Court File and Parties

COURT FILE NO.: CV-20-00641094

MOTION HEARD: 20210421

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Tribute (Colgan) Limited and Tribute (Colgan 2) Limited, Plaintiffs

AND:

The Corporation of the Township of Adjala-Tosorontio, Defendant

BEFORE: Master B. McAfee

COUNSEL: D. Smith and S. Sweet, Counsel, for the Moving Party, the Defendant

N. Roberts and A. Beale, Counsel, for the Responding Parties, the Plaintiffs

HEARD: April 21, 2021

REASONS FOR DECISION

[1] The defendant the Corporation of the Township of Adjala-Tosorontio (the “Township”) moves pursuant to Rule 25.11 of the Rules of Civil Procedure to strike portions of the statement of claim without leave to amend. The plaintiffs Tribute (Colgan) Limited (“Tribute 1”) and Tribute (Colgan 2) Limited (“Tribute 2”) (collectively “Tribute”) oppose the motion.

[2] The Township moves to strike paragraphs 32, 44 - 46, 77, 98, 110 and 111 on the basis that they are pleadings of evidence contrary to Rule 25.06(1). The Township moves to strike paragraphs 35 - 43, 47 - 49, 91 and 115 on the basis that they are irrelevant pleadings or, in the alternative, are pleadings of evidence. In advance of the hearing, the parties resolved the motion as it relates to paragraph 86.

[3] Tribute 1 and Tribute 2 are land development companies and owners of property located in the Hamlet of Colgan (the “Colgan Properties”). The Colgan Properties have been in the process of being developed into residential subdivisions (the “Colgan Subdivision”) since 2006 when the initial application for an Official Plan Amendment was filed.

[4] Since 2009, the development of the Colgan Properties has been governed by Minutes of Settlement. The Minutes of Settlement impose on the Township and the Township’s Council (“Council”) a duty to act in good faith in furtherance of the development of the Colgan Subdivision and clearing of the Draft Conditions.

[5] It is Tribute’s position that the Township breached the Minutes of Settlement by: (a) failing to adhere to the process for selection of the wastewater servicing solution; (b) acting in bad faith towards Tribute by misrepresenting facts about the Colgan Subdivision to the public; and (c) taking an obstructionist stance, including in connection with the clearing of the Draft Conditions.

[6] On May 15, 2020, the statement of claim was issued. The body of the statement of claim is 31 pages in length and consists of 139 paragraphs. Tribute claims, inter alia, damages in the amount of $165,000,000.00 for breach of contract and breach of the contractual duties of good faith, honest performance and fair dealing. Tribute also seeks a declaration that the Township owes Tribute a duty of good faith, honest performance and fair dealing and has breached that duty and acted in bad faith.

[7] The statement of claim was served on May 20, 2020. A notice of intent to defend was served on June 18, 2020. By way of letter dated November 10, 2020, the Township’s lawyer first raised issues with respect to the statement of claim which are the subject matter of this motion.

[8] Rule 25.06 of the Rules of Civil Procedure provides in part:

25.06(1) Every pleading shall contain a concise statement of the material facts on which the party relies for the claim or defence, but not the evidence by which those facts are to be proved.

(7) The effect of a document or the purport of a conversation, if material, shall be pleaded as briefly as possible, but the precise words of the document or conversation need not be pleaded unless those words are themselves material.

(8) Where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances from which it is to be inferred.

[9] Rule 25.11 provides:

25.11 The court may strike out or expunge all or part of a pleading or other document, with or without leave to amend, on the ground that the pleading or other document,

(a) may prejudice or delay the fair trial of the action;

(b) is scandalous, frivolous or vexatious; or

(c) is an abuse of the process of the court.

[10] As Justice Bielby states in Sachedina v. De Rose, 2017 ONSC 6560 (Ont. S.C.J.) at para. 16: “The purpose of pleadings is three-fold: (i) to define or clarify the issues; (ii) to give notice of the case to be met and the remedies sought; and (iii) to apprise the court as to what is in issue (Somerleigh v. Lakehead Region Conservation Authority, 2005 CarswellOnt 3546 (Ont. S.C.J.), para. 5).”

[11] In the recent decision of the Court of Appeal for Ontario in Abbasbayli v. Fiera Foods Company, 2021 ONCA 95 (Ont. C.A.) Justice van Rensburg states at paras. 48 and 49:

[48] Rule 25.06(1) provides that pleadings are to contain a concise statement of the material facts on which the party relies for the claim or defence, but not the evidence by which the facts are to be proved. As Perell J. noted in Jacobson v. Skurka, 2015 ONSC 1699, 125 O.R. (3d) 279, at paras. 43-44, the difference between pleading material facts and pleading evidence is a difference in degree and not of kind, and the prohibition against pleading evidence is designed to restrain the pleading of facts that are subordinate and that merely tend toward proving the truth of the material facts. As the same judge observed in Mirshahi v. Suleman, 2008 CanLII 64006 (Ont. S.C.), seeking to strike a pleading for pleading evidence can be a technical objection and pleading evidence may be closer to providing particulars, which in most cases is more helpful than harmful: at para. 21. Particulars are not evidence but “additional bits of information, or data, or detail, that flesh out the ‘material facts’”: see Janssen-Ortho Inc. v. Amgen Canada Inc. (2005), 2005 CanLII 19660 (ON CA), 256 D.L.R. (4th) 407 (Ont. C.A.), at paras. 89-90, citing Copland v. Commodore Business Machines Ltd. (1985), 1985 CanLII 2190 (ON SC), 52 O.R. (2d) 586 (S.C., Master), aff’d (1985), 52 O.R. (2d) 586 (note) (H.C.).

[49] Rule 25.11(b) provides that the court may strike out or expunge all or part of a pleading, with or without leave to amend, on the ground that the pleading is “scandalous, frivolous or vexatious”. A scandalous pleading includes those parts of a pleading that are irrelevant, argumentative or inserted for colour, and unfounded and inflammatory attacks on the integrity of a party: see George v. Harris, [2000] O.J. No. 1762 (S.C.), at para. 20. The focus in considering a challenge to a pleading under this rule is on the relevance of the pleading to a cause of action or defence. As this court recently noted in Huachangda Canada Holdings Inc. v. Solcz Group Inc., 2019 ONCA 649, 147 O.R. (3d) 644, at para. 15, “[a] fact that is relevant to a cause of action cannot be scandalous, frivolous or vexatious. On the other hand, a pleading that raises irrelevant or superfluous allegations that cannot affect the outcome of an action is scandalous, frivolous or vexatious, and should be struck out”.

[12] The essential elements of a claim for breach of contract are: (1) the nature of the contract; (2) the parties to the contract; (3) privity of contract between the plaintiff and defendant; (4) the relevant terms of the contract; (5) which term was breached; and (6) the damages that flow from the breach (Enercare Home and Commercial Services Limited Partnership v. Grand Hvac Leasing Ltd., 2020 ONSC 6946 (Ont. S.C.J.) at para. 14).

[13] Where, as is the case before me, the claim relates to a breach of the duty of good faith and honesty in contractual performance, the pleading must also provide particulars regarding the manner in which those terms were breached. Justice Morgan states as follows in 1523428 Ontario Inc./JB&M Walker Ltd. v. TDL Group, 2018 ONSC 5886 (Ont. S.C.J.) at para. 45:

[45] While this breach of contract claim, including a breach of duty of good faith claim, can potentially survive a challenge at this stage, it can only so do once particulars are provided. These must include some identification of the contractual terms that have been breached, the manner in which those terms were breached, and the damages that flow from the breach: Re Collections Inc. v. Toronto-Dominion Bank, 2010 ONSC 6560, para 108.

[14] As stated by Justice Shaw in Agfa v. Partners Prepress, 2006 CanLII 28730 (Ont. S.C.J.) at para. 12:

[12] Rule 25.06(8) requires that where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading must contain full particulars of the allegations. In Balanyk v. University of Toronto, 1999 CanLII 14918 (ON SC), [1999] O.J. No. 2162 (Ont. S.C.J.)] at para. 28, Cameron J. states:

The full particulars of the allegations of fraud, breach of trust or misrepresentation required by Rule 25.06(8) must set out precisely what each allegation of such wrongful act is, and the when, what, by whom and to whom of the relevant circumstances: see Lana International Ltd. v. Menasco Aerospace Ltd 1996 CanLII 7974 (ON SC), (1996), 28 O.R. (3d) 343.

[15] The parties agree that the requirement to provide full particulars applies to allegations of bad faith (Portuguese Canadian Credit Union Ltd. v. 1141931 Ontario Ltd., 2012 ONCA 274 (Ont. C.A.) at para. 9; and MacLean v. National CarWash Solutions, 2020 ONSC 6032 (Ont. S.C.J.) at para. 19).

[16] In Carter v. Minto Management Limited, 2017 ONSC 3131 (Ont. S.C.J.) at para. 9, Master Sugunasiri, as she then was, acknowledged that: “…there is not always a bright line that distinguishes material facts from evidence and/or particulars. Sometimes an allegation can be all three.”

[17] The need for particulars trumps the rule against pleading evidence. Justice J. MacDonald in Mislovitch v. Bloom, [1997] O.J. No. 5225 (Ont. Gen.Div.) at para. 12:

[12] The contents of the impugned pleadings also appear to be evidence. Rule 25.06(1) is mandatory in requiring that evidence not be pleaded. How is this overlap in mandatory rules to be resolved? In my opinion, pleadings which are full particulars pursuant to Rule 25.06(8) and also evidence contrary to Rule 25.06(1) should be allowed to stand in order to meet objectives of Rule 25.06(8). These objectives are definition of the issues and disclosure of the case to be met. This interpretation of Rule 25.06 is consistent with Rule 1.04(1). It is also akin to relief, of the kind mentioned in Rule 2.01(1), from the requirements of Rule 25.06(1). This interpretation and application of these Rules means that the ultimate exception to complying with the Rules, found in Rule 2.03, is unnecessary and thus unavailable.

[18] While pleadings must not offend the Rules, parties may frame their pleadings as they see fit and the right to do so should not be lightly infringed on by the court. (Carter at para. 8 citing Jourdain v. Ontario, 2008 CanLII 35684 (Ont. S.C.J.) at para. 38).

[19] As stated in Mislovitch at para. 9: “On a motion to strike out a pleading, the court must read the Statement of Claim generously with allowance for inadequacies due to draft deficiencies: Nash v. Ontario et al. (1995), 1995 CanLII 2934 (ON CA), 27 O.R. (3d) 1 (C.A.) at p. 6, citing Toronto-Dominion Bank v. Deloitte Haskins & Sells (1991), 1991 CanLII 7366 (ON SC), 5 O.R. (3d) 417 at p. 419 (Gen.Div.).”

[20] Motions under Rule 25.11 should only be granted in the clearest of cases (Hudson v. Linamar Corporation, 2010 ONSC 7248 (Ont. S.C.J.) at paras. 12 and 28 citing Toronto (City) v. MFP Financial Services Ltd., [2005] O.J. No. 3214 at para. 17 and Jama v. McDonald’s Restaurants of Canada Ltd., [2001] O.J. No. 1068 (Ont. S.C.J.)).

[21] A number of the impugned paragraphs concern alleged communications and opinions of one individual, Mr. Pinto. Mr. Pinto is a resident who was elected councillor in 2010, re-elected councillor in 2014 and elected Mayor in 2018. The Township argues that pleadings concerning Mr. Pinto do not relate to any actions taken by the Township, but rather refer to the alleged communications and opinions of one individual, who is not a named defendant, and are an attempt to colour the conduct of the Township. The Township argues that the pleadings concerning comments made by Mr. Pinto are not equivalent to the acts of the Township and therefore cannot be characterized as proof of intention or particulars of bad faith on behalf of the Township and are therefore irrelevant.

[22] The decisions relied on by the Township in this regard of Severn (Township) v. 934335 Ontario Ltd., [1994] O.J. No. 2678 (Ont. S.C.J.) at paras. 1-8, 12; Magical Waters Fountains Ltd. v. Sarnia (City), 1992 CanLII 7411 (ON SC), [1992] O.J. No. 1320 (Ont. Div.Ct.) at paras. 5 and 8; Durham (Regional Municipality) v. Oshawa (City) 2012 ONSC 5803 (Ont. S.C.J.) at para. 38; aff’d at 2013 ONCA 573; Unifor, Local 1688 v. The City of Ottawa 2018 ONSC 3377 (Ont. S.C.J.) at paras. 203-205 ask a legal question: can a staff member, individual councillor or mayor bind a municipality. The decisions do not involve a factual assessment of allegations of bad faith. They are not decisions from pleadings motions.

[23] Where bad faith is alleged on the part of a municipality, statements and actions of individuals may be material indicia of bad faith. In Xentel DM Inc. v. Windsor (City), 2004 CanLII 22084 (ON SC), [2004] O.J. No. 3656 (Ont. S.C.J.) at paras. 35, 41, 43 and 64, the statements of individual councillors were found to be relevant to a determination of bad faith on the application.

[24] In Mislovitch the following is stated at para. 13:

[13] The applicant argued that permitting these pleadings to stand would open the door to the admission of prejudicial evidence at trial. This argument is without merit. Admissibility of evidence is solely the trial judge’s responsibility and, if then it is made to appear that the prejudicial effect of evidence of the issues in the disputed pleadings outweighs its probative value, the trial judge will no doubt exclude it. On the other hand, if the disputed pleadings are struck out now, the applicant would be able to argue at trial that the court had already determined the issues to be irrelevant.

[25] The weight, if any, to be placed on Mr. Pinto’s personal opinions and interests will be a matter for the trial Judge.

[26] I am not satisfied of a basis to strike the impugned paragraphs of the statement of claim.

[27] Paragraphs 32 and 91 of the statement of claim concern Mr. Pinto’s personal interest. In this action Tribute alleges that the Township breached its duty of good faith. It is alleged that the personal opinions and interests of Mr. Pinto are indicia of that bad faith.

[28] Paragraph 32 pleads two material facts in relation to this cause of action: 1) it provides particulars of Mr. Pinto’s personal opinions and interests as early as 2010; and 2) it provides a material fact regarding Tribute’s assertion that the Township gave undue weight to the contention that there was an inadequate water supply for the development. Paragraph 32 includes a quotation from the Ontario Municipal Board’s (“OMB”) 2010 decision regarding the Colgan Properties.

[29] Paragraph 91 pleads the material fact that Mr. Pinto was aware, or should have been aware, of a potential conflict of interest on his part. Paragraph 91 contains a quotation regarding Mr. Pinto’s declared personal interest.

[30] To the extent that paragraphs 32 and 91 also include evidence in the form of a quotation from the OMB decision and a declaration, due to the requirement to provide full particulars, they should be allowed to stand. I would not strike paragraphs 32 and 91.

[31] Paragraphs 35 to 39 concern the Elston Report. Tribute alleges that the Township breached its duty of good faith by undermining professional planning advice. Instead, it is alleged that the Township relied on misinformation provided by Mr. Pinto. These paragraphs plead material facts to establish the pattern of conduct. The paragraphs plead that an Integrity Commissioner, Harold Elston was appointed to examine these issues and found that planning advice was undermined, and misinformation related to the Colgan Developments was provided. Paragraph 39 identifies specific misinformation. To the extent that paragraphs 35 to 39 also contain evidence in the form of references to and a quotation from the Elston Report, due to the requirement to provide full particulars, the paragraphs should be allowed to stand. I would not strike paragraphs 35 to 39.

[32] Paragraphs 40 to 49 concern blog posts of Mr. Pinto. The blog posts provide particulars of the alleged misinformation including the alleged misinformation itself, when, where, how, by whom and to whom it was made and its falsity. Paragraphs 40 and 41 identify misinformation about water and wastewater management and the cost of maintaining the infrastructure. Paragraph 41 also identifies why the information about the cost of maintaining the infrastructure is allegedly false. Paragraph 42 quotes from a blog post and identifies misinformation about the availability of water and the number of homes approved for development. Paragraph 43 quotes from the 2010 OMB decision and identifies why the information about the availability of water is allegedly false. Paragraph 44 quotes from a letter from Jones Consulting Group Ltd. and identifies why the information about the availability of water is allegedly false. Paragraph 45 identifies why the information about availability of water is allegedly false. Paragraph 46 quotes from the OMB decision and identifies why the information about the number of homes approved for the development and water and sewer capacity is incorrect. Paragraph 47 quotes from two blog posts and identifies misinformation about the number of homes approved for the subdivision. Paragraph 48 also quotes from two blog posts and identifies misinformation about water and wastewater management and the cost of maintaining the infrastructure. Paragraph 49 identifies misinformation about flooding risk and water supply and why the information is allegedly false. To the extent that the quotations are also evidence, due to the requirement to provide full particulars, the paragraphs should be allowed to stand. I would not strike paragraphs 40 to 49 of the statement of claim.

[33] Paragraphs 77, 98, 110, 111 and 115 of the statement of claim concern alleged obstructionist conduct and provide the required particulars of the alleged bad faith conduct. The pleadings identify discrete instances of conduct amounting to an alleged obstructionist stance, which forms part of an alleged course of conduct. To the extent that the pleadings also contain evidence in the form of a references to an email, a report and a public statement and a quotation from a letter, due to the requirement to provide full particulars, the paragraphs should be allowed to stand. I would not strike paragraphs 77, 98, 110, 111 and 115 of the statement of claim.

[34] Tribute argues that the Township’s position on this motion is contrary to its position before the Local Planning Appeal Tribunal (LPAT) (see Memorandum of Decision issued October 2, 2020). Tribute argues that in July 2020, the Township took the position that LPAT lacked jurisdiction to address certain motions brought by Tribute before LPAT on the basis that this action was before the Superior Court. Tribute argues that the Township is now taking a position on this motion that certain matters before the Superior Court are improper. These positions taken by the Township were not a factor in determining the propriety of the impugned pleadings.

[35] Tribute argues that this motion should also be dismissed on the basis of delay. While this motion was not brought as quickly as it could have been brought, I am not satisfied of undue delay as a basis to dismiss the motion. This is a large claim involving an alleged course of conduct over a number of years. Proceedings involving Tribute and the Township were also taking place before LPAT. Moving counsel has undertaken to provide a statement of defence within 2 weeks of the release of this decision.

[36] Reading the statement of claim generously as I am required to do, I am not satisfied this that is the clearest of cases. The motion is dismissed.

[37] If any party seeks costs, the parties shall make reasonable attempts to agree to costs. If after making reasonable attempts to agree to costs the parties are unable to agree, any party seeking costs shall serve and file by email to Assistant Trial Coordinator Teanna Charlebois (Teanna.Charlebois@ontario.ca) brief written submissions on costs of three pages or less in length on or before August 16, 2021. Any responding submissions on costs shall also be three pages or less in length and served and filed by email on or before August 31, 2021. Any reply submissions on costs shall not exceed one page in length and shall be served and filed by email on or before September 7, 2021. Costs outlines were provided to the Court at the conclusion of the hearing.

Master B. McAfee

Date: July 5, 2021