Ontario court reverses ruling striking out claims for defamation, civil conspiracy

Pleadings were not deficient in particulars, were not an abuse of process, decision says

Ontario court reverses ruling striking out claims for defamation, civil conspiracy

The Divisional Court failed to read the defamation and civil conspiracy pleadings generously and misapplied the modern and flexible approach applicable to such pleadings, the Court of Appeal for Ontario said in a recent case.

In PMC York Properties Inc. v. Siudak, 2022 ONCA 635, Bill Siudak bought a condominium unit at Bentley Place in 2018. He believed that PMC York Properties Inc., the property management company of Wentworth Condominium Corporation No. 171, and Paul Casuccio were negatively influencing the decisions of the condominium corporation’s board of directors.

In May 2019, Siudak was elected to the board. He started posting and disseminating information regarding issues allegedly showing financial mismanagement by PMC York and Mr. Casuccio, its principal. In an August 2019 meeting, a majority vote removed Siudak from the board. He sold his unit and moved out of Bentley Place.

PMC York and its directing principals, Mr. Casuccio and Margot Casuccio, sued him for damages based on defamation. Siudak brought a counterclaim for defamation and civil conspiracy against Mr. Casuccio and certain unit owners and board members. The plaintiffs moved to strike out the counterclaim.

The motion judge refused to strike out the civil conspiracy claim upon applying the test in Hunt v. Carey Canada Inc., [1990], 2 S.C.R. 959. He found that the defamation pleading included the required elements. Magnotta Winery Ltd. v. Ziraldo, 1995 CanLII 7122 (ON SC) set out these elements, while The Catalyst Capital Group Inc. v. Veritas Investment Research Corporation, 2017 ONCA 85 adopted them.

On appeal, the Divisional Court struck out and dismissed Siudak’s counterclaim. It determined that the defamation pleading was not particular enough and that the civil conspiracy claim depended on the defamation claim.

Ontario Court of Appeal allows Siudak’s appeal

The appellate court set aside the Divisional Court’s decision and restored the motion judge’s dismissal of the plaintiffs’ motion to strike.

In connection with the defamation pleading, the Court of Appeal ruled that the motion judge correctly interpreted and applied the modern, flexible approach that the cases of Catalyst and Magnotta Winery provided.

On the other hand, the Divisional Court failed to correctly apply the modern, flexible approach to all of Siudak’s pleadings, the appellate court said. According to the appellate court, the Divisional Court adopted an incorrect approach, requiring Siudak to plead the defamation claim strictly against at least one plaintiff. Only then would the Divisional Court apply the modern, flexible approach concerning the other plaintiffs.

For Siudak’s civil conspiracy pleading, the Court of Appeal held that this pleading did not duplicate or depend on the defamation claim’s success. The motion judge’s decision applied the Hunt test and correctly decided that, at the early pleadings stage, allowing the action to proceed would not amount to an abuse of process, the appellate court said.

The Court of Appeal found that the Divisional Court took an overly narrow approach to the civil conspiracy pleading. It focused on Hunt’s first scenario, which was that the plaintiffs used the alleged smear campaign as unlawful means to oust Siudak from the board. The Divisional Court failed to determine whether Siudak’s pleadings advanced the “predominant purpose to injure” version of the tort of civil conspiracy stated in Hunt and Canada Cement Lafarge v. B.C. Lightweight Aggregate, [1983] 1 S.C.R. 452, the appellate court added.

The Court of Appeal concluded that the pleadings were not deficient in their particulars and were not an abuse of process. It saw no reason in the circumstances to require Siudak to amend his pleadings, which would only lead to further delay and expenses. The appellate court noted that this case did not involve bad faith or a fishing expedition.

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