Herchak v Enbridge Pipelines Inc, 2016 ABQB 217

Court of Queen ’ s Bench of Alberta Citation: Herchak v Enbridge Pipelines Inc, 2016 ABQB 217 Date: 20160414 Docket: 1301 11939 Registry: Calgary Between: Glenn Herchak Plaintiff/Applicant - and - Enbridge Pipelines Inc. and Lydia Suzanne Scratch Defendants/Respondents _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice W. A. Tilleman _______________________________________________________ I. Brief History [ 1 ] The plaintiff, Glenn Herchak, was formerly employed by Enbridge. During his employment, Herchak and the defendant, Lydia Scratch, had a relationship.

Scratch was also an employee at Enbridge. When the relationship was brought to Enbridge’s attention, Herchak was dismissed for cause. While Herchak believed the relationship with Scratch was consensual, he now alleges that Scratch and her partner, the proposed defendant Michael Holden, conspired to use the relationship to get Herchak fired. [ 2 ] Herchak now brings an application to file an Amended Statement of Claim which had previously been commenced separately against the defendant Enbridge Pipelines Inc., “Enbridge,” and Scratch.

Those actions have been consolidated with the consent of the parties. [ 3 ] Herchak wants to add Holden as a defendant, and further seeks an Order under Rules 5.32 and 5.33 that those rules be

waived; alternatively, Herchak wishes to be relieved of these rules which relate to an implied undertaking. [ 4 ] The action against Enbridge was for wrongful dismissal and breach of a duty of good faith and fair dealing. The action against Scratch was that Enbridge fired Herchak for cause due to her false allegations. Additionally, at present, Herchak wishes to amend the consolidated claim to add Holden as a defendant and to add a claim for conspiracy against the proposed defendants Holden and Scratch.

Finally, Herchak wishes to amend his claim as against Enbridge to add further particulars relative to the breach of duty of good faith and fair dealing. [ 5 ] During the time material to this lawsuit, and as stated above, Herchak and Scratch were allegedly engaged in an extramarital and very intimate relationship. According to Enbridge, Herchak was Scratch’s direct superior at Enbridge from time to time during their relationship. During the alleged relationship, both Herchak and Scratch were married or otherwise in a long-term partnership.

Scratch’s long-term partner was Holden. [ 6 ] Procedurally, the Statement of Claim against Scratch was filed on September 6, 2013. Among other things it included the following:

a) That Scratch intentionally made a false statement to Enbridge about Herchak which resulted in him being wrongfully terminated for cause; and

b) Damages against Scratch for a variety of torts. [ 7 ] Herchak’s Statement of Claim against Enbridge was filed on October 8, 2013, alleging among other things:

a) That Herchak was wrongfully dismissed, including not only Scratch’s false allegations but that Enbridge failed to properly and fairly investigate those allegations; and

b) Damages against Enbridge for wrongful dismissal and breach of duty of good faith and fair dealing. [ 8 ] The two actions involving Enbridge and Scratch were consolidated into one action, numbered 1301-11939. On January 9, 2016, Herchak received the Scratch Affidavit of Records. On January 22, 2015, Herchak examined Holden regarding documents he produced. II. Procedural Steps Without listing all of the steps that have occurred, Herchak filed the Statement of Claim against Scratch on September 6, 2013, and against Enbridge on October 8, 2013. Scratch filed a Statement of Defence on October 7, 2013.

Enbridge filed its Statement of Defense on October 28, 2013, and filed a Third Party Claim against Scratch on April 28, 2014, after the parties had served Affidavits of Records. Herchak’s actions against Scratch and Enbridge were consolidated on May 6, 2014. Case management meetings started in 2015, and various other steps have been taken by the parties, including: Requests for Particulars; Notices to Admit Facts; striking portions of claims; Third Party Claims; objections to questions at cross-examinations; and requests for additional record production.

In some cases, these steps involved court applications, but apart from orders adjourning Applications, and those orders referenced in this chronology, no other orders have been granted. III. Issues [ 9 ] The issues on this application are as follows: A. Does the addition of Holden as a defendant violate Rule 5.33 of the Alberta Rules of Court , Alta Reg 124/2010 (the “ Rules ”), against implied undertakings? B. Are there sufficient facts pled to support Herchak’s claim of conspiracy against Scratch and Holden? C. What, if any, amendments ought to be made to Herchak’s proposed Amended Statement of Claim? D.

Should there be a consolidation of the proposed Amended Statements of Claim into one document to comply with the Consolidation Order, which directed this lawsuit to proceed under one action number? E. Does the timing of this application demonstrate bad faith on the part of Herchak? [ 10 ] These issues will be discussed in turn, as the outcome of A affects B, which affects C, and so on. IV. Positions of the Parties A.

Herchak [ 11 ] It is Herchak’s position that the proposed amendments to add conspiracy as a cause of action and to add Holden as a defendant simply expand upon allegations of what has already been pled against Scratch and Enbridge. Herchak therefore argues that there is no breach of Rule 5.33 against implied undertakings. [ 12 ] Yet, once questioned by the Court, Herchak suggested that certain portions be struck from the Amended Statement of Claim as they contained impermissible evidence. B. Scratch

[ 13 ] Scratch argues that the Amended Statement of Claim contains impermissible evidence, irrelevant information, and is deliberately and unnecessarily scandalous due to the inclusion of private sexual activities. Scratch provided the Court with an edited version of the Amended Statement of Claim, suggesting removal of numerous impugned paragraphs. [ 14 ] Scratch further argues that the timing of this application to amend the pleadings is a demonstration of bad faith on the part of Herchak.

An application brought in bad faith is grounds for a Court to refuse to grant proposed amendments. [ 15 ] Scratch also argues that, in that case that the Court allows the amendments to the Statement of Claim, she is entitled to a costs award pursuant to Rule 3.66. C. Holden [ 16 ] Holden challenges Herchak’s assertion that there are sufficient facts in the Amended Statement of Claim to add him as a defendant and to plead the tort of conspiracy. He further argues that the delay in bringing the application was unreasonable.

Like Scratch, Holden argues that the amendment application was brought in bad faith and that the contents are frivolous, irrelevant and designed to embarrass, contrary to Rule 3.68(2). Finally, Holden argues that the facts pled in the Amended Statement of Claim breach Rule 5.33 against implied undertakings. D. Enbridge [ 17 ] Enbridge argues that it is improper to have two separate Statements of Claim in the same action, and that this application to amend two separate Statements of Claim is impermissible. Enbridge therefore suggests that Herchak consolidate the pleadings.

Enbridge further argues the points raised by Scratch and Holden regarding frivolous, evidence-based, impermissible pleadings. V. Law [ 18 ] Rules 3.62(1), 3.65(1), 3.74, 5.32 and 5.33 state as follows: 3.62(1) A party may amend the party’s pleading, including an amendment to add, remove, substitute or correct the name of a party, as follows: (

a) before pleadings close, any number of times without the Court’s permission; (

b) after pleadings close, (

i) for the addition, removal, substitution or correction of the name of a party, with the Court’s prior permission in accordance with rule 3.74 [Adding, removing or substituting parties after close of pleadings], or (ii) for any other amendment, with the Court’s prior permission in accordance with rule 3.65 [Permission of Court to amendment before or after close of pleadings]. (

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. 3.74(1) After close of pleadings, no person may be added, removed or substituted as a party to an action started by statement of claim except in accordance with this rule.

(2) On application, the Court may order that a person be added, removed or substituted as a party to an action if (

a) in the case of a person to be added or substituted as plaintiff, plaintiff by-counterclaim or third party plaintiff, the application is made by a person or party and the consent of the person proposed to be added or substituted as a party is filed with the application; (

b) in the case of an application to add or substitute any other party, or to remove or to correct the name of a party, the application is made by a party and the Court is satisfied the order should be made.

(3) The Court may not make an order under this rule if prejudice would result for a party that could not be remedied by a costs award, an adjournment or the imposition of terms. 5.33(1) The information and records described in subrule (2) must be treated as confidential and may only be used by the recipient of the information or record for the purpose of carrying on the action in which the information or record was provided or disclosed unless (

a) the Court otherwise orders, (

b) the parties otherwise agree, or (

c) otherwise required or permitted by law.

(2) For the purposes of subrule (1) the information and records are: (

a) information provided or disclosed by one party to another in an affidavit served under this Division; (

b) information provided or disclosed by one party to another in a record referred to in an affidavit served under this Division; (

c) information recorded in a transcript of questioning made or in answers to written questions given under this Division.

V. Analysis A. Does the addition of Holden as a Defendant violate Rule 5.33? [19] Courts have discretion whether to grant leave to a party to amend pleadings after the limitation period: see rule 3.65(1) above.The test to determine whether to allow amendment after pleadings have closed was set out by Wittmann CJQB in Attila DoganConstruction and Installation Co Inc v AMEC Americas Ltd, 2013 ABQB 525 at para 13, 565 AR 1, aff’d 2014 ABCA 74, 569 AR308: Generally, any pleading may be amended, no matter how careless or late the party seeking the amendment, subject to four majorexceptions, which are: (

a) The amendment would cause serious prejudice to the opposing party, not compensable in costs; (

b) The amendment requested is hopeless [in that it would have been struck if it had been contained in the original pleading]; (

c) Unless permitted by statute, the amendment seeks to add a new party or new cause of action after the expiry of a limitation period;and (

d) There is an element of bad faith associated with the failure to plead the amendment in the first instance. [20] Production or discovery in the civil litigation process, wherein parties seek disclosure from one another that is material to theproceedings, requires production of all relevant information that is not subject to privilege. This often includes information that issensitive, personal and even confidential. As a safeguard against the potential invasion of privacy, Canadian courts have adopted theimplied undertaking of confidentiality.

In this province, the rule is set out as above in 5.33 of the Rules of Court. The rationale behind thesafeguard was articulated by Morden J of the Ontario Court of Appeal in Goodman v Rossi, (ON CA), [1995] OJ No1906, 24 OR (3d) 359 at para 23: [T]he principle is based on recognition of the general right of privacy which a person has with respect to his or her documents. Thediscovery process represents an intrusion on this right under the compulsory processes of the court.

The necessary corollary is that thisintrusion should not be allowed for any purpose other than that of securing justice in the proceeding in which the discovery takes place. [21] The Supreme Court of Canada dealt with the rule against implied undertakings in Juman v Doucette, 2008 SCC 8. At paras32 to 37 the Court addressed the criteria for modification or variance of an implied undertaking.

The Court granted a reviewing judgesignificant discretion in weighing the interests that may be affected by waiving the rule against implied undertakings: If satisfied that the interest of justice outweighs any prejudice that would result to a party who disclosed evidence, the court may orderthat [the implied or "deemed" undertaking] does not apply to the evidence or to information obtained from it, and may impose such termsand give such direction as are just; see para 34. [22] The parties refer the Court to its decision in Kent v Martin, 2013 ABQB 27, where it addressed implied undertakings in thecontext of a plaintiff who sought to report his former counsel to police for fraud and other allegations that were revealed through theproduction of a separate law suit.

In that case the law on implied undertakings is found at para 7 as follows: (

a) Pre-trial discovery evidence should only be used in the litigation in which it has been obtained, and (

b) if there is a more compelling public interest in doing so, a party may ultimately apply to the Court for leave to use that information inthe other "proceeding" if the Court believes the applicant has proven on a balance of probabilities the public interest supports it beingused there. [23] In the present matter, Herchak’s original claims against Scratch and Enbridge led to production of various communicationsbetween Scratch and Holden that were not known to Herchak at the time.

The content of the communication led Herchak to conclude thatHolden bears responsibility in concert with Scratch for the torts which are currently pled against her. [24] Herchak seeks to add Holden as a defendant to this action on that basis. It is Herchak’s position that the nature of the lawsuitwill remain the same, and that the addition of Holden is consistent with the scheme currently alleged against Scratch. It is therefore hisposition that adding Holden as a defendant does not violate the rule against implied undertakings.

Holden, in turn, argues that Herchakhas pled improper evidence, which violates the rule set out in 5.33. Decision on Implied Undertaking [25] The Court does not find that the addition of Holden as a defendant in this action violates rule 5.33 against impliedundertakings. In reference to point (

a) from Kent set out above, the rule is only infringed if pre-trial discovery is used beyond the scopeof the litigation in which it has been obtained. That is not the case here. The scheme initially alleged against Scratch is the same as thatnow alleged against Holden, apart from the tort of conspiracy, which is now also claimed against Scratch as a result of the newlydiscovered communications between the two. The production relied upon by Herchak to seek addition of Holden as a defendant is notbeyond the scope of the litigation in which it was discovered and is therefore not in violation of Rule 5.33.

Yet, the rule is important andthe Court believes it was proper to seek the Court’s approval to add Holden as a defendant, and approval is granted. [26] While the Court is satisfied that the production at issue does not trigger the rule against implied undertakings, or if it did it iswaived, the Court will now assess whether there is sufficient evidence to support the addition of Holden to this action in the discussionbelow. The addition of Holden is, in the Court’s judgment, consistent with the Supreme Court’s test in Juman, supra. B.

Are there sufficient facts pled to support Herchak’s claim of conspiracy against Scratch and Holden?

[27] It is necessary to address the tort of civil conspiracy in order to determine whether (

a) Holden can be added as a defendant,and (

b) whether conspiracy can be claimed against Scratch. Conspiracy necessarily involves two or more individuals, in this case Holdenand Scratch, and therefore allowing entry of pleadings against one will result in allowing pleadings against both. [28] The legal elements of unlawful conduct conspiracy were set out by the Supreme Court of Canada in Cement Lafarge v BCLightweight Aggregate, (SCC), [1983] 1 SCR 452, and recently affirmed in Balm v Aikins, MacAulay & ThorvaldsonLLP, 2012 ABCA 96 at para 11.

In Canada, there are two routes to establish the tort of conspiracy where two or more defendants actwith common design, and: (1) where the predominant purpose of the defendants’ conduct is to cause injury to the plaintiff, whether themeans used are lawful or unlawful; or (2) where the conduct of the defendants is unlawful, that conduct is directed toward the plaintiff,and the defendants should know in the circumstances that injury to the plaintiff is likely to and does in fact result; see Cement Lafarge atpara 33. [29] In (2), it is not necessary that the predominant purpose of the defendants’ conduct be to cause injury to the plaintiff.

It may beconstructive intent if the defendants should have known that injury to the plaintiff would result. In both (1) and (2) there must be actualinjury suffered by the plaintiff was which caused by the defendants’ conduct. Under (1), where predominant purpose is at issue, it isinsufficient to show merely that the defendants acted out of self-interest. [30] The “common design” element requires something more than agreed or mutual opinion between conspiring parties. While aformal contract is not necessary, the parties need to have an agreement rather than merely be in agreement with one another.

Decision on Potential Claim of Conspiracy [31] At this early stage of proceedings, I am not purposed with determining whether these elements are actually met; rather, myrole is to assess whether there is some evidence pled that could support the elements set out above in the context of both Holden andScratch. Unless an amendment alleges fraud or other dishonourable conduct, the amount of evidence required to support it is “low.”“[A]lthough only modest evidence need be provided, it must have some foundation in fact”: Attila at paras 14–16.

Thus, the applicantsbear the burden of adducing a modest amount of evidence. Herchak has met that burden. To the extent that the requisite threshold ofevidence is higher because conspiracy and sexual misconduct are alleged and fall within the category of “dishonourable conduct,” theenhanced threshold is nevertheless met due to the sufficient, if not extensive, facts that are now pled, even considering the redactions tothe Amended Statement of Claim. [32] Holden’s argument that Herchak has not adduced sufficient evidence to add him as a defendant in the present lawsuit thereforefails.

I am satisfied Herchak has adduced the requisite amount of evidence in this case to add conspiracy as a cause of action; namely,paragraphs 6(c), 7, 8(a), 8(c), 8(jj), 8(mm), 9, 9(a), among others. Note that these are not among the portions of the pleadings that I havedirected must be struck, as will be discussed below. [33] The above communications meet the threshold articulated in Attila to add conspiracy as a cause of action against both Scratchand Holden. I am therefore satisfied that Holden ought to be added as a defendant pursuant to the Court’s discretion under rule 3.74(2)(b). C.

What, if any, amendments ought to be made to Herchak’s proposed Amended Statement of Claim? [34] The Amended Statement of Claim contains a significant amount of content that is inappropriately pled because it is eithersuperfluous, salacious, or in breach of the rule against pleading evidence. [35] I wish to be clear from the outset that, although this lawsuit involves alleged sexual misconduct, I will not accept the inclusionof private, superfluous or unnecessary sexually explicit personal details in the pleadings.

Pleadings ought to be concise to affect theirpurpose of setting out for the Court all of the material facts necessary to establish the cause of action, and by defining the issues to beadjudicated; Radclyffe v Rennie, (SCC), [1965] SCR 703; Hussain v Edmonton (City), 2004 ABQB 204 at para 37. Thatgoal will be met when the Court concludes with its edits to the Amended Statement of Claim. [36] Before setting out which portions of the Amended Statement of Claim will be allowed, the following reasoning behind theCourt’s decision to strike certain portions from the pleadings will be set out. i.

Plead facts not evidence [37] Rule 13.6(2)(

a) of the Rules states as follows: A pleading must state any of the following matters that are relevant: (

a) the facts on which a party relies, but not the evidence by whichthe facts are to be proved. [38] The Amended Statement of Claim is a lengthy 14-page document. Many of the paragraphs pled contain quotations, often inblock form, of communications between Scratch and Herchak. While facts and evidence can sometimes be difficult to distinguish in thecontext of pleadings, that difficulty is not at issue when a party includes quotations. [39] Evidence, such as quotations, which serve to prove the truth of facts already alleged should not be pleaded.

It is improper toplead that a person made a statement, as this constitutes evidence of the fact rather than the fact itself; Devon Canada Corp vTransCanada Power Services Ltd, 2007 ABQB 479 at para 106. [40] None of the quotations in the Amended Statement of Claim allege anything beyond what has already been alleged in the factsas they are set out. The quotations are evidence, and having reviewed them carefully, I find they serve no purpose other than to supportor bolster facts that have already been pled. This is evidence that ought to be introduced at trial; it does not belong in the pleadings.

Itherefore find it proper and consistent with the Rules to strike all quotations from the Amended Statement of Claim. Should Herchakwish to re-draft the pleadings so as to better state, in fact form, the allegations against the defendants, those edits need to be consistent

with this decision. ii. Superfluous and Salacious Facts [ 41 ] I recognize that this is a case alleging conspiracy, and that the alleged conspiracy involves meetings or planning with the purpose of sexual conduct or misconduct. The pleadings will therefore necessarily contain some material that could be considered salacious. Beyond facts that are necessary to establish the elements of the alleged causes of action, however, I do not find it appropriate to include excessive or redundant facts.

This is consistent with the intention stated above to limit the inclusion of private or unnecessary personal details in the pleadings. [ 42 ] Therefore any repetitive, redundant or irrelevant salacious facts will be struck from the Amended Statement of Claim. Decision on the Amendments [ 43 ] Under Rule 3.65, the Court has broad discretion to amend pleadings as it deems appropriate. In this case the above principles will determine which amendments I find to be appropriate for the Amended Statement of Claim.

In general, the Court agrees with Scratch, Holden and Enbridge with regard to the proposed removal of problematic paragraphs from the pleadings. [ 44 ] The following paragraphs in the Amended Statement of Claim must be removed or edited because they are made up, in whole or in part, of impermissible evidence: 6(a); 6(d); 6(e); 7; 8(f); 8(g); 8(h); 8(j); 8(k); 8(m); 8(n); 8(o); 8(p); 8(s); 8(w); 8(bb); 8(cc); 8(dd); 8(ee); 8(ff); 8(gg); 8(mm); 8(nn); 8(oo); 8(pp); 8(qq).

Again, this is the case because the quotations in these paragraphs contain impermissible evidence rather than fact. [ 45 ] For the above paragraphs that contain both statements of fact and quotations, only the quotation portions must be removed. Even once the paragraphs are edited or removed from the Amended Statement of Claim, the Court is of the opinion that sufficient facts remain which meet the threshold to plead conspiracy; see para 30, above. [ 46 ] In addition to containing evidence, many of the above paragraphs discuss inappropriate and unnecessary details of Scratch’s private life.

The following paragraphs are struck for the same reason: 6(

c) from “and immediately” onward; 8(e); 8(r); 8(aa); 8(ii); 8(rr). Finally, paragraphs 8(t); 8(ii); 8(tt); 9(

a) are struck, as they plead argument rather than fact. [ 47 ] The names of persons not party to this lawsuit ought not to be included in the pleadings going forward. Where possible, corporate titles should be used in place of individuals’ names. Those persons already mentioned by name in the Amended Statement of Claim may continue to be referred to by name going forward. VI. Consolidation [ 48 ] Enbridge made written submissions on the inappropriateness of having multiple Statements of Claim under one action.

Once the parties were before the Court, they consented to a consolidation of the Statements of Claim into a single document. Herchak is therefore responsible for consolidating the pleadings against Scratch, Holden and Enbridge. VII. Unreasonable Delay [ 49 ] Scratch and Holden argue that the timing of this application demonstrates bad faith on the part of the Applicant. I do not agree. This matter first came before me on May 11, 2015, and before Chief Justice Wittmann who gave directions and appointed me initially on January 29, 2015.

Subsequent to that, case management meetings occurred on September 28, 2015 and December 4, 2015. Given all of the history of this case, I do not find the delay between the discovery of the evidence relied upon by Herchak and the filing of this application to be so egregious as to amount to bad faith. VIII.

Summary [ 50 ] The rule against implied undertakings does not prevent Herchak from pleading the tort of conspiracy or from adding Holden as a defendant to these proceedings. If it does apply it is waived. There is sufficient legitimate content in the Amended Statement of Claim for Herchak to plead conspiracy against Scratch and Holden. [ 51 ] Still, the Rules and the exercise of the Court’s discretion require the Amended Statement of Claim to be significantly reduced.

The paragraphs that must be struck or edited are listed above so as to remove evidence, as well as irrelevant, salacious or redundant information. [ 52 ] Finally, Herchak is to consolidate the Statements of Claim as per the parties’ agreement, and the claim against him that the timing of Herchak’s application demonstrates bad faith is dismissed. Heard on the 9 th day of March, 2016 to the 11 th day of March, 2016. Dated at the City of Calgary, Alberta this 13 th day of April, 2016.

W.A. Tilleman J.C.Q.B.A. Appearances: Robert J. Sawers of Sawers McFarlane and Peter Major Q.C. of McMillan LLP for the Plaintiff Sean Smyth Q.C. and Shana Wolch of McCarthy Tetrault LLP for the Defendants - Enbridge Pipelines Inc. Sabri M. Shawa Q.C. of JSS Barristers for the Defendant - Lydia Suzanne Scratch