Court File and Parties

COURT FILE NO.: CV-18-603277

DATE: 2019-04-18

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Ismail Abbasbayli, Plaintiff

AND:

Fiera Foods Company, Bakery Delux Company, 2168587 Ontario Ltd., David Gelbloom and Boris Serebryany Defendants

BEFORE: Pollak J.

COUNSEL: Nikolay Y. Chsherbinin, for the Plaintiff Jessica Roher, for the Defendants

HEARD: February 6, 2019

ENDORSEMENT

[1] The Plaintiff, Ismail Abbasbayli, has brought an action for wrongful dismissal against Fiera Foods Company, Bakery Delux Company, and 2168587 Ontario Ltd. (“the corporate Defendants”), that/whom he alleges are his common employer, and two directors of these corporate Defendants, Mr. Gelbloom and Mr. Serebryany (“the personal Defendants”). The Plaintiff pleaded, among other causes of action, causes of action in oppression and unpaid wages.

[2] On this motion to strike, the Defendants allege that the claims against them disclose no cause of action with respect to the oppression remedy pursuant to s. 248 of the Ontario Business Corporations Act, R.S.O. 1990 c. B. 16 (“OBCA”), or the payment of unpaid wages pursuant to both s. 131 of the OBCA, and s. 81(1) of the Employment Standards Act, 2000, S.O. 2000, c. 41 (“ESA”). Further, it is submitted that these allegations are scandalous, frivolous, and vexatious. The Defendants move for an Order that paragraphs 56-61 of the Claim be struck, without leave to amend.

[3] The Defendants also submit that paragraphs 14-23 and 40 of the Claim should be struck on the grounds that they plead irrelevant, scandalous, frivolous, and vexatious allegations regarding the Corporate Defendants’ breaches of health and safety requirements, and requirements for the manufacturing and storage of raw goods. These pleadings are made for atmosphere and to embarrass the Defendants. Further, it is submitted that these pleadings contain evidence and not material facts.

[4] The Plaintiff characterizes his Claim as relating to the Defendants' alleged bad faith conduct throughout his employment and the manner of his dismissal. He argues that he pleads the material facts surrounding the breaches of his employment contract; the Defendants' reprisals against him which necessarily includes their specific violations of manufacturing, storage and health and safety requirements; and the dates on which he witnessed those violations and reported them to the Defendants. These facts are directly relevant and material to the Plaintiff's claims for wrongful dismissal, oppressive conduct, statutory liability, punitive damages, moral damages, and bad faith.

Does the Claim plead causes of action which are not supported by the relevant material facts necessary to support each cause of action?

[5] The test to be applied on this motion is whether, on the facts as pleaded, it is "plain and obvious" that the Claim fails to disclose a reasonable cause of action.

[6] Section 131 of the OBCA and s. 81 of the ESA are statutory exceptions to the rule that directors are not personally liable for the wages a corporation owes to its employees. The directors of a corporation may be held jointly and severally liable for unpaid wages in specific circumstances if certain preconditions are met.

[7] Section 131 of the OBCA and s. 81 of the ESA set out statutory requirements to establish directors’ personal liability.

[8] The pleading with respect to s. 131 of the OBCA states:

“as directors, Serebryany and Gelbloom, exercised the powers of directors in an oppressive manner, without legal or moral justification, and as such are jointly and severally liable for the aforementioned claims pursuant to sections 131 and, inter alia, 248 of the Business Corporation Act, R.S.O. 1990 c. ("BCA").”

[9] The personal Defendants are jointly and severally liable pursuant to s. 131(1) for debts for services performed and for vacation pay accrued. Severance pay, termination pay, and claims for damages for wrongful dismissal are not debts for services performed. Directors are not liable for those amounts.

[10] It is submitted that the Plaintiff did not plead that the personal Defendants are liable under s. 131 for any debts for services rendered to the Corporate Defendants or vacation pay accrued, and as such has not pleaded the material facts necessary to establish a cause of action against the personal Defendants pursuant to s. 131 of the OBCA.

[11] With respect to the pleadings pertaining to the personal Defendants' liability under s. 81 of the ESA, although the Plaintiff pleads that the personal Defendants are liable for "an employee's unpaid wages, vacation pay, holiday pay and overtime wages", the Plaintiff pleads only that he was owed vacation pay at the time of his termination. This claim, however, is not included in the Plaintiff's prayer of relief at paragraph 1 of his Claim. As no relief is claimed, the pleading with respect to s. 81 of the ESA should be struck out.

[12] In the Claim there are no material facts addressing any of the statutory requirements to establish the personal Defendants’ liability as directors.

[13] Considering the Claim only, the Plaintiff cannot establish liability of either the personal Defendants nor does either personal Defendant have a statutory obligation to pay as a Director under s. 131 of the OBCA or s. 81 of the ESA. The Plaintiff has failed to plead material facts necessary to establish a cause of action.

[14] The Plaintiff opposes the motion and relies on the cases Ricci v. Chippingham Financial Group Ltd., 2017 ONSC 6958, and El Ashiri v. Pembroke Residence Ltd., 2015 ONSC 1172.

I do not agree that both cases are applicable to the issue before this Court. The Ricci case addressed a master’s ability to order answers to questions relating to director liability before ss. 81(1) preconditions were satisfied. The court held that ss. 81(2) of the ESA does not limit an employee’s ability to prosecute litigation until the preconditions in ss. 81(1) to establish director liability are satisfied (at paras. 12-16). Similarly, the decision held that an employ can commence an action against a director before the requirements in ss. 131(2) OBCA are made out (at paras. 19-20). The court did not decide what material facts were required in the pleadings regarding ss. 81(1) ESA or ss. 131(2) OBCA regime, allowing a claim against the directors personally. The Ricci case considers the requirements to continue an action, whereas in this case, the issue is what material facts are in the pleadings.

[15] The El Ashiri case is also distinguishable. The court considered whether the plaintiffs should be granted summary judgment on their undefended claims of constructive dismissal (at paras. 2-3). The court found that the oppression remedy in the OBCA contemplated imposing personal liability on directors, and found the defendant director personally liable (at paras. 17-18). The court did not comment or consider the sufficiency of the plaintiffs’ pleadings or what material facts must be pleaded to ground an oppression remedy that imposed personal liability on a director. This factual requirement had already been met before the court.

[16] For the above-noted reasons, it is plain and obvious that the Plaintiff has not pleaded a tenable cause of action under either s. 131 of the OBCA or s. 81 of the ESA, and that these claims have no reasonable prospect of success. These claims should be struck, without leave to amend.

[17] Rule 25.06(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides that the pleading must contain a "concise statement of the material facts" and that "evidence by which those facts are to be proved" should not be included in the Claim.

[18] In Jacobson v. Skurka, 2015 ONSC 1699, 25 O.R. (3d) 279, at para. 44, Perell J. described the difference between evidence and material fact as follows:

The difference between pleading material facts and pleading evidence is a difference in degree and not of kind. What the prohibition against pleading evidence is designed to do is to restrain the pleading of facts that are subordinate and that merely tend toward proving the truth of the material facts. [citations omitted]

[19] I find that paragraphs 14-23 and 40 of the Claim contain predominantly evidence contrary to rule 25.06(1).

[20] These pleadings should be struck.

[21] As well, it is submitted that paragraphs 14 to 23, 40, and 56 to 61 include irrelevant facts and inflammatory attacks on the Corporate Defendants’ integrity. The Defendants submit that these paragraphs have been included to embarrass the Defendants rather than to advance the action in any meaningful way. I find that these pleadings ought to be struck as they violate r. 25.11.

Leave to Amend

[22] Leave to amend a Statement of Claim can properly be given where a pleading can be fixed by amendment, and no injustice is done in doing so.

[23] The jurisprudence is clear that leave to amend should be denied only in the “clearest” of cases: TSI International Group Inc. v. Formosa, 2017 ONCA 261. In this case, I find that the moving parties have provided the defendant with a roadmap of what is required to “fix” the pleadings. I therefore cannot find that leave to amend should not be granted because there is no reasonable prospect that the claims can be fixed.

[24] I therefore grant the Defendants’ motion to strike out paragraphs 14 to 23, 40, and 56 to 61 of the Claim, with a leave to amend the Claim to the Plaintiff. The amendment to the Claim must be served and filed within two weeks of the date of this endorsement.

Costs

[25] If the parties have reached an agreement on costs at the hearing of this matter, that agreement will apply.

[26] If the successful party wishes to make submissions that costs on a higher scale should be awarded and the parties are unable to agree on such costs, they may make brief written submissions to me no longer than three pages in length. The Defendant’s submissions are to be delivered by 12:00 p.m. on April 25, 2019, and the Plaintiff’s submissions are to be delivered by 12:00 p.m. on April 30, 2019. Any reply submissions are to be delivered by 12:00 p.m. on May 3, 2019.

[27] Submissions are to be delivered to Room 170, 361 University Avenue or via email to my assistant. After May 3, 2019, if no submissions are submitted for costs, the matter will be considered at an end and the file returned to the motions office.

Pollak J.

Date: April 18, 2019