Court File and Parties

Court File No.: CV-20-648195-0000 Date: 2021-09-24 Superior Court of Justice - Ontario

Re: Michael Barsoum And: Eastern Canada Diocese of the Ethiopian Orthodox Tewahedo Church, St. Mary’s International Charitable Organization and St. Mary and St. Mena Orthodox Church

Before: J.T. Akbarali J.

Counsel: Michael Barsoum, in person Mordy Mednick and Jacky Cheung, for the defendants St. Mary’s International Charitable Organization and St. Mary and St. Mena Orthodox Church

Heard: September 10, 2021

Endorsement

Overview

[1] On this motion, I am asked to strike the plaintiff’s claim without leave to amend on the basis that the claim discloses no reasonable cause of action, the court has no jurisdiction to hear the claim, and the plaintiff has no standing to bring the claim. In the alternative, I am asked to strike the claim with leave to amend on the basis that the claim does not provide sufficient particulars to enable the defendants to respond.

Background

[2] The defendants, St. Mary’s International Charitable Organization (“SMICO”) and St. Mary and St. Mena Orthodox Church (the “Church”),[^1] are non-share corporations incorporated under the Corporations Act, R.S.O. 1990, c. C. 38. SMICO’s letters patent are in the record and set out its charitable purposes, which focus on poverty relief, education and health services in Canada and Egypt.

[3] The plaintiff, Michael Barsoum, has a history of involvement with SMICO and the Church. The exact nature of his involvement is a matter in dispute. SMICO and the Church describe the plaintiff as a volunteer, while the plaintiff claims he was a member and director of SMICO and the Church.

[4] Whatever the proper characterization of the plaintiff’s role, it is clear he was involved in the response of SMICO and the Church to an audit of their 2017-2018 fiscal year launched by Canada Revenue Agency in 2019, to take place in February 2020.

[5] According to the plaintiff, in the course of assisting with the response to the audit, he uncovered evidence of financial irregularities at SMICO and the Church. In argument, he alleged that Father Magdy Tadros, who is the treasurer of SMICO and the Church, and Father Tadros’s daughters, have misappropriated funds from SMICO and the Church, and caused the organizations to fail to live up to their contractual and other responsibilities.

[6] The plaintiff alleges that, because of what he uncovered, on July 30, 2020 he received a telephone call from Father Tadros informing him that he was no longer a board member of SMICO.

[7] The plaintiff commenced a claim seeking $500,000 in general damages for “reprisal, breach of contract, making false and misleading representation to the public, negligence, breach of trust, breach of fiduciary duty, unjust enrichment, conversion and conflict of interest.”

[8] The claim also seeks expectation damages, pecuniary damages, and punitive damages, together with interests and costs.

[9] The key elements of the plaintiff’s claim, drawn from the statement of claim unless otherwise indicated, are:

a. On May 9, 2012, the plaintiff began writing proposals for funding and worked on developing special events and projects at SMICO. His efforts led to the approval of SMICO by Immigration, Refugees and Citizenship Canada to become a Sponsor Agreement Holder to sponsor refugees to Canada. In argument, the plaintiff indicated he began this work in 2011, not 2012 as pleaded;

b. Father Tadros and the plaintiff agreed that when charitable fundraising was sufficient, the plaintiff will be Coordinator of the Refugees Sponsorship program. Although it is not pleaded in the claim, in argument, the plaintiff indicated this was intended to be a paid position, earning him $64,000 per year;

c. Father Tadros falsely convinced the plaintiff that SMICO had no funds available for payment of the Coordinator’s (the plaintiff’s) expenses. In argument, the plaintiff indicated that “expenses” refers not just to his out-of-pocket expenses, but also the intended $64,000 annual salary;

d. The plaintiff learned from reviewing corporate documents and financial records of SMICO and the Church that Father Tadros, his daughter Nancy Tadros, and Mr. Fawaz Aloniny (who I understand to have a role in the running of the organizations) “have serious breach of contracts,” which I understand to mean they have caused SMICO and the Church to breach their contractual obligations to various third parties;

e. The plaintiff also learned that Father Tadros, Nancy Tadros, and Fawaz Aloniny knowingly misled Canada Revenue Agency about SMICO’s and the Church’s compliance with requirements of the Income Tax Act, and the provincial and federal Not-for-Profit Corporations Act (the latter two of which do not apply to SMICO or the Church).

f. SMICO and the Church have breached the Sponsorship Agreement Holder Agreement with Immigration, Refugees and Citizenship Canada. From argument, I understand the allegation to be that Father Tadros and his daughters, and perhaps Mr. Aloniny, have caused the breaches;

g. The plaintiff became aware of the intent of SMICO’s board to present false documents to the CRA auditor, following which Father Tadros refused to allow the plaintiff to meet with the auditor;

h. Subsequently, on July 30, 2020, Father Tadros advised the plaintiff that he is no longer a board member of SMICO;

i. The plaintiff alleges the directors of SMICO have breached the standard of care, and their fiduciary duties. He further alleges they have acted in conflict of interest.

j. The plaintiff alleges that SMICO and the Church have publicly, and knowing it to be false, presented materially false representations, although the claim does not identify the representations.

k. The plaintiff alleges that SMICO and the Church have made false, misleading representations and deceptive marketing practices directed toward large audiences over a long period of time affecting the plaintiff and his expectations, although he does not identify the representations or marketing practices, or his expectations or how they have been negatively impacted.

[10] In his affidavit filed on the motion, the plaintiff deposes that, to the best of his knowledge and belief, he was elected as a member of the Board of Directors of SMICO and the Church on January 18, 2020 at a board meeting. He argues that, as a result, he has standing under the Corporations Act to raise his complaints. He specifically invokes s. 332 and 310 of that Act.

[11] SMICO and the Church deny that there was any board meeting held on January 18, 2020, and deny that the plaintiff ever complied with pre-requisites to become a member-director of SMICO and the Church, which include filing a formal application which must be approved by the Board, and making a donation to the Church. Moreover, they argue that the provisions of the Corporations Act that grant standing to a member to bring a proceeding do not allow a shareholder or member or creditor to seek damages personally, but only to seek to address the alleged wrongful conduct of the corporation.

Issues

[12] The defendants raise the following issues:

a. Should the claim be dismissed because it discloses no reasonable cause of action and is frivolous and vexatious because:

i. the court has no jurisdiction to entertain it; or

ii. the plaintiff has no standing; or

iii. even if all allegations are true, the plaintiff is not entitled to damages?

b. In the alternative, should the claim be struck with leave to amend to provide sufficient particulars to allow the defendants to defend?

[13] There is overlap in the analysis of these issues.

Analysis

[14] The defendant relies on rules 21.01(3)(a) and (b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194., which allow a defendant to move to have an action stayed dismissed on the ground that the court has no jurisdiction over the subject matter of the action, and that the action is frivolous, vexatious, or is otherwise an abuse of process of the court.

[15] In my view, the only causes of action which can proceed in this case are the plaintiff’s claims for breach of contract and unjust enrichment arising out of his allegations that he was engaged to perform work, he did the work, and he was not remunerated in accordance with the parties’ agreement for the work.

[16] I reach this conclusion because, first, consistent with the decision of the Supreme Court of Canada in Ethiopian Orthodox Tewahedo Church of Canada St. Mary Cathedral v. Aga, 2021 SCC 22, the plaintiff’s claims for breach of contract and unjust enrichment are claims over which the court has jurisdiction because they deal with the vindication of the plaintiff’s alleged legal rights. As the Court noted in Ethiopian Orthodox Church, a court should not intervene in the affairs of a voluntary religious organization unless it involves the vindication of a legal right: at paras. 42, 49. The Court held that “[w]here there is no contract, or other obligation known to law, there is no justiciable interest and no cause of action”: at para. 24. The legal rights which can ground jurisdiction in cases involving a voluntary religious organization include private rights, such as rights in contract, property, tort, or unjust enrichment, and statutory causes of actions: para. 29.

[17] While natural justice may be relevant to whether a legal right was violated, it is not a free-standing source of jurisdiction: Ethiopian Orthodox Tewahedo Church, at para. 30.

[18] The Court also noted that many rules observed, or obligations undertaken, by people who join a voluntary organization are not contractual in nature. In religious organizations, the mutual obligations people undertake may be spiritually binding, but not legally binding. However, where property or employment is at stake, an objective intention to create legal relations is more likely to exist: Ethiopian Orthodox Tewahedo, at paras. 40, 49.

[19] Second, there is no question that the plaintiff has standing to bring these claims, which are personal to him. Third, it is clear that the allegations, if true, are capable of grounding a claim for damages.

[20] However, the claims for breach of contract and unjust enrichment are not properly pleaded. To conclude that the claims are tenable, I must rely on the plaintiff’s affidavit evidence, factum, and oral submissions in addition to his claim. For example, the claim does not plead the terms of the contract; the plaintiff’s allegations about the contractual terms were related to me during argument. With respect to breach of contract and unjust enrichment, the plaintiff has not adequately pleaded the alleged material facts.

[21] I recognize that the plaintiff is a self-represented litigant. He indicated that he consents to relief striking his claim with leave to amend. It appears that through the process of this motion, he has come to understand the deficiency in his claim. He indicates he will seek legal advice to advance his claim properly. In these circumstances, his failure to properly draft the claim should not bar him from asserting what appears to be a valid cause of action. Thus, while the claims for breach of contract and unjust enrichment should be struck because they do not contain sufficient particulars to allow the defendant to respond in a meaningful way, the plaintiff shall be granted leave to amend his claim to properly plead these causes of action: Balanyk v. University of Toronto, 1999 14918 (Ont. S.C.J.), at para. 29.

[22] Moreover, it shall remain open to the plaintiff to assert a claim for punitive damages arising out of the allegations of breach of contract and unjust enrichment should he wish to do so. In reaching this conclusion, I make no comment on the merits of such a claim. Rather, at this stage, I find only that that the plaintiff should have the opportunity to articulate the claim with the assistance of counsel if he wishes.

[23] However, the remainder of the plaintiff’s claim shall be dismissed, for the following reasons.

[24] The plaintiff’s claims for breach of trust, breach of fiduciary duty, and his assertions of conflict of interest relate to his allegations that the directors of SMICO and the Church failed in their duties to SMICO and the Church. However, he does not rely on the Corporations Act to seek relief against the directors on behalf of the Church, or to seek orders requiring the directors or SMICO or the Church to take steps to redress these alleged breaches. Rather, he seeks personal damages. Even if the directors have failed in their duties to SMICO and the Church, there is no legal basis to conclude that the plaintiff is entitled to a remedy in damages. These claims are frivolous.

[25] The plaintiff admitted on cross-examination that no property was at issue in his claim. His claim for conversion can thus only relate to his allegation that the directors misappropriated funds from SMICO and the Church that should have been used by SMICO and the Church to pay the salary and expenses to which he was entitled. Even if the directors, or some of them, misappropriated funds belonging to SMICO and the Church, the plaintiff is not entitled to damages as a result. Moreover, it is difficult to see why the directors having acted wrongfully towards SMICO and the Church would lead to liability on the part of SMICO and the Church to the plaintiff, who, I note, did not commence any action against the directors he alleges to have misappropriated funds. This claim is also frivolous.

[26] The plaintiff claims damages for “reprisal.” I understand this claim to relate to his allegation that he was dismissed from his position as a board member at SMICO and the Church because he learned that Father Tadros and others intended to present false information to the auditor. In my view, even assuming that “reprisal” is a claim known at law, the court has no jurisdiction to adjudicate this claim. The plaintiff has identified no basis to claim a legal right related to his claim to his (disputed) position as a board member. Rather, even assuming the plaintiff was a board member, it is frivolous to think that an objective reasonable bystander would conclude that the plaintiff and SMICO and the Church intended to contract, or indeed, what the terms of such a contract would be: Ethiopian Orthodox Tewahedo, at para. 36. In Ethiopian Orthodox Tewahedo, the Court recognized that an objective intention to create legal relations may be more difficult to show in a religious context: see para. 41. Membership in a religious organization is not automatically contractual: see para. 49.

[27] It is possible that the plaintiff’s factual allegations relating to what he characterizes as reprisal are part of the narrative that may be relevant to his claims of breach of contract or unjust enrichment, but as a freestanding claim, I conclude that they disclose no reasonable cause of action, are frivolous, and must be dismissed.

[28] The plaintiff’s claims of misrepresentation also cannot stand. While the plaintiff alleges the defendants have knowingly presented materially false representations, and made false, misleading representations and deceptive marketing practices directed toward large audiences over a long period of time affecting the plaintiff and his expectations, he does not identify the representations or marketing practices or his expectations. While it is theoretically possible that this is a deficiency in the pleading, at no time in evidence, or even in submissions, was the plaintiff able to identify what representations he alleges were made.

[29] Moreover, in cross-examination, the plaintiff explained that his concern was that, through his association with the defendants, his reputation would be negatively affected by what he views as the defendants’ wrongful conduct, including what he alleges to be their breaches of conduct with third parties, and their response to the CRA audit. However, he admitted that no one has alleged that he acted inappropriately.

[30] With respect to the defendants’ actions, he argues that the CRA determined that the defendants acted inappropriately. In support of this argument, he points to a compliance agreement between SMICO and CRA. It discloses that, during the audit, the CRA found areas of non-compliance by SMICO, and SMICO had indicated its desire to rectify all identified areas of non-compliance, which CRA accepted. There is no evidence to indicate that CRA was not satisfied with SMICO’s actions following the execution of the compliance agreement. Other than the plaintiff’s own claims, there is no evidence of any reputational damage to the defendants.

[31] This is hardly evidence of damage to the plaintiff’s reputation, or representations affecting the plaintiff’s expectations. The plaintiff did not plead damage to his reputation, and his evidence about it in cross-examination is theoretical only. I thus conclude that the plaintiff’s claims of misrepresentation are frivolous because, even assuming the defendants made any misrepresentations, he is not entitled to any remedy.

[32] Finally, there are the plaintiff’s allegations of negligence. The plaintiff did not plead what duty of care was owed to him, or that a duty of care was breached. The plaintiff did not identify the defendants’ allegedly negligent conduct or explain how it caused him to suffer any damages. In fact, on his version of events, the wrong done to him – the failure to compensate him for his work – was deliberate, not negligent. The plaintiff was unable to identify any alleged negligence in his evidence, argument, or pleading. Negligence is not a cause of action that arises from the plaintiff’s allegations. The claim is thus frivolous and shall be dismissed.

Conclusion

[33] The plaintiff’s claims are dismissed because they are frivolous, disclose no reasonable cause of action, or are claims over which the court has no jurisdiction, except that the plaintiff’s claims for breach of contract, unjust enrichment, and punitive damages shall be struck with leave to amend.

Costs

[34] Overall, the defendant is the successful party and is presumptively entitled to its costs. It achieved the relief it sought with respect to most of the plaintiff’s claims, and the alternative relief it sought with respect to the claims in contract, unjust enrichment, and the claim for punitive damages. The defendants claim partial indemnity costs of $16,494.50, all inclusive.

[35] The three main purposes of modern costs rules are to indemnify successful litigants for the costs of litigation, to encourage settlement, and to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330, at para. 22.

[36] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The court exercises its discretion taking into account the factors enumerated in r. 57.01 of the Rules of Civil Procedure, including the principle of indemnity, the reasonable expectations of the unsuccessful party, and the complexity and importance of the issues. Overall, costs must be fair and reasonable: Boucher v. Public Accountants’ Council for the Province of Ontario, 2004 14579 (Ont. C.A.), 71 O.R. (3d) 291, at paras. 4 and 38. A costs award should reflect what the court views as a fair and reasonable contribution by the unsuccessful party to the successful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), 2002 CarswellOnt 4020, 118 A.C.W.S. (3d) 341 (C.A.), at para. 4.

[37] I accept that the issues in this case were important to the parties. I understand that some of the deficiencies in the plaintiff’s claim arise from his lack of familiarity with the legal process. Other deficiencies arise from the frivolous claims the plaintiff should not have advanced. For example, as a matter of common sense, it should be apparent that the defendants would not owe damages to the plaintiff for wrongs the plaintiff alleges were committed against the defendants by non-parties to the action.

[38] In my view, the time spent by the plaintiff’s counsel was reasonable having regard to the issues raised in this motion. However, I am of the view that some reduction in costs is appropriate to take into consideration the reasonable expectations of the plaintiff, and to ensure that the costs ordered are fair and reasonable.

[39] The plaintiff shall pay costs of this motion in the amount of $12,500, all inclusive, to the defendants within thirty days.

J.T. Akbarali J.

Date: September 24, 2021

[^1]: The claims against the defendant, Eastern Canada Diocese of the Ethiopian Orthodox Tewahedo Church, have been discontinued.