Court File and Parties
COURT FILE NO.: CV-21-663455
MOTION HEARD: 20220907
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Panagiota Roumanis, also known as Penny Roumanis, Plaintiff
AND:
Luigia Mandarello, Rickey Mandarello, Peter Mandarello, and Slumber Sleep Products of Canada Ltd., Defendants
BEFORE: Associate Justice Jolley
COUNSEL: Codie Mitchell, counsel for the moving party defendants
David Morawetz, agent for counsel for the responding party plaintiff
HEARD: 7 September 2022
REASONS FOR DECISION
[1] The defendants seek an order striking paragraphs 19-24 inclusive of the plaintiff’s reply and defence to counterclaim. They allege that the paragraphs are scandalous, frivolous and vexatious and risk prejudicing and delaying the fair hearing of this matter.
[2] For the reasons set out below, the defendants’ motion is granted.
[3] The plaintiff claims repayment of a loan she says she made to the defendant Slumber Sleep at the request of the defendants. They plead that the plaintiff was Slumber Sleep’s bookkeeper. In June 2019, knowing of the company’s financial difficulties, the plaintiff offered to provide funds in exchange for an equity stake in the business, an offer the defendants plead they declined. The plaintiff deposited the money into the bank account of Slumber Sleep nonetheless. It was unable to return the funds as the bank automatically applied them to the overdraft, but it made monthly repayments in order to return the funds to the plaintiff.
[4] Slumber Sleep then ceased making payments in May 2021, alleging the discovery of financial irregularities in the company books which were kept by the plaintiff. The company has counterclaimed for unspecified damages.
[5] The plaintiff admits she was an employee of Slumber Sleep but denies that she was the bookkeeper. She further denies any wrongdoing with respect to sales and discounts or any other financial irregularities. She pleads not only that she did not cause the irregular accounting records but also that they were caused by the personal defendants and their family members, and, in particular, their addiction to drugs.
[6] Specifically, she alleges:
Roumanis left the employment at SSPC in May 2020. Roumanis has no knowledge of the allegations contained in paragraph 46 of the Statement of Defence and Counterclaim. If there are any incomplete accounting records, it is a result of their own doing and the Defendants that participated in the operations of the business.
If the accounting records are incomplete, that is the sole cause of Rickey, Peter and/or Luigia in not maintaining proper books and records.
[7] These paragraphs, while not admitted, are not challenged on this motion.
[8] However, the plaintiff then goes on to plead the following impugned paragraphs:
Rickey, Peter and Claudia [Rickey’s wife] have an addiction to cocaine and other illicit drugs.
Rickey's wife Claudia attended rehab between July 2019 and May 2020.
In fact, in or around July 2019, Claudia contacted the police claiming that her husband Rickey was physically abusive to her.
Rickey has a substance abuse problem and is addicted to cocaine. In addition, he attended anger management therapy between 2005 and 2011.
Peter is also addicted to cocaine and other illicit drugs.
Roumanis states and pleads that Rickey and Peter were unable to function properly in the business operations because of their drug addiction.
[9] The law on scandalous pleadings can be summarized as follows:
[60] Under rule 25.11, the court may strike out a pleading that may prejudice or delay the fair trial of the action or that is scandalous, frivolous, vexatious or an abuse of process of the court. The same test that is used for striking a pleading for the failure to show a reasonable cause of action; i.e., the plain and obvious test, is used to determine whether a pleading is scandalous, frivolous or an abuse of process of the court.
[61] A claim may be found to be frivolous, vexatious or an abuse of process when it asserts untenable pleas, is argumentative, contains insufficient material facts to support the allegations made, or is made for an extraneous or collateral purpose. For the purpose of rule 25.11, the term “scandalous”, includes allegations that are that are irrelevant, argumentative, simply inserted for colour or to impugn the behaviour or character of the other party unrelated to the issues in the litigation. Parties are to be allowed a great deal of latitude in how they plead, but there are limits, and the court has the jurisdiction to strike a pleading to remove the pleading of evidence, prolix or vague allegations, repetitive or redundant allegations, or inconsistent allegations that are not clearly pled as alternatives and to direct a party to plead with certainty, precision and with sufficient particulars.
[62] A scandalous pleading refers to indecent or offensive allegations designed to prejudice the opponent or unnecessary allegations maliciously directed at the moral character of the opponent. Pleadings that are irrelevant, argumentative or inserted only for colour, or that constitute bare unfounded allegations should be struck out as scandalous. A pleading that raises an issue that cannot influence the outcome of the action is scandalous. The pleading is struck out because it serves no purpose other than to add colour or argument and to disconcert or humiliate the opponent. References in pleadings to settlement offers, discussions, and negotiations, which are privileged communications, are scandalous, frivolous or vexatious and should be struck from the pleading. The rule authorizing the court to strike out a pleading as prejudicial, scandalous, frivolous, vexatious, or an abuse of the process of the court is exercised only in the clearest of cases. (Fasteners & Fittings Inc. v Wang 2020 ONSC 1649)
[10] The decision on this motion does not turn on whether the allegations are unseemly or uncomfortable for the defendants; it is that they are not relevant. They are personal attacks that do not define or clarify the issues in the dispute between the parties. They do not give notice of the case to be met or set out materials facts on which a party relies for its claim or defence. They do not shed light on the allegations of mismanagement levelled at the plaintiff by the defendants in their counterclaim. They are not required for the plaintiff to defend the counterclaim.
[11] In this instance the counterclaim alleges financial wrongdoing by the plaintiff. As the plaintiff has done here, she can deny that she had any involvement in the books and records of the corporate defendant. She can also plead that any irregularities in those books and records were caused by the individual defendants. She can assert those defences without resorting to the allegations in paragraph 19-24 above. Given these further allegations are unnecessary to plead her defence, one is left with the impression they are a bit of a tit-for-tat for the defendants’ allegations that she was engaged in discreditable financial conduct for her own personal gain.
[12] The allegations of drug addiction, spousal violence and anger issues only add colour and, as such, represent a scandalous, drive-by, inflammatory attack. As did Mew, J. in 772694 Ontario Limited v Gurnsey, 2020 ONSC 5558, I find the paragraphs have been included solely to embarrass the personal defendants. Even if they were relevant, which I do not find, they would be so marginally relevant that the prejudice of including them strongly outweighs any probative value they might have.
[13] If allowed to stand, they would dramatically expand the scope and complexity of discoveries into multiple irrelevant areas, with little or no probative value.
[14] The plaintiff’s cause is not helped by her attempt, after receipt of the defendants’ motion materials, to shuffle these paragraphs around in a proposed amended defence to counterclaim. In the revised pleading, these same allegations are included, it is said, to support an allegation that any incomplete accounting records were caused by the drug use, assault and anger issues of the personal defendants. In this proposed amended defence to counterclaim, the plaintiff pleads that any incomplete accounting records were not caused by her (paragraph 31) but were caused by the “personal problems” of Peter, Rickey and Claudia (paragraph 32). She then goes on to define those “personal problems” to reference the same allegations of drug addition, rehab, anger management, etc. The plaintiff concludes in paragraph 34 that these “personal problems” adversely affected the business including the ability to keep proper records.
[15] As noted above, the plaintiff is able to advance her defence that not only that she was not responsible for the state of the records but that the records were the responsibility of the defendants. She can do so without the addition of irrelevant, scandalous, frivolous and vexatious allegations. Paragraphs16 and 17 of her pleading will enable the court to determine whether the financial irregularities did occur and, if so, whether the plaintiff was responsible for them. Paragraphs 19-24 are not necessary to enable her to prove her defence and are struck for the reasons outlined above.
[16] If the parties are unable to resolve the issue of costs, the defendants may serve their costs outline by September 23 and the plaintiff may respond by September 28. Material is to be provided to my assistant trial coordinator Ms. Meditskos at Christine.Meditskos@ontario.ca. If no materials are filed by September 30, I will assume counsel have been able to resolve this issue between them.
Associate Justice Jolley
Date: 12 September 2022