Samaroo v. Canada Revenue Agency, 2013 BCSC 482

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Samaroo v. Canada Revenue Agency, 2013 BCSC 482 Date: 20130320 Docket: 12-1154 Registry: Victoria Between: Tony Samaroo and Helen Samaroo Plaintiffs And Canada Revenue Agency, Brian David Jones, Brian D. Jones Law Corporation Defendants Before: The Honourable Mr. Justice R. Punnett Reasons for Judgment (In Chambers) Counsel for the Plaintiffs: S.M. Kelliher C. Funt G. Mather, Articled Student Counsel for the Defendants: D.J. Strachan S.A. Lord K.M. Choy Place and Date of Hearing: Victoria, B.C. January 10, 2013 Place and Date of Judgment: Victoria, B.C.

March 20, 2013 Nature of the Application [ 1 ] The plaintiff husband and wife were acquitted of various charges under the Income Tax Act , R.S.C., 1985, c. 1 and the Excise Tax Act , R.S.C., 1985, c. E-15. This action for malicious prosecution arises as a result. They sue the defendants Brian Jones and his law corporation (“Jones”) in their personal capacities and Canada Revenue Agency (“CRA”) as a corporation liable for the acts of its agent Jones. [ 2 ] The defendants in this application apply for particulars of certain claims advanced in the notice of civil claim.

Law on Particulars [ 3 ] The function of particulars was summarized in Cansulex Ltd. v. Perry , [1982] B.C.J. No. 369 (C.A.) at para. 15 as follows: 15 … (1) to inform the other side of the nature of the case they have to meet as distinguished from the mode in which that case is to be proved; (2) to prevent the other side from being taken by surprise at the trial; (3) to enable the other side to know what evidence they ought to be prepared with and to prepare for trial; (4) to limit the generality of the pleadings; (5) to limit and decide the issues to be tried, and as to which discovery is required, and

(6) to tie the hands of the party so that he cannot without leave go into any matters not included. [ 4 ] After a review of relevant authorities, the court also stated: 11 Those decisions delineate the difference between what is properly the subject matter of a Demand for Particulars and what is more properly the subject matter of a Demand for Discovery or material that should be obtained on an Examination for Discovery.

At the heart of the distinction between the two lies the question whether the material demanded is intended to, and does, delineate the issues between the parties, or whether it requests material relating to the way in which the issues will be proved. [ 5 ] This delineation is of particular relevance to the application before the court. Before considering the particulars sought, the foundation of the claim, that is the tort of malicious prosecution, must be considered. Elements of a Malicious Prosecution Claim [ 6 ] The tort of malicious prosecution requires that the plaintiffs prove the following:

a) they were prosecuted;

b) the prosecution concluded in their favour;

c) there were no objectively reasonable and probable grounds to believe that proof beyond a reasonable doubt could be made out in a court of law; and

d) the prosecution was initiated and/or continued for an improper purpose. ( Maizga v. Kvello Estate , 2009 SCC 51 , paras. 3 ; 53-56) Pleadings and Particulars [ 7 ] The requested particulars relate to allegations that the defendants were motivated by improper purposes and that the defendant Jones was in a conflict. In addition the defendants submit that the pleadings are unclear as to whether Jones is sued in his personal capacity or as an agent of the Crown and as a result seek particulars on that issue as well.

The precise requests and the pleadings to which they relate follow. [ 8 ] The relevant pleadings raising the allegation that the defendants were motivated by improper purposes are: 29. At material times, the CRA counselled, participated, and acquiesced to the initiation and continuation of the Prosecution without objectively reasonable and probable grounds to believe that some or all of the offences alleged in the Information could be properly established beyond a reasonable doubt in a court of law. … 31. In causing the ITOs to be sworn, the CRA was substantially motivated by improper purposes. 32.

At material times in the course of the Prosecution, the CRA was substantially motivated by improper purposes. … 37. At material times, Brian Jones counselled, participated in, and acquiesced to the initiation and continuation of the Prosecution without objectively reasonable and probable grounds to believe that some or all of the offences alleged in the Information could be properly established beyond a reasonable doubt in a court of law. … 38.

At material times in the course of the Prosecution, Brian Jones was substantially motivated by improper purposes. [ 9 ] The defendants’ request for particulars relating to para. 31 is: With respect to paragraph 31, specify what improper purpose is alleged to have motivated the CRA in causing the ITOs to be sworn … [ 10 ] The requested particulars respecting para. 32 are: With respect to paragraph 32, specify what improper purpose is alleged to have motivated the CRA in the course of the Prosecution … [ 11 ] The request for particulars respecting para. 38 states: With respect to paragraph 38, specify the improper purpose alleged to have motivated Brian Jones during the course of the Prosecution … [ 12 ] With respect to the issue of the alleged conflict of interest between Jones’ private interests and his duty to the public the notice of civil claim states:

33. On or before June 12th, 2008, Brian Jones agreed to act as the counsel prosecuting the Samaroos pursuant to an agreement withthe Public Prosecution Service of Canada (the "Retainer"). 34. The full particulars of the Retainer with respect to remuneration, supervision, and performance evaluation are not within theknowledge of the Samaroos. 35.

At material times, the Retainer created substantial conflicts of interest between Brian Jones' private interests and the duty he owedto the public interest in the due enforcement of the law. [13] The requested particulars demanded are: With respect to paragraph 35 specify what private interest of Brian Jones was in conflict with his duty to the public interest in the dueenforcement of the law … [14] The request for particulars respecting the capacity in which Jones is sued is: With respect to the malicious prosecution claim against Brian Jones, specify whether the claim is against Brian Jones in his personalcapacity or as an agent of the Crown … Position of the Defendants [15] The defendants say they seek the particulars demanded in order to enable them to understand and respond to the claim, definethe scope of discovery and refine the issues for determination by the court, both with respect to preliminary applications and at trial.

Position of the Plaintiffs [16] The plaintiffs submit that with respect to the issue of malice they have gone beyond a bare allegation of improper purposesunsupported by the pleading of material facts.

They submit that they have only declined to ascribe a particular motive for the intentionalimproper conduct. [17] With respect to the alleged conflict of interest they submit the pleadings sufficiently particularize the nature of the claim, notingthat further particulars lie within the control and knowledge of the defendants. [18] On the issue of the capacity in which the defendant Jones is being sued, they confirm that the intention was to sue Jones in hispersonal capacity, not as agent of the Crown.

Discussion Improper Purpose [19] While the pleadings refer to “improper purpose”, as stated by Lamer J. in Nelles v. Ontario, (SCC), [1989] 2S.C.R. 170 at 639 “[t]he required element of malice is, for all intents, the equivalent of “improper purpose”. As a result the defendantsrequest for particulars of the alleged improper purpose is a request for particulars of “malice”. [20] Rule 3-7(17) provides:

(17) It is sufficient to allege malice, fraudulent intention, knowledge or other condition of the mind of a person as a fact, withoutsetting out the circumstances from which it is to be inferred. [21] Its predecessor (Rule 19(23)) was considered in Curry v. Vancouver (City) (1996), 62 A.C.W.S. (3d) 45 (B.C.S.C.), by Shaw J.on an application by the defendant to strike the statement of claim for malicious prosecution on the grounds that it disclosed noreasonable claim and failed to plead the elements necessary to support such a claim.

Specifically, that the statement of claim did not setout the conduct which constituted the alleged abuse of the office of the Crown counsel. [22] Shaw J. held that the allegation of malice was sufficient. It was a state of mind and therefore within the application of Rule19(23) (para. 20). He relied on Prete v. Ontario (Attorney-General) (1993), (ON CA), 16 O.R. (3d) 161 (C.A.), asfollows at paras. 17-19: 17 Plaintiff's counsel cites Prete v.

Ontario (1993), (ON CA), 16 O.R. (3d) 161 (C.A.), a claim for damages inwhich the plaintiff alleged that a prosecution was undertaken maliciously, arbitrarily, capriciously and without reasonable grounds andthat the plaintiff's rights under s. 7 of the Canadian Charter of Rights and Freedoms were violated. The defendants (the police, theprosecutors, the Crown and the Attorney-General) moved to strike out the statement of claim on the grounds that: (1) it failed to disclosea reasonable cause of action, and (2) it was an abuse of process. The statement of claim made the following allegations: 18.

The preferral of the direct indictment was made arbitrarily, capriciously and without reasonable and probable grounds andtherefore constituted an abuse of process and an infringement of the plaintiff's rights under

section 7 of the Canadian Charter of Rightsand Freedoms. 19. The subsequent prosecution of the direct indictment was conducted maliciously and without reasonable and probable cause and

therefore also breached the plaintiff's rights under

section 7 of the Charter. 18 By a two to one majority, the Ontario Court of Appeal refused to strike out the action. The majority judgment of Carthy J.A.(McKinlay J.A. concurring) relied upon the Ontario counterpart to Rule 19(23) in British Columbia. Carthy J.A. said at p.170: Do the pleadings disclose a reasonable cause of action? To the extent that the allegations rely on malice, rule 25.06(8) provides that thismay be alleged as a fact without pleading the circumstances from which it is to be inferred.

This means that a court cannot treat this as abald allegation and must assume that there is substance behind the allegation for purposes of testing the pleading. 19 While the third judge, Weiler J.A., dissented on another point, her decision in respect of the pleading of "malice" was insubstantial agreement with the majority.

She said, at p.176: The malice alleged in para. 19 is a question of fact and no particulars need be pleaded. [23] Notwithstanding the fact that Rule 3-7(17) specifically states that particulars of malice are not required the defendants submitan order for particulars is discretionary and the general principles noted earlier should be applied. In addition they submit that Rule 3-7(18) can be relied on to order particulars, as the pleading is tantamount to fraud. [24] Rule 3-7(18) provides:

(18) If the party pleading relies on misrepresentation, fraud, breach of trust, wilful default or undue influence, or if particulars may benecessary, full particulars, with dates and items if applicable, must be stated in the pleading. [25] In saying the pleading of malice or improper purpose is tantamount to fraud the defendants rely on the observation of theBritish Columbia Court of Appeal in Strauss v.

Jarvis, 2007 BCCA 605 at para. 16, that “[m]alice requires proof of a deliberate andimproper use of office which amounts to the perpetration of a fraud on the process of criminal justice”. [26] The Court of Appeal in Strauss also said this: [16] … Allegations of malicious prosecution impugn the character and reputation of each defendant and should not be made lightly.Nonetheless, a plaintiff cannot be expected to plead more facts than those reasonably within his means of knowledge. The respondenthas alleged facts that separate him from any connection to the charges against him.

From those facts an inference sufficient for pleadingpurposes can be drawn that the appellants acted without an honest belief in his guilt and for an ulterior motive. To require the respondentto plead more would place an unfair burden on him having regard to the relative means of knowledge of the respondent and theappellants as to their state of mind. … In British Columbia, Rule 19(23) obviates the requirement to provide particulars of malice.

I amnot persuaded that the test on strike out applications in actions for malicious prosecution should be relaxed to discourage misguidedactions. [27] The defendants specifically rely on para. 20 of Strauss where the court stated: [20] At some stage before trial the appellants may be entitled to particulars of specific allegations against each appellant to refine thefactual issues for trial, but an application for particulars will be premature until the respondent has had the opportunity to exploreindividual involvement through discovery.

I agree with the chambers judge that the respondent has provided a sufficient context to theelements of malicious prosecution to have satisfied the requirement to plead material facts.

Any additional clarification of the pleadingsto assist the appellants in knowing the case they will have to meet at trial should be made through particulars when the respondent hashad sufficient disclosure of the facts within the knowledge of the appellants to reasonably provide those particulars. [28] They further submit that “[t]his distinguishes malicious prosecution claims against the Crown from the type of maliceunderlying Rule 3-7(17) and more closely aligns them with the types of claims referenced in Rule 3-7(18).” [29] This raises two issues.

The first is whether a pleading of malice in a claim against the Crown is a pleading of fraud within themeaning of Rule 3-7(18) and the second is whether Rule 3-7(18) must be read subject to the more specific Rule 3-7(17). In my view theanswers to the respective questions are no and yes. [30] I say this because the specific takes priority over the general but also because the purpose of Rule 3-7(17) is to permit a pleathat is founded in a “condition of the mind of a person as a fact”. That is, the subjective intent of the party is an essential element andnecessarily lies within the knowledge of that person.

I am not satisfied that the role of Jones as ad hoc prosecutor for the Crown changesthe nature of the claim. [31] In Siddon v.

Mair, (B.C.S.C.), a defamation action, the master considered the predecessor rule (19(23)) andstated at para. 54 that: [54] I am satisfied that the issue of malice is not to be determined solely from the four corners of the words mouthed by a defendantand must be considered by an examination of other matters and circumstances. [32] The master determined that the request for particulars of the malice “would unduly limit the plaintiff’s case on a plea of malice”and dismissed the application of the defendant.

Although the suit in that case was quite different, and the request for particulars in thatcase was with respect to certain alleged statements as opposed to the state of mind of the defendants, I find the ruling helpful in that itillustrates that a claim of malice should not be unduly limited at an early stage in the trial. [33] The defendants submit that the court has ordered particulars in cases involving improper conduct. They rely on OlympicInternational Agencies Ltd. v. Clancy, 2011 BCSC 661, where the court applying the principles in Cansulex ordered that particulars beprovided.

In my view Olympic does not assist the defendants as the allegations in Olympic involved breaches of contract and the duty ofconfidentiality as well as breach of obligations and duties owed as a director and officer of the plaintiff. The substance of the plea was a

breach of fiduciary duty. There was no allegation of malice and Rule 3-7(17) did not come into play. As a result I do not accept that particulars were ordered where the improper conduct was an allegation of malice. [ 34 ] While according to Gamble v.

Canada (Attorney General) , 2011 BCCA 488 at para. 39 , it may be arguable that the reasoning in Miazga at para. 52 requires a reconsideration of the required form of pleadings relating to a claim for malicious prosecution until that is decided Strauss remains the law. [ 35 ] It may be that further particulars will be required later in the proceeding (and I make no finding respecting that) however in my view, given the specific wording of Rule 3-7(17) and its rationale, it would not be appropriate at this time to exercise the court’s discretion in favour of the defendants.

As in Siddon to do so would “unduly limit the plaintiffs’ case on a plea of malice. In Strauss at para. 13 the court notes that despite the plaintiff providing some particulars of malice “[t]here is no good reason why a plaintiff who tries to provide some particulars of malice should be deprived of the benefit of Rule 19(23) for pleading purposes”.

The court notes as well that such particulars would be “redundant” to the general plea of malice itself. [ 36 ] Turning to the conflict of interest alleged to exist between the private interests of Jones and his public duty, the defendants submit particulars are required respecting what private interest was in conflict with Jones’ public duty.

They submit particulars are required because on the pleadings they cannot determine whether the conflict arises purely from the fact that Jones was counsel and that conflicted with private interests of contract counsel generally or whether it was a private interest particular to him alone. In their submission that leads to uncertainty respecting what is relevant for discovery. [ 37 ] The plaintiffs note that the defendants have refused to disclose any document discovery respecting the retainer.

The terms of the retainer are therefore solely in the control of the defendants hence the plaintiffs say they cannot provide particulars. Additionally they say that the pleadings are sufficient as they alert the defendants to the plaintiffs’ claim arising from Jones having a financial stake in the case because his accounts and their payment are within the decision making powers of the CRA.

They have in their responses to the defendants’ demands for particulars made clear that the private interests are the personal financial interests of the defendant Jones. [ 38 ] The plaintiffs’ pleadings allege that Jones’ private interests conflict with his public duty. The plaintiffs in their response to the demand for particulars state that it is the financial interests of Jones and the retainer that is alleged to conflict with his public duty.

Given the information concerning such matters lies within the control of the defendant Jones it is difficult to see how the plaintiffs’ could provide further particulars. As a result further particulars of his “private interests” are not required. [ 39 ] It would be unfair to require particulars at this time either with respect to the issue of malice or the issue of a conflict of interest given both issues are within the knowledge of the defendants, not the plaintiffs. Any attempt to provide particulars would of necessity be based on speculation or suspicion.

As such they would not be true particulars as they would not be material facts. Rather the requests relate not to the delineation of issues but instead seek “material relating to the way in which the issues will be proved”. ( Cansulex at para. 11). [ 40 ] Finally, with respect to the capacity in which the defendants are sued the plaintiffs have made clear that they are pursuing the defendants in their personal and corporate capacities, not as agents of the crown.

Although this appears clear from the pleadings the plaintiffs have now confirmed that to be the case. [ 41 ] The application of the defendants is dismissed with costs to the plaintiffs. “Punnett J.”