McCreight v. Can. (A.G.), 2013 ONCA 483

• Jurisdiction: Ontario
• Judge: Epstein, Pepall and Tulloch, JJ.A.
• Neutral Citation: 2013 ONCA 483
• Citation: 2013 ONCA 483,(2013), 308 O.A.C. 128 (CA),116 OR (3d) 429,308 OAC 128,116 O.R. (3d) 429,308 O.A.C. 128,(2013), 308 OAC 128 (CA)
• Date: 23 January 2013
• Court: Court of Appeal (Ontario)

McCreight v. Can. (A.G.) (2013), 308 O.A.C. 128 (CA)

MLB headnote and full text

Temp. Cite: [2013] O.A.C. TBEd. JL.021

Michael McCreight, Kim McCreight, John Gregory Skinner, Joan Skinner and BDO Dunwoody LLP (plaintiffs/appellants) v. The Attorney General of Canada Representing Her Majesty the Queen in Right of Canada, Canada Revenue Agency, formerly The Canada Customs and Revenue Agency, Henry George Kehl, William Carter a.k.a. Bill Carter, Gregory Mee a.k.a. Greg Mee, Ed Hooft, Anne Kamp, Ian McGuffin, Rod Mercer, Stephane Marinier, Morris Pistyner, Elaine Krivel, Bruck Easton, Stephen Harvey and Damien Frost (defendants/respondents)

(C55540; 2013 ONCA 483)

Indexed As: McCreight et al. v. Canada (Attorney General) et al.

Ontario Court of Appeal

Epstein, Pepall and Tulloch, JJ.A.

July 16, 2013.

Summary:

The plaintiffs were McCreight and Skinner, their wives and the national accounting firm BDO Dunwoody LLP (BDO). In 1998, the audit department of the defendant, Canada Revenue Agency (CRA), conducted an investigation into the use of research and development tax credits by several corporate taxpayers. The CRA's investigation extended to a team of tax advisors at BDO, which included McCreight, a chartered accountant and a BDO partner, and Skinner, a senior R&D consultant and claims preparer at BDO. The CRA's concern was that, with BDO's help, the corporate taxpayers were applying for fraudulent preferential research and development tax credits in the 1996, 1997 and 1998 tax years. Charges under the Income Tax Act and the Criminal Code were first sworn against McCreight and Skinner in 1999. The preliminary inquiry commenced in 2001 and ended in 2005. In 2006, McCreight and Skinner were discharged. Charges against the corporate taxpayers were subsequently stayed on the basis of unreasonable delay (Charter, s. 11(b)). The plaintiffs and their spouses sued the Attorney General of Canada, the CRA and other Crown defendants (auditors and investigators employed by the CRA and prosecutors employed by the Department of Justice and retained prosecutors). They claimed for malicious prosecution, abuse of process and negligence, and brought derivative claims under s. 61 of the Family Law Act. The defendants moved to strike all of the plaintiffs' causes of action, except misfeasance in public office, under Civil Procedure Rule 21.01(1)(b).

The Ontario Superior Court, in a decision reported at [2012] O.T.C. Uned. 1983, granted the motion. The court also denied leave to amend the amended statement of claim. The McCreight and Skinner plaintiffs appealed.

The Ontario Court of Appeal allowed the appeal in part. The court reinstated the claim for abuse of process and set aside paragraph 4 of the order under appeal, insofar as it struck the plaintiffs' claims in negligence against the CRA investigators.

Courts - Topic 561

Judges - Powers - To make order not requested - The plaintiffs claimed against the defendants for malicious prosecution, abuse of process and negligence, and brought derivative claims under s. 61 of the Family Law Act, arising out of stayed prosecutions against some of the plaintiffs under the Income Tax Act and Criminal Code - The defendants moved to strike all of the plaintiffs' causes of action, except misfeasance in public office, under Civil Procedure Rule 21.01(1)(b) - A motion judge allowed the motion - The plaintiffs appealed - The Ontario Court of Appeal allowed the appeal in part - The court stated, inter alia, that "... even though the respondents [defendants] served and filed an extremely detailed notice of motion in support of their motion to strike, they did not seek to strike the claim for abuse of process. In keeping with principles of practice and fairness, they should have done so. I am of the view that in the circumstances, it was inappropriate for the motion judge to strike that claim when such relief was not requested. See paragraphs 47 to 51.

Practice - Topic 1301

Pleadings - General principles - What constitutes a pleading - [See Practice - Topic 2208].

Practice - Topic 2208

Pleadings - Striking out pleadings - Application for - Evidentiary limitations - The plaintiffs claimed against the defendants for malicious prosecution, abuse of process and negligence, and brought derivative claims under s. 61 of the Family Law Act, arising out of stayed prosecutions against some of the plaintiffs under the Income Tax Act and Criminal Code - The defendants moved to strike all of the plaintiffs' causes of action, except misfeasance in public office, under Civil Procedure Rule 21.01(1)(b) - A motion judge allowed the motion - The plaintiffs appealed - The Ontario Court of Appeal stated that "No evidence is admissible on a rule 21.01(1)(b) motion to strike out a pleading on the basis that it discloses no reasonable cause of action. ... Therefore, no evidence is either necessary or permissible on such a motion." - At issue was whether five documents the plaintiffs sought to rely upon, namely a transcript from the criminal proceedings, three court decisions in the criminal proceedings, and the CRA's Tax Operations Manual, were sufficiently pleaded and therefore formed part of the amended statement of claim upon which the motion judge could make his decision - Civil Procedure Rule 25.06(7) provided that: "The effect of a document or the purport of a conversation, if material, shall be pleaded as briefly as possible, but the precise words of the document or conversation need not be pleaded unless those words are themselves material." - The court determined which of the documents formed part of the pleadings, and to what extent - See paragraphs 27 to 38.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - The plaintiffs claimed against the defendants for malicious prosecution, abuse of process and negligence, and brought derivative claims under s. 61 of the Family Law Act, arising out of stayed prosecutions against some of the plaintiffs under the Income Tax Act (ITA) and Criminal Code - The defendants moved to strike all of the plaintiffs' causes of action, except misfeasance in public office, under Civil Procedure Rule 21.01(1)(b) - A motion judge allowed the motion - The plaintiffs appealed - They submitted, inter alia, that the motion judge erred in concluding that the material facts pled in support of the fourth element of the test for malicious prosecution, namely, that the defendants were actuated by malice, were bald and insufficient - The plaintiffs argued that they pleaded as follows: the prosecution was launched for the purpose of retaining documents belonging to them that were otherwise to be returned by statute and a court order; this purpose was improper and therefore malicious - The Ontario Court of Appeal held that the motion judge did not err in dismissing the malicious prosecution claim - Retention of the seized documents was in furtherance of the prosecution, not collateral to it - Although the charges might have been laid in order to retain the documents, the documents were sought to be kept to pursue a prosecution of ITA and Criminal Code offences - Even read generously, a claim of mishandling a prosecution did not amount to a plea of malice - Further, Civil Procedure Rule 25.06(8) required that where malice was alleged, the pleadings had to contain full particulars - The motion judge correctly concluded that the pleading contained merely bald allegations - See paragraphs 41 to 46.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - The plaintiffs claimed against the defendants for malicious prosecution, abuse of process and negligence, and brought derivative claims under s. 61 of the Family Law Act, arising out of stayed prosecutions against some of the plaintiffs under the Income Tax Act (ITA) and Criminal Code - The defendants moved to strike all of the plaintiffs' causes of action, except misfeasance in public office, under Civil Procedure Rule 21.01(1)(b) - A motion judge allowed the motion - The plaintiffs appealed - The Ontario Court of Appeal held, inter alia, that the motion judge erred in striking the negligence claim against the Canada Revenue Agency (CRA) investigators - He erred in concluding that it was plain and obvious that CRA investigators did not owe a duty of care to suspects under investigation - See paragraphs 52 to 63.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - Two plaintiffs claimed against the defendants for malicious prosecution, abuse of process and negligence - Their wives brought derivative claims under s. 61 of the Family Law Act (FLA) - The action arose out of stayed prosecutions against their husbands under the Income Tax Act and Criminal Code - The defendants moved to strike all of the plaintiffs' causes of action, except misfeasance in public office, under Civil Procedure Rule 21.01(1)(b) - A motion judge allowed the motion - The plaintiffs appealed - The Ontario Court of Appeal held, inter alia, that the motion judge did not err in striking the wives' FLA claims - First, in the absence of physical injury, plaintiffs had to establish that they had suffered a recognized psychiatric illness caused by the defendants' negligence - As the wives' damages claims under s. 61 of the FLA were derivative of their husbands' primary claims, such an illness, caused by the defendants' negligence, had to be pleaded in the amended statement of claim in order for those paragraphs not to be struck - Post-traumatic stress was the injury alleged in the plaintiffs' pleading and this did not qualify as a recognized psychiatric illness - While a pleading should be read generously for purposes of a rule 21.01(1)(b) motion, no mention was made of any disorder or syndrome that would constitute a recognized psychiatric illness because the type of injury alleged here, namely, anxiety surrounding involvement in a criminal investigation and prosecution, was not the type of injury contemplated by the FLA - See paragraphs 64 to 71.

Torts - Topic 77

Negligence - Duty of care - Relationship required to raise duty of care - [See second Practice - Topic 2230].

Torts - Topic 6156

Abuse of legal procedure - Malicious prosecution - Malice - What constitutes - [See first Practice - Topic 2230].

Torts - Topic 8141

Derivative actions - By family of person injured or killed - General - [See third Practice - Topic 2230].

Torts - Topic 8703

Duty of care - Particular relationships - Claims for nervous shock and emotional suffering - Psychiatric illness - [See third Practice - Topic 2230].

Cases Noticed:

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

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321, refd to. [para. 17].

Montreal Trust Co. of Canada v. Toronto-Dominion Bank (1992), 40 C.P.C.(3d) 389 (Ont. Gen. Div.), refd to. [para. 28].

Leadbeater v. Ontario et al., [2001] O.T.C. 661; 16 C.P.C.(5th) 119 (Sup. Ct.), refd to. [para. 28].

Bird et al. v. Public Guardian and Trustee (Ont.) et al., [2002] O.T.C. 74 (Sup. Ct.), refd to. [para. 28].

Nash v. Ontario (1995), 27 O.R.(3d) 1 (C.A.), refd to. [para. 29].

Attis et al. v. Canada (Minister of Health) et al. (2008), 254 O.A.C. 91; 93 O.R.(3d) 35; 2008 ONCA 660, refd to. [para. 38].

R. v. Imperial Tobacco Canada Ltd. - see British Columbia v. Imperial Tobacco Canada Ltd. et al.

British Columbia v. Imperial Tobacco Canada Ltd. et al., [2011] 3 S.C.R. 45; 419 N.R. 1; 308 B.C.A.C. 1; 521 W.A.C. 1; 2011 SCC 42, refd to. [para. 39].

Aristocrat Restaurants Ltd. v. Ontario, [2003] O.J. No. 5331 (Sup. Ct.), refd to. [para. 39].

Wellington et al. v. Ontario et al. (2011), 277 O.A.C. 318; 105 O.R.(3d) 81; 2011 ONCA 274, leave to appeal denied (2011), 428 N.R. 394 (S.C.C.), refd to. [para. 39].

Kvello et al. v. Miazga et al. (2009), 395 N.R. 115; 337 Sask.R. 260; 464 W.A.C. 260; 2009 SCC 51, refd to. [para. 43].

Hill et al. v. Hamilton-Wentworth Regional Police Services Board et al., [2007] 3 S.C.R. 129; 368 N.R. 1; 230 O.A.C. 260; 2007 SCC 41, appld. [para. 54].

Neumann v. Canada (Attorney General) et al. (2011), 308 B.C.A.C. 179; 521 W.A.C. 179; 338 D.L.R.(4th) 348; 2011 BCCA 313, leave to appeal denied (2012), 434 N.R. 394 (S.C.C.), refd to. [para. 54].

Leroux v. Canada Revenue Agency (2012), 316 B.C.A.C. 187; 537 W.A.C. 187; 2012 BCCA 63, folld. [para. 54].

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268; 2001 SCC 79, refd to. [para. 57].

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), refd to. [para. 57].

Healey v. Lakeridge Health Corp. et al. (2011), 273 O.A.C. 179; 103 O.R.(3d) 401; 2011 ONCA 55, refd to. [para. 69].

Scott v. Ontario et al., [2002] O.T.C. 832 (Sup. Ct.), affd. [2003] O.A.C. Uned. 373 (C.A.), refd to. [para. 70].

Statutes Noticed:

Family Law Act, R.S.O. 1990, c. F-3, sect. 61(1) [para. 66].

Rules of Civil Procedure (Ont.), rule 25.06(7) [para. 30].

Counsel:

Paul J. Pape and Nicolas M. Rouleau, for the appellants;

Wendy J. Linden and P. Tamara Sugunasiri, for the respondents.

This appeal was heard on January 23, 2013, by Epstein, Pepall and Tulloch, JJ.A., of the Ontario Court of Appeal. Pepall, J.A., delivered the following decision for the court on July 16, 2013.