Weatherford Canada Partnership v Addie, 2016 ABQB 188

Court of Queen ’ s Bench of Alberta Citation: Weatherford Canada Partnership v Addie, 2016 ABQB 188 Date: 20160407 Docket: 0603 04628 Registry: Edmonton Between: Weatherford Canada Partnership Plaintiff/respondent - and - Dave Addie, David Anderson, Glen Kinnee, Ted Harland, Dan Endersby, Midfield Supply ULC, Midfield Supply International Ltd., Dale Denney, Douglas Golledge, John Letwinetz, Rick Endersby, Jakob Ambrosius, Artemis Kautschuk und Kunstoff-Technik GmbH, Wilhelm Kaechele GmbH, West Met Tools & Machinery Ltd., and Europump Systems Inc.

Defendants/applicants _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.B. Veit _______________________________________________________ Summa ry

[ 1 ] In this special chambers application, Artemis and Kaechele ask the court for leave to amend their statements of defence to plead that Weatherford’s claim against them is barred by the Limitations Act , and, if the applications for amendment are granted, for

summary judgment against Weatherford . [ 2 ] The parties agree, in large part, on the applicable law. Insofar as amendments to pleadings are concerned, the parties agree that, although applications for amendment need only cross a low bar, amendments should not be allowed, amongst other reasons, if they cause the party opposite prejudice which cannot be compensated by costs or if the proposed amendments are hopeless.

Weatherford argues that they would suffer prejudice if the amendments were allowed because Weatherford is now unable to serve its 2007 statement of claim which did name the applicants as defendants; Weatherford also claims that the applications are too late given that a trial date in early 2017 has already been set. [ 3 ] Insofar as applications for

summary judgment are concerned, the parties agree that there has been a shift in the legal culture which now supports the granting of

summary judgment in situations where uncontroverted evidence establishes that there is no genuine issue for trial. The applicants’ application for

summary judgment on a limitations basis is grounded in records produced by Weatherford in 2015, pursuant to court order, which disclosed internal Weatherford communications from November 2005. The applicants contend that the 2005 records establish, in light of all of the circumstances previously known, that Weatherford knew, by November 30, 2005, or in any event not later than March 31, 2006, of the issues which it raised in its Amended Amended Amended Statement of Claim filed April 7, 2008.

The applicants assert that Weatherford understood the limitations issues because Weatherford acknowledged that Q.B. action 0703 13544 filed by Weatherford on October 23, 2007 – which named the applicants as defendants but which was never served on the applicants - had been filed to “preserve [its] position”. Finally, the applicants argue that, because Weatherford deliberately chose not to serve its 2007 claim, it effectively chose not to initiate proceedings against them for tactical business reasons.

The defendants therefore argue that they are entitled to rely on what they characterize as Weatherford’s laches and acquiescence, together with s. 10 of the Limitations Act , to obtain limitations immunity from Weatherford’s claims. [ 4 ] Weatherford opposes the applications for

summary judgment on the basis that there are issues of fact and law which genuinely require a trial.

In particular, Weatherford highlights that: - the Artemis defence does not explicitly refer to laches and acquiescence and therefore those issues should not be considered on Artemis’ application; - the amendment relating to laches and acquiescence is largely hopeless because it provides a defence only to equitable claims and Weatherford’s claims are largely legal rather than equitable; - in any event, the Kaechele application is hopeless because it does not provide evidence that Kaechele altered its conduct in any way in reliance on anything said or done by Weatherford; - the facts surrounding the issue of when Weatherford had sufficient knowledge of the involvement of the applications are complex.

Weatherford maintains that it was not until June 2006, when Weatherford saw one of its stators in the yard of a competitor in Lloydminster that it obtained the requisite knowledge to sue the applicants; - if the court should find that Weatherford did not amend its claim to add the applicants to the main action within two years of the date on which it had sufficient knowledge of its cause of action, s. 6 of the Limitations Act allows it to add the applicants to its action even after the expiry of two years. - in any event, at no time did Weatherford ever conduct itself in a manner or represent to the applicants that it intended to abandon its legal rights and remedies against them; - Weatherford’s “contingency plan” or “replication project” was undertaken in direct response to the perceived threat that the applicants may be involved in supplying the startup competitor; - also, Weatherford maintains that the applicants themselves did not have the “clean hands” required by equity: at the same time as Weatherford was taking steps to strengthen its relationship with each of them, the applicants were, separately, negotiating with the startup to be involved with the competing business in some way; - the destruction by Dunn of the notes of his meetings with the defendants Addie and Anderson is not spoliation because Dunn took those notes personally and not during the course of his employment with Weatherford. [ 5 ] The applications for amendments of the statements of defence are allowed.

Weatherford has not established that it would suffer prejudice of the type required if the amendments are allowed: these amendments are not the reason why Weatherford is unable to serve its 2007 statement of claim. Weatherford chose to discontinue its 2007 action without any encouragement from the applicants.

Although the amendments are late, in the circumstances, Weatherford had a full opportunity to respond to the issues raised in those amendments. [ 6 ] The proposed amendments are not hopeless: in this context, the equitable doctrines of laches and acquiescence are potentially applicable to legal claims as well as to equitable ones. [ 7 ] The applications for

summary judgment are allowed. Spoliation, as an evidentiary concept, is not applicable here against Weatherford: the evidence does not establish that, when the senior Weatherford employee Dunn destroyed records of his meetings with the defendants Addie and Anderson, he did so "to affect the litigation". [ 8 ] A review of the uncontested evidence establishes that Weatherford had all the information it required to sue the applicants by November 30, 2005 or March 31, 2006 at the latest.

In all the circumstances, the November 25, 2005 email provided Weatherford with more than a mere suspicion of the alleged wrongful activities of the applicants. Therefore, Weatherford has failed to meet the s. 3 limitations deadline.

[9] Although Weatherford’s 2008 added claim to its original pleading does relate to the conduct described in the originalpleading, because of the equitable doctrines of acquiescence and laches outlined in s. 10 of the Limitations Act, the applicants are grantedimmunity from liability that would otherwise apply as a result of the application of the curative provisions of s. 6(4) of the LimitationsAct.

While the original pleading was in effect, Weatherford, a sophisticated litigant, knew of the limitations issue, but deliberately chosenot to serve its 2007 statement of claim naming the applicants as defendants for the tactical reason of maintaining a supply of statorsfrom the applicants until it could replicate the German stators. In those circumstances, it would be unequitable to allow Weatherford tobenefit from the curative provisions of s. 6(4) of the Limitations Act.

Cases and authority cited [10] By Artemis Kautschuk und Kunstoff-Technik GmbH: Weatherford Canada Partnership v Addie, 2009, ABQB 39;Weatherford Canada Partnership v Addie, 2012 ABQB 215; Alberta Rules of Court, Alta Reg 124/2010; Provalcid Inc. v Graff, 2015ABQB 574; Hryniak v Mauldin, 2014 SCC 7; Templanza v Wolfman, 2016 ABCA 1; Elkow v Sana, 2015 ABQB 803; Sticks andStones Communications Inc. v Hole's Greenhouses & Gardens Ltd., 2015 ABQB 774; Limitations Act, RSA 2000, c L-12; CentralTrust Co. v Rafuse, (SCC), [1986] 2 SCR 147; Quadrangle Holdings Limited v Coady, 2012 ABQB 22; De Shazo vNations Energy Company, 2005 ABCA 241; Mohr v 477470 Alberta Ltd., 2003 ABQB 294; Goldencare Holdings Inc. v Manu ChughArchitect Ltd., 2006 ABQB 696; Rosenich v.

Welke, 2003 CarswellAlta 1888; Leokadia Contracting Ltd. v Sabre Plumbing ServicesInc., 2012 ABQB 585; Jacqueleyne Poff v Great Northern Data Supplies (AB) Ltd., 2015 ABQB 173; Hunter Financial Group Ltd. vMaritime Life Assurance Co., 2007 ABQB 263; Brough v Yipp, 2014 ABQB 777; Desoto Resources Ltd. v EnCana Corp., 2010ABCA 110; S. (C.H.) v Alberta (Director of Child Welfare), 2006 ABQB 528; Barker v Budget Rent-A-Car of Edmonton Ltd., 2012ABCA 76; Castledowns Law Office Management Ltd. v FastTrack Technologies Inc., 2012 ABCA 219; 681210 Alberta Ltd. v Hunter,2012 ABCA 83 (Alta.

C.A.); North American Road Ltd. v Hitachi Construction Machinery Co, 200B5 ABQB 847; McDougall vBlack & Decker Canada Inc., 2008 ABCA 353; Schnick v Rosen 2009 ABQB 189; Great-West Life Assurance Company v King 2013ABQB 529; Devon Canada Corporation v Canadian Pacific Railway Co 2009 ABQB 143; Barker v Budget Rent-A-Car of EdmontonLtd. 2011 ABQB 127 [11] By Wilhelm Kaechele GmbH: Balm v 3512061 Canada Ltd. 2003 ABCA 98; Canada Deposit Insurance Corporation vCanadian Commercial Bank 2000 ABQB 440; Boyd v Cook 2013 ABCA 399; Canadian National Resources Limited v JensenResources Ltd. 2013 ABCA 27; M.(H.) v M.(K.) (SCC), [1992] 3 SCR 6; Manitoba Metis Foundation Inc. v Canada(Attorney General) 2013 SCC 14; Zurich Insurance Co. v TD General Insurance Co. 2014 ONSC 3191; Lac Minerals Ltd. vInternational Corona Resources Ltd. [1980] 2 S.C.R. 574; Perry, Farley, & Onyschuck v Outerbridge Management Ltd. (ON CA), [2001] O.J.

No. 1698; Hryniak v Maudlin 2014 SCC 7. [12] By Weatherford Canada Partnership: Weatherford Canada Partnership v Artemis Katschuk und Kunstoff-TechnikGmbH et al, 2009 ABCA 195; Weatherford Canada Partnership v Addie, 2011 ABQB 562; Weatherford Canada Partnership v DaveAddie et al, 2009 ABQB 538; Balm v 3512061 Canada Ltd., 2003 ABCA 98; Godhart v Westlake Developments Inc., 2015 ABQB 543;First Investors Corp. v Quinpak Development Ltd., 1985 CarswellAlta 72; Hryniak v Mauldin, 2014 SCC 7; Stoney First Nation vImperial Oil Resources Limited, 2014 ABQB 408; Windsor v Canadian Pacific Railway Ltd., 2014 ABCA 108; WP v Alberta, 2014ABCA 404; 776826 Alberta Ltd. v Ostrowercha, 2015 ABCA 49; Beier v Proper Cat Construction Ltd., 2013 ABQB 351; AT FilmsInc. v AT Plastics Inc., 2014 ABQB 422; Condominium Plan 0125764 v Amber Equities Inc., 2015 ABQB 235; Meek (Trustee of) vSan Jan Resources, 2005 ABCA 448; Atlanta Industrial Sales Ltd. v Emerald Management & Realty Ltd., 2006 ABQB 255; DeShazo v Nations Energy Co., 2005 ABCA 241; Sun Gro Horticultural Canada Ltd. v Abe's Door Service, 2005 ABQB 731, aff’d by2006 ABCA 243; Poff v Great Northern Data Supplies (AB) Ltd., 2015 ABQB 173; Canadian National Resources Limited vArcelormittal Tubular Products Roman SA, 2012 ABQB 679; Elbow River Marketing Limited Partnership v Canada Clean FuelsInc., 2012 ABQB 277; McLaughlin v Broddy, 2006 ABQB 914; 681210 Alberta Ltd. v Hunter, 2012 ABCA 83; Intact Insurance Co.of Canada v Lombard General Insurance Co. of Canada, 2015 ONCA 764; Allen M.

Linden, Lewis N.

Klar, Q.C.R Bruce Feldthusen, Canadian Tort Law Cases, Notes & Materials; 13th ed. (Canada: LexisNexis Canada Inc., 2009); Saskatchewan River Bungalows Ltd. vMaritime Life Assurance Co., (SCC), [1994] 2 SCR 490; Strand v Strand, 2014 ABQB 754; Zippy Print EnterprisesLtd. v Pawliuk, (BC CA), [1994] BCJ No. 2778; Ambrozic v Burcevski, 2008 ABCA 194; Seyedi v Nexen Inc. 2016ABCA 24; Re: San Francisco Gifts Ltd. (Companies’ Creditors Arrangement Act) 2004 ABQB 229; Seyedi v Nexen 2016 ABCA 24;Alberta Law Reform Institute, Report No. 55, December 1989, Limitations; [13] By the court: Chow-Hidasi v Hidasi 2013 BCCA 73; H.E. v M.M. 2015 ONCA 813; Steward v North MetropolitanTramways Co. (1886) 16 Q.B.D. 556 (C.A.); Bhasin v Hrynew 2014 SCC 71; Ferreira v Macedo 2016 ONSC 951; Bark-Fong vCooper (1913) (SCC), 49 S.C.R. 14; Webster v Gelinas (ON SC), [1941] 4 D.L.R. 495; Silver EagleManagement Inc. v Onoway (Town) 2011 ABQB 139; Paniccia Estate v Toal 2012 ABCA 397; No Limits Sportswear v 0912139 B.C.Ltd. 2015 BCSC 1698, at paras. 23 ff.; Urbas Estate v Home Savings and Loan Corp. 2015 ONSC 6399; Rivergate Properties Inc. vWest St.

Paul (Rural Municipality) 2006 MBCA 76. 1. Background

a) Factual [14] The general background to this application has been set out in previous decisions: 2009 ABQB 39; 2009 ABCA 195; 2009ABQB 538; 2011 ABQB 562; 2012 ABQB 215. [15] It is sufficient for the purposes of these applications to say that Weatherford is a manufacturer of progressing cavity pumps,hereafter PC pumps. Alberta is the world’s biggest market for those pumps. Two of the key components of those pumps are stators androtors; a PC pump stator is a steel tube with an elastomer lining into which a rotor is inserted.

The elastomers used by statormanufacturers are generally proprietary to that manufacturer, and highly confidential. Stators and rotors are then combined with othercomponents and assembled by various manufacturers, including Weatherford, and sold to end customers in the Alberta heavy oil industryincluding Husky Oil, CNRL, Encana, etc.

[ 16 ] Artemis and Kaechele are German stator manufacturers. Although other companies manufacture stators, including Weatherford itself both at its Edmonton Strathcona plant and at its plant in Brazil, the two German manufacturers have a certain “cachet” in the industry. Their stators have been particularly prized in the heavy oil industry. The two German stator manufacturers are competitors with one another in the stator industry. During the period in question, Weatherford had contracts with each of the applicants for the supply of stators.

The contracts did not contain exclusive production clauses; that is, Weatherford had not contracted with either of the German manufacturers to produce stators only for Weatherford. The contracts did not contain clauses prohibiting reverse engineering; that is, Weatherford had not contracted with either of the German manufacturers to prevent them from reverse engineering or replicating the stators which they produced for Weatherford for other potential customers.

Even after they were served with process in these proceedings, the German manufacturers did not refuse to supply Weatherford with any product ordered by Weatherford. [ 17 ] There are many models of PC pumps available on the market; typically, the pump models are differentiated by the total daily volume which can pass through the pump. Artemis produces 9 models of stators which have been used by Weatherford; Kaechele produces 2 such models.

The ability of a particular PC pump to pump larger or smaller volumes of fluid will depend on the size of the pump and the size of the cavities created by the juxtaposition of the stator and the rotor. The cavities, which are sometimes referred to as “interior geometries” of a PC pump, are therefore important to the utility of a pump.

Stators are manufactured based on specifications set for internal geometries, that is the cavity created between the stator and the rotor, and specific elastomer formulations. [ 18 ] Because limitations is a key component of these applications, it is necessary to have a clear outline of the chronology of the relevant events. [ 19 ] Starting in early 2005, two key Weatherford employees, the defendants Addie and Anderson, began to consider leaving Weatherford to start up a new company that would produce interchangeable components for PC pumps and would compete with Weatherford.

They approached another senior Weatherford employee, Lonnie Dunn, to ask him to join them. Dunn met with them off and on during 2005. Beginning in February 2005, Mr. Dunn made informal notes of his meetings. [ 20 ] Starting at the latest on February 3, 2005, Weatherford considered changing the business relationship it had had with Artemis for “the last couple of decades”: Weatherford would approach Artemis with a sole source agreement proposal.

The proposed agreement would include the following terms: confidentiality with respect to exchanged technical information; Weatherford would become Artemis’ world-wide PC pumps distributor; and, Weatherford would commit to order a certain dollar amount of product per year. Weatherford was informed by Anderson on March 2, 2005, that Artemis was not interested in making any such agreement. Renewed interest in pursuing the possibility of coming to such an agreement with Artemis was expressed by Weatherford in November, 2005.

See Tab Q of the Gillis affidavit. [ 21 ] On October 14, 2005, Addie resigned from Weatherford. [ 22 ] On October 25, 2005, Anderson resigned from Weatherford. [ 23 ] At about the time when Addie and Anderson left Weatherford, Mr.

Dunn decided not to join them. [ 24 ] After Dunn decided to remain with Weatherford, he destroyed the notes he had made of his meetings with Addie and Anderson. [ 25 ] In early November, 2005, Dunn confirmed with the Weatherford management that he had had discussions with Addie and Anderson regarding the setting up of a competing business. [ 26 ] On November 25, 2005, Lonnie Dunn, a key employee of Weatherford being the engineer who was responsible for the technical side of Weatherford’s PC pump operation and a man who routinely dealt with each of the German applicants, wrote a detailed email to Bill Lane, the Vice-President of Weatherford, (see tab K, Gillis affidavit filed January 25, 2016) which included the following comments: As you know I have been aware of the situation developing for some time but conflicted on whether or not to take advantage of my knowledge and begin working against it.

About a month ago after evaluating both sides I decided I would not participate and in light of what I saw going from the other side decided it was appropriate to begin doing some of the background work in confidence that would be required going forward. Some of the details on the consolidated product line, new stator and rotor production numbers and costs and pump configurations that I provided you and we discussed when you were here a few weeks ago were the result of that work. . . As a result of my situation I have given this much thought both in terms of what I would do if I was on either side.

I wanted to share some of this with you as it may provide additional perspective for you to consider. Note that these are purely my opinions and for the most part were formulated upon my

interpretation of the overall situation as opposed to my insider knowledge. Now that this is out in the open I feel like I can openly express my thoughts as the same thing would have happened had I not known in advance it would have just taken me longer to get to this point. Given that timing will be critical here and I am away next week I did not want to let any more time slip away. . . .

The whole premise of the start-up’s plan revolves aroun d their existing relationships with customers and their ability to obtain and supply the rotor and stator product that still comprises the majority of the Canadian business . . . . The second part revolves around their access to the exact same pump product that the customers are using already and their knowledge that most of them are not comfortable with the high percentage of the business that we have.

One thing I know that has concerned them is that over time the Strathcona product is cannibalizing the historical German product and beginning to differentiate itself in terms of performance . . .

They will offer the exact same product and try to convince the customers that ours is different and unproven especially if we bring it in from Brazil. . . [ t]hey will get stators from Artemis and Kaechele and rotors from . . . [f]rom the assembly end of things they only [need] . . . to deal with welding, phasing and testing which is relatively routine and it is not unrealistic that a small assembly operation can be set up in three months. That timing would be good as one would assume they have already ordered product from Artemis and Kaechele so it will arrive in about three months (early March) . . .

Obviously we need a strategy to complete [sic] with them as if we are offering the same product at the same price and they have the relationships we will lose a large portion of the business within six to nine months as they ramp-up capacity. . . If we are to compete on price over the long term we can’t continue to offer the German . . . product as since these companies are tied in with the start-up they will get preferential pricing even if we are ordering higher quantities . . . . One thing working

in our favour is being vertically integrated we should be more efficient and have better flexibility. Although all these companies are all working together they are comprised of manufacturers (Artemis, Kaechele . . .) an assembly operation (the start-up pump company) and a distributor . . . who all need to get their piece of the pie. . . . However, Artemis and Kaechele are legitimate businesses that need to make money and based on my conversations with . . . and . . . they have been squeezed quite tight over the last few years by Dave. . . .

The success of our pricing opportunity in the heavy oil market lies in utilizing our internal manufacturing to reduce cost and maintain margins. . . . Note that I am not suggesting an abrupt change in supply chain but rather phasing one or perhaps both German suppliers over time (one possibility although remove [sic] would be that the Germans would cut us off and I suspect . . . will do that regardless). . . . . With this situation now in the open John will be able to factor those scenarios into the AFEs he has been working on for new rotor and stator manufacturing equipment. . . .

On the technical side there would also be an extensive reengineering effort required to develop interchangeable conventional stators but it is not insurmountable as we have become very good at this by moving several German models here already . . . This situation becomes very complicated because the timing is critical and most of the options we have will take considerable time. To make matters worse the competition is already moving . . .

Since we have to anticipate competition from early March there is no possibility of us being able to replace any significant German production by then as the earliest we could have stators coming back from Brazil is about four to five months and a new extruder and associated capacity here in Canada about six to eight months. As such we need to continue our relationship with the Germans for at least three to four months after which even if we stop ordering the product on . . . and in inventory would carry us through.

If we require this working relationship with the Germans it likely impacts how aggressive we want to get in terms of going after them for using our technology/designs which in turn could potentially slow down the start-up . . . . [Emphasis added] [ 27 ] On December 19, 2005, Lonnie Dunn sent an email to Bill Lane, Bob McNair, Jeff Lembcke, Roland Moneta, and John Baker, all of whom are part of the management team of Weatherford. The email is entitled “Approval for Engineering Costs Associated with Strathcona Replication of German PCP Product Line”, can be found at tab T of Mr.

Gillis’ affidavit, and includes the following: In follow up to the discussion in our last conference call we have now moved into active development on the project to replicate the German PCP product line at Strathcona . . . . Whereas normally these developments would be individually documented and justified through the Project and Project databases and Stage Gate Development Process, for confidentiality we have agreed to replace this formal process with a single e-mail approval based on the following . . . . [Emphasis added] Every addressee approved Dunn’s proposal.

Bill Lane’s email reads: “Excellent detail and plan. Approved. Full speed ahead.” It goes without saying that the German manufacturers were not informed by Weatherford of its replication project. [ 28 ] On January 11-13, 2006, Bill Lane travelled to Germany to meet with each of the applicants separately. Lane did not discuss Weatherford’s replication project with the Germans. [ 29 ] While the Weatherford team was in Kaechele’s boardroom, the principal of Kaechele accidentally brought up onto a motorized whiteboard an outline of information relating to Europump.

He was greatly embarrassed by this; being unable to remove the offending panel, eventually pulled the plug out of the wall in order to remove the information. In a written thank you note for the hospitality which they had received in Germany, Lane referred to this incident only obliquely by referring to the fact that he realized that Weatherford had competitors. [ 30 ] On January 11, 2006, Lane visited the Artemis headquarters and assured himself that Artemis would continue to supply Weatherford with stators.

However, Artemis continued to refuse to enter into a new, more circumscribed arrangement with Weatherford. [ 31 ] In early 2006, that is at some time in the first quarter of 2006, Weatherford received, from one of its customers, a Europump spec sheet relating to rotors; see Dunn’s questioning, October 21, 2014, at page 2123/4. [ 32 ] On January 30, 2006, Dunn sent one of his regular, typically monthly, updating emails to Weatherford’s management about the replication of the German products.

That update contained the following information and recommendations: While it was important to kick this off aggressively it appears now that we are unlikely to suffer an immediate supply disruption and as such I would like to propose we back off on my very aggressive initial schedule. . . . .

This will also allow me to focus on the Brazil development aspect as well as beginning to look at the strategy through which we can differentiate our internal products (Strathcona and Brazil) from the German products. [ 33 ] On February 26-28, 2006, Dunn prepared a chronological history of his dealings with Addie and Anderson. [ 34 ] On April 11, 2006, Weatherford filed its statement of claim in this action against a number of defendants, not including the applicants. The statement of claim did, however, recite the defendants Addie and Anderson’s relationships to the applicants: 12.

Addie was a director and shareholder . . . . in BMW Monarch . . . BMW Monarch was a distributor of PC Pumps manufactured by Weatherford or its predecessors . . . 13. Addie, . . . subsequently formed a company called BMW Pump Inc. . . 14. Shortly after BMW Pump was formed, Anderson left his position with Weatherford to join BMW Pump as its Chief Engineer. . . .

While with BMW Pump, Anderson made arrangements to obtain parts used for the assembly of BMW Pump products directly from supplier who supplied parts to Weatherford’s PC Pump operating unit, including ARTEMIS Kautschuk und Kunstoff-Technik GmbH (“Artemis”) and Wilhelm Kaechele GmbH (“Kaechele”) both of which were (and continue to be) based in Germany and supplied (and continue to supply) Weatherford with stators manufactured to Weatherford’s confidential and proprietary specifications . . . . Stators and rotors are key components used in the manufacturing of PC Pumps.

15. BMW Monarch and BMW Pump became competitors of Weatherford. 16. On October 9, 1997 Weatherford . . . acquired both BMW Pump and BMW Monarch by purchasing all of the shares of those companies . . . Weatherford paid Addie $1,714,286.00 for his interest in BMW Monarch and $4,883,721.00 for his interest in BMW Pump. Anderson was paid $4,883,721.00 for his interest in BMW Pump. . . . 28.

Addie and Anderson had extensive and recurring contact with key suppliers of Weatherford around the world including Artemis, Kaechele and . . ., in the course of which Addie and Anderson gained and used an intimate knowledge of those suppliers’ special needs, preferences, idiosyncrasies and plans. 29. Addie and Anderson had direct contact and dealings with Weatherford’s key suppliers in relation to both field and shop testing of PC Pump prototypes . Both Addie and Anderson encouraged and facilitated the sharing of Weatherford confidential and proprietary information with Artemis, Kaechele and . . . . . . 58.

While still employed with Weatherford . . . . Addie and Anderson . . . devised and carried out a plan to attempt to cripple Weatherford’s PC Pump business while at the same time furthering the interests of [Addie and Anderson and others] by engaging, directly or indirectly, in the following wrongful acts:

a) incorporating ABC Co. Ltd. Through which the Defendants . . . are or will be manufacturing, assembling and supplying PC Pumps and PC Pump components for supply to . . . in competition with Weatherford, using Weatherford confidential and proprietary information in the possession of Addie, Anderson . . . and in the possession of Weatherford suppliers, Artemis, Kaechele, . . .

b) inducing or attempting to induce . . . suppliers or other persons with whom Weatherford has relationships relating to the research, design, development, manufacturing, supply, sales and service of PC Pumps and PC Pump components to alter, leave or terminate their relationships with Weatherford ; . . .

f) inducing or attempting to induce suppliers of Weatherford to provide PC Pumps and PC Pump components to the Defendants, . . . which PC Pumps and PC Pump components are manufactured using Weatherford confidential and proprietary information ; . . . 59. In carrying out their wrongful acts, [the defendants Addie and Anderson or others] directly or indirectly: . . .

b) arranged with Weatherford’s suppliers, Artemis, Kaechele , . . . to cease doing business with Weatherford or, alternatively, to supply ABC Co. Ltd., . . . or others with rotors and stators manufactured to Weatherford’s confidential and proprietary specifications in order to allow ABC Co. Ltd., . . and others to supply and offer to supply PC Pumps and PC Pump components to Weatherford customers; [ 35 ] “ABC Co. Ltd.” mentioned in the pleading has now been identified as Europump. [ 36 ] In early June, 2006.

Weatherford states that it saw some of its stators in a Europump yard in Lloydminster. [ 37 ] On October 23, 2007, Weatherford filed a new action against the same defendants as in its 2006 statement of claim, in virtually the same terms as the 2006 statement of claim, but also naming Artemis and Kaechele as defendants.

That statement of claim was never served on the applicants. [ 38 ] On January 18, 2008, Weatherford filed an application to amend its 2006 statement of claim, i.e. the claim in this proceeding, inter alia by adding Artemis and Kaechele as defendants. [ 39 ] On March 31, 2008, the case management judge permitted Weatherford to amend its statement of claim, inter alia by adding Artemis and Kaechele as defendants. [ 40 ] On April 7, 2008, Weatherford filed its Amended Amended Amended Statement of Claim in this action, which named these applicants as defendants. [ 41 ] On May 14, 2008 Weatherford was granted leave by the case management judge to serve the applicants outside Canada. [ 42 ] On June 3, 2008, Weatherford notified Artemis and Kaechele of the amended statement of claim naming them as defendants and of the issuance of an order allowing Weatherford to serve Artemis and Kaechele in Germany.

In August 2008, Artemis and Kaechele were served with the amended statement of claim naming them as defendants and the order permitting Weatherford to serve Artemis and Kaechele in Germany. [ 43 ] On September 25 and October 27, 2008, Artemis and Kaechele filed applications to set aside the order for service outside Canada. [ 44 ] On January 23, 2009, on the application of Artemis and Kaechele, the order for service outside of Canada was set aside.

[ 45 ] On April 22, 2009, Weatherford discontinued its 2007 action. [ 46 ] On May 29, 2009, the Court of Appeal overturned the Q.B. order which had set aside the order for service ex juris . [ 47 ] On January 28, 2011, Artemis and Kaechele file applications for

summary judgment; those applications were dismissed by the case management judge: 2011 ABQB 562 . [ 48 ] The trial of this action has now been set to begin on January 16, 2017; it is expected that the trial will last approximately 4 months.

b) Legislative [ 49 ] The applicable provisions of the Limitations Act are: s.3 Limitation periods 3(1) Subject to subsections (1.1) and (1.2) and

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.

(1.1) If a claimant who is liable as a tort - feasor in respect of injury does not seek a remedial order to recover contribution under section 3(1)(

c) of the Tort - feasors Act against a defendant, whether as a joint tort-feasor or otherwise, within (a) 2 years after (

i) the later of (

A) the date on which the claimant was served with a pleading by which a claim for the injury is brought against the claimant, and (

B) the date on which the claimant first knew, or in the circumstances ought to have known, that the defendant was liable in respect of the injury or would have been liable in respect of the injury if the defendant had been sued within the limitation period provided by subsection (1) by the person who suffered the injury, if the claimant has been served with a pleading described in paragraph (A), or (ii) the date on which the claimant first had or in the circumstances ought to have had the knowledge described in subclause (i)(B), if the claimant has not been served with a pleading described in subclause (i)(A), or (b) 10 years after the claim for contribution 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 for contribution.

(1.2) For greater certainty, no claim for contribution against a defendant in respect of damage referred to in section 3(1)(

c) of the Tort - feasors Act is barred by the expiry of a limitation period within which the person who suffered that damage could seek a remedial order.

(2) The limitation period provided by subsection (1)(

a) or (1.1)(

a) begins (

a) against a successor owner of a claim when either a predecessor owner or the successor owner of the claim first acquired or ought to have acquired the knowledge prescribed in subsection (1)(

a) or (1.1)(a), (

b) against a principal when either (

i) the principal first acquired or ought to have acquired the knowledge prescribed in subsection (1)(

a) or (1.1)(a), or (ii) an agent with a duty to communicate the knowledge prescribed in subsection (1)(

a) or (1.1)(

a) to the principal, first actually acquired that knowledge, and

(

c) against a personal representative of a deceased person as a successor owner of a claim, at the earliest of the following times: (

i) when the deceased owner first acquired or ought to have acquired the knowledge prescribed in subsection (1)(

a) or (1.1)(a), if the deceased owner acquired the knowledge more than 2 years before the deceased owner’s death; (ii) when the representative was appointed, if the representative had the knowledge prescribed in subsection (1)(

a) or (1.1)(

a) at that time; (iii) when the representative first acquired or ought to have acquired the knowledge prescribed in subsection (1)(

a) or (1.1)(a), if the representative acquired the knowledge after being appointed.

(3) For the purposes of subsections (1)(

b) and (1.1)(b), (

a) a claim or any number of claims based on any number of breaches of duty, resulting from a continuing course of conduct or a series of related acts or omissions, arises when the conduct terminates or the last act or omission occurs; (

b) a claim based on a breach of a duty arises when the conduct, act or omission occurs; (

c) a claim based on a demand obligation arises when a default in performance occurs after a demand for performance is made; (

d) a claim in respect of a proceeding under the Fatal Accidents Act arises when the conduct that causes the death, on which the claim is based, occurs; (

e) a claim for contribution arises when the claimant for contribution is made a defendant in respect of, or incurs a liability through the settlement of, a claim seeking to impose a liability on which the claim for contribution can be based, whichever first occurs; (

f) a claim for a remedial order for the recovery of possession of real property arises when the claimant is dispossessed of the real property. . . . s. 6 Claims added to a proceeding 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) is made by a defendant in the proceeding against a claimant in the proceeding, or (

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.

(3) When the added claim adds or substitutes a claimant, or changes the capacity in which a claimant sues, (

a) the added claim must be related to the conduct, transaction or events described in the original pleading in the proceeding, (

b) the defendant must have received, within the limitation period applicable to the added claim plus the time provided by law for the service of process, sufficient knowledge of the added claim that the defendant will not be prejudiced in maintaining a defence to it on the merits, and (

c) the court must be satisfied that the added claim is necessary or desirable to ensure the effective enforcement of the claims originally asserted or intended to be asserted in the proceeding.

(4) When the added claim adds or substitutes a defendant, or changes the capacity in which a defendant is sued, (

a) the added claim must be related to the conduct, transaction or events described in the original pleading in the proceeding, and (

b) the defendant must have received, within the limitation period applicable to the added claim plus the time provided by law for the service of process, sufficient knowledge of the added claim that the defendant will not be prejudiced in maintaining a defence to it on the merits.

(5) Under this section, (

a) the claimant has the burden of proving (

i) that the added claim is related to the conduct, transaction or events described in the original pleading in the proceeding, and (ii) that the requirement of subsection (3)(c), if in issue, has been satisfied, and (

b) the defendant has the burden of proving that the requirement of subsection (3)(

b) or (4)(b), if in issue, was not satisfied….

. . . s. 10 Acquiescence or laches Nothing in this Act precludes a court from granting a defendant immunity from liability under the equitable doctrines of acquiescence or laches, notwithstanding that the defendant would not be entitled to immunity pursuant to this Act. 2. Procedural issues [ 50 ] At the outset of the hearing, the parties raised several procedural issues.

At the conclusion of the hearing of submissions on those issues, I reserved a decision until the conclusion of the hearing when I would address those issues in my substantive decision. [ 51 ] Overall on the procedural issues, I have concluded that no evidence which has been led by any party on this application should be excluded from consideration for technical reasons.

Rather, the court will consider all of the material submitted, having in mind, of course, that, generally, evidence which is developed contemporaneously and which is independent is more weighty than evidence which is produced after time for consideration and by the party tendering the evidence. At this stage, I will make general comments about each of the main procedural issues; as I discuss each of the substantive issues, I may come back to comment on the procedural issues which affect the substantive results.

i) Filing of Bill Lane’s February,2016, affidavit [ 52 ] Although it acknowledges that Rule 6.6 does not set deadlines for the filing of affidavits, Artemis objects to the filing of Lane’s affidavit because it was filed after Weatherford had filed its written brief on this application; it states that Lane could use his affidavit as a way to reply to matters raised in the brief. Therefore, there is no technical objection to the filing of the Lane affidavit. Moreover, the court takes note of Weatherford’s claim that there have been some procedural uncertainties, such as whether the applicants were applying only to amend their statements of defence or whether the applications for

summary judgment would be joined to the first hearing. In those circumstances, it is not surprising that the Lane affidavit was filed after Artemis had filed its brief. ii) Use of Lonnie Dunn’s questioning [ 53 ] Relying on Rule 5.31(2), Artemis objects to Weatherford’s use of portions of Dunn’s questioning which have not been included in Artemis’ position. Naturally, Weatherford cannot use Dunn’s questioning in a self-serving way as, for example, an oath- helping device.

On the other hand, Weatherford is entitled to ensure that any excerpt from Dunn’s evidence on which the applicants rely constitutes a fair representation of Dunn’s evidence. I consider that Weatherford’s reliance on additional portions of Dunn’s questioning is merely Weatherford’s attempt to ensure fair representation of the evidence. iii) Weatherford’s use of Dunn’s 2008 cross-examination [ 54 ] Relying on Rule 6.7, Artemis objects to Weatherford’s inclusion in its materials of transcripts of the cross-examination of its key employee, Dunn, conducted in 2008. These are completely different applications.

Nonetheless, I view these excerpts of Dunn’s evidence in the same way as indicated above, i.e. an attempt by Weatherford to ensure that a fair representation of Dunn’s evidence is before the court. iv) Use of Gillis’ affidavit [ 55 ] Weatherford objects to the Gillis affidavit on the grounds that Gillis purports to provide direct, and even on occasion opinion, evidence about some of the issues in the proceedings.

Naturally, the applicants cannot use Gillis’ affidavit to spin existing evidence or to create evidence; the only purpose of his affidavit is to put before the court evidence which is contained in the various records disclosed by Weatherford and in the questioning of various Weatherford representatives. I agree with Weatherford that the court cannot rely on Gillis’ affidavit to summarize Weatherford’s evidence, but must refer to Weatherford’s actual evidence. 3.

Amending the Statements of Defence [ 56 ] The parties agree that a low threshold applies to requests to amend pleadings: they agree that the “classic rule” is that requests for amendment to pleadings should be granted unless the proposed amendment causes prejudice, is clearly hopeless, seeks to add a cause of action after the expiry of a limitation, or, is associated with bad faith: see, for example, Provalcid Inc .

Artemis and Kaechele maintain that none of these exceptions are engaged. [ 57 ] Weatherford agrees that the last two of the four exceptions do not apply, but maintains that the proposed amendments should not be allowed for two reasons. First, the amendments would cause them prejudice because they would prevent them from curing the identified limitations problem and because the request is made too late relative to the anticipated commencement of trial in January 2017.

Second, insofar as the proposed amendments rely explicitly or implicitly on laches and acquiescence, the proposed amendments should not be allowed because they are hopeless: the equitable concepts of laches and acquiescence apply only to equitable claims and Weatherford’s claims are, in the main, legal claims. [ 58 ] For the reasons set out below, I have concluded that: Weatherford will not suffer prejudice of the kind required in this context, and, the proposed amendments are not hopeless.

a) Weatherford will not suffer prejudice [ 59 ] Weatherford claims two types of prejudice. First, it claims that since Artemis and Kaechele did not, when they challenged the order for service on them outside Canada, also challenge the order of the court which allowed Weatherford to amend its pleadings so as to add them as defendants, they prevented Weatherford from serving its 2007 statement of claim which did name them as defendants clearly within the limitations period. Second, it claims that the late applications invoking laches and acquiescence do not allow

Weatherford sufficient time to respond given that a trial date has been set for January, 2017 and that a great deal of time and money has already been spent on pre-trial process.

i) The granting of an amendment at this time is not the reason why Weatherford is unable to serve its 2007 statement of claim [ 60 ] Weatherford states that its 2007 statement of claim was filed within 2 years of November, 2005 and, therefore, the 2007 claim was filed within the limitation period. I agree. [ 61 ] Weatherford states that, when the applicants applied to set aside the case management judge’s decision allowing Weatherford to serve its amended statement of claim on the applicants, the applicants did not appeal the case management judge’s decision to allow the amendments which included the applicants.

Weatherford suggests that if it had known, in 2008, that the applicants were intending to raise a limitations defence, it could have, would have, served the 2007 statement of claim. [ 62 ] With respect, I cannot agree with Weatherford that the current application to add a limitations defence causes them prejudice of the type that should preclude the amendments to the statements of defence.

At the outset of the analysis on this issue, I question whether the kind of prejudice claimed by Weatherford – the loss of the ability to right the substantive wrong – is the kind of prejudice which is anticipated in the Rules and in the law. The standard of non-compensable prejudice as being one of the bars to an amendment of pleadings was solidified in the Steward decision.

What must be recalled about that decision is, however, that Lord Esher himself said that his formulation of the standard of conduct – “if the amendment will put [the party opposite] into such a position that they must be injured, it ought not to be made” – which formulation has subsequently been adopted by many courts, had been better, more clearly, put by Bowen L.J. when he said that an amendment to the pleadings is to be allowed “whenever you can put the parties in the same position for the purposes of justice that they were in at the time the slip was made”.

It is therefore the latter articulation of the principle that I will follow. It will be recalled that the Steward decision arose out of a situation where a plaintiff was injured as a result of poor road repair; the defendant filed a statement of defence. Six months after the pleadings had closed, the defendant asked for leave to amend its statement of defence to plead a contract which it had with the local vestry which shifted the responsibility for maintenance from itself to the vestry.

By the time the defendant applied to amend its statement of defence, the plaintiff’s right to sue the vestry was taken away by the statute of limitations. In denying the defendant leave to amend its statement of defence based on prejudice to the plaintiff, the English Court of Appeal emphasized that it was essentially impossible for the plaintiff to have discovered the contract between the defendant and the vestry. In those circumstances, granting the defendant leave to amend its pleadings would have unfairly denied the plaintiff a substantive right.

In the circumstances here, there is nothing which the applicants have done which in any way precluded Weatherford from serving its 2007 statement of claim. [ 63 ] In any event, however, assuming that the prejudice of being unable to remediate the substantive wrong is the kind of prejudice which might prevent the amendment of pleadings, I have concluded that Weatherford has suffered no such prejudice.

On an overview, it is not because the applicants are bringing this application at this stage of the proceedings that Weatherford has lost its right to serve its 2007 statement of claim: nothing the applicants have done prevented Weatherford from serving its statement of claim and, in any event, Weatherford chose to take away from itself its ability to serve its 2007 claim when it discontinued that claim in 2009.

Moreover, under a Steward type of analysis, the inability of the applicants to bring this application before Weatherford disclosed its November 2005 emails was not due to a blunder or slip or carelessness on the part of the applicants, but a failure on Weatherford’s part to make full disclosure. [ 64 ] On a more detailed analysis, although the applicants knew, when they applied to set aside the order allowing service ex juris that they had been named as defendants – indeed, there could not have been an application for service ex juris unless Artemis and Kaechele had been named as defendants in the amended statement of claim – they were procedurally unable to apply to set aside the order which had allowed them to be added to the statement of claim.

Indeed, the reality was that the applicants were not affected by any aspect of Weatherford’s statement of claim unless the decision allowing service on them to be effected outside Canada was maintained. As a matter of law, had the applicants attempted to appeal the case management judge’s decision on the amendment separately from the issue of the amendment to the pleadings by which they were added as defendants, they would surely have been taken to have attorned to Alberta’s jurisdiction and would therefore have been necessarily involved in complicated lawsuit.

Although in its recent decision in H.E. the Ontario Court of Appeal, albeit in the context of the best interests of children, appears to state that explicit attornment to a jurisdiction is not determinative on the issue of jurisdiction, in the circumstances here – including the fact that this is normal commercial litigation rather than family litigation – attornment by the applicants to Alberta would surely have resulted in the automatic denial of their request to set aside the order allowing service on them in Germany. [ 65 ] What is determinative of Weatherford’s claim of prejudice is that Weatherford only discontinued its 2007 claim – the one that had named Artemis and Kaechele as defendants within the limitation period – in April 2009.

By April 2009, neither Artemis nor Kaechele had done anything to make Weatherford believe that they would not rely on a limitations defence. On the contrary, by April 2009, both Artemis and Kaechele had made it clear that they wanted to be removed from this lawsuit and that they would take every possible opportunity to achieve that result. In April 2009, when Weatherford discontinued its 2007 action, Artemis and Kaechele had the benefit of a QB decision which struck down the ex juris leave in this action; in other words, on April 21, 2009, Artemis and Kaechele were not properly part of this lawsuit.

There was therefore no reason whatever for Weatherford to discontinue its 2007 action against them; on the contrary, there was every reason for Weatherford to maintain its 2007 lawsuit. On April 23, 2009, Weatherford had no viable action of any kind against Artemis and Kaechele: Weatherford had discontinued its 2007 action and the QB decision held that Artemis and Kaechele could not be served in Germany.

By the time the Court of Appeal overturned the QB decision in May, 2009, and allowed Artemis and Kaechele to be included in this lawsuit, Weatherford had already put itself in the position where it could no longer serve its 2007 statement of claim. When Artemis and Kaechele were formally brought into this lawsuit after being served in September, 2009, they were facing a situation in which Weatherford had, on April 7, 2008, filed the order granting it leave to amend its statement of claim to add them as defendants. The time for appealing the April 2008 order had long since expired.

Moreover, the applicants were entitled to assume that the case management judge who granted the order in question had, in the same way that this court must consider the exceptions to the granting of amendments to pleadings, come to the conclusion in April 2008 that giving Weatherford leave to add Artemis and Kaechele as defendants did not allow them to be added outside a limitation period. It is not realistic to think that Artemis and Kaechele would immediately in September 2009 try to challenge the April 2008 decision; nor would it be fair to criticize them for failing to have done so.

In any event, even if they had done so, it was already too late to allow Weatherford to serve its 2007 statement of claim on them.

ii) Weatherford has enough time to defend the laches and acquiescence issues [ 66 ] The second kind of prejudice Weatherford alleges as a result of this application, particularly in relation to Kaechele’s explicit reliance on laches and acquiescence and also on any implicit reliance by Artemis on laches and acquiescence, is that the application is brought too late in the proceedings, given that a trial date for January, 2017 has already been set and there has already been massive pre- trial work undertaken. [ 67 ] Artemis and Kaechele could not have asked to amend their pleadings to plead a limitations defence earlier than the current applications. [ 68 ] It was not until Artemis and Kaechele came into possession of the November 25, 2005 email from Dunn to Lane that the applicants had evidence emanating from Weatherford itself about the state of its knowledge of the involvement of Artemis and Kaechele in Addie and Anderson’s scheme.

As soon as this evidence became available to the applicants, they brought the within application. [ 69 ] Not only does this chronology establish that Artemis and Kaechele acted at the first opportunity, the chronology also establishes that the defences filed by Artemis and Kaechele were not “blunders” or “slips” in relation to the limitations issue; they clearly could not responsibly have alleged a limitations defence until the November 2005 Weatherford documents came into their possession. [ 70 ] As to the ability of Weatherford to defend the applications without embarking on extensive, expensive additional process, I agree that there has already been extensive disclosure by, and questioning of, all parties; every aspect of the relationship amongst the parties has been subjected to careful scrutiny.

Moreover, Weatherford has been allowed to file the Lane affidavit which has given Weatherford the opportunity, unhindered, to put forward any evidence available to it on the limitations issue. Therefore, Weatherford has not suffered and will not suffer any prejudice as a result of allowing the proposed amendments. [ 71 ] In

summary on this issue, Weatherford will not suffer any of the required type of prejudice if the applications for amendment of the statements of defence are allowed.

b) The proposed amendments are not hopeless [ 72 ] Relying on the Ontario Court of Appeal’s decision in Intact Insurance , Weatherford asserts that the equitable principles of laches and acquiescence apply only to equitable claims and, since Weatherford’s claims are, in the main, legal rather than equitable, there is no point in allowing an equitable defence to be advanced to its claims.

With respect, Intact Insuranc e, and indeed all similar decisions which deal with the recent application of equitable defences to Ontario limitations legislation can be of no assistance in Alberta, where – as opposed to Ontario - there has been preservation of the use of equitable defences in Alberta’s Limitations Act . The importance of that statutory distinction is emphasized by the Ontario Court of Appeal in para. 35 of its decision.

The situation in Ontario is particularly stark because Ontario is a jurisdiction in which the legislation which previously maintained equitable defences then amended its legislation to remove that reference. In Ontario, there is therefore an argument that there has been a clear policy message from the legislator to the effect that limitations legislation should be addressed without reference to equitable principles; no such argument is available in Alberta. [ 73 ] Moreover, as many cases cited in the Intact decision itself make clear, contemporary Canadian courts are courts of both law and equity.

The Supreme Court of Canada illustrated this intersection recently in Bhasin when, in dealing with the

interpretation of contracts, it held: The principle of good faith must be applied in a manner that is consistent with the fundamental commitments of the common law of contract which generally places great weight on the freedom of contracting parties to pursue their individual self-interest. In commerce, a party may sometimes cause loss to another -- even intentionally -- in the legitimate pursuit of economic self-interest. Doing so is not necessarily contrary to good faith and in some cases has actually been encouraged by the courts on the basis of economic efficiency.

The development of the principle of good faith must be clear not to veer into a form of ad hoc judicial moralism or "palm tree" justice. In particular, the organizing principle of good faith should not be used as a pretext for scrutinizing the motives of contracting parties. [ 74 ] More prosaically, Intact Insurance itself refers to the Supreme Court of Canada decision in M.(K.) which provided an instructive outline of the fusion of courts of law and equity: see paras. 58 ff.

The Supreme Court saw no principled objection to the mingling of equitable and legal principles; on the contrary, it asserted: It is desirable, indeed inevitable, for the two great branches of our judicial law systems to borrow from one another to achieve just and reasonable results and consistency over time. [ 75 ] Given this type of comment in the Supreme Court’s decision, it is difficult to understand how M.(K.) has come to be thought of - even in Ontario - as authority for the proposition that equitable principles cannot apply to defeat legal claims: see Ferreira at para. 31 .

The Supreme Court of Canada has never made any such general assertion. [ 76 ] Although the doctrine of laches was, historically, important to deal with late-brought equitable claims since those claims were not subject to limitations statutes and the doctrine of laches was necessary to mimic the principles reflected in the law’s approach to limitations in the sphere of equity, the doctrine of laches was never restricted to situations in which there was an otherwise applicable limitations statute. Ferreira itself deals with a situation where there was an application for partition and sale.

In Bark-Fong , a decision which is now over 100 years old, the Supreme Court noted the potentially broad spectrum of application of the doctrine of laches: The question remains whether the appellants have lost their right by reason of laches. The general principle is stated in Fry on Specific Performance, at page 539:- The Court of Chancery was at one time inclined to neglect all consideration of time in the specific performance of contracts for sale, not only as an original ingredient in them, but as affecting them by way of laches.

But it is now clearly established that the delay of either party in not performing its terms on his part, or in not prosecuting his right to the interference of the court by the institution of an action,

or, lastly, in not diligently prosecuting his action, when instituted, may constitute such laches as will disentitle him to the aid of the court, and so amount, for the purpose of specific performance, to an abandonment on his part of the contract. [ 77 ] It is also important to note that in the particular circumstances of Intact Insurance , the appeal court found that laches was not available on the facts.

Therefore, its comments relating to the general application of laches principles to limitations as a matter of law are merely obiter. [ 78 ] Finally, even under the decisions on which Weatherford relies, where there is a strong equitable cast to a legal claim, the concept of laches has been applied. Here, Weatherford has not relied on any contractual basis for its claims against Artemis and Kaechele; rather, it has based its claims on grounds which are redolent of equity, i.e. that the German producers acted wrongly, unfairly, in providing stators to the competitive start-up.

All of Weatherford’s legal claims are, at a minimum, intertwined with its equitable claim. [ 79 ] In

summary on this point, in Alberta it is not hopeless to invoke laches or other equitable principles when dealing with limitations issues. It remains to be determined, of course, whether the application of equitable principles in the circumstances of this case entitles the applicants to the relief which they seek.

c) Conclusion [ 80 ] For the reasons set out above, the court concludes that the applications to amend the statements of defence are allowed. 4.

Summary Judgment [ 81 ] The parties agree on the general legal framework for contemporary

summary judgment applications: the parties are required to put their best foot forward, and the court is entitled to, and should, grant the application if it concludes that it can fairly do so on the basis of the material put forward, that is, without requiring a trial.

a) Artemis can rely on laches and acquiescence [ 82 ] The parties disagree, however, on whether Artemis can invoke the provisions relating to laches and acquiescence in the Limitations Act without having explicitly referred to laches and acquiescence in its pleadings. Weatherford’s objection is invalid. The historical requirement of pleadings is merely to state the facts, not to state the law. This principle was concisely articulated in Webster as follows: 7 In my view this

section means, in so far as the facts in issue in an action, are concerned, that after the facts have been established, the law as enunciated by any statute relating to the subject matter of the action, shall be made applicable to such facts by the tribunal which tries the case, without mention of the statute in the pleadings.

This statement is subject to any rule of law which requires a statute to be specifically pleaded. [ 83 ] In Silver Eagle Management , Ross J. outlined the gloss which has been added to the basic principle by Alberta’s Rules of Court: 71 At trial, counsel for the Town submitted that he was surprised by his friend's arguments on behalf of the Developer that the Condition had not been waived, that the Purchase Agreement and Option to Repurchase were invalid, and that the agreements had been varied. 72

Section 13.6(3) of the Alberta Rules of Court, Alta. Reg. 124/2010 , lists a number of arguments that must be pled in the pleadings if a party wishes to rely on them at trial: 13.6(3) A pleading must also include a statement of any matter on which a party intends to rely that may take another party by surprise, including , without limitation, any of the following matters: (

a) breach of trust; (

b) duress; (

c) estoppel; (

d) fraud; (

e) illegality or invalidity of a contract, including the grounds; (

f) malice or ill will; (

g) misrepresentation; (

h) payment; (

i) performance; (

j) release; (

k) undue influence; (

l) voluntary assumption of risk;

(

m) waiver; (

n) lack of capacity or authority; (

o) wilful default; (

p) tender of payment; (

q) a limitation period; (

r) a provision of an enactment. [Emphasis added] 73

Section 109 of the old Alberta Rules of Court, Alta. Reg. 390/1968 , which were in place at the time that the pleadings were filed, states as follows: When specific pleading required 109 A party shall in any pleading subsequent to a statement of claim plead specifically any matter, for example, performance, release, payment, any statute of limitation, statute of frauds, fraud or any fact showing illegality (

a) which he alleges makes any claim or defence of the opposite party not maintainable, or (

b) which, if not specifically pleaded, might take the opposite party by surprise, or (

c) which raises issues of fact not arising out of the preceding pleading. [ 84 ] In Silver Eagle Management , the town of Onoway stated that it was taken by surprise by the plaintiff’s argument with respect to the status of the contract. Ross J. observed that neither party had pleaded that a material condition had not been waived or that there had been a variation of the contract. Nonetheless, she dealt with the legal arguments despite the absence of explicit pleading: The question of variation in this case was basically a matter of interpreting three written contracts between the parties, contracts which were clearly placed before the Court, and the

interpretation of which should not have taken either party by surprise. [ 85 ] The use of pleadings to prevent surprise is also emphasized by our Court of Appeal in Paniccia Estate ; that court goes on to add that the Rules would, in certain circumstances, entitle a court to consider a matter not explicitly pled: see para. 36 ff. [ 86 ] Here, Weatherford cannot claim that it has been taken by surprise by Artermis’ position on laches and acquiescence. First, Artemis’ amended statement of defence includes the following: 28.

Further, and specifically, Artemis states that the Amended Amended Amended Statement of Claim is statute barred by operation of s. 10 of the Limitations Act, RSA, 2000 c. L-12 respecting Laches and the Plaintiff’s acquiescence.

Section 10 of the Act explicitly outlines laches and acquiescence as matters which may have to be taken into account in applying the statute. [ 87 ] Moreover, and more importantly given the stage at which the applications for amendment of the statements of defence are made, it is clear that, from at least 2007 on, Weatherford was very aware of the limitations issues: as Weatherford itself has acknowledged, a potential limitations problem is the reason for the filing of the 2007 statement of claim.

In those circumstances, Weatherford cannot maintain that it is taken by surprise by Artemis’ reliance on s. 10 of the Limitations Act and its reference to laches and acquiescence. [ 88 ] In the result, in its

summary judgment analysis, the court will consider laches and acquiescence in relation to the claims of both Artemis and Kaechele.

b) The undisputed facts here establish that Weatherford knew, or should have known of its alleged cause of action against Artemis and Kaechele by November 30, 2005 or, at the latest, by March 30, 2006 [ 89 ] The parties essentially agree on the framework which must be used to weigh an application for

summary judgment. As the case law reviewed in Sticks and Stones Communications Inc . emphasizes, the sufficiency of the evidence invoked in any application for

summary judgment is the key. If material evidence is, or can be, disputed, a trial will usually be required and the application for

summary judgment will be refused. [ 90 ] In the context of a limitations defence, therefore, the applicant for

summary judgment must satisfy the court that there are “undisputed facts that necessarily lead to the conclusion that it is plain and obvious that the plaintiff’s claim is statute barred”: DeShazo , at para. 19. [ 91 ] In this context, the first contested issue which arises is whether, as Artemis contends, the destruction of the Dunn notes results in a rebuttable adverse inference against Weatherford.

After he decided to remain with Weatherford, a key employee of Weatherford, Lonnie Dunn, destroyed records he had made - i.e. notes of meetings he had had with the defendants Addie and Anderson - at a time when he knew that litigation was contemplated. [ 92 ] I agree that the concept of spoliation as an evidentiary rule is even more well established now in Canada than it was a decade ago, and that, when it applies, it sensibly ensures that litigants will not get a litigation advantage by spoiling or destroying records that

might have a negative effect on them. [93] I also agree that, even though Dunn was clearly not taking notes of his meetings with Addie and Anderson as part of hisemployment with Weatherford, the evidence establishes that he destroyed his notes only after he had decided to remain in Weatherford'semploy. [94] In those circumstances, it is necessary to consider the potential application of the doctrine of spoliation on the facts of thiscase. [95] I agree that Dunn's own email of November 25, 2005 indicates that, at the least by that date, Dunn was aware that litigationwas being contemplated. [96] I also agree that the evidence establishes that Dunn intentionally destroyed his records of the Addie/Anderson meetings. [97] However, I am not satisfied that the evidence establishes that Dunn intentionally destroyed the evidence of the meetings "toaffect the litigation", as our Court of Appeal put it in McDougall.

Rather, I accept the evidence that Dunn was keeping the records toperform a SWOT (Strengths, Weaknesses, Opportunities, Threat) analysis for himself, i.e. as to whether it was to his advantage ordisadvantage to defect to the start-up company.

When he decided to remain with Weatherford, he had no further need for the records; hisdestruction of the records was therefore entirely personal. [98] Even if, in Alberta, it were possible to fashion a civil remedy for unintentional destruction of evidence, see Chow-Hidasi atpara. 30, for the reasons given above, there is no evidentiary basis in this case for the development of any such remedy. [99] Finally, the evidence suggests that Weatherford never received the benefit of Dunn's actual notes of his meetings with Addieand Anderson.

All Weatherford received from Dunn was general information about his meetings with Addie and Anderson, his variousemails, including the email of November 25, 2005 which summarized Dunn's "personal opinions" of the situation Weatherford wasfacing as of that date, and other emails which are now available from Weatherford's production, along with the chronology which Dunnprepared after the destruction of his notes.

From that perspective, as well as from the perspective that Dunn only became a corporateofficer of Weatherford in 2007, it would be unfair to draw an adverse inference against Weatherford as a result of Dunn's destruction ofpersonal records. [100] In response to the application, Weatherford relies on affidavit evidence from Lane.

However, I do not attach any weight to theLane affidavit: rather than comments in 2016 about events which occurred in the past, I rely on Weatherford’s contemporary documents. [101] By deciding not to draw any adverse inference against Weatherford as a result of the destruction of the Dunn notes, the onlyevidence which is left on the applications for

summary judgment establishes uncontested facts because it is all evidence fromWeatherford. [102] There is no dispute between the parties about what the undisputed facts must establish. As the DeShazo decision from our Courtof Appeal clarifies, perfect knowledge of a claim is not the correct test for determining when the limitations clock starts to run: 31 The principle of discoverability does not require perfect knowledge. As this court noted in Hill v. Alberta (South Alberta LandRegistration District) (1993), 1993 ABCA 75 , 100 D.L.R. (4th) 331 at 336 (Alta.

C.A.) (leave to appeal to S.C.C. denied): Even if the discoverability rule of limitations applies to this case (which I need not decide), it does not call for perfect certainty. It doesnot require discovery at all: it says something else will do instead. It suffices that "the material facts on which [the cause of action] isbased ... ought to have been discovered by the plaintiff by the exercise of reasonable diligence...": Central Trust v. Rafuse... . If theplaintiff is told a fact by someone who is likely to know, surely that makes the fact known or discoverable, even if someone else disputesthe fact.

Very few people who sue have perfect certainty. 32 The same point is made in Owners: Condominium Plan 9421549 v. Main Street Developments Ltd., supra, where Clackson J.summarily dismissed the plaintiff's claim on the basis of undisputed facts. He said at paras. 55-56: I am satisfied that these facts establish, beyond a reasonable doubt, that the Plaintiff knew that the buildings suffered from moistureproblems and knew of the potential sequella if the problems were not rectified. This knowledge existed well before May 25, 1999.

WhileI accept that it is possible the Plaintiff did not have perfect knowledge of the injury, that level of knowledge is not required: Peixeiro v.Haberman, (SCC), [1997] 3 S.C.R. 549; Hill v. Alberta (South Alberta Land Registration District), (1993) 1993 ABCA75 , 135 A.R. 266 (C.A.), leave to appeal to S.C.C. refused [1994] 1 S.C.R. viii; Ward v. Taubner, 2004 ABQB 565, 9 E.T.R.(3d) 275 (QB). What was obvious was that there was a problem and that there was damage or at least the real potential for damage if the problem wasnot addressed.

In my view, that is enough. [Emphasis added] 33 De Shazo says he was lacking proof that O'Mara owned or controlled NovoMundo. He says that in July 2002 he received, for thefirst time, "credible factual information from the defendants that O'Mara owned NovoMundo" in the form of the statement from Wilsonthat NovoMundo was, as far as Wilson and others knew, owned by O'Mara. This, De Shazo says, was the missing piece of the puzzlethat he needed to put his claim together.

However, that statement did not add significantly to the picture De Shazo already had inFebruary 2000. 34 In our view, the information in De Shazo's hands in February 2000 was sufficient for him to bring a claim against the appellants foran oppression remedy and in fraud, and to resist a

summary judgment application to dismiss such a claim. Further, in June 2001 DeShazo went so far as to obtain a legal opinion about the availability of an oppression remedy from Alberta counsel, and then changed that

legal opinion and sent the doctored version to O'Mara in March 2002 to bolster his threat of litigation. As counsel for the appellants noted in argument, if this is not an appropriate case for

summary judgment it is difficult to imagine what is. [ 103 ] In this case, therefore, the real issue to be decided is: Have the applicants established, on the basis of uncontested facts, that any cause of action which Weatherford may have had against them has been defeated by application of the 2 year limit in the Limitations Act ?

In this context, the applicants argue that, most likely by November 30, 2005 or, at the latest, by March 31, 2006, the statutory limitation period began to toll against Weatherford and that Weatherford did not file its lawsuit against them within the required limitations period. [ 104 ] Even if the answer to the above question is Yes, the court must then go on to consider whether the March 31, 2008 deadline has been extended by application of the provisions of s. 6(4) of the Limitations Act . [ 105 ] Weatherford has two essential responses to the applicants’ applications for

summary judgment: first, until it saw stators which it identified as having been manufactured by the applicants in Europump’s yard in early June, 2006, it had merely a suspicion about the activities of Artemis and Kaechele based on Dunn’s hearsay evidence. [ 106 ] Second, Weatherford argues that, even if the limitations clock would normally have started to run against it by March 31, 2006, s. 6(4)(

a) allows them to add the applicants as defendants after the expiration of the relevant limitation period because the addition of the applicants as defendants is related to the conduct, transaction or events described in Weatherford’s original statement of claim. [ 107 ] For the reasons set out below, I have concluded that the applicants have met the required burden and are entitled to

summary judgment dismissing Weatherford’s claims against them: the limitations clock started to run against Weatherford at the latest by March 31, 2006 and, by March 31, 2008, Weatherford had not filed its claim against them. While Weatherford’s April 2008 added claim against the applicants does relate to Weatherford’s original pleading, because of the application of the equitable principles of acquiescence and laches, the applicants should not be deprived of limitations immunity from Weatherford’s claim.

a) Indirect attack on earlier decision refusing

summary judgment [ 108 ] Obviously, the current applications for

summary judgment are completely different in character – limitations defence – from the 2011 applications for

summary judgment – exclusive use.

b) Best foot forward [ 109 ] Weatherford has had the opportunity of putting forward unchallenged evidence from Lane about the limitations issue. Therefore, the court is entitled to assume that there is no additional evidence which Weatherford could advance to improve its position on the limitations issue. [ 110 ] As indicated above, the court does not make any rebuttable adverse inference against Weatherford as a result of Dunn’s destruction of the notes of his meetings with Addie and Anderson. [ 111 ] There is no conflict in the evidence since the applications are based on Weatherford’s own evidence.

c) The two year limitations period started to run on November 30, 2005 [ 112 ] The key evidence on these applications is the November 25, 2005 email from Dunn to Lane. [ 113 ] In determining the effect of Weatherford's receipt of the November 25, 2005 email, the court must consider the nature of the person who is sending the email, Lonnie Dunn. [ 114 ] Mr. Dunn is not some insignificant or unreliable individual. He is a senior employee at Weatherford, with technical management of the PC pump sector, and having direct relationships not only with the d

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