Wolfe v Shawcor Ltd, 2016 ABQB 261

Court of Queen ’ s Bench of Alberta Citation: Wolfe v Shawcor Ltd, 2016 ABQB 261 Date: 20160506 Docket: 0803 11571 Registry: Edmonton Between: Donald Wolfe, Composite Technologies Inc., Proflex Pipe Corporation Appellants/Plaintiffs - and - Shawcor Ltd., Flexpipe Systems Inc., Sam Bouey, Kevin Gartner, ARC Financial Corporation and David Budney Respondents/Defendants _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice S.D. Hillier _______________________________________________________ Introduction [ 1 ] This is an appeal from a Master’s decision dated March 17, 2015 ( 2015 ABQB 181 ) granting

summary dismissal of the Plaintiffs’ claim under Rule 7.3 of the Alberta Rules of Court , Alta Reg 124/2010. [ 2 ] The Appellants assert that the Master failed to consider applicable law and relevant facts and erred in concluding that the actions of each of the Plaintiffs should be summarily dismissed.

They also allege that his reasons did not address the issues and evidence presented. [ 3 ] The Appeal was initially scheduled for May 6, 2015, on which date Goss J. adjourned the appeal to special chambers with leave to file further evidence on terms and with deadlines for Briefs pursuant to Civil Practice Note No. 2. However, no additional evidence was prepared and the appeal is essentially based on the record of proceedings before the Master. [ 4 ] For the following reasons, I have concluded that the Appeal should be dismissed.

Overview of the Claim [ 5 ] For the sake of brevity, I will refer to the individual parties by their last names. [ 6 ] At all material times, Wolfe was an officer and shareholder of Composite Technologies Inc. (CTI). He was also an officer of Proflex.

CTI was majority shareholder of Proflex. [ 7 ] In their Statement of Claim filed on August 18, 2008, the Appellants Wolfe, CTI, and Proflex generally alleged against the Respondents: a. breach of confidentiality agreements; b. wrongful disclosure and use of confidential information related to the technology; and c. unlawful or intentional interference with the Appellants’ economic relations. [ 8 ] In addition, the specific claims against Flexpipe were that it: a. induced the Respondents Bouey, Gartner and Budney to breach their confidentiality agreements with the Appellants; b. breached their fiduciary duties to the Appellants; and c. was unjustly enriched. [ 9 ] In the Amended Statement of Claim against Shawcor, Flexpipe, Bouey and Gartner filed on September 3, 2010, and the Statement of Claim against Budney filed on March 29, 2011, they allege that: a.

Shawcor, Bouey, Gartner and Budney are in breach of confidentiality agreements with CTI in providing to Flexpipe confidential information relating to the Plaintiffs' Technology; b. Bouey, Gartner and Budney have breached fiduciary duties of confidentiality owed to CTI and Proflex; c. Flexpipe has induced Bouey, Gartner and Budney to provide confidential information in breach of their confidentiality agreements and fiduciary obligations of confidentiality owed to the Plaintiffs; d.

Shawcor and Flexpipe have unlawfully or intentionally interfered with the Plaintiffs' economic interests. [ 10 ] It is common ground that the Appellants have withdrawn allegations against named Defendant Gartner with the intention of filing a formal discontinuance in due course, and that the allegation of conspiracy has been abandoned.

Background [ 11 ] The Appellants allege that they developed a technology for the manufacture of flexible composite pipe (the Technology). [ 12 ] Starting in 1990, some of the named Respondents, including Professor Budney and Bouey, worked or consulted with the Appellants. [ 13 ] On September 28, 1990, Budney and Wolfe signed a Proprietary Information Disclosure Agreement. [ 14 ] Budney and Wolfe signed a replacement confidentiality agreement on September 1, 1994 for services to May 31, 1995, with specific provisions that sections 3, 4, 7, 9 and 10 were to continue upon termination: 3. to keep in confidence, to not use for his own commercial benefit and not to disclose to any person, firm or corporation, any proprietary information pursuant to the agreement; 4. on public disclosure such as patent protection filing, Budney may disclose proprietary information in the form of papers, reports and conference presentations; 7. graduate student thesis projects to be done by separate University agreements; 9. other testing to be by separate agreement with the Department of Mechanical Engineering; and 10.

Budney to receive no other fees, shares or other ownership in the technology (beyond the specified remuneration of $1,000 per month). [ 15 ] Bouey was involved in production and testing of Proflex product that was first installed in 1995 for use as risers.

He signed a confidentiality agreement dated August 24, 1994 which set out a broad description of confidential information and noted specific aspects of continuous flexible pipe not to be disclosed, including: the MPLD interlocking mechanism, the method of connection, the method of laminating thermoplastic prepreg tape in the manufacture of flexible composite pipe, specific flexible composite pipe material data, and transverse fibre reinforcement as relating to flexible composite pipe. [ 16 ] CTI negotiated with Shawcor and its predecessors from time to time for business investment.

[ 17 ] Shawcor and CTI signed a confidentiality agreement by the terms of which all confidentiality obligations expired on August 11, 1995. [ 18 ] Budney’s formal employment relationship with CTI ended in September 1995. Budney then worked in a variety of other capacities and took early retirement from the University in 1998. [ 19 ] Bouey’s employment was terminated by CTI in March 1996 due to lack of business.

Bouey was employed from March 1996 to August 2001 by companies unrelated to the parties to this action. [ 20 ] CTI and Proflex entered into a License Agreement dated August 31, 1996, whereby Proflex acquired an exclusive license under certain patents issued, pending and applied for and an exclusive right to utilize CTI's proprietary technical information relating to equipment, processes, manufacturing data, market data, test data and installation data associated with those patents and applications. [ 21 ] Starting around 1998, Proflex attempted to raise equity for construction of a composite pipe plant. [ 22 ] From the evidence, it appears that the Appellants had obtained U.S. patents in respect of their process between November 1993 and March 1999 with product length up to 20 meters.

It also appears that some other producers including Fiberspar and Hydril developed their own patented composite flexible pipe for market, and the Appellants continued to modify Proflex product to extend length and reduce costs. [ 23 ] On September 15, 1999, CTI and Proflex entered into a Technology Transfer Agreement (TTA) which replaced their 1996 License Agreement. [ 24 ] Between late 1999 and 2001, CTI engaged in negotiations for Defendant ARC Financial Corporation (ARC) to invest in the manufacture of flexible pipe product.

ARC signed a confidentiality agreement with Proflex as to technical, financial, marketing and other information relating to the product, manufacturing process or operations of Proflex for a specified term of 36 months from December 15, 1999. [ 25 ] In March 2001, ARC presented a term sheet to CTI on behalf of its investment committee. It contemplated a $10 million share subscription for construction of a plant in Alberta and for general working capital purposes, but nothing was finalized. [ 26 ] In the period from 2001 to 2003, Flexpipe retained Budney to help develop a spoolable flexible composite product.

Budney introduced Flexpipe to Bouey who was hired in November 2001. [ 27 ] By 2003, Flexpipe had designed and patented a flexible pipe product that was spoolable in lengths of 750 to 1000 meters. That product was patented in January 2004. [ 28 ] Shawcor and CTI signed a second confidentiality agreement according to which all confidentiality obligations expired on October 10, 2004. [ 29 ] On July 2, 2006, Proflex was struck from the Corporate Registry.

The corporate search of Proflex dated February 3, 2014 and attached as Exhibit “B” to the Affidavit of Douglas Freel indicates that CTI owned 89.3% of the shares in Proflex. It identifies six other voting shareholders with minor shareholding interests. [ 30 ] A third confidentiality agreement with Shawcor, dated December 15, 2006 and signed by Wolfe in his name but on behalf of CTI, expressed that it applied only to documents which were marked “Confidential” and oral disclosures confirmed to be confidential within 30 days.

The evidence discloses that no such marked documents or confirmed oral disclosures were identified as having been sent to Shawcor. [ 31 ] In June 2007, Wolfe advised that he had signed a licence agreement with another company for North America, which effectively put an end to discussions between Wolfe and Shawcor. [ 32 ] In addition to its negotiations with the Appellants, ARC looked at investments in other operations including Flexpipe as a start-up operation. ARC acted as an advisor to certain limited partnership funds that owned shares in Flexpipe for a period of time.

As a result of the success of the Flexpipe product, Shawcor acquired all of the shares of Flexpipe pursuant to a plan of arrangement approved by the court and filed on June 27, 2008. [ 33 ] Shawcor retained some relevant materials in a sealed file solely in case Shawcor needed to prove what had been provided. Shawcor stated unequivocally that the sealed file was never accessed from October 2001 to the commencement of this action in August 2008.

That statement is uncontradicted. [ 34 ] Despite marked differences in the Flexpipe product, the Appellants allege that their confidential information and Technology were used to enable Flexpipe to model and manufacture their product. There is a significant factual dispute as to whether a confidential model was used to create the product, or simply engineering equations and algorithms to test and refine production.

Master’s Decision [ 35 ] The parties presented Affidavits sworn by Wolfe and Russ Agnew for the Appellants, and by Bouey, Douglas Freel, and Garry Graham for one or more of the Respondents. [ 36 ] The Defendants argued before the Master that none of the Plaintiffs had a proper cause of action. In particular: a. CTI transferred all right, title and interest in the Technology to Proflex before the action was commenced;

b. Proflex was struck off the Alberta Corporate Registry and can no longer be revived; c. Wolfe is not a party to the transfer in his personal capacity and holds no personal interest as a result of the transfer; d. there is no evidence that any of the Defendants intended to injure the business interests of any of the Plaintiffs. [ 37 ] On review of the extensive affidavit material and written briefs, the Master concluded that the claim could not be pursued by any of the named Plaintiffs for three main reasons: a. On July 2, 2006, Proflex was struck from the Corporate Registry.

This was well before the original Statement of Claim was filed in this action on August 18, 2008. It has not been, and is incapable of being revived. As a result, any and all claims advanced by Proflex in the action are a nullity, an abuse of process and without merit. b. On September 15, 1999, CTI assigned all of its right, title and interest in its technology for the manufacture of flexible composite pipe, including its patents and know how to Proflex. CTI has no basis on which to assert claims based on misappropriation or misuse of the Technology. Those claims lay with Proflex, the owner of the Technology.

As a result, all claims advanced by CTI cannot succeed. c. Wolfe has no claim in any personal capacity because his status as a shareholder in CTI is subsumed by the corporate entity.

Since he did not commence any derivative action prior to Proflex being struck off, he too is unable in law to advance any claim against the Defendants. [ 38 ] Having reviewed of all the submissions, the Master concluded that there would be no merit in allowing this matter to proceed to trial as the non-moving party’s position has no merit, and there is no genuine issue of a potentially decisive material fact. [ 39 ] The Master expressly declined to go into the strength of the breach of confidentiality claims and other claims, noting: 4 ...

The applicants rightly took the position that the issue of confidentiality and other claims are not in issue because that is a question of fact which would have to go to trial...

Standard on Appeal [ 40 ] The parties agree that the standard for review in these circumstances is correctness: Orr v Fort McKay , 2014 ABQB 111 , 587 AR 16, Gudzinski Estate v Allianz Global Risks US Insurance Company Ltd , 2012 ABCA 5 , 519 AR 215, Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 , 524 AR 382. [ 41 ] Reasons alleged to be insufficient are reviewable for intelligibility and a measure of meaningful review; they are not to be dissected minutely nor out of context: University of Alberta v Chang , 2012 ABCA 324 at para 23 , 539 AR 58 and cases cited therein.

Issues [ 42 ] This Court must decide whether the Master correctly concluded that: 1. the status of Proflex renders its claim a nullity; 2. the claims should not be stayed pending possible future legislative developments; 3. CTI transferred all of its rights in the Technology and therefore has no standing to sue; 4.

Wolfe and CTI have no independent cause of action; 5. it was fair and just to dismiss the whole of the action as an abuse lacking merit within the scope of Rule 7.3. [ 43 ] As well, the Court must determine whether the Master properly considered the positions of the parties and provided adequate reasons for his decision. Alberta Rules of Court [ 44 ] Rule 7.3 permits a party to apply to the court for

summary judgment in respect of all or part of a claim on the ground that there is no merit to a claim or part of it. [ 45 ] Rule 3.68 provides that all or any part of a claim or defence may be struck out if a commencement document or pleading constitutes an abuse of process. Analysis 1 Did the Master correctly conclude that the status of

Proflex renders its own claim a nullity? [46] Proflex was struck from the Corporate Registry on July 2, 2006. Steps could have been taken for its revival within 5 years ofdissolution, pursuant to s. 208 of Alberta’s Business Corporations Act, RSA 2000, c B-9 (ABCA). [47] The Unclaimed Personal Property and Vested Property Act (Alberta), SA 2007, c U-1.5, s. 34 (UPPVPA) also granted a rightof revival for up to 5 years after coming into force of that legislation. In fact, the UPPVPA was proclaimed in force on September 1, 2008which effectively accorded to Proflex a further two year grace period for revival up to September 1, 2013. Proflex was not revived. [48]

Section 227 of the ABCA allows the continuation of actions commenced prior to dissolution even after the dissolution.However, the Claim advanced in the name of Proflex was filed after it had been struck off, so that

section is of no assistance to theAppellants. [49] The Appellants argue that the Respondents did not raise the issue of ownership until after the revival period had expired. [50] Rule 13.6(2)(

b) provides that a pleading must state a matter that defeats, or raises a defence to, a claim of another party. Rule13.6 further provides: 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: ...(

n) lack of capacity or authority; ...(

q) a limitation period; ...(

r) a provision of an enactment. [51] The Statement of Claim makes no mention of the TTA or any transfer of rights. [52] Flexpipe, Bouey and Gartner filed a Statement of Defence on October 14, 2010, as did Shawcor. Budney filed a Statement ofDefence on May 31, 2011.

All stated in their respective paragraph 2 that Proflex’ registration as a corporation was struck in July 2006.Budney’s Statement of Defence states in paragraph 4(b): “Budney is not aware of the exact relationship between CTI and Proflex butunderstands that from their formation, one or other of them owned whatever rights existed in relation to technology developed by thePlaintiffs”. [53] None of the defences: 1) alleges that neither CTI nor Wolfe has an interest in the Technology or the confidential information,2) mentions the TTA, or 3) alleges that the claim of Proflex is a nullity.

However, they could not have made the first two assertions untildocument production had revealed the existence of the TTA. They could not have made the latter assertion until the grace period forrevival had expired. [54] It has been held that the issue of a party not having a legal personality is sufficiently raised by specifically denying itsincorporation: W. Stevenson & J.

Côté, Civil Procedure Encyclopedia (Edmonton: Juriliber, 2003) at 13-48, citing Williams v UnitedMine Workers of America, Local 1562, (SCC), [1919] 59 SCR 240, 49 DLR 578, revg in part (CA)(AB CA), [1919] 1 WWR 217, 235, 14 Alta LR 251. [55] It may be that the Appellants’ belief that ownership of the Technology or confidential information was not in issue informed,in some way, the steps it took or did not take in relation to Proflex and Proflex’ property prior to the application before the Master.However, it was at all times aware of the TTA and its wording, and therefore the TTA itself cannot have taken the Appellants bysurprise.

Moreover, the ownership of the Technology and confidential information has been squarely in issue since at least March 2014.As discussed below, the evidence does not support a finding that the Appellants have exhausted the avenues which may be available tothem to establish entitlement to the property in question. [56] The law is clear that a company that is struck off or dissolved lacks the capacity to sue and any claim filed in the name of theformer entity is subject to being struck as an abuse of process: Bute Logging Company v Sanders (1952), (BC SC), 5WWR (NS) 142, [1952] BCJ No 11 (SC) and cases cited at para 3. [57] The revival of a corporation with retrospective effect may save a claim which would otherwise be a nullity due to dissolution: 1036122 Alberta Ltd (cob AML Construction) v Khurana, 2012 ABCA 10, 519 AR 221.

However, no law was put forward supportingthe viability of a corporation’s claim filed after the corporation was struck, with no subsequent revival.

The principles behindincorporation speak against such a proposition. [58] I find that the Master correctly determined that the status of Proflex, which has essentially remained unchanged throughout thelitigation, renders its own claim a nullity. 2 Did the Master correctly conclude that the claims shouldnot be stayed pending possible future legislative developments? [59] Wolfe deposes in para 27 of his Affidavit sworn on June 24, 2014 that his counsel spoke to employees of the Crown who

advised that there have been administrative difficulties in returning the property of dissolved corporations to the shareholders and therefore the provincial Crown has drafted legislation to modify the existing legislation to provide for ongoing revival of corporations, which would be retroactive to the date the earlier legislation came into force.

It was anticipated that this legislation would be introduced in the fall 2014 sittings. [ 60 ] If the Appellants’ argument had any tentative weight in 2014, it carries absolutely no weight now. [ 61 ] It cannot serve the public interest to leave matters in abeyance where the legislature has clearly expressed the period within which the right of revival must be exercised. Proflex is moribund.

To borrow from the satire of Monty Python, it is a non-entity and denial does not change that fact. [ 62 ] It is now trite that the mere hope on the part of the non-moving party that something will turn up does not suffice to bar

summary judgment. [ 63 ] I find that the Master correctly concluded that the claims should not be stayed pending possible future legislative developments. 3 Did the Master correctly conclude that CTI transferred all of its rights in the Technology and therefore has no standing to sue? [ 64 ] The TTA was written and executed by Wolfe for CTI, and was executed by Agnew for Proflex on September 15, 1999. The Appellants take a strident position that: a. the wording of the TTA itself supports that CTI retained residual interests in the Technology, including the right to modify design and to market internationally; b. the

interpretation of the parties to the TTA as to design and marketing should govern; and c. the whole of the contract and factual matrix, including the relationship of the parties and commercial reasons, must be also be considered. [ 65 ] The relevant terms of the TTA are summarized below: WHEREAS CTI is the registered assignee of the issued patents, patents pending and patent applications in the United States, Canada and Mexico set out in

Schedule A relating to flexible composite tubular structures, and methods of manufacture and connection of a flexible composite tubular structures. AND WHEREAS CTI has developed materials, structures, designs, computer software, equipment, techniques, procedures and processes relating to flexible composite pipe, including its method of construction, manufacture, connection, testing and installation that are the subject of inventions, patents, designs, trade secrets and proprietary know how. AND WHEREAS in accordance with a License Agreement between CTI and Proflex dated August 31, 1996, Proflex acquired an exclusive license under the patents issued, pending and applied for listed in

Schedule A and an exclusive right to utilize CTI's proprietary technical information relating to equipment, processes, manufacturing data, market data, test data and installation data associated with the patents and applications set out in

Schedule A. AND WHEREAS Proflex desires to acquire and CTI is prepared to assign all right, title and interest in and to the patents, patents pending and patent applications set out in

Schedule A along with CTI's proprietary technical information in connection therewith. NOW THEREFORE, in consideration of the mutual promises, conditions and covenants contained herein, the adequacy and sufficiency of which is hereby acknowledged by each party, the parties agree as follows: 1. The License Agreement between CTI and Proflex dated August 31, 1996 is hereby terminated and replaced with this Technology Transfer Agreement, 2. In this Technology Transfer Agreement the following terms will have the following

definitions:

a) The term "Products" shall mean composite structures, materials used in their construction, and related processes and equipment, and shall include:

i) flexible composite pipe; ii) flexible composite pipe connections; and iii) equipment for manufacturing (

i) and (ii).

b) The term "Improvements" shall mean any modification to composite structures, materials, equipment or manufacturing processes, whether patentable or unpatentable, constituting an improvement in the structures, materials, equipment or manufacturing processes of CTI.

c) The term "Assigned Patents" shall mean the issued patents as set out in

Schedule A, all future patents which issue as aconsequence of the patent applications set out in

Schedule A, and all issued patents and patent applications assigned in the future toCTI relating to the Products.

d) The term "Assigned Know How" shall mean such techniques, practices, knowledge, skills, experiences, and other proprietaryinformation and data of CTI which are required and adequate to permit Proflex to manufacture the Products.

e) The term "Net Sales Value" shall mean... 3. CTI hereby sells, assigns, transfers and sets over to Proflex its entire right, title and interest in and to:

a) the inventions disclosed in the Assigned Patents;

b) the Assigned Patents; and

c) all issued patents and patent applications assigned in the future to CTI relating to the Products;

d) the Assigned Know How. 4. Proflex agrees, as a principal condition of this Technology Transfer Agreement, to pay to CTI, or its assigns, a royal equal totwo percent (2%) of the Net Sales Value of Products which are manufactured and sold and collected by Proflex… 6. CTI agrees to promptly notify Proflex of any Improvements obtained by CTI.

With respect to any notice to Proflex by CTI ofImprovements obtained by CTI, Proflex may, within sixty (60) days after the effective date of such notice, notify CTI in writing that itdesires to have such Improvements included in the Assigned Patents and/or Assigned Know How (at no additional royalty) and subject toall of the terms and conditions of this agreement in effect at that time; otherwise, such Improvements shall not be included herein. [66] To summarize, the TTA: a. expressly replaces the prior exclusive licence to use; b. lists the three patents for flexible tubular structure, the method of manufacture and pipe coupling issued between 1992 and 1997 inCanada, U.S. and Mexico; c. assigns without conditions the inventions as patented, all future applications assigned on the products and “assigned know how”; d. refers to patents in North America but includes no geographic, temporal or other qualifiers; e. includes in the assigned interest

Schedule A “...along with CTI’s proprietary technical information in connection therewith”. [67] The factual matrix surrounding the TTA is relevant in determining the objective intentions of the parties to it: Sattva CapitalCorp v Creston Moly Corporation, 2014 SCC 53 at paras 55-58. As the Supreme Court emphasizes at paras 59-60, the evidence cannotvary or contradict the wording such as by reference to subjective intentions of the parties. [68] Some of the factual matrix is not in dispute. Proflex was incorporated in 1993 to manufacture and sell the product. CTI ownedalmost 90% of the Proflex voting shares.

Proflex sought to compete with steel and fibreglass pipe in the oil and gas industry. One of themajor challenges was to achieve a competitive cost of production. [69] The Appellants note that the second “whereas” refers to US, Canada and Mexico patents. The Appellants argue that CTIretained international marketing rights. They assert that the role of Proflex as a subsidiary to CTI was to manufacture flexible compositepipe designed by CTI only in North America. [70] It is true that the TTA expressly refers in the

preamble to the issued patents, patents pending and patent applications in theUnited States, Canada and Mexico. However, in paragraph 3(c), CTI transferred to Proflex all issued patents and patent applicationsassigned to CTI in the future relating to the Products. That language is not restricted to North America. [71] As to the purpose or intent behind the TTA, the Appellants argued that paragraph 2(

d) of the TTA expressly restricted the“Assigned Know How” to that which was required and adequate to permit Proflex only to manufacture the products. The TTA defines“Assigned Patents” and “Assigned Know How” specifically for the purpose of manufacture by Proflex. Paragraph 6 contemplates thatCTI may make improvements which would not initially form part of the TTA. [72] The Appellants argue that the parties’ post-agreement conduct is consistent with an

interpretation of the TTA to the effect thatthe parties did not understand or intend that CTI had parted with all of its rights. Specifically, CTI subsequently entered into agreements,to the knowledge of Proflex, which would indicate that the rights were not exclusive to Proflex. [73] The Master characterized Wolfe and Agnew’s evidence as to intent as merely evidence of subjective intentions, citing Re:SemCanada Crude Company (Celtic Exploration Ltd), 2010 ABQB 531 at para 81, 495 AR 367; Dow Chemical Canada Inc v ShellChemicals Canada Ltd, 2010 ABCA 126 at paras 16-18, 20, 477 AR 112.

He also characterized the evidence as argument andconclusion, citing Alberta Human Rights Commission v Alberta Blue Cross Plan, 1983 ABCA 207 at para 8, 48 AR 192. [74] The Appellants argued that, where the parties to the contract both view its terms in the same way, third parties have noinvolvement and cannot rely on other

interpretations: Cie française du Phénis v Travelers Fire Insurance Co, (SCC),[1952] 2 SCR 190 at 217, [1952] SCJ No 19: When the parties are in agreement as to the meaning of a provision, a court, in the absence of compelling reasons to the contrary, should

construe the document in accord therewith. Adolph Lumber Company v. Meadow Creek Lumber Company [(1919) (SCC), 58 Can S.C.R. 306 at 307.], Forbes v. Watt [

(1872) L.R. 2 Sc. App. 214 at 216.]; Pollock on Contracts, 13th Ed., 373. [75] The issue in Phénis was the meaning of a particular phrase in an insurance contract. The extent to which the three levels ofcourt decisions consider the phrase and case law would suggest that the wording was ambiguous. Likewise, Davies C.J. in Adolphcommented that the contract in that case was so ambiguously worded that it was almost impossible to determine from its language whatthe parties really intended and meant to express.

The case has been followed for the proposition that subsequent conduct of the partiesmay be used to interpret an ambiguous contract. [76] The question, therefore, is whether the TTA is ambiguous. [77] The Appellants urged that the 2007 contract between Wolfe and Garneau Inc. reflects a geographic territory for the UnitedStates and Canada. That is a licence agreement signed two years after Proflex ceased to be active and a year after it was struck off. Theother contract of June 6, 2005 between Wolfe and the Kuwaiti Group purports to represent that CTI is the owner and registered assigneeof the four U.S. Patents.

The agreement does not disclose that those patents were assigned to Proflex under the TTA in 1999. Theconduct of CTI may suggest that it was not subjectively of the view that it had divested itself of all right in the Technology. That does notnecessarily mean the language in the TTA is ambiguous. [78] The Appellants argue that the design was not transferred. However, it is difficult to interpret the broad language of the TTAexcept in such a way as to conclude that property design is inherent in what has been transferred.

That does not preclude improvements indesign from emerging as the TTA contemplated. [79] Ideas could emerge out of CTI in various ways including further tests, actual installation and use, and consultations by theparties. Arguably, CTI’s use of the Technology in developing these improvements would be contrary to the terms of the TTA.

However,while it does appear to contemplate CTI’s continued use of the Technology for development purposes, the TTA prescribed that whereCTI obtains an Improvement, it was obliged to notify Proflex for potential, but not mandatory, inclusion at no additional royalty (para 6).That does not detract from the scope of the transfer as written. [80] Unlicensed third party infringers are to be pursued by CTI in the name of Proflex or by Proflex alone with royalty payments tobe withheld (para 7).

That does not modify or restrict the transfer of ownership to Proflex. [81] The Appellants also argue that the status of Proflex as a subsidiary of CTI colours the

interpretation of the TTA, and CTIcannot have intended to give its ownership away entirely. However, it is not the role of this Court to second guess the business efficacyof a property transfer between related companies, or to presume that a parent company would not likely divest itself of all ownership orotherwise. [82] During argument, the Appellants provided a Project

Summary from October 2001 that was submitted to Shawcor in pursuit offurther investment. This is one document that sets out the subjective intent that Proflex has exclusive rights in North America. But it isparole evidence expressing subjective intent two years after the TTA. Even if it had been available to the Master, or included insupplemental materials as contemplated for this appeal, such evidence cannot be used to contradict the plain language and disclose alatent ambiguity as to intention.

As confirmed in Eli Lilly & Co v Novopharm Ltd, (SCC), [1998] 2 SCR 239, [1998]SCJ No 59 at para 54, contractual intent of the parties is to be determined by reference to the words the parties used in drafting thedocument, possibly read in light of the surrounding circumstances which were prevalent at the time. Evidence of one party’s subjectiveintention has no independent place in this determination, and Sattva has not done away with this principle. [83] Overall, nothing in the circumstances varies or restricts the proper

interpretation of the TTA as written. The transfer was notsimply the right to manufacture. That was what Proflex had under its 1994 licence and this agreement speaks to a transfer of property.The Master was correct in his conclusion that Proflex owned the Technology from and after 1999. [84] However, this does not end the matter. [85] The ABCA provides: 26(1)

(3) If a corporation has only one class of shares, the rights of the holders of those shares are equal in all respects and include therights ... (

c) to receive the remaining property of the corporation on dissolution. [86] There is no evidence that the affairs of Proflex were properly wound up so as to allow the shareholders (primarily CTI with its90% interest) to claim an entitlement to the intellectual property which it had formerly granted to Proflex.

The latter entity no longerexists and can no longer participate in a winding-up. [87] It is clear by virtue of s. 229 of the ABCA and s. 15 of the UPPVPA that property owned by a corporation and not disposed ofat the date of dissolution of the corporation vests in the Crown in right of Alberta, subject to s. 227 of the ABCA. [88] The parties referred briefly in argument to the UPPVPA.

I invited and received supplemental submissions regarding theimpact of the UPPVPA on the current status of any intangible property transferred to Proflex under the TTA. [89] The Appellants submit that the property transferred to Proflex under the TTA falls within intangible personal propertycovered by the UPPVPA as it is not expressly excluded by ss. 3 and 4 of the General Regulation, Alta Reg 104/2008. Therefore, thesubject property vested in the Minister; CTI has an equitable interest and valid entitlement to the property, and is the only party in aposition to regain legal title to it.

The Appellants argue that CTI may avail itself of a claim under s. 48 or s. 49 of the UPPVPA. TheAppellants purport to rely on hearsay from an earlier government in 2014 as noted above (see para 59).

[ 90 ] The Respondents submit that the Minister does not hold the Technology in trust. They rely on the non-exhaustive list in s. 1(

s) in support of the argument that neither the UPPVPA nor its Regulation contemplates that this type of intellectual property would be held by the Minister. They further argue that even if it was held in trust pursuant to the Regulation , CTI does not have any interest in it and cannot bring a claim to the Minister under the legislation.

CTI was only one of seven voting shareholders of Proflex, and it is unlikely that CTI could meet the criteria under s. 22(2) of the Regulation . [ 91 ] The UPPVPA provides that “property” includes intangible personal property unless otherwise restricted by the UPPVPA or the Regulation . None of the express restrictions applies to the Technology. [ 92 ] Section 35(1) of the UPPVPA provides that no person other than a Minister may sell or otherwise dispose of the vested property of a dissolved corporation after the date of its dissolution.

Vested property transferred to the Minister must be held in trust for 10 years. [ 93 ] Under s. 22(2) of the Regulation , a person representing all of the shareholders of a corporation at the time of its dissolution, or who has been granted an order by a court authorizing it, may make a claim if the revival period has elapsed.

The person must provide reasonable grounds for not causing the corporation to be revived, and satisfy the Minister that injustice is likely to result if the claim is not considered and that there is no other person with a better entitlement to the property. [ 94 ] CTI has submitted that, until the

summary dismissal application, it had no basis to believe that the Respondents would allege it did not have sufficient rights to sue. Therefore, CTI did not take steps to wind-up or revive Proflex. Both signatories deposed that neither party intended that CTI would divest itself of all of its interest in the Technology by virtue of the TTA. There is no evidence before the Court to suggest that anyone has a better claim of entitlement to the Technology. [ 95 ] However, the Master ruled on March 17, 2015 that the ownership of the Technology had passed to Proflex.

There is no evidence that any steps have been taken at any time by CTI to make a claim under the UPPVPA . The Court might speculate on the success or otherwise of such a claim, but it would remain speculation. The affidavit evidence adverts to discussions in 2014 between counsel and Crown employees indicating that “the Minister at present is not responding to requests”.

This is insufficient evidence upon which to conclude that a claim has actually been made under the UPPVPA by CTI or that the Minister refused to consider such a claim. [ 96 ] The Appellants also submitted that the Master ought to have allowed them to amend their claim to seek rectification of the TTA. This remedy was included in written submissions to the Master at para 48 but does not appear to have been argued or considered.

The Master’s decision did not address rectification. [ 97 ] There is no real dispute that the Court is empowered to allow amendment unless there is prejudice which cannot be repaired: Balm v 351 2061 Canada Ltd , 2003 ABCA 98 at para 43 , 327 AR 149 . [ 98 ] However, no proposed amendment wording has been prepared, nor any suggestion as to how the contract would be revised. This is not a case where third parties seek to derive a specific benefit from the TTA between Proflex and CTI. Rather, the Appellants ask the Court to decide whether the claim supports proof of ownership in CTI on this

summary judgment motion as to which the parties are presumed to have prepared their best evidence. [ 99 ] The proper approach in weighing arguments on

summary applications is for the court to presume that the parties have presented their strongest evidence in condensed form: 1214777 Alberta Ltd v 480955 Alberta Ltd , 2014 ABQB 301 , [2014] AJ No 538 citing Canada v Lameman , 2008 SCC 14 , [2008] 1 SCR 372 at 378, 382. [ 100 ] The failure to file an application or to set out wording to rectify the contract before the Master or on appeal supports the inference that it is a late strategy seeking to avoid

summary dismissal. That sort of response is not consistent with the evidentiary burden which by the wording of the TTA shifted to the Appellants to show that there is arguable merit to the claim: Murphy Oil Company Ltd v Predator Corporation Ltd , 2006 ABCA 69 , 384 AR 251. [ 101 ] Again, this issue was squarely put before the Master. I conclude that the Master did not err in his

interpretation of the TTA. The Appellants have had time to prepare a proper application for rectification, but have not done so. 4 Did the Master correctly conclude that Wolfe and CTI have no independent cause of action? [ 102 ] The Amended Statement of Claim contains allegations that the Respondents induced breaches of duties of confidentiality to CTI and Proflex, breached contractual confidentiality agreements with CTI and Proflex, and induced Bouey, Gartner and Budney to breach their fiduciary duties to CTI and Proflex.

As well, it is alleged that the Respondents “breached their contractual duties of confidentiality to the Plaintiffs” and misrepresented the use to which they intended information to be put, during discussions with Wolfe in 1999 which were ultimately incorporated in the confidentiality agreements between the parties. [ 103 ] The Master did not list and deal with Wolfe’s alleged personal claims but he did conclude as follows: 23 There is nothing of merit to suggest that Wolfe had a separate and distinct claim with regard to a wrong done to him as a shareholder qua individual.

So it is clear that Wolfe has no separate right to advance a separate cause of action. Any right he would have had would have existed either directly through CTI or Proflex (which is the case here) or if they did not advance an action he could have applied for the right to advance a derivative action. [ 104 ] The Appellants purport to take no issue that Foss v Harbottle (1843), 2 Hare 461, 67 ER 189 precludes Wolfe from advancing a claim, derivative or otherwise, as a shareholder of either CTI or Proflex. The challenge on appeal is whether the Master concluded

correctly – although summatively - that Wolfe had no separate claims for: 1. breach of confidence to Wolfe directly; 2. loss of the sale of shares in CTI owned personally by Wolfe; 3. interference with economic interests; 4. unjust enrichment; 5. breach of contract. [105] Wolfe served as the Chief Executive Officer for CTI, and for Proflex until it was struck off. The Respondents argued thatabsent any agreement to the contrary, the technology which he developed for the benefit of CTI became the property of CTI, or itsassignee and he did not retain any personal rights or claims. [106] The TTA was signed in 1999.

Some of the earlier confidentiality agreements were signed by Wolfe on his own behalf, notablythe September 28, 1990 agreement between Budney and Wolfe, and September 1, 1994. [107] Most of the agreements in question were for limited duration and/or scope.

In oral argument, the Appellants conceded that theterms of an agreement supersede a common law duty of non-disclosure: CP Developers at paras 11-19; see also Cadbury Schweppes Incv FBI Foods Ltd, (SCC), [1999] 1 SCR 142, [1999] SCJ No 6 at para 36. [108] The September 1, 1994 agreement between Budney and Wolfe does contain specific provisions that were to continue aftertermination. The Appellants argue that Budney and Bouey used and disclosed confidential information which enabled Flexpipe toproduce their product in a much shorter time frame than the five years it took Proflex in the early nineties.

Wolfe refers to calculationsmade by Budney which he alleges are the CTI model of strips wound in a matrix and a type of slack that was unique. Budney denies thatthe mathematical equations were unique or that application of engineering principles to measure product variables is confidential innature.

That is the subject of the greatest debate. [109] The Appellants further argue that ARC and Shawcor are each responsible for their willful blindness in not recognizing thatFlexpipe derived benefit from the confidential information used by Budney and Bouey. [110] The Appellants profiled the retention of materials by Shawcor as a major breach of its covenant of confidentiality, even thoughthe documents were kept in a sealed file solely in case Shawcor needed to prove what had been provided.

Shawcor states unequivocallythat the sealed file was never accessed from October 2001 to the commencement of this action in August 2008. That statement isuncontradicted. The personal costing notes kept by Mr. Steele to which he referred in supporting the new proposal for investment cannotconstitute a breach of confidence.

I find nothing in the evidence to support a causal connection between that sealed retention of materialand any proof of entitlement to a remedy against the Respondents. [111] Most significantly, Wolfe confirmed in questioning (pp. 99-100) that the Technology and confidential information was ownedby CTI and that none of the confidentiality agreements provide any personal right for Wolfe to exploit the technology in his own name.He clearly stated in questioning that the Technology developed at the University and later was developed in the name of CTI, Wolfe’spaycheque came from CTI, and CTI owned the Technology and confidential information.

When asked how he personally suffereddamages, Wolfe noted only that he was the majority shareholder in CTI and Proflex. Questioning of Agnew is consistent with thisevidence.

Wolfe later asserted a personal interest in the claim for unjust enrichment and intentional interference with economic interests. [112] The Appellants argued that ownership is not a conclusive factor in breach of confidence cases; they do not need to proveownership in order to claim entitlement to the confidence and the Master was wrong to conclude otherwise, citing Cadbury andstatements from Free Trade Medical Network Inc v RBC Travel Insurance Co (2006), (ON CA), 215 OAC 230,[2006] OJ No 3636.

They note that Binnie J. stated in Cadbury at para 41 that the action on breach of confidentiality is rooted in therelationship rather than the legal characteristics of the information confided. [113] The Court in Free Trade acknowledged that the party complaining about breach of confidence may be a person entitled to theconfidence, but not necessarily the owner.

However, it rejected the application of that principle in the case before it, noting that thedefendant did not have a relationship with the plaintiff, and the plaintiff’s only entitlement was to have the confidence respected in orderto protect a third party. [114] Wolfe says his claim is for a separate and individual harm as residually recognized.

The Supreme Court in HerculesManagement Ltd v Ernst & Young, (SCC), [1997] 2 SCR 165, [1997] SCJ No 51 did acknowledge the possibility ofpersonal claims by individuals who happen to be shareholders, but reiterates that shareholders have no claim for wrongs done to thecorporation, citing at para 59 the English Court of Appeal in Prudential Assurance Co v Newman Industries Ltd (No 2), [1982] 1 AllER 354 at 367: ...When the shareholder acquires a share he accepts the fact that the value of his investment follows the fortunes of the company and thathe can only exercise his influence over the fortunes of the company by the exercise of his voting rights in general meetings.

The lawconfers on him the right to ensure that the company observes the limitations of its memorandum of association and the right to ensurethat other shareholders observe the rule, imposed on them by the articles of association.

If it is right that the law has conferred or shouldin certain restricted circumstances confirm further rights on a shareholder the scope and consequences of such further rights requirecareful consideration. [115] In Reach MD v Pharmaceutical Manufacturers Association of Canada (2003), (ON CA), 65 OR (3d) 30,[2003] OJ 2062 at para 46 (CA) the Court noted that the tort of interference with economic relations requires that the defendant’s actwas targeted against the plaintiff, although the predominant purpose may well have been to advance the defendant’s interests rather than

to injure the plaintiff. In RLTV Investments Inc v Saskatchewan Telecommunications, 2009 SKCA 83 at para 48, [2009] SJ No 457,the Court held that the defendant must have interfered with a business relationship which exists or is expected to exist between theplaintiff and a third party. [116] Meditrust Healthcare Inc v Shoppers Drug Mart, , 61 OR (3d) 786 (CA) dealt with a claim that the actionsof Shoppers Drug Mart caused harm to the subsidiaries of the parent plaintiff Meditrust, giving rise to an unjust enrichment claim. TheCourt held that Meditrust had not filed any evidence of separate damages to it.

Any loss of business opportunities were impacts on thesubsidiaries and not claimable by the parent. [117] In Kaverit Steel & Crane v Kone Corp (1983), 1993 ABCA 150 , 10 Alta LR (3d) 103, [1993] AJ No 402 (CA), theCourt found a third party withdrew a formal offer to purchase specific shares because of the defendants’ representations. The shares inquestion were not in Kaverit but in an entirely separate numbered company. [118] The Appellants argue that the Master was incorrect in holding that there must be detriment established by a claimant allegingbreach of confidentiality, citing a number of cases.

As argued by the Respondents, those cases are either distinguishable or fail toproperly consider the Supreme Court decision in Lac Minerals Ltd. v International Corona Resources Ltd, (SCC),[1989] 2 SCR 574, [1989] SCJ No 83. [119] Even Binnie J.’s dicta in Cadbury anticipate the need for proof of some form of loss or detriment along a spectrum of damagingimpact. Any loss here would accrue to Proflex as the entity alleging a loss of competitive advantage.

The other Appellants do not have aseparate residual claim of detriment. [120] On the best evidence, the terms of an ARC term sheet of March 27, 2001 (Exhibit S in Wolfe’s Affidavit sworn on June 27,2014) contemplated that more shares in CTI would be purchased above what ARC acquired by exchange or other transaction.

Nothing inthe evidence links even by inference the failure to complete a deal on this term sheet with any breach of confidence against the interestsof Wolfe, much less that it could support a separate cause of action in his name. [121] Similarly, Shawcor declined to invest in October 2001 after assessing that the Proflex product was too expensive to manufacture(Graham Affidavit pp. 4-5, para 13-20). No cause of action by Wolfe derives from that business decision either. [122] On the pleadings, Wolfe and CTI do not assert any personal damages that are not linked to their shareholder interests.

From fullreview of the profiled evidence, it was CTI who had the right, title or interest in the Technology. As previously discussed, CTI in turntransferred rights to Proflex under the TTA. I find no basis upon which Wolfe or CTI can assert an independent claim against theRespondents in these actions.

Their assertions of separate and extant breaches of confidentiality are without merit. 5 Did the Master correctly conclude that it was fair andjust to summarily dismiss the whole of the action as an abuselacking merit within the scope of Rule 7.3? [123] The Master held that viva voce evidence was not required to properly resolve the case, as there was no genuine issue of apotentially decisive material fact. [124] The test for

summary judgment has been settled in a series of recent Alberta Court of Appeal cases relying on FH v McDougall,2008 SCC 53, [2008] 3 SCR 41 and Hryniak v Maudlin, 2014 SCC 7, [2014] 1 SCR 87 which authorize the affordable, timely and justadjudication of claims. These decisions include: Windsor v Canadian Pacific Railways, 2014 ABCA 108, 572 AR 317; AccessMortgage Corporation

(2004) Ltd v Arres Capital Inc, 2014 ABCA 280, 584 AR 68; 776826 Alberta Ltd v Ostrowercha, 2015 ABCA49, 593 AR 391; Sherwood Steel Ltd v Odyssey Construction Inc, 2014 ABCA 320, 5 Alta LR (6th) 268; Ernst v Alberta (EnergyResources Conservation Board), 2014 ABCA 285, 580 AR 341. [125] Essentially, the Court is called upon to examine whether: (

a) the evidence is sufficient to make reliable findings of fact; (

b) the case allows the law to be properly applied to the facts; (

c) the expediency is justified in the circumstances. [126] Decisions have described the new standard for measuring the merit of

summary judgment position as “unassailable”. Caseswhich reach that standard need to be compelling, such that the likelihood of success is very high. [127] It remains clear that

summary judgment should not be granted if issues are unsettled, complex or intertwined with disputed factswhere evidence must be weighed: Elbow River Limited Partnership v Canada Clean Fuels Inc, 2012 ABCA 328 at para 33. [128] The mere assertion of a position by the non-moving party in a pleading or otherwise, or the mere hope of the non-moving partythat something will turn up at a trial, does not suffice. The key is whether the circumstances require viva voce evidence in order toproperly resolve the case: see Canada v Lameman, 2008 SCC 14 at paras 10 to 11, [2008] 1 SCR 372. [129] The Master at para 25 addressed the modern view that

summary judgment rules must be interpreted broadly, favouringproportionality and fair access to the affordable, timely and just adjudication of claims. He quoted from 776826 Alberta Ltd at para 12,distinguishing the test applied under Rule 3.68 for striking out pleadings as to “... any reasonable prospect of success, erring on the sideof generosity in permitting novel claims to proceed”.

[ 130 ] I note that these proceedings commenced in 2008 and that extensive questioning has resulted in numerous undertakings. This is relevant because the parties are obliged on such applications to put their best evidence forward. [ 131 ] I find that the Master did not err in determining that this is an appropriate case for

summary judgment based on the status of each of the Appellants in relation to the claim. 6 Did the Master consider the positions of the parties, fairly weigh the merits and provide adequate reasons for his decision. [ 132 ] I find that the Master’s reasons are intelligible and susceptible to meaningful review. In all events, I have re-examined and articulated further why

summary dismissal was justified in the circumstances. Decision [ 133 ] In

summary: 1. the status of Proflex renders its claims a nullity; 2. the claims should not be stayed pending possible future legislative developments; 3. CTI transferred all of its rights in the Technology and therefore has no standing to sue; 4. Wolfe has no personal cause of action; 5. it was fair and just to dismiss the whole of the action as an abuse lacking merit within the scope of Rule 7.3; and 6. the Master’s reasons are adequate. [ 134 ] In the result the decision of the Master is affirmed and the appeal is dismissed.

Costs [ 135 ] If the parties are unable to agree on costs, they may speak to me within 45 days of this decision. Heard on the 16 th day of March, 2016. Dated at the City of Edmonton, Alberta this 6 th of May, 2016. S.D. Hillier J.C.Q.B.A. Appearances:

Patrick D. Kirwin for the Appellants (Plaintiffs) James T. Neilson, Q.C. for the Respondents Shawcor Ltd., Flexpipe Systems Inc., Sam Bouey, Kevin Gartner and David Budney (Defendants) Michael E. Mestinsek for the Respondent ARC Financial Corp. (Defendant)