Claim of Breach of Fiduciary Duty Struck in Class Action Against University

Published on

February 25, 2016

On July 10, 2015, the Ontario Superior Court of Justice released its decision in Creppin v The University of Ottawa and Allan Rock, in which it dealt with a motion to dismiss a claim on the basis that it did not disclose a reasonable cause of action pursuant to Rule 21.01(1)(b) of the Rules of Civil Procedure. In the statement of claim, which was brought under the Class Proceedings Act, the plaintiffs, through Mr. Creppin as the lead plaintiff (the “Plaintiffs”), alleged that the University of Ottawa and its president, Allan Rock (the “Defendants”), mishandled allegations of sexual assault against two members of the university hockey team. Specifically, the plaintiffs allege that publicly announcing a suspension of the entire team unfairly cast suspicion and guilt on the entire team and breached their duties to the plaintiffs in several ways.

For a motion to strike a pleading to be successful, it must be plain and obvious that it does not disclose a reasonable cause of action. Courts must approach this analysis in a generous manner and remain open to allowing novel but arguable claims to proceed. In response to the Plaintiffs’ various accusations, the Defendants argued:

  • the Defendants, as university leaders have broad discretion and even if unfair there is no cause of action having to do with a breach of natural justice,
  • the Plaintiffs did not plead sufficient facts to make out a claim for negligence on part of the Defendants,
  • the university president did not have a fiduciary duty to the students in this case, and
  • there is not a cause of action against Mr. Rock for misfeasance in public office

In response to the first ground, Justice Phillips found that although the Defendants do enjoy broad discretion, their actions could be construed as disciplinary against students that were not involved with the sexual assault allegations. Discretion, albeit broad, is not unlimited and the court, therefore, found that it was not plain and obvious that the actions were within the Defendants’ discretion.

In response to the second ground, the Court again found that it was not plain and obvious that a claim for negligence could not be made out. A duty of care has been judicially recognized to arise within the relationship between a university and its students. Failing to become informed of all the facts before reprimanding uninvolved students could be seen to have created foreseeable harm.

In contrast, the Court found that it was plain and obvious that a claim for breach of fiduciary duty could not succeed. The court found that the Plaintiffs, as paying students, represent a vulnerable class of persons, and they had substantial practical interests that were negatively affected by the Defendants’ actions. However, the Court reviewed the objects and purposes in the University of Ottawa Act and determined that “the objects and purposes of the University are to look out for its various constituent elements as a whole.” As a result, the Defendants were obligated to consider all of these elements in making a decision and the Court therefore struck the claim of breach of fiduciary duty.

Finally, the Court also found that it was plain and obvious that misfeasance in public office was not a reasonable cause of action. As the Court stated, this tort involves bad faith and/or dishonesty and, as an intentional tort, the Defendants must have been aware that such conduct would cause harm. While the actions of the Defendants may well have been negligent, Justice Phillips stated that the deliberate moral turpitude was not present to meet the misfeasance claim and accordingly struck this allegation from the pleadings.

Since the motion to strike the statement of claim by the Defendants was not successful, the claim that the Defendants acted negligently may be determined in a further court decision. As a result, universities, but also other charities and not-for-profits that are involved in disciplining their students, members, or other beneficiaries, should follow this case to determine how the outcome of the claim may impact their discipline process.