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Civil Litigation - Pleadings - General (2). Grandfield Homes (Kenton) Ltd. v. Chen
In Grandfield Homes (Kenton) Ltd. v. Chen (Ont CA, 2024) the Ontario Court of Appeal states a general rule regarding pleadings:[6] We start with the well-established principles that, absent amendment, lawsuits are to be “decided within the boundaries of the pleadings,” and the parties are entitled to have a resolution of their dispute based on the pleadings: Rodaro v. Royal Bank of Canada (2002), 2002 CanLII 41834 (ON CA), 59 O.R. (3d) 74, at para. 60; Mihaylov v. 1165996 Ontario Inc., 2017 ONCA 116, 134 O.R. (3d) 401, at para. 123. The rationale underlying those principles is fairness: the responding party is entitled to know the case to be met. . Rivard v. Kingston Police
In Rivard v. Kingston Police (Div Court, 2023) the Divisional Court considered an appeal (with leave) of an interlocutory order dismissing a "motion to strike out an amended statement of claim" under R21.01(1)(b) ['no reasonable cause of action or defence'] and R25.11 ['Striking out a Pleading or Other Document'].
In these quotes the court waxes usefully on the purpose and principles of 'pleadings':i) Purpose and Principles of Pleadings
[20] The purpose of pleadings has been commented upon extensively by our courts: see Yordanes v. Bank of Nova Scotia (2006), 2006 CanLII 1777 (ON SC), 78 O.R. (3d) 590 (S.C.); and National Trust Co. v. Furbacher, [1994] O.J. No. 2385 (Gen. Div.). Pleadings should serve:. To define clearly and precisely the questions in controversy between the litigants for both the parties and the court;
. To give fair notice of the precise case which is required to be met and precise remedies sought;
. To assist the court in its investigation of the truth of the allegations made; and
. To constitute a record of the issues involved in the action so as to prevent future litigation upon the matter adjudicated between the parties. [21] While considering what a pleading must contain, it is equally important to recognize what it should not or need not contain: evidence, argument, proof, investigation, reports, will-says, references to documents or witness names. A pleading is a factual construct, to be sure, but one in which the component parts remain to be supported and proven by evidence.
[22] The wording of rule 25.06(1) merits careful consideration. Evidence “by which those facts are to be proved” is not permitted in a pleading. For example, in a claim containing allegations of negligent operation of a motor vehicle, one does not attach an accident reconstruction report or cite passages from it. Nor should one include a passage from an expert report in a medical malpractice claim wherein it is alleged that a practitioner breached the standard of care in the treatment of a patient. As stated succinctly by the Court of Appeal for Ontario in Burns v. RBC Life Insurance, 2020 ONCA 347, 151 O.R. (3d) 209, at para. 16:Rule 25.06(1) requires a statement of claim to contain a concise statement of the material facts on which the party relies for its claim. Each defendant named in a statement of claim should be able to look at the pleading and find an answer to a simple question: What do you say I did that has caused you, the plaintiff, harm, and when did I do it? [23] Rule 25.06(8) is instructive for it demands full particulars in cases where fraud, misrepresentation, breach of trust, malice or intent is alleged. This is a departure from the normal practice of pleadings which requires only material facts. Undoubtedly, the threshold for “full particulars” is higher than that for “material facts”. It is worth noting, however, that even the requirement for full particulars does not displace the general pleadings rule that “evidence by which those facts are to be proved” are not to be pleaded.
ii) Material Facts versus Proven Facts
[24] Nor should “material facts” be confused with proven facts. A pleading does not serve as proof of anything. Evidence proves facts; and a pleading is no more a piece of evidence than an indictment is in a criminal proceeding. One of the standard, and indeed essential, elements of any charge to a criminal jury is to remind the members that the indictment containing the charges is not evidence.
[25] So must it be with a civil pleading.
[26] The pleading is not evidence, but it does set out what a plaintiff intends to prove. Any experienced civil litigator understands that often, by the time a matter reaches trial, the importance of the pleading has diminished. Evidence and the matters to be proven take center stage; and while the issues remain defined by the pleadings, the issues raised by those pleadings have often been narrowed. Allegations are routinely admitted or discarded as redundant, irrelevant, unproveable, or unnecessary. Trial judges often ask the parties to furnish the court with an agreed set of facts. An agreed set of facts is treated as evidence and the jury is instructed accordingly. All the same, a trial judge is hardly likely to compel the parties to serve and file amended pleadings to reflect the agreed set of facts, the allegations that have been abandoned, or the allegations that are admitted.
[27] There is good reason why no evidence is permitted in motions brought under rule 21.01(1)(b); pleadings are not about evidence. They are about setting out material facts which, if proven, would tend to prove what is alleged. . Voreon Inc. v. Matas Management Services Inc.
In Voreon Inc. v. Matas Management Services Inc. (Ont CA, 2023) the Court of Appeal considered three merged related appeals of real estate ventures. In these quotes the court considered the appellate argument that the application judge granted declaratory relief that was unfairly 'unpled' [see esp para 55 re 'pleadings' in an application]:[49] ... Voreon argues that the respondent did not plead a request for declaratory relief, and that it was unfair for the application judge to grant it, because it left Voreon without notice or a fair opportunity to respond.
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[53] All parties knew that the validity and enforceability of the Settlement Agreement were in issue before the application judge. All parties made submissions on these issues. This is clear, in particular, from the many affidavits filed by both sides, and the factums filed before the application judge. There was no unfairness to Voreon.
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[55] Reading the Notices of Application in the Higher Living and Eminence Living applications together with the affidavits makes clear that Voreon raised the issue of the validity and enforceability of the Settlement Agreement, and that the respondents joined issue and responded on that issue in their affidavits. This court has held that affidavits filed on an application form part of the pleadings of the application: 1100997 Ontario Limited v. North Elgin Centre Inc., 2016 ONCA 848, 409 D.L.R. (4th) 382, at para. 17; see also Angeloni v. Estate of Franceso Angeloni, 2021 ONSC 3084, at paras. 27-29.
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[57] Similarly, the factums filed before the application support that the parties knew that the validity and enforceability of the Settlement Agreement was in issue, and fully addressed those issues before the application judge. The factums of both parties addressed whether the Settlement Agreement was a valid agreement, whether it was enforceable (including whether the respondent had complied with its terms), and the interpretation of the Settlement Agreement. In the alternative, Voreon argued that if the Settlement Agreement was valid and enforceable, its proper interpretation meant payment of various debts, including the promissory notes, were not satisfied by the payment of $6.5 million.
[58] Further, both parties sought declaratory relief in their submissions before the application judge. The relief requested by the appellants in each application included requests for declaratory relief in relation to amounts owed to it under either the shareholders agreement or the Settlement Agreement (depending on the findings of the application judge). ...
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[60] The impact of these requests for declaratory relief from both parties before the application judge is twofold. First, there was no unfairness to the application judge granting declaratory relief. All parties were on notice that it was being sought, and the issues were fully argued. Second, Voreon, having itself included requests for declaratory relief in its submissions before the application judge, including its relief requested in the alternative to enforce the Settlement Agreement, cannot now complain on appeal that the application judge granted declaratory relief. . Shwaluk v. HSBC Bank of Canada
In Shwaluk v. HSBC Bank of Canada (Ont CA, 2023) the Court of Appeal considered granting leave to amend a Claim, here in the context of withdrawal of an factual or a legal admission:[4] An admission may relate to a fact or to a legal consequence − a position − alleged to flow from the fact. In determining whether a proposed amendment withdraws an admission in a pleading, the nature and extent of the admission is a key consideration. ...
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[14] The motion judge dismissed the motion. She essentially gave two reasons for doing so.
[15] First, she held the proposed amendments seek “to withdraw the admission by [Ms. Shwaluk] that she did not submit an application for LTD benefits to Sun Life”. She noted that withdrawal of an admission is governed by r. 51.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and requires the moving party to demonstrate that the proposed amendment raises a triable issue, the admission was inadvertent or resulted from erroneous instructions, and the withdrawal will not result in non-compensable prejudice to the other party. The motion judge found that Ms. Shwaluk did not satisfy any of these criteria.
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(1) Did the motion judge err in concluding the amendments sought to withdraw an admission?
[17] In my view, the motion judge failed to use the correct legal test and erroneously determined that Ms. Shwaluk sought to withdraw an admission. That erroneous determination resulted in the motion judge applying the incorrect test to the question of whether the amendments should be allowed. Appellate interference is therefore justified, as a judge errs in law when they apply the wrong legal test: Canada (Director of Investigation and Research) v. Southam Inc., 1997 CanLII 385 (SCC), [1997] 1 S.C.R. 748, at para. 35.
(a) The Amendments Did Not Withdraw an Admission
[18] The motion judge’s reasons for concluding that the amendments involved the withdrawal of an admission were brief. She simply stated that the “amendments proposed by [Ms. Shwaluk] are an attempt … to withdraw her admission; that she never filed an application for LTD [benefits]”. The only paragraph of the amendments she specifically referred to was (underlining indicates the amended portion):[Ms. Shwaluk] did not submit an application/formal proof of loss claim form for LTD benefits to Sun Life, pending resolution of her STD benefits with her employer. However, [Sun Life] was put on notice by June 22, 2015 that [Ms. Shwaluk] was seeking short-term and long-term disability benefits. [19] With respect, the motion judge erred in concluding that this amendment constituted a withdrawal of an admission.
[20] To determine whether an amendment withdraws an admission, two matters need to be considered: (i) the nature and extent of the admission in the original pleading; and (ii) the difference between the original pleading and the proposed amended pleading concerning what was admitted.
[21] In addressing these matters, it is important to recognize that admissions can pertain to alleged facts or to the legal conclusions or consequences (i.e., the party’s positions) alleged to follow from the alleged facts, or to both.
[22] Therefore, when considering the nature and extent of an admission, a court must consider whether the admission does one, or both, of the following: makes a “deliberate concession to a position taken by” the other party; or, accepts that “a set of facts posed by” the other party is correct: Yang v. The County of Simcoe, 2011 ONSC 6405, at para. 46 (emphasis added).
[23] That admissions may relate to facts or positions follows from the nature of the pleadings process. Pleadings are required to set out the material facts on which a party relies for their claim or defence. However, they may also contain conclusions of law if the material facts supporting them are pleaded: rr. 25.06(1) and (2). In other words, pleadings must allege facts, but they also, permissibly and routinely, allege the positions said to follow from those facts.
[24] For example, a plaintiff’s pleading may describe what the defendant did or failed to do, and it may also plead that such behaviour was negligent. The former are allegations of fact, the latter a position as it is a conclusion of mixed fact and law: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 26-29. Similarly, a pleading may allege that the defendant fired the plaintiff with a specific amount of notice − an allegation of fact − but may also allege that doing so was a wrongful dismissal, a position as it is a proposition of mixed fact and law: Dupuis v. Edmonton Cellular Sales Ltd., 2006 ABCA 283, 397 A.R. 376, at para. 6.
[25] Responsive pleadings (defences and replies) may address both the factual allegations and the conclusions or positions in the pleading being responded to, including by making admissions. Efficiency and fairness in the civil litigation process is advanced when this occurs. Although the Rules of Civil Procedure regarding statements of defence and reply pleadings refer to admissions of alleged facts found in the pleading to which they respond (see rr. 25.07(1) and 25.09(1)), nothing in the Rules prevents a party from also admitting, or denying, a legal conclusion or position that has been alleged. For instance, a defendant could admit that they behaved as the plaintiff contends and deny the position that the conduct constituted negligence or wrongful dismissal. Or they could, instead, admit that the conduct constituted negligence or wrongful dismissal, but then deny that the plaintiff suffered any damages. Doing so helps to frame the issues in the litigation.
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(b) The Motion Judge’s Error Led Her to Apply the Wrong Test for Whether to Grant Leave to Amend
[36] Amendments to pleadings are generally governed by r. 26.01: “On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment”. Under this rule, the court must permit an amendment, regardless of the stage of the action at which it is sought, unless the party opposing the amendment can demonstrate actual prejudice that is non-compensable, or unless the delay in seeking it was so long, and the justification so inadequate, that prejudice is presumed: 1588444 Ontario Ltd. v. State Farm Fire and Casualty Co., 2017 ONCA 42, 135 O.R. (3d) 681, at para. 25.
[37] This is a different test than the one applicable for when the proposed amendment would withdraw an admission made in the original pleading. Rule 51.05 provides that: “an admission in a pleading may be withdrawn on consent or with leave of the court”. Absent consent, the party seeking an amendment to withdraw an admission must satisfy a three-part test to be granted leave. They must show that: (a) the proposed amendment raises a triable issue; (b) the admission sought to be withdrawn was inadvertent or the result of wrong instructions; and (c) the withdrawal will not result in non-compensable prejudice: Szelazek Investments Ltd. v. Orzech (1996), 44 C.P.C. (3d) 102 (Ont. C.A.).
[38] The test for withdrawal of an admission varies in two significant ways from the test applicable to other types of amendments. First, where no withdrawal of an admission is involved, the moving party is not required to show that the prior version of the pleading is the result of inadvertence or incorrect instructions. Second, the onus regarding prejudice is different. Where an admission is withdrawn “the onus is on the moving party to show that the opposite party will not be prejudiced, rather than the reverse as is the case under rule 26.01”: Kostruba and Sons v. Pervez, 2011 ONSC 4894, 38 C.P.C. (7th) 100, at para. 42.
[39] The motion judge applied the test for withdrawal of an admission and did so erroneously since no withdrawal was being made. The use of the incorrect test made a difference. I do not read the motion judge’s findings that Ms. Shwaluk had failed to satisfy the three-part test for withdrawal of an admission to be the equivalent of finding that Ms. Shwaluk should be denied leave to amend under r. 26.01. As I will explain, when the correct test is applied, leave to amend should be granted.
[40] The first consideration is the legal tenability of the amendment. An amendment will not be permitted if it is legally untenable, a point determined on the basis of the pleading taken as true, rather than by weighing evidence: Andersen Consulting Ltd. v. Canada (Attorney General) (2001), 2001 CanLII 8587 (ON CA), 13 C.P.C. (5th) 251 (Ont. C.A.), at paras. 34-35. Although the motion judge said the amendments did not raise a triable issue, her treatment of this point focussed on whether there was a reasonable explanation for Ms. Shwaluk’s supposed withdrawal of an admission, and was melded together with a consideration of whether the admission in the reply was inadvertent. She did not consider whether on the facts alleged in the amendments, taken as true, relief from forfeiture had a reasonable chance of success.
[41] Failing to file a proof of loss with an insurer within a policy-prescribed time limit is a type of imperfect compliance which might be amenable to relief from forfeiture: Falk Bros. Industries Ltd. v. Elance Steel Fabricating Co., 1989 CanLII 38 (SCC), [1989] 2 S.C.R. 778, at pp. 784-85; Kozel v. Personal Insurance Co., 2014 ONCA 130, 119 O.R. (3d) 55, at paras. 40-43. Although Sun Life argues that relief from forfeiture pursuant to s. 129 of the Insurance Act is not applicable to this type of policy, it is unnecessary that I determine whether that section, or any other section of the Insurance Act providing for relief from forfeiture, may apply. I see no reason why s. 98 of the CJA would not be applicable, as it has been held to be “available as an avenue of relief for contracts governed by the Insurance Act”: Kozel, at para. 58.
[42] In my view, the amended pleading raises a request for relief from forfeiture that is legally tenable. For example, in Smith v. Sun Life Assurance Company of Canada, 2021 ONSC 7109, the court granted relief from forfeiture after first determining that an insured’s failure to file a formal application for LTD benefits constituted imperfect compliance. The case involved circumstances where the insurer had previously dealt with and adjudicated the plaintiff’s request for STD benefits based on the same alleged disability and had some notice of an intention to claim LTD benefits: at paras. 25-28.
[43] The second consideration is prejudice. The motion judge made a finding that Ms. Shwaluk failed to show that Sun Life would not suffer non-compensable prejudice from the amendments. But given the different onus, this finding cannot be directly transposed into a finding that Sun Life proved it would suffer non-compensable prejudice, which is the test under r. 26.01. Other than noting the stage of the action, the only finding about prejudice the motion judge made was that “Sun Life has conducted its litigation strategy on the basis of the admission” and permitting the withdrawal of the admission would therefore prejudice it. However, since there is no withdrawal of an admission, this ground of prejudice cannot stand. . PMC York Properties Inc. v. Siudak
In PMC York Properties Inc. v. Siudak (Ont CA, 2022) the Court of Appeal considered principles for motions to strike, in particular the role of pleadings:(2) Correct approach to motions to strike
[30] Before I turn to examine the Divisional Court’s decision and the particular pleadings of defamation and civil conspiracy, it is helpful to review the principles governing the correct approach for a court to take in general on a motion to strike pleadings, whether under rule 21 or rule 25. It is beyond well-established that the bar for striking a pleading is very high.
[31] In the case of a claim, the question is whether the action has no reasonable prospect of success or whether it is plain and obvious that the action cannot succeed. This high standard applies to determinations of fact, law, and mixed fact and law. The facts pleaded are treated as true unless they are manifestly incapable of being proven. And the pleadings should be read generously, accommodating any drafting deficiencies because cases should be determined on their merits based on the evidence presented before judges at trial. The court should always consider whether the deficiency can be addressed through an amendment to the pleadings and leave to amend should be denied only in the clearest of cases. See: Hunt, at p. 980; R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45, at paras. 17, 22; Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, 447 D.L.R. (4th) 543, at paras. 87-88; Tran v. University of Western Ontario, 2015 ONCA 295, at paras. 16, 26-27; Abbasbayli v. Fiera Foods Company, 2021 ONCA 95, at para. 20.
[32] The correct approach was recently reiterated and summarized by the Supreme Court in Atlantic, at para. 90, as follows:The threshold to strike is therefore high. Where a reasonable prospect of success exists, the matter should be allowed to proceed to trial. The correct posture for the Court to adopt is to consider whether the pleadings, as they stand or may reasonably be amended, disclose a question that is not doomed to fail. [Citations omitted.] [33] The motivating rationale behind this high standard reflects the liberal construction of rules and pleadings that underlies the Rules of Civil Procedure and the requisite generous approach to pleadings in general, in order, as rule 1.04(1) provides, to “secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.”
[34] Pleadings are very important. They frame the proceedings and the case that must be met. However, long gone are the days where proceedings could be terminated at the early pleadings stage on mere technicalities that can be cured by amendment unless it would result in non compensable prejudice to the opposing party or the administration of justice. Motions to strike can certainly serve a useful purpose at early stages of a proceeding to weed out clearly untenable causes of action that have no chance of success: Imperial Tobacco, at para. 19. But in circumstances where parties are quibbling over whether a known cause of action has been pleaded with sufficient particularity, injudicious use of motions to strike inevitably lead to proceedings becoming mired down, as here, in technical pleadings disagreements that cause unnecessary delay and expense, rather than the adjudication of the dispute on the merits.
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