Court File and Parties

COURT FILE NO.: CV-19-81457 DATE: March 8, 2021 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Jonathan Guimont, Plaintiff AND SEO Twist Inc. and Yves Besner (moving party)

BEFORE: Master Marie T. Fortier

COUNSEL: J.F. Lalonde, for the Plaintiff Paul J. Willetts, for the Defendant Yves Bernier (moving party)

HEARD: December 10, 2020

Reasons for Decision

Overview

[1] This is a pleadings motion arising in a wrongful dismissal and libel action. The defendant Yves Besner seeks to strike portions of the plaintiff’s reply on the basis that it is irrelevant to the issues pleaded, is not responsive to the statement of defence and contravenes Rules 25.11 and 25.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The defendant Yves Besner is the former President of the defendant SEO Twist Inc, (also known as 8196095 Canada Inc.) which filed for bankruptcy on November 23rd 2020 and is the subject of a stay of proceedings under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3.

The Pleadings

[2] In his statement of claim the plaintiff pleads that he was employed by the defendant SEO Twist Inc. during the period October 2013 to April 15, 2019 at which time the defendant summarily terminated his employment, ostensibly for cause. His pleading recites his terms and conditions of employment in progressively senior management positions with enhanced remuneration. At the time of termination, the plaintiff held the position of Vice-President and was owner of 24.25% of the company stock. He pleads that he was earning a salary of $113,134 plus benefits.

[3] The plaintiff advances several heads of damages in his statement of claim; (1) damages for the failure to provide salary and benefits in lieu of reasonable notice, (2) Human Rights Code damages and a claim for reinstatement based on alleged discriminatory conduct relating to his family status, connected with his daughter’s medical issues, (3) a claim for defamation arising from the contents of the employer’s letter of termination,(4) damages for ‘bad faith termination’ and (5) punitive and aggravated damages arising from his overall alleged mistreatment.

[4] I observe that all the allegations in the statement of claim pertain to the plaintiff’s five and a half years of employment with the defendant, as would be expected. As noted previously all the claims against the company are now stayed pursuant to the bankruptcy proceedings.

[5] In the statement of defence, the defendants plead a somewhat different version of the terms and conditions of employment, citing changes resulting from the company’s financial difficulties in 2019. The pleading goes on to allege the plaintiff was terminated as a result of “unprofessional behavior throughout his tenure with the company” and “willful misconduct”, the details of which are provided in the pleading. The defendants also counterclaim for an alleged breach of the plaintiff’s non-competition obligations under a restrictive covenant.

The Reply

[6] The plaintiff then filed a reply consisting of 35 paragraphs. Most of the reply responds to the misconduct allegations in the statement of defence. However, paragraph 5 of the reply states:

5. The plaintiff was employed in a previous business of the defendant Besner, namely Evolutra Corporation, from 2005 to 2010. The defendant Besner was the President of Evolutra Corporation. At that time, the plaintiff was earning on average, an annual salary of $108,000 and had a corporate expense allowance from Evolutra. In December 2010 the defendant Besner filed for the bankruptcy of Evolutra corporation and subsequently filed for a personal bankruptcy in 2011. This has left of the plaintiff with large unpaid corporate expenses and has led the plaintiff to carry over considerable debts that the plaintiff still carries on to this date.

[7] As can be seen, paragraph 5 of the reply brings up the plaintiff’s former employment with Evolutra Corporation and the bankruptcy of that entity and of the defendant Besner. The defendants challenge this paragraph on this motion as being improper reply. They also challenge the underlined portions of paragraphs 6 and 22 of the reply which essentially repeat the same allegations. Paragraphs 6 and 22 state:

6. With respect to paragraph 8 of the statement of defence, the plaintiff states that he was offered employment by the defendant Besner in July of 2013 and started working for SEO TWIST as a contractor after the defendant Besner explained to the plaintiff that SEO TWIST was a start-up company and was not able to afford the plaintiff’s previous salary at Evolutra .The defendant Besner further convinced the plaintiff that being paid as a contractor would give him more fiscal advantages. The plaintiff was a contractor only in form and not in substance. As early as August 2013, the plaintiff was: (a) provided with SEO TWIST business cards with the title of Director of Operations; (b) provided with keys to the office; (c) provided with a monthly parking pass near the offices of SEO TWIST; (d) required to work for SEO TWIST on a full-time and exclusive basis; (e) required to work at the offices of SEO TWIST during regular business hours, being 9:00am to 5:30pm, from Monday through Friday; (f) provided with a desk, a desktop computer station, two computer monitors, a telephone and other tools, all of which were owned by SEO TWIST; (g) under the direct control and supervision of and reported directly to the defendant Besner; (h) entitled to two weeks of paid vacation per year; (i) SEO TWIST was the plaintiff’s only “client”.

22. The Plaintiff denies the allegations in paragraph 28 of the statement of defence. On July 10, 2018, Besner did not address an y misconduct. In the days leading to July 10, 2018, the plaintiff expressed concerns to Besner regarding his personal finances and called for a meeting. The plaintiff had been carrying over considerable debts from unpaid corporate expenses stemming from one of Besner’s prior companies, Evolutra Corporation, where the plaintiff was employed at and for which Besner filed for bankruptcy in 2010. Besner and the plaintiff came up with a plan to assist the plaintiff in repaying the debts that Besner had substantially created. Besner and the plaintiff agreed that the plaintiff would receive $1,750.00 in additional bi-weekly payments to pay off the debts if the plaintiff agreed, among other personal things, to improve his level of physical activity and nutrition, follow a sleep regimen and a proposed daily routine in addition to committing to always being on time. This agreement was reduced to writing but Besner failed to respect the terms and reduced then stopped making the payments of $1,750.00 within a few months, citing financial difficulties.

The Issue

[8] The issue is whether paragraph 5 of the reply and the above noted portions of paragraphs 6 and 22 of the reply are proper and, if not, whether they should be struck.

Analysis

[9] Rule 25.11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 permits the court to strike all or part of a pleading without leave to amend, where it is “plain and obvious” that it may prejudice or delay the fair trial of the action or if it is scandalous or vexatious or otherwise an abuse of process.

[10] Rule 25.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 prescribes the limited circumstances where a reply is permitted. Rule 25.08 states:

Different Version of Facts

25.08 (1) A party who intends to prove a version of the facts different from that pleaded in the opposite party’s defence shall deliver a reply setting out the different version, unless it has already been pleaded in the claim. R.R.O. 1990, Reg. 194, r. 25.08 (1) .

Affirmative Reply

(2) A party who intends to reply in response to a defence on any matter that might, if not specifically pleaded, take the opposite party by surprise or raise an issue that has not been raised by a previous pleading shall deliver a reply setting out that matter, subject to subrule 25.06 (5) (inconsistent claims or new claims). R.R.O. 1990, Reg. 194, r. 25.08 (2) .

Reply Only Where Required

(3) A party shall not deliver a reply except where required to do so by subrule (1) or (2). R.R.O. 1990, Reg. 194, r. 25.08 (3) .

Deemed Denial of Allegations Where No Reply

(4) A party who does not deliver a reply within the prescribed time shall be deemed to deny the allegations of fact made in the defence of the opposite party. R.R.O. 1990, Reg. 194, r. 25.08 (4) .

[11] In my view, it is clear that the impugned paragraphs of the reply do not fall within the parameters of Rule 25.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. There is no mention of the plaintiff’s former employment with Evolutra in his statement of claim. That is because the plaintiff’s former employment is irrelevant to the claims asserted in his statement of claim. Notably, the defendants have not referenced the matter of the plaintiff’s or Mr. Besner’s prior involvement with Evolutra in their statement of defence, again due to a complete lack of any apparent relevance to the issues in this action.

[12] In my opinion, the references in the plaintiff’s reply are not only irrelevant to the issues in the action but they are not responsive to any matter raised in the employer’s statement of defence or counterclaim. Further, the plaintiff’s former employment with Evolutra cannot reasonably be said to be “a matter that might, if not specifically pleaded, take the opposite party by surprise or raise an issue that has not been raised by a previous pleading” within the meaning of subrule 25.08(2) . This requirement presupposes that the issue could be potentially relevant, which is not the case here.

[13] I find that the impugned sections of the reply are not “required” for the purposes contemplated by subrules (1) or (2) of Rule 25.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and therefore contravene subrule 25.08(3) and are accordingly improper.

[14] If the plaintiff’s former employment is thought by him to be relevant in terms of raising a new ground of claim, he is required to move to amend the statement of claim, not to attempt to raise the matter in a reply. Rule 25.06(5) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 states:

(5) An allegation that is inconsistent with an allegation made in a party’s previous pleading or that raises a new ground of claim shall not be made in a subsequent pleading but by way of amendment to the previous pleading.

[15] I also agree with the defendants submission that the impugned pleading, if allowed, would open up the plaintiff’s former employment with Evolutra and the bankruptcy of that company, to production and discovery, with a likely increase of costs and complexity to no useful end. As submitted in the defendant’s factum (para 22), “It is plain and obvious that the impugned pleadings will greatly expand the breadth, complexity and expense of this litigation while offering minimal corresponding value.”

[16] I also accept the defendant’s submission that the impugned portions of the reply are scandalous in that they seek to raise irrelevant matters that appear to be calculated to embarrass the defendant Besner and which could not affect the outcome of the case.

[17] The plaintiff has filed a lengthy affidavit on this motion addressing what he apparently views as relevant evidentiary background. This is a pleadings motion concerning the propriety of what material facts have been pleaded. While evidence is admissible in a motion under Rule 25.11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as held by the Court of Appeal in Baradaran v. Alexanian, 2016 ONCA 533 at para 16, “ …the evidence must be relevant to, and considered for the purposes of, the motion that is before the court. In other words, the ability to file evidence in a pleadings motion does not change the character of the motion, which is not to determine the merits, but to decide whether the pleading should be struck, as having no chance of success because it is frivolous and vexatious or an abuse of process”.

[18] In my view, the plaintiff’s affidavit speaks to the merits of his claim and is not relevant to the determination of whether the impugned paragraphs of the plaintiff’s reply should be struck. Accordingly, I have not considered this affidavit.

Disposition

[19] The motion of the Defendant Besner is allowed. Paragraph 5 of the plaintiff’s reply is struck without leave to amend as are the impugned portions of paragraphs 6 and 22 of the reply.

[20] The operation of this order will be stayed pending my further order. The parties are directed to attend before me at a case conference to address the procedural issues arising from the bankruptcy of the defendant employer SEO Twist Inc. The case conference should also include the Licenced Insolvency Trustee. The parties will appreciate that the plaintiff’s action herein is stayed against the corporate defendant under the Bankruptcy and Insolvency Act except only for the claims which can be asserted against Mr. Besner personally, if any. It may be that there are no claims that can go forward on the existing Statement of Claim because the pleading does not purport to separate the claims asserted against the defendant employer from those asserted against the defendant Besner.

[21] If the parties cannot agree on costs, they may file written submissions not exceeding three pages, exclusive of their respective bills of costs. The defendant Besner shall file his costs submissions within 20 days of the release of this decision. The cost submissions of the plaintiff shall be filed within 10 days thereafter.

Master M. Fortier Date: March 8, 2021