IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20120412

Docket: S117157

Registry:
Vancouver

Between:

I.J.

Plaintiff

And

J.A.M., J.M.,
G.S., J.S. and T.B.

Defendants

Before: The Honourable Mr.
Justice Burnyeat

Reasons for Judgment
from Chambers

[1]          
Applying pursuant to Rule 9‑7 of the Supreme Court Civil
Rules, G.S. and J.S. seek an order that the claim of the Plaintiff be
dismissed and that they be awarded their costs throughout.  The application is
opposed by the Plaintiff on the basis that there has not been a complete
discovery of documents, there have been no examinations for discovery, and that
her claim is not susceptible to a summary determination.

BACKGROUND

[2]          
The Plaintiff was employed by a company from April 2005 to April 2009 as
its Chief Information Officer.  The Plaintiff alleges that she was sexually
harassed and assaulted by the Defendant J.A.M., the President and Chief
Executive Officer of the Company during the time she was employed.  In
particular, the Plaintiff alleges that she was sexually assaulted by the
Defendant, J.A.M., between April and August, 2005.  The Plaintiff also alleges
that the J.M., the wife of J.A.M., was an accomplice in the planning and
execution of the alleged sexual assault.  The Plaintiff also alleges that the
Defendant T.B. was an accomplice in the alleged harassment and that she
impersonated the Plaintiff at industry trade shows.

[3]          
The Plaintiff alleges that the Defendants G.S. and J.S. were negligent
in failing to intervene and that they “allowed” the alleged harassment and
assault to occur.  The Plaintiff also alleges that the Defendants G.S. and J.S.
are vicariously liable for the damages caused by the sexual harassment and
assault perpetrated on the Plaintiff by J.A.M.

[4]          
G.S. and J.S. are Directors of the Company.  They state that they were
never employed by the Company and that they were not involved in the day-to-day
operations of the Company.  G.S. and J.S. state that they had no knowledge of
any alleged harassment or sexual assaults until many years after the alleged
harassment and assaults are said to have occurred.  They also state that the
Plaintiff did not make any complaints to them during the time of the employment
of the Plaintiff by the Company.

[5]          
In April 2009, the Plaintiff and the Company entered into an agreement
in which it was agreed that the employment of the Plaintiff would terminate on
certain terms (“Severance Agreement”).  As part of the Severance Agreement and
in consideration of the payment of $188,189.10 by the Company to the Plaintiff,
the Plaintiff executed a “General Release” which provided in part that the
Plaintiff:

DOES HEREBY REMISE, RELEASE AND
FOREVER DISCHARGE … [the Company] and any and all subsidiaries or affiliates
and any other corporate entities within the … [group of companies associated
with the Company] including their past, present and future directors, officers,
employees, servants, agents, successors and assigns (hereinafter individually
or together referred to as the “Releasees”), of and from any and all actions,
causes of action, claims, suits, debts, contracts, demands, damages, interest,
costs, expenses and compensation of whatsoever kind and howsoever arising from
or related to the employment of the Releasor by … [the Company] over the
period April 13, 2005 to April 30^th, 2009 and termination
thereof effective on April 30 2009.

[6]          
For the purposes of this application, G.S. and J.S. do not rely on the
Severance Agreement to support their application that the claim of the
Plaintiff should be dismissed.  However, G.S. and J.S. reserve the right to
rely on the Severance Agreement if this application is not successful.

EVENTS SUBSEQUENT TO THE TERMINATION OF
THE EMPLOYMENT OF THE PLAINTIFF IN APRIL 2009

[7]          
On June 14, 2010, the Plaintiff sent a letter to J.A.M. in which she
stated that she had been sexually harassed by him while she was employed by the
Company and that she had in her possession recorded conversations and SIM cards
that contained inappropriate text messages that J.A.M. had sent to her while
she was employed by the Company.  The Plaintiff sent a copy of that letter to
G.S. and J.S.  The Plaintiff made these references to G.S. and J.S. in that
letter:

I called … [G.S.], to seek protection and advice, but we
were unable to meet.  Mr. … [G.S.] just got a baby.

It does not matter.  There is nothing to talk about anymore. 
It’s over, … [J.A.M.].  The truth is finally being told.  If you try to deny
anything, you will only hurt me more.  I will share my SIM card with the notes
you sent to me and the tapes of our conversations about everything you did to
me; in how many ways you hurt me as a woman, a professional, a wife and a
mother.

I know it will be very difficult for Mr. … [S.] to
accept that you committed all this and looked him in the eye saying “you did
not know what was wrong with … [the Plaintiff]”.  I still have nightmares and
open wounds because of everything you did to me, but I’m finally ready to fight
for my life.

I would expect that within the
next 48 hours, … [J.A.M.], you come up with a proposal for me as to how
to (1) try to heal from your sexual harassment and all the injuries you
[and you only] inflicted upon me over the past 5 years, and
(2) compensate for my general loss of purity, self-esteem, self-worth and
self-confidence; ability to be around people for a longer period of time and
not to withdraw; ability to concentrate; ability to sleep without nightmares;
and ability to smile and mean it.

[8]          
In a June 19, 2010 response to the Plaintiff on behalf of the
Company, G.S. acknowledged the June 14, 2010 letter and stated:

I can assure you that both …
[the Company] and I take this matter very seriously.  Your letter states that
you have possession of a SIM card containing inappropriate txt messages a well
as notes that … [J.A.M.] sent to you and tape recordings of some
conversations.  Please make copies of the contents of the SIM card, the notes
and tape recordings and send the copies to me so that … [the Company] and I
can consider how best to respond to this situation.

[9]          
The Plaintiff did not then and has not since provided copies of any SIM
cards or tape recordings.  In a June 21, 2010 response to G.S., the
Plaintiff stated in part:

The evidence of Mr. … [J.A.M.]’s sexual harassment and
targeted discrimination that followed it for years will be presented in formal
legal proceedings.  Until now, I have refrained from pursuing my legal rights
and remedies for a number of different reasons.  Most importantly, I have
wanted to avoid bringing any harm or disrepute to your family and … [the
Company]. ….

… the reason why you and Mr.
… [J.S.] were cc-ed on my complaint to Mr. … [J.A.M.] on June 14^th,
was to let you know that there are other realities than those presented to you. 
Did you know that on or about October 19, 2009, after Mr. … [G.Y.]
released his letter to all of us, Mr. … [D.N.] sent me an urgent voice
mail.  A few people spoke with me then, including Mr. [E.S.].  He told me
that as far as he could remember “pretty much everything was true in …
[G.Y.]’s letter”, but “he did not know … [G.Y.] was against his working at
… [the Company]”.  Oftentimes, the most difficult realities to believe in,
are in actuality, the true ones.

[10]       
On July 12, 2010, the Plaintiff filed a human rights complaint
against J.A.M. in which the Plaintiff alleged that he had discriminated against
her and had sexually harassed her during her employment.  The British Columbia
Human Rights Tribunal was of the opinion that the complaint was statute barred
and, accordingly, it should be dismissed.  An appeal of the decision of the
British Columbia Human Rights Tribunal is before the Court.

COMMUNICATIONS AND THE NOTICE OF CIVIL CLAIM

[11]       
In an October 11, 2011 communication to G.S., the Plaintiff stated
in part:

With a great sorrow I need to advise you
that I am contacting you today as a legal entity.  To secure some relief for my
son, I am forced to serve you with a notice of civil claim, for negligence in
relation to the lawsuit against … [J.A.M.].  All these years t was trying to
break free from … [J.A.M.] and I never meant to bring any disrepute to you or
your family, but … [J.A.M.] would not let me alone.  …

When I met with you to ask for a reference letter to become a
lawyer and change my profession (as …[J.A.M.] made it
clear to me he would never allow me to work again in business), you said “why
would I need the reference letter for anything”; you said “my husband or my
father should take care of me”.  I wish you have told me that in 2005, when I
was healthy, with a family, living in a … home, in peace, I wish I knew then
that you would let your employee destroy me using the money I made for him,
while he was hiding behind the degree I earned for him.  It is very unfair that
you told me that, only after I created millions for you and when it was too
late for me to escape …[J.A.M.].  It is also a
horrible deed to let …[J.A.M.] do all this to me and
my family.  …

Once again, I apologize of the inconvenience – it is possible
you did not know.  It does not reverse the tragedy brought upon my family.

I hope you and your family had a
good Thanksgiving and everyone is doing well.  [She] … must have grown up – I
hope she never get to experience what I did.

[12]       
The Notice of Civil Claim is a 26‑page
document.  It is not a “concise statement of the material facts giving rise to
the plaintiff’s claim”.  It contains much material which would be struck out if
an application was brought to do so.  It is a collection of confusing and
sometimes contradictory statements which do not clearly lay out the causes of
action claimed against G.S. and J.S. The Notice of Civil Claim also sets out a
number of complaints against G.S. and J.S. which do not create causes of action
available to the Plaintiff.  It is also a document which is mainly directed to
the alleged wrongdoings of J.A.M., J.M. and T.B., and not to the alleged wrong
doings of G.S. and J.S.

[13]       
In her October 25, 2011 Notice of Civil Claim, the Plaintiff makes
these statements regarding G.S. and J.S.:

The company co-owners … [G.S.] and … [J.S.] never
interfered despite…[J.A.M.’s] sexual jokes at … [the Plaintiff]’s expense.  The
company co-owners … [G.S.] and … [J.S.] moreover failed to interfere again
when years later … [the Plaintiff] summoned courage to inform them of …
[J.A.M.’s] treatment of … [the Plaintiff].  She informed them of her agony
and asked them for help, but their failure to interfere only encouraged …
[J.A.M.] to continue with his revenge.  …

… [G.S.] and … [J.S.] are directly responsible for
negligence related to the sexual assault and sexual harassment of … [J.A.M.]
over … [the Plaintiff]. … [G.S.] and … [J.S.] had a direct view into
company’s financials and … [J.A.M.]’s expenses.

They knew that … [J.A.M.] first reserved a single room for
the trade show where he assaulted … [the Plaintiff], but purchased two flight
tickets.

Shortly before the event, … [J.A.M.] told … [the
Plaintiff] that “the company being in the pre-bankrupt state does not have the
money for two rooms and they would need to share a room”.  To that, … [the
Plaintiff] refused to go if she did not have her own room.  … [J.A.M.] then
agreed to reserve another room and … [J.A.M.]’s expense reports clearly
showed the dates of the credit card charges for the rooms, travel, meals and
any other expenses.

It was clear that a single room and two airplane tickets were
a planned purchase, paid by … [J.A.M.]’s credit card adequately early to
prepare for the trip. The second room was a rushed purchase that occurred weeks
later, as an unplanned expense (only when … [the Plaintiff] declined to go if
she did not have her own room).  … [J.A.M.] expense reports will be ordered
for hearing through the company’s auditors, Ernst & Yung [sic].

These expense reports were approved by …
[J.A.M.]’s supervisors … [G.S.] and … [J.S.] and these expense reports clearly indicated that the second room
was reserved only a day before the trip, while the flight tickets for two
people were purchased much earlier.

These reports also revealed that …
[J.A.M.] exclusively purchased the food for … [the
Plaintiff] and him; that … [J.A.M.] controlled the
car to access airports, hotels, trade show conference centers, and similar.

…[G.S. and J.S.] further received direct
information about … [the Plaintiff’s] successful makeover of the company from
[J.A.M.] …. [G.S. and [J.S.] recognized … [the Plaintiff] as … [the successor to
J.A.M.] and the future President and CEO of … [the Company], and were fully
aware of … [the Plaintiff’s] equity in the company, as arranged by … [J.A.M.]
at 3%.  They never asked whether … [the Plaintiff’s] equity is being paid to
her.

…[G.S. and
J.S.] could not have confused … [the Plaintiff’s] 3% of … [the Company] equity
with her 1‑year Separation and Severance Contract in the amount of
$189,000, that covered the following ….  Her overtime, her outstanding payroll,
her outstanding four years of unused vacation time, her outstanding employment
loyalty credits, and 30 hours of prepaid future work on the contract and
work arrangements which were to last the next six months.

[14]       
The relief sought against G.S. and J.S. as “co-Owners of … [the
Company] and direct supervisors of J.A.M. is set out in the Notice of Civil
Claim as follows:

1.      An
apology for negligence and allowing … [J.A.M.] to assault, harass, defame,
exploit and abuse … [the Plaintiff].

2.      An order that the Respondents
… [G.S.] and [J.S.] to pay $300,000 in aggravated and punitive damages to the
Claimant [the Plaintiff], to address feelings of humiliation, degradation and
fear of repetition, loss of life enjoyment and life expectations and to
compensate for general losses in all spheres of her life.

[15]       
Under the heading “LEGAL BASIS FOR SEAXUAL [sic] ASSAULT, SEXUAL
HARASSMENT AND HARASSMENT AND RELATEDE [sic] CHARGES”, the Plaintiff sets out
the following:

Punitive and aggravated damages
for pain, mental and physical suffering and loss of life enjoyment and life
expectations, unjust enrichment of the four co-owners at expense of … [the
Plaintiff]; ([… J.A.M.] certified in writing that only on the eCommerce side,
… [the Plaintiff] developed the company business from 5% to 50% of the entire
company’s business worldwide, not counting its successes and improvements in
other spheres of business).

[16]       
Under the heading “LEGAL BASIS FOR BREACH OF CONTRACT, DEFAMATION AND
RELATED CHARGES”, the Plaintiff sets out various matters relating to J.A.M.
with none of the “legal basis” refer to the Defendants G.S. and J.S.

[17]       
In her submissions, the Plaintiff stated that she was pursuing claims of
breach of contract and defamation against G.S. and J.S.  While I am satisfied
that those claims have not been properly pleaded as against G.S. and J.S., I
will proceed on the basis that the application of G.S. and J.S. pursuant to
Rule 9‑7 includes an application that any claim for damages arising
out of those causes of action should also be dismissed.

CASE AUTHORITIES AND DISCUSSION

[18]       
The first question raised by the application of G.S. and J.S. is whether
they can be found liable for the alleged damages of the Plaintiff by virtue of
the fact that they had knowledge of the existence of the wrongdoing or were
woefully blind regarding the existence of the alleged sexual harassment and/or
the sexual assault.

[19]       
On behalf of the majority in M.(M.) v. F.(R.) (1997), 52 B.C.L.R.
(3d) 127 (C.A.), Esson J.A. set out the principles relating to the failure
of a “bystander” to prevent sexual assault by an “actor”:

Almost all of the reported cases involve actions against
defendants in the position of R.F., the actual wrongdoer.  The action against
Mrs. F. is one of very few brought against a parent who did not take part
in the assault but who is alleged to be liable for failing to prevent it.  He
was the “actor”, she was the “bystander”.  As the distinction is of vital
importance in considering the legal principles applicable to liability, I will
generally employ those terms to describe R.F., Mrs. F. or others in
similar positions.  I note that we have been referred to no case, and I have
found none, in which these issues have been considered by an appellate court.

As against Mrs. F., the appellant relies upon two causes
of action: breach of fiduciary duty and negligence.  Fiduciary duty, as a basis
for liability for sexual assault, first came to prominence in Norberg v.
Wynrib, [1992] 2 S.C.R. 226, [1992] 6 W.W.R. 673.  The majority in the
Supreme Court based liability upon the tort of assault and battery.  The
minority (McLachlin J., L’Heureux-Dubé J. concurring) held that
fiduciary duty, one of the “flexible remedies of equity”, was a more
appropriate basis for liability.  That view was effectively adopted by the
court in M.(K.) v. M.(H.), [1992] 3 S.C.R. 3 which, like Norberg
v. Wynrib, was one which involved only the liability of the actor. As
against him, in the circumstances of that case, negligence was of course not
available.

(at paras. 90-91)

[20]       
Regarding the liability of a “bystander”, Esson J.A. made the
following statement:

… the bystander can be held liable only if he or she had
actual knowledge of the existence of the wrongdoing or was wilfully blind as to
its existence.  Where wilful blindness is shown, the law presumes knowledge or,
as it is put in Glanville Williams, Criminal Law: The General Part, 2nd
ed. (London: Stevens & Sons, 1961), in a passage quoted with approval in
the judgment of Mr. Justice McIntyre for the Court in Sansregret v. The
Queen, [1985] 1 S.C.R. 570 at 585:

To the
requirement of actual knowledge there is one strictly limited exception.  Men
readily regard their suspicions as unworthy of them when it is to their
advantage to do so.  To meet this, the rule is that if a party has his
suspicion aroused but then deliberately omits to make further enquiries,
because he wishes to remain in ignorance, he is deemed to have knowledge.

(at para. 124)

[21]       
In J.C. v. Shaw, [2011] B.C.J. No. 2329, the Court dealt
with the liability of an employer for the sexual assaults committed on a
“journeyman” plumber by her supervisor.  After confirming that the employer
owed a duty of care and that the plaintiff had to show that the employer was in
breach of the standard of care, Butler J. concluded that the manager of
the business and the employer were not negligent and that no action or omission
by the company was the cause of the sexual assaults:

Given the nature of the business, I find that there was
nothing about the employment practices of Baker Industries that created or
exposed the employees to a risk of the kind of harm that occurred.  The
possibility of one worker assaulting another cannot be eliminated when employees
are required to work together, sometimes in confined spaces, and when they
spend time travelling together.  However, I conclude that the way in which
Baker Industries carried on its operations was reasonable.  It provided
adequate supervision of its employees and no act or omission of Baker
Industries caused or contributed to the Assaults.  Further, there was no credible
evidence to suggest that Mr. Shaw was previously involved in similar
tortious activities.  There was no reason for Baker Industries to take special
care regarding his activities.

(at para. 67)

[22]       
Of similar effect is the decision in Schultz v. Miki, 2005 BCSC
406 and (2006) 264 D.L.R. (4th) 201 (B.C.C.A.).  In
affirming the decision of the Chambers Judge, Southin J.A. on behalf of
the Court, stated:

The question then narrows to this: whether a landlord who
sends his employee, of whom he knows nothing to his detriment, to repair leased
premises is vicariously liable for a sexual assault by the employee on the
tenant.

I put the question in such stark terms because not only did
the respondent know nothing to R.H.M.’s discredit, but, also, nothing in the
evidence warrants a conclusion that anything to his discredit was available to
be found out.

The guiding authority now, when an issue arises of vicarious
liability for the acts of an employee, is, of course, Bazley v. Curry,
[1999] 2 S.C.R. 534, especially the passage at paragraphs 41-46.

Applying that passage to the evidence in this case, I am of
the opinion that vicarious liability does not arise.  The policy considerations
of fair compensation and deterrence are eliminated in the circumstances of this
case.

If the appellant’s arguments were to succeed, we would be
dangerously close to imposing absolute liability on employers for the
intentional torts of their employees.

(at paras. 13-17)

[23]       
At the Chambers level, the following statement was made regarding
liability:

Ms. Schultz must be able to show that it was reasonably
foreseeable that Mr. Miki would assault her.  In Newton v. Newton,
(2003) 17 B.C.L.R. (4th) 1 (B.C.C.A.), Lambert J.A. on behalf of the
Court emphasized that it was necessary to consider the question of whether a
duty of care was owed in relation to a foreseeable risk of harm that injury
would be caused within the risk that was foreseeable and that liability cannot
lie solely on unpredictability producing a result that everything unpredictable
which occurs should have been foreseeable and should give rise liability (at
paras. 9-10).

Having regard to all of the circumstances, I cannot conclude
that it was reasonably foreseeable that Mr. Miki would act as he did.  I
am satisfied that there was nothing which would lead to Dr. Miki as a
reasonable person to have foreseen, even as a possibility, that
Ms. Schultz might be in danger of harm arising from the access that
Mr. Miki would have to the Schultz home or that any greater precautions
were needed.  As cousins, it is likely that any previous inappropriate
behaviour would have come to the attention of Dr. Miki.  Dr. Miki was
not the physician for Mr. Miki so that nothing would have come to his
attention from a physician-patient relationship.  There is nothing in evidence
which would allow me to conclude that a reasonable person or a reasonable
medical doctor should have foreseen that a person off work because he was
depressed or a worker taking an antidepressant such as Celexa would put third
parties at risk if they were given access to a home or if no precautions for
supervision were put in place.

(at paras. 23-24)

[24]       
I cannot conclude that there should be a finding of negligence against
G.S. and J.S. such that the alleged damages of the Plaintiff should be visited
upon them.  I cannot conclude that they had actual knowledge or that they were
in any way willfully blind to either the alleged acts or the atmosphere at the
Company which would encourage the harassment alleged.  I cannot conclude that
their suspicions would have been aroused so that they would be obligated to
take steps to investigate what the Plaintiff alleges was taking place.  I cannot
conclude that there was anything about the employment practices put in place by
G.S. and J.S. which exposed the Plaintiff or others to the kind of risk
alleged.  In particular, I cannot conclude that it was Company policy to
require male and female employees who were travelling to stay in the same
accommodations.

[25]       
I also cannot conclude that the expense accounts in evidence would have
raised suspicions.  In any event, despite the allegation that the expense
reports of J.A.M. were “approved” by G.S. and J.S. and that G.S. and J.S. had a
direct view into the expense accounts submitted by J.A.M., I find that the
expense accounts relating to the 2005 visit would not have come to the
attention of G.S. and J.S.  Rather, it was only D.N., the Chief Financial Officer
of the Company, who received, reviewed and approved expense accounts.  G.S.
and/or J.S. did not and I find that they would not have seen the expense
accounts of J.A.M.  Even if the expense account relating to the 2005 trip to
Florida had come to the attention of G.S. and/or J.S., I cannot conclude that
their suspicions would have been aroused as a result of reviewing them.

[26]       
The expense report in issue seeks reimbursement by J.A.M. of $2,572.68
for the cost of return airfare to Orlando for the Plaintiff and J.A.M. and a
further $780.50 relating to hotel accommodation.  Both reservations were made
through the “Hilton Grand Vacations Club” of J.A.M., and show that a “Studio”
and a “One-Bedroom” room were booked by J.A.M. through that Club.  It is noted
on the One-Bedroom booking that the number of adults is “2”, whereas the Studio
booking indicates that the number of adults is “1”.  The confirmation numbers
on the room bookings are as follows:  (a) One-Bedroom – 284798110; and
(b) Studio – 284852010.  Because the confirmation numbers are so
different, the Plaintiff is of the view that the Studio was only booked after
she made it clear to J.A.M. that she would not share a room with him.  While
the confirmation numbers are different, there are no dates on the bookings.  It
is not possible to conclude that the theory advanced by the Plaintiff is
correct.  In any event, a reasonable person reviewing the expense accounts
presented would not have concluded that the hotel accommodation was booked in
accordance with the theories of the Plaintiff.

[27]       
The Plaintiff also alleges that G.S. and J.S. did not interfere despite
sexual jokes being made in the presence of the Plaintiff.  I cannot conclude
that G.S. and J.S. had any knowledge of this taking place.  The Plaintiff swore
an affidavit with 1204 pages attached as exhibits.  The Plaintiff did not draw
to my attention any evidence that she was presenting which would allow me to
conclude that sexual jokes were being made in the presence of the Plaintiff when
G.S. and/or J.S were also present.

[28]       
The Plaintiff also finds fault with G.S. and J.S. because she alleges that
they did not interfere “years later” when the Plaintiff drew to their attention
the alleged sexual harassment and sexual assault.  I cannot conclude that any alleged
failure after the fact would result in the “retroactive” breach of fiduciary
duty owed to the Plaintiff by G.S. and J.S.  I do conclude that G.S. and J.S.
did act appropriately when they alleged sexual harassment and sexual assault
were set out in the June 14, 2010 letter to J.A.M., a copy of which was
forwarded to G.S. and J.S.

[29]       
I reach no conclusion regarding whether the sexual harassment and sexual
assault alleged by the Plaintiff occurred or not.  However, I do come to the
conclusion that, while a duty of care was owed by G.S. and J.S. in relation to
a foreseeable risk of harm, I cannot conclude that the risk was foreseeable.  I
conclude that any liability of G.S. and/or J.S. cannot rest solely on
unpredictability.  Given the role of G.S. and J.S. in the Company, I am
satisfied that there was nothing which would lead them as reasonable persons to
have foreseen, even as a possibility, that what was alleged by the Plaintiff
might occur.

[30]       
Almost all of the attachments in the Affidavit of the Plaintiff deal
with issues which will be canvassed when the action against J.A.M., J.M. and T.B.
proceeds.  Some of the materials relate to alleged commercial wrongdoing by
G.S. and J.S.  I consider those matters irrelevant to the issues which are
before me, even though the Plaintiff is apparently of the view that those who
act inappropriately in a business sense must also have had knowledge of her
allegations of what J.A.M. was doing as the President of the Company.

[31]       
I cannot conclude that G.S. and/or J.S. had actual knowledge of the
existence of the wrongdoing alleged by the Plaintiff or that either of them was
willfully blind to its existence.  Even assuming that they had a direct hand in
creating the employment practices of the Company that created or exposed
employees such as the Plaintiff to the risk of the kind of harm that the
Plaintiff alleged occurred (and I do not make such a finding), I conclude that
the operations of the Company were reasonable and that liability cannot lie
solely on the unpredictability that produced what is alleged by the Plaintiff. 
There is nothing in evidence which will allow me to conclude that a reasonable
person should have foreseen that the alleged activities of J.A.M. would occur.

[32]       
The Plaintiff has not drawn to my attention from her extensive Affidavit
any matters which would allow me to conclude that J.S. had any involvement in
the business of the Company.  Some of the materials deal with the involvement
of G.S. in the business of the Company.  In particular, the Plaintiff relies on
the following: (a) various emails from J.A.M. which were forwarded to the
Plaintiff, to other members of the Company, and to G.S.; (b) G.S.
organized a product presentation by an outside supplier which was attended by
the Plaintiff and others; (c) G.S. attended a retirement dinner of an
individual who had worked for the Company for 16 years; (d) J.A.M.
included G.S. in an announcement that the Company had acquired another entity; (e) G.S.
attended a trade conference in Denver with J.A.M.; (f) J.A.M. provided
G.S. with a copy of a memorandum to senior staff that he was going to take a one-day
holiday; (g) J.A.M. shared with G.S. and senior staff of the Company the
news that there had been a recall of a competitor’s product as a result of
deaths alleged to have been caused by that product and G.S. provided an email
to J.A.M. regarding whether there was a business opportunity flowing from the
recall of that product; (h) J.A.M. provided a notice to senior staff and
G.S. that there had been a power outage at the warehouse of the Company; (i) J.A.M.
advised G.S. and senior staff regarding the vacating of a building previously
occupied by the Company; (j) J.A.M. provided an email to senior staff and
G.S. regarding production issues arising regarding an off-shore supplier; (k) J.A.M.
provided senior staff and G.S. with a memorandum regarding new business cards
being printed; (l) J.A.M. provided senior staff with notification that
G.S. would be attending a trade conference in Las Vegas; (m) J.A.M. and
G.S. met with the bankers of the Company; (n) G.S. sat at the corporate
table at a dinner honouring “Best Companies to Work For” and the advice from
J.A.M. that G.S. would be accepting any award “if we win”; (o) “Monthly
Corporate Reports” were being forwarded to G.S. and J.S.; (p) G.S. was
receiving an industry publication along with J.A.M. and senior management at
the Company; (q) G.S. and other senior staff of the Company were attending
a session honouring “Canada’s 50 Best Managed Companies”; (r) J.A.M.
indicated that he would send a copy of the organizational changes suggested by
the Plaintiff to G.S.; and (s) J.A.M. forwarded details to senior staff
and G.S. about the sales and marketing side of the business of the Company,
including a trucking strike and changes to pricing and a returns policy.

[33]       
Regarding the activities of G.S., I find that the activities would have
been common to a Director of the Company and not indicative of someone having
direct involvement in the operations of this Company.  The operation of the
Company was left in the hands of J.A.M.  I find that any involvement of G.S. in
the affairs of the Company would not have resulted in him having knowledge of
what was alleged to have occurred.  I also find that the involvement of G.S. in
the affairs of the Company would not have raised any suspicion that what is
alleged by the Plaintiff as occurring was, in fact, occurring.

[34]       
To the extent that the Plaintiff claims against the Defendants G.S. and
J.S. in negligence, I dismiss the claim of the Plaintiff.

[35]       
As well, I cannot make a finding that G.S. and J.S. are vicariously
liable for the alleged acts of J.A.M. and T.B. as employees of the Company.  In
Bazley v. Curry, [199], 2 S.C.R. 534, the Court established the test for
an employer’s vicarious liability for the intentional acts of its employees: 
(a) the Court must first determine if the acts of the employee were
authorized by the employer; and (b) a wrong that is only coincidentally
linked to the activity of the employer and the duties of the employee cannot
justify the imposition of vicarious liability on the employer.  In this regard,
McLachlin J., as she then was, stated:

A wrong that is only
coincidentally linked to the activity of the employer and duties of the
employee cannot justify the imposition of vicarious liability on the employer.  To
impose vicarious liability on the employer for such a wrong does not respond to
common sense notions of fairness. Nor does it serve to deter future harms.  Because
the wrong is essentially independent of the employment situation, there is
little the employer could have done to prevent it.  Where vicarious liability
is not closely and materially related to a risk introduced or enhanced by the
employer, it serves no deterrent purpose, and relegates the employer to the
status of an involuntary insurer.  I conclude that a meaningful articulation of
when vicarious liability should follow in new situations ought to be animated
by the twin policy goals of fair compensation and deterrence that underlie the
doctrine, rather than by artificial or semantic distinctions.  (at p. 556)

[36]       
I can make no finding that the acts of J.A.M. were authorized by G.S.
and/or J.S.  I also cannot conclude that the acts of J.A.M. and/or T.B. were
authorized by either the Company or by G.S. and/or J.S.  What was authorized by
implication was the ability of employees to travel to various conferences
together.  Obviously what was not authorized was sexual harassment and/or
sexual assault.  While I express no opinion about whether or not the alleged acts
occurred, I am satisfied that there can be no finding of vicarious liability of
G.S. and J.S. for the alleged activities of J.A.M. and T.B.  Any vicarious
liability is not closely or materially related to a risk introduced or enhanced
by G.S. and J.S.  It would be inappropriate to impose the status of involuntary
insurers on G.S. and/or J.S.  To the extent that the Plaintiff claims damages
against G.S. and/or J.S. on the basis of vicarious liability for the alleged
activities of J.A.M. and T.B., I dismiss those claims of the Plaintiff.

[37]       
Regarding the submission made by the Plaintiff that damages should be
available against G.S. and/or J.S. as a result of breach of contract, I can
make no finding that there was a direct contractual relationship between the
Plaintiff and G.S. and/or J.S.  Any contract that the Plaintiff had in these
regards was with the Company.

[38]       
Regarding the submissions of the Plaintiff that she should be entitled
to damages arising out of alleged defamation, there is nothing in the evidence
before me which would allow me to conclude that the Plaintiff has been defamed
by G.S. and/or J.S.  In this regard, I express no opinion about whether the
Plaintiff has been defamed by any of the remaining Defendants and/or the
Company.

[39]       
To the extent that the Plaintiff claims damages against G.S. and/or J.S.
arising out of an alleged breach of contract and alleged defamation, I dismiss
those claims of the Plaintiff.

WAS AN APPLICATION PURSUANT TO RULE 9‑7 APPROPRIATE?

[40]       
In Robertson v. Manitoba Keewatinowi Okimakanak Inc., [2011]
5 W.W.R. 381 (Man. C.A.), the Court dealt with an appeal from an order
striking out the statement of claim of the plaintiff on the basis that it did
not disclose any reasonable cause of action and/or that it was scandalous,
frivolous and/or vexatious.  The question that was before the Court was whether
the motions judge erred in permitting the matter to proceed without
discoveries.  In concluding that there was no error in that regard,
Beard J.A. stated on behalf of the Court:

The plaintiff argued that the court should permit the matter
to proceed to discoveries, where the facts would be disclosed.  What is at
issue in this case is the nature of the working relationship between the
plaintiff and Mr. Hart, and whether that relationship caused a material
increase in the risk of the sexual assault and the resulting harm to the
plaintiff.  The plaintiff was a party to that relationship and, therefore, had
personal knowledge of it.  She would know all of the relevant facts of that
relationship and she should not have to proceed to discoveries to obtain
further facts about the employment or the relationship in order to determine
whether it caused a material increase in the risk of a sexual assault.  The
discovery is not to be a fishing expedition to look for facts to fill the holes
in a defective claim.  The whole purpose of permitting a party to challenge the
sufficiency of a pleading is to weed out those claims for which there is not a
sufficient foundation to succeed at trial, so to permit a plaintiff to proceed
to discoveries in the hope of obtaining material facts in support of the claim
would defeat the purpose of requiring pleadings and make it impossible for the
other party to know the case to be met.

(at para. 56)

[41]       
Here, the Plaintiff held a senior position with the Company.  The
Plaintiff would be fully aware of the management of the Company and the role
that G.S. and J.S. played in the management of the Company.  The Plaintiff
would have full knowledge of their presence on occasions where alleged
inappropriate activity took place.  The Plaintiff would have full knowledge of
the extent to which she had drawn to the attention of G.S. and J.S. what she
now alleges occurred during her employment by the Company.  In the
circumstances, I am satisfied that it was not necessary for examinations for
discovery to take place prior to this application by G.S. and J.S.

[42]       
On the question of documents, the Plaintiff has produced 1,204 pages of
documents which she says are relevant relating to the issues between her and
all of the Defendants.  As a senior officer of the Company, the Plaintiff would
have access to documents which would show that G.S. and J.S. had significant
roles to play in the day-to-day management of the Company so that they would
have had direct knowledge of what is alleged by the Plaintiff to have occurred,
they would have had their suspicions raised, and they would have authorized the
activities alleged by the Plaintiff so that they would be liable to the
Plaintiff for what she alleges occurred.

[43]       
The Plaintiff has had since November, 2011 to bring on applications to
produce documents.  Instead, the Plaintiff forwarded subpoenas to a number of
individuals to attend to be examined before the Court and bring with them
documents relating to the claims of the Plaintiff against the Defendants.  The
subpoenas purported to be issued pursuant to Rule 7-5(5) of the Supreme Court Civil
Rules.  The subpoenas were all set aside on the basis that no Order had been
made under that Rule.  No subsequent application was made by the Plaintiff to obtain
an order under that Rule.

[44]       
While I reach no conclusion about whether the Plaintiff has been
diligent in pursuing discovery of documents in the possession or control of the
Defendants or of third parties, I am satisfied that it was appropriate for G.S.
and J.S. to proceed with this application given the extensive documentation
already available to the Plaintiff and the extensive knowledge that the
Plaintiff would have of the documents of the Company and of the Defendants
dealing with the claims she has advanced against G.S. and J.S.

[45]       
While I express no opinion about whether the Plaintiff has a claim
against the Company in view of the Severance Agreement or whether it would be
appropriate to deal with the claims that the Plaintiff alleges against J.A.M., J.M.
and/or T.B. pursuant to Rule 9‑7, I have no hesitation in concluding
that it was appropriate for G.S. and J.S. to proceed with their application
pursuant to Rule 9‑7, even though there had not been in the opinion
of the Plaintiff a complete discovery of documents and there had not been any
examinations for discovery.  The absence of discovery could not have provided a
sufficient foundation to counter the finding that I make that all claims of the
Plaintiff against the Defendants G.S. and J.S. should be dismissed.

[46]       
The parties will be at liberty to speak to the question of costs.

____________ “Burnyeat J.”_____________
Mr. Justice Grant Burnyeat