COURT FILE NO.: CV-18-4116-00
DATE: 20200129
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
AMY GASKA
Ethan M. Rogers, Counsel for the Plaintiff (Defendant to the Counterclaim) and Defendants to the Counterclaim
Plaintiff
- and -
G.R.T. GENESIS INC. and BRUNO TIMPANO
Julia A. Cecchetto, counsel for the Defendants and Plaintiffs by Counterclaim
Defendants
- and -
G.R.T. GENESIS INC. and BRUNO TIMPANO
Plaintiffs by Counterclaim
- and -
AMY GASKA, WILLIAM GASKA and DIANNE GASKA
HEARD: October 16, 2019
Defendants to the Counterclaim
REASONS FOR JUDGMENT
Daley, RSJ.
Introduction:
[1] The plaintiff Amy Gaska (“Amy”) brought this action seeking damages from the defendants for constructive dismissal from her employment with the defendant corporation G.R.T. Genesis Inc. (“G.R.T.”).
[2] Amy was employed with G.R.T. from 2012 to 2018.
[3] Following the service of the statement of claim the defendants delivered a statement of defence and counterclaim wherein the defendants, as plaintiffs by counterclaim, seek certain relief and damages from Amy and her parents William Gaska (“William”) and Dianne Gaska (“Dianne”). It is asserted that William was a 50 per cent shareholder in the defendant corporation G.R.T. until he sold his interest in the company to the defendant Bruno Timpano (“Bruno”) in July 2018, in and around the time of the plaintiff’s alleged constructive dismissal.
[4] The defendants/plaintiffs by counterclaim (“defendants”) were served with two Demands for Particulars and one Request to Inspect by the plaintiff and defendant by counterclaim (“plaintiff”) wherein particulars of the claims made in the counterclaim were sought. By order of January 15, 2019, the defendants were ordered to provide such particulars.
[5] The defendants assert that G.R.T. is entitled to damages from the defendants by counterclaim as a result of several alleged breaches. Notably, although Bruno is identified as a plaintiff by counterclaim in the statement of defence and counterclaim, as issued, the prayer for relief in that pleading, at paragraph 46 and following, only seeks relief on behalf of G.R.T. All allegations of wrongs or breaches committed by the defendants by counterclaim are in respect of G.R.T. alone.
[6] The defendants assert several causes of action and claims for damages in their counterclaim including:
(1) indemnification in relation to future possible claims by the Canada Revenue Agency and the Receiver Gen. of Canada;
(2) damages in relation to an alleged conspiracy regarding the income of the Plaintiff Amy Gaska;
(3) misrepresentation and deceit to the Canada Revenue Agency and the Court;
(4) damages in relation to alleged breach of contract;
(5) punitive and exemplary damages.
[7] The facts as alleged by the defendants relate primarily to the proper quantification of Amy’s salary payable by G.R.T. and the potential liability of G.R.T. to the Canada Revenue Agency (CRA).
[8] The defendants by counterclaim move for summary judgment dismissing the counterclaim pursuant to rule 20.01(3) of the Rules Of Civil Procedure, R.R.O. 1990, Reg. 194, on the grounds that the defendants and responding parties on the motion have failed to adduce any evidence demonstrating a genuine issue requiring a trial with respect to the counterclaim, including demonstrating that the defendants have suffered damages as a result of any of the alleged breaches by the defendants by counterclaim.
[9] For the reasons set out below, I have concluded that the counterclaim must be dismissed in its entirety.
2. Applicable Legal Framework and Analysis:
[10] The parties disagree as to whether or not this is an appropriate case to be determined by way of summary judgment. Therefore, so far as it relates to the counterclaim, the matter must be determined through r. 20.04(2)(a), which directs that the court, “shall grant summary judgment if….the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.”
[11] Rule 20.04(2)(a) must be read in combination with r. 20.04(2.1) which provides:
(2.1) In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence. O. Reg. 438/08, s. 13 (3).
[12] In resolving this motion the court must consider the pleadings and the evidentiary record to determine whether there are any genuine issues requiring a trial. The onus rests with the moving party to establish that there is no genuine issue requiring a trial with respect to a claim or defence. Where the moving party prima facie establishes that there is no genuine issue requiring a trial, the moving party is then entitled to summary judgment at law. To preclude the granting of summary judgment, the responding party then assumes the evidentiary burden of presenting evidence capable of supporting the positions advanced by that party in its pleading: Correct Group Inc. v. Cameron, 2019 ONSC 3901, at para. 31.
[13] Prior to the launching of this summary judgment motion, McSweeney J. ordered that the defendants were to provide particulars of the torts alleged in their pleading in the counterclaim, against whom they were being asserted and the quantum of damages sought in respect of those causes of action.
[14] The prayer for relief in the counterclaim reads as follows:
[46]
a. Damages in the amount of TWO HUNDRED and FIFTY THOUSAND ($250,000.00) DOLLARS;
b. an order directing the Defendants by Counterclaim to indemnity G.R.T. for any and all claims, charges, taxes, premiums, payments, withholdings, deductions, assessments, penalties, legal fees and disbursements, demands and any money that might be reuired to be paid to the Receiver General of Canada or the Canada Revenue Agency as a result of the allocation of the Unentitled Income to the Plaintiff and otherwise any income tax or other statutory premiums, withholdings, deductions, remittances, payments or charges that may be payable in excess of the income tax or other statutory premiums, withholdings, deductions, remittances, payments or charges previously withheld on account of moneys payable to him by G.R.T.:
c. damages in the amount of ONE HUNDRED THOUSAND ($100,000.00 DOLLARS) on acccount of exemplary and/or punitive damages.
[15] The plaintiff served a Demand for Particulars upon the defendants requiring particulars with respect to the damages asserted in the prayer for relief. In response, the defendants stated:
(1) with respect to paragraph 46 (a) of the prayer for relief, the particulars of damages are “unknown at this time”;
(2) with respect to paragraph 46 (b) of the prayer for relief the relief sought is “contingent upon any and all claims by Canada Revenue Agency during the tenure of this litigation”;
(3) with respect to paragraph 46 (c) of the prayer for relief “ the particulars of damages are unknown at this time.”
[16] The defendants by counterclaim served a Request to Admit on or about July 8, 2019 upon counsel for the defendants. No response to this request was delivered on behalf of those parties and as such those parties are deemed to have admitted all of the facts as set out in that Request to Admit.
[17] In paragraphs 13 to 15 inclusive and 18 to 24 inclusive of the Request to Admit, the defendants are deemed to have admitted the facts as outlined. Included among those facts is the statement that with respect to Amy’s payroll income, Bruno either approved the payroll records as prepared by Amy, or he asked Amy to make amendments to same and the payroll records prepared by Amy and sent to Bruno for approval included the payroll information respecting Amy’s salary and remuneration. Further, the defendants are deemed to have admitted that the income rates as set out in the statement of claim relating to Amy were in fact paid to her.
[18] As to the issue of damages allegedly sustained by the defendants, the only claim truly being asserted, that being the one on behalf of G.R.T., counsel for the defendants readily acknowledged in submissions that that defendant had, not as of the date of the summary judgment motion hearing, sustained any damages.
[19] The defendants have not adduced any evidence of damages suffered by them with respect to any of the causes of action asserted in the counterclaim. With respect to the claims for indemnification, they have admitted that no damages have been suffered and no indemnification has been sought from them.
[20] Counsel for the defendants readily acknowledged during her submissions that the defendants have not adduced any evidence as to any damages flowing from the alleged breaches of the defendants by counterclaim. She further acknowledged that the damages being sought are prospective only, in that they have not thus far been incurred.
[21] Damages are not intended to punish the defendant or enrich the plaintiff. Where a plaintiff has actually suffered losses, damages are awarded to serve the purpose of restoring the plaintiff to its original position as accurately as possible: Ratyach v. Bloomer, 1990 CanLII 97 (SCC), [1990] 1 S.C.R. 940, at para. 23.
[22] An essential element of tortious liability, for example with respect to the causes of action of civil conspiracy, misrepresentation and deceit, is a loss. If a plaintiff cannot demonstrate a loss, then it is not entitled to the recovery of damages: Ratych v. Bloomer, at para. 26.
[23] Several decisions have held that where a party responding to a summary judgment motion fails to adduce any evidence as to damages they have allegedly suffered, summary judgment dismissing the action should be granted in the absence of such evidence: Coast-to-Coast Industrial Development Co. v. 1570706 Ontario Inc., 2005 CanLII 18292 (Ont. S.C.), at paras. 32-33; Mahoney v. Sokoloff, 2015 ONCA 390.
[24] In Mahoney the court stated in part at para. 5:
“…… The appellants were obliged in responding to the summary judgment motion to put their best foot forward in respect of all their claims and to lead some evidence on the foundation for the…claimed losses… They did not do so. As a result, on the record, the motion judge did not err in concluding that no genuine issue for trial arose regarding these claims.”
[25] The respective evidentiary burdens on the moving and responding parties on motions for summary judgment were considered by Brown J.A. in Sanzone v. Schechter, 2016 ONCA 566, 402 D.L.R. (4th) 135, an appeal on a summary judgment motion, at paras. 24-32. He stated at para. 30:
First, the evidentiary burden on a moving party defendant on a motion for summary judgment is that set out in rule 20.01 (3) – “a defendant may… move with supporting affidavit material or other evidence.” As explained in Connerty at para 9, only after the moving party defendant has discharged its evidentiary burden of proving there is no genuine issue requiring a trial for its resolution does the burden shift to the responding party to prove that its claim has a real chance of success.”
[26] In response to the motion for summary judgment, an affidavit from Bruno in reply was submitted which essentially outlined the history of events with respect to Amy’s employment with G.R.T. commencing from approximately July 2013 through until approximately July 2018. The affidavit included various allegations regarding breaches committed by Amy, William and Dianne. However, no evidence was adduced with respect to any losses or damages sustained by the defendants and specifically by G.R.T.
[27] Thus, given the complete absence of any evidence with respect to damages other than speculative and prospective damages with respect to taxes owing to the CRA, which have thus far not been claimed, the defendants/plaintiffs by counterclaim have failed to meet the evidentiary burden resting upon them in responding to the summary judgment motion.
[28] On that basis alone, the counterclaim must be dismissed.
[29] For completeness, I will also consider the causes of action asserted by the defendants in their counterclaim and explain how the responding evidentiary record also fails to establish any genuine issues requiring a trial.
Claims for Indemnification with Regard to the CRA and the Receiver Gen. of Canada:
[30] The defendants and their counsel acknowledge that the relief sought under this head is contingent on the CRA and the Receiver Gen. of Canada advancing claims for payment of taxes or penalties not otherwise properly remitted by G.R.T. with respect to Amy’s income. No such claims have been advanced.
[31] A party is not entitled to seek relief in respect of a claim for liability that may arise against them in the future. As such, any claims advanced by the defendants in respect of possible liability to the CRA and the Receiver Gen. of Canada are premature and therefore not actionable: Frank v. Legate, 2015 ONCA 631, 390 D.L.R. (4th) 39, at paras. 69, 75; Kazman v. Joseph, 2005 CarswellOnt 3091 (S.C.), at paras. 21-25; Fireman’s Fund Mortgage Corp. v. Imasco Ltd., [1988] O.J. No. 441 (H.C.), at para. 17.
[32] Furthermore, the court will not presume the truth of an alleged fact which is stated based on a party’s expectation that it is likely to occur: Fireman’s Fund Mortgage Corp., at para. 16.
[33] Thus, all claims asserted in the counterclaim with respect to indemnification are premature and not actionable at this time as no claims have been made against the defendants by the CRA or the Receiver Gen. of Canada.
Conspiracy with Regard to the Income of the Plaintiff:
[34] At law there are two types of conspiracy in tort: predominant purpose conspiracy and unlawful means conspiracy. The defendants have failed to specify which type of conspiracy they are alleging.
[35] The defendants have not alleged the elements of the tort of the predominant purpose conspiracy, which would include allegations of actions to cause harm to the responding parties. As such, based on the general pleading of conspiracy it is reasonable to conclude that the defendants intended to assert a claim based on unlawful means conspiracy. This type of conspiracy requires that the unlawful conduct in question be directed towards a party; that the conspiring parties knew that the injury to the party was likely to result; and that the injury to the party does in fact occur: Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, [2013] 3 S.C.R. 477, at para. 74.
[36] The defendants have adduced no evidence that in any way supports unlawful means conspiracy by the defendants by counterclaim.
[37] It is asserted that Amy, William and Dianne conspired together to (1) arrange Amy’s employment income attributions in a way that “resulted in improper and excessive income being allocated and attributed” to her; (2) to provide “false” information to the CRA to the benefit of Amy and William; and (3) to evade taxes with regard to William.
[38] The evidence is that as William believed Amy was being underpaid, he directed some funds which would otherwise have been paid to him to be paid to Amy instead. This provided Amy with an income raise without any additional funds being drawn from the company’s revenue.
[39] The uncontradicted evidence is that all requisite payroll and tax forms were completed, all statutory deductions were made and paid to CRA, and all monies received by Amy were retained by her with none being paid or returned to her father William.
[40] The defendants have offered no evidence that would support a claim of unlawful means conspiracy in that there is no evidence of unlawful action, no evidence that the defendants by counterclaim knew that harm would likely result, and no evidence of harm being caused to G.R.T. Further, there is no evidence to support a claim in the nature of unjust enrichment or any deprivation caused by the defendants by counterclaim.
[41] Furthermore, there is no evidence adduced by the defendants that there has been any misrepresentation or deceit with respect to the CRA as alleged.
Breach of Contract:
[42] The defendants assert that William and Dianne breached the terms of the release agreement associated with a share transaction by allegedly disclosing confidential information in that agreement to Amy.
[43] In their statement of defence and counterclaim the relevant portion of the release is set out as follows:
…the terms evidenced by the Agreement and the Release or any matters relating to the circumstances giving rise to the Release, are confidential and cannot be disclosed in whole or in part to any third parties other than the Employee’s immediate family, legal or financial providers, provided that they first agree not to discuss with or disclose to anyone the terms of Agreement or Release, and such other disclosure as is required by law.
[44] The uncontradicted evidence is that William and Diane advised Amy not to disclose information regarding the transaction to anyone.
[45] Furthermore, the defendants have failed to adduce any evidence whatsoever of any damages or losses having been sustained by them as a result of the alleged breach of a confidentiality term in the release document relating to the share transaction. Further, the defendants have offered no evidence of misuse of any of the alleged confidential information.
[46] In order to assert a maintainable claim as to a breach of confidence, the party making the claim must establish that the information conveyed was confidential, that it was communicated in confidence and that it was misused by the party to whom it was communicated: 1215757 Ontario Inc. v. Zhadan, [2003] O.J. No. 3068, at para. 24. Possession of confidential information is not enough to substantiate its misuse: Craig v. CEO Global Network Inc., 2019 ONSC 3589, at paras. 116-117. There is no such evidence adduced by the defendants in support of their counterclaim.
Misrepresentation and Deceit:
[47] The defendants allege that William, as a shareholder of G.R.T., and Dianne allocated improper income to Amy without the defendants’ knowledge.
[48] Again, apart from the absence of any evidence being adduced by the defendants as to damages allegedly sustained in respect of misrepresentation and deceit, there is no evidence of any fraudulent misrepresentation. It is also uncontradicted that G.R.T. and Bruno received and would have or could have reviewed documentation within G.R.T. which would confirm the payroll so far as the plaintiff was concerned.
[49] The evidence is that a consultant controller retained by G.R.T. prepared payroll summaries which were provided to both William and Bruno, however the defendants have refused to produce year-end summaries of each employee’s income.
Punitive and Exemplary Damages:
[50] The defendants seek both punitive and exemplary damages from the defendants by counterclaim. In response to a Demand for Particulars dated January 30, 2019, the defendants advised that their claims for punitive and exemplary damages, “if proven”, are in respect of the torts asserted by them in the counterclaim as well as in respect of “breaches of the contractual duty of honesty in good faith and contractual performance.”
[51] A claim for punitive damages must be grounded on an underlying finding by a court that the plaintiff has an independent actionable wrong against the defendant: Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, at para. 78.
[52] Given the absence of any evidence as to damages allegedly sustained by the defendants, and further given the acknowledgement by those parties that no damages have been suffered in respect of the asserted causes of action, there is no independent actionable wrong which can form a basis for the granting of punitive damages flowing from the causes of action asserted in the counterclaim.
[53] Quite apart from the absence of any damages having been sustained by the defendants, there is no evidence regarding the conduct of the defendants by counterclaim that would warrant an award of punitive damages: Boucher v. Walmart Canada Corp., 2014 ONCA 419, 120 O.R. (3d) 481.
Conclusion
[54] As the responding parties on this summary judgment motion, the defendants have failed to specifically adduce any evidence whatsoever as to damages they claim were sustained by them as a result of the alleged breaches by the defendants by counterclaim. The defendants have therefore failed to meet the evidentiary burden that shifted to them following consideration of the evidence adduced by the moving parties. As such, on that ground alone, the counterclaim must be dismissed as it contains no genuine issue requiring a trial.
[55] Futhermore, for the reasons outlined above, quite apart from the absence of any evidence as to damages suffered as a result of the alleged breaches, the defendants have failed to adduce any evidence in support of the various causes of action they have asserted in the counterclaim. As such, on that basis as well, the counterclaim must be dismissed.
[56] Although the claims as set out in the counterclaim cannot proceed for the reasons set out, to the extent that the alleged breaches by Amy, when they are asserted against her alone, may constitute lawful defences to Amy’s claim for damages for construcive dismissal, those alleged breaches by Amy may still be put forward as defences by the defendants G.R.T. and Bruno in response to her claims.
[57] If the parties cannot agree as to the costs disposition on this summary judgment motion, counsel for the defendants by counterclaim shall deliver submissions as to costs of no longer than three pages plus a costs outline within 20 days from the date of release of these reasons followed by similar submissions by counsel for the defendants/plaintiffs by counterclaim within 30 days therafter. No reply submissions shall be filed without leave
Daley, RSJ.
Released: January 29, 2020
COURT FILE NO.: CV-18-4116-00
DATE: 20200129
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
AMY GASKA
Plaintiff
G.R.T. GENESIS INC. et al.
Plaintiffs by
Counter Claim
- and –
G.R.T. GENESIS INC. et al.
Defendants
AMY GASKA et al. Defendants to the Counterclaim
REASONS FOR JUDGMENT
Daley, RSJ.
Released: January 29, 2020