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Civil Litigation - Striking Pleadings - Evidence Not Normally Considered. Del Giudice v. Thompson
In Del Giudice v. Thompson (Ont CA, 2023) the Court of Appeal considered the extent to which documents 'incorporated into pleadings' [under RCP 25.06(7)] may be subsequently admitted into evidence in a R21 striking pleadings motion [where evidence may not be admitted pursuant to RCP 21.01(2)]:A. INCORPORATING CONTRACTUAL DOCUMENTS BY REFERENCE
[12] The first issue received significant attention both at the hearing of the motion and on appeal: whether it was permissible for Capitol One to have filed a document brief containing four documents that it argued were incorporated by reference into the Fresh as Amended Statement of Claim, and for the motion judge to have considered those documents.
[13] The four documents were the Capital One Privacy Policy, Ms. Del Giudice’s Application for Credit, a Credit Card Agreement, and a document entitled “Important Card Information”. The documents were pivotal in the motion judge’s analysis of the viability of some of the appellants’ substantive claims.
[14] The appellants argue that it was improper for Capital One to have filed the documents because the motion judge directed them not to do so. They further argue that the motion judge erred in accepting the documents into evidence given that the documents were not proven through sworn testimony and the appellants contested their authenticity.
[15] I do not agree that the motion judge erred in the use he made of the documents.
[16] As a preliminary matter, I do not agree that the documents filed by Capital One on the motion were either tendered or received as evidence. Nor do I accept the appellants’ related argument that the motion judge used the documents to transform a pleadings motion into a summary judgment motion.
[17] In its factum for the Phase 1 hearing, Capitol One set out the basis for filing the document brief: that the documents had been incorporated by reference into the appellants’ pleading. A document incorporated by reference in a pleading is not evidence, and a judge considering a document so incorporated in assessing a pleading is not making findings of fact: McCreight v. Canada (Attorney General), 2013 ONCA 483, 116 O.R. (3d) 429, at para 32; Darmar, at para. 44.
[18] It is well established that a statement of claim is deemed to include any document to which it refers, and which forms an integral part of the plaintiffs’ claim: McCreight, at para. 32. As the appellants had pleaded that they had contracts and a credit application with Capital One (and that Capital One had breached the contracts and exceeded the terms of the application), these documents were incorporated by reference into the Fresh as Amended Statement of Claim. It was therefore permissible to consider those documents in determining whether the appellants had pleaded viable causes of action.
[19] The additional arguments that the appellants advance against permitting the documents to be used on the motion are likewise unpersuasive.
[20] First, the appellants argue that some of the documents pertain only to cardholders, and that the vast majority of class members never became cardholders and have no contractual relationship with Capital One. These documents therefore have no application to the dispute between the respondents and the vast majority of non-cardholder class members who never had contractual relationships with Capital One.
[21] This argument, like the preceding one, is foreclosed by settled law. Whether a pleading discloses a reasonable cause of action is to be determined by reference to the claims of the named plaintiffs and not to potential members of a proposed class: Darmar, at para. 8. The appellants pleaded that they are both Capital One cardholders. Accordingly, although the proposed class includes those whose applications for Capital One credit cards were unsuccessful, the motion judge properly assessed the pleadings by reference to the appellants’ claims only.
[22] Second, the appellants argue the documents were not incorporated by reference in the claim, because the documents are not “central enough to the claim to form an essential element or an integral part of the claim itself”: Jensen v. Samsung Electronics Co. Ltd., 2021 FC 1185, at para. 85; McCreight, at para. 32. The appellants argue that the primary bases for the claim are the various torts relating to data breach and misuse of data. The breach of contract claim is not only pleaded in the alternative, but with express scepticism: “alternatively, (iv) breach of contract and negligent breach of contract (if a contract existed at all), (collectively, ‘Negligent Breach of Contract’).”
[23] This argument is unavailing. Whether the documents were integral to the claim is to be assessed objectively and not according to the plaintiffs’ intentions. “Integral to the claim” does not mean “integral to the plaintiffs’ dominant theory of liability”. The claims to be assessed include theories of liability pleaded in the alternative. The alternative claim that the respondents breached a contract with the appellants puts in play the contractual documents that form the basis of those contracts. The submission made by counsel for the appellants at the hearing of the appeal that the contract referenced in the pleading could be an oral contract is perplexing in the context of a claim arising out of a relationship between a financial institution and its account holders. It would be extraordinary in the 21st century for a relationship between a regulated financial institution and thousands of account holders to be constituted by oral contracts. If it were to be alleged – even in the alternative – that there were oral communications giving rise to unwritten contracts, the appellants would had to have pleaded the fact that such oral communications were made. They did not. This submission fails. (As explained further below, this conclusion has significant consequences for several of the privacy-based tort claims that are predicated on no consent having been provided beyond a single purpose use.)
[24] Third, the appellants argue they were prejudiced by the use of the documents, because they do not admit the authenticity of the documents. At the hearing of the motion, they objected to the documents’ production and advised that they were proceeding “under protest”.
[25] One would expect that where a party pleads the existence of a contract, and then disputes the authenticity of the contractual documents that a defendant argues are incorporated by reference in the statement of claim, the answer would be to produce the actual contractual documents. In this case, the appellants say they did not do this for two reasons. First, because counsel did not review the motion brief until the eve of the motion and were therefore unaware that the respondents had filed a document brief. Second, because they do not actually believe there were contracts.
[26] With respect to being caught unawares, Capital One filed the document brief in a timely fashion. If the appellants were to object, they needed to do so in a timely fashion. At the very least, they ought to have sought an adjournment in order to locate and produce what they assert to be the authentic contractual documents, or to file evidence establishing the false nature of the documents. The appellants did not do either but instead chose to proceed “under protest”. I am left with the conclusion that the protest was groundless.
[27] With respect to the argument that there was no contract, an available remedy – again – would have been to adjourn to seek leave to amend the pleadings to remove the contractual claim and all aspects of the claim that relied on a commercial relationship that could only be established by contract. The appellants did not do so and accordingly were left with no basis to complain of the impropriety of Capital One filing the document brief on the basis that the claim incorporated the documents by reference.
[28] The appellants further argued that the motion judge erred in considering the documents in his determination of whether the causes of action pleaded were viable because the contracts between the appellants and Capital One were invalid and unenforceable. Again, on a pleadings motion what is in the pleadings and what is not in the pleadings matters. This submission founders on what was not pleaded: invalidity or unenforceability of the contracts. To the contrary, the appellants pleaded in the alternative that Capital One had failed to live up to contracts that were enforceable against it.
[29] In summary, the documents were properly filed for the purposes of the s. 5(1)(a) hearing and the motion judge made no error in referencing them as though they were included in the pleadings. . Fowler v. Family and Children’s Services of the Waterloo Region
In Fowler v. Family and Children’s Services of the Waterloo Region (Ont CA, 2023) the Court of Appeal considered an R21.01(1)(b) [striking pleadings - "no reasonable cause of action or defence"], here in the context of a successful immunity argument by a child welfare agency:[12] The motion judge outlined the test on a r. 21.01(1)(b) motion. She assumed that the facts pleaded in the statement of claim were true and asked whether the pleading disclosed a reasonable cause of action: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45, at para. 17.
[13] As a preliminary matter, the motion judge considered an affidavit proffered by the appellants, which attested to and appended written service agreements between Fowler and FCS. As the motion judge correctly noted, r. 21.01(2)(b) explicitly precludes the admission of evidence on a r. 21.01(1)(b) motion. In accordance with McCreight v. Canada, 2013 ONCA 483, 116 O.R. (3d) 429, at para. 32, she asked whether the service agreements had been “sufficiently pleaded” to be treated as being incorporated by reference into the pleading. She found that the existence, terms, and alleged breaches of the agreements had not been pleaded. Accordingly, she determined that the service agreements were inadmissible.
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(1) The Motion Judge Correctly Declined to Admit Affidavit Evidence
[21] Evidence is not admissible on a r. 21.01(1)(b) motion.
[22] On the motion, Fowler proffered his affidavit. This affidavit included as exhibits foster agreements between Fowler and FCS. Fowler characterizes these agreements as contracts. The motion judge refused to admit the agreements because r. 21.01(2)(b) stipulates that “no evidence is admissible” on a r. 21.01(1)(b) motion.
[23] The appellants argue that the motion judge erred because the statement of claim asserted that Fowler was a foster parent for FCS, and foster families are required to enter into written agreements with their agencies under regulation: see General, R.R.O. 1990, Reg. 70, s. 120. Consequently, in their submission, the written agreements formed part of the pleadings.
[24] We dismiss this ground of appeal. The leading case from this court on when documents can be considered on a r. 21.01(1)(b) motion is McCreight. In short, a motion judge can consider a document that is “incorporated by reference into the pleading and that forms an integral part of the plaintiff’s claim”: at para. 32.
[25] As the motion judge noted, the written agreements cannot be viewed as having been pleaded in the statement of claim – they are not integral to the factual matrix of the appellants’ statement of claim. She observed that Fowler did not plead the existence, terms, or breach of any terms of the agreements. Nor did the statement of claim plead that the appellants made any acts or omissions because of any such agreements. The motion judge was accordingly correct in holding the written agreements to be inadmissible.
(2) The Motion Judge Made No Error in Finding that the Pleading Disclosed No Reasonable Cause of Action
[26] A r. 21.01(1)(b) motion to strike may be granted where the pleading discloses no reasonable cause of action. A generous approach should be given to assessing the pleading.
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[28] The standard of review on an appeal of a r. 21.01(1)(b) motion is correctness: Kang v. Sun Life Assurance Company of Canada, 2013 ONCA 118, 303 O.A.C. 64, at para. 27. . 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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