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When Can an Employee of a Corporation be Sued?

The Ontario Superior Court of Justice in Gyamfuaa v Leblanc, 2016 ONSC 5868

Background

The plaintiff, Maame Gyamfuaa (hereinafter the “Plaintiff”) was a nursing student at the University of Ottawa.  The Plaintiff alleged that the defendants, Barbara Leblanc, Judith Lafleur, Kelly Kidd, Dave Holmes, Gisele Carroll, Denis Prud'homme, University of Ottawa and Algonquin College (hereinafter collectively, the “Defendants”) wrongfully claimed that the Plaintiff had cheated on an exam.

With regard to the alleged cheating, a Committee of Inquiry determined that the Plaintiff had committed academic fraud. The decision of the Committee of Inquiry was upheld by the Executive Committee of the Faculty of Health Sciences on appeal. After a future appeal to the Senate of the University of Ottawa (hereinafter the “Defendant University”) the decision was quashed after exculpatory evidence was presented.

However, “[t]he allegation made against the plaintiff was disseminated in a widespread basis, it became known to the community of students and many members of the teaching staff at the University and the College.” (Gyamfuaa v Leblanc, 2015 ONSC 1422 at para 33).

As such, the Plaintiff brought an action against the Defendants seeking damages for physical, psychological and financial losses as well as alleged humiliation and embarrassment suffered.

The Defendants brought a motion to strike the statement of claim for failing to disclose a reasonable cause of action. On August 28, 2015, Justice Faieta ordered that several of the pleadings against all Defendants, including among other things, negligence, breach of fiduciary duty, and bad faith and malice, be struck with leave to amend. The Defendants brought a subsequent motion to strike the Amended Statement of Claim  on the grounds that if fails to disclose a reasonable cause of action for: (1) against  Barbara Leblanc, Judith Lafleur, Kelly Kidd, Dave Holmes, Gisele Carroll, Denis Prud'homme (hereinafter collectively the “Individual Defendants”); (2) breach of fiduciary duty; and (3) defamation.

Issues

Justice Faieta considered whether it was “plain and obvious” at that stage of the proceedings that the Amended Claim, as outlined in the Amended Statement of Claim, had no chance of succeeding.

For the purposes of this case commentary, Justice Faieta’s consideration of whether the Amended Claim disclosed a reasonable cause of action against the Individual Defendants will be discussed.

The Ontario Superior Court’s Decision

The Amended Claim included allegations against the Individual Defendants for negligence, negligent investigation, breach of fiduciary duty, defamation, malicious prosecution and invasion of privacy. The Defendants argued that the Plaintiff failed to plead the requisite material facts in her Amended Claim to establish the Individual Defendants’ personal liability.

Justice Faieta first noted that: “[e]mployees are not personally liable for actions ostensibly carried out under a corporate name ‘…unless it can be shown that their actions are themselves tortious or exhibit a separate identity or interest from that of the company so as to make the act or conduct complained of their own’” (para 9, citing Montreal Trust Co. of Canada v. ScotiaMcLeod Inc. (1995), 26 O.R. (3d) 481 (Ont. C.A.), at p. 491). Fraud, dishonesty or deceit are also usually required for an employee to become personally liable.
 
Further, Justice Faieta discussed the needed criteria to establish personal liability as: “(1) the actions of the employees are themselves tortious; or (2) the actions of the employees exhibit a separate identity or interest from that of the corporation or employer so as to make the act or conduct complained of their own.” Here, it was noted that there was no separate identity or interest of the Individual Defendants and the Corporate Defendants. Justice Faieta also noted that personal liability for an employee (as well as a corporate director or officer) must be specifically pleaded and the claim must distinguish the acts of each Individual Defendant from each other and from their employers.
 
As such, Justice Faieta ultimately held that the Plaintiff failed to assert separate claims against the Individual Defendants, in their personal capacity. The Amended Claim alleged that the Corporate Defendants were vicariously liable for the acts and/or omission of the Individual Defendants. Justice Faieta noted that this allegation suggests that the acts and/or omissions of the Individual Defendants therefore were in the scope of their employment. More, the Plaintiff in her Amended Claim failed to describe any personal allegations of liability “in negligence, negligent investigation, malicious prosecution, and invasion of personal privacy was independent of their roles as employees of one of the Corporate Defendants” (para 14). Therefore, the Amended Claim against the Individual Defendants was struck with leave to amend.

Our Thoughts

Ultimately, regardless if you are employee or an employer the above discussion highlights the importance of drafting pleadings carefully and fully. More specifically, it is clear from the above that blanket general claims, which lack material facts and specificity will likely be deemed insufficient, particularly with respect to claiming against employees of a corporation. To bring a claim against an employee that would likely survive a motion to strike, there must be material facts which support a tortious claim separate from the employer corporation and/or other individual defendants, which was independent of their roles as employees of the corporation. This is a high bar to pass.

The above article is for general information purposes only and does not constitute legal advice. If you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere.