Wrzesien v Arnett & Burgess Pipeliners Ltd., 2013 ABQB 59

Court of Queen ’ s Bench of Alberta Citation: Wrzesien v Arnett & Burgess Pipeliners Ltd., 2013 ABQB 59 Date: 20130123 Docket: 0903 01225 Registry: Edmonton Between: Ed Wrzesien, 587283 Alberta Ltd. and Allied Consulting Services Inc. Plaintiffs - and - Arnett & Burgess Pipeliners Ltd., Arnett & Burgess Oilfield Construction Limited, Tom Arnett and Long Tube Co. Ltd. Defendants _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice Don J. Manderscheid _______________________________________________________ I.

Nature of the Application [ 1 ] The Plaintiffs Ed Wrzesien, 587283 Alberta Ltd. [587283] and Allied Consulting Services Inc. [Allied] apply for an order permitting them to file an amended statement of claim and for an order requiring the Defendant Tom Arnett to provide answers to undertakings given at his questioning.

[ 2 ] The Defendants seek an order requiring Mr. Wrzesien to provide answers to certain undertakings given by him. II. Background [ 3 ] On January 27, 2009, the Plaintiffs filed a statement of claim against Arnett & Burgess Pipeliners Ltd. [Pipeliners], Arnett & Burgess Oilfield Construction Ltd. [Construction], Mr. Arnett and Long Tube Co. Ltd. [Long Tube]. [ 4 ] The Plaintiffs claim in their pleading that: ∙ Mr. Wrzesien is the controlling shareholder of 587283 and Allied; ∙ Mr. Wrzesien was a director of Construction; ∙ Mr.

Wrzesien was employed by Construction, although the transaction was structured as consulting agreements between 587283 or Allied and Long Tube; ∙ Mr. Arnett is a director and shareholder of Pipeliners; ∙ Mr. Arnett is a director of Construction; ∙ Mr. Arnett owns or controls Long Tube; ∙ Mr. Wrzesien and 587283 acquired Class “A” and Class “B” shares in Pipeliners; ∙ It was a term of an employee share purchase plan [ESPP] between Construction and Pipeliners on the one hand and Mr. Wrzesien on the other that the Class “B” shares in Pipeliners would be valued annually and would be repurchased by Pipeliners from Mr.

Wrzesien or 587283 on termination of Mr. Wrzesien’s employment; ∙ The Class “A” shares in Pipeliners were valued annually; ∙ The Defendants agreed with the Plaintiffs or it was a reasonable expectation of the Plaintiffs that the Defendants or some of them would repurchase Mr. Wrzesien and 587283's Class “A” shares on termination of Mr. Wrzesien’s employment at a price equal to the latest valuation; ∙ Mr. Wrzesien, Construction, Pipeliners and Mr. Arnett agreed [Retirement Agreement] that Mr.

Wrzesien would retire from his position as Vice President of Finance with Construction on March 31, 2010 and Pipeliners, Construction or Mr. Arnett would repurchase certain Class “A” and “B” shares from 587283 and Mr. Wrzesien at a set purchase price on a set schedule; ∙ Mr. Arnett and Pipeliners breached the Retirement Agreement by not making all of the initial purchase of Class “A” shares;

∙ The Defendants or some of them breached the employment agreement with Mr. Wrzesien by constructively dismissing him; ∙ Construction failed to provide notice to Mr. Wrzesien of the termination of his employment; ∙ Construction, Mr. Arnett and Pipeliners advised Mr.

Wrzesien they would not repurchase any additional shares held by the Plaintiffs in Pipeliners; ∙ The Defendants caused Long Tube to terminate the consulting agreements with 587283 and Allied; ∙ The Defendants have repudiated the Retirement Agreement and breached the ESPP; ∙ Long Tube is indebted to Allied for consulting services. [ 5 ] In their written submissions, the Defendants say that Mr. Wrzesien was at one time controller of Construction and Pipeliners and that Construction is a wholly owned subsidiary of Pipeliners. [ 6 ] Mr.

Wrzesien seeks damages for wrongful dismissal, specific performance of the ESPP or damages of $628,706.00, payment or judgment for $1,437.60 against Construction, and interest. The Plaintiff 587283 asks for specific performance of the ESPP or damages of $1,680,239.50 and interest. Allied claims payment or judgment for $18,900.00 and interest as against Long Tube. [ 7 ] The Plaintiffs now apply to amend their statement of claim on the basis that Mr.

Wrzesien and 587283 are shareholders of Pipeliners, some of the conduct of the Defendants alleged in the statement of claim and which occurred after its filing was oppressive or unfair and Mr. Wrzesien and 587283 wish to claim relief pursuant to s 242(2) of the Alberta Business Corporations Act , RSA 2000, c B- 9 [ ABCA ].

In the proposed amendments, the Plaintiffs claim that Pipeliners refused to value the Class “A” and “B” shares annually, failed to consult with the Plaintiffs regarding decisions that would affect the value of the shares, refused to provide the Plaintiffs with valuations of the shares, and amended the ESPP in June 2012 with the result of depressing the value of the Plaintiffs’ shares. [ 8 ] The Plaintiffs also seek answers to undertakings #8, 9, 12, 19, 21, 23, 25, 32, 33, 34, 36 and 38 given by Mr.

Arnett during his August 17, 2009 questioning on his own behalf and as an officer of the corporate Defendants. [ 9 ] The Defendants ask for an order requiring Mr. Wrzesien to answer his undertakings #6, 10, 14, 15, 16 and 17. III. Arguments of the Parties [ 10 ] The Plaintiffs submit that the proposed amendments satisfy the Rules for amending pleadings as: ∙ they would not cause serious, non-compensable prejudice to the Defendants; ∙ there is no element of bad faith associated with their failure to plead the amendments in the first instance.

∙ they are permitted by statute even if they seek to add a new cause of action after expiry of the limitation period since the proposed new claim relates to the conduct, transaction or events described in the original pleading; and ∙ they are not so hopeless that they would have been struck if they were in the original statement of claim. [ 11 ] The Plaintiffs maintain that Mr. Arnett has given incomplete or improper answers to undertakings #8, 9, 12, 19, 21, 23, 25, 32, 33, 34, 36 and 38. [ 12 ] The Defendants do not consent but do not object to the amendments to paras 9(

d) and (e), 20, 26 and 27(i), which they say are simply further particulars rather than essential facts that must be pled to constitute a cause of action. [ 13 ] The Defendants argue that there must be some evidence to warrant the proposed amendments. They say that amendments which cannot withstand an application for

summary judgment are hopeless and should not be permitted. They point to the following evidence or lack of evidence as indicating the proposed amendments will not succeed: ∙ the Plaintiffs conceded on questioning that the alleged Retirement Agreement was not documented. ∙ the Plaintiffs have not provided the Court with evidence that any of the Defendants agreed to the alleged Retirement Agreement. ∙ the Plaintiffs admit there was a written agreement dated August 27, 2008 pursuant to which only some of the Plaintiffs’ shares in Pipeliners were repurchased by that company.

That agreement contained an “entire agreement” clause. ∙ the ESPP by its own terms did not oblige anyone to buy or sell Class “B” shares except on a Plan Member ceasing to be employed by the “Corporation,” defined as Pipeliners. Mr. Wrzesien does not claim to have been an employee of Pipeliners. The ESPP did not deal with Class “A” or common shares. ∙ there is no evidence Mr. Wrzesien was an employee of Pipeliners. ∙ Mr.

Wrzesien testified during cross-examination on his affidavit that his share value has not been affected and his interests as a shareholder or creditor of Pipeliners have not been adversely affected by any of the alleged acts of oppression. ∙ the events of June 2012 were expressly contemplated by the ESPP, which gave Pipeliners the power to amend the ESPP. [ 14 ] The Defendants note that Allied has no shares in Pipeliners or Construction and, therefore, cannot be a claimant in terms of the oppression allegations. The Defendants point out that only one director of Pipeliners has been named a Defendant.

Also, they submit that no cause of action for oppression exists against Mr. Arnett personally or against Long Tube. They say that the proposed amendments to para 17 are not specific in identifying the Plaintiffs and Defendants involved. [ 15 ] The Defendants maintain that a statement of claim cannot be amended to assert facts concerning events which occurred after the filing of the statement of claim. [ 16 ] The Defendants argue that an amendment generally should not plead a new cause of action beyond the limitation period.

They point out that the proposed amendments to paras 17, 19 and 28 allege oppression, which they maintain is a new cause of action. They contend that the limitation period has passed.

[17] The Defendants submit that undertakings #8, 9, 12, 21 and 33 have been answered by Mr. Arnett and the other undertakingsin issue were properly refused.

They say that the answers to those undertakings would not “significantly help determine one or more ofthe issues raised in the pleadings, or... ascertain evidence that could reasonably be expected to significantly help determine one or moreof the issues raised in the pleadings.” They contend that many of those undertakings were for the production of records of which thePlaintiffs must have copies but which they have not disclosed in their affidavit of records. The Defendants argue that failure to produce arecord ought to preclude a party from compelling production of that record from the opposing party. IV.

Analysis A. Amending Statement of Claim [18] Rules 3.62 and 3.65 of the Rules of Court provide in part: 3.62(1) A party may amend the party’s pleading, including an amendment to add, substitute or correct the name of a party, as follows: (a) ... (

b) after pleadings close, (i) ... (ii) for any other amendment, with the Court’s prior permission in accordance with rule 3.65. (

c) despite clauses (

a) and (b), whether or not pleadings have closed, with the agreement of the parties filed with the Court. 3.65(1) Subject to subrule (5), before or after close of pleadings, the Court may give permission to amend a pleading.

(2) If the Court gives permission for a pleading to be amended, the Court must specify the time period within which the amendedpleading must be filed and served. [19] These Rules do not provide a great deal of guidance to the Court in terms of whether amendments proposed after the close ofpleadings should be allowed. The Supreme Court of Canada in Pasco v Canadian National Railway, (SCC), [1990] 1SCR 117 at 118 held that, absent prejudice, only a "clearly and obviously invalid" amendment should be rejected.

The Alberta Court ofAppeal in Balm v 3512061 Canada Ltd., 2003 ABCA 98 at para 43, 327 AR 149 agreed that: "[an] amendment should be allowed, nomatter how careless or late, unless there is prejudice to the other side" and that even a doubtful plea should be permitted, if arguable. [20] The law on amendment of pleadings in Alberta was recently reviewed by McCarthy J in Quadrangle Holdings Ltd. v Coady,2012 ABQB 22 at paras 21-23, 531 AR 48: Rules 3.62 and 3.65 give the Court the general right to give the applicant the permission to amend pleadings where no agreementbetween the parties exists and the pleadings have closed.

When Rule 3.65 is read in conjunction with Rule 1.2 (2)(

a) the result is verysimilar to former Rule 132. In Manson Insulation Products Ltd. v. Crossroads C & I Distributors, 2011 ABQB 51, Poelman J.reiterated the applicable principles as follows:

44 The reference to "purpose of determining the real question in issue between the parties" does not appear in rule 3.65. However, rule 1.2(2)(

a) includes that purpose in the overall purpose and intention of the new Alberta Rules of Court. Thus, rule 3.65 cannot be seen as a change from the approach taken by the courts under the former rule 132. 45 The principles to be applied on amendment applications, established by the authorities under the formal rules, were recently summarized by Wittmann C.J.Q.B. as follows: [20] Generally, any pleading can be amended no matter how careless or late is the party seeking to amend: Balm v. 3512061 Canada Ltd. , 2003 ABCA 98 , 327 A.R. 149 at para. 43 .

This is referred to in Balm as the "classic rule". [21] The classic rule is subject to four major exceptions: Canadian Deposit Insurance Corp. v. Canadian Commercial Bank , 2000 ABQB 440 , 269 A.R. 49 at para. 11 ; Foda v. Capital Health Region , 2007 ABCA 207 at para. 10 ; see also C.H.S. v. Alberta (Director of Child Welfare) , 2006 ABQB 528 , 403 A.R. 103 at para. 11 , aff'd 2006 ABCA 355 , 401 A.R. 215.

Those exceptions are as follows: 1. the amendment would cause serious prejudice to the opposing party, not compensable in costs; 2. the amendment requested is "hopeless" (an amendment that, if it were in the original pleadings, would have been struck); 3. unless permitted by statute, the amendment seeks to add a new party or a new cause of action after the expiry of a limitation period; and 4. there is an element of bad faith associated with the failure to plead the amendment in the first instance.

Therefore, if no exception applies, the pleadings can generally be amended. 46 The principles summarized by Wittmann C.J.Q.B. were not premised on particular words in the old rules. Rather, they arose from the function of pleadings before our contemporary common law courts. As stated by Bensler J.: [18] This discretion [to amend pleadings] exists because "pleadings are not a meaningless ritual incantation or medieval superstition; they fulfil the first rule of natural justice, knowledge of the case against one": Waquan v. Canada , 2002 ABCA 110 , 303 A.R. 43, 2 Alta. L.R. (4th) 1 at para. 85 .

Furthermore, with the Court bound to decide a matter upon the issues pled before it, accurate pleadings are necessary for just decisions. Therefore, it appears that under the new rules pleadings can be amended no matter how careless or late is the party seeking to amend.

Generally, the case law is clear that when evidence is actually required to support an amendment, only a modest amount of evidence is needed: see for example Balm v. 3512061 Canada Ltd. , 2003 ABCA 98 , 327 A.R. 149... [ 21 ] Tilleman J in Elbow River Marketing Limited Partnership v Canada Clean Fuels Inc. , 2012 ABQB 277 , 62 Alta LR (5th) 359 and Macleod J in Ignition Energy Ltd. v Direct Energy Marketing Ltd. , 2011 ABQB 90 also recognized that the threshold required to allow an amendment is very low given the importance of accurate pleadings.

[ 22 ] As noted above, the Defendants do not object, although they do not consent, to the proposed amendments in paras 9(

d) and (e), 20, 26 and 27(i). Those amendments and the one in para 5 simply add particulars to the existing claims or amend the amount of damages sought. As those proposed amendments do not involve any of the exceptions referred to in Quadrangle Holdings Ltd. , I am prepared to allow them. 1. Prejudice [ 23 ] The Defendants in the present case have not argued that any of the proposed amendments, if allowed, would cause them prejudice. Nor is there any evidence that the proposed amendments would do so. 2.

Bad faith [ 24 ] The Defendants make no assertion of bad faith on the part of the Plaintiffs in failing to plead the amendments when they initially filed their statement of claim. 3. Expiry of the limitation period [ 25 ] The Defendants contend the Plaintiffs are seeking to add the oppression cause of action (proposed amendments to paras 8, 17, 19 and 28) after expiry of the limitation period. [ 26 ] Sections 3(1) and 6 of the Limitations Act , RSA 2000, c L-12 provide as follows: 3(1) Subject to

section 11, if a claimant does not seek a remedial order within (a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known, (

i) that the injury for which the claimant seeks a remedial order had occurred, (ii) that the injury was attributable to conduct of the defendant, and (iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding, or (b) 10 years after the claim arose, whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim. 6(1) Notwithstanding the expiration of the relevant limitation period, when a claim is added to a proceeding previously commenced, either through a new pleading or an amendment to pleadings, the defendant is not entitled to immunity from liability in respect of the added claim if the requirements of subsection (2), (3) or (4) are satisfied.

(2) When the added claim (a) ... (

b) does not add or substitute a claimant or a defendant, or change the capacity in which a claimant sues or a defendant is sued, the added claim must be related to the conduct, transaction or events described in the original pleading in the proceeding . [ 27 ] The Alberta Court of Appeal in Crane v Brentridge Ford Sales Ltd. , 2008 ABCA 216 at para 12 discussed the concept of capacity in the context of the Limitations Act , stating: In our view, the word “capacity” refers to whether the named party sues or is sued on its own behalf, or merely as a representative for someone else, such as an executor or next friend.

Section 6 only mentions "capacity" as an alternative to an addition or substitution of a party, and plainly envisages something tantamount to, or very similar to, such a change of party. The law has always allowed amendments outside the limitation period which neither change parties nor add any new causes of action.

Therefore, there would be no need for any part of the Limitations Act to deal with such amendments. [ 28 ] The amendments proposed by the Plaintiffs in the present case do not alter the capacity in which they sue or in which the Defendants are sued. [ 29 ] Some of the events outlined in the proposed amendments to paras 17 are said to have occurred in June and July 2012.

If the added claim was based only on those events, the limitation period could not be said to have expired, although the issue would still exist as to whether amendments can be made to plead facts arising after filing of the statement of claim. [ 30 ] However, a number of the acts or omissions complained of by the Plaintiffs as the basis for their proposed oppression claim are said to have occurred between July 7, 2008 and October 27, 2008, prior to the filing in January 2009 of their statement of claim, and are referred to in their original pleading.

As such, the Plaintiffs’ January 24, 2012 application to amend their statement of claim to include the oppression claim is brought beyond the two year limitation period specified in the Limitations Act . [ 31 ] The Plaintiffs assert that the proposed new claim relates to conduct, transactions or events described in their original pleading and, therefore, the Defendants are not entitled to immunity from liability. [ 32 ] In Dow Chemical Canada Inc. v Nova Chemicals Corp. , 2010 ABQB 524 , 495 AR 338, Wittmann CJ considered whether proposed amendments which arguably raised a new cause of action outside of the limitation period met the requirements of s 6(2)(

b) of the Limitations Act . At para 70, he commented: Whether an amendment arises out of the same events as the original pleading is a matter of degree and judgment with which a certain amount of specificity is required: C.H.S. at para 32. An over broad definition would bestow on the plaintiff an unlimited ability to add on statute-barred claims: C.H.S. [ CHS v Alberta (Director of Child Welfare) , 2006 ABQB 528 , 403 AR 103 , aff"d 2006 ABCA 355 , 401 AR 215 ], DeSoto Resources Ltd. v.

EnCana Corp. , 2010 ABCA 110 at para. 8 . [ 33 ] Wittmann CJ determined that in that case there were points that connected the new claims and the original pleadings. At para 85, he distinguished De Soto Resources Ltd. v EnCana Corp. , 2010 ABCA 110 , 487 AR 138 , noting that in De Soto the Court of Appeal found that the original and new claims both dealt with misrepresentation, but that the conduct, transaction and events underlying the various misrepresentations were qualitatively different in time and content and were made to different persons at different times in different contexts.

Also, the proposed amendments raised the claim of breach of contract in relation to an agreement that had not been mentioned in the original pleadings. [ 34 ] In this case, as previously stated, the Plaintiffs rely in part on conduct referred to in the original statement of claim as the basis

[34] In this case, as previously stated, the Plaintiffs rely in part on conduct referred to in the original statement of claim as the basisfor their oppression claim. I agree with the remarks made by counsel for the Plaintiffs in argument that the new cause of action is basedon the same ongoing dispute between the same Plaintiffs and the same Defendants for the same shares and the same ESPP discussed inthe original pleadings. As a result, I find that the requirements of s 6(2)(

b) have been met. However, the question of whether theproposed amendments are hopeless must also be addressed. 4. Hopeless [35] The amendments to paras 8, 17, 19 and 28, which raise an oppression claim, cannot be approved if they are hopeless. [36] The Defendants maintain that the proposed claim of oppression is hopeless for several reasons, including: (

a) not all of the Plaintiffs have status to sue all of the Defendants for oppression; (

b) some of the alleged transactions or conduct relied on by the Plaintiffs as the basis for the claim occurred after the statement ofclaim was issued; (

c) there is insufficient evidence to support the amendments and certain of the amendments do not support a claim of oppression. (

a) Status to maintain the claim [37] In order to pursue an oppression complaint against a corporation, the complainant must be a holder of a security of acorporation or any of its affiliates; a director or an officer or a former director or officer of a corporation or of any of its affiliates; or acreditor, if the Court in its discretion finds the creditor is a proper person to make the application (ABCA, s 239). [38] Mr. Wrzesien deposes that he and 587283 are shareholders of Pipeliners. As such, they have status to pursue an oppressioncomplaint against that company and against Construction, which the Defendants admitted in argument is a subsidiary of Pipeliners.Pursuant to s 2(1)(

a) of the ABCA, one corporation is affiliated with another corporation if one of them is the subsidiary of the other. Mr.Wrzesien says he was a director of Construction. As such, he has status to pursue an oppression claim against that company in any event. [39] As a director of Pipeliners and Construction, a finding of oppression can be made against Mr. Arnett (ABCA, s 242(2)(c)).

It isunclear whether he is also a director of Long Tube and whether Long Tube is affiliated with Pipeliners or Construction. [40] The Plaintiffs assert in their statement of claim that Allied is owed money by Long Tube for consulting services. [41] In Builders' Floor Centre Ltd. v Thiessen, 2012 ABQB 86, 86 CBR (5th) 16, Master Wacowich considered whether standingshould be granted to the applicant creditor to pursue an oppression remedy against the defendant company.

He noted at para 37 that inGignac, Sutts & Woodall Construction Co. v Harris (1997), (ON SC), 36 BLR (2d) 210, the Ontario Court(General Division) gave wide meaning to the term “creditor” in relation to the oppression remedy. It held that the applicants, whoseclaim sounded in unjust enrichment at the date of the conduct complained of, were creditors for the purposes of seeking such a remedy.Master Wacowich commented at para 38: A Court has broad powers to determine that an applicant is a proper person to apply for the oppression remedy.

This is a broad power ofjustice and equity whereby a Court may allow a person who would not otherwise be a "complainant" to take proceedings in order to"right a wrong done to the corporation which would otherwise not be righted" or to "obtain compensation himself or itself where his orits interests have suffered"...

[ 42 ] Master Wacowich observed at para 42 that unfairly disregarding the reasonable expectations of a creditor may constitute oppression. At para 43 he stated: The following have been identified as reasonable expectations of creditors, and are relevant in the present case: 1. A creditor reasonably expects that a corporation will not be used as a vehicle for fraud; 2. A creditor reasonably expects that the debtor will not convey away, for no consideration, exigible assets which will leave the creditor unpaid and unable to realize upon assets to satisfy the debt; 3.

A creditor reasonably expects that the directors of a corporation will manage the company in accordance with their legal obligations, namely to act honestly and in good faith in the best interests of the corporation and to exercise the diligence expected of a reasonably prudent person. 4. A creditor reasonably expects that the debtor will honour the understandings and expectations which the debtor has created and encouraged. M.A. Springman, George R. Stewart, and J. J.

Morrison, Frauds on Creditors: Fraudulent Conveyances and Preferences (Toronto: Thompson Reuters Canada Limited, 2009) ("Springman") at p. 24 - 12.1, 24-13, 24-15, 24-16. [ 43 ] Allied has not made any allegations against Long Tube in the statement of claim or proposed amendments other than the failure to pay a contract debt. In my view, that is not sufficient, without more, to found an oppression claim. As a result, I am not prepared to grant Allied status to pursue an oppression remedy against Long Tube. (

b) Events occurring after filing of statement of claim [ 44 ] In Hunka v Degner, 2012 ABQB 207 , Gill J considered whether a proposed amendment to add a further particular to a previous claim of oppression was hopeless. The amendment related to conduct of one of the defendants alleged to have occurred some six months after filing of the statement of claim. Mr. Justice Gill allowed the amendment, stating at para 29 that: The proposed amendment seeks to add a further particular of oppression. The additional particular is not being put forward as a stand-alone action of oppression.

Rather it is being added to a list of other allegations already in the Statement of Claim. It will form part of a broader factual context alleged by the Plaintiffs.

For this reason alone it is not "hopeless". [ 45 ] There is no mention in the Hunka decision of the defendants raising or Gill J considering the argument the amendment should not be allowed as it concerned behaviour occurring post filing of the statement of claim. [ 46 ] I agree with the Defendants in the present case that, except in the situation where a new defendant is added, an amendment speaks from the date of the original issuance of the statement of claim.

As a result, the pleading generally cannot be amended to refer to events which occurred after filing of the statement of claim (Stevenson & Côté, Civil Procedure Encyclopedia , vol 1 (Edmonton: Juriliber, 2003) at p 21-7).

[ 47 ] Accordingly, any of amendments proposed by the Plaintiffs here which relate to events occurring after filing of the statement of claim in January 2009 are not allowed. It is clear that the proposed amendments in para 17(d)-(

f) concern events that took place in June and July 2012. In the proposed amendments at paras 17(a)-(c), the Plaintiffs say that since 2008, Pipeliners has refused to value the Class “A” and “B” shares annually, failed to consult with the Plaintiffs regarding decisions that would affect the value of their shares, and failed to provide the Plaintiffs with any annual or other valuations of the shares. In argument, counsel for the Plaintiffs indicated that the allegation in 17(

a) relates to the fact that such valuations have not, to the knowledge of the Plaintiffs, been consistently made. The valuation for 2008 was provided as part of the undertakings. The only other valuations that could be the subject of this proposed amendment are those for periods of time after the filing of the statement of claim. In his examination on affidavit, Mr. Wrzesien clarified that his allegation in proposed para 17(

b) concerned the amendments to the ESPP made in 2012, again after the filing of the statement of claim. [ 48 ] The allegation in proposed para 17(

c) is limited to the period of time prior to filing of the statement of claim. (

c) Evidence to support amendments [ 49 ] In 869120 Alberta Ltd. v B & G Energy Ltd. , 2011 ABQB 209 , the plaintiff applied to amend its statement of claim to add a s 242 ABCA oppression claim against the original corporate defendant and the proposed individual defendants as directors of the corporate defendant.

Eidsvik J noted at para 24 that a proposed amendment must raise a triable issue or, in other words, not be hopeless and “there must be a ‘modest degree of evidence’ if the amendment is beyond trivial or of a clarifying nature, unless the claim to be added is fraud, and there a ‘stiffer test’ is to be used.” [ 50 ] In Hunka , Gill J considered the evidence necessary in order to support an application to amend a claim of oppression.

At para 27, he quoted from BCE Inc. v 1976 Debentureholders , 2008 SCC 69 at para 68 , [2008] 3 SCR 560 , in which the Supreme Court of Canada stated: The leading decision on the oppression remedy is the Supreme Court of Canada case of BCE Inc. v 1976 Debentureholders , 2008 SCC 69 . At paragraph 58 the Court described the oppression remedy as follows: First, oppression is an equitable remedy. It seeks to ensure fairness -- what is "just and equitable". It gives a court broad, equitable jurisdiction to enforce not just what is legal but what is fair . . ..

It follows that courts considering claims for oppression should look at business realities, not merely narrow legalities. And at paragraph 65: 65 Section 241(2) speaks of the "act or omission" of the corporation or any of its affiliates, the conduct of "business or affairs" of the corporation and the "powers of the directors of the corporation or any of its affiliates". Often, the conduct complained of is the conduct of the corporation or of its directors, who are responsible for the governance of the corporation.

However, the conduct of other actors, such as shareholders, may also support a claim for oppression . . .. In

summary, the foregoing discussion suggests conducting two related inquiries in a claim for oppression:

(1) Does the evidence support the reasonable expectation asserted by the claimant? and

(2) Does the evidence establish that the reasonable expectation was violated by conduct falling within the terms "oppression", "unfair prejudice" or "unfair disregard" of a relevant interest? [ 51 ] At para 28, Gill J referred to other principles relating to oppression. He noted an action of oppression can be built on a pattern of behaviour or conduct and the context in which allegations are made often is relevant. As a result, unless the pleaded facts are completely irrelevant, they should be permitted. [ 52 ] The Defendants argue that the proposed allegation in para 17(

b) that Pipeliners failed to consult with them regarding decisions

[ 52 ] The Defendants argue that the proposed allegation in para 17(

b) that Pipeliners failed to consult with them regarding decisions that would affect the value of their shares cannot be the basis for a claim of oppression as shareholders are not entitled to that type of information.

Assuming this allegation relates to a period of time prior to filing of the statement of claim, I take the same position as Gill J in Hunka that as it will “form part of a broader factual context alleged by the Plaintiffs... it is not hopeless.” [ 53 ] In the proposed amendments to para 8 of the statement of claim, the Plaintiffs assert that it was their reasonable expectation that the price of the Class “A” shares would be equal to the price of the Class “B” shares, calculated in accordance with the ESPP but without a 20 percent discount. Attached as part of an exhibit to the affidavit sworn by Mr.

Wrzesien on October 18, 2012 is a copy of the amended ESPP which sets out how the Class “A” and “B” shares are to be valued. There is no indication that the wording of

Schedule “A” to the ESPP was amended, although the definition of Fair Value Per Class B Share was amended.

Schedule “A” provides that: ... The valuation will consider the Corporation as an entity and will not distinguish between Class A and B shares. The Fair Value Per Class B Common Shares will be expressed on a per share basis taking into account Class A and Class B Shares and will be a 20 percent discount to the per share value derived under the valuation to reflect the lack of any market or liquidity for the Class B Shares. [ 54 ] In the questioning on his affidavits, Mr. Wrzesien testified that he was fairly aware of the terms of the ESPP, although not of

Article 8.1. In my view, this is sufficient evidence to allow the proposed amendment to para 8. [ 55 ] The exhibit to Mr. Wrzesien’s affidavit also includes a

summary of ESPP changes made in 2012. The

summary indicates that the original definition in the ESPP of the phrase “Fair Value Per Class B Common Shares” was based on a valuation by the Corporation’s auditors determined at December 31 for the immediately preceding fiscal year in accordance with

Schedule “A.” Again, I find this to be sufficient evidence to support the proposed amendment to para 5. [ 56 ] In terms of proposed para 17(a), the only evidence is that the valuation for 2008 was sought as an undertaking. However, this is sufficient in my view to allow that amendment. [ 57 ] The proposed amendments in para 19 simply reiterate the definition of oppression. They are allowed, but only to the extent that they refer to conduct which occurred prior to filing of the statement of claim. The proposed amendments in para 28 include the relief sought for the alleged oppression. They are allowed. B.

Answers to Undertakings [ 58 ] The Plaintiffs maintain that Mr. Arnett has given incomplete or improper answers to undertakings #8, 9, 12, 19, 21, 23, 25, 32, 33, 34, 36 and 38. [ 59 ] The Defendants contend that they should not be obliged to produce copies of documents which are also in the possession or control of the Plaintiffs and which the Plaintiffs have not produced. In my view, they are obliged to do so, although they may bring their own application to compel production by the Plaintiffs. [ 60 ] Mr. Arnett filed an affidavit providing answers to undertakings #8, 9, 12, 21 and 33.

He provided certain of the information requested. In terms of undertakings #8 and 9, he indicated the Defendants have no further information in response to the question. As to undertaking #12, he said they have no better copies of the T-4s available. He said the information requested in undertaking #33 cannot be determined.

In my view, those answers meet the undertakings given. [ 61 ] At the hearing, counsel for the Defendants indicated that they have disclosed any information they have in response to undertaking #19, including the valuation of Pipeliners’ shares for 2008 and the cover letter to the 2006 valuation. He advised they have not found the body of the 2006 report and do not believe a valuation was done in 2007. If it was done, the Defendants do not have a copy of it. The individual who undertook the valuations is dead. Again, I find this response meets the undertaking.

[62] Undertaking #21 initially was refused due to privilege. The undertaking was to inquire of Smith Mack Lamarsh whether theyever provided any legal opinion to the shareholders (or Pipeliners) with respect to the pros and cons of unanimous shareholderagreements. The Plaintiffs argued that the fact a legal opinion was given is not privileged, simply the content of the opinion. Counsel forthe Defendants advised there was no such legal opinion provided. This answers the question. [63] Undertaking #23 was to produce the minute book for Pipeliners.

The Plaintiffs contend the minute book and sharetransactions that it will disclose are relevant. The Defendants argue it is not producible and a shareholder has no right under the ABCA toinspect the whole of the minute book. They maintain that the Plaintiffs have not shown the minute book is relevant and material or willsignificantly help determine the issues in the lawsuit.

They cite NAC Constructors Ltd. v Alberta (Capital Region WastewaterCommission), 2006 ABCA 246, 412 AR 272 in support of their argument. [64] As noted in NAC Constructors Ltd. at para 9, Rule 200(1.2) limits the obligation of a witness to answer questions on oralexamination to questions seeking evidence that is both “relevant and material.” Rule 186.1 provides that for purposes of oralexamination, a question is relevant and material only if the answer could reasonably be expected to significantly help determine one ormore of the issues raised in the pleadings or to ascertain evidence that could do so. [65] The Plaintiffs claim in their original statement of claim that it was their reasonable expectation that their Class “A” shares inPipeliners would be repurchased by Construction or Pipeliners or other shareholders of those companies on termination of Mr.Wrzesien’s employment and in their proposed amendment they say it was their reasonable expectation that the price would equal theprice of the Class “B” shares, calculated in accordance with the ESPP, without a discount of 20 percent.

They further claim theDefendants’ conduct in refusing to repurchase all of their Class “A” and “B” shares was contrary to their reasonable expectations andamounted to oppressive behaviour. In my view, the securities register of Pipeliners is relevant and material to this issue as it will discloseany course of conduct on the part of Pipeliners or other related Defendants in purchasing shares of employees whose employment endedand the price at which they did so. This evidence in turn would go to the reasonableness of the Plaintiffs’ alleged expectation in thatregard.

Transactions in the securities register from the date when Mr. Wrzesien or 587283 first acquired shares in Pipeliners to October23, 2008 involving former employees of any of the Defendants who held or hold shares in Pipeliners and who have terminated theiremployment with the Defendant companies are to be disclosed although the name of the employee shareholder(

s) in issue need not bedisclosed. [66] Undertaking #25 was to disclose cases where Pipeliners’ Class “A” shares were sold at a value other than the valueestablished by Mr. McKinnon. The Defendants submit that transactions of other shareholders are not relevant. As with undertaking #23, Iam of the view that this information is material and relevant to the Plaintiffs’ claim that they had a reasonable expectation theirPipeliners’ Class “A” shares would be repurchased at a price equal to the price of the Class “B” shares, calculated in accordance with theESPP, without a discount of 20 percent.

The Defendants are to disclose details of any such share transactions that occurred from the datewhen Mr. Wrzesien or 587283 first acquired shares in Pipeliners to October 23, 2008, including the date of the transaction, amount ofshares involved and the price. The name of the shareholder(

s) need not be disclosed. [67] Undertaking #32 was to inquire of Mr. Tobias, a representative of Pipeliners’ bank, whether he kept any notes of a discussionhe had with Mr. Arnett about the financial position of the company and whether it was financially capable of doing the transaction thatwas involved in Mr. Wrzesien’s retirement agreement. The Defendants take the position that Mr.

Arnett is not required to go to anemployee of the bank, a non-party and not a person under the power or control of any of the Defendants, and ask them to produceanything. [68] This issue was canvassed by the Court of Appeal in United Inc. v Jacques Whitford Environment Ltd., 2008 ABCA 158, 432AR 260, albeit under the old Rules of Court.

The court in that case commented at para 14 that, as a general discovery principle, “a partyis not required to inform himself from the third parties.” The court referred to Price v Labossiere (1985) (AB KB), 41Alta LR (2d), 253 (QB), in which it was held that documents are within the power of a party and, therefore, are subject to production if itis reasonable for the party to request the documents in the possession of the non-party.

In Nagtegaal v Stad (1997), (AB KB), 215 AR 216 (QB), Veit J explained at paras 6-8 that a party is required, for example, to request copies of their income taxreturns or bank statements if they have not retained copies, but is not required to request copies of files belonging to non-party insurers asthose might contain material that is privileged or otherwise confidential or contain information to which the insured has no colour ofright. [69] In my view, any notes made by Mr. Tobias of his discussion with Mr. Arnett are not within the power of the Defendants andthere is no obligation on Mr. Arnett to ask Mr.

Tobias to produce any such notes.

[ 70 ] Counsel for the Defendants took issue with the court reporter’s

summary of undertaking #34. At the questioning, counsel for the Plaintiffs asked Mr. Arnett whether certain financial and insolvency tests referenced in para 3 of the Plaintiffs’ production #14 were performed by anyone and, if so, by whom. He asked whether or not the tests were passed or failed and what failed. He asked for any documentation of the tests. Mr. Arnett initially said that he did not know what tests counsel for the Plaintiffs was talking about.

He then stated: “For the time that we did I checked with it and I was confident that we had the financial capabilities for – for the draft, no, we didn’t, but for the deal we did, yes.” In my view, that answered what the results were of the tests. Mr. Arnett subsequently was asked if he personally performed the tests. He testified that: “[t]hat was done between - - that was done between Al McKinnon and Thomas Tobias and me.... and the directors... at different times. This is not together, we didn’t have a group meeting.” In my view, Mr.

Arnett answered who performed the tests. [ 71 ] An undertaking was given by the Defendants to produce any documentation regarding the results of the tests. Counsel for the Defendants advised during the hearing of this application that the tests referred to in Plaintiffs’ document #14 were not documented.

In my view, the undertaking has been satisfied. [ 72 ] Undertaking #36 was taken off the list of undertakings which are the subject of this application. [ 73 ] Undertaking #38 was to produce any records the Defendants might have of which shareholders, if any, were interested in buying additional shares in Pipeliners at the time of the letter which is #38 in the Plaintiffs’ production. The Defendants again submit that the actions of other shareholders are not relevant.

Given that the Plaintiffs contend their shares in Pipeliners are unmarketable to anyone other than the Defendants and as the value of the shares at the time will be in issue, I am prepared to order production of any such documentation, although the name of any person indicating an interest in purchasing shares in the company need not be disclosed. [ 74 ] The Defendants originally applied for answers to undertakings #6, 10, 14, 15 16 and 17 given by Mr. Wrzesien. They agreed they will have these decided by the Master if they cannot be resolved in discussions with the Plaintiffs. V.

Costs [ 75 ] If the parties cannot agree on costs, they may apply to me within 30 days of the issuance of this decision for a ruling on that matter. Heard on the 6 th day of December, 2012. Dated at the City of Edmonton, Alberta this 23 rd day of January, 2013. Don J. Manderscheid J.C.Q.B.A. Appearances:

Richard B. Drewry, Q.C. Emery Jamieson LLP for the Plaintiffs C. Michael Smith Smith Mack Lamarsh for the Defendants