Court File and Parties
COURT FILE NO.: CV-08-00361217 CV-08-00357361
DATE: 20210108
SUPERIOR COURT OF JUSTICE – ONTARIO Commercial List
RE: MAGNOTTA WINERY CORPORATION, MAGNOTTA VINTNERS LTD., MAGNOTTA VINEYARDS LTD., MAGNOTTA WINES LTD., MAGNOTTA WINERY ESTATES LTD. and MAGNOTTA CELLARS CORPORATION Plaintiffs
AND:
THE ALCOHOL AND GAMING COMMISSION OF ONTARIO, THE LIQUOR CONTROL BOARD OF ONTARIO and HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO Defendants
BEFORE: Koehnen J.
COUNSEL: Ian Roher, David Altshuller, Dylan Baker for the plaintiffs Jill Dougherty, Debra McKenna the Liquor Control Board of Ontario: Leonard Marsello, Tamara Barclay, Kateryna Toderishena the Alcohol and Gaming Commission of Ontario and Her Majesty the Queen in Right of Ontario Padraic Ryan, Zachary Green for the Intervener, the Attorney General of Ontario:
HEARD: October 13 – 16, 2020
Endorsement
[1] These reasons address six motions brought by the parties against each other and which were argue together over four days. The motions, together with a brief statement of the disposition of each, are as follows:
(i) A motion by the plaintiffs to strike the defendants’ statements of defence for their alleged failure to produce a tolling agreement in a timely fashion.
Disposition: Motion dismissed.
(ii) A motion by the plaintiffs to strike out the factum that the Liquor Control Board of Ontario (“LCBO”) delivered on the plaintiffs’ partial summary judgment motion against The Alcohol and Gaming Commission of Ontario (“AGCO).”
Disposition: Although I declined to hear from the LCBO on the AGCO summary judgment motion, I nevertheless dismiss the plaintiffs’ motion.
(iii) A motion by the LCBO dismissing the action or, in the alternative, striking out portions of the Amended Statement of Claim.
Disposition: Granted in part. I decline to dismiss the action but strike out significant portions of the Amended Statement of Claim with leave to amend unless stated otherwise.
(iv) A motion by the Crown and AGCO for summary judgment against the plaintiffs or alternatively, an order striking Amended Statement of Claim.
Disposition: The Crown’s motion for summary judgment is granted. The AGCO’s motion for summary judgment is dismissed. Portions of the Amended Statement of Claim are struck out.
(v) A motion by the plaintiffs for partial summary judgment against the AGCO.
Disposition: The motion is dismissed.
(vi) A constitutional question relating to the constitutionality of sections 11 (4) and (5) of the Crown Liability and Proceedings Act, 2019, S. O. 2019, c. 17, Sched. 17.
Disposition: I decline to address the constitutional question and defer it to trial.
Background to the Action
[2] The Plaintiff Magnotta Winery Corporation is an Ontario corporation that carries on business, among other things, as a manufacturer of wine. The remaining plaintiffs are subsidiaries of Magnotta. Magnotta and its subsidiaries operate a separate wine retail store adjacent to each wine manufacturing facility. I will refer to the plaintiffs collectively as Magnotta.
[3] The defendant, Liquor Control Board of Ontario (the “LCBO”) is an agency of the province of Ontario and a Crown Corporation. Until 2001 it was the exclusive regulator of alcohol sales in Ontario. It remains the primary vendor of alcohol in Ontario.
[4] In 2001, the LCBO transferred many of its regulatory functions to the AGCO. The AGCO is responsible for, among other things, regulating the sale of alcohol in Ontario.
[5] The primary dispute in this action concerns what the parties referred to as the “Made Policy”. The Made Policy was enacted by the LCBO in 1999 and was subsequently adopted by the AGCO. The Made Policy governs the extent to which wineries can offer direct retail sales of their wines. In essence, it provides that a winery can sell wine either through the LCBO or at retail stores located on premises on which the wine is actually made. The Policy contains further rules that define where a wine is “made”.
[6] Magnotta has had long-standing objections to the Made Policy. At the risk of oversimplifying matters, Magnotta conducts certain winemaking functions at a centralized location. It then ships some of that partially made wine to what it calls local wineries for other winemaking functions or vice versa. The basic position of the LCBO and of the AGCO is that Magnotta does not “make” wine at local wineries in accordance with the Made Policy but manufactures it at a central location and distributes it to retail stores which the plaintiffs refer to as “wineries”.
[7] The LCBO and the AGCO have tried to shut down what they allege are Magnotta’s improper operations since approximately 1996.
[8] Between 1996 and 2001, Magnotta and the LCBO were involved in seven legal proceedings concerning the Made Policy and its predecessors.
[9] As a result of a two day mediation held before the Honourable George Adams, Magnotta and the LCBO executed Minutes of Settlement and accompanying releases (collectively, the “Minutes of Settlement” or the “Minutes”) to resolve their then existing legal proceedings on May 15, 2001.
[10] In 2008, Magnotta commenced this action against the LCBO and the AGCO. Magnotta seeks a declaration against the AGCO that the Made Policy is ultra vires. It seeks damages against the LCBO arising out of its continued role as an auditor of Magnotta’s sites under the Made Policy since the settlement. These motions were brought in 2015 but were not heard until 2020.
[11] I will address the motions in any order that they were argued.
I. Magnotta Motion to Strike Statements of Defence
[12] The first motion the plaintiffs bring is a motion to strike the defendants’ statements of defence for failing to produce a tolling agreement between themselves in a timely manner.
[13] On this motion, Magnotta argues that:
a. The defences should be struck under the principles that the Ontario Court of Appeal articulated in Aecon Buildings v. Stephenson Engineering Limited,[^1]; or in the alternative
b. The defences should be struck under rule 30.08.
[14] The issue arises because, in its Fresh as Amended Statement of Defence, the LCBO pleaded that Magnotta’s action against both the LCBO and the AGCO were barred by virtue of the settlement agreement. This led the LCBO to bring a motion to strike out the statement of claim. The LCBO’s motion was based on settlement documents that precluded Magnotta from bringing a further claim against the LCBO or against any other party that might claim over against the LCBO. The AGCO was a party that might claim over against the LCBO. In its responding factum, Magnotta noted that the AGCO had not made a cross-claim against the LCBO, that the limitation period for doing so had expired and that there was “no evidence of a tolling agreement” between the parties. As a result, argued Magnotta, the settlement did not preclude the claim against the AGCO.
[15] In response, the LCBO immediately produced the tolling agreement. It had not produced the tolling agreement until then because it and the AGCO took the position that the tolling agreement was subject to litigation privilege and was not otherwise relevant to the proceeding.
a. The Aecon Motion
[16] In the Aecon motion, the plaintiffs argue that the statements of defence should be struck out under rule 25.11 (c) as an abuse of process because the defendants failed to disclose the tolling agreement in a timely manner.
[17] It has long been the case in Ontario that Mary Carter agreements and Pierringer agreements must be disclosed as soon as they are entered into.
[18] More recently, in Handley Estate v. DTE Industries Limited [^2] at paragraph 39, the Court of Appeal noted that the disclosure obligation is not limited to Mary Carter or Pierringer agreements but extends to any agreement between parties to a lawsuit that has the effect of changing the adversarial position of the parties.
[19] To understand the application of that principle requires a bit of background about the types of agreement at issue.
[20] A Mary Carter agreement is one in which a plaintiff settles with one of several defendants but under which the settling defendant still proceeds to trial. The liability of the settling defendant is, however, limited to the amount of the settlement. Those agreements must be disclosed immediately because they “change entirely the landscape of the litigation”.[^3] They do so because, although the defendant remains a defendant at trial, in reality, the defendant is no longer a target of the plaintiff. This changes the litigation landscape because the defendant no longer has an interest in resisting the plaintiff’s claim but may in fact have an interest in assisting the plaintiff by pointing the finger at other parties.
[21] Pierringer agreements have been defined by Paul M. Perell & John W. Morden in The Law of Civil Procedure in Ontario, 3d ed. (Toronto: LexisNexis Canada, 2017), at p. 762, as agreements under which:
(1) the settling defendant settles with the plaintiff; (2) the plaintiff discontinues its claim [against] the settling defendant; (3) the plaintiff continues its action against the non-settling [defendant] but limits its claim to the non-settling defendant’s several liability (a ‘bar order’); (4) the settling defendant agrees to co-operate with the plaintiff by making documents and witnesses available for the action against the non-settling defendant; (5) the settling defendant agrees not to seek contribution and indemnity from the non-settling defendant; and (6) the plaintiff agrees to indemnify the settling defendant against any claims over the by non-settling defendants.
[22] In Aecon, the plaintiff had sued the city of Brampton. Shortly after the statement of claim was issued, the plaintiff and Brampton entered into an agreement pursuant to which Brampton agreed to join a third party and pursue a claim against it. The plaintiff in turn agreed with Brampton that the plaintiff would limit its claim to whatever Brampton was able to recover from the third party. In that context, the Court of Appeal noted at para. 13 that agreements that “change entirely the landscape of the litigation” must be disclosed immediately.
[23] In Handley, the plaintiff entered into litigation agreements with one of the defendants pursuant to which that defendant agreed to defend the action and commence a third-party claim. The defendant also agreed to assign to the plaintiff, all benefits of the third party claim. In return, the plaintiff agreed to limit its recovery to the third party claim and to indemnify the defendant for all costs and any other exposure arising of the litigation.
[24] In both Aecon and Handley the agreements changed the litigation landscape. What one expected to be adversarial parties (plaintiff and defendant) were in fact cooperating parties.
[25] The agreement between the LCBO and the AGCO is different. It does not change the expected litigation landscape. One would expect that two defendants would have a common interest in defeating a plaintiff’s claim. That expectation will be only stronger if, as is the case here, the two defendants are different agencies of the same government. The tolling agreement does not change that expected relationship in any way. Indeed, if anything, it reinforces that relationship because it provides that, for the moment at least, the defendants will be cooperating to defeat the plaintiffs’ claim.
[26] According to Magnotta, the AGCO and the LCBO rely on the tolling agreement as one of the main reasons for trying to bar Magnotta’s claims. In Magnotta’s words, the defendants have converted what is normally a simple agreement to preserve rights between two parties into a “weapon” they now use to dismiss Magnotta’s claims.
[27] On my view of events, this overstates the significance of the tolling agreement. The defendants rely primarily on the settlement agreement to strike the Magnotta claim. The thrust of their argument is that any issues arising out of the legitimacy of the Made Policy have already been dealt with by virtue of the settlement agreement. It is therefore improper to raise those issues again in a new action against anyone.
[28] Several other cases have distinguished tolling agreements from the type of litigation agreements at issue in Aecon and Handley. [^4]
[29] In Aviaco, Nordheimer J. (as he then was) addressed a standstill agreement between certain defendants. The full extent of the agreement was unknown because it was delivered to the court under seal. As a result, the reasons do not make clear whether it included a tolling agreement between the defendants. However Justice Nordheimer’s description of the agreement as a “standstill agreement” suggests that it tolled the limitation period for cross-claims.
[30] Nordheimer J. described the proper analysis as follows at para. 23:
I would put the issue as follows: Do the terms of the agreement alter the apparent relationships between any parties to the litigation that would otherwise be assumed from the pleadings or expected in the conduct of the litigation? The reason why “Mary Carter” agreements have to be produced is because such agreements fundamentally alter what otherwise would be the expected relationship between two parties to the litigation—normally the plaintiff and one of the defendants. It changes that relationship from an adversarial one to a co-operative one and it is consequently important that both the court and the other parties know of that change. Otherwise the court and the other parties might be misled. If, however, as is the case here, the agreement entered into between co-defendants is simply directed at sharing information and otherwise concentrating on the defence of the plaintiffs’ claim, which all defendants would plainly have an interest in achieving and which the court would expect the defendants to pursue, then I see no reason to override the common interest privilege that would otherwise apply to it. I note in this regard that counsel remain under their professional responsibility, referred to in commentary 4 to rule 10 of the Rules of Professional Conduct, not to mislead the court as to the position of their clients in the adversarial process. If there was any aspect of such an agreement that could lead at any point to a misleading of the court and other parties, the counsel whose clients were parties to the agreement would then be under an absolute obligation to immediately disclose the agreement.
[31] The defendants’ conduct is consistent with the reasoning of Aviaco.
[32] The expected relationship between the LCBO and the AGCO is one in which they have a common interest to uphold the Made Policy and present a joint defence of that policy vis-à-vis Magnotta. The tolling agreement does not change that relationship but maintains it by encouraging a joint defence. The defendants did not believe the tolling agreement was relevant or producible because of litigation privilege. When, however, it became clear that the court could be misled about the presence of a tolling agreement, the agreement was produced.
[33] In the circumstances, the tolling agreement does not change the expected litigation relationship between the LCBO and the AGCO. As a result, any disclosure obligations are as described in Aviaco and have been complied with.
The Tolling Agreement Is a Sham
[34] As part of its argument on the Aecon motion, Magnotta submits that the tolling agreement is a sham. It points out that the agreement purports to be effective as of the date that the defendants delivered their first statement of claim on August 6, 2010 even though it was not actually signed until late 2012. This was after the expiry of a limitation period for any cross-claims to arise. Magnotta also notes that there is no realistic possibility of a tolling agreement being necessary given that the defendants are both agencies of the same government. It is highly unlikely that one government agency would seek indemnity from another.
[35] The defendants respond by submitting that limitations periods have not expired because it had been agreed by all parties that the initial statements of defence were purely pro forma defences that were delivered to prevent the action from being dismissed for delay. It was agreed that the “real” defences would be exchanged later that could be changed in any way any defendant wanted without any limitation periods being raised.
[36] The very nature of the allegation that an agreement is a sham raises issues of credibility that are better determined at a trial than on the paper record I have before me. I therefore decline to make any finding in that regard.
b. The Failure to Produce Relevant Documents
[37] In the alternative, the plaintiffs move to strike the defendants’ statements of defence under rule 38 which provides:
30.08 (1) Where a party fails to disclose a document in an affidavit of documents or a supplementary affidavit, or fails to produce a document for inspection in compliance with these rules, an order of the court or an undertaking,
(a) if the document is favourable to the party’s case, the party may not use the document at the trial, except with leave of the trial judge; or
(b) if the document is not favourable to the party’s case, the court may make such order as is just…
Failure to Serve Affidavit or Produce Document
(2) Where a party fails to serve an affidavit of documents or produce a document for inspection in compliance with these rules or fails to comply with an order of the court under rules 30.02 to 30.11, the court may,
(b) dismiss the action, if the party is a plaintiff, or strike out the statement of defence, if the party is a defendant; and
(c) make such other order as is just.
[38] Brown J.A. recently addressed striking out pleadings under that rule in Falcon Lumber Limited v 2480375 Ontario Inc (GN Mouldings and Doors).[^5] He described the rule at paras. 49-57 as a discretionary one that should be guided by applying the following considerations:
(i) Has the party had a reasonable opportunity to cure its non-compliance?
(ii) Was the party’s failure deliberate or inadvertent?
(iii) Was the failure clear and unequivocal?
(iv) Is there a reasonable explanation for the default?
(v) Can the default be cured quickly?
(vi) Was the default material or minimal?
(vii) To what extent does the party remain in default at the time of the motion?
(viii) To what extent does the default affect the ability of the court to do justice in the particular case?
(ix) The merits of the claim or defence, although this may play only a limited role since one would expect a party with a strong claim or defence to comply with its production obligations.
(x) Is an order to strike a pleading a proportional remedy?
(xi) To what extent has the defaulting party’s conduct increased the non-defaulting party’s costs and the proportionality of those increased costs to the amount in dispute.
(xii) To what extent has the defaulting party’s failure to comply delayed the final adjudication of the case on its merits, taking into account the simplicity/ complexity of the claim and the amount in dispute.
[39] The plaintiffs submit that the failure to produce the tolling agreement earlier has cost Magnotta substantial time and money, and has significantly delayed the adjudication of the main motions. The plaintiffs provided no explanation about just how the alleged delay in the production of the tolling agreement has added delay or cost apart from the cost of the plaintiffs’ motion to strike.
[40] The plaintiffs submit that the delay in producing the tolling agreement has caused irreparable harm because it pursued its “entire litigation strategy (including the preparation and conduct of examinations)” without knowing about the tolling agreement. The plaintiffs say they cannot now turn back time and pursue a different litigation strategy.
[41] I cannot find any prejudice to the plaintiffs in this regard. Apart from the general allegation that they developed their strategy without knowing of the tolling agreement, the plaintiffs have not been able to point to any issue, either specifically or conceptually, that they would have dealt with differently had they known of the tolling agreement earlier. I note that the plaintiffs had two years and several additional examinations after they received the tolling agreement to refine their strategy or pursue a different strategy. This proceeding is still at the very early stages and has not yet moved to discoveries. I am not persuaded that the plaintiffs have suffered the degree of prejudice that warrants striking out the statements of defence.
[42] If I apply the principles set out by Justice Brown in Falcon, I can find no basis to strike the statements of defence even if the defendants should have produced the tolling agreement earlier than they did. The defendants’ failure to produce the tolling agreement was not a deliberate decision but was the consequence of believing it was not relevant. They had a reasonable basis for that belief. As soon as its relevance became apparent, it was produced. To the extent there was a default, it was minimal given the early stage of the proceeding at which the document was produced. The allegedly late production does not jeopardize the Court’s ability to do justice. Striking a pleading here would be entirely disproportionate, not only because of the interests between the parties, but because a significant number of third parties are affected by the issue underlying this proceeding. Magnotta has run its business in a particular way. The defendants object to the way Magnotta has run its business. There are no doubt a number of other vintners in Ontario who conduct their businesses in a way that complies with the defendants’ view of the Made Policy. To strike the statements of defence would potentially allow the plaintiffs to continue to operate in a way that other vintners are precluded from doing.
II. Magnotta Motion to Strike LCBO Factum
[43] Magnotta brings a motion to strike the LCBO’s factum on Magnotta’s partial summary judgment motion against the AGCO.
[44] After hearing arguments on the issue, I advised the parties that I would not hear from the LCBO on Magnotta’s partial summary judgment motion against the AGCO. I did that for purely practical reasons. We were running short of time and the AGCO was perfectly competent to make whatever arguments were necessary to address the issue.
[45] That ruling should have no bearing on the LCBO’s ability to make whatever arguments it wants in opposition to Magnotta’s claim against the AGCO going forward.
[46] Magnotta submits the LCBO has no standing to deliver a factum on Magnotta’s partial summary judgment motion because no relief is being sought against the LCBO on that motion. In my view that states the proposition too expansively.
[47] In support of its argument, Magnotta relies on Gariepy v. Shell Oil Co.[^6] However, at paragraph 37 of that decision, Nordheimer J. (as he then was) stated that standing is tied to whether the party “is affected by the relief being sought” or has an “interest that would be impacted by the decision.” Those are broader concepts than seeking relief against a party.
[48] On my reading of the materials, the LCBO is “affected” by the relief Magnotta seeks against AGCO and has interests that would be impacted by any such motion.
[49] In its statement of claim, Magnotta seeks, among other things, a declaration that policies “created by the Liquor Control Board of Ontario, are without proper jurisdiction or statutory authority or are unlawful.” Magnotta also argues that the Made Policy was implemented in order to harm Magnotta. In the first 11 pages of its factum on the motion for partial summary judgment, Magnotta makes submissions about the history of the LCBO’s conduct in implementing the Made Policy and its predecessors. In doing so it refers to the evidence of one of the LCBO’s affiants.
[50] A declaration that the LCBO created policies without jurisdiction or statutory authority does affect the LCBO. I note particularly in this regard that Magnotta’s motion is one for only partial summary judgment. It intends to continue the claim against the LCBO and AGCO for damages. One can easily envisage a wide number of scenarios in which the finding that Magnotta seeks on the summary judgment motion about the jurisdiction and authority to implement the policies may have an impact on the trial judge’s assessment of both liability and damages against the LCBO.
[51] That alone is sufficient to implicate the LCBO’s interests to the extent that it should be entitled to deliver a factum and make submissions on Magnotta’s partial summary judgment motion. As a matter of law, I would therefore dismiss Magnotta’s motion to strike the LCBO’s factum even though, as a practical matter I did not allow the LCBO to make submissions on the partial summary judgment motion and even though I have not relied on the LCBO’s factum in arriving at these reasons.
[52] For future purposes, I also note that much of Magnotta’s argument on the partial summary judgment motion against the AGCO was based on the alleged conduct of LCBO employees. I expect that will continue throughout the proceeding including the trial. As a result, the LCBO has a right to respond to such allegations and submissions.
III. LCBO Motion to Strike Statement of Claim
[53] The LCBO moves:
(a) To strike all or portions of the statement of claim under rule 25.11 and 21.01(3)(d) as an abuse of process.
(b) To strike out the portions of the statement of claim under rule 21.01(b) as disclosing no reasonable cause of action.
a. The Abuse of Process Motion
[54] Rules 25.11 (c) and 21.01(3)(d) allow the court to strike all or part of a pleading on the grounds that it is an abuse of process of the court. The LCBO submits that the Amended Statement of Claim is an abuse of process because the allegations it contains against the LCBO are precluded by Minutes of Settlement and a release that Magnotta entered into in favour of the LCBO on May 15, 2001.
[55] It may be useful to recap some brief background. The sale of alcohol in Ontario is heavily regulated. Until 2001, the LCBO was the sole regulator. In 2001 the LCBO transferred many of its regulatory functions to the AGCO.
[56] One of the forms of regulation applicable to winemakers to limit the premises in which they can sell their wine. At the risk of oversimplifying, wines are generally sold only in LCBO stores, subject to a few exceptions. One of those exceptions allows a winemaker to sell wine on the premises at which the wine is made. The LCBO and the AGCO submit that specific policies in this regard are required and need to be enforced because of Canada’s obligations under international trade agreements. Again, at the risk of oversimplifying, countries like the United States have relatively little regulation over alcohol sales compared to Ontario. They allow wine to be sold widely. The sale of alcohol was negotiated in trade agreements between Canada and the United States. If Canadian wines are allowed to be sold freely but American wines can only be sold at the LCBO, that could give rise to a challenge under Canada’s international trade agreements because of discriminatory treatment between Canadian and foreign winemakers. An exception exists for vineyards to allow the vineyard to sell on its own premises, wine it makes on those premises. The Made Policy defines what amounts to wine made on particular premises.
[57] In 1996 Magnotta challenged a predecessor of the Made Policy. It also challenged the Made Policy when it was implemented in 1999.
[58] After over four years of litigation in several proceedings, Magnotta and the LCBO settled their disputes after a two day mediation before the Honourable George Adams. The terms of the settlement are set out in Minutes of Settlement and an attached release which, among other things, dismissed all existing litigation on consent.
[59] The language of the Minutes of Settlement demonstrates that it was the object of considerable compromise as a result of which the language is not necessarily as clear as it might be in a perfect world.
[60] [Redaction for confidentiality]
[61] [Redaction for confidentiality]
[62] The nub of the issue on this motion is how one reads paragraph 4 with the provisions of the release which state that the plaintiffs release the LCBO:
[Redaction for confidentiality]
[63] The LCBO submits that although the Minutes allowed Magnotta to try to persuade the AGCO to take a different approach than the LCBO did, the Minutes do not permit Magnotta to re-litigate the matters raised in the previous litigation, including its complaints about how the LCBO enacted, interpreted or applied the Made Policy before 2001.
[64] Magnotta emphasizes the language of paragraph 4 (b) of the Minutes of Settlement to the effect that the minutes are [Redaction for confidentiality] Magnotta argues that this entitles it to challenge the Made Policy.
[65] In addition, Magnotta submits that the purpose of the Minutes of Settlement and the release were simply to dispose of litigation with its previous regulator because it would make no sense to continue that litigation in light of the transfer of regulatory authority to AGCO. According to Magnotta, however, the settlement did not amount to a compromise of any rights other than not being able to seek damages against the LCBO for pre-settlement conduct.
[66] On my view of events, it is not quite as simple as that. Magnotta received substantial concessions as a result of the settlement. [Redaction for confidentiality] That makes the settlement more than simply a discontinuation of one proceeding with the complete right to reinstitute the proceeding later.
[67] Approximately 60 paragraphs of the Amended Statement of Claim refer to pre-settlement conduct of the LCBO. Magnotta says the allegations in those paragraphs need not be adjudicated because they are not there for their truth, but are there merely to demonstrate the knowledge that the AGCO had when it began carrying out its regulatory functions in 2001 and to demonstrate the knowledge that the LCBO had when it continued, at the AGCO’s request, to carry out audits to determine if Magnotta was complying with the Made Policy after 2001.
[68] The difficulty with Magnotta’s position is that the LCBO disagrees with the allegations in the 60 paragraphs that Magnotta says need not be adjudicated. In that context, Magnotta is really trying to make allegations against the LCBO, use them to impute knowledge to both defendants but prevent the LCBO from contesting those allegations. AGCO and the LCBO could only be imputed with knowledge if the allegations were true and were actually known to them. That requires the allegations to be adjudicated.
[69] Moreover, Magnotta’s factum belies the suggestion that the allegations are not there for their truth. Paragraph 89 of its factum states:
Magnotta submits that its pleadings of historical facts are not frivolous, vexatious, or scandalous. They are not only relevant, they are of exceedingly probative value.
[70] To assert that the allegations contained in 60 paragraphs of its pleading are of “exceedingly probative value” but not have the truth of those allegations tested, is untenable.
[71] The core of the allegation against the AGCO is that it was enforcing regulations that the LCBO had enacted without jurisdiction and for improper purposes. Those were the very allegations made against the LCBO in the pre-settlement litigation. By way of example, paragraph 69 of the Amended Statement of Claim alleges that:
At all material time … the AGCO knew, or was wilfully or recklessly blind to the fact that the LCBO’s Made Policies were created without jurisdiction and for the improper or ulterior purpose of injuring Magnotta and enhancing the LCBO’s retail position.
[72] The plain language of the release would prevent Magnotta from raising pre-settlement conduct.
[73] How then to reconcile the potentially conflicting provisions of paragraph 4 of the Minutes of Settlement with the language of the release?
[74] Minutes of settlement and releases are contracts like any other. Contracts are to be interpreted using a practical, common-sense approach that aims to give effect to the intent of the parties. The words of a contract are to be interpreted in their ordinary and grammatical meaning consistent with the surrounding circumstances known to the parties at the time,[^7] in a fashion that accords with sound commercial principles and good business sense, and avoids a commercial absurdity.[^8] interpretations that read the contract as a harmonious whole are to be preferred over interpretations that give rise to conflict between different provisions of the contract.
[75] Applying these principles, the Minutes of Settlement and the release should be read as a whole. They refer to each other. The release is a schedule to the Minutes of Settlement. As a result, they should be read harmoniously and not in a matter that would have them conflict with each other. It is readily possible to do that.
[76] On my reading of paragraph 4 of the Minutes of Settlement, Magnotta is free to take the position that the AGCO has no statutory jurisdiction to apply the Made Policy or that AGCO’s conduct is motivated by bad faith towards Magnotta, but it cannot refer to pre-settlement conduct of the LCBO to support that position.
[77] That reading of that sort gives meaning and purpose to the language of both the Minutes of Settlement and the release. More specifically, it gives force to paragraph 3 of the Minutes which provides that Magnotta is entering the minutes [Redaction for confidentiality]. It gives force to the provisions of paragraph 4 to the effect that Magnotta’s execution of the Minutes [Redaction for confidentiality]
[78] At the same time, it also gives force to the release and its language to the effect that the LCBO is being released from all matters raised in the pre-settlement litigation.
[79] Finally, this reading gives force to the obligation in the release that Magnotta will not make any claims:
[Redaction for confidentiality]
[80] There was considerable debate during the course of the hearing about the degree to which any claims for indemnity were made or could be made given the alleged lapse of the limitation period and given the fact that both the LCBO and AGCO are agencies of the same government and would be unlikely to cross-claim against each other.
[81] In my view that misses the point. The release does not prohibit a claim against a person who makes a claim for contribution and indemnity. It prohibits claims against people who “might” claim contribution or indemnity. The distinction is significant.
[82] “Might” expresses the concept of possibility without addressing probability. Excluding claims that “might” give rise to a claim for contribution or indemnity is in the interests of a settling party. The settling party is bargaining not only for the prevention of actual claims against it but also against the mere possibility of such claims. A settling party has a legitimate interest in doing so. The mere possibility of a claim for contribution or indemnity drags the settling party back into the settled litigation in one form or another. Even if the settling party is not made the subject of a claim for contribution or indemnity, it may well have to address the issues in discussions with the defendant in the subsequent action to help defend against them. Those discussions require research into the factual matrix of the settled litigation and entail potential obligations to retain records about the settled lawsuit.
[83] As Laskin J. A. put it in Sinclair-Cockburn Insurance Brokers Ltd. v. Richards[^9]:
[14] [...] As Mr. Cadsby, counsel for Wiggins, said during oral argument, his client paid a substantial sum of money to buy peace, not just peace from potential liability for a judgment, but peace from even having to respond to a claim from Richards. Sinclair-Cockburn signed an unqualified release. Wiggins is entitled to all the benefits that flow from that release, which include its reputational interest and its interest in not being dragged into a lawsuit. Wiggins was entitled to expect the party who signed the release to live up to its bargain… (emphasis added)
[84] Those considerations have particular force here. The claims were settled in 2001. They related to conduct that occurred in the 1990s. It is now 2021 and Magnotta’s claim has not even gotten to discovery. To allow a claim based on pre-settlement conduct obliges the LCBO to address conduct relating to alleged bad faith and intention on its part that occurred over 20 years ago. That is well beyond the expiry of any limitation period. The difficulty of finding individuals who had decision-making authority over 20 years ago is considerable. Many of those will have moved on to other careers, have retired or have died. Indeed, at least one witness who was deposed for these motions has since died. Forcing the LCBO to address those issues even if, as Magnotta asserts, they are not the subject of a monetary claim would still pose an unreasonable obligation on the LCBO in light of the bargain the parties made in the settlement.
[85] Courts have dismissed or stayed proceedings or struck out pleadings for abuse of process where a party seeks to re-litigate matters that have been determined in previous proceedings.[^10]
[86] In applying the doctrine of abuse of process, the court exercises its inherent and residual discretion to prevent an abuse of the court that would bring the administration of justice into disrepute.[^11] As articulated by Goudge J.A. (and adopted by the Supreme Court of Canada):
The doctrine of abuse of process engages the inherent power of the court to prevent the misuse of its procedure, in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute. It is a flexible doctrine unencumbered by the specific requirements of concepts such as issue estoppel...
One circumstance in which abuse of process has been applied is where the litigation before the court is found to be in essence an attempt to re-litigate a claim which the court has already determined.[^12]
[87] Having settled the allegations against it in 2001, the LCBO should not be required to relitigate them 20 years later. A settlement finally disposes of a claim to the same extent as a judicial determination does.[^13]
[88] As a result of the foregoing, all paragraphs that relate to pre-settlement conduct must be struck. In principle this encompasses paragraphs 7, 14-15, 20-70 and 75-84 of the Amended Statement of Claim.[^14] I say in principle because some of those paragraphs, although they refer substantially to pre-settlement conduct, may also contain minor components that relate to post settlement conduct. In striking out those paragraphs I am not precluding Magnotta from pursuing those portions that relate to post settlement conduct in a further amended statement of claim. Any disputes in that regard can be resolved before me at a case conference in my capacity as case management judge.
[89] I also strike paragraphs 1 (a), (b), (d), and (i) of the statement of claim because they also relate substantially to pre-settlement conduct.
b. Striking for No Cause of Action
[90] The LCBO has been named as a defendant in two separate actions. Although the actions are similar, the paragraph numbering is not identical. In referring to the paragraph numbers with respect to the LCBO’s motion to strike I am referring to the claim that bears court file number CV- 08 -357361.
[91] Magnotta submits that the motion to strike the claim as disclosing no cause of action should be dismissed because it has been brought out of time. Under rule 2.02 of the Rules of Civil Procedure, a motion to attack a pleading for irregularity shall not be made after the expiry of a reasonable period of time or if the moving party has taken any further step in the proceeding after obtaining knowledge of the irregularity. Here, AGCO brings its motion after having defended.
[92] Rule 2.02, however, allows the court to grant leave to bring a motion even after a substantial delay. Here, there has been sufficient complexity and confusion caused in the 12 years of procedural wrangling and delay that I am disinclined to reject the motion on this basis and, if necessary, grant leave to bring the motion. There is much benefit and efficiency to be gained from pleadings that are clearer than is the current statement of claim.
[93] The importance of proper pleadings was explained succinctly by Low J. in Lysko v Braley,[^15] at para. 64:
The purpose of pleadings is to define the issues for the parties and for the Court. The pleadings govern the trial and the interlocutory proceedings. A case properly pleaded permits an efficient use of judicial resources and the parties’ resources. Bad pleadings do the opposite and more. They are instruments of potential mischief in the litigation process. One of the functions of pleadings is to govern discovery. If a matter is pleaded, it may be discovered upon. Where a pleading is replete with evidence or irrelevant material, for example paragraphs 94 to 98 of this pleading, it is calculated to open the door to prolonged and potentially abusive discoveries which do not address the real issues between the parties. For that reason, offensive portions of the pleading tend to prejudice or delay the fair trial of the action and are thus an abuse of process.
[94] Pleadings that do not set out the specific elements of a cause of action or do not set out material facts are fundamentally prejudicial because they do not adequately define the scope of documentary or oral discovery. A party is entitled to know the case it has to meet. This begins at the pleadings stage by providing a defendant with adequate information about the case it has to defend. The court itself has an interest in property framed pleadings. As a result, to the extent that leave is required to bring the motion, it is granted.
[95] Rule 21.01(1)(b) allows a defendant to move to strike out a Statement of Claim where it discloses no reasonable cause of action. The test on a Rule 21 motion is whether it is “plain and obvious” that the claim discloses no cause of action or that the action has no chance of success.[^16] The focus of a motion to strike is on the facts as pleaded. As the Supreme Court of Canada put it in R. v. Imperial Tobacco Canada Ltd.:
It is incumbent on the claimant to clearly plead the facts upon which it relies in making its claim. A claimant is not entitled to rely on the possibility that new facts may turn up as the case progresses. The claimant may not be in a position to prove the facts pleaded at the time of the motion. It may only hope to be able to prove them. But plead them it must.[^17]
[96] Unless otherwise indicated, where I strike the claim, I also grant leave to amend. It is rare that a case will be decided at the pleadings stage. Leave to amend is generally refused only if there is an absolute bar to the claim that does not depend on the nature of the pleading but depends on some legal state of affairs exterior to the claim such as the expiry of a limitation period, a claim on an illegal contract or some other similar legal barrier.[^18]
i. The Claim of Misfeasance in Public Office
[97] The tort of misfeasance in public office requires four elements to be pleaded:
(a) That a public official deliberately engaged in unlawful conduct in the exercise of public functions;
(b) That the public official was aware that the conduct was unlawful and was likely to injure the plaintiff;
(c) That the public official’s tortious conduct was the legal cause of the plaintiff’s injuries; and,
(d) That the injuries suffered are compensable at law.[^19]
[98] A pleading of misfeasance in public office also requires bad faith or dishonesty[^20] as well as full particulars. It is not sufficient simply to allege that a defendant knew that his or her deliberate conduct was unlawful and was likely to injure a plaintiff. [^21]
[99] In this regard, Stratas J.A. noted in St. Johns Port Authority v. Adventure Tours Inc.,[^22] that
“it is all too easy for a plaintiff who is aggrieved by governmental conduct to assert, perhaps without any evidence at all, that “the government” acted, “knowing” it did not have the authority to do so, “intending” to harm the plaintiff”.
Stratas J.A. concluded that such a bald assertion was insufficient.
[100] There was some debate at the hearing about the extent to which the tort requires the names of individual officials to be pleaded. Some cases require the officials to be named[^23] others do not.[^24] Flexibility is probably required on this point. In some cases the plaintiff may not know the identities of the officials at issue at an early stage of the proceedings. In other cases plaintiffs will know the identity of the officials in question. Here, Magnotta has already indicated that it intends to amend to name the officials in question as a result of which the point is somewhat academic in this case.
[101] The allegations of misfeasance in public office are set out in paragraphs 94 to 99 of the Amended Statement of Claim. Paragraphs 96 (a) and 97 (d) are struck out without leave to amend because they speak to pre-settlement conduct.
[102] The remaining allegations of public misfeasance are struck out as against the LCBO because they do not assert any particulars of unlawful conduct by LCBO. There is only a general allegation that the defendants have “invalidly and unlawfully exercised their respective statutory powers.” There is no reference to the statutory power at issue or what conduct of LCBO’s was unlawful. Although paragraph 97 pleads malice and personal animosity, no particulars are provided. The same is true of the allegation in paragraph 97 (b) and its allegation that Magnotta was “unfairly and improperly targeted”.
[103] What is left of the misfeasance claim against the LCBO is that its auditors were subject to a conflict of interest when the AGCO hired them. That is insufficient to ground the tort.
[104] Magnotta submits that its allegations of bad faith are sufficiently supported by paragraph 92 of its statement of claim. I disagree. In so far as it relates to LCBO, paragraph 92 says:
Magnotta alleges the reports and conclusions reached by the LCBO employees retained as inspectors were inaccurate, deliberately inflammatory, influenced by those previous events described above, and not supportable by the evidence.
[105] To the extent that the paragraph refers to employees being influenced by “events described above”, the paragraph is struck as being overly vague. Events described above refers to the previous 91 paragraphs, much of which relates to pre-settlement conduct which has already been struck. In addition, paragraph 92 does not describe with sufficient particularity what reports are at issue, what was inaccurate or inflammatory in those reports or who prepared them.
ii. The Negligence Claim
[106] The negligence claim is contained in paragraphs 100 – 113 of the statement of claim. Magnotta agreed in argument that a number of those paragraphs should be struck because they relate to pre-settlement conduct. Those paragraphs are: 100, 102 (e), 105, – 108 and 113 (a) – (d) and are therefore struck out.
[107] In addition, I strike out the following portions of paragraphs because they relate to pre-settlement conduct:
(i) In paragraph 104, the words “initially by the LCBO and presently”.
(ii) In paragraph 109 (d) (i) the words “and Magnotta’s previous litigation with, inter alia, the LCBO”.
(iii) In paragraph 112 the words “with full knowledge of the history between Magnotta and the LCBO”.
[108] With these paragraphs struck out, the only remaining allegation is in paragraph 102 to the effect that “each of the LCBO and the AGCO owed Magnotta a duty of care…” The reference to the LCBO owing a duty of care is also struck out given that there is no further claim of negligence against the LCBO.
iii. The Conspiracy Claim
[109] The conspiracy claim is found in paragraphs 114 – 117 of the statement of claim.
[110] A claim for conspiracy must plead the following elements:
(i) The parties to the agreement and their relationship to one another;
(ii) Particulars of the agreement;
(iii) The purpose or object of the conspiracy;
(iv) The overt acts done in pursuit of the agreement; and
(v) Damages resulting from those acts.[^25]
[111] On my reading of the Amended Statement of Claim, it sets out those elements with sufficient particularity to withstand a motion to strike. The parties to the relationship are identified as the LCBO and AGCO. Their relationship is described in the pleading. The particulars of the agreement are to conduct wrongful audits of Magnotta for the purpose of withdrawing its license. The object of the conspiracy is to eliminate competition and increase the LCBO’s revenue. The overt acts pursuant of the agreement are the allegedly improper audits and the steps taken to withdraw Magnotta’s licenses.
[112] Although damages from that conduct are not specifically articulated, it can readily be inferred the loss of the business or steps related to preventing that loss amount to damages.
[113] As a result, I decline to strike any portion of the conspiracy allegations.
iv. Intentional Interference with Economic Interests
[114] The allegations concerning the tort of intentional interference with economic relations are found in paragraph 118 – 125 of the Amended Statement of Claim.
[115] Cromwell J. described the tort as follows in in Bram Enterprises Ltd. v. A.I. Enterprises Ltd.:
Liability to the plaintiff is based on (or parasitic upon) the defendant’s unlawful act towards the third party. While the elements of the tort have been described in a number of ways, its core captures the intentional infliction of economic injury on C (the plaintiff) by A (the defendant)’s use of unlawful means against B (the third party).[^26]
[116] In other words, the tort cannot be one in which the defendant is alleged to have done something negative to the plaintiff. The tort is one in which the defendant is alleged to have done something wrong to a third party which in turn causes economic harm to the plaintiff.
[117] In argument, Magnotta submitted that it had met this test and that this “could be further clarified by amendment to the Amended Statement of Claim if necessary.” Magnotta submits it has met the test because it has alleged that the LCBO’s conduct in carrying out its audits amounts to a breach of its contractual obligations to the AGCO which breach has caused harm to Magnotta.
[118] That is clearly not, however, what the Amended Statement of Claim alleges. Paragraphs 118 to 125 of the amended statement of claim allege that LCBO and AGCO worked together for improper purposes to damage Magnotta’s business. Indeed, the allegation is that
“AGCO participated in such unlawful interference with Magnotta’s economic interests and accordingly is jointly and severally liable for damages caused to Magnotta as a result thereof.”
[119] That is the very opposite of the allegation Magnotta now purports to assert.
[120] As a result, at paragraphs 118 to 125 of the statement of claim or struck out.
IV. Crown and AGCO Motions
[121] The Crown and the AGCO bring a motion to strike out the statement of claim as disclosing no cause of action and, in the alternative, a motion for summary judgment. Given that I have already dealt with many of the pleadings issues on the LCBO motion, I will deal the motion for summary judgment first.
a. The Motion for Summary Judgment
[122] The motion for summary judgment is brought on behalf of both the defendant, her Majesty the Queen in Right of Ontario and the AGCO.
[123] The Crown can be liable in tort if: (a) it has authorized wrongful conduct;[^27] or, (b) its agents committed a tort while acting in the course of their agency which is so connected with the scope of their authority that it can be said that the Crown has introduced the risk of the wrong.[^28]
[124] The claim against the Crown is contained in the statement of claim relating to court file number CV-08-361217. Paragraph 1 (o) (i) of that statement of claim seeks, from the Crown:
Damages in the amount of $60 million in respect of the tortious acts committed by her servants, including, misfeasance in public office, negligence, interference with economic interests, breach of duty of good faith in respect of the adoption, administration, implementation, enforcement and actions taken with respect to the Made Policies without due and proper, or any reasonable review, consideration, analysis or independent critique of the same consideration, required pursuant to its legal duties and conspiracy to commit some or all of the foregoing;
[125] Paragraphs 77-80 of the statement of claim contain statements from the relevant cabinet minister relating to the transfer of authority to AGCO. The thrust of those statements is to create separation between LCBO and AGCO.
[126] The only other paragraphs relating to the Crown are paragraphs 5, 6 and 127 which read as follows:
The Crown servants, agents, employees and representatives (collectively, the “employees”) engaged, partook or were otherwise involved in the conduct forming the subject matter of this action.
Moreover, such Crown employees had at all material times been employed by, contracted with, were supervised by or took instructions from the LCBO and the AGCO.
Magnotta alleges that the acts and conduct forming the subject of this action, were carried out by or on behalf of, or pursuant to the instructions or with the assistances of the Crown employees, by reason whereof, Her Majesty the Queen in Right of Ontario is jointly and severally liable to the same extent and degree as the other Defendants herein.
[127] On a motion for summary judgment, the court must be satisfied that there is a genuine issue that requires a trial to resolve. Magnotta’s factum contains no information about its claim against the Crown. In oral argument I was not taken to any evidence about the Crown’s involvement let alone anything that creates a genuine issue which requires a trial to resolve.
[128] On motions for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial.[^29]
[129] The totality of the “evidence” before me against the crown are the bald allegations in paragraphs 5, 6, and 127 of the statement of claim. Allegations in a pleading do not constitute evidence and are insufficient to withstand a motion for summary judgment. As a result, I grant the Crown’s motion for summary judgment and dismiss the action against Her Majesty the Queen in Right of Ontario.
[130] I come to the opposite conclusion with respect to the AGCO’s motion for summary judgment. I was taken to sufficient evidence in the record to satisfy me that a trial is required to resolve the issues that evidence creates.
[131] This is not to pass any judgment on the potential claim against the AGCO. The fact that there is an issue does not in any way mean that the AGCO is liable. I am not satisfied that I can do justice to the issues that arose before me on a summary judgment motion. The plaintiffs rely on a large variety of claims against the LCBO and the AGCO. Against the LCBO, they allege that it conducted audits improperly and in bad faith. They point to conflicting evidence about whether a particular winery complies with the Made Policy. They point to alleged weaknesses in the audit process and inconsistent or unfounded findings in the audits. The plaintiffs allege that AGCO failed to consider whether the Made Policy should be continued, used conflicted LCBO auditors who were incapable of determining whether the Made Policy was complied with and of enforcing a policy that is impossible to apply.
[132] The evidence about these issues, is found in a myriad of affidavits, responding affidavits, reply affidavit, sur-reply affidavits and cross-examination transcripts.
[133] A motion for summary judgment can be successful even on a record of that nature if there is a guiding principle that allows the court to dismiss all of the detail as chaff and focus on one or two crisp issues that render the detail superfluous. I was given no such guiding principle.
[134] The AGCO attempted to give me such a principle by focusing on the concept that the AGCO does not owe the plaintiffs a private duty of care, that the AGCO is a government agency that owes a duty of care to the public at large and that the application of the Made Policy by the AGCO is a policy decision made in good faith. The difficulty with those submissions is that they all turn on the AGCO and its delegate, the LCBO, acting in good faith. The thrust of Magnotta’s claim is that they did not act in good faith but acted with an intention to target Magnotta improperly. That allegation may turn out to be completely unfounded. I was not, however, given any evidentiary basis for dismissing that as an issue without a trial. Magnotta on the other hand raised enough conflicting evidence to persuade me that, given the limited time and resources available, I could not do justice between the parties in a summary fashion.
b. The Pleadings Motion
[135] When addressing the paragraph numbers in relation to AGCO’s motion to strike the statement of claim as disclosing no cause of action, I will revert back to the statement of claim in court file number CV-008-357361.
[136] For the reasons indicated on the LCBO’s pleadings motion, where I strike portions of the claim as against the AGCO, I also grant leave to amend unless otherwise indicated.
i. Public misfeasance
[137] Although I have struck out those allegations against the LCBO, there are sufficient allegations against the AGCO to withstand a pleadings motion. Although the individual public officer was not named, that is not fatal to a claim of public misfeasance, often because the names of the public officials are not known at the time of pleading.[^30] Magnotta has already indicated an intention to amend the statement of claim to add the names of the employees involved.
ii. Conspiracy
[138] As indicated when with the LCBO’s motion to strike, I am satisfied that the conspiracy claim has been made out.
iii. Interference with Economic Interests
[139] For the reasons set out in dealing with this claim when addressing the LCBO’s motion to strike, the claim for intentional interference with economic relations found in paragraph 118 – 125 of the amended statement of claim is struck out. Before spending any time and effort amending that claim, I would ask the plaintiffs to consider what a claim for interference with economic interests adds to the equation that is not already subsumed in their other claims.
iv. Breach of the Duty of Good Faith and Discrimination
[140] Magnotta alleges a breach of a duty of good faith and discrimination as a basis for its damage claim in paragraph 1 (m) (i) of the Amended Statement of Claim.
[141] AGCO correctly submits that there is no free-standing tort of good faith[^31] and there is no tort of discrimination.[^32] I am nevertheless not prepared to strike that paragraph of the Amended Claim. The statement of claim does not assert freestanding torts for either good faith or discrimination. It asserts something more elastic than that. The nature of the defendants good faith and the extent to which they were motivated by a desire to discriminate against Magnotta are relevant to the relief Magnotta seeks. If, for example, Magnotta were able to demonstrate that the defendants’ actions were motivated by a desire to discriminate against Magnotta for no valid public policy reason, that would support some form of relief in Magnotta’s favour.[^33]
[142] Similarly, the defendants are only immune from suit to the extent that they were acting in good faith. The issues of good faith and discrimination are therefore clearly relevant to the claims the plaintiffs make. Moreover, the precise extent and formulation of the concept of good faith is an evolving concept within the law of Canada and Ontario. I do not think it would be wise to hamper that development at a pleadings stage.
v. Impermissible Collateral Attack
[143] The AGCO asserts that the relief Magnotta seeks can be granted only on an application for judicial review as a result of which the claims constitute an impermissible attack on the AGCO’s exercise of statutory authority.
[144] I am not inclined to prevent Magnotta from pursuing its claim on this basis.
[145] In Canada (Attorney General) v. TeleZone Inc.,[^34] at para. 18 the court noted:
People who claim to be injured by government action should have whatever redress the legal system permits through procedures that minimize unnecessary cost and complexity. The Court’s approach should be practical and pragmatic with that objective in mind.
[146] Given the admonition to take a practical and pragmatic approach, I note that this proceeding is already underway. The trial judge will be a member of the Ontario Superior Court of Justice. Had the matter proceeded to judicial review, it would have been heard by the Divisional Court. All members of the Superior Court of Justice de facto members of the Divisional Court. A practical, pragmatic approach would not force a distinction between the two in this case.[^35] Magnotta’s claim for damages is not one that it could pursue on an application for judicial review. To require judicial review would therefore require two proceedings which afford widely different fact-finding tools which increases the risk of inconsistent findings. To the extent there is benefit in having a judge experienced in judicial review hear the trial, I can make arrangements for that as case management judge.
[147] The AGCO also submits that the claim for an injunction is impermissible because Crown agents are exempt from injunctive relief except where they have acted outside of their scope of authority.[^36] That, however, is one of the allegations Magnotta makes against defendants. It will be up to the trial judge to determine whether that claim has been made out.
[148] Similarly, the AGCO submits that the claim for punitive damages should be struck because Magnotta has fallen well short of proving the malicious, oppressive or high-handed conduct necessary to establish such a claim. That too, however, will be up to the trial judge to determine.
V. Magnotta’s Motion for Summary Judgment
[149] Magnotta brings a motion for partial summary judgment against the AGCO.
[150] On that motion, Magnotta seeks a declaration to the effect the Made Policy as administered by AGCO is ultra virus because: (i) the AGCO acted without statutory authority to adopt the Made Policy; (ii) abused its discretion by exercising powers outside of the scope of its legislative authority; and (iii) because the Made Policy is void for uncertainty and is impossible to enforce fairly.
[151] In Butera v. Chown, Cairns LLP,[^37] the Court of Appeal warned of the undesirability of partial summary judgment motions. It set out several reasons for which partial summary judgment motions are undesirable including the following:
(a) Unless the issue on which judgment is sought is clearly severable from the balance of the case there is a very real possibility of a trial result that is inconsistent with the result of the summary judgment motion on essentially the same claim.
(b) Judges already face a significant responsibility addressing the increase in summary judgment motions that have flowed since Hryniak. On partial summary judgment motions those same judges will be required to spend preparation time, court time, and time writing comprehensive reasons on an issue that does not dispose of the action.
(c) The record available at the hearing of a partial summary judgment motion will likely not be as expansive as the record at trial thereby increasing the danger of inconsistent findings.
(d) Motions for partial summary judgment delay the overall disposition of the case.
[152] Those reasons are apposite to the case at hand.
[153] Although Magnotta frames the motion as being based on the AGCO’s alleged lack of statutory jurisdiction, this is by no means a motion that simply involves comparing the words of the statute with what the AGCO did to determine whether the conduct was inside or outside of the statutory language.
[154] On the contrary, the motion is based on a highly complex, highly contested factual matrix.
[155] Magnotta’s purported jurisdictional issue actually turns on, among other things, whether the AGCO acted in bad faith and with discriminatory intent against Magnotta in implementing the Made Policy. This in turn depends on, among other things, why the AGCO continued to implement the Made Policy and whether the audits of each of Magnotta’s six facilities under the Made Policy were conducted honestly and in good faith. That, in turn, involves an analysis of both documents and witness conduct during the course of all of those steps.
[156] On the motion, that evidence evolved through a series of affidavits, responding affidavits reply affidavits, sur-reply affidavits, conflicting experts’ opinions and examination transcripts.
[157] Each side referred to extracts from cross examinations. In many cases the parties took me to different portions of the same transcript which appeared to contain conflicting information. Resolving those conflicts would require a judge to read the entire transcript and then likely be left with the conclusion that the issue is one on which the judge requires viva voce evidence that allows them to assess credibility and reliability.
[158] In addition, Magnotta alleges that it has been treated in a discriminatory manner because of the way in which the AGCO gave certain wineries the ability to sell wines in grocery stores. This turns on an assessment of the reasons behind those decisions and the good or bad faith underlying them. Indeed, Magnotta’s complaint is based largely allegations of bad faith. That requires a close factual review of the circumstances and the motivations of the actors involved.
[159] Quite apart from the fact that an assessment of those issues is largely credibility based and requires viva voce evidence, evaluating those issues on a paper record also creates certain practical issues.
[160] During a trial, evidence is led in a way that allows the judge to absorb information slowly and incrementally. The entire process tends to evolve in a calm, serene matter. Motions involve considerably tighter time limitations. Evidence tends to be referred to in a far more compressed, summary manner that requires the judge to review the evidence for the first time outside of the court room. Judges have very limited time to do that. As a result, summary judgment is more appropriate for cases or issues that are narrowly focused and turn on the review of a limited body of evidence.
[161] To demonstrate why a trial is the preferable way of presenting and absorbing the evidence on which Magnotta relies for its summary judgment motion, I give but one practical example. The limited time for a motion for summary judgment did not allow Magnotta to take me to the actual documents it relies on in support of its motion. In its factum, those documents were identified by the identification numbers they bear in the affidavits of documents in which the documents were produced. Magnotta’s factums did not identify where in the electronic record I could find the particular documents at issue. The electronic record involved five separate motions. On any one motion, the parties frequently incorporated by reference, materials from one of the other motions. Each motion had multiple records, supplementary records and compendiums. I tried to find the documents where I thought they should be but had no success. Without a pinpoint reference to a document, I would have to wade through what by my count are 35 different motion records and compendiums (excluding briefs of transcripts and exhibits to the transcripts) to find a document to which no pinpoint citation was provided in the factum or during oral argument. As much as judges would like to help parties resolve their disputes as quickly as possible, it is simply not possible for judges to engage in those sorts of exercises given the volume of matters they hear and the limited out of court time to prepare, review materials or write reasons.
[162] The proportionality of the procedure to the monetary or other importance of the issues in the action is also relevant to consider when determining whether to proceed by summary judgment. Had Magnotta wanted a more limited procedure, it could have appealed the AGCO’s notices to revoke licenses in 2006 to what is now the License Appeal Tribunal with a subsequent right to judicial review of the Tribunal’s decision. It chose not to do so and preferred to commence this claim. In those circumstances, Magnotta cannot complaint of the consequences of its own choices. All parties here are sophisticated and economically well resourced. Magnotta has turned this case into one that concerns the legitimacy of the regulatory structure affecting the manufacture and sale of alcoholic beverages in Ontario. Those are significant issues that warrant serene judicial consideration.
[163] At the end of the day, to determine whether summary judgment is an appropriate procedure, the judge must ask themselves whether they are confident that they can do justice between the parties by way of summary judgment. Not only do I not have that confidence, I have a strong sense that there is no possible way I could do justice to the parties in this case by way of summary judgment, whether partial or full.
VI. Constitutional Question
[164] During the course of these motions, the Crown Liability and Proceedings Act, 2019, S. O. 2019, c. 17, Sched. 17 (the “CLPA”) came into force. Section 11 (4) of that act provides that no cause of action arises against the Crown or an officer, employee or agent of the Crown in respect of negligence in making a decision in good faith respecting a policy matter. Section 11 (5) defines policy matters.
[165] Magnotta challenges the validity of section 11 of that statute. Argument on the issue occurred at the tail end of four very long motion days.
[166] At the end of the day, the applicability of s. 11 turns on the presence or absence of good faith. That is a hotly contested issue in the case before me.
[167] In my view it would not be appropriate to determine the constitutional question at this time. It would effectively amount to a motion for partial summary judgment. For the reasons set out earlier, this is not a case on which even the constitutional question should be subject to partial summary judgment given the complex, contested factual matrix from which it arises.
VII. Disposition and Costs
[168] As a result of the foregoing, I order as follows:
(i) The plaintiff’s motion to strike the defendants’ statements of defence for failing to produce the tolling agreement sooner than they did is dismissed.
(ii) The plaintiffs’ motion to strike out the factum of the LCBO on the plaintiffs’ partial summary judgment motion against the AGCO is dismissed.
(iii) On the motion by the LCBO to strike out paragraphs of the Amended Statement of Claim in that matter bearing court file number CV-08-357361:
(a) The following paragraphs are struck out without leave to amend: 1 (a), (b), (d), and (i), 7, 14 – 15, 20 – 70, 75 – 84, 96 (a), 97 (d), 100, 102 (e), 105 – 108, 113 (a) – (d).
(b) The following portions of the following paragraphs are struck out without leave to amend:
In paragraph 104, the words “initially by the LCBO and presently”.
In paragraph 109 (d) (i) the words “and Magnotta’s previous litigation with, inter alia, the LCBO”.
In paragraph 112 the words “with full knowledge of the history between Magnotta and the LCBO”.
(c) The following portions of the Amended Statement of Claim are struck out with leave to amend:
Allegations of public misfeasance as against the LCBO.
The reference to the LCBO owing a duty of care in paragraph 102.
Paragraphs 118 – 125.
(d) To the extent that the action in court file number CV-08-361217 continues after this motion, an identical order applies to the corresponding but slightly differently numbered paragraphs in that statement of claim.
(iv) The motion for summary judgment of Her Majesty the Queen in Right of Ontario in Court file number CV-08-361217 is granted.
(v) The AGCO’s motion for summary judgment is dismissed.
(vi) Magnotta’s motion for summary judgment is dismissed.
(vii) The issue of the constitutionality of the Crown Liability and Proceedings Act is deferred to the trial of this action.
[169] Any party seeking costs as a result of these motions may make written submissions within 14 days of the release of these reasons. Responses are to be delivered seven days later and replies delivered a further five days later.
[170] Should there be any questions arising out of these reasons, any party can contact me directly for a case conference to address the issues.
[171] Magnotta has asked for six weeks to amend its statement(s) of claim if any paragraphs were struck and leave to amend was granted. Magnotta shall have until February 19, 2021 to deliver an amended statement of claim. The defendants shall have until March 19, 2021 to defend.
[172] The action is now 13 years old and is still at the pleadings stage! As another judge noted earlier in these proceedings, delay is in Magnotta’s interest. While Magnotta tried to explain during the motion why 13 years to not even complete pleadings was not really as bad as it sounded, its explanations ring hollow. Any delay will have its reasons. Some of those reasons will be justified. That, however, misses the point. After all is said and done, 13 years to get to a pleadings motion is simply unacceptable.
[173] Much of the 13 years has been tied up with procedural wrangling over every conceivable issue, including appeals from scheduling directions. Court time is a public resource. Outside of the court system no one would even think that they had a right to unlimited use of public resources based entirely on their self interest and without regard to the interests of others. That attitude cannot prevail in an effective justice system either.
[174] While pleadings are being prepared, the parties should confer to work out a timetable peremptory to all parties for the balance of the proceeding up to trial. There is no reason that the parties cannot be ready for trial within 12 to 18 months. If Magnotta intends to join other parties as a result of any amendments to its statement of claim, it should advise all parties of that, including the parties to be added by February 8, 2021.
[175] The parties should work out the timetable to trial by March 1, 20201. They should confer about times for a case conference to finalize the case timetable before me. That case conference should occur by March 12, 2021.
Koehnen J.
Date: January 8, 2021
[^1]: Aecon Buildings v. Stephenson Engineering Limited, 2010 ONCA 898 [^2]: Handley Estate v. DTE Industries Limited, 2018 ONCA 324, 2018 ON CA 324. [^3]: Aecon at para 13. [^4]: Aviaco International Leasing Inc. v. Boeing Canada Inc., 2000 CanLII 22777 (ON SC); Bilfinger Berger (Canada) Inc. v. Greater Vancouver Water District, 2014 BCSC 1560; Glasjam v. Freedman, 2014 ONSC 3878. [^5]: Falcon Lumber Limited v 2480375 Ontario Inc (GN Mouldings and Doors), 2020 ONCA 310. [^6]: Gariepy v. Shell Oil Co., 2002 CanLII 12911 (ON SC). [^7]: Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 SCR 633, 2014 SCC 53, paras 47-48 [^8]: Pomeroy v. Couprie et al., 2017 ONSC 6906, para. 12, referring to Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, para. 24 [^9]: Sinclair-Cockburn Insurance Brokers Ltd. v. Richards 2002 CanLII 45031 (ON CA), [2002] 61 O.R. (3d) 105, leave to appeal to the Supreme Court of Canada dismissed (March 20, 2003, S.C.C. Bulletin, 2003, p. 457) [^10]: Toronto (City) v. CUPE, Local 79, 2003 SCC 63 at paras. 42, 35-37, 51; Canam Enterprises Inc. v. Coles (2000), 2000 CanLII 8514 (ON CA), 51 O.R. (3d) 481 (C.A.) at paras. 55‑56. [^11]: Toronto (City) v. CUPE, Local 79, 2003 SCC 63 at paras. 35 and 37. [^12]: Ibid at para. 37, citing Goudge J.A. (dissenting, affirmed on appeal) in Canam Enterprises Inc. v. Coles (2000), 51 O.R. (3d) 4181 (C.A.) at paras. 55‑56. [^13]: Toronto (City of ) v. CUPE Local 79, supra, at paras.37; Battista v. Emergis Inc. [2008] O.J. No. 2031 (S.C.J.) at para. 16; Reddy v. Oshawa Flying Club [1992] O.J. No. 1337 (Gen. Div.) at pages 5‑6 (QL). [^14]: In this regard I am referring to the Amended Statement of Claim in court file number CV-08-357361. [^15]: Lysko v Braley, 2004 CanLII 40666 (ON SC), [2004] O.J. No. 4727 (Ont. S.C.J.) at para. 64, affirmed (2006), 2006 CanLII 11846 (ON CA), 79 O. R. (3d) 721 (Ont. C.A.). [^16]: Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959 (SCC). [^17]: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 at para. 22. [^18]: See for example sample: AGF Canadian Equity Fund v. Transamerica Commercial Finance Corp. Canada, 1993 CanLII 8682 (ON SC), 1993 CarswellOnt 1053, [1993] O.J. No. 1340, para. 21 ; Dawson v. Baker, 2017 ONSC 6477. [^19]: St. Elizabeth Home Society v. Hamilton (City), [2010] O.J. No. 1515 at para. 20, 2010 ONCA 280. [^20]: Ibid. at para. 20. [^21]: Sagharian (Litigation Guardian of) v. Ontario (Minister of Education) 2007 CanLII 6933 (ON SC) at para. 34. [^22]: St. Johns Port Authority v. Adventure Tours Inc., 2011 FCA 198 [^23]: St. John’s Port v. Authority Adventure Tours Inc., 2011 FCA 198 at para. 44-63. Also see: Taylor v. Workplace Safety & Insurance Board, 2018 ONCA 108, at para. 17. [^24]: Grand River Enterprises Six Nations Ltd. v. Attorney General (Canada), 2017 ONCA 526, paras 89-90 [^25]: H.A. Imports of Canada Ltd. v. General Mills, Inc. et al., [1983] O.J .No. 3128; see also Sweda Farms Ltd. (c.o.b. Best Choice Eggs) v. Ontario Egg Producers, 2011 ONSC 6146. [^26]: Bram Enterprises Ltd. v. A.I. Enterprises Ltd., 2014 SCC 12 at para. 23. [^27]: G.H.L. Fridman, The Law of Torts in Canada, 3d ed (Toronto: Carswell, 2010), at 273 - 274. [^28]: Bazley v Curry, 1999 CanLII 692 (SCC), [1999] 2 SCR 534, at paras. 10 & 37; 671122 Ontario Ltd v Sagaz Industries Canada Inc, 2001 SCC 59, [2001] 2 SCR 983,; Fridman, Ibid. at 273 – 274. [^29]: Rules of Civil Procedure, r. 20.02(2). [^30]: Grand River Enterprises Six Nations Ltd. v. Attorney General (Canada), 2017 ONCA 526, para. 87. [^31]: Oz Optics Ltd. v. Timbercon, Inc., 2011 ONCA 714, at para 62. [^32]: King v. Ryerson University, 2015 ONCA 648, at para 5. [^33]: Roncarelli v. Duplessis, 1959 CanLII 50 (SCC) at p. 140. [^34]: Canada (Attorney General) v. TeleZone Inc., 2010 SCC 62, [2010] 3 S.C.R. 585 [^35]: Braithwaite v. Nova Scotia 1999 NSCA 77 at para 59. [^36]: Fradenburgh v. Ontario Lottery and Gaming Corp., 2010 ONSC 5387 (S.C.J.), at para. 14(c); Kohler Drugstore Ltd. et al. v. Ontario Lottery Corp. et al., (1984) 1984 CanLII 1966 (ON SC), 46 O.R. (2d) 333 (H.C.J.). [^37]: Butera v. Chown, Cairns LLP, 2017 ONCA 783.