COURT FILE NO.: CV-18-5202-00
DATE: 2019 12 17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SURABH BAWEJA AND BINDIYA BAWEJA
P. Singh Wadhwa, Counsel for the Plaintiffs
Plaintiffs
- and -
ROYAL AUTO COLLISION and ECONOMICAL INSURANCE
S. Rustomji Counsel for the Defendant Economical Insurance
No one appearing for Royal Auto Collision
Defendants
HEARD: October 2, 2019
REASONS FOR DECISION
LEMAY J
[1] The Plaintiffs, Surabh Baweja and Bindiya Baweja (“the Bawejas”) own an Audi Q7 (“the Audi”). They were involved in a car accident December 21st, 2017. The Audi was damaged, and the Plaintiffs were insured by the Defendant, Economical Mutual Insurance Company (“Economical”). The Audi was repaired by the Defendant Royal Auto Collision (“Royal”), and finally returned to the Bawejas on March 13th, 2018. Economical paid Royal for the repairs.
[2] After the Bawejas got the Audi back from Royal, they were not satisfied with the repairs. After some discussion with both Royal and Economical, the Bawejas sued both Defendants for the cost of the repairs. The Bawejas also claimed damages for fraud, breach of contract and unjust enrichment. The Bawejas also claimed general damages for negligence and mental harassment as well as 22% pre and post judgment interest on all monies owing.
[3] The action was commenced at the beginning of the year, but has not progressed past the pleadings stage. Economical has brought a motion under Rule 21 and Rule 25 to strike all of the claims brought by the Bawejas except for the claim for the cost of the repairs as well as a motion to set aside the noting in default and a motion to move the action against Economical to Small Claims Court. The Bawejas’ oppose this motion, and Royal takes no position on this motion.
[4] For the reasons that follow, Economical’s motion is allowed in part. I am setting aside the noting in default and striking all of the claims brought by the Bawejas against Economical except for the claim for the cost of the repairs as there are no material facts pled to support these claims. The Bawejas have leave to amend their claim on terms I have set out below. The motion to move the action to Small Claims Court is dismissed.
Background Facts
[5] For the purposes of this motion, I have taken the Plaintiff’s summation of facts as found in the Statement of Claim. As the allegations in the Statement of Claim are to be taken as provable for this motion, I will outline what is included in the Statement of Claim so that the context of this motion is understood. In addition, there are some procedural facts that are relevant to the Orders that I am making, and I will set those out.
a) The Claim
[6] All of the facts in this section are taken directly from the Statement of Claim. For the purposes of this motion, I accept that these facts are provable, although I make no findings that any of these facts are actually proven.
[7] The Bawejas own an Audi Q7. It was involved in an accident on December 21st, 2017 at around 7:00 p.m. The Bawejas had a policy of insurance with Economical, and they were told about the accident. The tow truck driver who arrived on the scene mentioned Royal Auto to Mr. Baweja. The Audi was in driveable condition, so Mr. Baweja drove it home.
[8] Mr. Baweja was told by a representative of Economical to take the Audi to any certified Audi Workshop for repair, as it was in a driveable condition. He contacted Audi of Mississauga, who told him that they “did not carry Autobody repair at Audi of Mississauga”. Mr. Baweja advised Economical of this fact, and Economical provided Mr. Baweja with the names of other shops.
[9] None of these other body shops was an “Audi Workshop”. As a result, Mr. Baweja told Economical that he would be taking the car to Royal. Royal provided a quote to Economical, which was approved in early January of 2018. The work was supposed to have been completed by January 24th, 2018. However, the car was not returned to Mr. Baweja until March 13th, 2018.
[10] The costs of the repair were approved by Economical, and thereafter Economical paid the claim without checking with Mr. Baweja as to whether the repairs had been completed.
[11] Shortly after taking delivery of the car, Mr. Baweja was on a trip to Niagara Falls with his family when he noticed that the cruise control was not working properly. He took the car to Audi of Mississauga, who advised him that many of the parts that were supposed to be repaired were not repaired by Royal Auto, and provided him with an estimate of $7,000.00 to repair the Audi.
[12] Mr. Baweja contacted Royal, who refused to accept any responsibility for the deficiencies in the repair of the car. Mr. Baweja also contacted Economical, who refused to take responsibility for Royal’s work, and refused to provide reimbursement for the additional repairs performed by Audi of Mississauga.
[13] Economical also originally refused to pay for the car rental for the entire time when the Audi was in the possession of Royal awaiting repairs. After counsel for the Bawejas contacted Economical, the complete car rental was paid. Finally, Economical promised to conduct an investigation against Royal but later refused to do so.
[14] In their claim, the Bawejas seek the following damages:
a) $14,512.33 on account of repairs to the Audi.
b) $40,000.00 in damages on account of fraud, breach of contract and unjust enrichment.
c) General damages in the amount of $20,000.00 for negligence and mental harassment.
b) The Requests for Particulars
[15] Procedurally, the steps that were taken by Economical before it brought this motion are important. The Statement of Defence was due on January 3rd, 2019. On that date, Counsel for Economical served a Demand for Particulars on the Bawejas, seeking inter alia an identification of the factual elements of the fraud, unjust enrichment, negligence and mental harassment claims.
[16] A first reply to this request for particulars was provided by the Bawejas on January 10th, 2019. Economical took the view that this reply was not satisfactory and provided a second demand for particulars, specifically setting out the deficiencies in the first reply. On January 18th, 2019, a second reply was provided by the Bawejas. Economical also viewed this reply as being deficient.
[17] In the meantime, counsel for the Bawejas had noted Economical in default on or about January 24th, 2019. Royal Auto had also served and filed its’ Statement of Defence.
[18] This motion was served on March 6th, 2019. It was originally returnable March 15th, 2019. At that appearance, Bloom J. determined that this was a long motion and should be heard for two hours. He adjourned it to October 2nd, 2019. Bloom J. also ordered that no default judgment could be taken out until after the motion had been heard.
[19] The matter came on for hearing before me on October 2nd, 2019.
Issues
[20] There are five issues to be determined on this motion, as follows:
a) Should the noting in default be set aside?
b) Should the claims for fraud, unjust enrichment, negligence and mental harassment be struck under Rule 21?
c) Should the claim for pre-judgment and post-judgment interest at the rate of 22% per annum be struck under Rule 25?
d) If any of the claims are struck, should the Bawejas be given leave to amend?
e) Should the Bawejas’ action against Economical be transferred to the Small Claims Court?
[21] I will deal with each issue in turn
Issue #1- Noting in Default
[22] In court, I received confirmation that counsel for the Bawejas was not opposing the setting aside of the noting in default. In my view, a noting in default should never have been sought by counsel for the Bawejas in the first place.
[23] While I acknowledge that counsel for the Bawejas notified counsel for Economical that Economical was going to be noted in default, it was clear throughout this action that Economical has been challenging the Bawejas’ pleadings and would likely have any issues relating to the pleadings resolved by way of a motion.
[24] Where a party is seeking particulars on the pleadings, and does so in a timely way, the other party should not use the fact that a Statement of Defence has not yet been filed as an opportunity to note the party seeking clarity on the pleadings in default. Counsel’s assertion that he had given Economical more than 40 days instead of the 30 days required by the Rules of Civil Procedure is not a reasonable position to have taken. Instead, he should have waited until after this motion was heard and determined before noting Economical in default.
[25] The noting in default is set aside.
Issue #2- Striking the Non-Contractual Claims
[26] In addressing this issue, I will first set out the test to be applied in considering Rule 21. Then, I will assess each of the claims to see whether there are sufficient particulars for Economical to respond to the claims.
a) The Applicable Law
[27] The test to be applied under Rule 21 of the Rules of Civil Procedure requires the Court to determine whether it is plain and obvious that the pleadings disclose no reasonable cause of action or that the claim has no reasonable prospect of success. (Addison Chevrolet Buick GMC Ltd. v. General Motors of Canada Ltd. 2016 ONCA 324 at para. 21 and R. v. Imperial Tobacco Canada Ltd. 2011 SCC 42 at para 17).
[28] On a motion under Rule 21, the allegations in the Statement of Claim should be taken as true, unless they are either patently ridiculous or incapable of proof. (McCreight v. Canada (Attorney General) 2013 ONCA 483.)
[29] It follows from that statement that the Court should not look beyond the pleadings in order to determine whether the action can actually succeed. This type of analysis should be left to a Rule 20 motion.
b) The Claim for Fraud and/or Civil Conspiracy
[30] The materials filed on the motion seem to suggest that the Bawejas are claiming both civil fraud and conspiracy. I will review both causes of action. In doing so, I start with the particulars that have been provided by the Bawejas. In order to ensure that I give the pleading as expansive a reading as possible, I have considered anything that mentions either civil fraud or conspiracy
[31] In addition to the factual points set out at paragraphs 6 to 14 of these reasons, the specific allegations that could reasonably be related to fraud and/or conspiracy in the Statement of Claim are as follows:
Royal Auto gave an estimate or Quotation of about $20,000 to the Insurance Company and listed many parts to be replaced for the repair of Audi Q7.
The Adjustor of Insurance Company approved the estimate given by Royal Auto
Insurance Company provided Preliminary Supplement containing the details of the parts to be replaced in Audi Q7 to Saurabh for reference purposes.
38.Insurance Company there after [sic] did not bother to check whether Royal Auto carried the repair work according to the estimate or not.
The Insurance Company promised to conduct an investigation against Royal Auto, but later refused to do any investigation or take any action against Royal Auto.
Insurance Company did not conduct investigation against Royal Auto as promised by them.
Royal Auto committed fraud with Saurabh and Insurance Company by not replacing the parts as listed by them in the estimate to the Insurance Company
Royal Auto Committed fraud by submitting false estimate to the Insurance Company
Royal Auto conspired with the Adjustor of the Insurance Company to get the false estimate approved from the Insurance Company
[32] The additional particulars provided about fraud and conspiracy in the two Replies are as follows:
First Response to Particulars
- (a) The alleged false representation was by the adjustor of Economical that the vehicle had been repaired, for which the Economical [sic] was ultimately responsible.
(b) The Plaintiffs called Economical multiple times after taking the delivery of the Audi Q7 to complain that the Audi Q7 has not been repaired as per the requirements, but Economical did not pay an attention to the complaint of the Plaintiffs.
(c) Loss has been as described above and in Statement of Clam.
- (a) The paragraphs 71-72 of the Statement of Claim do not contain any allegations of conspiracy. The identity of the conspirators are in Paragraph 73 of the Statement of claim.
(b) The plaintiffs never alleged that there was any agreement between the conspirators. Allegations are in the Statement of Claim
(c) the overt acts taken in furtherance of the conspiracy is in paragraph 73 of the Statement of Claim.
(d) The damage occurred is in the above mentioned paragraphs and in Statement of Claim.
(e) Please refer to the Statement of Claim
Second Response to Particulars
4(c) The amount of the actual loss suffered by the Plaintiffs from the alleged representation made by Economical cannot be specified as both the defendants are jointly and severally liable for the whole claim plus damages. Again, your client cannot ask for the specific amount suffered by the plaintiffs for just alleged representations and leave the rest of the claim aside. The claim will be proved in the Court and I do have [sic] to give more explanations.
- It has been sufficiently answered in the previous reply. The Actual damages in furtherance of the conspiracy cannot be specified as it is the part of the whole claim and your client is jointly and severally liable along with other Defendant.
[33] I start with the claim for fraud. First, whether it is pled as fraud, deceit or fraudulent misrepresentation, the Courts have used the same test to analyze whether the claim can be made out (see Paulus v. Fleury 2018 ONCA 1072 at paras 8-9, and the cases cited therein).
[34] In order to make out a claim for fraud, the Bawejas must establish the following:
a) A false representation of fact was made by Economical to the Bawejas;
b) Knowledge that the representation Economical made was false, or an absence of belief in its truth or recklessness as to its truth;
c) An intention that the Bawejas would act in reliance on the representation;
d) That the Bawejas did act on the representation; and
e) That the Bawejas suffered a loss in doing so.
[35] As I understand it from the pleadings and the responses to the request for particulars, the Bawejas are claiming that the false representation was that the vehicle had been repaired and that this statement was false. That may be correct.
[36] However, the materials I have before me do not plead any material facts that would indicate that the representative for Economical knew that the representation that the car was repaired was false, or had an absence of belief in the truth of the representation.
[37] I acknowledge that the Bawejas may have a claim for fraud against Royal. However, even if Royal fraudulently claimed that the repairs had been completed, there are no material facts plead that would outline how Economical knew that Royal was making a fraudulent assertion when it claimed that the car was repaired.
[38] If Economical had chosen Royal as the repair shop, it might be possible to infer knowledge of a potential fraud on the part of Economical because of the relationship between the two entities. However, on the Statement of Claim, it was the Bawejas who chose Royal as the repair shop. As a result, there has to be some basis pled for establishing that Economical and its representatives knew about the alleged fraud.
[39] Finally, the only pecuniary loss that is complained of in this case is the cost of repairing the car. This claim sounds in contract rather than as a basis for an economic tort, particularly when the other elements of the economic tort are not readily ascertainable.
[40] In terms of conspiracy, Tran v. University of Western Ontario (2015 ONCA 295) sets out the elements that must be made out to establish a claim of conspiracy. Those elements are:
a) The identity of all co-conspirators
b) The precise agreement amongst the alleged conspirators;
c) The overt acts taken in furtherance of the agreement/conspiracy by each alleged co-conspirator;
d) The actual damages or injury occasioned to the Bawejas by each at in furtherance of the conspiracy by each co-conspirator.
e) The specific act or acts committed by each co-conspirator and, to the extent that the conspiracy alleged is with respect to unlawful acts, particulars as to how such acts were lawful.
[41] The first problem with the Bawejas’ claim of a conspiracy is that their own pleadings and responses to particulars are inconsistent. Specifically, the Bawejas stated that they never alleged that there was any agreement between the conspirators. If that is true, then there is no cause of action.
[42] Given the Bawejas’ position, it is incumbent on them to identify who the conspirators were. It is not sufficient to say that Royal conspired with Economical. Economical is entitled to know who amongst its staff is alleged to have conspired with Royal.
[43] Even if it were sufficient to say that Economical and Royal conspired, there are other deficiencies in the pleading in respect of the claim for conspiracy. Those problems include:
a) When this conspiracy was allegedly formed.
b) Who was involved in the conspiracy from each company.
c) The specific acts of each of the alleged co-conspirators. This is especially important where unlawful acts are alleged, as there need to be particulars of the unlawful acts.
[44] For the foregoing reasons, the claims for fraud and/or conspiracy are struck from the Statement of Claim pursuant to Rule 21.
c) The Claim for Unjust Enrichment
[45] Again, I will start with the specific claims that have been made by the Bawejas. In addition to the claims set out at pargraph 31 the pleadings allege in essence that the Audi was not properly repaired, and that this amounted to an unjust enrichment of Economical. However, the Statement of Claim also acknowledges that Economical paid Royal for the repairs that were allegedly made to the Audi.
[46] In addition to these points, the two replies to particulars set out the following additional statements about unjust enrichment:
First Response to Particulars
- (a) The unjust enrichment was of the Royal Auto with the approval of the Adjustor of Economical for which Economical was ultimately responsible.
(b) The plaintiffs suffered a deprivation of enjoyment of a vehicle in perfect condition which did not require repair.
Second Response to Particulars
- (a) As alleged in the Statement of Claim and replied to in demand for particulars. The unjust enrichment is of the Adjustor of Economical Insurance who was hired by Economical Insurance to represent them in the claim, for which Economical Insurance is ultimately responsible. Even if Economical Insurance was not directly enriched, the adjustor along with Royal Auto was enriched. Economical Insurance is liable for the acts of the adjustor for the reasons provided above. Again, a portion of the monetary amount cannot be specified for unjust enrichment as your client is jointly and severally liable for the whole claim.
[47] In order to be able to establish a claim of unjust enrichment, a party must plead the following:
a) The defendant has been enriched;
b) There has been a corresponding deprivation to the plaintiff; and,
c) There is no juristic reason for the enrichment.
[48] These elements have been explored in detail in numerous cases. See, for example, Bank of Montreal v. i Trade Finance Inc. (2009) 2009 ONCA 615, 96 O.R. (3d) 561.
[49] In this case, I must consider what is in the pleadings and in the replies to the demands for particulars. There are five key problems with the Plaintiff’s pleadings, as follows:
a) There is no evidence that Economical received anything as a result of any unjust enrichment. Economical, even on the Statement of Claim, paid Royal for the repairs.
b) There is an assertion by the Plaintiffs that the adjuster hired by Economical was unjustly enriched. However, the responses to particulars do not make it clear either what the unjust enrichment was that the adjuster received or how it was obtained.
c) The link between the alleged unjust enrichment and the deprivation that the Plaintiffs suffered is unclear at best, even if the unjust enrichment was clear (which, for the reasons set out in points a and b, it is not).
d) As far as the claim against Economical is concerned, there is also a reason (even on the pleadings) for Economical to have been “enriched”. Simply put, on the Plaintiff’s pleadings, the Audi was repaired at an auto body shop of the Plaintiff’s choosing, and Economical paid for the repairs.
e) The amount of the unjust enrichment is not quantified. While I acknowledge that sometimes the quantum of damages can be difficult to prove, there has to be at least an explanation as to how one might go about ascertaining the damages. No such explanation is provided in this case.
[50] For these reasons, the Plaintiff’s pleadings with respect to unjust enrichment are struck pursuant to Rule 21.
d) The Claim for Negligence
[51] The statement of claim makes no specific allegations of negligence, other than the paragraphs that are set out elsewhere in these reasons. It is difficult to ascertain the basis of a claim for negligence from the Statement of Claim.
[52] The replies to the demand for particulars state the following about negligence:
First Response to Particulars
- (a) The specific duty was owed by the Adjustor of Economical for which Economical was ultimately responsible.
(b) Negligent Acts included the approval of the estimate by the adjustor without checking whether the repair was carried by Roayl [sic] Auto for which Economical was ultimately responsible. The other acts were the ignorance of complaints of the plaintiffs by Economical.
(c) The corresponding losses have been described in the Statement of Claim.
Second Response to Particulars
5(a) Plaintiffs are the clients of the Defendant, The Economical Insurance. The Plaintiffs have been paying premium for years to Economical Insurance. The Defendants owe a duty of care to the plaintiffs and are responsible for compensating for the loss of the plaintiffs.
5(c) The corresponding losses suffered by the plaintiffs cannot be taken out of the whole claim as the defendants are jointly and severalay liable for the whole claim which has to be proved in Court and will be proved in Court.
[53] The constituent elements that must be pled when alleging negligence are as follows:
a) The alleged duty of care owed by the defendant to the plaintiff;
b) That the defendant breached the alleged duty of care; and
c) That damage resulted from this breach.
[54] This test is, again, set out in many decisions in the case law. See, for example, Gjonaj v. Ontario Lottery and Gaming Corporation (2018 ONSC 2404).
[55] In this case, the problems with the Plaintiff’s claim for negligence are as follows:
a) There is nothing in the Statement of Claim that specifically addresses negligence at all other than in the prayer for relief.
b) The duty of care that allegedly exists between Economical and the Plaintiffs has not been explained in the particulars. This is an important requirement because Economical has a contractual relationship with the Plaintiffs, and has obligations (including obligations of good faith) under that contractual relationship. However, breaching the contractual terms (or the contractual obligations) does not necessarily mean that there is a claim in negligence. A claim in negligence is separate and must be explained.
c) There are no losses, other than the repair costs, that are identified as being attributable to this negligence.
[56] This is the first claim on which the losses of the Bawejas is directly raised, although it is a part of the previous two claims. In that regard, I note that the Statement of Claim states as follows in paragraph 62:
- Saurabh and his family had to go through mental harrasement and huge business loss in dealing with Insurance Company, Car Rental Company and Royal Auto
[57] When asked to expand on this claim in the demand for particulars, the Bawejas replied as follows:
First Response to Particulars
- Huge business loss of the plaintiff is because of the time, the plaintiffs had to spend in dealing with Economical after getting the delivery of Audi Q7 from Royal auto Collision.
[58] I start with the observations that “huge business losses” requires additional particularization and, on its own, is probably not sufficient to establish a claim that Economical has to meet. However, even if I accept that this is sufficient for a pleading, there is no link between the business losses and any negligent conduct on the part of Economical.
[59] To put it another way, the Bawejas can claim damages in contract as a result of Economical’s failure to pay the costs of the Audi’s repair twice, and that claim is not challenged on this motion. However, to claim business losses as a result of negligence requires both an explanation of the losses and a link between the alleged negligent conduct and the losses.
[60] Finally, in any event, it is not necessarily negligent for Economical to decide that they are not paying twice for the repair of the vehicle. As far as I can tell from the pleadings as they exist at this point, that is the extent of the Baweja’s claim, and it is not sustainable without further explanation.
[61] For these reasons, the Bawejas’ claims in negligence are struck from the Statement of Claim pursuant to Rule 21.
e) The Claim for Mental Distress
[62] The statement of claim alleges, in paragraph 1(c), that general damages on account of mental stress should be paid. In addition, the Statement of Claim sets out the following particulars:
- Saurabh and his family had to go through mental harrasement and huge business loss in dealing with Insurance Company, Car Rental Company and Royal Auto.
[63] In addition, the replies to particulars state as follows:
First Response to Particulars
- (a) The acts committed by Economical and the adjustor of Economical as described above and in Statement of Claim mental harassment to the plaintiffs. The plaintiffs were disturbed due to the fact that, Audi Q7 was not functioning properly and required repair which was ultimately caused due to the above said accident.
(b) The plaintiffs suffered the loss because plaintiffs had to drive a malfunctioning vehicle or pay the cost of getting the repair done at their own cost. The repair was the ultimate responsibility of Economical as the loss was due to the accident.
Second Response to Particulars
6(a) Following specific acts and Statements were made by Economical that resulted in mental harassment of the plaintiffs.
(i) Economical Insurance provided the access to the documents mentioning the parts replaced in Audi Q7 only after Audi Q7 was picked up by the Plaintiffs. So, the Plaintiffs could not confirm that Audi Q7 was completely repaired and the parts replaced as per the Estimate approved by the Adjustor.
(ii) The plaintiffs were not informed about the payment of the rent of the rental car arranged by the Economical Insurance. The Economical Insurance Company refused to pay the rental of the above said rental car. The Rental Company called my client and informed him that the Economical had refused to pay the full amount of the rental company. Therefore, the Car Rental Company deducted $3590.02 from the credit card of my clients.
(iii) The Plaintiffs called the Economical requesting the Economical to reimburse $3580.02 paid by the Plaintiffs to the Car Rental Company. The Economical Insurance refused to pay and did not accept the request of the Plaintiffs. The Plaintiffs kept on calling Economical for approximately two months to ger the issue resolved but to no avail.
(iv) The Plaintiffs came to know about the defence in the Audi Q7 after taking the delivery. The Plaintiffs were going on Highway on a family trip, when they found out that, the Cruise Control of Audi Q7 was not working. The Plaintiffs took their Audi Q7 to Audi of Mississauga after returning from the trip, they found out about the defects left unrepaired and the parts unreplaced by Royal Auto.
(v) The Plaintiffs called Economical Insurance telling them about Fraud committed by Royal Auto along with the Adjustor of Economical Insurance.But, Economical Insurance refused to do anything in this regard.
(vi) The Plaintiffs kept contacting Economical Insurance for nearly two months to get their issue resolved, but to no avail.
(vii) The Plaintifffs [sic] had to send a letter to the Ombudsman of Economical to resolve the issue. But, the Ombudsman of Economical Insurance also refused to help the Pliantiffs [sic].
(viii) The Plaintiffs then hired me to deal with the Economical Insurance Company. I sent Demand Notice [sic] to the Economical Insurance, the copy of which can be obtained by you from your client. The Representative of Economical Insurance, Mathew Maclean called me and tried to settle this matter. He settled the matter on the phone on following terms in the presence of the Plaintiffs in my office:
(a) Economical Insurance would pay $3,580.02 to the Plaintiffs for the Car Rental Company.
(b) Economical Insurance would conduct an investigation against Royal Auto and the Adjustor to find out if they committed fraud.
(c) If Royal Auto is found guilty of fraud, then Economical Insurance would pay all the recovered amount from Roayl [sic] Auto to the Plaintiffs
(ix) Economical Insurance only paid $3,580.02 to the Plaintiffs and later refused to fulfil the other terms of the settlement.
(x) Economical Insurance refused to conduct any investigation against Royal Auto.
(xi) Economical Insurance refused to pay any amount, as there was no amount recovered because of no investigation by them against Royal Auto.
All these above stated acts caused mental harrasement [sic] as these acts were intentionally and negligent.
[64] For reasons that I will explain in a moment, the claim for mental harassment is really a claim for the intentional infliction of mental suffering. This is a tort that is discussed in detail by the Court of Appeal in both Prinzo v. Baycrest Centre for Geriatric Care ((2001) 2002 CanLII 45005 (ON CA), 60 O.R. (3d) 474 (C.A.)) and Boucher v. Wal-Mart Corp. (2014 ONCA 419).
[65] The Court of Appeal has most recently considered the issue in detail in Merrifield v. Canada (Attorney General) (2019 ONCA 215, rev’g 2017 ONSC 1333). In that case, the Court of Appeal set out a three part test for establishing intentional infliction of mental suffering as follows:
a) The conduct must be flagrant and outrageous;
b) The conduct must be calculated to harm the Plaintiff; and
c) The conduct must have caused the Plaintiff to suffer a visible and provable illness.
[66] At the hearing of the motion, reference was made by both parties to the trial decision in Merrifield, supra. That decision sets out an expanded test for a tort of mental harassment as a separate tort from intentional infliction of mental suffering. In her test for the tort of mental harassment, the trial judge in Merrifield set out elements that are somewhat different from the ones included in the test for intentional infliction of mental suffering.
[67] In its decision in Merrifield, supra, the Court of Appeal rejected the plaintiff’s call for the creation of a tort of mental harassment. After a detailed analysis, the Court of Appeal determined that it was neither necessary or desirable at this stage to create a new tort of mental harassment, given the similarities between the proposed tort and the already existing tort of intentional infliction of mental suffering.
[68] The Court of Appeal also noted (at paragraph 48) that the test for the proposed tort of mental harassment was less onerous than the test for a claim for intentional infliction of mental stress, as the tort of mental harassment is negligence based, while intentional infliction of mental stress has an element of intent. I note that both still require outrageous conduct (see Merrifield, supra Court of Appeal decision at paragraph 47).
[69] Even if the less onerous test is applied in this case (and there is no legal reason at this point to apply the lower test), there is still nothing pled that would sustain the Baweja’s claim in this regard. In that respect, I note the following:
a) There is nothing high handed or outrageous about the conduct of Economical or its agents, even in the detailed listing of events that the Bawejas’ second reply to particulars provides.
b) There is nothing in the Bawejas’ pleadings or replies to particulars that establishes that any conduct, outrageous or otherwise, was intended to harm the Bawejas.
c) There is no explanation as to the allegedly severe emotional distress that the Bawejas suffered. For example, there is no indication that anyone took time off work or engaged in psychological or other medical treatment as a result of this claim.
[70] For these reasons, the Bawejas’ claim for intentional infliction of mental suffering, or a claim for mental harassment, is struck from the Statement of Claim pursuant to Rule 21.
f) Conclusions
[71] For the foregoing reasons, the claims relating to fraud, conspiracy, unjust enrichment, negligence and mental distress are struck from the Statement of Claim pursuant to Rule 21 of the Rules of Civil Procedure.
[72] Finally, counsel for the Bawejas argued that it would be “against natural justice” if the pleadings were amended or the case sent to small claims court. I will address the small claims court issue under the final issue. This argument, as it pertains to the pleadings, is without merit.
[73] It is vital that a party who is responding to a pleading has an opportunity to understand the nature of the claim that they are facing. The claims that the Bawejas have advanced are not supported by any of the material facts in their pleadings or in their replies to particulars. Once that determination is made, there is nothing against natural justice in dismissing the allegations, with or without leave to amend.
Issue #3- Should the Claim for 22% Pre-Judgment and Post-Judgment Interest be Struck?
[74] This relief is being sought under Rule 25, rather than Rule 21. Under Rule 25.11 a pleading may be struck if it:
a) May prejudice or delay the fair trial of the action;
b) Is scandalous, frivolous or vexatious; or
c) Is an abuse of process of the Court.
[75] In this case, the Statement of Claim makes a bald claim for a 22% interest rate to be applied to all damages, both pre and post judgment. There were no specific facts that I could find in the Statement of Claim that would support such a claim.
[76] Counsel for Economical sought particulars of this claim from the Bawejas. In response, the Bawejas stated as follows:
First Response to Particulars
- The basis of claim for pre-judgment and post-judgment interest rate is this action and the cause of action that led to this Statement of Claim.
[77] There is no basis in either contract or law that is pled for the interest rate. Rule 25.06(1) requires that every pleading shall contain a concise statement of material facts on which the party relies for his or her claim. In this case, there is nothing from which I can see any facts to support the interest rate that has been claimed.
[78] Similarly, I see nothing in the law that would support a claim for the interest rate that has been sought. I acknowledge that trial judges have a discretion under section 130(2) of the Courts of Justice Act to fix a rate that is different from the interest rates that are prescribed under the Courts of Justice Act for pre and post judgment interest. However, there are no facts pled in this case to explain why the trial judge ought to exercise that discretion in this case in the manner sought by the Plaintiff.
[79] As a result, the claim for 22% interest is struck pursuant to Rule 25.
Issue #4- Should Leave to Amend be Granted?
[80] When a pleading is struck, leave to amend should only be denied in the clearest of cases (see Tran, supra and T.S.I. International Group Inc. v. Formosa 2017 ONCA 621).
[81] A detailed listing of the factors that Courts should consider when deciding whether to grant leave to amend is set out in McHale v. Lewis (2018 ONCA 1048) where Pardu J.A. stated as follows (at para. 6):
(a) the approach that amendments should be presumptively approved unless they would occasion prejudice that cannot be compensated by costs or an adjournment, they are shown to be scandalous, frivolous, vexatious, or an abuse of the court’s process, or they disclose no reasonable cause of action, is relevant to the issue of whether, on a motion to strike a pleading, a court should exercise its discretion to grant leave to amend;
(b) leave to amend should properly be given where a pleading can be put right or improved by amendment and no injustice is done thereby;
(c) depending on the circumstances of the case, striking out a pleading without granting leave to amend often does little to advance the ends of justice;
(d) in disposing of a motion to strike when a recognized cause of action has been improperly pleaded, but can be put right without non-compensable prejudice to the defendants, the preferred route is to afford the plaintiff the opportunity, upon appropriate terms, to plead the cause properly within the action before the court; and
(e) the foregoing approach makes practical sense and is in keeping with the objectives set out in rule 1.04, namely that the rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
[82] When this list of factors is considered, it is clear that leave to amend will regularly be granted, even when the pleadings are, as is the case here, seriously deficient.
[83] Counsel for Economical argues that leave should not be granted in this case because the Bawejas were provided with two opportunities to provide further particulars and have not provided anything that meets the requirements for any of the claims. This submission is entirely reasonable in my view.
[84] In addition, during argument I asked counsel for the Bawejas to explain both the bases for the various causes of action he is advancing, and whether there were any additional facts that would assist him in advancing these claims. I did not receive satisfactory answers to these questions.
[85] In my view, these two factors provide a strong basis for denying leave to amend the pleadings. However, it is clear to me that these issues are being strongly pursued by the Plaintiffs and that they will continue to be pursued. In addition, the remedy of a 22% interest rate is something that is normally in the discretion of a trial judge. Certainly on that point, I should be very cautious about striking the Bawejas claim for interest without providing leave to amend.
[86] As a result, I am prepared to permit amendments to the pleadings on the following terms:
a) The Plaintiffs must serve and file a black-lined Statement of Claim with all of the amendments that they wish to make within thirty (30) days of the release of these reasons. Those amendments must address the concerns that I have outlined in my reasons.
b) Economical shall have twenty (20) days thereafter to determine whether it wishes to renew its motion to have the various causes of action struck out.
c) In the event that Economical wishes to renew its motion, then that motion shall be argued before me on a date to be determined by the trial office. This appearance shall be for one hour. Each side will have twenty (20) minutes for argument, and the remaining time will be for questions from the bench.
d) The parties shall each be required to file an updated factum, taking into account the new amendments at least fourteen (14) days before the hearing of the motion.
e) Other than the updated pleading and any additional case-law that the parties may wish to rely upon, no other materials are required or permitted on this motion.
[87] There are to be no extensions of these deadlines, even on consent, without my leave. I would note that these timelines take into account the fact that we are just about to enter the winter holiday season. Had that not been the case, the Bawejas would have had twenty (20) days to provide their new pleading.
[88] I should also briefly explain why this motion will return before me. The claims that the Bawejas are making are complex. I have already considered the underlying facts of this case and, as a result, will be able to address this motion more efficiently than one of my colleagues.
[89] Further, if this matter had to come back before one of my colleagues, it would be a long motion. We are currently booking long motion days well into next year. As a result, having this matter return before one of my colleagues would unnecessarily slow this action down. It has been a year since the claim was commenced, and pleadings still have not closed.
Issue #5- Should Economical’s Action be Transferred to the Small Claims Court?
[90] No.
[91] Economical is correct that, if none of the torts are allowed to proceed, this action is within the range of the small claims court. If the action were solely against Economical, then it would be appropriate to transfer it to the Small Claims Court.
[92] However, the Bawejas also have an action against Royal arising out of the same series of transactions. That action will be proceeding in the Superior Court. Permitting the Economical action to proceed as a separate claim in the Small Claims Court creates two problems:
a) There is the possibility of inconsistent findings. For example, the Deputy Judge in the small claims court action could find that the Bawejas were entirely responsible for the delays in the repairs, while the Superior Court judge might conclude that the delays were the responsibility of Economical and Royal.
b) There is clearly going to be duplication of resources. The evidence in both cases will be similar, and many of the same witnesses will have to testify in both cases.
[93] The prejudice to Economical if they are required to participate in a Superior Court action is purely financial. A Superior Court action, with Affidavits of Documents and discovery, will be more expensive. In the event that the trial judge determines that the action brought by the Bawejas against Economical is unnecessary, then the trial judge can address that through an award of costs.
[94] As a result, the request to move the action to the Small Claims Court is denied.
Conclusion and Costs
[95] For the foregoing reasons, I order as follows:
a) The noting in default is set aside.
b) The claims brought by the Bawejas for fraud, civil conspiracy, unjust enrichment, negligence, mental harassment and/or distress and 22% interest on all amounts awarded are struck.
c) Leave to amend the Statement of Claim is granted on the following terms:
i) The Plaintiffs must serve and file a black-lined Statement of Claim with all of the amendments that they wish to make within thirty (30) days of the release of these reasons. Those amendments must address the concerns that I have outlined in my reasons.
ii) Economical shall have twenty (20) days thereafter to determine whether it wishes to renew its motion to have the various causes of action struck out.
iii) In the event that Economical wishes to renew its motion, then that motion shall be argued before me on a date to be determined by the trial office. This appearance shall be for one hour. Each side will have twenty (20) minutes for argument, and the remaining time will be for questions from the bench.
iv) The parties shall each be required to file an updated factum, taking into account the new amendments at least fourteen (14) days before the hearing of the motion.
v) Other than the updated pleading and any additional case-law that the parties may wish to rely upon, no other materials are required or permitted on this motion.
d) Economical’s request to transfer this action to the Small Claims Court is dismissed.
[96] Economical is to file its costs submissions within fourteen (14) calendar days of the release of these reasons. Those submissions may be no longer than two (2) single-spaced pages, exclusive of case-law and offers to settle. I have already received Economical’s bill of costs.
[97] The Bawejas have ten (10) days from the day they receive Economical’s submissions to provide their responding submissions. Those submissions may be no longer than two (2) single-spaced pages, exclusive of bills of costs, case-law and offers to settle. I have already received the Bawejas’ bill of costs as well.
[98] There will be no reply submissions, even on consent, without my leave. If I do not receive the cost submissions in accordance with this timetable, I will presume that the parties have agreed upon costs, and there will be no costs payable. In this regard, I would note that the time for the parties to provide their costs submissions has also been extended to take into account the fact that we are entering the winter holiday season. Should a further extension be required, however, it requires my leave.
LEMAY J
Released: December 17, 2019
COURT FILE NO.: CV-18-5202-00
DATE: 2019 12 17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SURABH BAWEJA AND BINDIYA BAWEJA
Plaintiffs
- and -
ROYAL AUTO COLLISION and ECONOMICAL INSURANCE
Defendants
REASONS FOR JUDGMENT
LEMAY J
Released: December 17, 2019