On-Site Solutions Inc v Peddle, 2019 ABQB 935

Court of Queen’s Bench of Alberta Citation: On-Site Solutions Inc v Peddle, 2019 ABQB 935 Date: 20191209 Docket: 1910 00309 Registry: Red Deer Between: On-Site Solutions Inc. Plaintiff - and - Jeff Peddle Defendant _______________________________________________________ Endorsement of A.R. Robertson , Q.C., Master in Chambers _______________________________________________________ Introduction [ 1 ] These are cross-applications (

a) to amend a counterclaim to provide more detail, and (

b) for an order striking the counterclaim pursuant to rule 3.68 on the grounds that it discloses no reasonable cause of action. The Statement of Claim [ 2 ] As described in the statement of claim, On-Site Solutions’ claim relates to the former involvement of the defendant, Mr. Peddle, as an employee and a director of On-Site. [ 3 ] The statement of claim explains that On-Site Solutions’ registered office and primary place of business is in Red Deer, and it carries on business as a property manager under the Real Estate Act . On-Site has managed a condominium complex in Fort McMurray, Alberta, where Mr.

Peddle lives. Mr. Peddle apparently had a direct or indirect interest in multiple condominium units within that complex and he was employed as the Operations Manager for On-Site to manage the complex. [ 4 ] In addition, in 2015 Mr. Peddle bought shares in On-Site and entered into a unanimous shareholders agreement. According

to the statement of claim, he was appointed as director and secretary of On-Site. Accordingly, he became part of management, and inthat capacity had fiduciary obligations to On-Site. [5] The claim is that he breached his obligations to On-Site under his employment agreement, the unanimous shareholdersagreement, and at common law. The statement of claim sets out various details of the allegations made by On-Site. The Statement of Defence and Counterclaim [6] Mr. Peddle filed both a statement of defence and a counterclaim.

In his statement of defence, he asserts that he has norecollection of being made a director or shareholder of On-Site, and had no authority to make decisions. All decisions were made byBryce Chapman, Tyler Chapman, and Travis Chapman and Charlene Turner (a long-term employee of Bryce Chapman), to the exclusionof him. He denies that his duties were to manage the assets or obligations of the condominium complex or to manage the complex.

Hestates that he was hired for crime prevention, pest control and evicting problem tenants, and to do miscellaneous tasks where needed. [7] It is in this context that he denies the extensive allegations in the statement of claim and that he breached his duties to On-Site, and advances a counterclaim.

He asserts in his defence that the plaintiff’s claim is frivolous and vexatious “aimed solely tointimidate the defendant and drain his financial resources as it pertains to the defence of another lawsuit, namely, the Plaintiff’sStatement of claim against the defendant’s wife’s corporation, Chez Max Ltd.” [8] He further states that the plaintiff’s director, Bryce Chapman, who mentored him when he began his employment with theplaintiff, advised him that Mr.

Chapman “had a lot of angry owners and that suing them would either ‘shut them up’ or cause them to gobankrupt.” [9] The counterclaim once again asserts that the claim is “frivolous, vexatious, and without merit”, and that it amounts to“conduct that is malicious, high-handed, oppressive, and offends the public’s sense of decency and warrants a claim of punitivedamages.” He seeks punitive damages of $100,000. He seeks no other damages. Application to Amend [10] In his application, Mr.

Peddle applies to amend his counterclaim by providing seven paragraphs of particulars of theplaintiff/defendant’s behaviour, making a reference to the separate claim by the plaintiff against his wife’s company, Chez Max Ltd.,which has now been amended to name him personally despite the fact that he is not either a director or shareholder of that company. Hehas provided an affidavit in support describing On-Site’s use of the legal process as described to him by Bryce Chapman. [11] An application to amend, when there is an application to strike under rule 3.68 or an application for

summary judgment,should be heard and decided before the application to strike or dismiss: 926 Capital Corp v Petro River Oil Corp, 2015 ABQB 431,following Hur v 726913 Alberta Ltd, 2013 ABQB 208. Accordingly, I deal with Mr. Peddle’s application first. [12] Following the “classic rule” relating to amendments, described in Balm v 3512061 Canada Ltd, 2003 ABCA 98, it isappropriate to allow the amendments proposed. At paragraph 12 of that decision, the court said, “the court must allow an amendmenteven though it raises a doubtful plea, if it is arguable”.

The plaintiff says that the entire plea, including the proposed amendments, is“hopeless”, following the approach in Dow Chemical Canada Inc v Nova Chemicals Corp, 2010 ABQB 524. I find that if theallegations are proven, the proposed amendments are not “hopeless”. Rule 3.68 Application to Strike [13] That takes us to the next point, which is whether the counterclaim, with or without the amendments, is arguable or whether itshould be struck pursuant to rule 3.68(2)((

b) on the ground that the counterclaim discloses no reasonable claim. [14] The application filed on behalf of On-Site is to the effect that the claim for $100,000 in punitive damages is based entirely onOn-Site’s delivery of its statement of claim. Counsel refers to Harris v GlaxoSmithKline Inc, 2010 ONCA 872, 2010 CarswellOnt 9696at paragraph 31, where it cites Metrick v Deeb, (ON CA), [2003] O.J.

No. 2221 and, in particular, the Court of Appeal’s quote from Fleming on Torts, 9th ed. at p. 668, “some such overt conduct is essential, because there is clearly no liability whenthe defendant merely employs regular legal process to its proper conclusion, albeit with bad intentions”. [15] On-Site argues that the law relating to the tort of abuse of process, as described in paragraph 27 of Harris. Those elementsare: (

a) the plaintiff is a party to a legal process initiated by the defendant (in this case this would refer to the plaintiff by counterclaim beinga party to legal process initiated by the defendant by counterclaim On-Site); (

b) the legal process was initiated for the predominant purpose of furthering some indirect, collateral and improper objective; (

c) the defendant (defendant by counterclaim here) took or made a definite act or threat in furtherance of the improper purpose, and (

d) some measure of special damage has resulted. Analysis [16] Madam Justice Hollins struck a claim based on assertions that a previous action was conducted by the defendant maliciouslyand in a manner that breached duties owed by the counsel as lawyers, in Carbone v Burnett, 2019 ABQB 98, 2019 CarswellAlta 296. Atparagraph 26, she noted that the plaintiff’s complaints were entirely about the conduct of a previous action. There were no particularfacts pled which would support a separate and maintainable action.

[17] That is not the case here. The separate action is mentioned as part of what the defendant/plaintiff by counterclaim asserts is akind of business model which is abusive of the court process. That separate action is on-going and directly related to this action – heasserts that he has been added as a defendant personally despite the fact that the original defendant is his wife’s company and he is not ashareholder or director. [18] The elements described above as paragraphs (

a) and (

b) would appear to be present in this case, if what is pled in thecounterclaim is later proven. The element described in (

d) would appear to be present, in that the counterclaim is to the effect that notonly this action, but another action has been commenced against him and his wife and her company is an abuse of process. [19] The element that is open to some debate is whether the assertion by Mr. Peddle that Mr.

Bryce Chapman advised him aboutOn-Site’s strategy to deal with third is a definite act or threat in furtherance of an improper purpose. [20] The plaintiff first argues that the assertion is essentially simply that the plaintiff is an aggressive litigator and it is common foraggrieved persons to sue in hopes of reaching a favourable settlement. [21] However, the assertion is more than that. [22] The plaintiff further argues that there is no such specific threat to Mr. Peddle here. Rather, what Mr. Peddle describes as On-Site’s “business model” was explained to him and he now finds it being used against him. Mr.

Peddle acknowledges that this is, to someextent, a novel claim. [23] I do not consider it appropriate to strike the counterclaim based on the assertion that the threat was not directly made to Mr.Peddle after his association with On-Site solutions ended.

According to what he has pled, and what he has stated in his affidavit insupport of his amendment, On-Site brings lawsuits without regard to whether they are meritorious as a way of dealing with parties with aview to outspending the defendant, and it may be said that that is a kind of general threat made some years ago that has now come hometo roost as a specific threat applied to him. [24] A factor that has some bearing on this decision is that the facts asserted in the counterclaim are the same as those asserted inthe defence.

The basic issue for the trial judge will be, if the defendant’s position prevails, whether an award of punitive damages isappropriate as a form of punishment in addition to the indemnity provided by an award of solicitor client costs. This counterclaim willnot likely make any difference to the parties’ record production or pre-trial questioning, or the length of trial. It is simply a question ofwhether a remedy should be available to Mr.

Peddle. [25] What he is suing for is punitive damages which are, of course, awarded against a party whose behaviour is seen to warrantsome form of punishment when the criminal law is not available to perform that function. Punitive damages may be imposed if there hasbeen high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards ofdecent behaviour: Whiten v. Pilot Insurance Co, 2002 SCC 18 , [2002] 1 SCR 595. It is this kind of behaviour that Mr. Peddleasserts.

It is not clear to me that he must plead any other specific tort in order to seek punitive damages on this ground. Conclusion [26] Accordingly, the application to strike the counterclaim is dismissed. [27] If counsel are unable to agree upon costs, they may contact the court to arrange for an appearance, perhaps by telephonegiven that plaintiff’s counsel is in Calgary and defence counsel is in Fort McMurray. [28] I remind counsel that when the application was argued, there was also an application by the defendant to move theproceedings from Red Deer to Fort McMurray, which was unsuccessful.

On this application, the defendant was successful. This dividedsuccess would normally lead to no costs being awarded, or costs being directed to be in the cause, but there may be other factors ofwhich I am unaware. Heard on the 3rd day of December, 2019. Dated at the City of Red Deer, Alberta this 9th day of December, 2019. A.R. Robertson, Q.C. M.C.C.Q.B.A. Appearances: Emmett Scrimshaw Peacock Linder Halt & Mack LLP

for the Applicant/Respondent (Plaintiff/Defendant by Counterclaim) Clifton D. Jang Thorne & Thorne for the Respondent/Applicant (Defendant/Plaintiff by Counterclaim)