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Appeal Court Dicta

Civil Litigation - Striking Pleadings - Evidence Not Normally Considered

. Truscott v. Co-Operators General Insurance Company

In Truscott v. Co-Operators General Insurance Company (Ont CA, 2023) the Court of Appeal consider an exception to the general rule that on a motion to strike pleadings under R21.01, the pleadings should be taken as true:
2. The Pleadings Error

[109] The motion judge also erred by failing to accept, as true, the material facts as pleaded against Mr. Carroll.

[110] When assessing whether to strike out a pleading under r. 21.01, on the basis that it discloses no reasonable cause of action, the court must accept as true the material facts as pleaded; however, this obligation does not extend to bald conclusory statements of fact, unsupported by material facts: Trillium Power Wind Corp. v. Ontario (Ministry of Natural Resources), 2013 ONCA 683, 117 O.R. (3d) 721, at para. 31. Accepting as true the material facts as pleaded, it is not plain and obvious that the Claim against Mr. Carroll has no reasonable prospect of success: it should not have been struck.

[111] As a preliminary matter, I note that the motion judge ruled on this issue with consideration only for the Claim. In my view, that was an error. As previously noted, at para. 1 of his reasons, the motion judge stated that leave for the appellants to amend their pleadings had been resolved (subject to costs). In light of that, in my view, the motion judge should have considered the additional particulars in the draft amended statement of claim when determining whether the pleadings disclosed a reasonable cause of action against Mr. Carroll. In the draft amended claim, the appellants allege that Mr. Carroll acted outside the reasonable role of an adjuster and his conduct led to aggravated damages, increased business losses beyond the Policy provisions, constituted defamation, and interfered with the economic relationship between the appellants and Co-operators. Numerous particulars of Mr. Carroll’s alleged conduct to support these broad allegations are set out at para. 43 of the draft amended claim.

[112] In any event, however, reading the Claim generously, and accepting the allegations in it to be true, it cannot be said that the appellants’ claims against Mr. Carroll have no reasonable prospect of success. At para. 45 of the Claim, the appellants set out particulars of Mr. Carroll’s conduct which they allege attracts punitive damages. Those particulars include Mr. Carroll: accusing Mr. Truscott and his representative of fraud and dishonesty; making proposals for settlement and payments calculated to take advantage of the appellants’ vulnerability and which were made without evidence or a basis in law; taking unreasonable and unsubstantiated positions with respect to the value of the building loss, which led to that matter unnecessarily having to go to appraisal and causing delay; intentionally or negligently failing to secure experts that would have verified the appellants’ position on the building loss; and, forcing Mr. Truscott to spend excessive time away from his business to support his claims, knowing that this burden would result in reduced income and added expenses.
. Mohr v. National Hockey League

In Mohr v. National Hockey League (Fed CA, 2022) the Federal Court of Appeal considered the reasons why motions to strike pleadings don't normally allow evidence, here under the federal rules:
[56] Rule 221(2) of the Federal Courts Rules, S.O.R./98-106, provides that no evidence shall be heard on a motion to strike for an order under paragraph (1)(a).

[57] This legislative prohibition against the use of evidence on a motion to strike is underlined by solid policy considerations. There are no affidavits or cross-examinations. The Court has neither the assurance that it has the complete picture nor that the "“evidence”" that it does have is credible. Relying on extrinsic evidence on a motion to strike makes it unclear as to whether the result was reached as a matter of law following the application of the principles of statutory interpretation, or whether it was reached based on the extrinsic evidence. The line between jurisprudence and evidence blurs. The waters become muddy. That is the case before us.

[58] A motion to strike pleadings is different from other creatures under the Rules: a ruling on a question of law or a summary judgment motion. Each of these motions has its proper place and for good reasons they should not be smudged together.

[59] To allow evidence in a pleadings motion would quickly make it just an early summary judgment motion, but stripped of the requirements for summary judgment motions (i.e. leading the best case, filing the motion only after defence). The parties would be filing evidence before all of the issues are on the table (no defence has been filed). The evidence could be wrong or incomplete.

[60] The error of the Federal Court was to treat the extrinsic evidence as relevant to the statutory interpretation issue before us. Policy statements of the regulator do not tell us what a statute means. Our focus is the statute, not how people have been using it. The Federal Court used the debates and proceedings not as context to inform the statutory interpretation analysis but instead as corroboration of its interpretation.

[61] As noted, section 45 has been previously considered (Dow Chemical and Latifi). In both cases the court reached the conclusion that section 45 only applied to prohibit arrangements between suppliers, and in both cases the court reached that conclusion without regard to the extrinsic evidence. In fact, in Latifi, the Court questioned the appropriateness of the Federal Court’s reliance on extrinsic evidence to understand the meaning of section 45, and concluded that "“even if … admissible”" it was of little weight (Latifi at paras. 73-74).

[62] In other words, the Federal Court could have reached the same result without relying on the extrinsic evidence.

[63] I accept that legislative history may be used on a motion to strike as it may inform the purpose of the legislation (Alberta (Attorney General) v. British Columbia (Attorney General), 2021 FCA 84, 41 C.E.L.R. (4th) 157 at para. 127). But even here, care must be taken not to confuse the evolution of the legislation, which is law, with what individual politicians or regulators think or hope the legislation says. There is a substantive difference between committee proceedings that shed light on the evolution and legislative history of a law on the one hand and on the other hand the testimony of academics and public servants which may be aspirational, disputable or of arguable relevance. While perhaps self-evident, if it is necessary to resort to Hansard to discern the meaning of a statute, it is difficult to conclude that it is plain and obvious that a plaintiff’s case has no reasonable prospect of success.

[64] In Imperial Tobacco, the Supreme Court considered the admissibility of evidence in the context of statutory interpretation on a motion to strike, holding that it was proper to rely on Hansard on a motion to strike a pleading. The appeal was from the British Columbia Court of Appeal, and the motion to strike was governed by the British Columbia Supreme Court Rules, B.C. Reg. 221/90 [BCSC Rules], as they then were. Like the Federal Courts Rules, Rule 19(27) of the BCSC Rules (now Rule 9-5(2) of the Supreme Court Civil Rules, B.C. Reg. 168/2009) provided that no evidence was admissible on a motion to strike a statement of claim for failure to disclose a reasonable cause of action. Nonetheless, the Court opined that courts "“may”" consider all evidence relevant to statutory interpretation in order to discern legislative intent (Imperial Tobacco at para. 128).

[65] Two points can be said about Imperial Tobacco.

[66] First, and at risk of repetition, if a court must resort to material beyond the statute and its legislative history to answer the question as to its scope and application, it is difficult to conclude that the interpretation which forms the foundation of the claim has no reasonable prospect of success. In this context, yellow lights should be flashing before any judge who needs extrinsic evidence to answer a question of statutory interpretation on a motion to strike.

[67] Second, in Imperial Tobacco, the Supreme Court was not asked to consider the range of procedural options available to parties in the Federal Court to resolve preliminary legal issues, several of which provide for the admission of the type of extrinsic evidence in issue here. Put otherwise, the prohibition on the use of evidence in Rule 221(2) is best understood when situated in the broader architecture of the Federal Courts Rules.

[68] Rule 221(1)(a) is the beginning point on a continuum of procedural options available to parties to resolve questions of interpretation. Rule 213 provides for summary judgment, Rule 220 allows for the determination of preliminary questions of law, and should a matter reach trial, a trial judge has the discretion to direct the parties to address a questions of law. Unlike Rule 221, evidence is admissible under each of these rules to determine a question of statutory interpretation, with all of the guarantees of completeness and credibility associated with the adversarial process. It is for the judge to determine whether there is a sufficient evidentiary foundation to answer the question.
. Xanthopoulos v. Canada (Attorney General)

In Xanthopoulos v. Canada (Attorney General) (Fed CA, 2022) the Federal Court considered the rule in motions to strike pleadings that the pleadings be assumed truthful:
[7] The appellant argues that the Motion Judge erred in failing to treat contents of the application as true on the motion to strike. We see no error in the Motion Judge’s refusal to do so in view of a distinction between factual allegations and a bald statement. The appellant’s statement in the notice of application that the statutory appeal process is not an adequate remedy is a legal conclusion that is not supported by any factual allegations. It is hence a bald statement that need not be treated as true: see Canada v. John Doe, 2016 FCA 191 at para. 23. ...
. Taylor v. Hanley Hospitality Inc.

In Taylor v. Hanley Hospitality Inc. (Ont CA, 2022) the Court of Appeal considered the interesting issue of whether judicial notice 'facts' could be considered in the R21 striking pleadings motion where the pleadings in the claim (only) were assumed to be true (no, they couldn't):
[29] Nor was it open to the motion judge to take judicial notice of the litany of adjudicative facts set out in paragraph 4 of her reasons. These adjudicative facts mirror many of the disputed allegations contained in the respondent’s statement of defence concerning the impact of the COVID-19 pandemic and of the government’s various emergency measures on the respondent’s operations and its business decisions.

[30] The concept of judicial notice allows a court to receive “facts” that are “so notorious or uncontroversial that evidence of their existence is unnecessary”. This does not allow parties “to put before the court controversial evidence to the prejudice of the opposing party without providing a proper opportunity for its truth to be tested”: Public School Boards’ Assn. of Alberta v. Alberta (Attorney General), 2000 SCC 2, [2000] 1 S.C.R. 44, at para. 5. The threshold for judicial notice is strict since the facts are not proved by evidence under oath nor tested by cross-examination: R. v. Find, 2001 SCC 32, [2001] S.C.R. 863, at para. 48.

[31] The fact of the COVID-19 pandemic is notorious and uncontroversial, as are the facts that the government declared a state of emergency and has undertaken various remedial emergency measures to combat the pandemic’s severe health, economic and social effects. However, the legislative context and intention behind the government’s emergency measures and their impact, especially as they pertain to the parties to these proceedings, are not. This is demonstrated by the parties’ respective, divergent pleadings. For example, the motion judge purported to take judicial notice of the respondent’s pleading that it “was required by the Ontario government to close all their storefronts and was limited to takeout and delivery”, which “had an impact on the employment market”. As I have already noted, the appellant did not admit those facts and disputed that her lay-off was the result of the Ontario government’s mandatory pandemic measures.

[32] Under the rule 21.01(1)(a) motion that the respondent chose to bring, the only facts that the motion judge was entitled to accept as true as far as they related to and affected the parties were those in the statement of claim. As a result, there was no basis for the motion judge’s myriad findings, including that the appellant had not resigned from her employment and that the appellant was on an infectious disease emergency leave because of the COVID-19 emergency government-mandated measures and therefore was not constructively dismissed by the respondent.
. Gaur v. Datta

In Gaur v. Datta (Ont CA, 2015) the Court of Appeal considered a R21 motion to strike pleadings, and varied from some courts by allowing that some evidence may be reviewed:
[5] The motion judge correctly identified the legal principles applicable 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: Lysko v. Braley, 2006 CanLII 11846 (ON CA), [2006] O.J. No. 1137 (C.A.), 79 O.R. (3d) 721, at para. 3; McCreight v. Canada, 2013 ONCA 483 (CanLII), 116 O.R. (3d) 42, at para. 29. In determining whether a cause of action is disclosed, particulars can be considered as part of the pleading. In assessing the substantive adequacy of the claims, the court is entitled to review the documents referred to in the pleadings: McCreight, at para. 32.


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