For Pre-Trial Issues, It’s Not a Matter of Proof: Gaur v Datta

Judges should assume facts in claims are true when considering whether to strike out a pleading under Rule 21 of Ontario’s Rules of Civil Procedure (“Rules”). In a case earlier this month, Gaur v Datta, 2015 ONCA 151, the Ontario Court of Appeal overturned a motion judge’s ruling in a 3-0 decision, allowing the appellants to proceed with their cause of action.

Rule 21.01(1)(b) states that a party can make a motion asking a judge to “strike out a pleading on the ground that it discloses no reasonable cause of action or defence.” At this stage, no evidence is admissible and all facts in the pleadings are assumed to be true. In Guar, Justice van Rensburg determined that the motion judge erred in dismissing the action against the respondents. She ruled that the appellants could proceed with their action. She did, however, make suggestions on how the appellants could amend their pleadings to make the elements of their tortious claims clearer.

Background

The parties in this case were business associates. Pradeep Gaur and Apt Flow Technologies Inc. and 2081706 Ontario Inc (two companies he is a principal of) were the appellants. The defendants were Dipti Datta, Utpal Datta, Inge Datta and M&I Power Technology Inc. Uptal Datta and Inge Datta were current directors of M&I Power. Dipti Datta is a former officer and director of M&I Power. Uptal Datta and Inge Datta were the respondents in this appeal. While Dipti Datta was one of the defendants, he was not a respondent.

In 2012, M&I Power launched an action against Pradeep Gaur, Apt Flow Technologies Inc. and 2081706 Ontario Inc. The action alleged breach of contract and breach of fiduciary duty and began after Pradeep Gaur was no longer employed by M&I Power. Then, in 2013, the appellants launched an action against the defendants. This action claimed damages for defamation and intentional interference with economic relations. The alleged defamation occurred in three emails, two that were written by Dipti Datta and a third that was written by Utpal Datta. The respondents agreed that there was enough for a defamation claim against Dipti Datta, but did not believe there were grounds for a claim against them. The motion judge considered the pleadings and the emails and dismissed the cause of action.

Issue

The issue of this appeal was whether the motions judge had erred in dismissing at an action against the respondents for containing no reasonable action under rule 21.01(1)(b) of the Rules.

Analysis

Justice van Rensburg wrote that the motion judge had correctly identified the legal principles that apply to a motion to strike under Rule 21.01(1)(b). “No evidence is admissible, and the facts pleaded are assumed to be true unless patently ridiculous or incapable of proof.” (para 5) She also noted that the court is entitled to review documents referred to in the pleadings. She was concerned, though, that the motion judge had seemed to weigh the emails as evidence.

She went on to assess each tort separately, beginning with defamation:

The tort of defamation requires the plaintiff to prove three elements: (1) the defendant made a defamatory statement, in the sense that the impugned words would tend to lower the plaintiff’s reputation in the eyes of a reasonable person; (2) the words in fact refer to the plaintiff; and (3) the words were communicated to at least one person other than the plaintiff. (para 8)

She cited the point made in Lysko v Braley, 2006 CanLII 9038 (Ont CA), at para 90, that “publication by the defendant is an essential element of a defamation action and any person who participates in the publication of the defamatory expression in furtherance of a common design will be liable to the plaintiff.” (para 9) She also stressed that “[p]leadings in defamation cases are more important than in any other class of action, and require a concise statement of the material facts.” (para 10).

For Justice van Rensburg, the issue of whether the action could proceed against the respondents depended on whether the pleading sufficiently showed that they had participated in or somehow authorized Dipti Datta’s defamatory words about the appellants to make them liable for the publication of the emails. She noted that the motion judge had found it necessary to separate the emails sent by Dipti Datta from the email sent by Uptal Datta. The bench decided that there were grounds to read the emails together, as the third email by Uptal Datta contained the same defamatory words that appeared in emails written by Dipti Datta. Justice van Rensburg determined that the repetition of the defamatory words was a material fact and was enough to show the possibility of a link between the respondents and the publication of the emails:

The facts pleaded are neither patently ridiculous nor incapable of proof. This of course does not mean that they will necessarily be proven, only that on a Rule 21 motion sufficient material facts have been pleaded to support an action in defamation against the respondents. (para 20)

She then turned to the issue of intentional interference with economic relations:

The tort requires the defendant to have committed an actionable wrong against a third party that intentionally caused the plaintiff economic harm. Conduct is unlawful if it is actionable by the third party, or would be actionable if the third party had suffered a resulting loss. (para 25)

After reviewing the pleadings and the documents, Justice van Rensburg found that there were grounds for allowing an action. The emails presented details of the respondents’ attempts to thwart the plaintiffs’ ability to maintain existing contracts and attempts to persuade other business associates to break contracts or stop dealing with the plaintiffs. Beyond that, the emails included a threat that the respondents would only pay an outstanding debt to a third party if the third party cut all ties with the plaintiffs. Justice von Rensberg cited AI Enterprises Ltd v Bram Enterprises Ltd, 2014 SCC 12, at para 80, that “threatening to breach a contract with a third party can satisfy the unlawful means element of the tort of intentional interference with economic relations.” (para 29)

She admitted she was giving a generous reading of the pleadings and documents and suggested that the appellants amend the pleadings to make the connection between the material facts and each of the elements of both torts more explicit. She ruled that, regardless, the allegations for both torts were neither incapable of proof nor patently ridiculous.

Conclusion

The role of Rule 21 is important. It helps keep frivolous and groundless cases out of the courts and from taking up precious resources. However, Rule 21 should be applied properly—with judges first assuming all facts presented in a pleading are true and then considering, if they are true, whether the plaintiff has established a reasonableness cause of action. The time for proving these facts is not before a motions judge. The time for proving these facts is at trial.