Nygard v CBC: Disposition Without Trial – The Bigger Picture

In their recent decision in Nygård International Partnership v Canadian Broadcasting Corporations (Nygard v CBC), 2012 MBCA 8, the Manitoba Court of Appeal dismissed the Canadian Broadcasting Corporation’s (CBC) motion to strike out Nygard’s statement of claim accusing the CBC of committing a series of economic torts. The case is interesting not only because of its high profile plaintiff, but also because it illustrates the high bar courts have set throughout Canada when it comes to disposition without trial.

In 2009, Nygård International Partnership, which is owned by clothing mogul Peter Nygård, brought a motion against the CBC. In it, Nygård alleged the CBC had interfered with Nygård’s contractual relations or other economic interests, induced breach of contract, and converted proprietary information or otherwise engaged in conspiracy. According to Nygård, this occurred when the CBC induced certain current and former employees at Nygård to breach confidentiality provisions in their employment contracts as part of a CBC exposé concerning Nygård’s business practices. The “exposé” was a Fifth Estate documentary entitled “Larger than Life” which can be found here.

In response, the CBC brought a motion to strike the statement of claim, pursuant to s.25.11 of the Court of Queen’s Bench Rules – Manitoba’s equivalent of Ontario’s Rules of Civil Procedure, RRO 1990, Reg 194. Section 25.11 reads,

25.11 – The court may on motion 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 vexatious;

(c) is an abuse of the process of the court; or

(d) does not disclose a reasonable cause of action or defence

The CBC argued that the provisions were frivolous and vexatious and constituted an abuse of process. It denied being aware of any confidentiality or fiduciary duties between Nygård and its employees, or inducing any such breach. It further asserted that Nygård’s action constituted “libel chill” by trying to suppress its s. 2(b) Charter right to freedom of expression without proper justification. Accordingly, CBC argued that the case was effectively one for defamation. This would be preferable from the CBC’s point of view because it would open up the opportunity for it to apply the recently acknowledged defence of “responsible communication on matters of public interest” from the Supreme Court’s 2009 decision of Grant v Torstar Corp, [2009] 3 SCR 640.

The CBC did not explicitly allege that there was  no reasonable cause of action in its motion to strikeout the statement of claim. Despite this, CBC asserted  that Nygård had failed to plead any facts to support its allegations that the CBC had induced Nygård employees to breach their confidentiality agreements. Accordingly, pursuant to the Manitoba Court of Appeal’s holding in the 2007 decision of Kreiner v Auditor General (Manitoba), 2007 MBCA 154, the CBC was obliged to show that there was “no probable justification at law for the claim advanced.” The Court in Nygård v CBC went on to note that for pleadings to be struck as frivolous or vexatious, there would also have to be evidence of some “ulterior motive.”

Unsurprisingly in light of this high standard, the Court of Appeal had little trouble dismissing the CBC’s motion. In its reasons, the Court noted that the sentence in the Nygård statement of claim, “The claim alleges that by inducing current and former employees of Nygård International to breach their duties the CBC defendants intentionally interfered with the plaintiff’s economic interests thereby causing damage” was sufficient, since, at the pre-trial stage, the issue is not whether there are facts to support the claim. The Court was careful to note that it was not passing judgment on the merits of either Nygård or the CBC’s arguments, restricting their argument to an explicitly legal analysis of whether the Kreiner threshold had been met.

Analysis

Nygård v CBC illustrates the high bar courts have set throughout Canada when it comes to disposition without trial. In Ontario, pursuant to Dawson v Rexcraft Storage and Warehouse Inc, 164 DLR (4th) 257, the jurisprudence exhibits a similarly high standard for striking a statement of claim. However, the recently updated rule 20 of the Ontario Rules of Civil Procedure has statutorily lowered this high bar. Specifically, rule 20.02 allows judges to make assessments of credibility at the pre-trial stage. At least in Ontario then, in the never-ending struggle between “justice” and “efficiency” that characterizes the civil field, legislature has opted to accord efficiency more significance than its robed counterparts.

Given the high costs associated with litigation and strain on the system generally, such steps seem necessary, but are they appropriate? What would it mean, going back to Nygård, if judges could make preliminary assessments of credibility against either Nygård or the CBC? The Manitoba Court of Appeal seemingly sidestepped a contentious issue when they noted that for pleadings to be struck as frivolous or vexatious, there would also have to be evidence of some “ulterior motive” but did not pass judgment on whether one existed in the case before them.

If judges were able to make assessments of credibility at such an early stage, no doubt many actions would be removed from the system, one way or another. On the other hand, where there are genuine issues to be tried, such procedures risk justice in the name of efficiency, since there may sometimes be insufficient evidence before judges to make a credibility assessment.

Since the high costs of litigation and strain on the justice system are a reality which, unfortunately, transcends provincial boundaries, legislatures across the country will eventually have to address the problem in an meaningful fashion. There is an undeniable link between procedural and substantive justice. When legislatures turn their mind to the challenges at hand, the availability of both will be what hangs in the balance.