Court File and Parties
COURT FILE NO.: CV-18-593160
DATE: 2019/07/25
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: LEMONIUS, Plaintiff/Defendant by Counterclaim
AND: AUDMET CANADA LTD. Defendant/Plaintiff by Counterclaim
BEFORE: MASTER RONNA M. BROTT
COUNSEL: Jean-Alexander DeBousquet, for the Plaintiff Fax: 1-866-246-6190
Elyse J. Mallins, for the Defendant Fax: 416-901-5290
ENDORSEMENT
[1] The defendant Audmet Canada Ltd. (“Audment”) brings this motion pursuant to Rule 25.11 seeking an order to strike out two paragraphs of the Amended Statement of Claim and three paragraphs of the Reply and Defence to Counterclaim, on the basis that they include privileged, without prejudice communications and settlement offers.
[2] This is a wrongful dismissal action. The plaintiff Steve Lemonius (“Lemonius”) first commenced this action seeking damages from Audmet arising from his alleged dismissal without cause on January 16, 2018. The Statement of Claim was issued on March 2, 2018. On June 1, 2018 the defendant filed a Statement of Defence and Counterclaim alleging that the plaintiff had breached his fiduciary duty to the defendant by consulting for an unrelated party while employed with Audmet.
[3] On June 12, 2018 the plaintiff amended the Statement of Claim to include a claim for punitive and aggravated damages. On June 19, 2018 the plaintiff served his Reply and Defence to the Counterclaim. The defendant has not yet delivered an Amended Statement of Defence and Counterclaim.
[4] The paragraphs in dispute on this motion are as follows:
Paragraphs 17 and 18 of the Amended Statement of Claim are as follows:
The Plaintiff states that, following receipt of the Statement of Claim, the Defendant fabricated allegations pertaining to alleged wrongful use of the company’s property and wrongfully alleged after-the-fact cause for the Plaintiff’s termination.
The Plaintiff further states that the sole purpose of the aforementioned actions of the Defendant was to intimidate him into accepting an unfair severance package. The Plaintiff pleads that the Defendant acted in bad faith and that its conduct was high handed, malicious and deserving of an award of punitive and/or aggravated damages.
Paragraphs 11, 12 and 16 of the Reply and Defence to Counterclaim are as follows:
Mr. Lemonius states that Audmet’s alleged investigation into his actions only commenced after Audmet received notice of his action for wrongful dismissal and was instigated for the sole purpose of intimidating him into accepting a lowball settlement offer.
Mr. Lemonius further states that Audmet’s allegations of after-the-fact cause and alleged breaches of his fiduciary duties are entirely fabricated and lack credibility for the following reasons:
In August 2017, when Mr. Lemonius’s involvement with Fibrecast was widely known, Audmet discussed a possible severance package in the amount of $210,000.000 to $236,000.00;
On January 16, 2018, at the time of is termination, and well after Audmet learned of Mr. Lemonius’ involvement with Fibrecast, Mr. Lemonius was offered a severance package of 10 months’ pay.
-On February 26, 2018, after Audmet learned that Mr. Lemonius was in the process of commencing his own competing business, it offered him a severance package equivalent to 12 months’ pay.
- Mr. Lemonius further states that Audmet asserted after-the-fact cause and issued its counterclaim in bad faith and in order to intimidate and extort him into accepting a lowball severance package. Lemonius further pleads that he suffered further severe emotional distress as a result of the Defendant’s high-handed and callous disregard for his rights and feelings by making humiliating lowball-offers and threatening a counterclaim while negotiating his entitlement to compensation.
THE LAW
[5] Rule 25.06(1) of the Rules of Civil Procedure sets out the rules of pleading as follows:
Every pleading shall contain a concise statement of the materials facts on which the party relies for the claim or defence, but not the evidence by which those facts are to be proved.
[6] Rule 25.11 of the Rules of Civil Procedure provides the basis for striking all or part of a pleading as follows:
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.
[7] Rule 49.06(1) of the Rules of Civil Procedure states:
No statement of the fact that an offer to settle has been made shall be contained in any pleading.
[8] The defendant submits that the Amended Statement of Claim refers to ‘three instances of settlement negotiations’ as follows:
(a) August 2017 (prior to termination) – The plaintiff describes a confidential without prejudice conversation between himself and the director of human resources;
(b) January 16, 2018 – The defendant offered to resolve the action which had been initiated in exchange for the signing of a release;
(c) February 26, 2018 – The defendant through its counsel offered to settle the action.
[9] Paragraph 17 of the Amended Statement of Claim simply pleads the material facts upon which the plaintiff intends to rely to prove after termination behaviour which he alleges entitles him to punitive and/or aggravated damages.
[10] Paragraph 18 of the Amended Statement of Claim does not plead settlement. The plaintiff is alleging that the defendant was attempting to push him into accepting a settlement but it does not plead those settlement discussions.
[11] At paragraph 11 of the Reply and Defence to Counterclaim the first portion of the paragraph follows the rules of pleading by pleading material fact. The plaintiff then opines in this paragraph about why the defendant’s investigation was commenced. It is not an appropriate pleading of material fact. The second part of paragraph 11, after the words ‘wrongful dismissal’ shall be struck.
[12] Paragraph 12 of the Reply and Statement of Defence to Counterclaim is argument. It sets out three instances of settlement discussions/ negotiations as further evidence. A pleading of evidence is not a pleading of material fact. Pleading privileged communications has been found to be unacceptable. As Master Muir stated at paragraph 8 of 2030945 Ontario Ltd. v Markham Village Shoppes Limited, 2013 CarswellOnt 1516, 2013 ONSC 1020, 226 A.C.W.S. (3d) 85:
I agree with the defendant that references to settlement offers, discussions and negotiations should not be included in a pleading. The law in this regard is summarized by Master Beaudoin (as he then was) in Canadian Gateway Development Corp. v Canada (National Capital Commission), [2002] O.J. No. 3167 (Ont. Master) at paragraphs 8 and 9 where he states as follows:
- A Master has jurisdiction pursuant to Rule 25.11(b) to strike out a pleading on the ground that the pleading is scandalous, frivolous or vexatious. Although the defendant correctly submits that a Master cannot generally strike out a defence as being untenable, that is not the nature of the motion here. The law is clear that evidence of privileged communications, such as settlement discussions, should not be before the Court. (See I. Waxman & Sons v Texaco Canada Ltd., 1968 CanLII 178 (ON SC), [1968] 1 O.R. 642 (H.C.J.), aff’d 1968 CanLII 327 (ON CA), [1968] 2 O.R. 452 and Sopinka, Lederman and Bryant, The Law of Evidence in Canada, 2nd Edition, Vancouver, Butterworths, 1999). If such discussions are inadmissible in a civil proceeding, any reference to them in a party’s pleadings can be considered scandalous, frivolous or vexatious and should be struck from their pleading.
[13] As these discussions would be inadmissible in the civil proceeding, reference to them in the plaintiff’s Reply and Defence to Counterclaim can be considered scandalous, frivolous or vexatious.
[14] The first sentence of paragraph 16 of the Reply and Statement of Defence to Counterclaim pleads the alleged after-the-fact cause which is permitted. It sets the foundation for the plaintiff to seek moral, bad faith, punitive and/or aggravated damages and as per Morison v Ergo-Industrial Seating Systems Inc. 2016 ONSC 6725 and is therefore allowed.
[15] The second sentence of paragraph 16 references extortion with a view to having the plaintiff accept a lowball offer. This is the plaintiff’s opinion, and it shall not be pleaded on the basis that it is scandalous, frivolous or vexatious and it refers to privileged communications. Reference to ‘disregard for his rights and feelings’ is also an improper pleading. Paragraph 16 of the Reply and Statement of Defence to Counterclaim is hereby struck with leave to amend to read as follows:
Mr. Lemonius further states that Audmet asserted after-the-fact cause and issued its counterclaim in bad faith. Lemonius further pleads that he suffered further severe emotional distress as a result of the Defendant’s high-handed and alleged callous misconduct.
[16] For these reasons:
(a) Paragraphs 17 and 18 or the Amended Statement of Claim shall remain;
(b) Paragraph 11 of the Reply and Defence to Counterclaim – Any words after “wrongful dismissal” are hereby struck;
(c) Paragraph 12 of the Reply and Defence to Counterclaim is hereby struck with leave to amend;
(d) Paragraph 16 of the Reply and Statement of Defence to Counterclaim is struck and amended as noted in paragraph 15 above.
[17] The moving party delivered a costs outline following the completion of the hearing. The responding party delivered his Costs Outline shortly after the hearing. The parties agreed at the hearing that upon receipt of these Reasons, they would use best efforts to agree within 30 days, on the issue of costs, failing which they would exchange and file brief (1 – 2 page) costs submissions within 60 days of today’s date. No reply submissions may be delivered without leave.
MASTER RONNA M. BROTT
Date: July 25, 2019