The Supreme Court of British Columbia has struck out several key claims brought by a former executive of VINN Automotive Technologies Limited in a wrongful dismissal lawsuit, leaving only a civil conspiracy claim to proceed.
The decision, delivered by Justice Tammen, narrows the scope of the case brought by C.F., a co-founder of the online automotive sales company, who alleges wrongful dismissal and various tort claims against his former employer and others.
The court’s ruling dismissed claims of interference with economic relations, inducing breach of contract, breach of fiduciary duty, and negligence. However, the court allowed C.F.’s civil conspiracy claim to proceed, indicating that while the details are sparse, they are not fatally deficient.
In the suit, C.F., who was VINN’s chief operating officer and claims to have been its original investor, alleged that his wrongful dismissal stemmed from misrepresentations made by VINN’s CEO to an investor, iNovia Capital GP-2018 Inc. These alleged misrepresentations, which inflated VINN’s sales figures, led iNovia to reduce its investment in VINN from $10 million to $3 million.
C.F. contends that after these misrepresentations came to light, he sought the CEO’s removal from the board. However, he claims that instead of supporting his proposal, other board members and VINN employees began scapegoating him, culminating in his termination in October 2022. According to the court, if C.F. can prove his claims related to his termination, he has “a relatively strong claim against VINN for wrongful dismissal.”
Despite the wrongful dismissal claim being a core part of the lawsuit, C.F. also advanced tort claims against VINN, its directors, and iNovia, alleging civil conspiracy, interference with economic relations, inducing breach of contract, breach of fiduciary duty, and negligence.
Justice Tammen criticized these additional claims as an overly broad attempt to assign liability. He noted that many of the alleged tortious acts, such as accepting a reduced investment from iNovia, do not constitute misconduct or could not give rise to a claim by C.F. The judge described the attempt to plead multiple tort claims as “throwing darts blindfolded, hoping that one will hit the bullseye” or trying to “fit a host of square pegs into an insufficient number of round holes.”
The judge’s analysis of the claims resulted in the striking of four key tort claims:
- Breach of fiduciary duty: The court found no material facts to support C.F.’s claim that VINN’s directors owed him a fiduciary duty. While C.F. argued that his role as a co-founder and original investor created a relationship of trust, the court disagreed, stating that directors owe their duty to the corporation, not individual shareholders or employees.
- Negligence: Justice Tammen dismissed the negligence claim, noting that the facts pleaded were insufficient to establish the existence of a duty of care owed to C.F. by VINN’s directors or iNovia. The allegations, the judge said, simply circled back to previously defined misconduct, which could not sustain the claim.
- Intentional interference with economic relations: This claim was also struck for lack of sufficient facts. The court found that C.F.’s pleadings failed to allege an unlawful act committed by any of the defendants against a third party, which is a necessary element for such a claim to proceed.
- Inducing breach of contract: C.F.’s claim that the defendants induced VINN to breach his employment contract was dismissed as well. The court noted that employees of a company cannot be held personally liable for inducing their employer to breach a contract under the principle established in Said v. Butt.
Although the court was critical of the broad scope of C.F.’s claims, it allowed the civil conspiracy claim to move forward. He alleges that between May and October 2022, the defendants conspired to remove him from his executive roles and prevent him from disclosing misrepresentations to investors and shareholders. While the court acknowledged that the pleadings lacked specificity, it noted that C.F. may not yet have access to all the details regarding the conduct of the various defendants.
Justice Tammen stated, “At this juncture, (C.F.) may not have knowledge of details of the conduct of the various defendants. Ultimately, if Mr. Flanagan cannot put some meat on the bones of the alleged conspiracy, he may be unable to prove his claim at trial.”
The defendants were successful in having most of the claims struck and were awarded costs at Scale B.
C.F. has been granted leave to amend his notice of civil claim to reflect the court’s ruling and must do so by October 15, 2024.
For more information, see Flanagan v VINN Automotive Technologies Limited, 2024 BCSC 1612 (CanLII).
