Hartwell v Taylor, 2016 ABQB 289

Court of Queen ’ s Bench of Alberta Citation: Hartwell v Taylor, 2016 ABQB 289 Date: 20160520 Docket: 1301 11861 Registry: Calgary Between: James B. Hartwell Plaintiff - and - Brett Taylor Defendant _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice E.C. Wilson _______________________________________________________ Background [ 1 ] The Plaintiff sold the Defendant a home which backed onto the Elbow River for $1.95 million. [ 2 ] After all conditions upon the purchase of the property were met or waived, but prior to closing on September 20, 2013, the

basement of the home was damaged during the significant flooding that occurred along the Elbow River in Calgary on or about June 21, 2013. [ 3 ] The Plaintiff says that after the flood and before the intended closing date, the house, which was insured, was fully remediated and put into significantly superior condition than it was at the time of purchase. [ 4 ] The Defendant says that he failed to close on the transaction, because the house was not in substantially the same condition as at the time of purchase. [ 5 ] As a result, the Plaintiff started an action for damages arising from the Defendant’s failure to close on the real estate purchase agreement.

The Defendant counter-claimed to recover his $100,000.00 deposit. [ 6 ] During questioning of the Defendant, some admissions came out that, in the Plaintiff’s view, suggested that new parties, being Red Tree Management Inc. a company wholly owned and managed by the Plaintiff’s wife, Christine Taylor, and Christine Taylor herself may have had a role in the matters pled in the lawsuit and may well, along with the Defendant, have liability to the Plaintiff in this action. [ 7 ] As a result, this Application to Amend was filed in September 2014 and is opposed by the Defendant.

As a sidelight it might be noted that in October 2014, a second action was started against Red Tree Management Inc. and Christine Taylor along with two other “Red Tree” companies (filed as QB Action No. 1401 12148). In response to the filing of the second action the Defendant has filed an Application to have it declared as an abuse of process; alternatively he seeks security for costs. Those issues remain outstanding.

Parties’ Positions on this Application to Amend [ 8 ] The Plaintiff submits that material found within his August 10, 2015 Affidavit, the questioning of the Defendant on May 27, 2014, the Affidavit of Michael Murphy – the Defendant’s realtor – sworn April 8, 2016 and the Plaintiff’s Affidavit sworn April 14, 2016 provide sufficient evidentiary record to connect Red Tree Management Inc. and Christine Taylor to the issues raised in this lawsuit (Action No. 1301 11861). [ 9 ] The Plaintiff’s submissions and the information upon which he relies in this regard, are set out in his brief at paragraphs 8- 26. [ 10 ] The Defendant opposes this Application.

He submits that the Application is frivolous, vexatious and an abuse of process (paragraphs 12-13 of his brief). He adds that the Plaintiff is simply engaged in an inpermissable fishing expedition (paragraph 14). [ 11 ] The Defendant takes issue with the value of Mr.

Murphy’s Affidavit to the Plaintiff’s Application and as to the hearsay information received from a person named “Prem Chandra” and detailed in the Plaintiff’s April 14, 2016 Affidavit. [ 12 ] The Defendant takes further issue with the Plaintiff’s desire to further amend pleadings to allege the tort of inducing breach of contract and for seeking personal liability of Christine Taylor, the 100% shareholder and sole director of Red Tree Management Inc. The Law [ 13 ] Rules 3.74 (1); (2)(

b) and (3) apply to this unconsented Application: 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: ... (

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. [ 14 ] I agree with what Poelman, J. said in Manson Insulation Products Ltd v Crossroads C & I Distributors , 2011 ABQB 51 when dealing with Rules 3.74(2)(

b) and (3): [48] The material parts for this application, where there is no consent, are rules 3.74(2)(

b) and 3.74(3). These establish three requirements:

a) the application must be made by a party;

b) the court must be satisfied that an order should be made; and

c) there must be no prejudice that could not be remedied. [49] The amendment application is made by New Manson, a party to both the claim and counterclaim. Thus, the first requirement is satisfied.

[50] The rule gives no express guidance on what is meant by the second requirement, that the court be satisfied. It clearly intends toconfer discretion on the court. Discretionary powers of the court must, of course, be exercised judicially -- that is, in accordance withaccepted principles. [51] In my view, for the reasons given above, the guidelines established by the authorities under the former rules should again informthe court’s discretion under rule 3.74(2)(b).

There is, therefore, no reason to take a different approach in principle to amendments thatadd parties, subject of course to the express inclusion of prejudice considerations in rule 3.74(3). [52] The third element, prejudice, is a consideration in any amendment application, according to the authorities.

It is given moreprominence where new parties are added, presumably because they are more likely to expand the scope and expense of an action, andmay be particularly be affected where the action is well advanced or limitation periods have passed. [15] The guideline principles referenced by Poelman, J. are summarized by Wittmann, CJQB in Dow Chemical Canada Inc v NovaChemicals Corporation, 2010 ABQB 524 as follows: [20] Generally, any pleading can be amended no matter how careless or late is the party seeking to amend: Balm v. 3512061 CanadaLtd., 2003 ABCA 98 , ABCA 98, 327 A.R. 149 at para. 43.

This is referred to in Balm as the “classic rule”. [21] The classic rule is subject to four major exceptions: [citations omitted] Those exceptions are as follows: 1. the amendment would cause serious prejudice to the opposing party, not compensable in costs; 2. the amendment requested is “hopeless” (an amendment that, if were in the original pleadings, would have been struck); 3. unless permitted by statute, the amendment seeks to add a new party or a new cause of action after the expiry of a limitation period;and 4. there is an element of bad faith associated with the failure to plead the amendment in the first instance.

Therefore, if no exception applies, the pleadings can generally be amended. [16] In giving effect to these principles there is nothing before me to support a suggestion that any of these four exceptions notedabove apply. The real complaint is that there is no ‘evidence’ to support the requested amendments. [17] The above-noted decision of Côté, J.A. in Balm v 3512061 Canada Ltd., 2003 ABCA 98 provides some guidance as to the‘quantify’ and ‘quality’ of evidence required to permit amendment: – “a modest degree of evidence” (paragraph 28) – “any evidence will do.

It need not be an affidavit by the party seeking to amend” (paragraph 26) – “the threshold is low ... Hearsay clearly suffices” (paragraph 25) – “an uncertain conclusion, hearsay or evidence which does not exclude a possible defence, suffices (paragraph 27) – “One must recall that the original statement of claim here needed no evidence at all, and that any plaintiff can always issue a newstatement of claim if the limitation period has not expired. Lack of a factual basis is ordinarily not a ground to strike out a pleading, solong as it alleges facts which (if true) would have given a cause of action (or defence).

And a plaintiff with two statements of claim couldlikely then have the two suits either consolidated or tried together.” (paragraph 28) See also Plaintiff’s Brief, paragraph 38, which fairly reflects the law. [18] Having reviewed the information relied upon by the Plaintiff in paragraphs 8-26 of his Brief, I am satisfied he has met thelegal requirements to permit the requested amendments to the Statement of Claim.

It necessarily follows that the Court does not agreewith the Defendant that this Application was vexatious, frivolous, an abuse of process or amounted to a fishing expedition. [19] I am satisfied that there is no basis to deny the Plaintiff’s application of essentially piercing the corporate veil to add theindividual Christine Taylor as Defendant where she is apparently, for all intents and purposes, the corporate alter ego: see 869120Alberta Ltd v B & G Energy Ltd, 2011 ABQB 209 at paragraphs 28-32. [20] Lastly, I am satisfied that at this stage the Plaintiff can rely upon the hearsay allegations of the individual “Prem Chandra” –see Balm, above. [21] In conclusion, the requested amendments as found in

Schedule “A” to the Plaintiff’s Application filed September 18, 2014 areallowed. Costs [22] After reflecting upon counsel’s submissions in this regard during the case management meeting from which this decisionflows, I find that the Plaintiff is entitled to costs in the amount of $750.00 payable forthwith.

Heard on the 17 th day of May, 2016. Dated at the City of Calgary, Alberta this 19 th day of May, 2016. E.C. Wilson J.C.Q.B.A. Appearances: Ed Bresky for the Plaintiff Brian Clark for the Defendant