Court File and Parties

COURT FILE NO.: CV-19-00625973 MOTION HEARD: 2021-08-20 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Visual Information Products Inc., Plaintiff AND: Tony Rossi and Globe POS Systems Inc., Defendants

BEFORE: Associate Justice L. La Horey COUNSEL: Julien Bonniere, Counsel for the moving party defendant Globe POS Systems Inc. Daria Chyc, Counsel for the responding party plaintiff

HEARD: August 20, 2021 by videoconference

REASONS FOR DECISION

[1] The defendant Globe POS Systems Inc. ("Globe") brings this motion to amend its statement of defence by adding a counterclaim against the plaintiff Visual Information Products Inc. ("Visual" or the "plaintiff").

[2] Visual commenced this action on August 21, 2019 against its former employee, Tony Rossi ("Rossi") and Rossi's subsequent employer, Globe. Visual alleges that Rossi has breached the non-competition and confidentiality clauses in his employment contract, appropriated corporate opportunities, violated the plaintiff's intellectual property rights and breached his fiduciary duty to the plaintiff. As against Globe, Visual alleges that Globe is liable for inducing Rossi to breach his contract with it. Visual claims damages and injunctive relief.

[3] Globe filed a defence on August 30, 2019. Rossi filed a defence and counterclaim for unpaid commissions and wrongful dismissal damages. Pleadings are now closed.

[4] Globe now wishes to add a counterclaim against Visual seeking general damages of $1,000,000 "for intentional and wrongful interference with the contractual and economic relations and business opportunities" of Globe.

[5] Rule 26.01 of the Rules of Civil Procedure provides:

26.01 On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

[6] In 158844 Ontario Ltd. v State Farm Fire and Casualty Co.,[^1] the Court of Appeal summarized the general principles on motions for leave to amend and, in so doing, said in part:

The rule requires the court to grant leave to amend unless the responding party would suffer non-compensable prejudice; the amended pleadings are scandalous, frivolous, vexatious or an abuse of the court's process; or the pleading discloses no reasonable cause of action: Iroquois Falls Power Corp. v. Jacob Canada Inc., 2009 ONCA 517, 75 C.C.L.I. (4th) 1, at paras. 15-16, leave to appeal to SCC refused, 2010 CarswellOnt 425, and Andersen Consulting v. Canada (Attorney General) (2001), 2001 CanLII 8587 (ON CA), 150 O.A.C. 177 (C.A.), at para. 37. [emphasis in original]

[7] On a motion to amend, the court must assume that the facts in the proposed amendment are true unless patently ridiculous or incapable of proof.[^2]

[8] As the Court of Appeal has stated on more than one occasion, "leave to amend should be denied only in the clearest of cases, especially where the deficiencies in the pleading can be cured by an appropriate amendment and the other party would not suffer any prejudice if leave to amend was granted."[^3]

[9] Visual resists the motion on the basis that the proposed amendments are not legally tenable.

[10] The proposed counterclaim, which is nine paragraphs long, reads in part as follows:

3. The Defendant Globe states that this action was commenced by the Plaintiff to intimidate their former employee, the Defendant Tony Rossi ("Rossi"), and to further their own economic pursuits by extinguishing the potential success of parties that they perceive as competitors within their industry.

4. Subsequent to the Plaintiff's issuance of this Claim, the Defendant Tony Rossi ("Rossi") resigned from his position of employment with the Defendant Globe in and around March of 2020 due to the unwanted stress and mental anguish caused by the Plaintiff's action.

5. The Defendant Globe states that the Plaintiff knew or ought to have known that their allegations against the Defendant Rossi would cause him emotional distress and suffering and that this outcome was deliberately orchestrated by the Plaintiff as a means by which to maliciously interfere with Defendant Globe's contractual and economic relations as well as with their potential future business opportunities.

6. As a result of the Defendant Rossi's resignation, the Defendant Globe has sustained and will continue to sustain significant financial losses including, but not limited to, the loss of sales earnings and the loss of future business opportunities and contracts.

7. The Defendant Globe states that the Plaintiff is wholly liable for the economic harm caused to them by way of the Plaintiff's intentional and malicious conduct.

[11] In essence, Globe seeks to bring a counterclaim against Visual for commencing this action. As a matter of principle, in my view, such a counterclaim cannot be successful.

[12] At the hearing of the motion counsel for Globe confirmed that the counterclaim asserts two causes of action: 1) intentional interference with economic relations (now known as the unlawful means tort); and 2) inducing breach of contract.

[13] In A.I. Enterprises Ltd. v Bram Enterprises Ltd.,[^4] the Supreme Court of Canada clarified and restated the law with regard to the unlawful means tort. The elements of the tort were summarized as follows:[^5]

The unlawful means tort creates a type of "parasitic" liability in a three-party situation: it allows a plaintiff to sue a defendant for economic loss resulting from the defendant's unlawful act against a third party. Liability to the plaintiff is based on (or parasitic upon) the defendant's unlawful act against 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)…

[14] In Bram, Cromwell J. writing for the Court considered the unlawful means component of the tort at length and wrote:

In light of the examination of the jurisprudence in this country and comparable common law jurisdictions, the trend of authority is towards a narrow definition of "unlawful means". In addition to being consistent with precedent, this approach is also in my view desirable in principle. Restricting unlawful means to acts that would give rise to civil liability to the third party (or would do so if the third party suffered loss from them) provides a coherent and rational basis for the development of the unlawful means tort. The limitation of unlawful means to actionable civil wrongs provides certainty and predictability in this area of the law, since it does not expand the types of conduct for which a defendant may be held liable but merely adds another plaintiff who may recover if intentionally harmed as a result of that conduct. While details relating to the scope of what is "actionable" may need to be worked out in the future, the basic contours of liability would be clear: see Alleslev-Krofchak, at para. 63. This approach does not risk "tortifying" conduct rendered illegal by statute for reasons remote from civil liability: see OBG, at paras. 57 and 152. The narrow definition of "unlawful means", in short, keeps tort law within its proper bounds.

I conclude that in order for conduct to constitute "unlawful means" for this tort, the conduct must give rise to a civil cause of action by the third party or would do so if the third party had suffered loss as a result of that conduct.

[15] The conduct complained of in the proposed counterclaim is Visual's commencement of this action and the making of the allegations contained in the statement of claim.

[16] It is beyond clear that this proposed pleading is not legally tenable. Commencing a lawsuit does not give rise to a civil cause of action. Issuing a civil claim is not an unlawful act, and it cannot give rise to civil liability.

[17] The second cause of action relied upon by the Globe is the tort of inducing breach of contract. In order to be successful in establishing this tort Globe would have to prove the four elements of the tort, which are:[^6]

1. Globe had a valid and enforceable contract with Rossi;
2. Visual was aware of the existence of this contract;
3. Visual intended to and did procure the breach of contract; and,
4. As a result of the breach, Globe suffered damages.

[18] If Globe is able to make out these four elements, the action may nonetheless fail if the defence of justification is available.[^7]

[19] The alleged contractual interference by Visual is the issuance of this action. It is a tenet of our legal system that any person may issue a civil action to seek redress of their rights. Visual is certain to be able to make out the defence of justification. The claim for inducing breach of contract is bound to fail.

[20] Globe's proposed counterclaim is clearly untenable.

[21] Visual also alleges that it would be prejudiced by the amendments if allowed. The only prejudice alleged is that if the amendments are allowed, Visual's next step would be to bring a Rule 21 motion and thus the action will be delayed. In my view, this is not the kind of prejudice contemplated by the case law.

[22] Globe's motion is dismissed.

[23] Visual is entitled to its costs on a partial indemnity basis. I heard submissions on costs at the hearing. Ms. Chyc indicated that she was seeking partial costs of $9,045.20. Mr. Bonniere said that Globe's partial indemnity costs were $4,311.22. In my view, the all-inclusive sum of $6,500 is a fair and reasonable amount that Globe could expect to pay for costs in all of the circumstances of the motion. Costs are payable within 30 days.

Associate Justice L. La Horey

Date: 20210907

[^1]: 2017 ONCA 42 at para 25 [^2]: Spar at para 43 [^3]: Burns v RBC Life Insurance Co., 2020 ONCA 347 at para 22 [^4]: 2014 SCC 12 [^5]: Ibid at para 23 [^6]: Drouillard v Cogeco Cable Inc., 2007 ONCA 322 at para 26 [^7]: Ibid at para 26 citing to Posluns v. Toronto Stock Exchange and Gardiner, 1964 CanLII 199 (ON SC), [1964] 2 O.R. 547 (H.C.), aff'd 1965 CanLII 32 (ON CA), [1966] 1 O.R. 285 (C.A.), aff'd 1968 CanLII 6 (SCC), [1968] S.C.R. 330