine of ex turpi causa to prevent abuse and misuse of the judicial process is well established in contract law and insurance law, where it provokes little controversy.

[37] In Hall, the Court considered the situation of a person who suffered head injuries in a car accident during the commission of an offence. The Court held that ex turpi causa did not operate so as to preclude the injured party in that case from seeking compensatory damages relating to his injury, notwithstanding that the injury occurred during the commission of an offence.

[38] The Court emphasized in Hall that the doctrine, as a defence to a claim in tort, operated to prevent a party from profiting on the basis of illegal or immoral conduct, but did not prevent a party from being compensated for loss in circumstances where that party would otherwise be entitled to such compensation. In other words, ex turpi causa does not change the usual threshold issues in a tort or other claim, but rather operates to prevent recovery of certain kinds of damages or other remedies in certain circumstances.

[39] Subsequently, in British Columbia v. Zastowny, 2008 SCC 4, the Supreme Court returned to an examination of the purpose and operation of the ex turpi causa doctrine. Justice Rothstein summarized the key points in Hall as follows (at para 20):

The question is, “under what circumstances should the immoral or criminal conduct of a plaintiff bar the plaintiff from recovering damages to which he or she would otherwise be entitled” (p. 169). The following principles and approach are established in Hall v. Hebert and are applicable in the present case.

1. Application of the ex turpi doctrine in the tort context invalidates otherwise valid and enforceable actions in tort (p. 169).

2. Therefore, its application must be based on a firm doctrinal foundation and be made subject to clear limits and should occur “in very limited circumstances” (p. 169).

3. The only justification for its application is the preservation of the integrity of the legal system. This concern is only in issue where a damage award in a civil suit would allow a person to profit from illegal or wrongful conduct or would permit evasion or rebate of a penalty prescribed by the criminal law (p. 169).

It would, in short, introduce an inconsistency in the law. It is particularly important in this context that we bear in mind that the law must aspire to be a unified institution, the parts of which — contract, tort, the criminal law — must be in essential harmony. For the courts to punish conduct with the one hand while rewarding it with the other, would be to “create an an intolerable fissure in the law’s conceptually seamless web”: Weinrib, supra, at p. 42. We thus see that the concern, put at its most fundamental, is with the integrity of the legal system. [p. 176]

4. The ex turpi doctrine generally does not preclude an award of damages in tort because such awards tend to compensate the plaintiff rather than amount to “profit”:

Such damages accomplish nothing more than to put the plaintiff in the position he or she would have been in had the tort not occurred. . . . [A plaintiff should get] only the value of, or a substitute for, the injuries he or she has suffered by the fault of another. He or she gets nothing for or by reason of the fact he or she was engaged in illegal conduct. [pp. 176-77]

5. The ex turpi doctrine is a defence in a tort action. The plaintiff’s illegal conduct does not give rise to a judicial discretion to negate or refuse to consider the duty of care which goes to the relationship between a plaintiff and a defendant. It is independent of that relationship. The defendant may have caused harm by acting wrongly or negligently, but the “responsibility for this wrong is suspended only because concern for the integrity of the legal system trumps the concern that the defendant be responsible” (pp. 181-82).

6. Treating the ex turpi doctrine as a defence places the onus on the defendant to prove the illegal or immoral conduct that precludes the plaintiff’s action. And as a defence, it allows for segregation between claims for personal injury and claims that would constitute profit from illegal or immoral conduct or the evasion of or a rebate of a penalty provided by the criminal law.

(Emphasis in original)

[40] Therefore, in light of these principles, in order to establish the application of ex turpi causa in this case, the defendants must first show the existence of an underlying illegal or immoral act, and second that Aviva stands to profit from this illegal or immoral act.

Did Aviva commit an illegal or immoral act?

[41] With respect to the first prong of this test and establishing the existence of an underlying illegal or immoral act, the defendants rely on two assertions.

[42] First, the defendants assert that by damaging the subject vehicles, Aviva committed “mischief” in breach of section 430(1) of the Criminal Code, R.S.C. 1985, c. C-46, which provides:

Mischief

430(1) Every one commits mischief who wilfully:

(a) destroys or damages property;

(b) renders property dangerous, useless, inoperative or ineffective;

(c) obstructs, interrupts or interferes with any person in the lawful use, enjoyment or operation of property.

[43] In order to justify the application of ex turpi causa on this basis, it is necessary to determine if the subject vehicles were in fact the property of Aviva, or the property of a third party, in this case, the numbered company, 252, established for purposes of this investigation. If the vehicles belonged to a third party, as the defendants assert, then it is possible Aviva could be found to have damaged the property of another person within the meaning of s. 430(1) of the Criminal Code.

[44] If, however, the subject vehicles belonged to Aviva, then the company cannot be said to have committed mischief within the meaning of s. 430(1) of the Criminal Code by damaging its own property.

[45] In that event, Aviva argues the relevant section of the Criminal Code for this analysis is not s.430, but s. 429(3)(b) which provides that where a person has a “total interest” in the damaged property, that person will only be guilty of the offence of mischief if it is established that the destruction or damage was caused with an intent to defraud.

[46] For this reason, the question of whether the numbered company, 252, is a separate entity or in fact indistinguishable from Aviva becomes important. All parties to these motions rely on the case law setting out the circumstances in which a court will “piece the corporate veil” for purposes of establishing civil liability, though they do so for divergent propositions.

[47] Piercing the corporate veil represents an exception to the general rule that corporations that are legally separate will be treated as such even where, as a matter of fact, one may control another or be part of an interwoven corporate ownership structure. As Cromwell J. affirmed in Sun Indalex Finance v. United Steelworkers, 2013 SCC 6 (at para. 238), “unless there is a legal basis for ignoring the separate corporate personality of separate entities, those separate corporate existences must be respected.”

[48] Aviva argues this case law demonstrates that piercing or lifting the corporate veil only arises where a party is seeking to shield itself from liability based on the fact of separate corporate entities. By contrast, Aviva submits that it is always open to a party to disclose information about its own corporate ownership in order to show that corporate entities are in fact not separate. To this end, Aviva’s representative in the examination for discovery, Donald Dunstan, provided the following account of the numbered company structure:

On July 11, 2016, the Plaintiff incorporated the numbered company [252]. Aviva has complete control of the numbered company. The directors of the numbered company are Gregory D. Somerville (Aviva’s former CEO), Colin L. Simpson (Aviva’s CFO) and Sharon Sandall (a former Corporate Secretary at Aviva). As directors, these individuals act solely as agents for Aviva. Any actions of the numbered company were for the sole benefit of Aviva.

[49] Aviva argues that since the numbered company 252 owns the subject vehicles and is itself is wholly owned and controlled by Aviva, then the numbered company cannot be considered a separate entity for purposes of the determination of whether Aviva committed criminal mischief in damaging the subject vehicles.

[50] The defendants assert that Aviva’s situation is no different than other legal contexts where piercing or lifting the corporate veil arises, and that Aviva has not met the test established in the case law for lifting the corporate veil as between itself and the numbered company.

[51] The test for lifting or piercing the corporate veil was set out in Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 28 O.R. (3d) 423 (Gen. Div.), affirmed: (1997) 74 A.C.W.S. (3d) 207 (Ont. C.A.) (“Transamerica”), where Sharpe J. (as he then was) held that (at pp. 433-34), “courts will disregard the separate legal personality of a corporate entity where it is completely dominated and controlled and being used as a shield for fraudulent or improper conduct.”

[52] More recently, in Yaiguaje v. Chevron Corporation, 2018 ONCA 472 (“Yaiguaje”), the Court of Appeal considered the test for piercing the corporate veil in the context where one corporate entity controlled another. In Yaiguaje, parties with a judgment against Chevron Corporation sought to pierce the corporate veil between Chevron Canada and its indirect parent, Chevron Corporation, in order to enforce their judgment against Chevron Corporation through the assets of Chevron Canada. For the Court, Hourigan J.A. held that the corporate veil should not be pierced in this context, as the Transamerica test was not met. Hourigan J.A. rejected the invitation to depart from the Transamerica test and introduce other policy goals into the analysis, stating (at para. 79):

The appellants further submit that the corporate separateness of Chevron Corporation and Chevron Canada should be ignored for policy reasons. Yet they provide no guidance regarding the basis upon which it will be appropriate to pierce the corporate veil in future cases. Once the Transamerica test is jettisoned and no principled basis for piercing the corporate veil replaces it, we are left with a purely ad hoc test. In the end, Mr. Lenczner’s submissions boil down to an exhortation that we should do the right thing for his clients, untethered to the jurisprudence, the statutory rights of corporations, or any discernible principle.

[53] The defendants argue that aside from the circumstances set out in Transamerica, the courts will respect corporate separateness. Wetzel relies further on the Court of Appeal’s decision in Smith v. National Money Mart Co., 2006 ONCA 14958, where the issue was whether two corporations could conspire with one another to commit a tort where one was controlled by the other. Feldman J.A. held (at para. 19), “Either way, where one controls the other, as two separate legal entities each remains responsible in law for its own actions…”

[54] While these cases reaffirm the limited circumstances in which a corporation can be held liable for the actions of a related corporation, I see no basis in this case law that prevents Aviva from relying on the evidence that it controlled the numbered company, which owned the subject vehicles, for purposes of asserting that it damaged its own vehicles. Aviva does not argue that it should avoid liability because of the acts of the numbered company or that the numbered company should avoid liability based on the acts of Aviva.

[55] For these reasons, I am unable to find a basis on the “plain and obvious” standard to conclude that Aviva committed criminal mischief.

[56] Aviva argues that unlike cases such as Hall and Zastowny, where an underlying illegal or immoral act was not disputed, in this case, whether Aviva’s investigation resulted in an illegal or immoral act is very much the subject of dispute. Aviva submits (in its reply factum to Wetzel, at para. 49):

Importantly, in the case at hand, the criminal and immoral conduct as against the plaintiff by the defendants has only been alleged. The plaintiff’s position is that its conduct was neither illegal nor immoral. It damaged its own vehicles and sent them out for repair. This is hardly immoral and was not illegal. There is no foundation in law in law that would classify its actions as illegal or immoral.

[57] While there is case law on ex turpi causa deals in Canada in which the underlying act may not be criminal (for example, in Apotex Inc. v. Abbott Laboratories Limited, 2018 ONSC 7736, Lederer J. accepted that it was “tenable” to invoke ex turpi causa in the context of a patent infringement), I am not aware of any case where the defence has been permitted, notwithstanding uncertainty about the legal status of the underlying act.

[58] For this reason, I find that it is not plain and obvious that ex turpi causa relating Aviva’s intentional damage to the subject vehicles operates so as to prevent Aviva’s claim in this case.

[59] Second, and apart from the claim relating to the underlying act of mischief, the defendants assert that initiating a fictitious claim through a staged accident amounts to a wilful act of fraud and misrepresentation, also capable of warranting the application of ex turpi causa to this case.

[60] Again, in this context, the nature of the immoral or illegal act underlying this claim is disputed.

[61] The defendants rely on Section 233 of the Ontario Insurance Act, R.S.O. 1990, c. I.8., which provides:

Misrepresentation or violation of conditions renders claim invalid

233.(1) Where,

(a) an applicant for a contract,

(i) gives false particulars of the described automobile to be insured to the prejudice of the insurer, or

(ii) knowingly misrepresents or fails to disclose in the application any fact required to be stated therein;

(b) the insured contravenes a term of the contract or commits a fraud; or

(c) the insured wilfully makes a false statement in respect of a claim under the contract,

a claim by the insured is invalid and the right of the insured to recover indemnity is forfeited.

[62] On its face, this provision deals with the rights of insured parties to collect under a policy and provides a protection to insurance companies against fraudulent or false claims.

[63] This provision does not create a basis for finding an insurance company to have engaged in an illegal or immoral act by itself accepting a fictitious claim, nor have the defendants raised a case where such a finding under the Act has been made.

[64] I find that it is not plain and obvious that Aviva’s payment of the insurance claim in relation to the subject vehicles constitutes an illegal or immoral act capable of giving rise to the operation of ex turpi causa.

Will Aviva “profit” from an illegal or immoral act if it is successful on its claim?

[65] Even if Aviva’s conduct could be characterized as illegal or immoral, it is plain and obvious that ex turpi causa would not operate so as to prevent Aviva’s claim altogether. As set out above in Hall and Zastowny, ex turpi causa is a defence to a tort claim which prevents a plaintiff from “profiting” from a wrong.

[66] In this case, even if Aviva can be said to have engaged in an illegal or immoral act, ex turpi causa does not operate to prevent compensation where there has been a specific and quantifiable loss. As the Court of Appeal stated in Livent Inc. v. Deloitte & Touche, 2016 ONCA 11 at para. 113:

[U]nder Canadian law, the ex turpi causa defence does not give the court discretion to withhold a civil remedy for damages merely because the plaintiff has engaged in misconduct. The overriding concern is whether permitting recovery would give rise to inconsistency in the law and thereby damage the integrity of the legal system.

[67] Therefore, even if ex turpi causa can be invoked by the defendants based on Aviva committing mischief by intentionally damaging the subject vehicles, it does not preclude Aviva’s claim for its actual losses in relation to the repairs.

[68] Aviva alleged it paid for work from the Warda defendants, and based on Wetzel’s appraisal, which was not done, or which was the result of additional damage to the vehicles resulting from the defendants’ actions. With respect to these claims for compensatory damages, ex turpi causa, as applied by Canadian courts, can have no effect.

[69] With respect to its claim for losses related to the subject vehicles, Aviva does not seek to “profit” from its claim relating to its actual losses. Indeed, if no discrepancy emerged from its own independent appraisal and the appraised work which the Warda defendants undertook and Wetzel confirmed, then Aviva would have been out-of-pocket the cost of the repairs to the subject vehicles with no compensation from any other party.

[70] Therefore, I find that the operation of ex turpi causa, even if applicable on these facts, does not affect the ability of Aviva to pursue a claim against Wetzel and the Warda defendants for compensatory damages from the wrongdoing it has alleged.

[71] The potentially novel aspect of this claim arises with respect to Aviva’s claim for $100,000.00 as the cost for its investigation and $200,000.00 in punitive damages.

[72] The Warda defendants submit these damages are out of any proportion to Aviva’s loss and that, in effect, Aviva is seeking to make an example of this body shop as a deterrent to others with whom Aviva works.

[73] Would Aviva “profit” from receiving damages equivalent to the full cost of its investigation? While punitive damages should not be seen as a windfall or “profit,” could this analysis change where punitive damages of approximately 20 times the actual losses with respect to the subject vehicles are claimed?

[74] I believe these are exactly the kind of novel arguments that should not be resolved at the stage of a Rule 21 motion. Below, I return to this issue in the context of Aviva’s motion to strike the portion of the defendants’ pleadings which raise ex turpi causa.

Fictitious Claims and Insurance Coverage

[75] In addition to ex turpi causa, the defendants also argue that Aviva’s claims should be precluded on the separate ground that this litigation is based on a fictitious insurance claim which would not be allowable under insurance law. In my view, this ground is simply another variation of the aspect of its ex turpi causa argument relating to the Insurance Act discussed above.

[76] It is not disputed that Aviva took out insurance policies on the subject vehicles and paid out the claims under those policies for the work undertaken at the McLaren Collision Centre.

[77] The premise of the defendants’ position is that providing a fictitious claim or a claim based on staged accidents constitutes a fraudulent claim. This fraud, if it exists, is against an insurance provider. I do not find a basis to conclude that Aviva, by engaging in a fictitious claim for the purpose of investigating suspected fraud, could be said to be itself in breach of the Insurance Act.

[78] In other words, this provision of the Insurance Act may be used by an insurance company to protect against fraud. I do not see its relevance where an insurance company itself agrees to pay a claim, notwithstanding that it knows the claim is fictitious.

[79] For these reasons, I do not see a basis for precluding Aviva’s claim on this basis.

Abuse of Process and Entrapment

[80] Finally, the defendants argue that, in addition to the other grounds on which this action should be dismissed under Rule 21, dismissal is also warranted pursuant to abuse of process. This aspect of the Rule 21 motion is pursued in particular by Wetzel.

[81] Wetzel relies on the criteria for abuse of process set out by Arbour J. in Toronto (City) v. C.U.P.E. Local 79, 2003 SCC 63, at para 29:

(3) Abuse of Process

Judges have an inherent and residual discretion to prevent an abuse of the court’s process. This concept of abuse of process was described at common law as proceedings “unfair to the point that they are contrary to the interest of justice” (R. v. Power, [1994] 1 S.C.R. 601, at p. 616), and as “oppressive treatment” (R. v. Conway, [1989] 1 S.C.R. 1659, at p. 1667). McLachlin J. (as she then was) expressed it this way in R. v. Scott, [1990] 3 S.C.R. 979, at p. 1007:

. . . abuse of process may be established where: (1) the proceedings are oppressive or vexatious; and, (2) violate the fundamental principles of justice underlying the community’s sense of fair play and decency. The concepts of oppressiveness and vexatiousness underline the interest of the accused in a fair trial. But the doctrine evokes as well the public interest in a fair and just trial process and the proper administration of justice.

The doctrine of abuse of process is used in a variety of legal contexts. The unfair or oppressive treatment of an accused may disentitle the Crown to carry on with the prosecution of a charge: Conway, supra, at p. 1667. In Blencoe v. British Columbia (Human Rights Commission), [2000] 2 S.C.R. 307, 2000 SCC 44, this Court held that unreasonable delay causing serious prejudice could amount to an abuse of process. When the Canadian Charter of Rights and Freedoms applies, the common law doctrine of abuse of process is subsumed into the principles of the Charter such that there is often overlap between abuse of process and constitutional remedies (R. v. O’Connor, [1995] 4 S.C.R. 411). The doctrine nonetheless continues to have application as a non-Charter remedy: United States of America v. Shulman, [2001] 1 S.C.R. 616, 2001 SCC 21, at para. 33.

In the context that interests us here, the doctrine of abuse of process engages “the inherent power of the court to prevent the misuse of its procedure, in a way that would . . . bring the administration of justice into disrepute” (Canam Enterprises Inc. v. Coles (2000), 51 O.R. (3d) 481 (C.A.), at para. 55, per Goudge J.A., dissenting (approved [2002] 3 S.C.R. 307, 2002 SCC 63](https://www.canlii.org/en/ca/scc/doc/2002/2002scc63/2002scc63.html))). Goudge J.A. expanded on that concept in the following terms at paras. 55-56:

The doctrine of abuse of process engages the inherent power of the court to prevent the misuse of its procedure, in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute. It is a flexible doctrine unencumbered by the specific requirements of concepts such as issue estoppel. See House of Spring Gardens Ltd. v. Waite, [1990] 3 W.L.R. 347 at p. 358, [1990] 2 All E.R. 990 (C.A.). (Emphasis in original)

[82] In their submissions, the defendants argued that if Aviva had suspicions of fraud it wished to pursue through a “sting” operation, it should have done so in collaboration with a law enforcement agency. This approach would have ensured public oversight and accountability for the sting operation, procedural protections to those targeted, and no potential liability on those targeted for the costs of the investigation itself.

[83] The defendants assert that Aviva should not be permitted to use the civil justice system to enforce its own anti-fraud initiative.

[84] There is certainly precedent for such sting operations conducted by law enforcement in the insurance field. R. v. Jeeva, 2013 ONCJ 307, for example, concerned one of 39 individuals charged with conspiracy to commit fraud over $5000.00 as part of Project Whiplash, a sting operation “targeting allegedly fraudulent insurance claims from fantasy accidents based on false injury reports…” (at para. 2).

[85] I do not see how the fact that it was open to Aviva to initiate its investigation in collaboration with law enforcement precludes it from pursuing civil liability as a result of its investigation. As stated above, whether or not Aviva is entitled to recover the costs of its investigation goes beyond the scope of this Rule 21 motion. The availability of a different route to investigate potential fraud in insurance claims could be relevant in determining the appropriateness of the defendants’ bearing the cost of the investigation as damages. To determine that issue fully and fairly, however, it will be important to have details on the actual cost and scope of the investigation, which is not part of the record on these motions.

[86] Wetzel also argues that this case is an abuse of process because it amounts to civil entrapment.

[87] In R. v. Mack, [1988] 2 S.C.R. 903, the Supreme Court sets out the elements which need to be established in order to rely on entrapment in the criminal context: 1) first, the authorities provide an opportunity to persons to commit an offence without reasonable suspicion or in bad faith; or 2) second, having a reasonable suspicion or acting in the course of a bona fide inquiry, they go beyond providing an opportunity and induce the commission of an offence.

[88] Entrapment as a defence arises after the elements of a criminal offence have otherwise been established. In this case, there has been no investigation, much less any finding, into whether an “offence” has taken place, though for purposes of Rule 21, the facts as alleged by the defendants in their statements of defence and counterclaim are to be taken as proven.

[89] Wetzel, in his factum, further relies on the decision of Justice Laskin in R.v. Imoro, 2010 ONCA 122 (at para. 11), in which he held that even if the elements of the underlying offence have yet to be proven, entrapment if subsequently found will justify staying the proceedings as an abuse of process.

[90] Leaving aside the fact that Aviva is a private company, and not the state, there is a significant question as to whether the pleadings in this case, assumed to be proven, meet the entrapment threshold even assuming a civil analogy to entrapment exists as a defence to tortious or contractual liability.

[91] I do not see how contracting with the Warda defendants to repair the subject vehicles, or asking Wetzel to appraise the repairs to the subject vehicles in the normal course of his employment, provided an opportunity for the defendants to engage in tortious conduct.

[92] With respect to the second prong of entrapment, as the alleged civil entrapment occurred in this case in the course of a bona fide inquiry, it is necessary for Wetzel to establish that Aviva went beyond providing an opportunity, and induced the commission of the tortious conduct.

[93] While I would not rule out a civil equivalent to entrapment giving rise to an abuse of process as a general proposition, I do not see how entrapment could arise in these circumstances. Aviva did set in motion the events which led to the opportunity for wrongful conduct by Wetzel and the Warda defendants, but there is no allegation that Aviva provided the opportunity, much less induced or encouraged either defendant to engage in wrongful conduct. Rather, Aviva sought the services each defendant regularly provided.

[94] To preclude this action on abuse of process grounds would be to compel Aviva to bear the cost of damage it states has been caused by Wetzel and Warda defendants. The defendants have not established that Aviva should be denied its opportunity to pursue this action on abuse of process grounds.

[95] To conclude, with respect to determinations of the legal issues to which this action gives rise that may assist in reducing the complexity of the claim and counterclaims, I find that Wetzel and the Warda defendants have not established that it is plain and obvious that the application of the ex turpi causa defence in this case prevents Aviva from bringing its action.

[96] I also find that the defendants have not established that it is plain and obvious that Aviva’s claim is precluded as an abuse of process on the basis of a civil equivalent of entrapment. Assuming without deciding that entrapment could arise in the context of a tort claim as the basis of an abuse of process argument, the facts as set out in the pleadings to this action do not meet the key elements of entrapment as established by the Supreme Court.

[97] For these reasons, the motion brought by Wetzel under Rule 21.01(1)(a), 21.01(1)(b) and/or 21.01(3)(d) of the Rules of Civil Procedure to strike or dismiss Aviva’s statement of claim on the basis that it discloses no reasonable cause of action and is otherwise an abuse of process is dismissed.

[98] Similarly, the motion brought by the Warda defendants under Rules 21.01(1)(a) and 21.01(1)(b) disposing of all or part of Aviva’s statement of claim on the basis that it discloses no reasonable cause of action and/or is an abuse of process is also dismissed.

[99] As a result, Aviva is not prevented in law from bringing this action against the defendants.

Is Wetzel entitled to summary judgment under Rule 20?

[100] The other question I must address, in relation to Wetzel alone, is a motion for summary judgment against Aviva.

[101] Rule 20.01 of the Rules of Civil Procedure provides:

20.01 (1) A plaintiff may, after the defendant has delivered a statement of defence or served a notice of motion, move with supporting affidavit material or other evidence for summary judgment on all or part of the claim in the statement of claim. R.R.O. 1990, Reg. 194, r. 20.01 (1).

(2) The plaintiff may move, without notice, for leave to serve a notice of motion for summary judgment together with the statement of claim, and leave may be given where special urgency is shown, subject to such directions as are just. R.R.O. 1990, Reg. 194, r. 20.01 (2).

To Defendant

(3) A defendant may, after delivering a statement of defence, move with supporting affidavit material or other evidence for summary judgment dismissing all or part of the claim in the statement of claim. R.R.O. 1990, Reg. 194, r. 20.01 (3).

[102] On a motion for summary judgment, the Court must determine if there is a genuine issue for trial. In Hryniak v. Mauldin, 2014 SCC 7, the Supreme Court set out the test to be applied on a summary judgment motion (at paras. 49-50):

49. There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

50. These principles are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.

[103] Aviva argues that there are genuine issues for trial.

[104] First, Aviva submits it must determine if Wetzel intentionally completed the appraisal inaccurately.

[105] This issue remains in dispute based on Aviva’s cross-examination of Wetzel on his affidavit evidence. I agree that in the absence of evidence which can establish whether Wetzel is liable for the damages sought, this constitutes a genuine issue for trial.

[106] Second, if the defendant Wetzel wishes to raise the issue of ex turpi causa, Aviva argues a trial is needed as to whether Aviva committed an immoral or illegal act.

[107] While some aspects of ex turpi causa’s application to this case are legal determinations (for example, the applicability of the law in relation to “piercing the corporate veil” to the determination of whether the criminal elements of mischief are met by the facts as pleaded), others may require additional evidence (for example, relating to the motivations and actions of Aviva in pursuing this investigation).

[108] Additionally, a trial is needed in this case to determine the effect, if any, of ex turpi causa on the damages to which Aviva might be entitled. If there is evidence that Aviva will “profit” from the damages it seeks, this will need to be established on more than the record before the Court on these motions.

[109] More specifically, the issue of whether Aviva is entitled to recover the costs of its investigation, in addition to the other damages claimed, may require a trial. The defendants raise a concern that such damages, if allowed, would enable parties such as Aviva to claim almost indeterminate damages against the subject of a sting operation. Wetzel argues in his factum (at para. 30):

In the case at bar, there are many “oppressive” aspects of this case which militate strongly in favour of dismissal as against Aviva’s claim. First Aviva is seeking as against all defendants $100,000.00 for its “investigative costs”. This is highly problematic not only because its actual “damages” (i.e. what it claims was over-billed) were only approximately $10,000.00, but it also literally creates the specter of unlimited liability for these defendants (and any other similarly situated) since a company like Aviva can literally spend hundreds of thousands (or even millions) of dollars on its “investigative costs”, had it so chosen, and thus financially ruin the defendants.

[110] Wetzel also raises the issue of whether Aviva has discharged its responsibility to mitigate its damages generally. Specifically, the determination of mitigation in the context of the investigative expenses also may require additional evidence.

[111] In short, the determination of whether the costs of the investigation in this case are justified and reasonable goes beyond the record before the Court on these motions, and constitutes a genuine issue for trial.

[112] For these reasons, I find there are questions both of liability and damages that are genuine issues for trial.

Has Aviva established that the paragraphs it has identified in the statements of defence and counterclaim of the Warda Defendants and/or Wetzel should be struck under Rules 21 or 25?

[113] In addition to Rule 21.01 set out above, Aviva also relies in its motion to strike certain paragraphs from the statements of defence and counterclaim of the Warda defendants and/or Wetzel under Rule 25.06 and Rule 25.11 of the Rules of Civil Procedure.

[114] Rule 25.06(1) and (2) of the Rules of Civil Procedure provide:

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. R.R.O. 1990, Reg. 194, r. 25.06 (1).

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. R.R.O. 1990, Reg. 194, r. 25.06 (2).

[115] Rule 25.11 of the Rules of Civil Procedure provides,

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. R.R.O. 1990, Reg. 194, r. 25.11.

[116] Aviva seeks to strike paragraphs 4, 8, 9, 10, 17, 18, 19, 20, 21, 22 and 23 from Wetzel’s statement of defence and counterclaim.

[117] Aviva seeks to strike paragraphs 6, 7, 14, 15 and 20 from the Warda Defendants’ statement of defence and counterclaim relating to the concept of civil entrapment.

[118] The test under both Rule 21.01, as stated above, and Rule 25 is whether it is “plain and obvious” that a part of a pleading discloses no reasonable cause of action or have no reasonable prospect of success.

Should the paragraphs in the Wetzel statement of defence and counterclaim be struck?

[119] I rely on the analysis above in relation to the Rule 21 motions with respect to the main arguments pursued by Wetzel in his statement of defence and counterclaim.

[120] Based on that analysis, I found that it is not plain and obvious that ex turpi causa arises so as to preclude Aviva’s claim on the facts as pleaded by the defendants. Here, the question is whether it is plain and obvious that ex turpi causa has no application on the facts as pleaded and should be struck from Wetzel’s pleading.

[121] In Cruz v. McPherson, 2014 ONSC 4841, Justice Perell reiterated the importance of not using Rules 21 and 25 to strike pleadings which make novel arguments (at paras. 25-27):

Matters of law that are not fully settled should not be disposed of on a motion to strike: Dawson v. Rexcraft Storage & Warehouse Inc., supra, and the court's power to strike a claim is exercised only in the clearest cases: Temelini v. Ontario Provincial Police (Commissioner) (1990), 73 O.R. (2d) 664 (C.A.).

The law must be allowed to evolve, and the novelty of a claim will not militate against a plaintiff: Johnson v. Adamson (1981), 34 O.R. (2d) 236 (C.A.), leave to appeal to the S.C.C. refused (1982), 35 O.R. (2d) 64 n. However, a novel claim must have some elements of a cause of action recognized in law and be a reasonably logical and arguable extension of established law: Silver v. Imax Corp., [2009] O.J. No. 5585 (S.C.J.), at para. 20; Silver v. DDJ Canadian High Yield Fund, [2006] O.J. No. 2503 (S.C.J.).

Generally speaking, the case law imposes a very low standard for the demonstration of a cause of action, which is to say that, conversely, it is very difficult for a defendant to show that it is plain, obvious, and beyond doubt that the plaintiff cannot succeed with the claim.

[122] While the ex turpi causa defence has not been applied in a factual setting of the kind alleged in this case, I do not find that it is plain and obvious that such an argument could not succeed in this case. The category of conduct that constitutes “illegal” or “immoral” acts under this doctrine is neither fixed nor static. Similarly, the issue of what kinds of damages may constitute a party’s “profit” under this doctrine may evolve in response to novel claims and/or remedies.

[123] Aviva also argues that paragraph 4 of the Wetzel statement of defence and counterclaim should be struck pursuant to Rule 25.11. This paragraph states:

4. The plaintiff Aviva Canada Inc. (“Aviva”), in a deeply misguided quest to cub and curtail what it perceived to be fraudulent practices amongst certain auto body shops within the Greater Toronto area, as aided and abetted by industry appraisers, by its own admission, embarked on a scheme to stage fake car accidents in the hope that it could subsequently identify and punish these alleged fraudsters. However, in so doing, Aviva violated both federal criminal law and provincial insurance law. As such, the herein proceeding, by its very nature, is an abuse of the process of the Court and should, on account thereof, be summarily dismissed. In addition, Aviva also violated Wetzel’s contractual rights by unilaterally and without any notice terminating his employment therewith on the purported “for cause” basis that Wetzel was an alleged co-conspirator in the alleged fraud, which termination effectively foreclosed any possibility that Wetzel can ever work again as an appraiser. These allegations as against Wetzel are specious and false. Accordingly, for the reasons given herein, Wetzel pleads that the herein action against himself be dismissed, with costs awarded in his favour on a substantial indemnity basis.

(Emphasis in original.)

[124] I understand the term “deeply misguided guest” to have been intended to read as “deeply misguided quest.”

[125] In Canadian National Railway Company v. Brant, 2009 ONSC 32911, at para. 28, the Court held that, “A pleading of fact will be struck if it cannot be the basis of a claim or a defence in the action and is designed solely for the purpose of atmosphere … If the only purpose of the pleading is to cast the opposing party in a bad light, it will be struck.”

[126] Justice Newbould elaborated on the standard to be applied in determining whether to strike a pleading on this basis. In The Catalyst Capital Group Inc. v Dundee Kilmer Developments Limited et al, 2016 ONSC 7365, Newbould J. held (at para. 111):

[111] Under rule 25.11 a pleading may be struck if it may prejudice or delay the fair trial of an action or it is scandalous, frivolous or vexatious. A court may strike out portions of a pleading, even where the allegations are relevant, if the applicant can establish that they are of marginal probative value and their probative value is outweighed by their prejudicial effect. Before doing so, a judge must balance the rights of the parties on the particular facts of the case and must consider carefully the extent to which the particulars attacked are necessary to enable a party to prove its case and their probative value in establishing that case. This power should be exercised with considerable caution. See Quizno's Canada Restaurant Corp. v. Kileel Developments Ltd., 2008 ONCA 644 at para. 15 and Canadian National Railway Company v Brant (2009), 2009 ONSC 32911, 96 O.R. (3d) 734.

[127] I find that this paragraph serves several purposes. While certainly casting Aviva in a negative light, “atmosphere” is not the only purpose of the paragraph. The paragraph summarizes Wetzel’s arguments for dismissing the claim, and the alleged facts which led to Wetzel’s dismissal. In the context of Aviva’s claim, I do not find paragraph 4 Wetzel’s statement of defence and counterclaim meets the standard for striking it under Rule 25.11.

[128] In light of this analysis, I find that paragraphs 4, 8, 9, 17, 18, 19, 20, 21, 22 and 23 should not be struck.

[129] Paragraph 10 of the Wetzel statement of defence and counterclaim sets out the various repairs completed on the subject vehicles. Pursuant to Rule 21.01(2), Aviva submits that this paragraph sets out evidence rather than argument and should be struck on that basis.

[130] I agree that the itemized list of repairs conducted to the subject vehicles is evidence and should be struck from this pleading.

Should the paragraphs in the Warda Defendants statement of defence and counterclaim be struck?

[131] At the hearing, Aviva abandoned its challenge to paragraphs 6 and 15 of the Warda defendants’ statement of defence and counterclaim, which allege that if the owner of the subject vehicles was not satisfied by the repairs conducted, it could have used the lifetime warranty offered by the collision centre to rectify the problems.

[132] Aviva maintains its challenge to paragraphs 7 and 14, in which the Warda defendants allege “entrapment.” A civil form of entrapment has not been recognized in the case law. In this context, however, novelty cannot save these allegations. Assuming the facts as pleaded are proven, and assuming the criminal standard for entrapment were applicable in this case, it is plain and obvious that the conduct of Aviva does not meet the standard for entrapment. This doctrine, therefore, has no application to this case, and the paragraphs alleging civil entrapment should be struck.

[133] Finally, in paragraph 20, the Warda defendants allege that Aviva could have resorted to other “legal, administrative correct and controlled procedures” to determine whether any improper practices were being conducted rather than the “vigilante approach” of conducting its own investigation. The Warda defendants also allege that they may also have been subject to the conduct of “an errant employee” which resulted in their inclusion in this action. This paragraph is broadly worded and it is not plain and obvious that the allegation, assuming it is proven, could not affect the Warda defendants’ liability and/or the appropriate damages in this case.

[134] Therefore, Aviva’s motion to strike certain passages from the defendants’ statement of defence and counterclaim is granted in part and dismissed in part.

[135] I find that paragraph 10 of the Wetzel statement of defence and counterclaim is struck as pleading evidence.

[136] I find that paragraphs 7 and 14 of the Warda defendants’ statement of defence and counterclaim alleging entrapment are struck.

[137] The motion with respect to all other paragraphs is dismissed.

CONCLUSION

[138] For the reasons above, I dismiss the motions under Rule 21 by Wetzel and the Warda defendants.

[139] Wetzel’s summary judgment motion under Rule 20 is dismissed as there are genuine issues which require a trial.

[140] Aviva’s motion under Rules 21 and 25 to strike portions of the defendants’ statements of defence and counterclaim is granted in part and dismissed in part.

COSTS

[141] While the result of its own motion is mixed, Aviva generally has been successful in resisting the motions of the defendants, and is entitled to a portion of its costs.

[142] If the parties cannot agree on costs, brief submissions may be provided to me along with bills of costs within 30 days of this judgment.

Sossin J. Released: June 21, 2019