864503 Alberta Inc., Sukhjinder Boparai, Sukhwant Boparai, Hardial Boparai v. Sampuran Chatha, 2017 ABQB 809

Court of Queen’s Bench of Alberta Citation: 864503 Alberta Inc v Genco Place Properties Ltd, 2017 ABQB 809 Date: 20171222 Docket: 1401 00942 Registry: Calgary Between: 864503 Alberta Inc., Sukhjinder Boparai, Sukhwant Boparai, Hardial Boparai and Sampuran Chatha Appellants/Plaintiffs - and - Genco Place Properties Ltd., GDC (GP) Ltd., GDC (Copperfield) Ltd., GDC (Copperfield 2) Ltd., GDC (MG) Ltd., GDC

(634) Ltd., GDC

(608) Ltd., Genco Development Corporation, Genco Land Holdings Ltd., Pali Bedi, Jasbir Hans and Navpreet Bedi, also known as Navpreet Singh Respondents/Defendants - and- Genco Holdings Ltd., Genco Place Properties Ltd., GDC (Copperfield) Ltd., , GDC (MG) Ltd., GDC

(634) Ltd., GDC

(608) Ltd., Genco Development Corporation, and Pali Bedi Plaintiffs by Counterclaim - and - 864503 Alberta Inc., Sukhjinder Boparai, and O.K. General Food Stores Ltd. Defendants by Counterclaim

Corrected judgment: A corrigendum was issued on February 14, 2018; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice C. Dario _______________________________________________________ Appeal from the Decision by A.R. Robertson, Q.C., Master in Chambers Dated the 18 th day of March, 2016 ( 2016 ABQB 163 , Docket: 1401 00942) I. Introduction [ 1 ] This is an appeal from Master Robertson, Q.C.’s decision to grant

summary judgement against the Plaintiffs in this action. He granted

summary judgment based on his finding that this action was attempting to re-litigate a claim that was settled in 2013. The Master’s decision can be found at 864503 Alberta Ltd v Genco Place Properties Ltd , 2016 ABQB 163 (the “ Master’s Decision ”). In a subsequent related decision, the Master also declared moot one of the counterclaims, as it was wholly dependent on the main action proceeding. The remaining counterclaims were not addressed as there was no application for

summary judgement on those related claims and it is not clear that they are wholly dependent on the main action proceeding. The Master granted a triple cost award against the Plaintiffs (now the Appellants), which along with disbursements came to an amount of $185,000. [ 2 ] There were a number of issues that were before the Master which he did not fully rule on. Rather, he proceeded with the issue of

summary judgement on the basis that if granted, it would render the other issues moot: Master’s Decision paras 5 to 8. For example, although normally the court would first address the application to amend the statement of claim and issues around the expiry of a limitation period, in this case, the respondents argued the claim would not succeed no matter how plead and, by inference, notwithstanding the limitation period.

The Master proceeded on the basis favorable to the Plaintiffs with respect to these issues, such as assuming the pleadings could be amended in the manner sought by the Plaintiffs and adding the parties sought to be added by the Plaintiffs: Master’s decision at para 23. Implicit in the Master’s decision is that he was proceeding as though the limitation period with respect to this claim had not expired. Despite such assumptions, the Master ruled against the Plaintiffs on the basis of res judicata and abuse of process, and granted

summary judgment to dismiss their claim. [ 3 ] The parties have implored this Court to resolve certain of the matters assumed and therefore not further addressed by the Master. As such issues were on the record before the Master, they are reviewable by this Court: r 6.14(3). I will address those issues in addition to the primary substantive issues. [ 4 ] The Plaintiffs appeal on the basis that the Master erred by:

a) finding res judicata applied to this action,

b) finding there was an abuse of process, and

c) granting a heighted costs award. [ 5 ] The Plaintiffs request several forms of relief:

a) They seek a reversal of Master Robertson’s

summary judgment against the Plaintiffs (which I note would also require a reinstatement of the counterclaim declared moot by the Master).

b) The Plaintiffs sought before the Master and continue to seek approval to amend the Statement of Claim in this action (the “ First Amended, Amended Statement of Claim ”), which included adding parties as Defendants. The Plaintiffs have also submitted before

this Court further amendments to the First Amended, Amended Statement of Claim (the “ Second Amended, Amended Statement of Claim ”), which was not before the Master. They seek an order permitting the filing of the Second Amended, Amended Statement of Claim.

c) The Plaintiffs seek a reversal of the cost award of the Master and costs for this application, as well as direction that certain other applications and cost determinations be heard before a Master. II. Standard of Review [ 6 ] The standard of review on appeal from a Master’s decision is correctness, which is also sometimes called “non-deferential” or an “appeal de novo ”: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 , at paras 3 , 19, 29-30. This means that the judge “may exercise any discretion anew and substitute their own views for that of the Master”: P.

Burns Resources Limited v Locke, Stock & Barrel Company Ltd , 2013 ABQB 129 at para 12 , reversed on unrelated grounds: 2014 ABCA 40 . [ 7 ] An appeal from a Master’s decision is an appeal on the record of proceedings before the Master, and may also include additional evidence. Additional evidence may be admitted if it is relevant and material: Alberta Rules of Court , Alta Reg 124/2010 [the “ Rules ”], r 6.14(3); Gudzinski Estate v Allianz Global Risks US Insurance Co Limited , 2012 ABCA 5 at para 21 .

This test has been applied in a broad manner, tending towards permitting evidence in rather than excluding it: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 at para 16 ; Boyd v Cook , 2013 ABCA 266 at para 5 . Particularly in cases where there is new evidence, there is no deference to a Master’s findings of fact or discretion: Bacheli , 17, citing Gudzinki at para 24. III. Background [ 8 ] The Plaintiffs and the Defendants were involved in operating joint venture companies to develop real estate for a number of years.

After some time operating in this fashion, certain of the Plaintiffs and the Defendants entered into an arrangement to wind up their business dealings and go their separate ways. The wind up involved the transfer of two joint ventures to the Plaintiff corporation, 864503 Alberta Inc. (“ 864”) , of which Mr. Boparai is director, shareholder and principal. The remaining joint ventures were transferred to Genco Holdings Ltd. (“ Genco ”), of which Mr. Bedi is a director, shareholder, and principal.

Genco would also assume the lion’s share of the debt. [ 9 ] The parties entered into a non-binding letter agreement on March 14, 2012. It was signed by Genco Holdings Ltd, Pali Bedi, Jasbir Hans, and Tarlok Tatla, (who I will refer to as the “ Genco Group ”) and 864503 Alberta Inc., Sukhinder Boparai, Sukwhat Boparai, Hardial Boparai and Sampuran Chatha (who I will refer to as the “ 864 Group ”). The agreement has been variously described as the “Non-Binding Agreement”, the “Settlement Agreement”, and the “Separation Agreement”.

To be consistent with the Master’s decision, I will refer to it as the “ Separation Agreement ”. [ 10 ] The structure of the arrangement set out in the Separation Agreement was unusual in that it transferred out of the hands of 864 the shares in the joint ventures transferred to Genco before full payment to 864 for such assets.

The parties planned for a “square up” of accounts to occur at a later date to determine what Genco’s buy-out amount would be. [ 11 ] The structure of this transaction was also unusual in that Genco’s financing of the acquisition of its joint ventures was secured against real property held by one of the two joint ventures retained by 864. The agreement contemplated Genco would be entitled to register caveats and pursue legal action to compel a discharge of that indebtedness under certain conditions.

Further, if Genco was late in discharging such indebtedness, 864 would be entitled to receive compensation for Genco’s delay in failing to pay back the indebtedness in a timely manner (by April 30, 2013). [ 12 ] Although the Separation Agreement was stated to be non-binding, the parties did not enter into any other agreement to address the overall arrangement.

Rather, the specific transfers contemplated in the Separation Agreement were effected by Purchase and Sale Agreements between 864, Genco, and each of the subject joint ventures. [ 13 ] The lawyer that set out the terms of the Separation Agreement, David Prasow, acted for both parties. Despite encouraging them to obtain independent legal advice, it appears that both parties were prepared to proceed with this mutual lawyer drafting the Purchase and Sale Agreements to transfer each joint venture, and associated documentation, which he did. The lawyer, Mr.

Prasow, also arranged a $4.5 million loan through his personal finance company, which the Plaintiffs state was for the benefit of Genco, yet was secured against one of the two parcels of property that was to be transferred to 864. Although Mr.

Prasow included warnings in the Separation Agreement that the parties should obtain their own independent legal counsel, the potential for a conflict of interest in this case, particularly with respect to counsel loaning money through his personal finance company while acting for the other parties, raises concerns. [ 14 ] The parties moved forward with the joint venture transfers through Purchase and Sale Agreements, which transferred the properties and reflected certain adjustments (in

Schedule “B” described below). However, there was no additional agreement to ensure the transfer of the debt obligations to Genco as set out in the Separation Agreement. The debts on the parcels of property transferred to the Plaintiffs (including the debt owing to Mr. Prasow’s private finance company) do not appear to have been discharged. [ 15 ] Although the Purchase and Sale Agreements were dated effective January 1, 2012, the calculations required to “square up” the financing between the two parties was not completed until much later. This global reconciliation of accounts, referred to as

Schedule “B” , was based on each joint venture’s December 31, 2011 year-end financial statements.

Schedule “B” was prepared by the accounting firm MNP LLP (“ MNP ”) and was provided to the parties in February 2013. [ 16 ] In May 2013, caveats were registered against certain properties held by the joint ventures acquired by Genco.

[ 17 ] By June 10, 2013, the Plaintiffs commenced an action (the “ 2013 Action ”) to enforce the terms of the Separation Agreement. At that time, they state the properties that were to have been transferred to them unencumbered were still encumbered with debt, and that Genco had not complied with the terms of the agreement or sought (let alone paid for) an extension for the time to remove the encumbrances on the property. Further, Genco did not assume the liabilities it had agreed to assume. The relief sought was specific performance and payment for the delay in complying with the terms of the agreement.

One additional form of relief sought in the 2013 Action was an accounting from Genco of all bank accounts until the date of the completion of the Separation Agreement so that the funds could be properly adjusted. [ 18 ] The Plaintiffs subsequently agreed to a release of the caveats to allow Genco to finance the payments owing to the Plaintiffs. [ 19 ] The 2013 Action was resolved by a Consent Dismissal Order dated December 17, 2013, and involved a payment by Genco to 864 of approximately $4.4 million.

The Defendants assert that they paid a premium to end that dispute, which they argue makes the current lawsuit even more egregious. The documentation submitted in evidence, however, suggests that this payment fairly accurately reflected the amounts owed by Genco to 864 based on the

Schedule “B” square up relied upon by the Plaintiffs (once factoring in interest on balances outstanding and other incidental amounts). [ 20 ] The day after the Consent Dismissal Order was granted, counsel for the Plaintiffs advised counsel for the Defendants that his client was seeking further documentary disclosure of financial statements, deposit books and banking statements for a number the joint- venture companies.

Counsel advised that the request was due to his client’s concerns about whether financial transactions were being properly handled, as his client realized certain unrelated expenses were being charged to his corporation following the resolution of the Separation Agreement. [ 21 ] Mr. Boparai acknowledged that he had considerable concerns before December 2013 as to these charges and the accounting of the Bedi’s.

The Amended Statement of Claim filed in January 2014 outlines that the Defendants became concerned about the financial accounting after reviewing financial statements related to a Red Deer Mall property around October and November of 2013 that showed expenses and revenues were not being properly claimed or applied by the personal Defendants. [ 22 ] In response to the request for records, the Defendants’ then counsel initially refused disclosure, then agreed to it, but did not provide it. The Defendants then changed counsel, and there was again a refusal to provide further financial disclosure.

The Plaintiffs filed and served the Statement of Claim for the current action in January 24, 2014, they state in part to obtain the financial disclosure (the “ 2014 Action ”). [ 23 ] The Plaintiffs state they are still unsure of the actual amounts owed to them. MNP prepared the

Schedule “B” square up of the offsets and determined the amount owed by whichever party. The Plaintiffs say that

a) they never got to see the ledgers that went to MNP (the ledgers were prepared by the wife of one of the defendant’s, Mrs. Bedi, a registered CGA, and the financial statements MNP created went back to her without review by the Plaintiffs), and

b) they believed that MNP would audit or validate the information upon which it relied in preparing the square up. [ 24 ] Although the Plaintiffs suggest that there is still missing disclosure, the examination of Mr. Boparai suggests that he did not review all of the documents before asserting that certain disclosure was still outstanding (perhaps due to the amount of disclosure to review, which the Plaintiffs suggest was approximately 320,000 documents). [ 25 ] In any event, the Plaintiffs now assert that the entire basis upon which the 2013 Action was resolved (and the 2012 Agreement was founded), namely the

Schedule “B” square-up, was faulty; that the information provided to MNP from Ms. Bedi (potentially at the instruction of Mr. Bedi or Genco) misstated the allocation of debts and assets between the parties. As a result they allege that the reconciliation was completed improperly and that funds that should have been paid to the Plaintiffs were improperly paid to or retained by the corporate Defendants. As a result, the Plaintiffs allege that they have received somewhere between $3-7 million less than they were entitled to under the 2012 Agreement and seek an accounting and damages.

Although in oral argument, the Plaintiffs assert that “fraud unravels everything”, I note that they did not plead fraud in any statement of claim, including in the Second Amended, Amended Statement of Claim before me. An allegation of fraud must be specifically pled, with particulars (rules 13.6, 13.7). As it was not plead, it is not appropriate for me to consider the claim of fraud. [ 26 ] The Defendants state that issues relating to the Agreement were already decided, and the Plaintiffs do not get another opportunity to review the settlement agreement and negotiate another deal. IV.

Issues [ 27 ] This Court will address the following issues: (

a) New Evidence (

b) Amendments to the pleadings and parties (

c) Res judicata (

d) Abuse of process (

e) The O.K. Foods claim (

f) Costs

V. New Evidence [ 28 ] The Plaintiffs state that as a result of the documentary disclosure and questioning of Mr. Bedi, they now have evidence that demonstrates that the basis used to settle the 2013 Action was fundamentally flawed. The new evidence submitted by the Plaintiffs in the current action is two affidavits from Mr. Boparai dated June 14, 2016. The shorter affidavit was tendered in support of the Plaintiffs’ proposed Second Amended, Amended Statement of Claim (the “ Shorter 2016 Affidavit ”).

The longer affidavit goes over the history of the parties and the claim in significant detail, and contains 13 exhibits, some of which contain new evidence (the “ Longer 2016 Affidavit ”). [ 29 ] In the Longer 2016 Affidavit, there is one particular exhibit of concern. The exhibit is a letter from the accountant of the 864 Group, Ms. Nolke. Ms. Nolke provides her analysis of certain general ledger transactions that occurred in Genco Land Holdings Ltd., which she then compares to transactions in the adjustments in

Schedule “B”. This accountant’s review was not itself filed in affidavit format or in the format required by rule 5.34 for expert reports (Form 25). As such, there is no way the Defendants could question on it. The Defendants also state that the accountant’s opinion was arrived at by only looking at the select documents provided to her by the Plaintiffs. For these reasons, the Court cannot rely upon the analysis or opinions of the Plaintiffs’ accountant. While I am not accepting the accountant’s opinion as expert evidence at this stage, I can accept that Mr.

Boparai’s statements in his affidavit were formed partly on this accountant’s analysis and support the hearsay statements he makes in this affidavit relating to 864’s amendment application. Reliance on his hearsay evidence is further addressed below. [ 30 ] Given the low threshold of relevance and materiality, subject to the limitation upon how the accountant’s letter will be relied, the Longer 2016 Affidavit and the Shorter 2016 Affidavit constitute new evidence, as do the subsequent affidavit[s] of Mr. Bedi, and the responses of each of Mr. Bedi and Mr.

Boparai in their subsequent examinations on affidavits, Twinn v Sawridge Band , 2012 ABQB 44 , at para 13 . These are all accepted as “new evidence” for the purpose of this appeal. I note consequently that some of the evidence before this court is different than that which was before the Master. VI. Parties and Pleadings [ 31 ] For the sake of expediency and to most efficiently use court resources, the learned Master assumed, without deciding, that the parties to the current action would be as amended as proposed by the Plaintiffs’ First Amended, Amended Statement of Claim, namely: 864503 Alberta Inc.

Plaintiff – and – Genco Development Corporation, Pali Bedi and Genco Holdings Ltd. Defendants [ 32 ] This reflects a removal of all individual plaintiffs (the Boparai’s and Sampuran Chatha), adds back a defendant against which the action was previously discontinued, Genco Development Corporation (“ GDC ”), and adds a new defendant, Genco Holdings Ltd. (“ Genco Holdings ”), not previously named. [ 33 ] As noted, the Master assumed the pleadings could be amended in the manner sought by the Plaintiffs when analyzing the res judicata argument. Despite this, he dismissed the action on the basis of res judicata.

He therefore did not find it necessary to make a determination on the First Amended, Amended Statement of Claim. [ 34 ] The parties implore this Court to make a finding on which parties and which pleadings the Court allows, rather than proceeding on the substantive issues without making these findings. I will address each in turn, including addressing both the First Amended, Amended Statement of Claim and the Second Amended, Amended Statement of Claim. A. The Pleadings i. First Amended, Amended Statement of Claim [ 35 ] The Plaintiffs filed the original Statement of Claim on January 24, 2014.

They filed an Amended Statement of Claim a week later on January 30, 2014, which removed one defendant and added one defendant. [ 36 ] Approximately a year later, the Plaintiffs filed an application to amend the Amended Statement of Claim (the First Amended, Amended Statement of Claim) on January 13, 2015. Along with changes to the parties, the amendments significantly changed the pleadings by making new allegations and expanding on previous ones.

The Amended, Amended Statement of Claim lengthens the prior claim significantly and contains new allegations relating to breach of contract, misrepresentation, oppression, claims on land, as well as a much more detailed recitation of the prior facts and claims. [ 37 ] In support of the application, the Plaintiff Mr. Boparai swore a short affidavit in January 2015 stating that when the action was commenced there was uncertainty about what the Defendants had done and which companies held money owed to the Plaintiffs. Mr.

Boparai swore that the Plaintiffs realized in late 2013 that the financial reconciliation had not been fully and properly completed. He

stated that document production and questioning for discovery had resulted in new information being obtained which allowed the Plaintiffs to narrow the parties, to better identify the issues, and to better particularize their loss and damage. He further stated that the proposed amendments allege loss due to the same event listed in the prior Statement of Claim, being the alleged improper reconciliation done as a part of the settlement agreement between the parties. [ 38 ] As mentioned earlier, Mr. Boparai also swore the Longer 2016 Affidavit, after the Master’s decision.

This affidavit has been accepted as new evidence for this appeal. The Longer 2016 Affidavit was sworn in support of “an Order reversing the dismissal of the Plaintiffs’ application to Amend the Amended Statement of Claim” (amongst other relief). In this affidavit, Mr. Boparai swears to having personal knowledge or belief of matters relating to the creation of the Separation Agreement, the Purchase and Sale Agreements, the creation of

Schedule “B”, the 2013 Action and its settlement, the issues with the Red Deer Mall property, and the 2014 Action, but he also states that he was unaware of certain steps taken by Mr.

Prasow and Genco prior to the resolution of the 2013 Action. [ 39 ] Amendments to pleadings under rules 3.62 and 3.65 are generally allowed, no matter how careless or late, subject to four exceptions: where there is serious prejudice to the opposing party not compensable in costs; where the amendment is hopeless; where the amendment seeks to add a new party or a new cause of action after the expiry of a limitation period; or where there was bad faith in failing to plead the amendment initially: Manson Insulation Products Ltd v Crossroads C & I Distributors , 2011 ABQB 51 , citing Dow Chemical Canada Inc v Nova Chemicals Corporation , 2010 ABQB 524 , at paras 44-45 .

The leniency in this approach encourages the determination of the real question in issue between the parties: Manson , at para 44. [ 40 ] In addition to this general approach to amendments, the case law requires a party seeking substantive amendments to present some evidence in support, as was noted by our Court of Appeal in Attila Dogan Construction and Installation Co. Inc v AMEC Americas Limited , 2014 ABCA 74 , at para 29 : As noted, the evidentiary standard for amendments is low, but the test does not preclude all weighing of the tendered evidence by the judge.

While it is true that the mere presence of contradictory evidence would not necessarily prevent an amendment, it does not follow that merely providing "some evidence" on each point is sufficient.

The judge is allowed to engage in some limited assessment of the evidence presented in determining if the threshold necessary to justify amendment has been met. [ 41 ] A failure to adduce evidence in relation to proposed amendment can result in the amendments being denied: Geophysical Service Incorporated v NWest Energy Corp ., 2014 ABQB 2015 . [ 42 ] The Defendants argue that the application to file the First Amended, Amended Statement of Claim was correctly dismissed by the Master.

They submit that the amendments should not be allowed on a number of grounds, including that the Plaintiffs failed to meet the evidentiary burden to support the proposed amendments, and that the amendments are hopeless. [ 43 ] The Defendants submit that the amendments in this case are substantive. They argue there are over 50 densely written new or substantially rewritten paragraphs which amount to almost an entirely new claim.

The Defendants submit the Plaintiffs have not met their onus to support the amendments with sufficient evidence . [ 44 ] Finally, the Defendants state the amendments fall under the second exception to the classic rule because they are hopeless, arguing they would be struck or dismissed because they are res judicata , an abuse of process, or a collateral attack on prior orders of the court.

I find this final argument targets the larger substantive issue of whether this action as a whole should be able to proceed or not, which will be dealt with later in these reasons. [ 45 ] The Defendants’ prior arguments relating to a lack of evidence deserve attention, however, as significant amendments have been made to the original Statement of Claim. [ 46 ] In order to evaluate whether the proposed amendments should be accepted or denied based on a lack of supporting evidence, I refer to Justice Hughes’

summary of the law in Canadian Natural Resources Ltd v Arcelormittal Tubular Products Roman S.A. , 2012 ABQB 679 , 549 AR 72, aff’d 2013 ABCA 87 . She notes that not every amendment requires evidence to be filed in support. If an amendment is trivial or ancillary, it does not require evidence, such as amendments that do not seek to impose liability on new defendants: at para 47.

Arguably this would include amendments that further particularize allegations already pled. [ 47 ] She further notes that amendments that are based on facts already plead that raise a new cause of action or claim may also be accepted with no or minimal evidence in support, Canadian Natural Resources at paras 48: Amendments pleading a new cause of action or claim arising from facts already plead in existing pleadings filed in time, also require little if any evidence. In Balm, Côté JA observed at para 11: Paragraph 37 in the amended statement of claim is new, and is clearly a new cause of action.

However, though the legal conclusion pleaded is new, the acts alleged in it are not new. It is trite law that a statement of claim need not name causes of action or draw legal conclusions. It need only plead facts. So the plaintiff could merely have sent the original defendants' counsel a letter warning that he would argue at trial that proof of such and such facts already alleged in the statement of claim would constitute the cause of action of mutuality of obligations under law merchant. See 30 Hals. Laws 7 (3rd Ed. 1959). [ 48 ] It is only substantive amendments that require evidence to be filed in support.

Even then, however, the evidentiary standard is low and can include evidence like hearsay, Canadian Natural Resources at paras 49-50. Justice Hughes referred to Balm v 3512061 Canada Ltd , 2003 ABCA 98 , as the leading Alberta case on this point, citing paras 26 and 26 of the decision: When evidence is needed to support a significant amendment to a pleading, before the limitation period has expired, what evidence is needed? ...

One case says that the test is whether in the evidence filed to support the proposed amendment "facts were alleged from which it could be inferred that" the facts to be pleaded occurred: Wil-Ton Constr. v. Amerada Minerals Corp. Chief Justice Moore held that the evidence need not be enough to prove the new allegations on a balance of probabilities: Anderson Expl. v. Pan-Alberta Gas. Possibly Kent J. was stating a standard when she called for "more than a scintilla of evidence", in Firemaster Oilfield Services v. Safety

Boss (Can.). She said that "everyone is in agreement that the threshold is low": ibid. The chambers judge here adverted to that standard of proof (in his paras. 15, 16). Hearsay clearly suffices: Marathon Constr. (Alta.) v. Bank of N.S.. The appellants' factum does not cite any authority which contradicts those propositions. Of course any admissible evidence will do. It need not be an affidavit by the party seeking to amend: Sheckter v. W.

Motor Hotels (Edm). [citations omitted] [ 49 ] With these principles in mind, I have undertaken a detailed review of the amendments in the First Amended, Amended Statement of Claim as well as considered the affidavits filed in support by Mr. Boparai in January 2015 and June 2016. Based on my review, there are a few amendments that cannot stand because they are substantive and add new claims or causes of action based on new facts, with no evidence in support. Despite this, I find that the majority of amendments are permitted because they are either:

i) trivial or merely expand on claims or facts that were already alleged in original Statement of Claim, without seeking to impose liability on a new defendant; or ii) because they are supported by evidence. [ 50 ] My analysis follows of whether sufficient evidence, if any is required, was provided to allow the amendments to the Statement of Claim. Any amendments not specifically addressed below were accepted because they were trivial or ancillary, or particularized prior facts and claims, and did not add a new claim or cause of action based on new facts without evidence in support.

I review the amendments in the order they appear. [ 51 ] The arguments relating to Genco Holdings Ltd. and re-adding Genco Development Corporation are dealt with in following sections as there are unique considerations for those amendments. [ 52 ] The amendments in the First Amended, Amended Statement of Claim start with a new

section relating to the “Settlement Agreement” (paragraphs 9-13). The

section sets out new facts relating to: the creation of the Separation Agreement between the Plaintiff 864 and Genco Holdings Ltd, the involvement of the parties’ mutual counsel Mr. Prasow, the post-agreement creation of the reconciliation (Schedule “B”), and the allegations relating to the reconciliation being prepared improperly. It also lists the joint ventures that were adjusted on

Schedule “B”. These new amendments are permitted because there is evidence to support their inclusion in the Longer 2016 Affidavit. Mr. Boparai swears to these particular facts in paragraphs 5, 6, 13-14, 17, 31, and 75-82. [ 53 ] I note that some of Mr. Boparai’s knowledge and belief in relation to the improper reconciliation in

Schedule “B” is based on the letter from the accountant Ms. Nolke. As mentioned, she provided a review of the general ledgers for Genco Land Holdings Ltd. and the reconciliations in

Schedule “B”. I did not allow Ms. Nolke’s evidence in as expert evidence, for example, to support an appeal of the Master’s decision. The threshold is low, however, for evidence supporting amendments, and can include hearsay. In that vein, Ms. Nolke’s evidence can be relied on to bolster the affiant’s position that he believes there to be accounting issues based on her statements in the letter. I find Mr. Boparai’s evidence as to his belief that there was an improper reconciliation to be proper for that purpose. [ 54 ] The next substantive amendment is the new

section on “Breach of Contract” (paragraphs 14-16). The provisions set out a new claim alleging the Defendants breached the Separation Agreement by not providing MNP with full and complete information in order for an equal reconciliation to be prepared. The Plaintiffs allege that the failure to do so was a breach of the Agreement. [ 55 ] The Plaintiffs allege a second breach of contract based on the failure of the Defendants to provide a reconciliation of GDC in

Schedule “B”. [ 56 ] These are both new claims based on new facts and require some evidence to be admitted. [ 57 ] There is support for the first claim in the Longer 2016 Affidavit at paragraphs 24-33 and 75-82 and this breach of contract claim is accepted. I also find there is evidence to support the second claim regarding GDC through a combination of affidavit and other evidence. [ 58 ] It is not disputed that GDC was the main holding company for the joint ventures and funds flowed back and forth between GDC and these joint ventures. In the January 22, 2013 letter that Mr.

Prasow wrote to Genco and 864, it is acknowledged that one important component of the Separation Agreement is to determine the consideration being paid by each party to the other. He confirms the intent of

Schedule “B” is to reflect the global consideration to be paid. In that same letter, Mr. Prasow notes that, in accordance with the Agreement, Mr. Bedi has become the sole owner (in his personal capacity) of GDC. I note that under the terms of the Separation Agreement, this transfer was to have occurred for a total consideration of $1. [ 59 ] In Mr.

Boparai’s affidavit sworn February 13, 2015, he attests that “ Genco Development Corporation is a necessary Defendant in these proceedings because some shareholder loans and joint venture profits were transferred to it, including the profits from the sales in Genco Place Properties Ltd ., and there has been no accounting for same. As such, Genco Development Corporation still has to be adjusted in

Schedule "B" to conclude this matter.” [ 60 ] As I understand the Plaintiff’s breach of contract claim regarding the transfer of GDC, the Plaintiff is alleging that for consideration of $1, rather than transferring a notional holding company to Mr. Bedi, the Genco Group instead transferred shareholder loans and joint venture profits to GDC in contravention of the parties’ mutual understanding, which amounts were not subsequently reconciled in

Schedule “B” (the only place the parties were accounting for such reconciliations). [ 61 ] On this basis, I find there is sufficient evidence to allow the breach of contract claim relating to the valuation of GDC and incorporation of such valuation in

Schedule “B”. Of course, this only allows the claim to stand. It will be up to the parties at trial to argue whether such a term of the contract existed, and if so, whether it was breached. [ 62 ] Moving on, there are new allegations relating to an “Improper Closing” contained in paragraphs 17 and 18. These paragraphs are permitted as there is sufficient support for the new facts in the Longer 2016 Affidavit at paragraphs 12, 13, 18, and 21. [ 63 ] The next new section, on “Misrepresentations” (paragraphs 19-24) is more concerning. The Plaintiffs allege in paragraph 20

that: The Defendants, and each of them, had represented to the Plaintiff that the financial reconciliation was prepared independent of them, in order to provide compliance with the term of the Settlement Agreement requiring that a financial reconciliation would equally divide the equity in the joint venture properties between the parties to the Settlement Agreement (the First Misrepresentation). [ 64 ] This is a new claim based on new facts and needs some evidence in support to be allowed. I have not found any support for this allegation in Mr. Boparai’s affidavits from early 2015 or June of 2016. In fact, Mr.

Boparai’s Longer 2016 Affidavit suggests that the Plaintiffs believed that the financial reconciliation was performed independently based either on representations from Mr. Prasow (who is not a Defendant) or based on their own assumption (see paragraphs 29-33 of the Affidavit). This amendment is therefore denied.

I instruct the Plaintiffs to remove it from the First Amended, Amended Statement of Claim as well as the many further references to the “First Misrepresentation” throughout the claim. [ 65 ] The Plaintiffs refer to other misrepresentations at paragraphs 25 and 29 of the claim relating to “Genco Place Properties Ltd.”. The new amendments allege that certain facts which were already plead in the original claim amount to a misrepresentation, (involving promises by Mr. Bedi to provide financial records and an accounting in relation to a construction project).

The original claim made it clear that the Plaintiffs were pursuing the Defendants for not living up to those representations. These amendments are therefore permitted as they allege a new claim based on facts already pled: Canadian Natural Resources . [ 66 ] There are additional facts that are added to the Genco Place Properties Ltd.

section in paragraphs 31 and 33. They are supported by Mr. Boparai’s Longer 2016 Affidavit in paragraphs 12-23 and are accepted. [ 67 ] The next

section of note is entitled “Proof of Breach of Contract and Misrepresentations”. Within this

section are a number of headings which particularize the alleged breaches, both in relation to certain joint ventures (‘Grand Prairie”, “Copperfield”) and in relation to why the

Schedule “B” reconciliation is improper (“Distorted Transfer Values to GHL”, “Improper Reconciliation of Joint Debts”) (see paragraphs 35-60). [ 68 ] In the original Statement of Claim issued in 2014, the Plaintiffs put the Defendants on notice that until the Plaintiffs received the bank records, they would not be able to provide the particulars about the improper management or mismanagement of funds, or improper allocations of revenues and expenses.

The Plaintiffs stated that they would amend their pleadings once the information was known, and this is what they have done in paragraphs 35 to 60 of the First Amended, Amended Statement of Claim. [ 69 ] I therefore find that these additions, while lengthy, are particularizing claims that were already made in the original claim that “the Plaintiffs have failed to account for all profits earned on various business ventures conducted by the parties” (paragraph 23), or particularize claims relating to distorted transfer values or improper reconciliation of the $2.4 million in joint debt, which were supported by the Longer 2016 Affidavit.

While some of the amendments are close to the line in terms of pleading evidence rather than fact, they are permitted. That said, any references to the First Misrepresentation in this

section must still be removed. [ 70 ] The next

section in the First Amended, Amended Statement of Claim is entitled “Breach of Fiduciary Duties and Oppression”. Breach of fiduciary duty was already pled, but the amendment includes an expanded description of the fiduciary duties owed by Mr. Bedi to the Plaintiffs at paragraph 61. This is merely adding more details to an allegation already pled (breach of fiduciary duty) and is permitted as ancillary. Paragraph 63 adds a new allegation of oppression, which alleges that the breaches of fiduciary duties outlined in paragraph 62 (paragraph 41 in the original claim) also amount to oppression.

Although this is a new claim, it is based on facts already pled in time and is permitted. [ 71 ] The final

section of concern is entitled “Claims Against Land”. It states that as a result of the First Misrepresentation, Subsequent Misrepresentations, Breach of Fiduciary Duties, and Oppression, the Plaintiff claims an interest in a number of properties. It then lists 11 properties by their legal description. [ 72 ] This is a new claim and does not appear to be addressed in any of Mr. Boparai’s affidavits on the amendments, or on the evidence before me specifically relating to the amendments.

For example, although the Separation Agreement references the transfer of some properties, it does so in general terms, for example: "the Grande Prairie property," "the 120 acre parcel," "Copperfield 1”. There are no legal descriptions. [ 73 ] The Court is left to seek documentation that refers to the prior caveats filed by 864 and discharged pursuant to the Consent Dismissal Order to attempt to match the lands listed in the Separation Agreement with those contained in para 69 of the Amended, Amended Statement of Claim.

I have been able to do so after spending a significant amount of time digging through the evidence on the record, a job that should have been done by the Plaintiffs. Mr. Bedi’s Affidavit sworn February 12, 2015 describes various lands that were caveated, which I have been able to cross-reference to the Separation Agreement and paragraph 69 of the Amended, Amended Statement of Claim. Through this cross-referencing, I have been able to find sufficient evidence to tie the lands in the Separation Agreement to the amendments.

Counsel is cautioned that it is not the job of the court to find the evidence to substantiate the claim, and the claim could have just as easily been dismissed on the basis that there was not sufficient evidence provided in support of this specific application. [ 74 ] It does not appear that the Defendants deny that these are the same lands as addressed in the Settlement Agreement.

Rather, the Defendants’ position is that the transfers were of shares in the joint venture companies holding the lands and, as such, that the Plaintiffs have no interest in land since the assets of the joint venture companies are not the assets of the shareholders: Taylor v 1103919 Alberta Ltd , 2014 ABQB 167 at paras 95 , 97-99 and 101-102. [ 75 ] I note the specific wording of the

section of the Separation Agreement addressing the transfer of these assets states: “The parties agree that the following assets will be transferred to Genco or to a company or companies owned by Genco, ...” then lists the properties (additional examples to those listed above include “the 40 acre parcel”, “the Mongolie Grill property”, and 634 – 6 th Ave SW”), not the names of the joint venture companies. In fact, the assets transferred to 864 in the Separation Agreement are also described

as properties (and not the joint venture companies holding them). Despite this wording, I acknowledge that the transfer of shares in the joint venture companies is the mechanism by which the parties achieved these asset transfers. I also note, however, that the Separation Agreement further states that Genco would assume and be solely responsible for all debt currently registered against all or any of such assets (meaning the properties): Separation Agreement para 3(b).

The Separation Agreement further speaks to financing registrations (or encumbrances) that can be made by Genco against these lands notwithstanding the transfer to 864. [ 76 ] While I agree that, in a situation of transfer of shares in a company where the company also holds lands, the principle in Taylor may apply to determine the validity of an interest in land to sustain a caveat, this is not a case dealing with the registration of a caveat.

In this case, by virtue of the wording of the Separation Agreement, there is sufficient evidence to merit the inclusion of this para 69 in the Amended, Amended Statement of Claim. Should the Plaintiff subsequently register a caveat against any or all of these lands, and Genco apply for a show-cause hearing pursuant to

section 141 of the Land Titles Act, RSA 2000, c L-4, it will be up to the court hearing that application to determine if there is sufficient cause to maintain the caveat. [ 77 ] This concludes my analysis of the substantive amendments.

As previously stated, any amendments not specifically mentioned are accepted and were not discussed as they are either ancillary or particularized prior facts and/or claims, and did not add a new claim or cause of action based on new facts without evidence in support. [ 78 ] The Plaintiffs are instructed to amend the First Amended, Amended Statement of Claim according to my findings above. ii. The Second Amended, Amended Statement of Claim [ 79 ] The Plaintiffs submitted before this Court further amendments to the First Amended, Amended Statement of Claim, being a Second Amended, Amended Statement of Claim.

I have accepted into evidence the Shorter 2016 Affidavit of Mr. Boparai, which was specifically sworn in support of these amendments. The differences between the First and Second Amended, Amended Statements of Claim are few. The revisions appear to be concerned with the timing and manner in which the Plaintiffs discovered there were problems with the reconciliation in

Schedule “B”. As the Defendants note, however, these amendments appear to be directed at getting around some of the factual findings of the Master, such as focusing on whether the issues regarding the

Schedule “B” reconciliation were discovered before or after the Consent Dismissal Order for the 2013 Action. [ 80 ] Although amendments are generally allowed, no matter how careless or late subject to the exceptions, I have significant difficulties with the Plaintiffs’ approach and timing here. This amendment was not brought by way of application to amend. 864 instead attached the new claim as an exhibit to the Shorter 2016 Action. This was an improper way to tack on an amendment application to an appeal of a

summary judgment. The Plaintiffs have failed to follow the proper procedure. For these reasons, the Plaintiffs’ request is denied. B. Amendments to the Parties i. Genco Holdings Ltd. [ 81 ] I now turn to the addition of Genco Holdings Ltd. as a party. When 864 applied to add this party to the action in January 2015, it relied on Mr. Boparai’s January 7, 2015 affidavit in support.

The Affidavit justifies the addition of Genco Holdings by stating that the discovery process “made it clear that Genco Holdings Ltd. was the recipient of monies that should have been paid to the Plaintiffs and was a participant in the improper reconciliation in the settlement agreement. Further, Genco Holdings Ltd. was a party to the settlement agreement.” [ 82 ] The law relating to adding a defendant consists of same general test and exceptions already discussed at paras 39 - 41 above, as well as the additional considerations that flow from rule 3.74.

In a case where the pleadings have closed (which was true in this case), the applicant must apply to the court to determine whether “the order should be made”: rule 3.74(2)(b). An order is prohibited “if prejudice would result for a party that could not be remedied by a costs award, an adjournment or the imposition of terms” (rule 3.74(3)): [ 83 ] Justice Tilleman discussed the considerations at play when determining if the court is satisfied “the order should be made” in Kent v Martin , 2011 ABQB 416 , at para 9 . There should be a link between the new defendant and the facts and incidents originally alleged.

The new defendant should be added as soon as reasonable under the circumstances and the amendments must not be brought in bad faith. The requirement in Rule 3.74(2)(

b) that the Court must be "satisfied the order should be made" means justice must require the addition of the parties. In the case of a new Defendant, the Court would want to see a link between the new Defendant and the facts and incidents originally alleged against the extant Defendants. There must not be bad faith in the pleadings as against the new Defendant or misconduct by the Plaintiff in bringing them in. Procedurally, the new Defendant should be added as soon as is reasonable in the circumstances; in other words there should not be inexplicable concerns regarding tardiness.

Finally, of course, as Rule 3.74(3) states, an order should not be made if prejudice would result that could not be remedied by a costs award, an adjournment or the imposition of terms. [ 84 ] Additionally, adding a new party is considered a substantive amendment, and there must be some evidence put forward in support, Balm , at para 19 . [ 85 ] The Defendants argue that the addition of Genco Holdings seeks to add a new party after the expiry of a limitation period and should be denied. They argue that because the Plaintiff Mr.

Boparai was the secretary-treasurer of Genco Development Corporation from 2004 to 2012, he was aware of and approved the financial statements on behalf of 864 through to 2012. As such, he knew or should have known of the wrongs complained of in this action up until the time of the Joint Venture Purchase and Sale Agreements, which were effective as of January 1, 2012. They submit that the filing of the original Statement of Claim on January 24, 2014, and the application to amend on January 13, 2015, both occurred after more than two years had passed since 864 and Mr.

Boparai knew or ought to have known of the wrongs complained of, and the amended pleading is therefore statute barred.

[ 86 ] I do not find this argument persuasive. [ 87 ] In terms of the limitation period applicable in this case, the following sequence of events appears to be non-controversial: (

a) The Separation Agreement between Genco Holdings Ltd and 864 was signed on March 14, 2012; (

b) The Joint Venture purchase and sale agreements were signed sometime prior to July 3, 2012, but were back-dated to January 1, 2012; (

c) Schedule “B”, being the final reconciliation of the joint ventures for the Separation Agreement, was prepared on February 6, 2013; (

d) Some of the obligations referred to in the Separation Agreement were not finalized until November 2013; (

e) The Plaintiffs filed the original Statement of Claim on January 24, 2014; (

f) The Plaintiffs filed an Amended Statement of Claim on January 30, 2014; (

g) The Plaintiffs filed an application to amend the Amended Statement of Claim, adding Genco Holdings as a defendant, on January 13, 2015 (the First Amended, Amended Statement of Claim). [ 88 ] For the January 13, 2015 addition of Genco Holdings to be statute barred, I must find that the limitation period against Genco Holdings started running prior to January 13, 2013. (Notwithstanding that, I would also need to consider whether the Plaintiffs could argue that s 6(4) of the Limitations Act permits the amendment past the limitation period in this case.) [ 89 ] In my view, the 2014 Action, as it was framed in in the original claim and more fully in the First Amended, Amended Statement of Claim, is aimed at getting an accounting of profits and proper reconciliation of the joint venture companies until the time they were transferred to either 864 or Genco Holdings.

A key document is therefore the

Schedule “B” reconciliation. The Plaintiffs could not have known prior to the creation

Schedule “B” that the accounting leading to the adjustments in the reconciliation was improper and that they needed to sue the Defendants for a proper reconciliation (s 3(1)(

a) of the Limitations Act).

Schedule “B” was created in February 2013, making it impossible for the limitation period against Genco Holdings to have started running before January 13, 2013. This is therefore not a case of a party attempting to add a defendant after the expiry of a limitation period. [ 90 ] I am also satisfied that there is a link between Genco Holdings and the original facts and incidents alleged, as Genco Holdings was a party to the Separation Agreement and the alleged improper reconciliation, and was a recipient of shares of joint venture corporations.

I also see no prejudice as Genco Holdings added itself to this action through a counterclaim on March 21, 2014 and was clearly aware it was a proper party early on. [ 91 ] I note that Genco also erroneously argued that the Plaintiffs sought to add Genco Holdings through an amended discontinuance (at the same time they sought to reinstate the discontinued GDC, as discussed below). The facts reveal that is not what occurred, as the Plaintiffs properly filed a motion to amend to add Genco Holdings. ii.

Genco Development Corporation (GDC) [ 92 ] With respect to the addition of Genco Development Corporation, the considerations are slightly different and a brief procedural history is necessary. [ 93 ] On February 5, 2015, the Plaintiffs filed a discontinuance against ten defendants, including Genco Development Corporation (as well as discontinuing against the following defendants: Genco Place Properties Ltd., GDC (GP Ltd., GDC (Copperfield) Ltd., GDC (Copperfield 2) Ltd., GDC (MG) Ltd., GDC

(634) Ltd., GDC

(608) Ltd., Jasbir Hans and Navpreet Bedi). This left only Mr. Bedi and Genco Land Holdings Ltd. as Defendants. [ 94 ] After this discontinuance was filed, the Plaintiffs noticed that there was an error in the parties; they had intended to discontinue against Genco Land Holdings Ltd. - a company which was now owned by 864 - rather than discontinuing against Genco Development Corporation. On February 13, 2015, the Plaintiffs filed an application to correct the error, asking for permission to file an amended discontinuance that kept GDC in the action and discontinued against Genco Land Holdings Ltd.

On the same date, however, they were able to file with the clerk a partial discontinuance adding back GDC, and consequently withdrew their application to reinstate GDC. [ 95 ] The Defendants argue that there is prejudice to GDC since, in the approximate one week period between filing the discontinuance and attempting to re-add it, the limitation period (by its calculations) against GDC expired. As such, the amendment permitting GDC should not be allowed as it falls into one of the exceptions in the classic rule. [ 96 ] Our courts have grappled in the past with whether a party can set aside a discontinuance.

An analytical approach is used, similar to the one used to determine if a party can be added after a limitation period. The case law and considerations were discussed in Yancey v Neis , 1999 ABCA 271 , at paras 14 -27 . A court should assume prejudice, though this can be rebutted if the plaintiff establishes special circumstances. An absence of actual prejudice is a factor which may contribute to showing special circumstances.

Other considerations include whether the party being added had a substantial prior connection to the matter so that timely notice can be inferred, and the type of circumstances which gave rise to the discontinuance: Yancey at paras 17, 23. [ 97 ] Special circumstances can also be established where the discontinuance was a result of a mistake, so long as there was no actual prejudice to the defendant, Yancey at para 27, where our Court of Appeal agreed with Master Funduk’s approach in Eisenkrein v Eisenkrein (1984), 53 AR 199 :

Hence, I agree with Master Funduk that special circumstances in the nature of a slip must be established before a discontinuance may be withdrawn. Therefore, special circumstances must include an absence of actual prejudice to the defendant: Basarsky v. Quinlan, as well as a consideration of the circumstances giving rise to the discontinuance. [ 98 ] I find that the discontinuance against GDC in this case was clearly an inadvertent slip, which the Plaintiffs caught quickly and attempted to fix, albeit problematically.

This would qualify as a special circumstance. [ 99 ] In terms of whether there was actual prejudice, I find the Defendants’ argument of limited weight as GDC had knowledge of the claim against it well before the limitation period allegedly expired and little changed in that one week period in terms of its ability to defend itself at trial. [ 100 ] I also reject the Defendants’ contention that the limitation period had expired in this case.

The Defendants’ position would require the limitation period to start running by February 13, 2013, two years prior to when the Plaintiffs filed their application to correct the discontinuance, and the Defendants received “notice” of the claim. [ 101 ] The Defendants’ proposed date is premature. As noted, the thrust of the 2014 Action seeks an accounting for the alleged improper reconciliation of

Schedule “B” of the Agreement, which was only created on February 6, 2013. It is not realistic to expect the Plaintiffs to have known within one week of

Schedule “B”’s creation that the reconciliation was improper and that they needed to sue the Defendants for a proper reconciliation (s 3(1)(

a) of the Limitations Act ), at least not based on the information in front of the Court on a

summary judgment application. Therefore this argument fails. [ 102 ] The Defendants also argued that GDC is not a proper defendant to this action as it was not a signatory to the Separation Agreement. Given the nature of the claims, which appear to assert both written and oral terms in relation to the

Schedule “B” reconciliation, this is an issue best determined at trial. [ 103 ] Despite my findings above that the amendments can be allowed, permitting amendments is in the discretion of the court, and some further comments are warranted here.

I am troubled by the Plaintiffs’ approach in this case of abandoning their application to correct the discontinuance when they were able to file an “Amended Discontinuance” with a court clerk. [ 104 ] There is prejudice to the court system if parties are allowed to circumvent process by sliding in substantive changes through overburdened and under-resourced court clerks without an opportunity for affected parties to speak to the matter.

The Plaintiffs had an application for this matter to be spoken to and regardless of the partial discontinuance accepted by the court clerk’s desk, should have proceeded on that basis. The Plaintiffs likely knew this because they filed the application. I note the annotated versions of the discontinuance rule (4.36) suggest that plaintiffs must show special circumstances to withdraw a discontinuance, which means an application is required. Additionally, it is clear from rules 3.62(1)(

b) and 3.74 that absent the other party’s consent, an application to add a party is always required after pleadings close. [ 105 ] Despite these concerns, in this case the proper resolution of this matter is best determined with the re-addition of GDC as a party: Manson Insulation Products Ltd. v Crossroads C & I Distributors , 2011 ABQB 51 at paras 42-44 . The error was clerical, not substantive, and GDC was a named party until the erroneous discontinuance. It is also a related party to others who remained Defendants.

It has suffered no prejudice not compensable in costs. [ 106 ] To prevent future attempts of circumvention of the process, however, I award costs against the Plaintiffs in the amount of $10,000, payable to the Defendants, as well as $15,000 payable to the court clerk pursuant to rule 10.49. This large costs award is intended to deter parties in the future from side-stepping the proper procedure for withdrawing a discontinuance or similar applications.

I note that an alternative to the cost award is to reject the withdrawal of the discontinuance outright, and in view of the magnitude of the claim, this cost award is proportionate. I also note the court may not be as lenient in the future with either permitting the withdrawal of a discontinuance or with the size of the cost award. C.

Conclusion on Amendments [ 107 ] Based on the foregoing, I order the Plaintiffs to file a new Amended, Amended Statement of Claim according to my findings on the accepted and rejected amendments to the First Amended, Amended Statement of Claim. [ 108 ] In terms of the parties, I find that the removal of the individual plaintiffs is an appropriate amendment to determine the real question between the proper parties to the action: Manson , at paras 42-44.

I have also permitted the addition of Genco Holdings and GDC, resulting in the parties to this action being the Plaintiff: 864503 Alberta Inc.; and the Defendants: Genco Development Corporation, Genco Holdings Ltd. and Pali Bedi. VII . Res judicata [ 109 ] I now turn to the substantive issue in this appeal, which is whether the Plaintiff’s claim should be dismissed based on the doctrine of res judicata . [ 110 ] The doctrine of res judicata has developed to maintain respect for the administration of justice. It is based on the principle that it is in the public interest for litigation to come to an end.

To that end, the law requires that parties put forward their entire and best case once, and that judicial decisions be accepted as the final and conclusive determiner of the parties’ dispute. Further, “ [p]arties should not be called upon a second time to answer the same claim because legal ingenuity has revealed a new or revised version of the case” : Hill v Hill , 2016 ABCA 49 , at para 27 , leave to appeal to SCC refused, [2016] SCCA.

No. 175. [ 111 ] The result of this doctrine is that courts will not permit the same parties to litigate on the same subject matter that was at issue in prior litigation, or on any point that should have been raised in that litigation, even if it was left out due to negligence, inadvertence or

even accident: ...the Court requires the parties to that litigation to bring forward their whole case and will not (except under special circumstances)permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of thesubject in contest, but which was not brought forward only because they have from negligence, inadvertence or even accident, omittedpart of their case.

The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually requiredby the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation andwhich the parties, exercising reasonable diligence, might have brought forward at the time. Maynard v Maynard, (SCC), [1951] SCR 346 at para 32, citing with approval Green v Weatherill, [1929] 2 Ch 213 [112] There are two branches of the doctrine of res judicata: issue estoppel and cause of action estoppel.

Issue estoppel is aimed atpreventing the re-litigation of issues already addressed.

Cause of action estoppel is aimed at preventing the fragmentation of litigation –it prohibits matters from being litigated in a second action that belonged in the first litigation: Wavel Ventures Corp v Constantini(1996), 1996 ABCA 415 , 46 Alta LR (3d) 292 9 (ABCA) at paras 37-38, leave to appeal to SCC refused [1999] SCCA No 279;Erschbamer v Wallster, 2013 BCCA 76, at paras 13, 15. [113] The essential requirements for issue estoppel are that: (1) the same question has been decided; (2) the judicial decision which issaid to create the estoppel was final; and (3) the parties to the judicial decision (or their privies) were the same persons as the parties tothe proceedings in which the estoppel is raised (or their privies): Erschbamer at para 13. [114] The essential requirements for cause of action estoppel are that: (1) there must be a final decision of a court in the prior action;(2) the parties to the subsequent litigation must have been parties to (or privies with) the parties in the prior action; (3) the cause ofaction in the prior action must not be separate and distinct; and (4) the basis of the cause of action in both actions was argued, or couldhave been argued, in the first action if the parties had exercised reasonable diligence: Erschbamer at para 15. [115] When looking at cause of action estoppel, a court must look at the cause of action asserted in the prior proceedings and compareit to the one in the current action, and may also look at other evidence to understand what cause of action was advanced in a prior proceeding, D’Addario v EnGlobe Corp, 2012 ONSC 1918, 1 BLR (5th) 23 at para 267: The term "cause of action" refers to a set of facts giving rise to a legal claim or entitlement.

The materials which a court may look at inorder to determine what cause of action was advanced in a prior proceeding are not limited to the pleadings or judgment, but may includeother evidence. [116] Regarding the fourth element of cause of action estoppel, the question of whether the basis of the cause of action “could” havebeen argued is often also described as a question of “should” it have been argued. [117] For example, in D’Addario the Court reviewed the traditional requirements for cause of action estoppel, noting the classicstatement from Henderson v Henderson (1843), 3 Hare 100 that a party is prohibited from bringing forward the same subject oflitigation in respect of a matter which might have been brought forward in prior litigation, but was not brought forward due to negligence,inadvertence or even accident.

The Court noted that in recent years the principle has been refined so that the test is whether the partyshould have raised the matter, at para 265: Recent years have seen some refinement of the broad principle articulated in Henderson v. Henderson. In Freedman v. Reemark SterlingI Ltd. our Court of Appeal adopted the analysis undertaken by Cromwell J.A. (as he then was) in Hoque v. Montreal Trust Co.: The submission that all claims that could have been dealt with in the main action are barred is not borne out by the Canadian cases.

Withrespect to matters not actually raised and decided, the test appears to me to be that the party should have raised the matter and, indeciding whether the party should have done so, a number of factors are considered. [118] There are various factors to consider when determining the “should have” question, including: whether there is new evidencethat could not have been discovered earlier; whether the two proceedings are separate and distinct causes of action; or whether thesecond proceeding constitutes an abuse of process, at para 265. [119] Our Court of Appeal has also taken the approach that the question to ask is whether an issue should have been argued or pled inthe first proceeding.

The Court held the answer to this question will depend on the evidence presented as to the two proceedings and mayinvolve issues of discoverability: Hnatiuk v Assured Developments Ltd, 2012 ABCA 97, at para 25. A. Consent Orders [120] In the present case, the matter is somewhat different because we are dealing with a consent dismissal order, rather than thedisposition of a matter by a court.

The Court in D’Addario, however, confirmed that that estoppel may still apply to a consent order,relying on Ontario Sugar Co. (Re) (1911), 24 OLR 332, leave to appeal denied (1911), (SCC), 44 SCR 659. [121] The Court in Greater Vancouver Water District v SSBV Consultants Inc, 2015 BCSC 1349, specifically addressed how toconsider a plea of res judicata arising out of a consent dismissal order. The Court noted that in such a case, a court should go beyond therecord and pleadings to determine the scope of the settlement.

Courts are entitled to examine the record, the reasons for judgment (ifany), the pleadings, and the correspondence leading to the settlement. [122] The Court cited the case of Spender (Guardian ad litem of) v Spender, (BC SC), [1999] BCJ No 910, forthe procedure to be followed when faced with a plea of res judicata on grounds of a consent order in an earlier proceeding, at paras 24-25:

First, the cause of action in the earlier proceeding must be compared to the cause of action in the later proceeding. If they are different, then no "cause of action" estoppel can arise. If the causes of action are identical, the court must examine the consent order and any agreement, correspondence, or releases leading to its entry, in order to ascertain objectively whether the consent order was intended to finally dispose of all issues in the cause of action.

If no cause of action estoppel is established, the court must nevertheless examine the pleadings, the consent order, and any agreement, correspondence, or releases leading to its entry, in order to ascertain what issues, if any, were intended by the parties to be determined by the consent order. The parties will be precluded by "issue estoppel" from controverting any issue that the parties intended to dispose of through the consent order. B. Application to this Case [ 123 ] Turning to this case, I will now consider the pleadings, consent order and settlement correspondence, to determine whether res judicata . i.

Pleadings [ 124 ] The 2013 Statement of Claim was commenced by 864503 Alberta Inc., Sukhjinder Boparai, Sukhwant Boparai, Hardal Boparai and Sampuran Chatha against the defendants Genco Holdings Ltd., Pali Bedi, Jasbir Hans, and Tarlok Tatla. [ 125 ] In the claim, the Plaintiffs allege that the parties structured an agreement in March 2012 to divide the assets and liabilities between the 864 Group and the Genco Group (i.e. the Separation Agreement).

Genco breached the agreement by failing to complete its terms, primarily by failing to transfer the Boparai 120 Acre Parcel without encumbrances and failing to properly transfer and adjust the Red Deer Mall Property. Further, Genco failed to assume responsibility for debts outlined in the agreement. The Plaintiffs allege the obligations under the Separation Agreement had not been completed by April 30, 2013 as promised which resulted in financial and other consequences.

The Plaintiffs sought specific performance of all terms of the agreement, including payment of cash, with interest, as properly adjusted, and conveyance of the properties, properly adjusted. The Plaintiffs sought “an accounting from the Genco Group of all bank accounts, until the date of completion of the Agreement, so that funds are properly adjusted.” [ 126 ] The 2014 Statement of Claim, as amended in this decision, is an action by 864503 Alberta Ltd. against Genco Development Corporation, Pali Bedi and Genco Holdings Ltd.

The Plaintiff alleges that 864 and Genco were in various joint ventures together and that the Defendants failed to provide an accounting of revenues and expenses for the joint ventures, resulting in 864 not receiving its share of profits. In particular, the agreement in March 2013 resulted in a division of assets, which was completed in December 2013, but did not provide for a full or proper reconciliation of the equity between the parties. A reconciliation,

Schedule “B”, was completed in February 2013 by MNP LLP, but was based on erroneous or incomplete information provided by the Defendants. As a result of the improper reconciliation, the Plaintiff received less consideration than it was owed. [ 127 ] In the 2014 Statement of Claim, the Plaintiff also makes additional claims relating to an improper closing of the 2013 agreement, the failure to provide an accounting or reconciliations for a number of joint ventures including GDC and the Genco Place Properties project, breaches of fiduciary duty by Mr.

Bedi including improperly using corporate funds for personal loans, and oppression. The Plaintiff seeks an accounting its share of profits from the various business ventures, a proper reconciliation of

Schedule “B”, and damages. [ 128 ] Note that more detailed but unofficial summaries of the 2013 and 2014 (as amended) Statements of Claim appear in the Appendix. ii. Consent Dismissal Order [ 129 ] The consent dismissal order, filed December 17, 2013, was a simple order which dismissed the 2013 Action against the Defendants, as well as the counterclaim (which dealt with caveats), and stated there were no costs payable by any party. iii. Settlement Correspondence [ 130 ] The settlement correspondence I reviewed covers the period of November 8, 2013 to December 18, 2013.

The parties wrote to each other, through counsel, a number of times as they came to an agreement on the amount of money that Genco would pay to 864 to settle the outstanding matters between them and bring an end to the 2013 Action. [ 131 ] The correspondence from November 8 through to settlement discussed focussed on four areas of compensation that remained owing to 864 pursuant to the Separation Agreement: 1) a payment for the Boparai 120 Acre Parcel of $2.675 million dollars plus interest to unencumber the property; 2) an adjustment to the Red Deer Mall property to pay down the mortgage on that property to the amount that had been agreed to, plus interest and other costs that had arisen due to the late transfer of the property; 3) a payment of $650,000 plus interest, and 4) a $25,000 payment.

The latter two amounts were not discussed in evidence before the court and appeared non- contentious between the parties during the settlement. [ 132 ] Genco made an offer on November 8 to pay a total amount of $4,231,540 dollars in exchange for a discharge of all caveats and certificates of lis pendens , a mutual release, and a consent dismissal order. [ 133 ] 864’s response to the proposal was to ask for documentation to back up Genco’s calculations.

On November 13, 864 stated that in order to assess Genco’s proposed adjustments, it needed to see the bank records, reconciled ledgers, and cancelled cheques, back to January 1, 2012. Counsel stated he would require access to the financials for all the related corporations “back to the original adjustment

date, so my client can reconcile what has been collected and where it has been ‘expensed’”. He also stated that “I believe my client is going to look at going back further, in these circumstances, because of concerns of where revenues were collected and where they were allocated”.

Genco responded by sending documentation relating to the adjustments the next morning. [ 134 ] The parties spent time arguing over the adjustments to the Red Deer Mall property. 864 also raised two additional issues, a pending legal action by a tenant of the Red Deer Mall called Chatters, and 864’s demand for contribution to its legal costs. [ 135 ] There was a flurry of correspondence on November 15 between the parties as they tried to come to an agreement. Genco’s counsel offered to pay the settlement monies less a holdback for the Red Deer Mall adjustment.

He proposed the holdback so that 864 would have more time to review the financials for Red Deer and proposed a binding mediation if there were disagreements.

He also proposed dealing with the Chatters litigation later and advised there would be no contribution to legal costs. [ 136 ] 864 responded that it had identified concerns with the accounting for the Red Deer Mall, including the improper use of revenues, and provided its own much higher number to adjust the transaction. 864 also continued to demand funds for the legal costs and for money to be set aside for the Chatters litigation. [ 137 ] Genco’s counsel responded by setting out their points of agreement, and offered to contribute to the legal costs.

He stated that he thought they agreed the Red Deer Mall accounting matters could be hived off and resolved separately. 864 disagreed that things could be hived off. [ 138 ] The correspondence continued the next morning, Saturday the 16th, with Genco’s counsel stating that he was “disappointed that you are resiling from our understanding that the disagreement over the Red Deer accounting can be hived out”. 864’s counsel responded as follows (in a letter that was relied on heavily by the Master and by Genco): I have Never agreed to hive anything out.

In fact, I was always clear we have to resolve it all and that would include money in trust with me for numbers we couldn’t figure out. We never got to discussing conditions. I won’t let you hold money hostage forever. Do not suggest I am going back on something I never promised. In fact I have always refused to hive things off. We are not going to give your client something again to get halfway. We were lied to previously. I have the emails. I told you we will settle it all now. Don’t give me partial documents on a Thursday and claim duress because we don’t accept your bad math a day later.

I asked to address this months ago. If you think we agreed to hive anything out, you were not listening. And your math is wrong... Please spend the weekend figuring out how to pay us out, as promised. Look at our math and the settlement agreement. We adjusted it properly. ... [ 139 ] After this point in time, the parties continued to discuss the adjustment of the Red Deer Mall accounting in detail. On November 19 th , the parties were able to come to an agreement on the numbers.

If one compares the numbers from the November 8 and November 19 proposals, the only differences are: • the adjustment on the Red Deer Mall had changed from approximately $433,000 to $584,000; • Genco was now contributing $6,000 towards bookkeeping; • Genco was now contributing $7,500 towards legal costs; and • Genco was setting aside $60,000 to deal with the Chatters litigation. [ 140 ] The above overview demonstrates that the main issue in dispute through these settlement negotiations was the adjustment to the Red Deer Mall property, and the settlement itself pertained primarily to post-closing adjustments required under the terms of the Settlement Agreement. [ 141 ] The parties continued to discuss minor issues relating to the closing of the transaction, when a new issue arose relating to the wording in the release requested by Genco. [ 142 ] On December 6 th , 864’s counsel suggested the wording in the release went too far, noting specifically that his client was not resolving all claims against the Genco Group: On your form of Release, I think it could be read to suggest it goes beyond resolution or completion of the terms of the settlement agreement.

I would ask you to review it, as my client is not resolving any and all claims against the Genco group at this point. He is agreeing that the Genco group finally lived up to the terms of the Settlement Agreement and he makes no further claims in relation to it. ...

If there are other areas of dispute, this release cannot be used as a defence to them. ... [ 143 ] 864’s counsel suggested the following sentence be inserted into the release: “[t]he release cannot be used as a defence as against any claims arising between the parties that are not related to enforcement of the settlement agreement.” He also noted that “[w]hile your client wants to put this all behind him, my client is not about to give an all encompassing release to your client, when the release is intended to resolve the settlement agreement terms...”. [ 144 ] On December 12, Genco’s lawyer advised that he was instructed to dispense with the trust condition requiring an executed release. [ 145 ] The remaining issue was the consent dismissal order, which was executed and provided to a Master on December 17, 2013.

C. Analysis [146] I now turn to consider whether the 2013 Action and 2014 Action were pursing the same cause of action. And if so, was theconsent order intended to finally dispose of all issues in the cause of action? Finally, even if the answer to the foregoing two questions isno, should 864 have pursued the issues of the 2014 Action in the 2013 Action? [147] 864 argues that the 2013 Action and 2014 Action are sufficiently distinct and should not be considered an attempt by 864 to re-litigate the action.

It submits the 2013 Action was primarily based on enforcing the terms of the Settlement Agreement which weresupposed to be completed as of April 2013, but were not. Conversely, the 2014 Action raises the issue that the entire foundation for thesettlement of the 2013 Action was incorrect. The 2014 Action is premised on alleging that Genco made improper financial adjustmentswhich resulted in fundament

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