Dario J

3.68: Court options to deal with significant deficiencies

Case Summary

The Defendants, the Canada Revenue Agency and a number of its Officers, applied to strike the Statement of Claim of the Plaintiff, Grenon. The Action had arisen out of a tax audit and reassessment against Grenon and a number of corporations wholly owned by him. Grenon protested the Defendants’ conduct, including negligence, misfeasance in public office, interference with contractual relations, and breach of fiduciary duty. Justice Dario considered whether the facts alleged in Grenon’s Statement of Claim were sufficient to support the causes of action.

Dario J. reviewed prior leading authority on Applications to strike, and summarized the principles as:

1.  The Court must assume the facts alleged in the Pleading are true, but this assumption does not extend to bald allegations, to legal conclusions or to speculations, absurdities, highly implausible statements or statements incapable of proof.

2.  Making conclusory statements without evidence is an abuse of process and such statements should be struck.

3.  Improper reference to terms such as “maliciously” and “recklessly” also constitutes an abuse of process and such terms should be struck unless they are relevant to the cause of action alleged.

4.  Where a plaintiff’s statement of claim includes contradictory facts that cannot both be true, such contradictory allegations need not be accepted by the Court.

5.  The Court is not obligated to assume that an alleged fact is true where that allegation is contrary to a statutory directive.

Dario J. noted that these principles were non-exhaustive and a Court may consider other bases in rejecting a Plaintiff’s allegations; further, while a Court should not be quick to dismiss novel claims, the entire contents and context of a Pleading must be considered, and a line-by-line analysis may not be appropriate.

Dario J. noted that the test under Rule 3.68 for failing to disclose a reasonable cause of action is whether the Claim has a reasonable prospect of success. Several paragraphs in Grenon’s Statement of Claim were struck because they were found to be a collateral attack on the exclusive jurisdictions of the Tax Court of Canada and Federal Court of Canada, or because they failed to disclose a reasonable cause of action. A number of terms were struck, and some were replaced.

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