Court File and Parties

COURT FILE NO.: CV-21-00662579

MOTION HEARD: 20220707

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Marco Rodriguez, Plaintiff

AND:

Aquaterra Corporation o/a Primo Water North America, Defendant

BEFORE: Associate Justice L. La Horey

COUNSEL: Suzy Kauffman and Mark Leonard, Counsel for the Moving Party Defendant

Guillermo Schible, Counsel for the Responding Party Plaintiff

HEARD: July 7, 2022, by videoconference

REASONS FOR DECISION

[1] The defendant Aquaterra Corporation o/a Primo Water North America (the “defendant” or “Aquaterra”) brings this motion to strike out portions of the Fresh as Amended Statement of Claim (the “Claim”) issued by Marco Rodriguez (the “plaintiff” or “Mr. Rodriguez”) in this matter.

[2] For the reasons that follow, I grant Aquaterra’s motion in part.

Brief Summary of the Claim

[3] Mr. Rodriguez’s claim is founded on a contract he signed with the defendant on July 15, 2009 (the “Contract”). The Contract provided Mr. Rodriguez with the exclusive right to provide cleaning and sanitizing services of water cooler dispensers at client sites and water filtration units hooked up to the client’s own water line within the Greater Toronto Area and the Golden Horseshoe. Mr. Rodriguez pleads that the Contract was terminable only with just cause and not on notice.

[4] Mr. Rodriguez pleads that Aquaterra decided that he was making too much money under the Contract and engaged in a course of conduct treating him differently and unfairly in a manner designed to push him to terminate the Contract.

[5] Aquaterra ultimately decided to terminate the Contract, with or without just cause, despite being aware that it could not terminate the Contract on notice. It set out to build a case for just cause. It engaged in a course of conduct intended to make Mr. Rodriguez’s satisfactory performance of the Contract more difficult. It did not advise the plaintiff of any concerns that it had, depriving Mr. Rodriguez of the opportunity of addressing any legitimate performance concerns.

[6] Aquaterra also decided to terminate all the drivers and technicians with their own route and to offer hourly-based contracts instead of the commission arrangements in place. These contracts were terminable on reasonable notice, unlike Mr. Rodriguez’s Contract. The defendant terminated the plaintiff’s Contract before terminating the contacts of the drivers and technicians, because then his service calls could be reassigned to others, with the consequence that they would be satisfied and more likely to sign a release regarding the termination of their commission arrangements. The defendant also decided that some of the plaintiff’s routes would be transferred to others who would be compensated less for their services than the plaintiff was under the Contract.

[7] Aquaterra commenced an investigation into Mr. Rodriguez’s performance (the “Investigation”) that the plaintiff says was designed to support a decision to terminate the Contract. The Investigation was commenced, conducted and concluded in a manner that breached Aquaterra’s duty of good faith contractual performance.

[8] On February 1, 2021, Mr. Rodriguez was advised of the Investigation. He was advised that an audit found that approximately 70% of a group of customers contacted by the defendant confirmed that service calls that he invoiced for were not completed and that he and his team did not visit the customer. He given until 5:00 p.m. that day to provide a written response to the Investigation. He was told to leave the building and, among things, his truck was searched.

[9] On February 2, 2021, Mr. Rodriguez received a letter terminating the Contract immediately as a result of his material breach of Contract. The letter alleged that Mr. Rodriguez had not performed all of the work that he claimed to have done.

[10] On May 19, 2021, the plaintiff launched the within proceedings, and amended his claim on July 30, 2021. The relief that the plaintiff is seeking includes a declaration that Aquaterra engaged in conduct designed to push him to repudiate the Contract or otherwise repudiated the Contract; a declaration that the defendant breached its obligations of good faith contractual performance; and, an award of $10,000,000 for loss of the Contract (or disgorgement of Aquaterra’s wrongful gains, or “negotiation damages”). Alternatively, if the court concludes that the Contract was terminable on notice, the plaintiff seeks damages equal to a notice period of 36 months. The plaintiff also seeks aggravated and punitive damages.

[11] Aquaterra moves under Rule 25.11 of the Rules of Civil Procedure to strike out all or parts of ten of the 78 paragraphs of the Claim. At the hearing, Ms. Kauffman withdrew the request to strike out the second last sentence of paragraph 13 and the last sentence of paragraph 14.

The Law

[12] Rule 25.06 sets out the rules of pleading. It provides in part:

Material Facts

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.

Documents or Conversations

(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.

Nature of Act or Condition of Mind

(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.

[13] Rule 25.11 provides in part as follows:

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 vexations; …

[14] In a decision of the Court of Appeal for Ontario, Abbasbayli v Fiera Foods Company,[^1] Justice van Rensburg states at paragraphs 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".

[15] A party pleading a breach of the duty of good faith in contractual performance must provide particulars of the manner in which the alleged wrongdoer breached the duty.[^2]

[16] The Court of Appeal has considered when a pleading may be struck out as prejudicing or delaying the fair trial of the action, even where the allegations are relevant, stating:[^3]

[15] A court may strike out portions of a pleading, even where the allegations are relevant, if the applicant can establish that they are of marginal probative value and their probative value is outweighed by their prejudicial effect. Before doing so, a judge must balance the rights of the parties on the particular facts of the case and must consider carefully the extent to which the particulars attacked are necessary to enable the defendant to prove its case and their probative value in establishing that case: see Clement v. McGuinty, 2001 CanLII 7949 (ON CA), [2001] O.J. No. 1400, 18 C.P.C. (5th) 267 (C.A.), at paras. 21-24; Asper v. Lantos (2000), 2000 CanLII 29038 (ON SCDC), 51 O.R. (3d) 215, [2000] O.J. No. 3712 (Div. Ct.), at paras. 18-20; Lee v. Globe and Mail (2001), 2001 CanLII 28035 (ON SC), 52 O.R. (3d) 652, [2001] O.J. No. 317 (S.C.J.), at paras. 11 and 14. Where the allegations in question are relevant and material, however, the court should exercise this power with considerable caution, in my view.

[16] Pleadings are not the appropriate stage in an action to engage at large in what is essentially a trial judge's exercise for determining the admissibility of evidence at trial - i.e., weighing the probative value versus prejudice of facts. That exercise is not particularly well-suited to defining issues for trial, something which is for the parties to decide. Rule 25.11 provides that the pleading may be struck if it "may prejudice the fair trial of the action". A fair trial requires that the defendant be able to put forward a "full" defence, not -- as the motion judge erroneously concluded -- a "reasonable" defence defined in advance by the plaintiff and the court. [emphasis in original]

ANALYSIS

Category 1 – paragraphs 13 (last sentence), 17 (last sentence), 27 (first and third sentences), 63, 71, 72 (portions)

[17] The moving party divided its objections into two categories. The first category is alleged to be scandalous, as the pleadings cannot affect the outcome of the case. In the alternative, it argues that even if some of the pleadings are relevant, they should be struck out because they prejudice and delay the fair trial of the action by improperly expanding the discovery process and the trial.

Paragraph 17 (last sentence)

[18] Paragraph 17 provides:

On June 11, 2020, PWC announced a “2020 Restructuring Plan” to optimize synergies from PWC’s transition to a pure-play water company while navigating the Covid-19 pandemic. Within that document and elsewhere (pursuant to, among other things, the work product of Workforce Managers and analysts), Aquaterra was encouraged to reduce headcount, pursue Route-consolidation, transition from “commission”-based to hourly-based Drivers and Technicians, and to de-emphasize (and ultimately exit) its OCS business.

[19] The moving party seeks to strike out the last sentence (underlined). In this sentence the plaintiff makes an issue of the “work product of Workforce Managers and analysts” in cost-cutting measures further to the 2020 Restructuring Plan. The defendant submits that this allegation is not a material fact, but if allowed to stand, would potentially make relevant a vast number of documents related to the restructuring and the work product of managers and analysts. It is possible that Aquaterra’s financial circumstances are evidence in support of the plaintiff’s theory that it was motivated by cost-cutting measures in its treatment of the plaintiff, but the broad statement about the work product of managers and analysts in the restructuring is not a material fact. Even if the allegation has any probative value, it is marginal and is outweighed by the resultant expanded scope of discovery. The last sentence in paragraph 17 is struck out, without leave to amend.

Paragraph 27 (first and third sentences)

[20] The defendant moves to strike out the first and third sentences in paragraph 27 (underlined) which read as follows:

Around this time, Aquaterra provided its Dispatch Manager, Joy Austin (“Austin”) with notice of termination. As Dispatch Manager for the last eight years, Austin’s main duties included ensuring that Service Calls got done. Marco pleads that Aquaterra removed Austin to continue an unfair and defective ‘audit/investigation’ against Marco (the "Investigation”). [bolding in original].

[21] The defendant submits that the allegation that Aquaterra terminated Ms. Austin “to continue the unfair and defective” Investigation is a bare allegation, unsupported by any material fact and should be struck out. As pleadings determine relevance for the purposes of discovery, Aquaterra is concerned that it will be required to produce documents and provide evidence concerning Ms. Austin’s employment and termination which are not relevant to the Claim, adding to the expense and complexity of the proceedings, which outweighs any marginal probative value that the allegation may have.

[22] The plaintiff says in his factum at paragraph 36, that common sense dictates if he committed a fraud, Ms. Austin was terminated either because she was incompetent in failing to detect the fraud or she was in on it. This is speculation and is premised on a proposition that Mr. Rodriguez vehemently denies. There could be many reasons for Ms. Austin’s termination unrelated to Mr. Rodriguez.

[23] In response to the concern raised by Aquaterra about having to produce Ms. Austin’s entire employment file, the plaintiff says in his factum that Aquaterra will not produce documents that are not relevant and will refuse discovery questions it considers irrelevant. He further submits that a court on a refusals motion is better equipped to do justice. However, this submission is mistaken. If the allegations are not struck out, they are presumptively relevant.

[24] Justice’s Perell’s observation on the role of pleadings in Kang v Sun Life Assurance Co. of Canada[^4] is instructive:

8 … it is important to emphasize that this is a pleadings motion; this is not the time to determine the propriety of questions on an examination for discovery nor is it the time to determine the admissibility of evidence for a trial. This motion is the time to determine whether the Plaintiffs have properly pleaded their various causes of action; it is not the time for them to prove or argue their case.

9 I make this point because it negates the Plaintiffs' submissions that they need to plead the impugned allegations and if the paragraphs are struck from the pleadings, then they would be seriously prejudiced because the fundamental theory and integrity of their case would be removed, which would not be in the interests of justice. As will emerge from the discussion below, the Plaintiffs will have meaningful claims to pursue, and if they have proof of those claims, there is another and more appropriate time to tender evidence and argument.

10 In their factum, the Plaintiffs repeatedly insist that the impugned paragraphs are "relevant," "material," "not irrelevant," "directly relevant," "clearly relevant," and "highly relevant." These submissions miss the point that Sun Life's challenge is based on the requirements of proper pleadings. It may be the case that facts are relevant to a cause of action, however, that does not make them a concise statement of material facts and not evidence. A pleading is not a proof or a polemic. While pleadings can and should be rhetorical and persuasive, the pleadings must still comply with the rules that call for a concise statement of the material facts but not the evidence by which those facts are to be proved.

[25] Ms. Austin’s termination or the reason for it is not a material fact. At best, it may be evidence that supports the plaintiff’s narrative of events. The plaintiff will be entitled to ask questions about the Investigation and ask if Ms. Austin’s termination was related to the Investigation.

[26] The first and third sentences of paragraph 27 shall be struck out. The plaintiff has leave to amend the second sentence to insert Ms. Austin’s full name.

Paragraphs 13 (last sentence) 63, 71, and 72 (part)

[27] Aquaterra objects to the portions of these paragraphs relating to conduct by Aquaterra towards other technicians. It says that the impugned parts of the pleading are not relevant to the plaintiff’s claim, that he is entitled to damages for breach of his Contract with Aquaterra.

[28] Paragraph 13 (last sentence) - In this paragraph the plaintiff complains about Aquaterra not paying him for certain services. The impugned sentence pleads that other technicians were paid for these services. Whether other technicians were paid for these services pursuant to their contracts with the defendant is not relevant to whether the plaintiff ought to have been paid for them pursuant to the Contract. The last sentence is struck out, without leave to amend.

[29] Paragraph 63 - The plaintiff pleads that two other technicians and many drivers engaged in similar kinds of misconduct to that alleged against him and were subject to similar kinds of client complaints, but were treated more leniently by Aquaterra.

[30] Aquaterra relies on Brodie v Thomson Kernaghan & Co.[^5] in support of its submission that allegations with respect to the defendant’s conduct vis a vis others is irrelevant, superfluous and can have no affect on the outcome of the action. That case involved a claim for negligence by Ms. Brodie against the defendants for losses she incurred on her financial investments. In that case, Justice Molloy considered whether a paragraph in the claim in which the plaintiff alleged that her investment advisor had been the subject of a lawsuit and complaints from customers, including complaints about the suitability of his investment recommendations, ought to be struck out.

[31] Justice Molloy held that allegations of past conduct were not relevant to the claim against the investment advisor stating: “He either acted improperly in managing Mrs. Brodie’s investments, or he did not. Whatever he may or may not have done for other clients has no bearing on this issue.” The same applies here: either the defendant improperly terminated the plaintiff’s contract, or it did not.

[32] Justice Molloy went on to conclude that the past conduct may have relevance to a punitive damages claim and the claim against another defendant for failure to supervise. Notwithstanding the potential relevance, she nonetheless struck out the paragraph. In so doing she held in part:

33 Therefore, although the issue of the defendants' knowledge of prior complaints against Mr. Grieve has some tangential relevance, it is minor. It adds very little to the plaintiff's claim and its absence would not deprive her of a cause of action or reduce any compensatory damages to which she might be entitled. On the other hand, allowing the pleading to stand will result in a far more expensive and complex proceeding. Production and discovery will be considerably more protracted and complicated. There will likely be numerous interlocutory motions in respect of confidentiality issues and the rights of non-parties to protect their privacy. The trial itself would also be greatly complicated and extended. As was stated by O'Brien J. in Wilson v. Lind, "Rather than one trial there would be several." In my opinion, the prejudice to the defendants and the delay to the fair trial of this action outweigh the slight value to the plaintiff if the pleading is allowed to stand. I am therefore exercising my discretion to strike out those portions of the pleading referring to the past complaints as against Mr. Grieve, without leave to amend.

[33] In my view, the same applies here. Even if the allegations of differential conduct on the part of Aquaterra are relevant, the marginal probative value is outweighed by the prejudice to the defendant and the delay to the fair trial of the action. I therefore exercise my discretion to strike out paragraph 63 without leave to amend.

[34] Paragraph 71 – In this paragraph the plaintiff alleges that less than four weeks after Aquaterra terminated Mr. Rodriguez for cause, it gave 18 months notice to ten other technicians and drivers. He further alleges that although Aquaterra had decided to make these terminations before starting its investigations, it delayed, terminating Mr. Rodriguez first. The plaintiff relies on this pleading as a component of the manner of termination.

[35] Aquaterra argues that this paragraph has no relevance to the plaintiff’s claim. I agree. There is no pleading that Mr. Rodriguez’s contract is the same as or similar to the contracts of others. Although the pleading is not clear, it implies that the other contracts were quite different. In any event, the termination of these contracts and the notice given to others is not relevant to whether the Aquaterra breached the Contract and if so, what damages Mr. Rodriguez would be entitled to. The allegations cannot affect the outcome of the action.

[36] Further, even if the allegations were relevant and were not struck out, Aquaterra would have to produce documents and provide evidence about its contracts with others and the terminations of those contracts, adding to the expense and complexity of the litigation which would outweigh any marginal probative value the allegations may have.

[37] Paragraph 71 is struck out, without leave to amend.

[38] The defendant moves to strike out the underlined portions of paragraph 72 which states:

It is aggravating that despite, and indeed because of, Marco’s (1) 21.5 years of service, and (2) exclusivity, which allowed Marco alone to engage multiple Helpers under him, (3) which “commission” arrangement was not terminable on any notice, Marco ended up receiving from Aquaterra less concern and consideration than everyone else, as Acquaterra decided that its best course of action was to terminate Marco summarily (and by extension, six Technicians at once), so that all other Drivers and Technicians could feast on Marco’s Route(s) for 18 months or Aquaterra could hire others more cheaply, including Marco’s Helpers by the hour. It is therefore further aggravating that Aquaterra contracted one or more of Marco’s Helpers. [italics and bold in the original]

[39] As with the allegations in paragraph 71, these underlined pleadings are irrelevant and have no bearing on the outcome.

[40] Paragraphs 71 and 72 are pleaded in support of the plaintiff’s claim for aggravated damages. Aggravated damages compensate a plaintiff for the injury done to him. How others are treated is not relevant to the pain, humiliation, or distress that the plaintiff claims to have suffered.

[41] The plaintiff submits that paragraphs 71 and 72 are not only to relevant to aggravated damages (although they fall under the heading “Aggravated Damages”), but support a gains-based remedy and thus should not be struck out. However, the defendant does not seek to strike out the allegation that “Aquaterra could hire others more cheaply” as a result of the plaintiff’s termination, which I take to be the basis for a gains-based remedy (the pleading is not clear). The plaintiff asks to be compensated by the amount that Aquaterra saved by terminating the plaintiff and hiring others more cheaply by the hour.

[42] Further, the words “feast on Marco’s route” are inserted for colour and are scandalous and improper. The impugned parts of paragraph 72 are struck out, without leave to amend.

Category 2 – paragraphs 44, 45 and 49 (last sentence)

[43] The defendant moves to strike out paragraphs 44, 45 and part of paragraph 49. These paragraphs concern the day that the plaintiff was advised of the Investigation and told to leave the building. These paragraphs quote statements made to the plaintiff by Aquaterra employees.

[44] The defendant submits that these paragraphs are improper as they plead the precise words of conversations, despite them not being material to any of the claims. Aquaterra contends that the pleadings of the specific words are included only to embarrass the defendant and for colour.

[45] The plaintiff submits that as he has alleged that Aquaterra acted with malice, he is required by Rule 25.06(8) to provide full particulars. The statements and actions of individuals may be “material indicia of bad faith”.[^6] Further, he points out that Rule 25.06(7) does not preclude using precise words. Therefore, the plaintiff argues that the pleading of the conversations is proper and necessary as the words used demonstrate the callousness of the defendant’s employees on the particular day.

[46] I accept that the precise words are relevant to the plaintiff's claims. I do not agree that they are included only to embarrass the defendant and for colour.

[47] The request to strike out paragraphs 44, 45 and the last sentence of paragraph 49 is refused.

Disposition

[48] The following portions of the statement of claim are struck out without leave to amend: paragraph 13 (last sentence), 17 (last sentence), 63, paragraph 71, and paragraph 72 (as indicated above). The first and third sentences of paragraph 27 are struck with leave to amend to insert Ms. Austin’s full name in the second sentence.

[49] The plaintiff has leave to deliver a further Fresh As Amended Statement of Claim in accordance with these reasons.

Costs

[50] The parties made submissions on costs at the hearing. The parties agreed that if the moving party was successful on category one, but was unsuccessful on category two, the defendant would be entitled to its costs on a partial indemnity basis of $11,800.58 (inclusive of disbursements and GST). The plaintiff shall pay the defendant costs in the sum of $11,800,58 within 30 days of the release of these reasons.

L. La Horey, A.J.

Date: July 21, 2022

[^1]: 2021 ONCA 95; See also Kang v Sun Life Assurance Co. of Canada, 2011 ONSC 6335 at para 71, rev’d on other grounds, 2013 ONCA.

[^2]: Tribute (Cogan) Ltd. v Adjala-Tosorontio (Township), 2021 ONSC 4746 (Master) at para 13

[^3]: Quizno’s Canada Restaurant Corp. v Kileel Developments, 2008 ONCA 644

[^4]: 2011 ONSC 6335, rev’d on other grounds, 2013 ONCA 118

[^5]: Brodie v Thomson Kernaghan & Co.,; 2002 CarswellOnt 1587; [2002] OJ No 1850

[^6]: Tribute (Cogan) Ltd. v Adjala-Tosorontio (Township), 2021 ONSC 4746 at para 23