LBI Brands Inc. v. AquaTerra Corporation, 2016 ONSC 3572

In this case, the defendants brought a motion to strike various parts of the Statement of Claim without leave to amend. Counsel settled parts of the motion before hearing. Success was divided. Where paragraphs were struck, the plaintiff was allowed to amend its pleading.

Seven paragraphs dealt with allegations that the defendants made false and misleading representations. The defendants filed evidence to try to show these allegations were frivolous and vexatious. However, the Court held that it must accept the facts alleged in the pleading as proven or true unless they are patently ridiculous or incapable of proof. In this case, although the facts pleaded are in dispute, they are material to the pleadings. Thus, the allegations are not scandalous frivolous or vexatious, and were not ordered struck. Similarly, a further paragraph relating to conspiracy was not struck, as the Court held that the necessary facts were pleaded to establish both types of conspiracy claims.

The next impugned paragraphs dealt with allegations under s. 36 of the Competition Act. The Court held that such a cause of action requires that the plaintiff must have suffered loss as a result of the defendants' conduct contrary to s. 52(1) of the Competition Act. In this case, the causal connection was held not to be plead. Thus those portions of the claim that advanced claims pursuant to s. 36(1) of the Competition Act were struck. However, the Court held that the usual practice was to allow leave to amend, and so ordered.

Similarly, the Court held that the intellectual property aspect was missing from a claim pursuant to s. 7(d) of the Trade-marks Act. This was held to be a necessary element. Thus the paragraph was struck with leave to amend. However, further paragraphs were struck without leave to amend, as they were held to relate to origin and quality representations, and not intellectual property.