Andersen Consulting v. Canada (Attorney General), 107 ACWS (3d) 759

• Judge: Carthy, Doherty and Moldaver, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: June 22, 2001
• Jurisdiction: Ontario
• Citations: 107 ACWS (3d) 759;150 OAC 177;[2001] CarswellOnt 3139;13 CPC (5th) 251;[2001] OJ No 3576 (QL);2001 CanLII 8587 (ON CA);(2001), 150 O.A.C. 177 (CA)

Andersen Consulting v. Can. (A.G.) (2001), 150 O.A.C. 177 (CA)

MLB headnote and full text

Temp. Cite: [2001] O.A.C. TBEd. SE.010

Andersen Consulting (respondent/plaintiff) v. Attorney General of Canada (appellant/defendant)

(C35583)

Indexed As: Andersen Consulting v. Canada (Attorney General)

Ontario Court of Appeal

Carthy, Doherty and Moldaver, JJ.A.

September 10, 2001.

Summary:

The Crown terminated a contract with Andersen Consulting of Canada (ACC). ACC sued the Crown for damages for wrongful termination. The Crown filed a statement of defence and counterclaimed for damages arising from ACC's failure to perform the contract. The Crown subsequently moved to amend its statement of defence and counterclaim to plead fraudulent and/or negligent misrepresentation, professional negligence and conspiracy against ACC and to add Andersen Consulting of the United States and Andersen International as defendants by counterclaim and assert claims against them for negligence and conspiracy.

The Ontario Superior Court, in a decision reported at [2000] O.T.C. 958, dismissed the motion. The Crown appealed.

The Ontario Court of Appeal allowed the appeal and granted the Crown leave to file the proposed amended statement of defence and counterclaim.

Actions - Topic 1625

Cause of action - Torts - Tort v. contractual cause of action - [See both Contracts - Topic 4005 ].

Contracts - Topic 2116

Terms - Express terms - "Entire agreement" or "four corners" clause - [See second Contracts - Topic 4005 ].

Contracts - Topic 4005

Remedies for breach - Negligent breach - Availability of tort action - The Ontario Court of Appeal discussed the application of the rule against concurrent actions in circumstances where one party sought to invoke the rule to either strike out a particular pleading or to resist an application by the other side to amend its pleadings - The court stated that in such circumstances, the rule should be applied sparingly and only in the clearest of cases - See paragraph 16.

Contracts - Topic 4005

Remedies for breach - Negligent breach - Availability of tort action - The Crown terminated a contract with Andersen Consulting of Canada (ACC) - ACC sued for wrongful termination - The Crown counterclaimed for damages for ACC's failure to perform the contract - The Crown later moved to amend its statement of defence and counterclaim to plead fraudulent and/or negligent misrepresentation and professional negligence against ACC and to add Andersen Consulting of the United States (ACUS) and Andersen International (AI) as defendants by counterclaim and assert a products liability claim against them - The motions judge refused to allow the amendments on the basis that the proposed tort claims were precluded by the contract which included an "entire agreement" clause in s. 36 - The motions judge also held that as the Crown was aware that ACUS and AI would be performing duties for ACC, they were afforded the same contractual exemption from tort claims - The Ontario Court of Appeal held that the motions judge erred - The contract did not shield ACC from the tort claims and, even if it did, that would not assist ACUS or AI - See paragraphs 15 to 24.

Practice - Topic 2101

Pleadings - Amendment of pleadings - General principles - A defendant moved to amend its statement of defence and counterclaim to add additional causes of action and defendants by counterclaim - A motions judge refused the amendments - In doing so, he expressed concern about the length and complexity of trials in general and the impact that the proposed amendments would have on the length and complexity of this trial - He also stated that "in this type of case the court is required to closely scrutinize the request and refuse it, except perhaps if some unusual factual scenario might dictate otherwise" - The Ontario Court of Appeal held that the concerns raised by the motions judge could not be used to emasculate the well-established rule that amendments like those sought in this case should be presumptively approved unless they would occasion prejudice that could not be compensated by costs or an adjournment; they were shown to be scandalous, frivolous, vexatious or an abuse of the court's process; or they disclosed no reasonable cause of action - See paragraphs 36 to 38.

Practice - Topic 2110

Pleadings - Amendment of pleadings - Adding new cause of action - [See Practice - Topic 2101 ].

Practice - Topic 2142

Pleadings - Amendment of pleadings - Considerations governing granting of leave - [See Practice - Topic 2101 ].

Torts - Topic 80

Negligence - Duty of care - Concurrent liability - [See both Contracts - Topic 4005 ].

Torts - Topic 5702

Conspiracy - Pleadings - The Crown terminated its contract with Andersen Consulting of Canada (ACC) - ACC sued for wrongful termination - The Crown counterclaimed for damages for ACC's failure to perform the contract - The Crown later moved to amend its statement of defence and counterclaim to plead conspiracy against ACC and to add Andersen Consulting of the United States (ACUS) and Andersen International (AI) as defendants by counterclaim and assert a claim of conspiracy against them - A motions judge refused to allow the "conspiracy" amendments because they were not sufficiently independent of the breach of contract claim to stand on their own - Rather, he viewed them as being "so entwined in the alleged breach of contract" pleadings that the two causes of action merged - The Ontario Court of Appeal held that the motions judge misapplied the doctrine of merger - The facts pleaded in support of the conspiracy claims were different from the facts pleaded for the breach of contract claim - The fact that there might be some overlap, or that the allegations related to the same contract, was of no moment - See paragraphs 25 to 32.

Torts - Topic 5702

Conspiracy - Pleadings - The Crown terminated its contract with Andersen Consulting of Canada (ACC) - ACC sued for wrongful termination - The Crown counterclaimed for damages for ACC's failure to perform the contract - The Crown later moved to amend its statement of defence and counterclaim to plead conspiracy against ACC and to add Andersen Consulting of the United States (ACUS) and Andersen International (AI) as defendants by counterclaim and assert a claim of conspiracy against them - A motions judge refused to allow the amendments - The Ontario Court of Appeal held that the motions judge erred in rejecting the conspiracy claims based on his conclusion that the amended pleadings failed to establish a sufficient separate interest on the part of AI and ACUS from that of ACC - The fact that certain employees from AI and ACUS might have performed work for ACC did not foreclose the possibility that those individuals might have acted on behalf of their corporate employers in furtherance of the alleged conspiracy - The pleadings specified a separate motive for the respective conspirators and it was not for the motions judge to weigh that evidence - See paragraphs 33 to 34.

Cases Noticed:

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109; 37 C.C.L.T. 117; 31 D.L.R.(4th) 481, refd to. [para. 15].

BG Checo International Ltd. v. British Columbia Hydro & Power Authority, [1993] 1 S.C.R. 12; 147 N.R. 81; 20 B.C.A.C. 241; 35 W.A.C. 241, refd to. [para. 15].

Grossman et al. v. Woolf (1990), 40 O.A.C. 154; 44 C.P.C.(2d) 288 (Div. Ct.), refd to. [para. 20].

Hayward and Govier v. Mellick and Mellick (1984), 2 O.A.C. 161; 45 O.R.(2d) 110 (C.A.), refd to. [para. 21].

Normart Management Ltd. v. West Hill Redevelopment Co. et al. (1998), 113 O.A.C. 375; 37 O.R.(3d) 97 (C.A.), refd to. [para. 26].

Berry et al. v. Pulley et al. (2000), 131 O.A.C. 337; 48 O.R.(3d) 169 (C.A.), refd to. [para. 32].

Operation Dismantle Inc. et al. v. Canada et al., [1985] 1 S.C.R. 441; 59 N.R. 1; 13 C.R.R. 287; 18 D.L.R.(4th) 481; 12 Admin. L.R. 16, refd to. [para. 34].

Prete v. Ontario et al. (1993), 68 O.A.C. 1; 16 O.R.(3d) 161 (C.A.), leave to appeal refused (1994), 175 N.R. 322; 72 O.A.C. 160; 17 O.R.(3d) xvi (S.C.C.), refd to. [para. 34].

Atlantic Steel Industries Inc. v. CIGNA Insurance Co. of Canada (1997), 31 O.T.C. 184; 33 O.R.(3d) 12 (Gen. Div.), refd to. [para. 37].

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321, refd to. [para. 37].

Hunt v. Carey Canada Inc. - see Hunt v. T & N plc et al.

Counsel:

Dana B. Fuller and Alan B. Merskey, for the appellant;

Thomas G. Heintzman, Q.C. and M. Philip Tunley, for Andersen Consulting Canada and Andersen Consulting U.S.;

Barry A. Leon and Peter Balasubramanian, for Andersen Worldwide, S.C.

This appeal was heard on June 22, 2001, before Carthy, Doherty and Moldaver, JJ.A., of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by Moldaver, J.A., and was released on September 10, 2001.