Court File and Parties

COURT FILE NO.: CV-19-296 DATE: 2023-04-19 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

RH20 North America Inc. and Unit Precast (Breslau) Ltd. Plaintiffs – and – Martin Friedrich Bergmann, Martin Friedrich Bergmann carrying on business as Martin Bergmann Umwelttechnik, Bergmann Umwelttechnik GmbH, Bergmann Beton + Abwassertechnik GmbH, Bergmann GmbH, Bergmann AG, Bergmann North America Inc., Click + Clean GmbH, Lars Bergmann, Michael John MacCormack, LeRoy Harvey Robinson, Carlos Feliope Araque Parra Defendants

COUNSEL: Sean M. Sullivan, James Plotkin, Jeramie Gallichan, for the Plaintiffs / Responding Parties Adam J. Stephens for Bergmann North America Inc., Click + Clean GmbH, Lars Bergmann, Michael John MacCormack, Leroy Harvey Robinson, and Carlos Felipe Araque Parra, the Defendants / Moving Parties

HEARD: December 20, 2022 and January 12, 2023

the Honourable justice m.j. valente

Reasons for Decision

Nature of the Motion

[1] The moving defendants, Bergmann North America Inc., Click + Clean GmbH, Lars Bergmann, Michael John MacCormack, Leroy Harvey Robinson, and Carlos Felipe Araque Parra, bring a motion under Rule 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg 194 for an order striking a number of claims in the statement of claim without leave to amend. The targeted claims are as follows:

(a) all the claims of the plaintiff, Unit Precast (Breslau) Ltd. (‘Unit Precast’) for failing to disclose a reasonable cause of action;

(b) the claim of conspiracy as against all of the moving defendants for failing to meet the pleadings requirement of this tort; and

(c) all the claims against the defendants, Lars Bergmann (‘Lars’), for disclosing no reasonable cause of action.

[2] The moving defendant, Click + Clean GmbH (‘Click + Clean’), also seeks an order staying the action against it by the plaintiff, RH20 North America Inc. (‘RH20’), on the basis that the attornment clause in its contract with RH20 specifies disputes arising in connection with the contract are to be arbitrated in London, England.

Factual Background

[3] RH20 is an Ontario corporation that carries on business across North America as a manufacturer and distributor of onsite wastewater treatment and rainwater harvesting equipment for residential and commercial use.

[4] Unit Precast is an Ontario corporation engaged in the manufacturing and sale of concrete septic tanks, holding tanks, pump tanks and related products.

[5] The defendants, and father and son, Martin Friedrich Bergmann and Lars, respectively, founded, controlled or directed the corporate defendants (collectively the ‘Bergmann Group’). Lars is the CEO of the defendant, Bergmann North America Inc.

[6] The defendants, Michael John MacCormack (‘MacCormack’) and LeRoy Harvey Robinson (‘Robinson’) were previously employed by Unit Precast in senior roles before becoming employees of RH20. MacCormack, Robinson and the defendant, Carlos Felipe Araque Parra (‘Parra’), are each currently former employees of RH20 (collectively, the “Departing Employees”).

[7] Only the moving defendants have responded to the claim; all remaining defendants have been noted in default.

[8] RH20 uses WSB-branded wastewater treatment systems which it licensed from the Bergmann Group. The most recent license agreement between RH20 and the defendant, Martin Bergmann Umwelttechnik GmbH, was signed on November 23, 2012. (the ‘Bergmann License Agreement’).

[9] Unit Precast assembled and sold WSB-brand wastewater systems in Ontario. RH20 subcontracted maintenance and other services for these wastewater systems to Unit Precast.

[10] RH20 also sold wastewater treatment system control panels. RH20 licensed the control panels from Click + Clean. The most recent license agreement between RH20 and Click + Clean is dated November 23, 2012 (the ‘Click Licensing Agreement’).

[11] On November 24, 2012 RH20 and Click + Clean also signed a General Agreement for Web Portal and GPRS Use (the ‘General Agreement’). The General Agreement governed Click + Clean’s provision of services to its customers that used its control panels through a Click + Clean operated web portal.

[12] The Click License Agreement contains the following clause at article 21:

21. Place of Jurisdiction, Applicable Law All disputes arising in connection with this contract or about its validity shall be finally decided in accordance with the rules of the London Court of International Arbitration (LCIA Arbitration Rules) by exclusion of taking recourse to the courts of law. The place of the arbitration proceedings is London, UK…The contract is subject to the law of the Federal Republic of Germany.

[13] The General Agreement provides as follows at article 19:

The exclusive place of jurisdiction for any disputes about the accrual and termination of the contract and all rights and obligations under this contract shall be Kuhlenfeld.

[14] The plaintiffs commenced this action to redress the defendants’ alleged scheme to prematurely terminate the Bergmann License Agreement and the Click License Agreement as well as their alleged use of confidential information to undermine the plaintiffs’ operations and solicit their customers and employees. At the same time, the plaintiffs allege that the Bergmann Group was developing plans to establish a new Ontario corporation (Bergmann NA) to compete directly with RH20 and solicit the Departing Employees from RH20 for Bergmann NA.

Guiding Principles – The Test on a Motion to Strike – Rule 21

[15] Pursuant to Rule 21.01(1)(b) , a party may move to strike a pleading on the ground that is discloses no reasonable cause of action. Evidence is not permitted on a Rule 21. 01(1)(b) motion but a document that is referenced in a claim or that is integral to the plead allegations may be considered (see: Web Offset Publications Limited v. Vickery).

[16] Both the moving defendants and the responding plaintiffs agree that the legal test applicable to 21. 01(1)(b) motions to strike are established by the Supreme Court of Canada in Hunt v. Carey Canada Inc., [1990] S.C.R. 959 (‘Hunt’). In Hunt, the Supreme Court states that on a motion to strike a pleading for disclosing no reasonable cause of action:

(a) the material facts pleaded are to be taken as true unless they are patently ridiculous or incapable of proof;

(b) a pleading is to be read generously, with fair allowance for drafting deficiencies;

(c) pleadings will only be struck where it is “plain and obvious” that the pleadings disclose no reasonable cause of action, or put another way, the plaintiff cannot succeed if all alleged material facts are proved to be true; and

(d) neither the length and complexity of the issues, the novelty of the cause of action, nor the potential for a strong defence should prevent a party from proceeding with its case (at para 36; see also Trillium Power Wind Corp. v Ontario (Ministry of Natural Resources), 2013 ONCA 683, at paras 30-31).

[17] It is plain and obvious that a claim does note disclose a reasonable cause of action where the pleading fails to plead the material facts required to support the claim. Rules 25.06(1) and 25.06(2) require a pleading to contain a concise statement of the material facts on which the party relies for the claim. It follows, therefore, that where the necessary material facts are not plead, the appropriate remedy is to strike the claim (see: Aristocrat Restaurant Ltd. v. Ontario, [2003] OJ No. 5331 (OSC), at para. 78).

[18] In matters that involve multiple plaintiffs, defendants and causes of action, as in the case before me, each plaintiff must identify the causes of action, material facts and relief being sought against each of the defendants (see: Martin v. Astrazeneca Pharmaceuticals PLC, 2012 ONSC 2744, at paras 132-133). In these types of cases with multiple causes of action, it is also important that each of the claims be separately plead along with each element of the subject cause of action (see: Shafique v. University of Waterloo, 2019 ONSC 2418, at para. 40).

The Claims Advanced by Unit Precast

[19] Unit Precast has advanced 8 separate causes of action against the defendants, excluding its claim of conspiracy. I will address each cause of action separately. As a preliminary matter, I find that the statement of claim establishes a relationship between RH20 and Unit Precast to the extent that RH20 sub-contracts work to Unit Precast respecting the WSB brand of wastewater systems and it sells the Click + Clean control panels to Unit Precast. I also find, however, on the basis of RH20’s plead letter of April 10, 2018 to defendant, Bergmann Umwelttechnick GmbH, that Unit Precast was not at all material times an “affiliate” of RH20.

(i) Breach of Contract against The Departing Employees

(ii) Inducing Breach of Contract against the Defendants

[20] Unit Precast claims damages against the Departing Employees for breach of contract and as against all of the defendants for inducing breach of contract.

[21] A proper pleading for breach of contract must provide sufficient particulars to identify the nature of the contract, the facts supporting privity of contract between the plaintiff and the defendant, the terms of the contract that were breached, the conduct giving rise to the breach, and finally, the damages that flow from the breach (see: Nanra v. NRI Legal Services, 2017 ONSC 4503, at para. 19).

[22] According to the Ontario Court of Appeal in Correia v. Canac Kitchens, 2008 ONCA 506, a sufficient pleading for inducing breach of contract is required to include the following elements:

(a) the defendant had knowledge of the contract between the plaintiff and the third party;

(b) the defendant’s conduct was intended to cause the third party to breach the contract;

(c) the defendant’s conduct caused the third party to breach the contract; and

(d) the plaintiff suffered damages as a result of the breach (at para. 99).

[23] Although MacCormack and Robinson (but not Parra) are former senior employees of Unit Precast who later joined RH20, the statement of claim fails to allege any contract between Unit Precast and the Departing Employees that may give rise to a breach of contract. It is simply not enough to plead that two of the Departing Employees had been previously employed by Unit Precast. Likewise, it is insufficient to plead that the Departing Employees developed expertise and relationships with the customers of RH20 and Unit Precast while employed at RH20 without pleading what contract bound the Departing Employees to Unit Precast, the contractual terms breached by the Departing Employees and their conduct giving rise to the breach. In my opinion, the pleading is wholly deficient in that it fails to disclose any enforceable contract between Unit Precast and any of the defendants.

[24] Unit Precast submits that it has plead all of the essential elements of the tort of inducing breach of contract. Specifically, it points out that it has plead that it has significant relationships with its employees, customers and partners and that the defendants knew of these relationships. Unit Precast also alleges that the Bergmann Group knew that its premature termination of its agreements with RH20 would negatively impact the plaintiffs’ relationships with their customers and partners while simultaneously presenting the Bergmann Group with opportunity to appropriate those relationships. Finally, Unit Precast relies on the allegation in the statement of claim that the defendants used their knowledge of RH20’s and Unit Precast’s contractual relationships to solicit their employees, customers, and partners to breach their agreements with each of the plaintiffs.

[25] While these allegations may satisfy the key components of the tort based on a very liberal and generous interpretation, the facts proffered to support the essential elements fail to meet the minimum level of factual disclosure required by Rule 25.06. The reason for this failure is that the alleged facts support only a claim by RH20. By way of example:

(a) while the pleading includes allegations that the Departing Employees played strategic decision making roles for the plaintiffs, only the work of the Departing Employees for RH20 is described;

(b) the statement of claim alleges the “conversion of the Plaintiffs’ confidential and proprietary information, customer and partner relationships, and employment /contractor relationships to the new company” but the details of the alleged conversion are limited to RH20;

(c) although the statement of claim alleges that the defendants solicited the plaintiffs’ employees, customers and partners, the only employees referenced are those of RH20 and the only customer or partner specified in the pleading is ASI Group Ltd., a customer of RH20; and

(d) while the statement of claim alleges the impact of employee resignations was devastating for the plaintiffs, the particularized impact is limited to RH20.

[26] In summary, it is my opinion that Unit Precast has failed to plead the material facts necessary to establish a contractual relationship between itself and a third party, the salient terms of any such contract and any breach of such terms that was knowingly induced by the defendants. The pleading discloses no reasonable basis for the tort of inducing breach of contract.

(iii) Breach of Fiduciary Duty

(iv) Inducting Breach of Fiduciary Duty

(v) Knowing Assistance in Breach of Fiduciary Duty

[27] Rule 25.06(8) provides that where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleadings shall contain full particulars. Because a claim for breach of fiduciary duty carries with it a stench of dishonesty and a negative connotation, the claim must comply with Rule 25.06(8). (see: Morrison v. Partington [2005] OJ No. 3176 (OSC))

[28] The parties are agreed that to sufficiently plead a fiduciary duty claim, the plaintiff must plead sufficient facts to show a relationship between itself and the defendant with the following characteristics:

(a) the alleged fiduciary has the scope to exercise some discretion or power over the plaintiff;

(b) that discretion or power can be exercised unilaterally so as to effect the beneficiary’s legal or practical interests; and

(c) the plaintiff is particularly vulnerable to, or at the mercy of, the fiduciary exercising the discretion or power (see: Bonaparte v. Canada at para. 15).

[29] The plaintiffs assert that the facts plead in the statement of claim establish how the Departing Employees exercised discretion or power over Unit Precast and their ability to unilaterally exercise that discretion or power to effect Unit Precast’s legal or practical interests. The plaintiffs further submit that as a result of the exercise of the Departed Employees’ discretion or power, Unit Precast was vulnerable to their unfair solicitation of its employees, customers and partners.

[30] Based on my review of the statement of claim, and in particular, the specific paragraphs that the plaintiffs suggest are supportive of Unit Precast’s claim of breach of fiduciary duty, I find that Unit Precast has not plead any of the necessary elements of a fiduciary relationship with any of the defendants, including the Departing Employees. Where fiduciary relationships and duties are plead, they are raised in connection with RH20 or the “plaintiffs” generally without any specific allegations of fiduciary duties owed by any of the defendants to Unit Precast. Bald allegations against the “plaintiffs” without any particulars, and only conclusions, do not suffice. On the one occasion in the pleadings where the prospect of a fiduciary duty is raised between Unit Precast and the defendants, the plaintiffs fail to lay the foundation for the alleged relationship. Specifically, while the statement of claim alleges with some particularity the defendants’ alleged solicitation of Unit Precast employee, Phil Erb, to join Bergmann NA, there are no facts plead to explain why the defendants’ relationship with Unit Precast prohibits them from soliciting Unit Precast employees. In summary, the pleading fails to establish a fiduciary relationship between Unit Precast and one or more of the defendants.

[31] The torts of inducing breach of fiduciary duty and knowing assistance in breach of fiduciary duty each require the existence of a fiduciary duty (see: Enbridge Gas Distribution Inc. v. Marinaccio, 2010 ONCA 650, at para. 23 and 2027707 Ontario Ltd v. Richard Burnside & Associates et al, 2017 ONSC 4022, at paras 21 – 22). Because I have found that the plaintiffs have not plead the required elements of a fiduciary relationship between Unit Precast and any one of the defendants, I therefore must conclude that the statement of claim fails to disclose any reasonable cause of action with respect to one or more of the defendants inducing breach of fiduciary duty or knowing assistance in breach of such duty.

(vi) Breach of Duty of Good Faith and Honest Performance

[32] There is no free-standing common law or statutory duty of good faith and fair dealing independent of an agreement (see: 6646107 Canada v. The TDL, 2019 ONSC 2240, at para. 8). Simply put, if there is no contract, there is nothing to perform and if there is nothing to perform, then it cannot be performed dishonestly or in bad faith (see: Aimco Re GP Corp v. CHC MPAR Church Holdings Inc., 2019 ONSC 5864, at para. 106)

[33] The moving parties submit that because the statement of claim does not allege the existence of a contract between Unit Precast and any of the defendants, Unit Precast’s claim for breach of duty of good faith and honest performance cannot succeed. For their part, the plaintiffs advise that Unit Precast is no longer pursuing this cause of action but submit that a pleadings amendment is not necessary to reflect their change in position.

[34] I disagree with the plaintiff’s submission. The constituent elements of a plaintiff’s claim must be plead with sufficient precision and clarity to enable a defendant and the trial court to identify the issues to be determined (see: Pennyfeather v. Timminco Limited, 2011 ONSC). The claims of the plaintiff must, as a practical matter, be stipulated to eliminate any second guessing by the defendant of the claims it is to meet. The claims must be particularized to address the possibility of the plaintiff appointing new counsel with a different theory of the case. Finally, the claims of the plaintiff are to be clearly stated so that the trial judge is not prejudiced in identifying the issues to be determined.

(vii) Breach of Loyalty

[35] The moving parties submit that the statement of claim fails to disclose any fiduciary or employment relationship between Unit Precast and any of the defendants that might give rise to a duty of loyalty. Unit Precast advises that it is prepared to abandon its claim for breach of loyalty but sees no need to document its decision with a formal amendment to the pleading.

[36] For the same reasons I have stated above, I reject the plaintiff’s submission and find that the claim for breach of loyalty is to be struck.

(viii) Intentional Interference in Contractual Relations

[37] Unit Precast’s claim for intentional interference with its contractual relations is limited to one paragraph in the statement of claim. In that paragraph, the plaintiffs allege that:

(a) the defendants have interfered in the “plaintiffs’” contractual relationships;

(b) the “plaintiffs” have numerous contracts;

(c) the defendants’ actions have caused the “plaintiffs” to be in breach of their contracts; and

(d) the defendants’ actions have resulted in the “plaintiffs” suffering on-going damages.

[38] Given that I have found that the plaintiffs have not plead the existence of any contract between Unit Precast and a third party, there cannot be any knowledge by the defendants of Unit Precast’s contracts or actual wrongful interference by one or more of the defendants. These elements are essential to the tort (see: D.G. Jewelry Inc. v. Cyberdiam Canada Ltd., [2022] OJ No. 1465 (OntSC) at para. 39). Accordingly, I find that Unit Precast’s claim of intentional interference with its contractual relations is to be struck.

(ix) Breach of Confidence

[39] The parties are in agreement that a claim for breach of confidence requires proof of the following three elements:

(a) the information conveyed must be of a confidential nature;

(b) the information must be conveyed in confidence: and

(c) the confidential information must be misused by the party to whom it was communicated to the detriment of the confider. (See: CTT Pharmaceutical Holdings Inc. v. Rapid Dose Therapeutics Inc., 2019 ONCA 1018 at para. 31.)

[40] Additionally, each defendant is entitled to know with particularity what confidential information the defendant is alleged to have taken. Justice Cavanagh in the recent 2019 decision of Evertz Technologies Limited v. Lawo AG, 2019 ONSC 1355 (‘Evertz’) makes it clear that a general description of categories of confidential information are inadequate to satisfy the minimum requirement of pleading material facts to support a claim for breach of confidence (at para. 33). In Evertz, the court found that the plaintiff’s description of the stolen confidential information as “software” and “pricing information” was too vague and general to meet the required standard of disclosure (at para. 33).

[41] The statement of claim fails, in my opinion, to adequately describe the confidential information alleged to belong to Unit Precast. References to “the Plaintiffs’ confidential information” are wholly inadequate. Similarly, such descriptions as the plaintiffs’ “business development activities”, “project information”, “employee lists”, “business plans” and “strategic direction” are too vague and general to meet the minimum requirements of a breach of confidence pleading.

[42] More significantly to my mind, however, is the plaintiffs’ failure to plead the circumstances of how the alleged Unit Precast confidential information came into the possession of each defendant and how each defendant misused that information. The statement of claim also fails to specify how Unit Precast suffered a loss as a result of the misuse of the information.

[43] The plaintiffs urge me to find otherwise but I am unable to do so even after a generous and liberal reading of the state of claim. For example:

(i) The pleading alleges Robinson had access to the plaintiffs’ confidential and proprietary information and knew or ought to have known that this information and the plaintiffs’ customer and employment relationships were critical but nowhere in the pleading do the plaintiffs allege any facts to support how this defendant had access to Unit Precast confidential information and how he misused the information. This is likely because whereas the statement of claim pleads material facts regarding Robinson’s relationship with RH20, there are no allegations regarding his relationship with Unit Precast;

(ii) The same can be said with respect to the allegations against MacCormack and Parra. Furthermore, whereas the pleading provides some detail with respect to the implied duties owed by these two Departing Employees to RH20, no such allegations are made in respect of Unit Precast; and

(iii) In more than one instance, the plaintiffs allege that the defendants have incorporated and disclosed the plaintiffs’ confidential information in the development and advancement of Bergmann NA’s operations, but the specific explanatory allegations focus solely on the conversion of RH20’s confidential information.

[44] Accordingly, I have reached the conclusion that it is “plain and obvious” that the pleading does not disclose a breach of confidence cause of action that can be advanced by Unit Precast. Therefore, pursuant to Rule 21.01 the breach of confidence claim of Unit Precast is to be struck.

[45] To summarize, my conclusions thus far, I find that each of Unit Precast’s claims for breach of contract, inducing breach of contract, breach of fiduciary duty, inducing breach of fiduciary duty, knowing assistance in breach of fiduciary duty, breach of duty of good faith and honest performance, breach of loyalty, intentional interference in contractual relations, and breach of confidence are to be struck.

[46] I do not grant leave to amend. I am not prepared to grant this relief in this instance because there is no reason to believe that Unit Precast’s case can be improved by an amendment. The moving party’s motion to strike had been outstanding for some two and one-half years prior to its first day of argument. In these circumstances, I have no confidence that Unit Precast could improve its position by alleging further material facts to support its alleged causes of action. Rather, I conclude that the statement of claim as currently framed is Unit Precast’s best position and that position does not meet the minimum threshold standard for each of the plead causes of action. (see: Glycobiosciencies v. Amosey, 2020 ONSC 2566, at para. 42).

[47] Furthermore, any amendments that might improve Unit Precast’s position would be fundamentally different causes of action. Given the passage of time since 2018 when the causes of action arose, these different causes of action are likely statue-barred. It is clear that leave to amend is to be refused if the amendments raise statute – barred causes of action (see: Taylor v. Tamborill Cigar Co., [2005] OJ NO. 4182 (Ont. C.A.), at para. 2).

The Claims Advanced By RH2O and Unit Precast

(i) Conspiracy

[48] The parties are in agreement as to the essential elements of the cause of action that must be plead in order to establish the tort of conspiracy. They agree, as do I, that the essential elements of the tort of conspiracy should include:

(a) a description of the parties and their relationship;

(b) the agreement to conspire and its purpose or object;

(c) the overt acts that are alleged to have been done by each of the conspirators; and

(d) the injury and particulars of the damages suffered by the plaintiff as a result of the conspiracy (see: Normat Management Ltd v. West Hill Redevelopment Co., [1998] 37 OR (3d) 97 (ONCA)).

[49] I accept that a conspiracy claim by its very nature “resists detailed particularization at early stages” when the relevant evidence is in the minds of the alleged conspirators (see: North York Branson Hospital v. Praxair Canada Inc. (‘North York Branson’). As this court has stated in North York Branson at para. 22:

Part of the character of a conspiracy is its secrecy and the withholding of information from alleged victims. The existence of an underlying agreement bringing the conspirators together, proof of which is a requirement borne by the plaintiff, often must be proven by indirect or circumstantial evidence. A conspiracy is more likely to be proven by evidence of overt acts and statements by conspirators from which the prior agreement can be logically inferred. Such details would not usually be available to the plaintiff until discoveries. These considerations and the general theme of Hunt, instructing courts not to shy away from difficult litigation, also militate against holding pleadings in civil conspiracy cases to and extraordinary standard.

[50] Having said that, bald allegations that the defendants conspired with one another to do certain things to injure the plaintiff without material facts are not acceptable (see: Fastners & Fittings Inc. v. Wang, 2020 ONSC 1649 (‘Wang’) at para. 156). Likewise, an itemization of overt acts alleged to have been done by the defendants as a group to harm the plaintiff has been routinely rejected by the courts. By lumping some or all of the defendants together, it is not possible for any one defendant to know the case they must meet (see: Wang at para. 156).

[51] It is my opinion that while RH2O’s allegations of conspiracy include particulars of the parties and their relationships with one another as well as overt acts alleged to have been done by the conspirators, the pleading lacks specificity with respect to one or more agreements to conspire and the purpose of each agreement as well any damages suffered as a result of the conspiracy. The statement of claim lumps some or all of the defendants and adopts the prohibited “group” approach in describing many of the alleged conspiratorial acts. Additionally, I find that RH2O’s recitation of the alleged acts of conspiracy are for the most part scattered throughout the pleading and require the reader to put the conspiratorial puzzle together before they have some understanding of the theory of RH2O’s claims. Neither the defendants nor the court should be put to this task and be required to have second thoughts as to the issues to be determined.

[52] For the reasons set above, RH2O’s claim of conspiracy as against all of the defendants is struck with leave to amend.

[53] I next turn to Unit Precast’s claim of conspiracy. Plaintiffs’ counsel submits that the statement of claim alleges with particularity that the defendants conspired to solicit Unit Precast’s key employees and confidential information for the benefit of Bergmann NA and that Lars, together with the Departing Employees, conspired to interfere with Unit Precast’s customers and partner relationship. A review of the specific paragraphs upon which counsel relies, however, causes me to conclude otherwise. For the most part, the pleading refers solely to RH2O’s employees, RH2O’s confidential information, customers and partners, or in the alternative, to the “plaintiffs’” employees, confidential information, customers and partners without any distinction between the two. To my mind, by failing to particularize any material facts to support an agreement between two or more of the defendants to injure Unit Precast as well as the acts done by each of the conspirators to achieve that end, the plaintiffs have failed to plead the essential elements of the tort of conspiracy on behalf of Unit Precast. Bald assertations that the defendants conspired with one another to do certain things intended to injure this plaintiff do not meet the required standard for a plea of conspiracy on behalf of Unit Precast. It is not acceptable for Unit Precast to suggest that the details of its conspiracy claim are within the knowledge of the defendants only. Courts have recognized that as consequence of alleging such a serious cause of action, the conspiracy pleading requires a degree of specificity. If the plaintiff does not have knowledge of certain material facts, then it is not appropriate to plead conspiracy (see: Martin v. Astrazeneca Pharmaceuticals PLC, 2012 ONSC 2744 at para. 177).

[54] Accordingly, Unit Precast’s claim of conspiracy is struck as against all of the defendants without leave to amend. I decline to grant Unit Precast leave to amend because as I have stated above, I have no confidence that Unit Precast could improve its position by alleging further facts to support a claim for conspiracy.

(ii) Action against Lars Bergmann

[55] To plead a cause of action against directors or officers of a corporation, a separate claim against them in their personal capacity must be brought. This claim must allege tortious conduct by the individuals or conduct that exhibits a separate identity of interest from the corporation to make the conduct their own (see: Glycobiosciencies v. Amosey, 2020 ONSC 2566 (‘Glycobiosciencies’) at para. 73). In simple terms, this means that the plaintiff must plead sufficient particulars that describe a basis for attaching liability to the directors or officers in their personal capacities. Absent any suggestion that they did anything other than act in the normal course of their employment in the ordinary business of the corporation, the directors and officers cannot be held personally liable (see: Glycobiosciencies, at paras 72, 75).

[56] The Court of Appeal in 1175777 Ontario Ltd. v. Magna International Inc. confirmed that a pleading that attributes a specific intention or purpose to a director or officer and alleges steps taken in furtherance of that purpose is sufficient to plead tortious conduct personal to the director or officer (at para. 21).

[57] The plaintiffs would have me find that the statement of claim alleges that Lars set out with the specific purpose to solicit the plaintiffs’ employees and customers and to misappropriate confidential information. I disagree. Whereas the pleading arguably alleges steps taken in furtherance of that purpose, albeit in many instances without the required level of “clarity and precision” for allegations of intentional tortious conduct (see: Lysko v. Braley (2006), 79OR (3d) 721 (C.A.), at para. 144), the specific intention of Lars is not particularized. Moreover, as with the RH2O allegations of conspiracy, so too do the allegations against Lars personally populate the paragraphs of the statement of claim without any direction and structure. The reader requires a roadmap to make any sense of where the allegations against Lars personally may lead. Finally, I am of the view that unlike RH2O, Unit Precast has not advanced the slightest claim against Lars in his personal capacity even with the benefit of the most generous reading of the pleading.

[58] Accordingly, I find that the statement of claim discloses no reasonable cause of action against Lars in his personal capacity, and therefore, must be struck with leave to RH2O to amend. No such leave is, however, granted to Unit Precast for the same reasons expressed above.

Should the Claims against Click + Clean be Stayed?

[59] Rule 21.03(a) permits a party to move before a judge to have an action stayed on the ground that the court has no jurisdiction over the subject matter of the action. Section 106 of the Courts of Justice Act, R.S.O. 1990, c.C43, provides that a court may stay any proceeding in the court on such terms as are considered just.

[60] As I have previously stated, the Click License Agreement in article 21 stipulates:

“All disputes arising in connection with this contract… shall be finally decided in accordance with the rules of the London Court of International Arbitration… The place of the arbitration proceedings is London, U.K.… The contract is subject to the law of the Federal Republic of Germany (the “Arbitration Agreement”).

[61] In addition the jurisdiction provisions of the General Agreement between RH2O and Click and Clean state:

The exclusive place of jurisdiction for any disputes about the accrual and termination of this contract and all rights and obligations under this contract shall be Kuhlenfeld (the “Jurisdiction Clause”).

[62] Kuhlenfeld is located in Germany.

[63] It is agreed between the parties that the arbitration referenced in the Click License Agreement is an international arbitration governed by the International Commercial Arbitration Act, 2017, SO2017, c2., Sched 5 (the ‘ICAA’) and the Model Law on International Commercial Arbitration (the “Model Law”) because Click + Clean’s place of business was the town of Kuhlenfeld, Germany and RH2O’s place of business was Breslau, Ontario at the time of the conclusion of the Click License Agreement.

[64] Section 5 of the ICAA provides that subject to the provisions of the ICAA, the Model Law has the force of law in Ontario. The parties agree that article 8(1) of the Model Law is applicable to the matter before me. It provides that where court proceedings are brought with respect to a matter that is the subject of arbitration, the court shall refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed. The parties also agree that section 9 of the ICAA stipulates that if, pursuant to article 8 of the Model Law, a court refers a matter to arbitration, the court proceedings are stayed with respect to the matter to which the arbitration relates.

[65] The parties differ, however, as to whether the causes of action raised in the statement of claim against Click + Clean fall within the Arbitration Agreement. The moving defendants submit that the only claims advanced by RH2O against Click + Clean, as supported by alleged material facts, are Click + Clean’s improper termination of the Click License Agreement and its breach of the confidentiality clause in the Click License Agreement. Because these are claims of breach of contract and breach of confidence, the defendants argue these causes of action arise in connection with the Click License Agreement, and therefore, fall within the state scope of the parties’ agreement to arbitrate.

[66] The plaintiffs submit firstly that they do not seek damages against Click + Clean for breach of contract. Rather, the substance of the claim against Click + Clean is its participation in the defendants’ conduct to usurp the plaintiffs’ employees, customers and partners.

[67] In their rebuttal, the defendants argue that even if the court finds that there are other tenable causes of action plead against Click + Clean, the Arbitration Agreement contains language that should be construed broadly to include non-contractual claims, including claims in tort. Specifically, they submit that the phrase, “all disputes arising in connection with this contract”, as found in the opening sentence of the Arbitration Agreement, is the kind of contractual language that has been generously interpreted by the Court of Appeal to enjoy “a wide compass” (see: Dancap Productions Inc. v. Key Brand Entertainment Inc, 2009 ONCA 135, at para 38; Donaldson International Livestock Ltd. v. Znamensky Selekcionno-Gibridny Centre LLC, 2008 ONCA 872, at paras 33 and 36)).

[68] The defendants also rely on the principles recognized by the Court of Appeal in Dalimpex LTD. v. Janicki, [2003] 64 OR (3d) 737 (ONCA) where at para. 22, Justice Charron states:

Where it is arguable that the dispute falls within the terms of the arbitration agreement or where it is arguable that a party to the legal proceeding is a party to the arbitration agreement then, in my view, the stay should be granted and those matters left to be determined by the arbitral tribunal.

[69] In applying these principles, I accept the defendants’ submission that the provisions of the Arbitration Agreement apply to all disputes between RH2O and Click + Clean, including not only clauses founded in breach of contract but also all of the tenable causes of action plead in the statement of claim against Click + Clean. This conclusion is supported by the uncontested evidence that RH2O specifically requested that an arbitration agreement be included in the parties’ contract. Applying the general principles of contractual interpretation, which give words their ordinary meaning consistent with the surrounding circumstances, I find RH2O and Click + Clean intended the Arbitration Agreement to apply to all disputes between them.

[70] While the nature of the claims favours arbitration, the analysis does not end there. The plaintiffs argue that the conflict between the provisions of the Arbitration Agreement and the Jurisdiction Clause renders both provisions void or incapable of being performed. The Arbitration Agreement contemplates arbitration in London, UK while the Jurisdiction Clause stipulates that “the exclusive place of jurisdiction for any dispute about the accrual and termination of this contract and all rights and obligations under this contract shall be Kuhlenfeld”. The defendants acknowledge the Jurisdiction Clause. It is impossible for the parties to comply with the relevant provisions of both agreements; they clearly conflict. Because the provisions are in conflict, I agree with the plaintiffs that at a minimum they are incapable of being performed.

[71] Courts have emphasized that it is not the traditional forum non conveniens analysis which applies when parties have agreed to a forum selection clause. The starting point of the analysis is that commercial parties should be held to their bargain. The onus is on the plaintiff to show why the court should displace the forum chosen by the parties. A stay should be granted unless the plaintiff shows “strong cause” that the case is exceptional and the forum selection clause should not be enforced (see: Novatrax International Inc. v. Hagele Landtechnik GmbH, 2016 ONCA 771 (‘Novatrax’), at para. 5).

[72] The Ontario Court of Appeal found a strong cause to reject a forum selection clause where, as in this case, multiple agreements between the parties contained conflicting clauses designating different jurisdictions for dispute resolution. The court held in Quickie Convenience Stores Corp v. Parkland Fuel Corp, 2020 ONCA 453 (“Quickie Convenience”) at paragraphs 31-32 that this approach furthers the requirement to avoid multiple proceedings as prescribed by s. 138 of the Court of Justice Act. Furthermore, the court noted that “requiring parties to litigate the same issue twice, in different courts, does not advance the commercial reality” (see: Quickie Convenience at para. 31).

[73] The Bergmann Defendants include several companies of which Click + Clean is but one. The plaintiffs submit that as in Quickie Convenience, the commercial relationship between the Bergmann Defendants and the plaintiffs should be considered, not simply one individual agreement. While a dispute may arise out of any of the individual agreements and be the subject of a forum selection clause, the plaintiffs argue the basis of the litigation results from the tortious conduct of the Bergmann Defendants collectively. I agree.

[74] I find that it would be commercially unreasonable to interpret the agreements as requiring the parties to litigate the same issue in multiple jurisdictions. This interpretation falls outside of what the parties would have reasonably contemplated when they agreed to the forum selection clause and favours dismissal of the defendants’ stay motion.

[75] A third agreement that favours the dismissal of the defendants’ stay motion is that the defendants have taken steps in this proceeding which invoke the jurisdiction of the court. The British Columbia Court of Appeal in Larc Developments Ltd v. Levelton Engineering Ltd, 2010 BCCA 18 (‘Larc’) dismissed a stay motion founded on an arbitration agreement where the moving party took a step in the proceeding and that step provided it with a benefit in the litigation. The court established this principle regardless as to “whether or not the party intended to embrace the jurisdiction of the court” (Larc, at para. 17). In Larc, the court applied the analogy the common law principle that “any step taken which invokes the jurisdiction of the court will result in attornment even if the party has reserved or is pursuing a challenge to the jurisdiction (at para. 31). Agreeing to the jurisdiction of the court is contradictory to agreeing to arbitrate (see: One West Holdings Ltd. v. Greata Ranch Holding Corp., 2014 BCCA 67 (‘One West’) para. 51). Agreeing to the court’s jurisdiction is equivalent to waiving the agreement to arbitrate with the result that the arbitration agreement is inoperative and the ICAA no longer applies to require the court to stay an action (see: CSI Toronto Car Systems Installation Ltd. v. Pittasoft Co., 2021 ONSC 5117 at paras 24-31).

[76] In Mid-Ohio Imported Car Co v. Tri-K Investments Ltd, 129 DLR (4th) 181 (BCCA) (‘Mid-Ohio’), the defendant challenged a claim on the basis of inadequate pleadings and lack of jurisdiction. The British Columbia Court of Appeal found that since the jurisdictional challenge was coupled with an attack on the pleadings, the jurisdictional argument must fail. It must fail because at the same time that the moving party objected to the court’s jurisdiction, it sought the benefit of that same jurisdiction.

[77] At para. 16 of the Mid-Ohio decision the court stated:

In this case, all respondents who are presently before this court applied for an order that the plaintiff’s claim of fraud be struck for lack of particularity. Had the Ohio court ruled in their favour on that application, they would unquestionably have accepted the judgment. In my view, they must equally accept the decision against them, because by combining that application with one that challenged the jurisdiction of the Ohio court, they thereby attorned to that court’s jurisdiction over them in the dispute as a whole.

[78] The Ontario Court of Appeal in Wolfe v. Pikar, 2011 ONCA 347, at para. 44 and in Van Damme v. Gelfer, 2013 ONCA 388, at para. 25 has cited with the approval the Mid-Ohio ruling. I accept and adopt the principles as stated by the British Columbia Court of Appeal in Mid-Ohio, Larc and One West.

[79] The moving parties would have me find that their motion to strike the plaintiffs’ pleadings does not amount to an attornment of this court’s jurisdiction because that motion is procedural in nature to the extent that it seeks to clarify the nature of the plaintiffs’ claims so that the jurisdictional claim can be decided in the proper context. The defendants rely on the Ontario Court of Appeal’s decision in Fraser v. 4358376 Canada Inc, 2014 ONCA 553 (‘Fraser’) in support of this submission.

[80] I find that Fraser is distinguishable on its facts and reject the defendants’ argument. In Fraser, the moving party sought a temporary stay in anticipation of the jurisdictional motion being heard. The court found that:

“a party who challenges the jurisdiction of the court is entitled to insist upon a proper procedural foundation for the determination of the challenge: Provided that the party’s steps request no more than that, they don’t amount to attornment” (at para. 11).

[81] To my mind, a motion to strike pleadings amounts to far more than seeking a procedural foundation for the jurisdictional challenge. A motion to strike seeks substantive relief. Furthermore, Click + Clean has brought a motion to strike certain of the plaintiffs’ claims against it in conjunction with a challenge of the jurisdiction of this court. With my dismissal of Click + Clean’s jurisdictional challenge, I have little doubt that this defendant will take the benefit of my rulings that the Unit Precast claims against it are to be struck along with RH20’S claim of conspiracy. As the court concluded in Larc, a party should not be entitled to the benefit of the litigation process while also preserving its ability to reject that same process in favour of arbitration (at paras 18 – 19). I find that by taking the steps that it did in bringing a motion to strike pleadings along with a motion for stay, Click + Clean has given the court consent-based jurisdiction.

Disposition

[82] For all of the above noted reasons, the following order shall issue:

1. all claims of Unit Precast are struck without leave to amend;

2. RH2O’s claim of conspiracy is struck as against all defendants with leave to amend;

3. RH2O’s claims against Lars are struck with leave to amend;

4. the amended statement of claim of RH20 shall be delivered within 45 days of the release of this Decision or such later date as the parties may agree.

5. The motion of Click + Clean to stay this action as against it is dismissed.

Costs

[83] I would strongly encourage the parties to agree with respect to the issue of costs. In the unfortunate event that they are unable to do so, however, the party seeking costs shall deliver costs submissions within 15 days of the release of this Decision and the responding party shall deliver responding costs submissions within 10 days of receipt of the submissions of the party seeking costs. Reply submissions, if any, are to be delivered within 5 days of receipt of the submissions on behalf of responding party. The initial and responding submissions are not to exceed five (5) pages doubled spaced excluding costs outlines, offers to settle and authorities. Any reply submissions are not to exceed two (2) pages. All submissions are to be sent to my attention via my Judicial Secretary by email to Kelly.Flanders@ontario.ca with a copy to the Kitchener.SCJJA@ontario.ca email address.

M.J. Valente J.

Released: April 19, 2023