MacDonald v. Deutsche Bank AG, 2016 NSSC 284

SUPREME COURT OF Nova Scotia Citation: MacDonald v. Deutsche Bank AG , 2016 NSSC 284 Date: 2016-10-26 Docket: HFX442818 Registry: Halifax Between: Richard Hugh MacDonald Plaintiff v. Deutsche Bank AG, Canada Branch and Deutsche Bank AG Defendants Library Heading Judge: The Honourable Justice Suzanne Hood Heard: September 28, 2016, in Halifax, Nova Scotia Written Decision: October 26, 2016 Subject:

Summary judgment on pleadings; Breach of contract; Interference with business relations; Malicious prosecution

Summary: The defendants Deutsche Bank AG, Canada Branch and Deutsche Bank AG (“Deutsche Bank”) seek

summary judgment on the pleadings Issues: Should

summary judgment be granted? Result:

Summary judgment granted; proceeding dismissed THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET. SUPREME COURT OF Nova Scotia Citation: MacDonald v. Deutsche Bank AG , 2016 NSSC 284 Date: 2016-10-26 Docket: HFX442818 Registry: Halifax Between: Richard Hugh MacDonald Plaintiff v.

Deutsche Bank AG, Canada Branch and Deutsche Bank AG Defendants Decision Judge: The Honourable Justice Suzanne Hood Heard: September 28, 2016, in Halifax, Nova Scotia Counsel: Ian M.P. Gray and Dale Dunlop, for the Plaintiff John Fabello, Jeremy Opolsky, and Penny Harding, for the Defendants By the Court: [ 1 ] The defendants Deutsche Bank AG, Canada Branch and Deutsche Bank AG (“Deutsche Bank”) seek

summary judgment on the pleadings. Issue [ 2 ] Should

summary judgement be granted? Facts [ 3 ] In

summary the plaintiff alleges the actions of Deutsche Bank lead to the downfall of TIM Systems Inc. (“Systems”) and those actions caused personal losses to him. He alleges Deutsche Bank deliberately destroyed Systems. He brings a personal action against Deutsche Bank. On a motion for

summary judgment on the pleadings, I am to assume the facts set out in the statement of claim can be proven. They are set out in

summary in the following paragraphs. [ 4 ] The plaintiff incorporated Systems in 1987. It was in the business of designing and selling software, primarily for automotive dealer management. Systems had financing from the Province of Nova Scotia, one term of which was that the Province could replace the plaintiff as CEO if the Province believed that he was acting in a manner inconsistent with their agreement. [ 5 ] In 1991 Russell Pynn approached the plaintiff and proposed he incorporate a company to arrange transactional sales financing for Systems products.

The plaintiff agreed and TIM Finance Inc. (“TIM Finance”) was incorporated. The two companies were not interrelated and the plaintiff had no involvement with TIM Finance. TIM Finance borrowed money from Deutsche Bank. Systems guaranteed the loan, one condition of which was that there would be regular audits conducted by the bank. The plaintiff was not a guarantor of the loan nor was he a party to the loan. [ 6 ] Audits were done by Deutsche Bank of TIM Finance’s financial records and, in 2001, irregularities were found. TIM Finance was engaged in fraudulent loans.

Deutsche Bank said the total fraud was approximately 20 million dollars. The loan was called and Systems responded to its guarantee. [ 7 ] Subsequently Systems and Deutsche Bank entered into a forbearance agreement to enable Systems time to raise the funds needed while continuing in operation. Systems made deals with potential investors, EDS and later Siebel, but those deals fell through. The plaintiff claims that was because of interference by Deutsche Bank which was in breach of the forbearance agreement.

The plaintiff says that during this time Deutsche Bank interfered in those deals to save face in its sale to GE Commercial Finance for 2.9 billion dollars. As a result of the interference Systems did not have enough money to pay off the guarantee. [ 8 ] Subsequently Deutsche Bank interfered in Systems financing with the province by convincing the Province to replace the plaintiff as CEO.

Thereafter Deutsche Bank sold Systems source code for $750,000 not 15 million dollars which was the price in the previous option deal Systems had with Ford Canada. [ 9 ] Deutsche Bank provided wrong information to the Canada Revenue Agency claiming the plaintiff was involved in TIM Finance’s fraudulent schemes. It subsequently provided improper information to the RCMP which led to the plaintiff being charged in 2010.

Both the CRA and RCMP investigated and ultimately the charges were permanently stayed in 2014. [ 10 ] As part of the disclosure to him in the criminal proceedings, the plaintiff learned of Deutsche Bank’s role in the collapse of Systems. In the interim Systems had been struck off the register and was non-operating.

[11] The plaintiff alleges that these actions of Deutsche Bank caused loss to him personally. He says the losses were as a result ofdeliberate actions by Deutsche Bank. He says Deutsche Bank should have found the fraud earlier in its audits of TIM Finance’s businessrecords. The plaintiff said there were breaches of good faith and Deutsche Bank breached the forbearance agreement.

He claimsDeutsche Bank’s behaviour constituted the tort of interference with business relations. [12] The plaintiff also says that Deutsche Bank knew or ought to have known about the fraudulent actions of TIM Finance andallowed them to continue. He says Deutsche Bank deliberately destroyed Systems. [13] The plaintiff seeks damages for breach of contract and in tort; for loss of a value of his businesses; and malicious prosecution asa result of the information provided to CRA and the RCMP.

He also seeks punitive damages. [14] Deutsche Bank says the key facts are that the plaintiff’s only role was as a shareholder and he had no legal relationship withanyone else including Deutsche Bank. Deutsche Bank says the sole effect of any actions by Deutsche Bank was on Systems and theplaintiff’s claim is derivative. [15] The plaintiff has not taken steps to have Systems restored to the register pursuant to the Companies Act. If he did so he wouldstill have to get court approval for a derivative action.

Summary Judgment on Pleadings [16] Civil Procedure Rule 13.03 provides:

Summary judgment on pleadings 13.03

(1) A judge must set aside a statement of claim, or a statement of defence, that is deficient in any of the following ways: (

a) it discloses no cause of action or basis for a defence or contest; (

b) it makes a claim based on a cause of action in the exclusive jurisdiction of another court or tribunal; (

c) it otherwise makes a claim, or sets up a defence or ground of contest, that is clearly unsustainable when the pleading is read on itsown.

(2) The judge must grant

summary judgment of one of the following kinds, when a pleading is set aside in the following circumstances: (

a) judgment for the party making a claim, when the statement of defence is set aside wholly; (

b) dismissal of the proceeding, when the statement of claim is set aside wholly; (

c) allowance of a claim, when all parts of the statement of defence pertaining to the claim are set aside; (

d) dismissal of a claim, when all parts of the statement of claim that pertain to the claim are set aside.

(3) A motion for

summary judgment on the pleadings must be determined only on the pleadings, and no affidavit may be filed in supportof or opposition to the motion.

(4) A judge who hears a motion for

summary judgment on pleadings may adjourn the motion until after the judge hears a motion for anamendment to the pleadings.

(5) A judge who hears a motion for

summary judgment on pleadings, and who is satisfied on both of the following, may determine aquestion of law: (

a) the allegations of material fact in the pleadings sought to be set aside provide, if assumed to be true, the entire facts necessary for thedetermination; (

b) the outcome of the motion depends entirely on the answer to the question. [17] The court must set aside a claim or a proceeding which is “clearly unsustainable” or “discloses no cause of action”. [18] In Cormier v. Nova Scotia, 2015 NSSC 352, Chipman J. quoted from Bank of Montreal v. Ross, 2011 NSSC 359, whereLeBlanc J. said at para 27: [27] The test on a motion to strike remains the same under the new Rules (Body Shop Canada Ltd. v. Dawn Carson Enterprises Ltd.,2010 NSSC 25).

The test is whether assuming that the facts as stated in the Statement of Defence can be proven, is it "plain and obvious"that the defendants' Defence and Counterclaim is "certain to fail" or "absolutely unsustainable" (Hunt v. Carey Canada Inc., (SCC), [1990] 2 SCR 959; Cape Breton (Regional Municipality) v. Nova Scotia (Attorney General), 2009 NSCA 44). [19] In undertaking the inquiry the court proceeds on the basis that the facts pleaded are true. Therefore the facts referred to above,from the statement of claim, are taken to be true. The test was set out in Knight v.

Imperial Tobacco Canada Ltd., 2011 SCC 42,where McLachlin C.J.C. said at paragraph 22: A motion to strike for failure to disclose a reasonable cause of action proceeds on the basis that the facts pleaded are true, unless they aremanifestly incapable of being proven… She continued in paragraph 25:

…The question is whether, considered in the context of the law and the litigation process, the claim has no reasonable chance ofsucceeding. [20] The Nova Scotia Court of Appeal in Cragg v. Eisener, 2012 NSCA 101, said in paragraph 9, the test for

summary judgment onpleadings is taken from language in the jurisprudence involving motions to strike pleadings. Saunder J.A. continued in that paragraph: [9] …The "test" is drawn from language found in the jurisprudence involving motions to strike out pleadings.

In other words, to grantsummary judgment on the pleadings, the judge must be satisfied that the claim (or defence, as the case may be) "is certain to fail" or "isabsolutely unsustainable" or "discloses no cause of action or basis for a defence"… [21] Deutsche Bank says there are five causes of action pleaded and the plaintiff has not pleaded the constituent elements of each.They say in their notice of motion: a. Breach of Contract: A claim for breach of contract requires privity of contract between the two parties. The plaintiff has failed toallege that he was in privity of contract with Deutsche Bank. b.

Inducing Breach of Contract: A claim for inducing breach of contract requires, among other things, that that there was a validcontract between the plaintiff and third party and that the defendant’s conduct knowingly caused it the third party to breach the contract.The plaintiff has failed to plead that there was a valid contract that either defendant knowingly caused the third party to breach. c.

Interference with Business Relations: The tort of unlawful interference with business relations requires that a defendant committedan unlawful act against a third party and, through this action, a defendant intentionally caused economic harm to the plaintiff. Theplaintiff has failed to allege that Deutsche Bank committed an unlawful act against a relevant third party. d. Malicious Prosecution: The tort of malicious prosecution requires, among other elements, that the prosecution was initiated by adefendant and that the defendant was motivated by malice.

The plaintiff has failed to adequately plead that Deutsche Bank initiated theprosecution or was motivated by malice in doing so. e. Negligence: The tort of negligence requires, among other elements, that the defendants owed a duty of care to the plaintiff. Theplaintiff has failed to plead the elements of an action for negligence, including that Deutsche Bank owed a duty of care to him. [22] The plaintiff has agreed that (e), the claim for negligence, is statute barred. The plaintiff, in his written submissions, refers tobreach of contract, interference with business relations and malicious prosecution.

He does not refer in his statement of claim or writtensubmissions to a cause of action for inducing breach of contract, (

b) above. I therefore move on to consider the other three causes ofaction. Breach of Contract [23] Although there are four possible contracts in this case, the plaintiff says the only one which is in issue is the forbearancecontract. The plaintiff alleges Deutsche Bank breached that contract. [24] Privity of contract is a fundamental principle of contract law. In his text on contract law, The Law of Contracts, Second Edition,(Toronto: Irwin Law (2012)), Professor John D. McCamus refers to Dunlop Pneumatic Tyre Company Limited v. Selfridge andCompany Limited, [1915] A. C. 847 (H.L.).

Viscount Haldane, L.C. said at page 853: My Lords, in the law of England certain principles are fundamental. One is that only a person who is a party to a contract can sue on it… [25] The plaintiff was not a party to the forbearance contract. The agreement arose after Deutsche Bank called the TIM Finance loanwhich Systems had guaranteed. The plaintiff was not a party to the guarantee and the loan itself was between TIM Finance and DeutscheBank.

The plaintiff had no involvement with TIM Finance. [26] There is therefore no privity of contract between the plaintiff and Deutsche Bank with respect to the forbearance agreement. Theonly party which can bring an action for damages suffered by a corporation is the corporation itself. The effect of the rule in Foss v.Harbottle, (1843), 67 All E.R. 189, is that an individual shareholder has no separate cause of action for wrongs suffered by thecorporation. As La Forest J. said in paragraph 59 of Hercules Management Ltd. v. Ernst & Young, (SCC), [1997] 2SCR 165: [59] The rule in Foss v.

Harbottle provides that individual shareholders have no cause of action in law for any wrongs done to thecorporation and that if an action is to be brought in respect of such losses, it must be brought either by the corporation itself (throughmanagement) or by way of a derivative action. The legal rationale behind the rule was eloquently set out by the English Court of Appealin Prudential Assurance Co. v. Newman Industries Ltd., [1982] 1 All E.R. 354 (Eng. C.A.), at p. 367, as follows: The rule [in Foss v. Harbottle] is the consequence of the fact that a corporation is a separate legal entity.

Other consequences are limitedliability and limited rights. The company is liable for its contracts and torts; the shareholder has no such liability. The company acquirescauses of action for breaches of contract and for torts which damage the company. No cause of action vests in the shareholder. When theshareholder acquires a share he accepts the fact that the value of his investment follows the fortunes of the company… [27] La Forest J. continued in paragraph 62 to consider derivative claims as distinguished from personal actions. He said:

[62] … In finding that claims in respect of losses stemming from an alleged inability to oversee or supervise management are really derivative and not personal in nature, I have found only that shareholders cannot raise individual claims in respect of a wrong done to the corporation . Indeed, this is the limit of the rule of Foss v. Harbottle .

Where, however, a separate and distinct claim (say, in tort) can be raised with respect to a wrong done to a shareholder qua individual, a personal action may well lie, assuming that all the requisite elements of a cause of action can be made out. [ 28 ] It is only where all the elements of a personal cause of action are made out that an individual shareholder can commence action. There being no privity of contract between the plaintiff and Deutsche Bank no such action in breach of contract lies. [ 29 ] Nor has the plaintiff taken the necessary steps to bring a derivative action.

He submits that the court has the authority to order that Systems “be restored to the register and that this action continue as a derivative action” (paragraph 10, Plaintiff’s brief). The Companies Act R.S. 1989, c. 81, provides for removal of a company from the register (Section 136(1)). There is also provision for an aggrieved person to apply to the registrar for restoration of the company name to the register.

Section 136(4) provides in such a case “… the Registrar, where satisfied that the company was, at the time of the striking off, carrying on business or in operation…shall restore the name of the company on the register…”. Subsection (4C) provides for review of the Registrar’s decision by the court within thirty days of the Registrar’s decision. [ 30 ] There is no evidence before me that an application was made to the Registrar or that Systems was in fact carrying on business or operating at the time it was struck off the register.

The only role for the court in restoring the company name on the register is that set out above for dealing with a review of the Registrar’s decision. [ 31 ] The Third

Schedule to the Companies Act deals with derivative actions in

Section 4. It provides: 4

(1) Subject to subsection (2) of this Section, a complainant may apply to the court for leave to bring an action in the name and on behalf of the company or any of its subsidiaries, or intervene in an action to which any such body corporate is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the body corporate.

(2) No action may be brought and no intervention in an action may be made under subsection (1) of this

Section unless the court is satisfied that (

a) the complainant has given reasonable notice to the directors of the company or its subsidiary of his intention to apply to the court under subsection (1) of this

Section if the directors of the company or its subsidiary do not bring, diligently prosecute or defend or discontinue the action; (

b) the complainant is acting in good faith; and (

c) it appears to be in the interests of the company or its subsidiary that the action be brought, prosecuted, defended or discontinued. [ 32 ] It is clear the court has no authority to act pursuant to

Section 4 where there is no operating company. No case authority was provided by the plaintiff that the court can order Systems restored on the register. I conclude I have no such authority. [ 33 ] I conclude the contractual claims made by the plaintiff cannot succeed. They are clearly unsustainable and disclose no cause of action between the plaintiff and Deutsche Bank. Interference with Business Relations [ 34 ] The test for a claim of the tort of interference with business or economic relations is set out in A.I. Enterprises Limited v. Bram Enterprises Limited , 2014 SCC 12 .

In that decision Cromwell JA. said at paragraph 23: [23] The unlawful means tort creates a type of "parasitic" liability in a three-party situation: it allows a plaintiff to sue a defendant for economic loss resulting from the defendant's unlawful act against a third party. Liability to the plaintiff is based on (or parasitic upon) the defendant's unlawful act against the third party.

While the elements of the tort have been described in a number of ways, its core captures the intentional infliction of economic injury on C (the plaintiff) by A (the defendant)'s use of unlawful means against B (the third party)… [ 35 ] The plaintiff must show he incurred an economic loss, personally, not as a shareholder, because of Deutsche Bank’s unlawful act against a third party. The plaintiff says Deutsche Bank convinced the province to replace him as CEO of Systems and then sold its source code to Ford Canada “for a fraction of its value” (paragraph 11 of the plaintiff’s written submissions).

He says this was an actionable wrong to Systems. [ 36 ] It was Systems that suffered any economic loss not the plaintiff personally. The plaintiff did not allege any economic loss other than to say in this written submissions at paragraph 12: That this was aimed at harming MacDonald seems equally clear from the pleadings.

The goal of the Bank’s action was to remove MacDonald so as to allow the conclusion of a business agreement that no person acting in either TIM Systems’ or MacDonald’s interests would have completed… He did not elaborate on economic harm to himself from these actions but refers only to the fact that the agreement was not in his “interests”. [ 37 ] He concludes by reiterating that it may be necessary to allow a derivative action. I have dealt with that submission above. [ 38 ] In this case the plaintiff claims that Deutsche Bank caused harm to Systems.

No harm to the plaintiff personally is pleaded nor is there any pleading of Deutsche Bank’s intent to harm the plaintiff personally. Instead the pleadings allege that Deutsche Bank

deliberately destroyed Systems. The intent of Deutsche Bank which is pleaded is its intent to avoid embarrassment. Furthermore there is no pleading of an actionable wrong to any other third party. The plaintiff pleads that Deutsche Bank interfered with Systems’ potential sale of shares to two potential purchasers.

No actionable wrong against those third parties is alleged. [ 39 ] In this context, the plaintiff also argues that Deutsche Bank acted in bad faith in performing its duties under the forbearance agreement. [ 40 ] In Bhasin v Hrynew , 2014 SCC 71 , Crownwell J. referred to “a general duty of honesty in contractual performance” (paragraph 73). However in this case, the plaintiff was not a party to the forbearance agreement.

He therefore cannot claim against Deutsche Bank that it breached that agreement including alleged breaches of good faith in the performance of the contract between Systems and Deutsche Bank. [ 41 ] Accordingly neither part of the two part test for interference with business relations is made out. The claim by the plaintiff personally is therefore clearly unsustainable. It is certain to fail. Malicious Prosecution [ 42 ] Before I can grant

summary judgment on the pleadings under this heading I must be satisfied the claim is clearly unsustainable. Based upon the facts pleaded I conclude that is the case. [ 43 ] The relevant time period to consider is the time when the charges were laid. That is when the prosecution of the plaintiff commenced. [ 44 ] The plaintiff says he has a claim against Deutsche Bank for malicious prosecution.

His allegations are contained in paragraph 25 of the statement of claim: In the course of the ensuing RCMP investigation of MacDonald, Deutsche Bank representatives provided the RCMP with documentation that was not original and in many cases was incomplete, reconstructed or outright falsified… [ 45 ] He says as a result of Deutsche Bank’s representations he “was charged with a variety of criminal offences in January of 2010” (paragraph 26), but those charges were permanently stayed in September 2014. [ 46 ] There is a four part test for malicious prosecution. It was set out by Charron J. in Kvello v.

Miazga , 2009 SCC 51 , as follows: [3] To succeed in an action for malicious prosecution, a plaintiff must prove that the prosecution was: (1) initiated by the defendant; (2) terminated in favour of the plaintiff; (3) undertaken without reasonable and probable cause; and (4) motivated by malice or a primary purpose other than that of carrying the law into effect. [ 47 ] In this case the factors which are in issue are whether Deutsche Bank initiated the prosecution and if so, whether it did so with malice or an intent other than to carry the law into effect. a.

Initiation of Prosecution [ 48 ] Ordinarily criminal charges are initiated by a police officer or a crown prosecutor. That was the case in Kvello . [ 49 ] In an exceptional case, a court could conclude that a private entity initiated the prosecution. The factors to be considered in coming to that conclusion were set out in Cave v. Bambury , 2012 NSSC 129 , where Scaravelli J. quoted from St. Jacques v. Doyle , [2008] CanLII 9381 (ONSCDC), which in turn referred to Kefeli v. Centennial College of Applied Arts and Technology , [2002] O.J. No. 3023 (ONCA) . In St.

Jacques the court said at paragraph 16 (quoted at paragraph 38 of Cave ): [16] Only in exceptional circumstances will a private citizen or complainant be found to have initiated a prosecution for purposes of an action in malicious prosecution. The Ontario Court of Appeal has identified the following as indicia of such exceptional circumstances: (

a) the complainant desired and intended that the plaintiff be prosecuted; (

b) the facts were so peculiarly within the complainant's knowledge that it was virtually impossible for the professional prosecutor to exercise any independent discretion or judgment; and (

c) the complainant procured the institution of proceedings by the professional prosecutor, either by furnishing information that he knew to be false, or by withholding information that he knew to be true, or both. [ 50 ] Overall the plaintiff must prove Deutsche Bank’s role was a more active one than providing information which led to a charge being laid. In many criminal matters the complainant is someone other then a police officer. Unless exceptional circumstances exist, that complainant would not be seen to have initiated the prosecution.

As Scaravelli J. said in Cave at paragraph 38 : The onus is on the plaintiff to prove all of the elements of malicious prosecution. In order to prove the first element of the test, the plaintiff must prove the defendants played an active role in the decision to prosecute beyond supplying information… [ 51 ] I will consider the three indicia in turn. i. Desire and Intent to have the Plaintiff Prosecuted [ 52 ] There is no pleading that Deutsche Bank “desired and intended” the plaintiff be prosecuted. However, the statement of claim in

paragraphs 24 and 25 refers to false claims to the Canada Revenue Agency and “incomplete, reconstructed or outright falsified”documentation provided to the RCMP. [53] The House of Lords judgment in Martin v. Watson, [1996] A.C. 74, at pages 567-68, was cited by Sharpe J. (as he then was) inWood v.

Kennedy, (Ont SC) at paragraph 51, where the House of Lords said: … Where an individual falsely and maliciously gives a police officer information indicating that some person is guilty of a criminaloffence and states that he is willing to give evidence in court of the matters in question, it is properly to be inferred that he desires andintends that the person he names should be prosecuted… That passage was repeated in McNeil v.

Brewers Retail Inc., 2008 ONCA 405, at paragraph 47. [54] In the circumstances of this case, based upon the pleadings being true, it is possible a court could conclude from theseallegations that the requisite intent by Deutsche Bank has been made out. Providing false or incomplete information to the RCMP couldbe considered to show a desire and intent by Deutsche Bank that the plaintiff be prosecuted. ii.

Facts “Peculiarly” within Deutsche Bank’s knowledge so as to prevent the prosecutor from exercising independent discretion orjudgment [55] The issue here is whether Deutsche Bank had information in its control which was only in part or in a falsified form turned overto the police and/or the prosecution. [56] In D’Addario v. Smith, 2015 ONSC 6652, Beaudoin J. referred to Pate Estate v. Galway-Cavendish and Harvey(Township), 2013 ONCA 669, in paragraph 19. In that case Lauwers JA. (in dissent on the issue of punitive damages only) dealt withthe test for initiation of prosecution.

In paragraph 32 he quoted four elements required in that case to determine the issue of maliciousprosecution. The court said in paragraph 32 (referring to the decision on the First Appeal (2011 ONCA 329)): [32] Simmons J.A. identified four elements that are required in this case to determine malicious prosecution: (1) whether Mr. Beaven"knowingly withheld exculpatory information from the police"; if so, (2) "whether the conduct of Mr. Beaven undermined theindependence of the police investigation"; (3) "whether Mr.

Beaven prepared his statements in a manner that misled the officers into notconducting their own search of the relevant records"; and (4) whether Mr. Beaven undermined "the independence of the decision-makingprocess... [57] Although it is not specifically pleaded that some of the “incomplete” information was exculpatory, it is noteworthy that thecriminal charges were permanently stayed in 2014. The statement of claim alleges the conduct of Deutsche Bank led to the chargesbeing laid. The information being provided by Deutsche Bank is said to be not only incomplete but “falsified” or “reconstructed”.

In thecircumstances of bank loans, the party with the best knowledge of the fraud would be the bank. The conduct alleged may have not onlymisled the police into not searching the relevant records, perhaps not until 2014 (when the prosecution was stayed), but may haveundermined the independence of the investigation. That in turn may have undermined the role of a prosecutor in deciding whether to laycharges in 2010. iii.

Furnishing Information Known to be False or Withholding True Information or Both. [58] The pleadings allege falsified information was provided by Deutsche Bank as well as incomplete and reconstructed information.In the circumstances I am to assume these allegations are true. [59] Based upon these three factors, it is possible that a trial judge could conclude that Deutsche Bank initiated the prosecution. [60] There is one additional part of the test that must be met before I can conclude that this cause of action is not clearlyunsustainable. b.

Malicious or a Primary Purpose Other than that of Carrying the Law into Effect [61] Although the pleadings do not use the word “malice”, that is only part of the test. The issue therefore is whether Deutsche Bankhad as its primary purpose something other than carrying the law into effect. [62] According to the pleadings Deutsche Bank provided incomplete, reconstructed, and falsified information to the RCMP. Theplaintiff alleges it did so when it knew or ought to have known that its representations to the RCMP were untrue (paragraph 26 of thestatement of claim). He alleges bad faith (paragraph 32).

He also says Deutsche Bank acted to avoid embarrassment and a negativeimpact upon its negotiations with GE Commercial Finance. [63] However even if Deutsche Bank initiated the prosecution, the allegations of bad conduct on the part of Deutsche were againstSystems not the plaintiff. There is nothing in the pleadings that alleges a purpose with respect to the plaintiff other than givinginformation to the police so charges could be laid.

The sole basis for the plaintiff’s claim is set out in paragraph 34 of the statement ofclaim which provides: [34] MacDonald also says that in providing Revenue Canada and the RCMP with “evidence” that it knew or ought to have known wasfalse against him, Deutsche Bank committed the tort of malicious prosecution. [64] That allegation alone is not sufficient to ground a claim for malicious prosecution. There is no allegation of an improperpurpose.

[ 65 ] In Kvello Charron J. referred to the history of the tort. In paragraph 87 she said: [87] As noted above, the tort of malicious prosecution was born in the context of prosecutions between private parties, and the malice component of the tort developed accordingly.

In many of the historical cases, the parties in a malicious prosecution action had a pre- existing relationship, and the surrounding circumstances were such that it was possible to infer an improper motive from the groundlessness of the prosecution alone: see, e.g., Jewhurst (prosecution initiated to collect a pre-existing debt); Gabler (prosecutor sought to take physical possession of an office); and Love (prosecution commenced to procure the value or return of a cow)… [ 66 ] Although Kvello was a case alleging the tort against a crown prosecutor, Charron J’s comments on improper purpose are generally applicable.

She said in paragraph 89: [89] In

summary, the malice element of the test for malicious prosecution will be made out when a court is satisfied on a balance of probabilities, that the defendant Crown prosecutor commenced or continued the impugned prosecution with a purpose inconsistent with his or her role as a "minister of justice". The plaintiff must demonstrate on the totality of the evidence that the prosecutor deliberately intended to subvert or abuse the office of the Attorney General or the process of criminal justice such that he or she exceeded the boundaries of the office of the Attorney General.

While the absence of a subjective belief in reasonable and probable cause is relevant to the malice inquiry, it does not dispense with the requirement of proof of an improper purpose. [ 67 ] In my view there is no sustainable claim of an improper purpose. Providing false information to CRA and the RCMP is of course not to be condoned but it does not in and of itself show an intent to subvert the criminal justice process. Accordingly the claim of malicious prosecution is clearly unsustainable. [ 68 ] Since I have concluded all the claims are clearly unsustainable, the motion for

summary judgment is granted. The proceeding is therefore dismissed. Costs [ 69 ] In its notice of motion Deutsche Bank says it requires “the plaintiff to pay the moving parties costs of the motion” and in its written submissions Deutsche Bank says it is seeking costs on a solicitor and client basis. That issue was not addressed otherwise in the written submissions and was not addressed in oral submissions. If Deutsche Bank is seeking solicitor-client costs, written submissions from both parties will be required on that issue: Deutsche Bank’s written submissions by November 21 st and the plaintiff’s submissions by December 5 th . Hood, J.