Court File and Parties
Court File No.: CV-20-002 & CV-17-6713 Date: 2021-05-14 Superior Court of Justice - Ontario
Re: Ronald Montreuil, Plaintiff And: Larmer & Wayne Stickland et al, Defendants
Before: The Honourable Madam Justice K.E. Cullin
Counsel: Ronald Montreuil, Plaintiff, Self-Represented Peter Diavolitsis, for the Defendants, Larmer & Wayne Stickland Sabrina Lucenti, for the Defendant, Geoffrey Laplante Adam Pantel, for the Defendant, John D’Agostino James Ireland, Defendant, Self-Represented Alexander Melfi, for the Defendant, William Sangster (Action CV-17-6731) Wayne Stickland, for the Defendant, R.J.M. Garnets Inc. (Action CV-17-6731)
Heard: May 14, 2021
Endorsement
1On April 13, 2021, I issued an endorsement in this matter directing the registrar, pursuant to Rule 2.1.01(3), to give notice in Form 2.1A to the plaintiff, Ronald Montreuil, with respect to this action. I have now received written submissions from Mr. Montreuil and the defendants. This endorsement sets out my decision with respect to the notice.
Factual Background
2This proceeding arises from a dispute about a group of mining claims which were originally owned by the plaintiff, Ronald Montreuil. The mining claims are for a potential garnet mine near Mattawa, Ontario. The plaintiff spent many years and significant personal funds developing the claims.
3In September 2014, the plaintiff approached his daughter and her husband, seeking their assistance to secure investors to further proceed with the development. After some discussions, a plan was created whereby Tammy Cross and Rodney Cross (the plaintiff’s daughter and son-in-law), Marty Williams, and Stan Bovey would, along with the plaintiff, become shareholders in a corporation with a view to developing the mining claims into a viable mining project.
4An oral agreement between the parties contemplated that they would become shareholders in a corporation that would own the mining claims. The plaintiff would own 25% of the shares, and the remaining investors would own 75% of the shares. A modest amount of money was to be paid to the plaintiff as consideration for the transfer of the mining claims to the corporation. It was also understood that the defendants would make good faith efforts to develop the claims into a viable mining project in order to create value in the plaintiff’s 25% interest in the corporation.
5William Sangster, a lawyer in North Bay, was retained to complete the legal work for the transaction, which took place in or about May and June 2015.
6While the project was still in its infancy, the relationship between the plaintiff and the other shareholders deteriorated.
7Among other things, the plaintiff alleged that Williams, Bovey and Rodney Cross were engaging in conduct that was placing the mining claims at risk of devolving to the Crown. He also alleged that, in response to his concerns, they had excluded him from the affairs of the corporation and had purported to remove him as a corporate officer and director.
8Williams, Bovey and Cross alleged that there were irregularities with the registration and ownership of the mining claims that could only be rectified by the plaintiff, and that he refused to do so. They alleged that the plaintiff’s actions frustrated the transaction and that they were required to take steps to protect the corporation and the claims. Among other things, they retained James Ireland, a mining consultant, to assist in rectifying the irregularities with the claims.
9On April 5, 2017, the plaintiff issued a Statement of Claim against Tammy Cross, Rodney Cross, Marty Williams and Stan Bovey, seeking damages as well as an order setting aside their transaction. Subsequently, William Sangster was added as a party to the proceeding; it is alleged that he failed to protect the interests of the plaintiff in the transaction. The corporation in which the parties were shareholders, R.J.M. Garnets Inc., was also added as a defendant. That claim was issued at North Bay under Court File No. CV-17-6731 (the “Main Claim”).
10The plaintiff issued the Main Claim on his own behalf and has for the most part been self-represented in that proceeding. The defendants Rodney Cross, Marty Williams and Stan Bovey have been represented by Geoffrey LaPlante. The defendant Tammy Cross has been represented by Jerry Herszkopf. The defendant William Sangster has been represented by Gavin Tighe and Alexander Melfi. The corporate entity in which the parties are shareholders, R.J.M. Garnets Inc. (the “Corporation”), has been represented in the litigation by Wayne Stickland; John D’Agostino has been its corporate counsel.
11On January 2, 2020, the plaintiff issued a Statement of Claim against Larmer & Wayne Stickland, Geoffrey LaPlante, John D’Agostino and James Ireland. The claim was issued at North Bay under Court File No. CV-20-002-0000 (the “Current Claim”).
The Current Claim
12The Current Claim alleges that the defendants have engaged in negligent and unlawful acts by providing services to the defendants in the Main Action and to the Corporation. The plaintiff alleges that he has suffered damages as a result of the conduct of the defendants.
13The plaintiff has plead the following causes of action against the defendants:
a. As against the defendant, Larmer & Wayne Stickland, the plaintiff seeks damages of $1,000,000.00 for:
i. False representation as a lawyer for R.J.M. Garnets Inc.;
ii. Tort of a minority with medical issues;
iii. Corruption, slander and misrepresentation of R.J.M. Garnets Inc. and the plaintiff;
iv. Ignoring the Business Corporations Act, R.S.O. 1990, c.B-16; and,
v. Having no sense, direction, knowledge or experience to be lawyers in the mining industry.
b. As against the defendant, Geoffrey Laplante, the plaintiff seeks damages of $1,000,000.00 for:
i. Contradicting the Business Corporations Act;
ii. Stating incorrect facts in his Statement of Defence and Counterclaim and misrepresenting the truth;
iii. Neglecting his duty of directing and guiding his clients for the benefit of all;
iv. Causing damage to the plaintiff’s relationships with aboriginal groups and ministries;
v. Making statements that are false, slanderous and damaging to R.J.M Garnets Inc. and the plaintiff;
vi. Causing R.J.M. Garnets Inc. and the people of a depressed area to suffer losses as a result of his lack of knowledge, experience and communication in the mining industry; and,
vii. Tort, tort of a minority and tort of R.J.M. Garnets Inc.
c. As against the defendant, James Ireland, the plaintiff seeks damages of $500,000.00 for:
i. Making false statements in an affidavit provided in support of a motion for summary judgment by the defendants in the Main Action;
ii. Negligence in applying for and inappropriate use of an exploration permit;
iii. Breach of agreement and neglect of duty to keep claims in good standing;
iv. Conflict of the Business Corporations Act and the Negligence Act, R.S.O. 1990, c.N-1;
v. Deflamation;
vi. Tort to a minority;
vii. No responsibility to the future of the corporation; and,
viii. Tampering with a government document.
d. As against the defendant, John D’Agostino, the plaintiff seeks damages of $1,000,000.00 for:
i. Receiving payments for services from R.J.M. Garnets Inc. with no supporting documentation;
ii. Neglect of duties and responsibilities in failing to provide a first report in accordance with the Endorsement of Justice Nadeau, dated November 18, 2018;
iii. Causing tension and distrust between the plaintiff and the Algonquins First Nations;
iv. Causing R.J.M. Garnets Inc. and the people of the area to suffer losses as a result of his lack of knowledge, experience and communication in the mining industry;
v. Tort of a minority and tort of R.J.M. Garnets Inc; and,
vi. Preparing an inappropriate draft Shareholders’ Agreement.
Submissions of the Parties
14The plaintiff submits that the request by the defendants to dismiss or stay the Current Claim pursuant to Rule 2.1 should be denied.
15In summary, the plaintiff submits that he has viable claims against the defendants and that the defendants are creating difficulties in the Main Action. It is the plaintiff’s position that any individuals acting for the Corporation are accountable to him and have a duty of care to him as he is the President, a Director, and a shareholder, of the Corporation.
16The plaintiff has also expressed concerns that he is disadvantaged in the legal process. He submits that he is illiterate, struggles from a head injury and short-term memory loss, and suffers from cancer, heart disease and stress. He feels that Rule 2.1 is being used to deny justice and to suppress his rights as a litigant. He is concerned that the use of Rule 2.1 is an abuse of process and a tool for protecting advantaged parties at the expense of the disadvantaged.
17The defendants submit that the Current Claim is frivolous and vexatious and that it discloses no known cause of action at law. The defendants also submit that the claim discloses insufficient facts to enable them to meaningfully comprehend the claim or to defend the action.
18The defendants also argue that the Current Claim is tactical. It was commenced immediately after court-mediated settlement negotiations in the Main Action were discontinued. It is their position that the proceeding has been commenced by the plaintiff to create conflicts of interest for the defendants’ counsel in the Main Action which will require the defendants to retain new counsel or to represent themselves.
19The parties were asked to make submissions regarding the remedy of a stay as opposed to a dismissal of the plaintiff’s claim. The defendants oppose a stay. They submit that staying the action will leave it outstanding, creating a conflict of interest for the defendants which will render them unable to continue to act in the Main Action or to otherwise act for the Corporation and its officers and directors.
The Law
20Rule 2.1 of the Rules of Civil Procedure, R.R.O. 1990, Reg.194 provides that, on its own initiative or at the request of any party, the court may stay or dismiss a proceeding that it finds is frivolous, vexatious or otherwise an abuse of the process of the court.
21In Rivette v. The Queen, et al., 2020 ONSC 6525, Corthron, J. described Rule 2.1 as, “a blunt instrument, reserved for the clearest of cases” (para. 10). In describing the principles to be applied by a court considering a request for a Rule 2.1 dismissal, she summarized the following:
The principles to be applied by a judge considering a requisition under r. 2.1.01 include the following:
The statement of claim must be read generously. Drafting deficiencies may be overlooked and the plaintiff given the benefit of the doubt if it appears that the action might be viable;
“[R]ule 2.1 is not for close calls. Its availability is predicated on the abusive nature of the proceeding being apparent on the face of the pleadings themselves”: Raji v. Borden Ladner Gervais LLP, 2015 ONSC 801, at para. 8;
An action should be dismissed under r. 2.1 only if there was “a basis in the pleadings to support the resort to the attenuated process” in the rule: Raji, at para. 8;
The procedure under r. 2.1.01 should not be used as a substitute for a pleadings motion; and
The procedure is intended to serve the purpose of “nipping in the bud actions which are frivolous and vexatious in order to protect the parties opposite from inappropriate costs and to protect the court from misallocation of scarce resources”: Markowa v. Adamson Cosmetic Facial Surgery Inc., 2014 ONSC 6664, at para. 3.
22Frequently, Rule 2.1 requests will involve actions commenced by self-represented litigants and, in some cases, although it is not clear from the pleadings, the foundation of those actions may involve a legitimate legal issue. The court must be liberal and objective in its review of disputed claims, even in the face of significant drafting deficiencies. As observed by Myers, J. in Gao v. Ontario WISB, 2014 ONSC 6497 (para. 18):
…It is not uncommon for there to be a real issue at the heart of a vexatious litigant’s case. The problem is often that the litigant either cannot properly communicate the concern or, more typically, cannot accept that the law may not provide the remedy sought despite the unfairness felt by the litigant. While rule 2.1 should be applied robustly to bring to an early end to vexatious proceedings, the matters should not be considered lightly or dismissively. Care should be taken to allow generously for drafting deficiencies and recognizing that there may be a core complaint which is quite properly recognized as legitimate even if the proceeding itself is frivolously brought or carried out and ought to be dismissed.
Analysis
23I have noted before, but it bears repeating, that I am sympathetic to the frustration of the plaintiff in addressing his legal proceedings. These proceedings involve issues which are very personal to the plaintiff. It is understandable why he may feel that he is being wronged when positions are taken by the parties or decisions are made by the court which compete with his view of how the litigation should proceed.
24The Main Action is, principally, an oppression remedy action by the plaintiff against the other shareholders of R.J.M Garnets Inc. and a solicitor’s negligence claim against the lawyer who prepared the legal documents in the original transaction. Without commenting on the merits of those claims, I would note that the Main Action has not been the subject of a Rule 2.1 notice. The statement of claim has been appropriately pled and the plaintiff is within his rights to bring that action without raising allegations of abuse of process.
25Stated plainly, this process is not an attempt to restrict the plaintiff’s ability to seek relief against the other shareholders of R.J.M. Garnets Inc. or against the lawyer who prepared the transaction giving rise to their dispute.
26The Current Claim is another story. It is, basically, a claim by the plaintiff against the lawyers and the consultant who are acting on behalf of the Corporation and the other shareholders. Read generously, the claim alleges that these professionals have enabled the oppression of the plaintiff’s minority shareholder rights, have acted negligently in the execution of their duties on behalf of the Corporation, and have through misleading, false, and defamatory statements damaged the reputation of the plaintiff and the Corporation.
27Under the right circumstances, the plaintiff may have a viable claim against some of the defendants. Those circumstances, however, do not presently exist and it would be an abuse of the process of the court to permit the Current Claim to continue at this time.
28Presently, the plaintiff is a 25% shareholder in R.J.M Garnets Inc. Rightly or wrongly, between 2015 and now, a resolution was passed by the other shareholders removing him as an officer and director of the Corporation and restricting his voting rights. There is no shareholders’ agreement and nor are there any interim orders restricting the ability of the other shareholders to direct the affairs of the Corporation or enabling the plaintiff to do so.
29The defendants in the Current Claim are, apart from James Ireland, lawyers retained by the Corporation and its officers and directors. They are acting under the authority of those retainers. James Ireland is an independent contractor who is also acting under the authority of a retainer by the Corporation.
30If the plaintiff’s claims in the Main Action succeed, he will have access to a broad spectrum of relief, ranging from damages to orders directing the restoration of his rights within the Corporation. In the interim, however, the Corporation must continue to operate, and the other shareholders currently have the right to direct those operations. This includes the right to appoint and instruct counsel both for the Corporation and its officers and directors, and to engage and instruct employees, independent contractors and professionals.
31At law, employees, independent contractors and professionals are entitled to rely upon retainers and instructions which are extended to them by corporations and corporate officers and directors who have the ostensible authority to do so. If that were not the case, the day-to-day business of any corporation in the midst of litigation or a power struggle would be at risk of grinding to a halt.
32If an officer, director or shareholder commences litigation against the corporation and has serious concerns that imminent harm will occur if the corporation’s operations continue, there are legal remedies to address those concerns. Independently suing professionals and independent contractors acting for the corporation within the scope of proper retainers and instructions is not one of those legal remedies.
33That is not to say that the defendants in the Current Claim are immune indefinitely from claims by the plaintiff. If the plaintiff is successful in his oppression remedy claim, and if evidence emerges that conduct by the defendants contributed to the oppression of the plaintiff’s minority shareholder rights or otherwise resulted in losses and damages to the plaintiff, the plaintiff may have grounds to commence proceedings against them. Until then, as frustrating as it may be, the plaintiff is limited to pursuing claims and any other appropriate relief within the Main Action.
34I have considered whether it would be more appropriate to stay the Current Claim pending the outcome of the Main Action as opposed to dismissing it. After pondering the consequences that would flow from such an order, I have concluded that simply staying the Current Claim would only result in mischief.
35First, the outstanding claim would leave the defendants in a conflict of interest and unable to act for their clients. This would result in expense and further delay in the Main Action. In my view, the effect would be the equivalent of granting injunctive relief.
36Second, disqualifying the defendants from acting for their clients will do nothing to address the concerns of the plaintiff. They will simply be replaced by new lawyers and consultants who will be acting on the same instructions from the other shareholders. This will undoubtedly engage another legal process between the plaintiff and the new lawyers and consultants; it will be a vicious circle.
37The only process that is going to resolve the plaintiff’s dispute with his business partners is the process that he has already commenced in the Main Action. That claim must be advanced without any further detours or delay.
Costs
38I will be exercising my discretion not to award any further costs in this action.
39First, I would note that a large portion of the defendants’ efforts in this file were expended on the motion to amend pleadings, and that costs have already been awarded with respect to that step of the proceeding.
40Second, while I have dismissed the plaintiff’s claim at this time, I have done so because I believe that it is premature and an abuse of process and not because I believe that the claim could never have merit. It is my view that, in the circumstances, it would be inappropriate to award additional costs beyond what have been previously Ordered.
Disposition
41I therefore make the following orders:
a. That File No. CV-20-002 between the plaintiff, Ronald Montreuil, and the defendants Larmer & Wayne Stickland, Geoffrey Laplante, John D’Agostino and James Ireland is hereby dismissed, subject to the following conditions:
i. The claims against the named defendants are dismissed without prejudice;
ii. No claims may be commenced by the plaintiff against any of the named defendants until the completion of the proceedings bearing North Bay Court File No. CV-17-6731; and,
iii. No claims may be commenced by the plaintiff against any of the named defendants without leave of either the case management Judge or the trial judge in North Bay Court File No. CV-17-6731.
b. That a case management conference shall be scheduled in North Bay Court File No. CV-17-6731 at the earliest convenience of the parties and/or counsel in that action.
c. That there shall be no order as to costs with respect to this dismissal.
The Honourable Madam Justice K.E. Cullin
Date: May 14, 2021