Strategic Acquisition Corp v Multus Investment Corporation, 2013 ABQB 681

Court of Queen ’ s Bench of Alberta Citation: Strategic Acquisition Corp v Multus Investment Corporation, 2013 ABQB 681 Date: 20131120 Docket: 1301 02303 Registry: Calgary Between: Strategic Acquisition Corp.

Plaintiff - and - Multus Investment Corporation, Qualia Real Estate Investment Fund V Limited Partnership, Starke Capital Corp., Starke Dominion Ltd., 1680472 Alberta Ltd., John/Jane Doe 1 Through 10, XYZ Corporation 5 Through 10, ABC Partnership or Limited Partnership 1 Through 10, Opal Investment Corporation, Franklin Building AAM GP Corp., Starke Franklin Industrial Ltd., Starke Plaza 14 Ltd., Paragon Capital Corporation Ltd., and S.A. Backlin Professional Corporation Defendants _ ________________________________________ ______________ Memorandum of Judgment of the Honourable Madam Justice C.A.

Kent _________________________________________ ______________ [ 1 ] Strategic Acquisition Corp. (Strategic) applies to question directors of Starke Capital Corp. (Starke). Strategic says that Rules 5.17 and 5.18 should be interpreted liberally, in the same manner as former Rule 200. Starke says that Rules 5.17 and 5.18 have been drafted taking into account the jurisprudence that developed around Rule 200. As a result, the enumeration of who may be examined means only those people may be examined as of right. Others may be examined pursuant to Rule 2.18 so long as the requirements of the rule are met.

[ 2 ] Rules 5.17 and 5.18 read as follows: 5.17(1) A party is entitled to ask the following person questions under oath about relevant and material records and relevant and material information: (

b) if the party adverse in interest is a corporation, (

i) one or more officers or former officers of the corporation who have or appear to have relevant and material information that was acquired because they are or were officers of the corporation, and (ii) the corporate representative; (

d) one or more other persons who are or were employees of the party adverse in interest who have or appear to have relevant and material information that was acquired because of the employment; 5.18(1) Subject to subrules (2) and (3), if (

a) a party cannot obtain relevant and material information from an officer or employee or a former officer or former employee of a corporation that is a party adverse in interest, (

b) it would be unfair to require the party seeking the information to proceed to trial without having the opportunity to ask questions about the information sought, and (

c) the questioning will not cause undue hardship, expense or delay to, or unfairness to , any other party or to the person to be questioned, the party may question, under oath, a person who has provided services for the corporation and who can provide the best evidence on the issue.

(2) A person described in subrule (1) may be questioned only (

a) by written agreement of the parties, or (

b) with the Court’s permission. [ 3 ] There is no doubt that Rule 200 had wide application ( Cana Construction Co. Ltd. v Calgary Centre for Performing Arts , 1986 ABCA 175 ) and permitted examination of several categories of people connected to a corporation ( Prairie Land Corporation v Concert Properties Ltd. , 2004 ABQB 726 at para. 8 ). In Prairie Land , Slatter, J. (as he then was) permitted examination of a director in a case where he was satisfied that the directors would have relevant knowledge. [ 4 ] The only decision provided to me on Rules 5.17 and 5.18 is Cogent Group Inc. v Encana Leasehold Ltd.

Partnership , 2011 ABQB 355 , where Master Mason found that an employee of a related defendant could not be questioned. That employee had provided services to the defendant but the knowledge that he had did not arise as a result of those services. In the result, the employee did not fit into Rule 5.18. While the case is not directly on point, it is a more restrictive approach to questioning than found in the former Rule 200. [ 5 ] This case is like Prairie Land . Here Strategic wants to question the directors about their knowledge of Mr.

Chandran’s relationship to Starke and the financing of the transaction at the core of this case. I expect the questioning would not be lengthy. A cautious approach would require Strategic to question the officers and then apply to question the non-officer directors pursuant to Rule 5.18. A more efficient would be to allow the questioning on the same dates as the other questioning is scheduled. That is consistent with Rule 1.2. I so order. [ 6 ] The second issue is how these former directors and officers are to be compelled to attend.

I see no reason why this should not be done in the usual manner, by service on those directors or officers. Starke is directed to provide Strategic with their contact information. Heard on the 1 st day of November, 2013. Dated at the City of Calgary, Alberta this 20 th day of November, 2013.

C.A. Kent J.C.Q.B.A. Appearances: Sean Smyth, Laurie Baptiste, Kelli McAllister McCarthy Tetrault LLP for the Plaintiff Strategic Acquisition Corp Derek Nash and Judy Burke Demiantshuk Lequier Burke & Hoffinger LLP for the Defendants Starke Kenneth T. Lenz Bennett Jones LLP for the Defendants Multus Investment Corporation and Qualia Real Estate Investment Fund V Limited Partnership