Aircraft Finance Services Inc v Miller, 2018 ABQB 1005

Court of Queen’s Bench of Alberta Citation: Aircraft Finance Services Inc v Miller, 2018 ABQB 1005 Date: 20181210 Docket: 0901 18731 Registry: Calgary Between: Aircraft Finance Services Inc and Robin Brodhurst Plaintiffs - and - Jeffrey R Miller Defendant - and - Stephen Livergant, QC and McCarthy Tetrault LLP Third Parties _______________________________________________________ Memorandum of Decision of A.R. Robertson , Q.C., Master in Chambers

_______________________________________________________ Introduction [ 1 ] This is an application to amend the statement of claim to add two new parties and to add allegations of conspiracy and fraud against Mr. Miller, the current defendant, as well as against the proposed new defendants. Notice was given to the proposed new defendants, but they did not appear. The existing defendant Mr. Miller does not oppose the addition of the new parties, but he opposes the expansion of the claim to include new causes of action. [ 2 ] This is also a cross-application by Mr.

Miller to dismiss the claim firstly under rule 7.3, on the merits, and secondly under rule 4.31, for delay and consequential prejudice. [ 3 ] Where there are concurrent applications such as we have here, the Court is to determine the application to amend first, and then determine the

summary judgment application: Hur v. 726913 Alberta Ltd , 2013 ABQB 208 at paragraph 27 , citing Elbow River Marketing v Canada Clean Fuels Inc , 2011 ABCA 258 at paragraph 3 . [ 4 ] Following the approach mandated in Hur , in my view I must determine the question of whether the claim should be dismissed for delay and consequential prejudice under rule 4.31 before considering the amendment application.

It would seem appropriate to determine whether the claim should be dismissed because the movement has been dilatory before considering whether the plaintiff should be allowed to take up even more time, with new defendants, if the claim, perhaps, should already be dismissed. [ 5 ] The claim arises out of the intended establishment of a domestic air service business by Platinum Jet Air Charters Inc. Platinum Jet was party to a sale and purchase agreement dated January 13, 2005 between Platinum Jet and Aircraft Finance Services Inc. (“ AFS ”).

Pursuant to that transaction, Platinum Jet agreed to transfer 4 million of its series “A” common shares to AFS in consideration for the transfer of a certain aircraft. Background [ 6 ] The dispute here began with a very questionable arrangement to manage Platinum Jet. [ 7 ] An individual named Michael Hills was at all times responsible for the operations, management and business of platinum jet.

However, he could not, and did not, serve as an officer or director of Platinum Jet because he was under a director and officer ban from the Alberta Securities Commission. [ 8 ] A November 13, 2001 Provincial Court order, issued in proceedings commenced by the ASC, provided as follows: IT IS HEREBY ORDERED THAT: 1) The Accused shall cease trading in securities for a period of ten years from the date of this Order. 2) The Accused shall within 30 days resign all positions he holds as a director or officer of any issuer, save for his position as a director and officer of 923039 Alberta Ltd., carrying on business as 9th Avenue Car Wash and Detailing Shop. 3) The Accused shall be prohibited from becoming or acting as a director or officer or as both a director and an officer of any issuer for a period of ten years from the date of this Order. 4) All of the exemptions contained in the Alberta securities laws shall not apply to the Accused for a period of ten years from the date of this Order. [ 9 ] The Securities Act , RSA 2000 c.

S-4 defines “issuer” as follows: “issuer” means a person or company that (

i) has outstanding securities, (ii) is issuing securities, or (iii) proposes to issue securities; [ 10 ] The Act defines a “security”, in part, as follows: “security” includes (

i) any document, instrument or writing commonly known as a security; (ii) any document constituting evidence of title to or interest in the capital, assets, property, profits, earnings or royalties of any person or company; (iii) …; (iv) any document constituting evidence of an option, subscription or other interest in or to a security;

(v) … [ 11 ] Instead, the directors and officers of Platinum Jet were one of the plaintiffs, Robin Brodhurst; one of the proposed new defendants, Robert Whitney; and the current defendant, Jeffrey R Miller. [ 12 ] All of them knew of Mr. Hills’ ban. However, Mr. Brodhurst deposes that he did not know the lack of Mr. Miller’s involvement in the management of Platinum Jet. He knew that Mr. Miller was helping Mr. Hills, but he thought having Mr. Miller as president gave the company a lot of credibility, that he believed in. Mr. Miller [ 13 ] Mr. Miller, a long-time friend of Mr.

Hills, allowed his name to stand as president and director even though Mr. Miller claims he had no actual role in the day-to-day operations, management or business of Platinum Jet. Instead, those functions would actually be performed by Mr. Hills, the person the ASC had banned from being a director or officer of an issuing corporation. [ 14 ] Mr. Miller knew, prior to becoming involved in Platinum Jet, that Mr. Hills had been convicted for breaching the Securities Act . He also knew that Mr. Hills had been banned from being a director and officer and from trading in securities for 10 years. [ 15 ] Mr.

Miller held some of his own shares in Platinum Jet, but most of the shares registered in his name he held for the benefit of Mr. Hills. That would, of course, allow for the sale of those shares if the opportunity and desire arose, without the knowledge of the ASC. [ 16 ] Mr. Miller did not receive any remuneration or compensation from Platinum Jet for being one of its directors, or holding shares for Mr. Hills. He was just doing it for a friend. [ 17 ] That is, Mr. Miller’s involvement in Platinum Jet was as a matter of convenience to allow Mr.

Hills to effectively do the very job that the Alberta Securities Commission said he could not. Mr. Whitney [ 18 ] Mr. Whitney was a director and the Chief Operating Officer of Platinum Jet. He actually played an active role in assisting Mr. Hills in the operation of Platinum Jet. [ 19 ] Platinum Jet was unsuccessful at obtaining a license from the Canadian Transportation Agency, and the company was effectively defunct as of December 2008. Mr. Livergant [ 20 ] Mr.

Miller asserts that he obtained legal advice about the proposed management structure of Platinum Jet from Stephen Livergant, a Calgary lawyer. [ 21 ] There was a meeting attended by Mr. Livergant, Mr. Hills, Mr. Miller and Mr. Whitney. Of note is that the plaintiff Mr. Brodhurst, also a director, was not in attendance. According to Mr. Miller, Mr. Livergant was aware of the ASC ban, and it was discussed at that meeting, but at no point during the meeting, or thereafter, was Mr. Miller advised by Mr.

Livergant that the proposed management structure of Platinum Jet was illegal or improper. [ 22 ] I note that although Mr. Livergant swore an affidavit used in support of the

summary dismissal application, he did not specifically address his knowledge of Mr. Hills’ ban and the management structure of Platinum Jet. Mr. Brodhurst [ 23 ] The plaintiff Mr. Brodhurst was the beneficial owner and directing mind of the plaintiff corporation AFS. As mentioned, he was also a director of Platinum Jet. He was aware that Mr. Hills was subject to the ASC ban prior to Mr. Brodhurst running as director, and he was also aware that Mr. Hills was an integral part of Platinum Jet. [ 24 ] Mr. Brodhurst did not exercise any oversight role at Platinum Jet.

He only stood as a director to “give credence” to Platinum Jet’s operational knowledge and expertise, to assist with applications to the Canadian Transportation Agency. He did not have any other particular responsibilities as a director, and if his signature was required in corporate documents, he would sign them without reading them, relying exclusively on the representations of Mr. Whitney, who was the Chief Operating Officer. [ 25 ] Although Mr. Brodhurst owned AFS, his interest was masked by another person.

An individual named Glen Kolk was the figurehead director, figurehead officer and firgurehead shareholder of AFS, but Mr. Brodhurst was the actual directing mind of AFS by virtue of an undocumented power of attorney, and Mr. Kolk held all of the shares of AFS for the benefit of Mr. Brodhurst pursuant to an undocumented trust agreement. This arrangement was put in place to allow Mr. Brodhurst to circumvent the rules against foreign citizens owning aircraft registered in the United States. Mr. Brodhurst lives in British Columbia. [ 26 ] Accordingly, both the plaintiff Mr. Brodhurst and the defendant Mr.

Miller were engaged in some deceptive practices to conceal ownership and responsibilities from regulatory agents, in the case of Mr. Brodhurst from a US regulatory agency for the plaintiff AFS, and in the case of Mr. Miller from an Alberta regulatory agency for Platinum Jet.

The Put Option [ 27 ] The credibility of Mr. Miller is in issue in this lawsuit. A Put Option was created in his name, allegedly granted by Mr. Miller to AFS on January 13, 2005. However, Mr. Miller has, since being sued in this action, alleged that he was unaware of that Put Option prior to the plaintiffs alleging that it existed. The evidence discloses that he facilitated the creation of the Put Option in a number of ways, although his evidence is that he was not aware that he was doing so. He says Mr. Hills took advantage of his trust in him. [ 28 ] Under the Put Option, Mr.

Miller allegedly agreed to purchase 3 million shares of Platinum Jet from AFS for USD $2 million, and it effectively constituted a personal guarantee for Mr. Miller of the value of Platinum Jet’s shares. It is therefore said to have been provided as part of the consideration for the purchase of the aircraft. [ 29 ] However, the bookkeeper who handled all of the Platinum Jet’s financial affairs never recorded the aircraft as an asset of Platinum Jet. She was never given information about its value or its purchase.

It was simply never entered in the books of Platinum Jet that it had acquired an aircraft. [ 30 ] The Put Option was brief and to the point. The operative words were these: WHEREAS AFS is the holder of Four Million (4,000,000) Series A Common Shares (hereinafter referred to as the “Shares”) of Platinum Jet Air Charters Inc. and has the right to put the Three Million (3,000,000) Shares to Miller and Miller has agreed to purchase the shares for Two Million Dollars ($2,000,000) US funds. Upon Thirty

(30) Days written notice of the Put by AFS, Miller will exchange the sale proceeds for the Shares held by AFS. Dated this 13 th day of January, 2005 in the State of Florida. [ 31 ] Below those words it appears to be signed by Jeff Miller, and witnessed by Mr. Livergant. In the photocopy, or fax copy, that has been produced, it appears that Mr. Livergant’s notarial seal has been applied to the document. [ 32 ] That document was sent by fax to Mr. Brodhurst accompanied by a fax coversheet on the letterhead of Mr. Miller’s company, Alberta Tubular Products Ltd., addressed in handwriting (apparently Mr. Miller’

s) to “Mr. Robin Broadhurst” [sic]. The message handwritten on it, said “Robin Hopefully this will suffice. Regards + many thanks” followed by the signature of Mr. Miller. [ 33 ] It is acknowledged that Mr. Brodhurst did not have any discussion with Mr. Miller or with Mr. Livergant about the Put Option before he received it. [ 34 ] On November 9, 2009, Miller was served with notice that AFS intended to exercise the option. That was when Mr. Miller says he first learned of it and asserted that he had not created the option; it was a fraud. [ 35 ] Mr.

Miller further deposes that he prepared the fax coversheet, but for another purpose, and that Mr. Hills misused it by attaching it to the Put Option that Mr. Miller did not sign. [ 36 ] Mr. Livergant deposes that he did not witness the signature purported to be Mr. Miller’s, and he did not sign it, nor did he attach his notarial seal. [ 37 ] The original Put Option has never been produced. Mr. Hills’ Confession [ 38 ] In June 2016, over 11 years after the Put Option document was sent, Mr. Hills claimed that he had fraudulently manufactured the option to make it appear that Mr. Miller had executed it.

By then this lawsuit was about seven years old. [ 39 ] Although Mr. Hills is a Canadian citizen, he currently resides in Puerto Vallarta, Mexico. He swore an affidavit in these proceedings confessing to his fraud, although when it came time to cross-examine him, he insisted on being cross-examined from Mexico by videoconference. [ 40 ] As mentioned, Mr. Livergant swore an affidavit to the effect that he had nothing to do with the Put Option, but he was not cross-examined on it. There is no evidence to the effect that Mr. Miller signed the Put Option. [ 41 ] The only evidence is that Mr.

Hills prepared it as a fraud, making use of the fax coversheet prepared by Mr. Miller for another purpose, and then faxing it, mid-afternoon, from the fax machine in Mr. Miller’s office. The Arguments on the Merits [ 42 ] Given the evidence before the court, Mr. Miller says that the facts are clear: he is not liable on a Put Option that he did not create, and that although the plaintiff AFS may well have a claim against Mr. Hills, it has none against Mr. Miller. [ 43 ] From AFS’s perspective, it is out the USD $2 million promised in the Put Option and wants to be paid. Although Mr.

Brodhurst is named as a plaintiff, he appears to have no personal interest in the airplane, and was not personally a party to the Put Option, which was only between AFS and Mr. Miller, assuming it has any validity. [ 44 ] Mr. Miller says the claim on behalf of Mr. Brodhurst should be dismissed summarily on the grounds that there is no privity of

contract. [ 45 ] It is in this context that AFS and Mr. Brodhurst want to add Mr. Hills and Mr. Whitney as defendants, and they want to redraft the statement of claim, initially drafted on the basis of a contract breach. They want to allege fraud by Mr. Miller, Mr. Hills and Mr. Whitney and claim in conspiracy on the basis that the defendants put Mr. Miller forward as the president and directing mind of Platinum Jet and a significant shareholder. Mr. Miller in fact only held a nominal shareholding interest in the company, and also held all of Mr.

Hills shares in his name under an undisclosed and undocumented trust agreement, giving the appearance that Mr. Miller had a substantial financial interest in the company. The plaintiffs also want to seek punitive damages of CDN $200,000. [ 46 ] Accordingly, there is evidence before the court that Mr. Miller was put forward as a “straw principal” of Platinum Jet. There is also evidence that Mr. Brodhurst was aware that Mr. Hills had been banned from trading in securities or acting as a director or officer, and there is some basis for Mr. Brodhurst and AFS for asserting that they were unaware of the extent of Mr.

Miller’s non-involvement in the company. Analysis Delay and Prejudice [ 47 ] As to the delay application, the delays have not, at any point, been in and of themselves extraordinary. Most applications invoking rule 4.31 involve several years between steps, or any communication at all – when the defendant can properly begin to assume that the plaintiff has lost interest in pursuing the claim. Mr. Miller’s application is primarily based on the cumulative effect of delay. [ 48 ] There is little evidence of prejudice, other than (perhaps) the fact that Mr.

Hills now lives in Mexico, although no doubt that can be overcome either with a subpoena or a video-conference arrangement for him to give evidence at the trial. In fact, Mr. Hills’ refusal to attend for cross-examination in Calgary led to some considerable delay in the 2016-17 timeframe. [ 49 ] We do not know what effect the delay has had on Mr. Whitney’s evidence – he did not participate and there is no evidence from him. [ 50 ] Mr. Miller’s complaint about prejudice is mostly based on the fact that he has had this claim hanging over his head for many years.

However, he is now retired and aside from the stress of being sued for a significant amount of money he does not have the kind of adverse professional consequence that was discussed in Humphreys v Trebilcock , 2017 ABCA 116 .

That is, he is not losing the opportunity to work or to maintain a professional practice because of the allegations. [ 51 ] More importantly, there is no real indication that he tried to have the case moved to trial promptly at an early stage, which is the fact situation in the hypothesis at paragraph 134 of Humphreys , and furthermore the claim until now has been based on a breach of contract. It is Mr. Miller who introduced the issue of fraud – that he was indirectly a victim, not a perpetrator.

It is only now that the plaintiffs want to assert that he was directly involved in the wrongdoing. [ 52 ] It is a theory of the plaintiffs that the revelation of the fraud by Mr. Miller’s long-time friend Mr. Hills so many years after the event is an important part of the story here. In their brief, the plaintiffs sarcastically describe this late-breaking admission to be “convenient”. [ 53 ] In the result, I do not find that the delay has resulted in significant prejudice.

I also do not find that the delay has been inordinate and inexcusable, although clearly moving forward there need to be some deadlines. [ 54 ] Rule 4.31 includes some discretion. The rule says the Court “may” dismiss if the requirements are met. In my view, the requirements overall have not been met, but if I am wrong in that, if the plaintiffs’ theory is correct the rule would be used to miscarry justice.

A defendant involved in the suppression of evidence – to the point of concealing a fraud – should not be rewarded if the defendants’ actions are successful in frustrating and delaying resolution of the claim. [ 55 ] I want to make it clear that in this memorandum I am not making any finding that Mr. Miller was involved in any wrong- doing. There is clearly a powerful debate over his knowledge and involvement in Mr. Hills’ actions. My decision on this point is based in principle in this very unusual fact situation.

Amendments to Statement of Claim [ 56 ] There is some evidence to support an amendment to the statement of claim. The “classic rule” for amendments enunciated in Balm v 3512061 Canada Ltd , 2003 ABCA 98 is to the effect that if there is some evidence to justify it (although some amendments may need no evidence in support) any amendment may be allowed to the pleadings, at any time, provided that the affected party’s prejudice, if any, may be compensated in costs. [ 57 ] Although the defence of fraud was asserted by Mr. Miller at the outset, the new information is that the fraud was committed by Mr. Hills.

Moreover, the new evidence provides an explanation why Mr. Miller’s company’s fax machine could have been used to send a fax cover sheet that was created by Mr. Miller. Until Mr. Hills gave his confession, the defence by Mr. Miller would have been at least confusing. The evidence that is now said to be true – that it was Mr. Hills’ doing, and Mr. Miller was just a dupe in the fraud – can still be said to have been facilitated by Mr. Miller’s involvement with and trust in Mr. Hills.

He apparently allowed him mid-day access to his office and fax machine, as well as agreeing to let his name stand as a straw director so that Mr. Hills could run Platinum Jet. [ 58 ] Mr. Miller’s reason for opposing the amendment arises from the test described in Dow Chemical Canada Inc. v Nova Chemicals Corporation , 2010 ABQB 524 at paragraphs 20 – 21 , cited in Attila Dogan Construction v AMEC Americas Limited

(AMEC E & C Services Limited and AGRA Monenco Inc.) , 2013 ABQB 525 . Those cases set out the four major exceptions, being the following: (

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

b) the amendment requested is hopeless; (

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

d) there is an element of bad faith associated with the failure to plead the amendment in the first instance. [ 59 ] This case calls into play the Limitations Act , RSA 2000, c. L-12, sections 3 and 6 . [ 60 ] The relevant part of

section 3 sets out the “ultimate” limitation period, as follows: 3(1) Subject to subsections (1.1) and (1.2) and sections 3.1 and 11 , if a claimant does not seek a remedial order within ... (b) 10 years after the claim arose, whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim. [ 61 ] Section 4(1) extends the limitation period where the defendant has fraudulently concealed the claim, as follows: 4(1) The operation of the limitation period provided by section 3(1)(

b) or (1.1)(

b) is suspended during any period of time that the defendant fraudulently conceals the fact that the injury for which a remedial order is sought has occurred.

(2) Under this section, the claimant has the burden of proving that the operation of the limitation period provided by section 3(1)(

b) or (1.1)(

b) was suspended. [ 62 ]

Section 6 allows a new “claim” to be added to an existing proceeding, as follows: 6

(1) Notwithstanding the expiration of the relevant limitation period, when a claim is added to a proceeding previously commenced, either through a new pleading or an amendment to pleadings, the defendant is not entitled to immunity from liability in respect of the added claim if the requirements of subsection (2), (3) or (4) are satisfied.

(2) When the added claim (

a) is made by a defendant in the proceeding against a claimant in the proceeding, or (

b) does not add or substitute a claimant or a defendant, or change the capacity in which a claimant sues or a defendant is sued, the added claim must be related to the conduct, transaction or events described in the original pleading in the proceeding.

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

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

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

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

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

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

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

(5) Under this section, (

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

(

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

b) or (4)(b), if in issue, was not satisfied. [63] Mr. Miller says the new claim is out of time and that

section 6 does not allow a new claim to be added as proposed. [64] The plaintiffs say that critical facts were fraudulently concealed, including the involvement of Mr. Hills and the use of Mr.Miller’s fax machine and office and cover sheet. This now allows the claim to be advanced that both Mr. Miller and Mr. Hills workedtogether to effect the fraud, and the apparent knowledge of both Mr. Miller and Mr. Whitney of the heavy involvement of Mr. Hills in theoperation of Platinum Jet while the “president” Mr. Miller did effectively none of the jobs he was held out to perform, allows AFS andMr.

Brodhurst to assert that the fraudulent concealment applies to all of them. Alternatively, Mr. Whitney was aware of the claim (hedoes not attend to say otherwise, and given that he was Chief Operating Officer it must be assumed that he had some knowledge of thedispute) and Mr. Miller was certainly aware of the fraud claim – he had been sued and his defence was that the Put Option was a fraud. [65] Given these facts, I certainly cannot conclude that the claim has not been fraudulently concealed, possibly extending thelimitation period as against Mr. Whitney and Mr. Hills, and given Mr. Miller’s involvement,

section 6 allows the claims to be addedbecause they are “related to the conduct, transaction or events described in the original pleading in the proceeding”. [66] As to the plaintiff’s burden to show that the limitation period has been extended by the fraudulent concealment, in my viewthere is enough evidence to accept that the plaintiff may be able to prove that there has been fraudulent concealment. Clearly there wasfraudulent concealment by Mr. Hills. As to Mr. Miller, the decision will be based on the credibility of Mr. Miller, Mr. Hills, Mr.Whitney and perhaps Mr. Livergant. Mr. Miller and Mr.

Whitney will be allowed to defend on the basis that the limitation period hasnot been extended as against them, and the trial judge will rule on that point. [67] I am aware of the decision of Schutz, J. (as she then was) in Poff v Great Northern Data Supplies (AB) Ltd, 2015 ABQB 173,where she discussed

section 6 of the Limitations Act and she might be said to have concluded that once an amendment is allowed undersection 6 there can never be a defence allowed on the grounds of the limitation period having expired. She said this: [28]

Section 6 of the Act is substantive, primary law. In addition to setting out the requirements that must be satisfied undersubsections 6(2), (3) or (4), this statutory provision extinguishes the added defendant’s substantive right to raise a limitation defence towhich it otherwise would have been entitled pursuant to s 3 of the Act.

Section 6 also imports a consideration of prejudice into itsprovisions. [29] In assessing whether pleadings can be amended outside of the limitation period, the court must evaluate whether each of therequirements of s 6 are made out in the circumstances of that particular case: Stout (Estate of) v. Golinowski (Estate of), 2002 ABCA 49 at para 100, 299 AR 13 (CA) [Stout Estate]. [30] The specific subsection of s 6 applicable to this appeal is s 6(4), because Ms. Poff seeks to add NewCo as a defendant, by way ofamendments to her statement of claim. If Ms.

Poff prevails, on a plain reading of s 6(1), NewCo is not entitled to immunity from liabilityin respect of the added claim against it: 6(1) Notwithstanding the expiration of the relevant limitation period, when a claim is added to a proceeding previouslycommenced, either through a new pleading or an amendment to pleadings, the defendant is not entitled to immunity from liability inrespect of the added claim if the requirements of subsection (2), (3) or (4) are satisfied. (Emphasis added)……. [68] At paragraph 37, she said, The cumulative effect of s 6 of the Act, therefore, is to eliminate the immunity granted by s 3 of the Act, in favour of having the addedclaim heard with the original claim(

s) in a single proceeding, provided that the requirements of subsections (2), (3) or (4) are firstproperly met. [69] However, if her decision was intended to say that once the amendment is allowed under

section 6, where the evidence isuncertain on the very issue of whether there has been fraudulent concealment of the claim, the Court cannot allow the defendant affectedby the added claim to plead that it is out of time, I respectfully cannot follow it. [70] Firstly, that approach would be inconsistent with the conclusion of Wittmann, C.J. in Dow Chemical (to which she refers atparagraph 40 of her decision) that where there is uncertainty in the evidence on an application to amend, the issue of limitation should beleft to the trial judge. [71] Secondly, the critical evidence as to whether the defendants fraudulently concealed the claim – and thereby caused thelimitation period to be extended - is the same evidence of the fraud itself.

In simple terms, if Mr. Miller is lying, and he participated inthe fraud and concealment of his involvement, then the result is both that (

a) the limitation period has not yet run and (

b) he is guilty ofthe fraud. One cannot make one decision on a final basis without the other. Accordingly, if I were to find that Mr. Miller’s evidencecannot be believed, that fraudulent concealment must have occurred and the limitation period extended, and that consequently Mr. Millercannot plead the imitation defence going forward, the lawsuit would effectively be over. [72] Alternatively, if I were to find that his evidence must be believed because it has not been contradicted despite the concernsthat I set out below, then I will effectively be summarily dismissing the claim on the amendment issue, never addressing the

summaryjudgment application itself. [73] Apart from the restriction place on a master in chambers to deal with “contentious questions of fact” by section 9(3)(

b) of theCourt of Queen’s Bench Act, RSA 200 c. C-31, that approach could be unfair. [74] The only way to resolve with finality the conflicting evidence at this stage to determine whether the amendment should beallowed might be to have a trial on this portion of the evidence - simply to determine whether the amendment to the pleading should beallowed. And if it is allowed, the outcome of the trial itself would have been pre-determined. If the amendment is not allowed, that

would also pre-determine the outcome of the trial. [ 75 ] That can’t be right. [ 76 ] Thirdly, the general approach to amendments (the Balm “classic” approach) is to allow the amendments even if there is only a small amount of evidence, subject to the four exceptions identified by Wittmann, C.J. in Dow Chemical . And if the amendment is triggered by a pleading of the other side, the amendment will be allowed, perhaps even without evidence: Balm at para. 31 . [ 77 ] Here, the amendment application was triggered in part by the evidence, provided late in the day, by Mr. Miller’s counsel. Mr.

Hills’ affidavit was first provided on June 23, 2016 (although the affidavit was not filed until October 11, 2016), the defendant’s application for

summary dismissal was filed October 11, 2016 (the same date as Mr. Hills’ affidavit was filed), and then he was cross- examined (after a skirmish in chambers resulting in Mr. Hills being examined by video-conference) on June 2, 2017. [ 78 ] Fourthly, since the proper approach is to consider the amendment application and then determine the

summary judgment application, I must make a ruling of some kind on the amendment application before making a ruling on

summary judgment - or possibly adjourn the

summary judgment application until there has been a determination of whether the amendment is to be allowed, taking us back to the trial over the proposed amendment. [ 79 ] Accordingly, in my view the issue of credibility and the evidence provided by Mr. Miller and Mr. Livergant is better dealt with in the context of the

summary dismissal application. [ 80 ] The proposed added claim must be related to the conduct, transaction or events described in the original proceeding: paragraph 6(4) (

a) of the Limitations Act . That is a very broad test: Bow Valley Insurance Services

(1992) Limited v Shah , 2005 ABCA 304 , 2005 CarswellAlta 1351 at para. 14 . As well, the proposed defendant and the existing defendant “must have received, within the limitation period applicable to the added claim plus the time provided by law for the service of process, sufficient knowledge of the added claim that the defendant will not be prejudiced in maintaining a defence … on the merits”: paragraph 6(3) (

b) of the Limitations Act . [ 81 ] An “added claim” is also broadly interpreted. It does not refer to a new cause of action but rather an added claim arising from the same factual circumstances as did the original claim, possibly involving new parties. “An ‘added claim’ is a wider concept than an ‘added cause of action’, as the former includes changes to the parties as well as to the causes of action”: Alberta v Canadian National Railway Co ., 2001 ABQB 984 , quoted and followed in Poff . [ 82 ] Here, it was Mr. Miller who first alleged the fraud.

There are limited people who might have committed it and had a motive to do so. Mr. Miller had sufficient knowledge, and in my view so did Mr. Whitney in light of his involvement as COO as well as a director. [ 83 ] The plaintiffs are intending to recover the money from whoever created the Put Option and sent it to Mr. Brodhurst. There should not be two separate proceedings over this dispute. I am (to quote paragraph 6(3) (

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

Summary Dismissal [ 84 ] I now turn to the

summary dismissal aspect of the applications. [ 85 ] One aspect is very clear. Mr. Brodhust may personally have lost money by the fraud, but it is clear that if he did it is only through his corporation AFS. He had no privity to the contract he sues on, and to the extent there is a loss, the loss is that of AFS. A shareholder does not have a separate claim: 804977 Alberta Ltd v Lowrie , 2003 ABQB 234 , Cormode & Dickson Construction

(1983) Ltd v 394200 Alberta Ltd , 2008 ABQB 607 . Accordingly, the claim as advanced by him is dismissed. [ 86 ] The more difficult question is whether the evidence of Miller and Mr. Livergant should lead to a

summary dismissal of the claim as against Mr. Miller. Both of these witnesses say that the Put Option is a fraud. It appears to bear their signatures and Mr. Livergant’s notarial seal, although why his seal would appear on the Put Option is a mystery. He was purportedly signing as a witness, not as notary public. If this document were actually signed by Mr. Livergant, we would not expect him, as a witness, to apply his notarial seal. [ 87 ] This evidence is not contradicted by anyone, and Mr. Hills’ own confession tends to corroborate it. [ 88 ] On the other hand, there is clearly some basis for not taking Mr.

Miller’s evidence at face value, and it is possible that Mr. Miller might have been involved with Mr. Hills without Mr. Livergant’s knowledge. [ 89 ] Mr. Miller participated in putting Mr. Hills in charge of Platinum Jet so as to subvert the court order issued at the behest of the ASC. There is no evidence that Mr. Livergant knew that Mr. Miller was effectively going to take no active role. [ 90 ] Mr. Miller had no illusions about Mr. Hills. The evidence is clear that they had known each other for years, and Mr. Miller knew of his ASC ban. [ 91 ] Having placed the fox in charge of the henhouse, Mr.

Miller also seems to have at least facilitated Mr. Hills’ access to Mr. Miller’s office and fax machine – it was not in the process of some late-night surreptitious use, but the fax was sent at mid-day. To what extent this may have been how the business of Platinum Jet was regularly done might be something to be considered by a trial judge. The bookkeeper was aware of one other example of a “cut and paste” signature on a document.

[ 92 ] Since the decisions in Hryniuk v Mauldin , 2014 SCC 7 , 2015 CarswellOnt 640 and Windsor v Canadian Pacific Railway , 2014 ABCA 108 , 2014 CarswellAlta 395, the higher courts have been clear that the court hearing a

summary judgment application should consider the record and consider whether it is fair and just that a decision can be made. If there is not sufficient merit to establish a genuine issue to send to the case trial,

summary judgment should be granted. [ 93 ] Speculating that evidence might be available at a trial is not sufficient to create a genuine issue requiring a trial: Windsor at para. 21 . Mr. Miller urges the Court to see the current evidence from the plaintiffs this way. [ 94 ] In many cases that come before masters in chambers at the first instance, it is possible to conclude that evidence not contradicted should be accepted and judgment granted, as Mr. Miller urges here.

Often in such cases there is no basis for not accepting the applicant’s evidence. [ 95 ] However, as we (the bar and the court) collectively find the proper balance between what cases may be summarily determined without viva voce evidence, and what cases show sufficient merit to require a trial, the circumstance that we find here sometimes arises: a party asserts certain critical facts that are difficult if not impossible for the opposing party (who has the burden of proof) to disprove, but there is some identifiable, palpable reason to believe that the party making the assertion may not be telling the truth. [ 96 ] Even with cross-examination or pre-trial questioning conducted before the

summary judgment application is brought, it is sometimes impossible for a master in chambers, or a justice in chambers, to determine whether the evidence is credible. [ 97 ] At trial a judge does not accept the evidence of every witness simply because no one has contradicted the witness on a critical point.

The trial judge may conclude that the witness is likely not telling the truth, because he or she has an interest to protect, because the witness has a history of making false statements, or because other evidence that the witness has given in the hearing is found to be false. [ 98 ] Here, as mentioned, we have the appearance of corroboration of Mr. Miller’s evidence by Mr. Livergant, but he cannot corroborate a negative. He can only say that he was not involved. [ 99 ] We have the corroboration by Mr.

Hills, but we have a long-standing friendship that we know led to improper behaviour years ago with someone who the Provincial Court concluded should stay away from securities issues, and Mr. Hills’ latter-day confession from a relatively safe place. [ 100 ] These factors make it difficult to say that there is no issue of merit to go to trial. There is. There is at least an issue about Mr. Miller’s credibility and candour. A trial judge should have the opportunity to hear Mr. Miller, Mr. Whitney, Mr. Livergant and Mr. Hills and make a determination.

Conclusion [ 101 ] Accordingly, the application for dismissal delay is dismissed, the application to amend the statement of claim and add parties is allowed, the application to dismiss the claim by Mr. Brodhust personally is allowed, and the application to dismiss the claim by AFS is dismissed. [ 102 ] The amendments are allowed without prejudice to the rights of the defendants Mr. Miller and Mr. Whitney to deliver statements of defence on the grounds that the new claims are out of time.

The resolution of that issue shall be for the trial judge to decide. [ 103 ] It would be appropriate to issue a scheduling order to make sure this dispute gets to trial as soon as possible in the circumstances. The parties should agree on one, and if they cannot the plaintiff is directed to apply for one. I reserve jurisdiction under rule 4.31(1)(b). [ 104 ] If the parties cannot agree upon costs they may make an appointment with the masters’ chambers clerk to speak to the Court for a ruling. Heard on the 19 th day of November, 2018. Dated at the City of Calgary, Alberta this 10 th day of December, 2018. A.R.

Robertson, Q.C. M.C.C.Q.B.A. Appearances:

Andrew Wilson and Cassandra Sutter Jensen Shawa Solomon Duguid Hawkes LLP for the Plaintiffs Michael A. Dixon and Geoff Adair Blake, Cassels & Graydon LLP for the Defendant Daniel A. Downe, Q.C. Field Law for the Third Parties