Kichton Contracting Ltd v Giselbrecht, 2021 ABQB 641

Court of Queen’s Bench of Alberta Citation: Kichton Contracting Ltd v Giselbrecht, 2021 ABQB 641 Date: 20210813 Docket: 2003 16365 Registry: Edmonton Between: Kichton Contracting Ltd., C.L. Dirks Developments Ltd., 870383 Alberta Ltd., 2136570 Alberta Ltd., Kichton Contracting (Sask) Ltd., 1737913 Alberta Ltd., Chris Dirks, Richard Kichton, Laurie Conrad, and Matus Toth Plaintiffs - and - Russell Ronald Giselbrecht also known as Russell Giselbrecht also Known as Russell R.

Giselbrecht, 2134960 Alberta Inc., Rusty Bear Enterprises Ltd., Master Paving Alberta Ltd., Amy Elizabeth Giselbrecht also known As Amy Giselbrecht and 2059778 Alberta Ltd. Defendants Corrected judgment: A corrigendum was issued on November 2, 2021; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Decision of the Honourable Mr. Justice G. S. Dunlop _______________________________________________________

1. Overview [ 1 ] On February 20, 2020, Kichton Contracting Ltd. terminated Russell Giselbrecht’s employment. On May 21, 2020 Mr. Giselbrecht sued Kichton Contracting for wrongful dismissal. Since then numerous pleadings have been filed or submitted for filing in four actions.

The pleadings to date are: DATE PLEADING PAGES 2003 08628 Russell Giselbrecht v Kichton Contracting May 21, 2020 Statement of Claim 4 June 19, 2020 Statement of Defence 5 2003 16365 Kichton Contracting, 5 other corporations, Chris Dirks, Richard Kichton, Laurie Conrad and Matus Toth v Russell Giselbrecht, Amy Giselbrecht, Master Paving Alberta Ltd and 3 other corporations October 16, 2020 Statement of Claim 45 October 22, 2020 Amended Statement of Claim 45 December 1, 2020 Second Amended Statement of Claim 45 December 10, 2020 Statement of Defence of Master Paving 2 December 11, 2020 Statement of Defence of Russell and Amy Giselbrecht and 2134960 Alberta Inc. 5 December 21, 2020 Third Amended Statement of Claim 46 May 28, 2021 Fourth Amended Statement of Claim 29 May 31, 2021 Amended Statement of Defence of Master Paving 3 May 31, 2021 Amended Statement of Defence of Russell and Amy Giselbrecht and 2134960 Alberta 6 2103 02320 Russell Giselbrecht and 2134960 Alberta v 2059778 Alberta Ltd., 3 other corporations, Chris Dirks, Richard Kichton and Laurie Conraad February 26, 2021 Originating Application 10 Not yet filed Russell Giselbrecht and 2134960 Alberta v Kichton Contracting not yet filed Originating Application 3 [ 2 ] In the first action, Mr.

Giselbrecht claims damages of $692,880 consisting of 24 months’ pay in lieu of notice, damages for mental suffering and punitive, exemplary and aggravated damages. [ 3 ] In the second action, Kichton Contracting and the other plaintiffs claim several declarations, interlocutory and permanent injunctions, leave to commence a derivative action, return of property, an accounting, disgorgement, tracing, equitable charges and $5,250,000 in damages, including punitive and exemplary damages. They also seek to have the first action and the second action heard consecutively or concurrently. [ 4 ] In the third action, Mr.

Giselbrecht and 2134960 Alberta claim declarations and orders with respect to 2059778 Alberta Ltd. pursuant to the Business Corporations Act . [ 5 ] In the fourth action, Mr. Giselbrecht and 2134960 Alberta claim declarations with respect to Kichton Contracting pursuant to the Business Corporations Act and an order that Kichton Contracting provide financial and other information. [ 6 ] On February 24, 2021 the parties applied for case management of the first two actions. On March 2, 2021 Associate Chief Justice Nielsen appointed me to conduct a case conference pursuant to r. 4.10.

I conducted the case conference on April 6, 2021, during which I issued a procedural order and following which I recommended to the Associate Chief Justice that a case management justice be appointed for the three actions which had been commenced to that point. On April 14, 2021 Associate Chief Justice Nielsen appointed me to case manage the first three actions. [ 7 ] On June 29, 2021 I conducted the first case management meeting in these actions. At that time, I learned of the fourth action.

I also learned that on May 25, 2021 the Giselbrechts and 2134960 Alberta filed an application which sought both striking of portions of the fourth amended statement of claim and particulars. The grounds for striking is the alleged failure of Kichton Contracting and the other plaintiffs in the second action to comply with the procedural order I issued on April 6, 2021. I directed that the application regarding compliance with the April 6, 2021 procedural order be heard by me as a written application with no oral hearing. The

particulars part of the application is not presently before me. I received the submissions of the Giselbrechts and 2134960 Alberta on July 12, 2021 and the submissions of Kichton Contracting and the other plaintiffs on August 3, 2021.

I also received reply submissions of 2134960 Alberta and the Giselbrechts on August 9, 2021, however, as I did not request reply submissions when the desk application process was set on June 29, 2021, I have not considered the August 9, 2021 reply submissions. [ 8 ] The context for this application is the procedural order I issued on April 6, 2021, as it relates to the claims advanced by Kichton Contracting and the nine other plaintiffs in the second action.

As I stated during the April 6, 2021 case conference, I am unable to tell from reading the third amended statement of claim what causes of action are being advanced, and in each case which plaintiffs are claiming a cause of action and which defendants a cause of action is advanced against. There are also portions of the third amended statement of claim that are unintelligible, ungrammatical, fail to follow a logical numbering or lettering sequence, and employ very lengthy, and consequently confusing, sentences.

The third amended statement of claim also includes a lengthy verbatim quotation from a unanimous shareholders agreement.

For those reasons I found the third amended statement of claim to be deficient and ordered the plaintiffs in the second action to do one of the following by April 30, 2021: • provide a response to the defendants’ most recent request for particulars; or • file a fourth amended statement of claim that at least does the following: o names the causes of action forming the basis of the claim; o specifies which plaintiffs are advancing each cause of action; o specifies which defendants are the subject of each cause of action; o follows the rules of English grammar; o uses sentences of no more than fifty words; o numbers or letters paragraphs consecutively starting with 1 or A; o lists the remedies sought under the heading “remedies sought” and not elsewhere; o pleads the gist of the contractual obligations alleged to have been breached without quoting the contracts verbatim; o does not attach schedules; o shows the change from the third amended statement of claim with a single underline. [ 9 ] The plaintiffs’ fourth amended statement of claim was filed on May 28, 2021.

There were some difficulties getting it filed. The Giselbrechts and 2134960 Alberta do not argue that the fourth amended statement of claim was filed late. [ 10 ] The issues are: • did the plaintiffs do what I ordered? • if not, what is the appropriate remedy? [ 11 ] I find that the plaintiffs did not do what I ordered because they did not name all of the causes of action and they did not specify which plaintiffs assert which causes of action against which defendants. They also breached the requirements of the Rules of Court with respect to being pleading material facts rather than bare allegations.

Based on the plaintiffs’ conduct of the second action to date, I find that they are abusing the Court’s process in an attempt to frustrate and delay the first and the second action. Therefore, the most appropriate remedy is to strike the offending portions of the fourth amended statement of claim in the second action. 2. Plaintiffs’ Compliance with the April 6, 2021 Order [ 12 ] The April 6, 2021 order required the plaintiffs to either provide a response to the most recent request for particulars, or file a fourth amended statement of claim meeting the minimum requirements set out in the order.

The plaintiffs did not provide a response to the most recent request for particulars; they filed a fourth amended statement of claim. [ 13 ] The fourth amended statement of claim numbers the paragraphs consecutively, lists the remedies under the heading “remedies sought” only, does not attach schedules and uses a single underline to show changes. For the most part, the sentences are 50 words or less. The Giselbrechts and 2134960 Alberta do not argue that the provisions regarding grammar and the gist of contracts were breached.

Consequently, the issues regarding compliance with the April 6, 2021 procedural order are whether the fourth amended statement of claim specifies which causes of action are advanced by which plaintiffs against which defendants and otherwise complies with the Rules of Court. 2.1 names of causes of action and plaintiffs and defendants in each case 2.1.1 requirement and purpose [ 14 ] The April 6, 2021 procedural order includes the following:

1. No later than April 30, 2021, the Plaintiffs in this Action (the “Plaintiffs”) shall either: A. provide a response to the March 19, 2021 Request for Particulars provided to them, or B. file an Amended (x4) Statement of Claim that: i. names the causes of action which form the basis of the Plaintiffs’ claim ii. specifies which Plaintiffs are advancing each cause of action; iii. specifies which Defendants in this Action (the “Defendants”) are the subject of each cause of action; [ 15 ] The plaintiffs submit that a statement of claim is not required to name causes of action.

That may be the general rule, but the April 6, 2021 procedural order made it a requirement if the plaintiffs chose to file a fourth amended statement of claim. [ 16 ] I granted the procedural order on April 6, 2021 in an attempt to have the plaintiffs precisely identify their claims, which would help the parties to identify the issues in dispute, so they could move on to document production and questioning. Precision is necessary because there are ten plaintiffs and six defendants and various alleged relationships among them.

Regrettably, the fourth amended statement of claim does not name each cause of action and specifically identify which plaintiffs and defendants are alleged to be involved in each. 2.1.2 failure to be specific [ 17 ] There are six corporate plaintiffs and four individual plaintiffs. The alleged relationships among the plaintiffs are: • Kichton Contracting (Sask) Ltd.(hereafter Kichton Sask) is a subsidiary of Kichton Contracting. • 870383 Alberta Ltd. is controlled by either Laurie Conrad (paragraph 17) or Chris Dirks (paragraph 18). • C.L.

Dirks Developments is controlled by Chris Dirks. • 2136570 Alberta Ltd. is controlled by Richard Kichton. [ 18 ] 1737913 Alberta Ltd. is allegedly controlled by Fred Kichton, who is not a plaintiff. [ 19 ] At the core of the claim is Kichton Contracting, which is a corporation. It allegedly owns Kichton Sask. It is not clear from the fourth amended statement of claim what, if any, relationship, there is between Kichton Sask and any of the other parties. [ 20 ] Kichton Contracting is described as having an earthmoving business in paragraph 24.

There is no allegation in the fourth amended statement of claim that Kichton Sask has any business, but paragraph 31 refers to the business of both Kichton Contracting and Kichton Sask and alleges that Mr. Giselbrecht played a role in both businesses. [ 21 ] The other corporate plaintiffs are not alleged to have any business. They are alleged to be shareholders in Kichton Contracting and subject to obligations in a unanimous shareholders agreement. Mr.

Giselbrecht and 2134960 Alberta are also alleged to be shareholders in Kichton Contracting and subject to obligations in the same unanimous shareholders agreement. [ 22 ] Paragraph 35 of the fourth amended statement of claim alleges Mr. Giselbrecht owed contractual, fiduciary and employment duties to all of the Plaintiffs arising out of his position with Kichton Contracting and Kichton Sask and his being a party to the unanimous shareholder agreement. This is confusing because only two of the ten plaintiffs, Kichton Contracting and Kichton Sask, are alleged to have employed Mr.

Giselbrecht and because Kichton Sask is not alleged to be bound by the unanimous shareholders agreement. [ 23 ] Paragraph 36 alleges that both Mr. Giselbrecht and 2134960 Alberta owed contractual, fiduciary and employment duties to all of the Plaintiffs. The basis for any duties owed by 2134960 Alberta to any of the Plaintiffs is not pled. It is a mystery because 2134960 Alberta is not alleged to have been employed by Kichton Contracting or Kichton Sask. 2134960 Alberta is not alleged to have any relationship to any of the Plaintiffs other than through the unanimous shareholders agreement.

Kichton Sask is not alleged to be a shareholder in Kichton Contracting and is not alleged to be party to the unanimous shareholders agreement, so there is no relationship alleged between Kichton Sask and 2134960 Alberta. What then is the factual basis for any duty owed by 2134960 to Kichton Sask? The fourth amended statement of claim does not say. Do the plaintiffs allege that Mr. Giselbrecht owed duties arising from his employment to the plaintiffs who did not employ him? The fourth amended statement of claim may allege that.

It is unclear. [ 24 ] The plaintiffs submit that paragraph 35 and 36 do not plead employment duties. I disagree. The duty of fidelity and good faith, pled in paragraph 35, and the obligation to serve selflessly, honestly and loyally, pled in paragraph 36, are duties that arise out of employment: CRC-Evans Canada Ltd. v Pettifer [1997] AJ No 20 at para. 45 ; affd 1998 ABCA 191 .

The confusion created by paragraphs 35 and 36 would have been avoided if the plaintiffs had complied with the April 6, 2021 order and pled specifically which causes of action are advanced by which plaintiffs against which defendants. [ 25 ] Subparagraph (c)(iv) of paragraph 39 alleges that Mr. Giselbrecht, 2134960 Alberta, Rusty Bear Enterprises Ltd., Master Paving Alberta Ltd. and other corporations, for their benefit, diverted services to the “Potential Residence Lands”, which are defined in paragraph 12 as being owned by one of the plaintiffs, Richard Kichton.

How is the diversion of services to lands owned by one of the plaintiffs alleged to have benefitted Mr. Giselbrecht, 2134960 Alberta, Rusty Bear, Master Paving, or any other corporation? The fourth amended statement of claim does not say. [ 26 ] Subparagraph (

d) of paragraph 39 alleges that that Mr. Giselbrecht, 2134960 Alberta, Rusty Bear Enterprises, Master Paving

and other corporations approached competitors or suppliers of Kichton Contracting and Kichton Sask to assist in exercising the shotgun buy/sell provisions of the unanimous shareholders agreement. Is that relevant to a cause of action? If so, what cause of action? Do the plaintiffs allege that the defendants had a duty not to do that? If so, what is the factual basis for that duty? Does this have any relationship to a claim for secret profits, benefits or commissions, which is the heading immediately before paragraph 39?

The fourth amended statement of claim leaves all of those questions unanswered. [ 27 ] Paragraphs 45 to 47 allege Mr. Giselbrecht harassed employees of Kichton Contracting and Kichton Sask, but no cause of action is named. The plaintiffs submit that the cause of action is the novel tort of harassment. Even if there is a tort of harassment which the victims could advance, the fourth amended statement of claim fails to identify which plaintiffs, if any, claim Mr. Giselbrecht harassed them. Paragraph 47 alleges the Kichton Contracting and Kichton Sask had to manage the employees Mr.

Giselbrecht harassed and that the harassed employees were periodically inhibited from working. Perhaps the plaintiffs wish to assert a doubly novel cause of action of being the employer of a harassment victim. It is far from clear. [ 28 ] Paragraph 50 alleges Mr. Giselbrecht breached the confidentiality provisions of the unanimous shareholders agreement, but sub-paragraph 50(

f) alleges he withdrew American Express points. No disclosure of information is alleged in subparagraph 50(

f) and no cause of action based on withdrawing American Express points is identified. [ 29 ] Paragraphs 54 to 60 follow the heading “Wrongful Employment Insurance Claim by Giselbrecht”. Paragraphs 61 to 63 follow the heading “Wrongful WCB Claim” Those headings were not in the third amended statement of claim and the allegations in paragraphs 54 to 63 are new. The plaintiffs submit that these are novel causes of action.

The purpose of the April 6, 2021 procedural order was to have the plaintiffs precisely identify their claims, either by responding to the request for particulars or by amending their statement of claim. The order did not permit the plaintiffs to add entirely new claims. The plaintiffs submit that that absence of any restrictions in the April 6, 2021 order gave them carte blanche to add new claims. I disagree. If the plaintiffs wanted to add new claims, they could have raised them during the April 6, 2021 case conference. They did not.

During the April 6, 2021 case conference, I asked the plaintiffs’ counsel what causes of action the plaintiffs were advancing. He did not mention wrongful employment insurance claim or wrongful WCB claim. 2.1.3 indirect shareholder claims [ 30 ] The inclusive wording employed by the plaintiffs in the fourth amended statement of claim lumps together direct claims by Kichton Contracting with indirect claims by its shareholders. Specifically: • Paragraph 38 alleges that Mr.

Giselbrecht’s breaches of his employment duties led to losses for Kichton Contracting and Kichton Sask and “indirectly the other Plaintiffs”. • Paragraph 40 alleges that the plaintiffs have suffered losses, directly or indirectly as a result of what is alleged in paragraph 39. • Paragraph 43 alleges that all of the plaintiffs suffered losses directly or indirectly as a result of the breaches of trust, knowing assistance and knowing receipt alleged in paragraph 42. • Paragraph 44 pleads unjust enrichment based on the allegations in paragraph 42, and alleges that the plaintiffs, other than Kichton Contracting and Kichton Sask, have indirectly suffered a deprivation. • Paragraph 51 asserts an indirect claim by the plaintiffs other than Kichton Contracting and Kichton Sask, with damages to Kichton Contracting and Kichton Sask, and “indirectly to the other Plaintiffs”. • Paragraph 53 alleges all of the Plaintiffs have suffered losses directly or indirectly as a result of Mr.

Giselbrecht’s breaches of the non-compete provisions of the unanimous shareholders agreement. • Paragraph 60 alleges that the Plaintiffs other than Kichton Contracting and Kichton Sask have suffered loss in the form of reassessment, interest and penalties payable to the Canada Revenue Agency, but they have not identified which plaintiffs are or may be subject to those losses.

In particular, it is unclear how the plaintiffs whose only involvement in Kichton Contracting and Kichton Sask was to hold shares could be liable to the Canada Revenue Agency for anything. [ 31 ] The fourth amended statement of claim does not plead what the shareholders’ indirect losses are. If they are diminution in the value of the shares of Kichton Contracting or Kichton Sask, the shareholder plaintiffs have no cause of action.

This is the rule in Foss v Harbottle (1843) 67 ER 189 , which continues to apply in Alberta: New Century Properties Ltd. v Bank of Montreal 2020 ABQB 39 at para. 14 . [ 32 ] If the plaintiffs had specifically pled which plaintiffs were advancing each cause of action, as required by the April 6, 2021 procedural order, the defendants and the Court could apply the rule in Foss v Harbottle on a striking or

summary judgment application, which would help focus future steps in the second action on the real issues. 2.1.4 Amy Giselbrecht and 2059778 Alberta [ 33 ] The only references to Amy Giselbrecht in the fourth amended statement of claim are allegations that she held shares in 2134960 Alberta and owned or resided on some of the land to which services were provided as set out in paragraph 39. Paragraph 42 alleges knowing assistance and knowing receipt against defendant corporations, but not against Ms. Giselbrecht.

The plaintiffs submit that because 2134960 Alberta is alleged to have committed torts and breaches of the unanimous shareholder agreement Ms. Giselbrecht is subject to any remedies ordered against 2134960 Alberta. I disagree. Shareholders are not liable for torts and breaches of contract of a corporation, unless the shareholders participate in the tort or contractual breach: Business Corporations Act, RSA 2000, c. B-9, s. 46 ; Zaccardelli v Kraus 2003 ABQB 319 at para. 64 . The fourth amended statement of claim does not allege that Ms. Giselbrecht did anything.

Consequently, the fourth amended statement of claim discloses no cause of action against Ms. Giselbrecht.

[ 34 ] The only references to 2059778 Alberta are: • the statement in paragraph 22 that it is named as a defendant “for the purposes of having it bound by any Order, Judgment or Declaration granted in this action”; • the allegation in paragraphs 23, 24 and 26 that it owned the premises from which Kichton Contracting conducted business; • the allegations in paragraph 26 that it issued and received shares to some of the other parties; • the remedy sought in paragraph 70(

e) of a set-off in its favour. [ 35 ] The fourth amended statement of claim does not state which plaintiffs are asserting which causes of action against 2059778 Alberta. The minimal allegations do not support any cause of action. [ 36 ] The Giselbrechts and 2134960 Alberta raise the absence of any causes of action pled against Ms.

Giselbrecht and 2059778 Alberta in their written submission, but do not seek the striking of either defendant from the claim as relief in their written submission or their application. 2.1.5 conclusion regarding vague allegations [ 37 ] The plaintiffs have failed to comply with the April 6, 2021 procedural order regarding the specific identification of their claimed causes of action, with the result that the real issues in the second action remain undefined. The plaintiffs’ defiance of my order has lengthened the limbo of the second action.

Presumably the plaintiffs consider that this furthers their interests somehow. 2.2 Rules of Court [ 38 ] The April 6, 2021 procedural order did not relieve the plaintiffs of the obligation to comply with the Rules of Court. R. 3.25(

b) requires that a statement of claim “state the claim and the basis for it”. That requires a statement of claim to plead material facts that establish a cause of action: Vanmaele v Maryniak 2018 ABCA 179 at para 10 . A bald assertion reciting the basic elements of a cause of action is insufficient: Al-Ghamdi v Alberta 2017 ABQB 684 at para 114 , citing GH v Alcock 2013 ABCA 24 at para 58 . [ 39 ] Two of the claims pled in the fourth amended statement of claim are bald assertions without any material facts. Specifically: • The only reference to conspiracy is subparagraphs 70(

f) and (g), where the plaintiffs seek a declaration that some or all of the defendants conspired to cause damage to one or more of the plaintiffs, or conspired to engage in wrongful acts which harmed one of more of the plaintiffs. The fourth amended statement of claim contains no allegations of fact relating to the tort of conspiracy. In particular there is no allegation that any two or more defendants agreed to do anything, which is an essential element of conspiracy: S unshine Village Corporation v. Chevalier 2018 ABQB 484 at para. 13 .

The plaintiffs submit that paragraphs 39 to 44 and 50 to 53 plead sufficient facts for the Court to ascertain that there may have been an agreement. I disagree. Nowhere in the fourth amended statement of claim is an agreement among any of the defendants alleged. • The only reference to unlawful interference with economic interests is in subparagraph 70(

h) where the plaintiffs seek a declaration that Mr. Giselbrecht and 23134960 Alberta unlawfully interfered with the plaintiffs’ economic interests. There are no allegations of fact in the fourth amended statement of claim to support that cause of action. In particular, the fourth amended statement of claim contains no allegations that Mr. Giselbrecht and 2134960 Alberta applied unlawful means against at third party which caused any of the plaintiffs a loss. A wrongful act against a third party is essential: Bram Enterprises Ltd. v AI Enterprises Ltd 2014 SCC 12 at para 23 .

The plaintiffs submit that sufficient facts are pled throughout the fourth amended statement of claim, referring to paragraphs 37 – 44 and 50 – 53. I disagree because those paragraphs allege wrongful acts against the plaintiffs, not third parties. 4. Other Paragraphs Objected to by the Giselbrecths and 2134960 Alberta [ 40 ] The Giselbrechts and 2134960 Alberta submit that that the duties alleged in paragraph 37 are impenetrable. I disagree. I understand paragraph 37 to allege Mr. Giselbrecht breached duties he owed to his employers, Kichton Contracting and Kichton Sask.

They also submit that paragraph 37 fails to plead material facts. I disagree. Subparagraphs (

a) through (

d) plead are sufficient facts for the purposes of a statement of claim. Lastly, the Giselbrechts and 2134960 submit that paragraph 37 fails to name a cause of action. That is true, but the cause of action is clearly breach of contract, specifically Mr. Giselbrecht’s alleged contract of employment with Kichton Contracting and Kichton Sask. [ 41 ] The Giselbrechts and 2134960 Alberta submit that paragraphs 39, 40 and 41fail to specify a cause of action, the plaintiffs asserting it and the defendants it is asserted against. I disagree. The cause of action is secret profits, benefits and commissions.

The plaintiffs asserting it directly are Kichton Contracting and Kichton Sask. The other plaintiffs assert an indirect claim in paragraph 40, which I have addressed earlier in these reasons. The claim is asserted against Mr. Giselbrecht,2134960 Alberta, Rusty Bear and Master Paving. [ 42 ] The Giselbrechts and 2134960 Alberta also submit that the factual allegations in paragraphs 39, 40 and 41are scant. They are, but they are not mere bald assertions. [ 43 ] The Giselbrechts and 2134960 Alberta submit that paragraphs 42, 43 and 44 fail to name causes of action and fail to state material facts. I disagree.

The causes of action are breach of trust, knowing assistance, knowing receipt and unjust enrichment. Material

facts are set out in sub-paragraphs (

i) through (iv) in 42 (a), (

b) and (c). [44] The Giselbrechts and 2134960 Alberta submit that paragraphs 48 and 49 fail to identify a cause of action. I disagree. Thecause of action is spoliation. Whether such a cause of action exists in Alberta is a question for another day. [45] The Giselbrechts and 2134960 Alberta submit that portions of paragraphs 50 and 52 contain bare allegations without materialfacts, but they concede other parts of those paragraphs do contain allegations of material facts.

The Rules require that material facts beplead somewhere, not everywhere. [46] The Giselbrechts and 2134960 Alberta take issue with some of the items of relief set out in paragraph 70. Generally, theprayer for relief is outside the scope of the April 6, 2021 order and the requirement in the Rules to plead material facts. However, 70(f),(

g) and (

h) do violate the rule against bare allegations, because there are no other pleadings in the statement of claim supportingconspiracy and unlawful interference with economic interests. 5. Appropriate Remedy 5.1 pleadings, particulars, case conferences and case management [47] R. 1.2 reads: 1.2(1) The purpose of these rules is to provide a means by which claims can be fairly and justly resolved in or by a court process in atimely and cost effective way.

(2) In particular, these rules are intended to be used (

a) to identify the real issues in dispute, (

b) to facilitate the quickest means of resolving a claim at the least expense, (

c) to encourage the parties to resolve the claim themselves, by agreement, with or without assistance, as early in the process aspracticable, (

d) to oblige the parties to communicate honestly, openly and in a timely way, and (

e) to provide an effective, efficient and credible system of remedies and sanctions to enforce these rules and orders and judgments.

(3) To achieve the purpose and intention of these rules the parties must, jointly and individually during an action, (

a) identify or make an application to identify the real issues in dispute and facilitate the quickest means of resolving the claim at theleast expense, (

b) periodically evaluate dispute resolution process alternatives to a full trial, with or without assistance from the Court, (

c) refrain from filing applications or taking proceedings that do not further the purpose and intention of these rules, and (

d) when using publicly funded Court resources, use them effectively.

(4) The intention of these rules is that the Court, when exercising a discretion to grant a remedy or impose a sanction, will grant orimpose a remedy or sanction proportional to the reason for granting or imposing it. [48] At the beginning of the case conference on April 6, 2021, I read r. 1.2(1) and 1.2(3) out loud and stated that everyone shouldkeep those fundamental rules in mind as background to litigation. [49] The Court of Appeal in Elan Construction Ltd. v South Fish Creek Recreation Assn 2016 ABCA 215 wrote at para 23: Rules 13.6 and 1.2(2)(

a) of the Rules of Court, Alta Reg 124/2010 (Rules) should be read to facilitate fair and effective trial by ensuringthat pleadings "identify the real issues in dispute". [50] S.L. Martin, J., as she then was, described the purposes of particulars in Wesley First Nation v Alberta 2009 ABQB 418 atpara. 20: In Welco Expediting Ltd. v. Harris, (AB KB), [1995] A.J. No. 564 (Alta.

Q.B.) Moshansky J. held at para. 30 thatparticulars may be required for any one of number of reasons, including the need to inform the other side of the nature of the case to bemet; to prevent the other side from being taken by surprise at trial; to enable the other side to know what evidence they ought to beprepared with and to prepare for trial; to limit the generality of the pleadings and to limit and desire the issues to be tried and as to whichdiscovery is required. In Kwakiutl Nation v. Canada (Attorney General), [2004] B.C.J. No. 728 (B.C.

S.C.), Harvey J added to the list,including, "to tie the hands of the party so that he cannot without leave go into any matters not included." These lists are illuminating, butultimately the reasons listed fall into one of the two more general functions of particulars noted by Wachowich J.: to allow the other sideto frame a defence, and to narrow the issues for trial. [51] A case conference may consider “simplification or clarification of a claim, a pleading, a question, an issue an application or aproceeding”: R. 4.10(2)(b).

The April 6, 2021 procedural order was designed to have the plaintiffs clarify their statement of claim.

[ 52 ] As the case management judge, I may “order that steps be taken by the parties to identify, simplify or clarify the real issues in dispute” and “make an order to facilitate an application, proceeding, questioning or pre-trial proceeding”: R. 4.14(1)(

a) and (c). [ 53 ] In considering the appropriate remedy for the plaintiffs’ failure to comply with the April 6, 2021 order, my objective remains having the parties identify the real issues in dispute, so that they can proceed to document production and questioning. 5.2 litigation steps about the statement of claim [ 54 ] On November 12, 2020, the Giselbrechts and 2134960 Alberta served a request for particulars on the plaintiffs. On December 7, 2020, they filed and served an amended request for particulars, an affidavit of Mr. Giselbrecht, and an application seeking an order for particulars.

On January 15, 2021, the plaintiffs questioned Mr. Giselbrecht on his affidavit. [ 55 ] The questioning of Mr. Giselbrecht began at 10:05 am and ended at 3:45 pm with a 45-minute lunch break. The questioning should have been limited to content of Mr. Giselbrecht’s affidavit and the issues on the application for particulars: Stovius v Chem-Dry Canada Ltd 2007 ABQB 89 . It was not. Instead it was a wide-ranging discovery including many irrelevant questions, such as: • Ms. Giselbrecht’s maiden name and who her sister is; • Mr. Giselbrecht’s age, education and employment background; • Mr.

Giselbrecht’s work at Kichton Contracting, including specific projects and invoices; • the work done by Master Paving for Kichton Contracting and vice versa; • where the Giselbrechts reside and who owns their residence; • when Mr. Giselbrecht or 2134960 Alberta became shareholders in Kichton Contracting; • whether Mr. Giselbrecht signed a unanimous shareholders agreement; • Kichton Contracting shareholders meetings, whether Mr. Giselbrecht made a recording of one such meeting and whether Ms.

Giselbrecht sent that recording to Fred Kichton’s wife; • whether 1737913 Alberta Ltd. is Fred Kichton’s company and whether it is referred to as Fredco in the unanimous shareholders agreement; • whether Mr. Giselbrecht met with Fred Kichton’s wife; • whether Mr. Giselbrecht signed a document and who provided that document to him; • the daily time slips used by Kichton Contracting; • who developed the property where the Giselbrechts previously resided; • Mr. Giselbrecht’s current employer, when he started working there, whether he is employed directly or through a company he and Ms.

Giselbrecht control, whether he or Ms. Giselbrecht own shares in his current employer, the basis for his compensation from his current employer, whether he consulted to his current employer prior to February 20, 2020, who the president of his current employer is, whether Mr. Giselbrecht is an officer of his current employer, when and with whom Mr. Giselbrecht negotiated his current employment, who owns his current employer, and what his current employer’s business is; • whether certain people are employed at Mr. Giselbrecht’s new employer, including a friend of Mr.

Giselbrecht, previously worked at Kichton Contracting; • whether certain corporations were clients of Kichton Contracting; • whether two people attended a golf night in 2019; • whether a Kichton Contracting employee emailed Mr. Giselbrecht Kichton Contracting financial records in February 2020; • whether Mr.

Giselbrecht asked the plaintiff, Laurie Conrad, who is a shareholder and Chief Financial Officer of Kichton Contracting, to send him the bank ledger for the period September 15 – October 15, 2019, whether she did and whether he forwarded that to his personal email address; • what bank Kichton Contracting was dealing with in October 2019; • whether Mr. Giselbrecht told any Kichton Contracting employees between September 2019 and February 2020 that Kichton Contracting was going to fail, that he was going to leave, that they should too and that he would help them find new employment; • whether Mr.

Giselbrecht referred any Kichton Contracting employees to other companies for employment; • whether Kichton Contracting had cash flow issues and sold equipment to raise funds prior to February 20, 2020; • Kichton Contracting’s losses between October 2019 and February 2020; • whether Mr. Giselbrecht has a cabin, where it is, who owns it and whether his cousins own the neighbouring lot;

• whether a certain corporation is owned by Mr. Giselbrecht’s cousins, whether that corporation hauled clay to his cousins’ property in May 2019, and whether that corporation sent an invoice for that work to Kichton Contracting; • what access Mr. Giselbrecht had to other Kichton Contracting employees’ emails; • the names of the project managers employed by Kicthon Contracting in 2019 and up to February 2020; • whether Mr. Giselbrecht signed a bank credit facility in November 2019; • whether Mr.

Giselbrecht guaranteed that credit facility, whether he contacted the bank to terminate his guarantee, and what he told the bank about the financial viability of Kichton Contracting; • who did business development for Kichton Contracting and whether that contract was terminated prior to February 20, 2020; • the names of the project managers of a certain project from November 2015 through December 2018; • whether certain customers of Kichton Contracting were key customers; • whether a certain customer of Kichton Contracting was a quick payer; • whether Mr.

Giselbrecht had a dispute with one of Kichton Contracting’s customers while he was employed there; • whether Mr. Giselbrecht redeemed points with a credit card company in February 2020 which resulted in a payment to him of $52,000 and a reduction in Kichton Contracting’s credit limit with that company from $1 million to zero; • who Mr. Giselbrecht talked to about that point redemption and what he told them; • how Kichton Contracting handled the expenses charged to the credit cards and when the credit card company’s invoices were paid; • whether Mr.

Giselbrecht received monthly financial statements for Kichton Contracting; • whether Mr. Giselbrecht tried to access a Kichton Contracting office on October 14, 2020; • where certain people employed at Kichton Contracting when Mr. Giselbrecht was employed there, are now employed; • whether Mr. Giselbrecht told an employee of John Deere on February 4, 2020, that he would be leaving Kichton Contracting because it was having financial difficulties and would be out of business. [ 56 ] Many of those questions were objected to and not answered. The plaintiffs advised at the end of Mr.

Giselbrechts questioning that they were adjourning and would require multiple additional days to conclude. Mr. Giselbrecht gave seven undertakings, all under advisement. [ 57 ] The issue on the particulars application would be “whether the allegations in the statement of claim are sufficiently detailed to allow the defendant to frame a proper defence”: Newland Construction Limited v Brookes 2018 ABQB 655 at para. 6 . None of the subjects on which the plaintiffs questioned Mr. Giselbrecht is relevant and material to that. [ 58 ] I have searched the transcript of Mr.

Giselbrecht’s questioning, in vain, for a single question the answer to which could be material to the particulars application. At one point, following an objection to a question, the plaintiff’s counsel states: I’m just going to keep laying the framework of my theory of this case, sir, and you can object all you want. (p. 46, ll. 4 – 6) [ 59 ] This statement is misplaced in the context of a questioning on affidavit in support of an application for particulars. It does nothing to make a connection between the questions asked and either Mr.

Giselbrecht’s affidavit or the issues on the particulars application. [ 60 ] The questioning of Mr. Giselbrecht on January 15, 2021 was a waste of time and money which was prolonged and made acrimonious by the conduct of the plaintiffs’ counsel, Mr. Cotter. For example, at page 40 of the transcript: MR. JAMES: Sorry, could you restate that? I didn't catch that. MR. COTTER: Susan, repeat it, please. COURT REPORTER: (By Reading) "Q Do you know Quinton Buyar?" MR. JAMES: Thank you. Do you? A Yes. MR. COTTER: Gentlemen, I object to the fact that you are asking each other comments. That is not appropriate, sir. MR.

JAMES: I'm sorry? I have no idea --

MR. COTTER: I don't know if you are sorry. MR. JAMES: Again, Mr. Cotter, I'm not going to take the bait. You said something. I would like you to clarify that. I think you said that something inappropriate is happening. You can clarify it. MR. COTTER: It is clear that someone, either you or Mr. Witt, asked Mr. Giselbrecht "do you", and I think that that is an inappropriate comment to be made, and I have placed my objection on the record. Either he does or he doesn't. Either it is or it isn't an appropriate question. MR. JAMES: Very good. Carry on. MR. COTTER: I didn't hear the answer to the question.

A Yes. [ 61 ] When Mr. James asked “Do you?” he was simply encouraging Mr. Giselbrecht to answer the question that had just been read back. That is not coaching and Mr. Cotter’s objection was ill-founded. Mr. Cotter’s insult in suggesting that Mr. James was disingenuous in saying he was sorry was gratuitous and served to turn up the heat in the questioning and drag it out. [ 62 ] During the questioning, the plaintiffs’ counsel advised that the plaintiffs would be bringing several applications. On January 19, 2021 the plaintiffs filed an application to strike portions of Mr. Giselbrecht’s affidavit.

On March 3, 2021 they filed two applications, one to compel answers to questions and undertakings refused and the other to have the first action and the second action heard together. 5.3 April 6 case conference [ 63 ] During the April 6, 2021 case conference, I asked the plaintiffs’ counsel how his clients are served by the extensive litigation over the adequacy of the statement of claim, including applications to strike portions of Mr. Giselbrecht’s affidavit and compel him to answer questions and undertakings.

In response, the plaintiffs’ counsel said that it is important to the plaintiffs to have the Court determine the validity of objections to questions based on documents not being provided in advance. I do not see how an answer to that procedural legal question would help the plaintiffs, who presumably want to move their action to either settlement or trial. [ 64 ] I then read the following passage from the Alberta Civil Procedure Handbook 2020 , WA Stevenson and JE Cote (Edmonton, Alta: Juriliber, 2020) at p 3-107: It is rarely worth resisting an opponent’s request for further and better particulars.

Normally any expense and inconvenience of giving further particulars is much less than the expense and delay of resisting them and fighting a chambers application. Usually your opponent will be content with the particulars which you supply, so long as they really do attempt to answer the questions which he or she has asked. Resisting particulars makes you look untrustworthy or unreasonable, so an application for particulars is likely to succeed unless it is unreasonable at first blush. It is certainly likely to succeed if R. 13.6 or 13.7 has been violated.

If your client cannot give the particulars, that is often a sign that you do not know whether you have grounds for suit (or defence), and are just bluffing or gambling. [ 65 ] After reading that passage I stated that I was concerned that the parties were spending a lot of time and money on the adequacy of the statement of claim.

I continue to have that concern. [ 66 ] In addition to my order with respect to the plaintiffs’ pleadings, I also included in my April 6, 2021 procedural order a direction that the defendants in the second action have 30 days from receipt of the particulars or fourth amended statement of claim to file amended statements of defence and that all parties to the second action provide sworn affidavits of records to the other parties within 30 days of the last served amended statement of defence.

Lastly, I ordered that the parties complete the initial round of questioning by September 30, 2021 and provide each other with lists of general areas of questions and documents to be questioned on at least ten days in advance of questioning. I understand from the plaintiffs’ submissions on this application that questioning has been scheduled for September 7 – 10, 2021. 5.4 abuse of process [ 67 ] The Giselbrechts and 2134960 Alberta submit that the plaintiffs’ failure to comply with the April 6, 2021 procedural order is an abuse of process.

The context is protracted litigation over the statement of claim, including a pointless and antagonistic questioning on affidavit, which had the effect of driving up the costs of this litigation for all parties, with a threat to continue that questioning for multiple additional days. The context also includes the plaintiffs’ application to join the first and second action for trial.

In that context, the blatant and obvious failure of the plaintiffs to comply with my clear directions for a fourth amended statement of claim satisfies me that the plaintiffs are abusing the Court’s processes to drive up costs and frustrate the defendants’ efforts to understand and defend the plaintiffs’ claim, as well as Mr. Giselbrecht’s efforts to prosecute the first action. 5.5 the applicants’ conduct [ 68 ] The plaintiffs submit that the Giselbrechts and 2134960 Alberta are guilty of misconduct which should deprive them of any relief on this application.

Specifically, the plaintiffs point to: • Changing their position regarding whether they needed the plaintiffs’ affidavits of records before providing their own. • Asserting that the case is complex when seeking case management but then asserting that the first and third actions are simple cases.

• Failing to provide the court with the exhibits from the plaintiffs’ cross-examination of Mr. Giselbrecht and a subsequent email from counsel correcting some of the testimony. • Mr. Giselbrecht’s refusal to answer some of the questions put to him on cross-examination. • Mr. Giselbrecht correcting some of his testimony during and following the cross-examination. • Mr. Giselbrecht’s inability to recall some things during the cross-examination. [ 69 ] None of those criticisms is well-founded.

Specifically: • Changing own’s mind on a point is not misconduct. • It is not inconsistent to assert that the case as a whole is complex, while also asserting that two of the actions are simple actions. • In the context of the present application, which is about compliance with the April 6, 2020 procedural order, there is no obligation to submit exhibits from a cross-examination on an affidavit in support of an earlier application for particulars, unless one intends to refer to them. Furthermore, most of the exhibits were for identification, so they are scant, if any, evidence. • The correction to Mr.

Giselbrecht’s testimony provided in the email was minor and not material to this application. • As set out earlier in these reasons none of the questions put to Mr.

Giselbrecht was material to the particulars application, so his refusal to answer questions was not misconduct. • Correcting one’s testimony during or after a questioning and failing to remember things are not misconduct. 5.6 striking pleadings versus other potential remedies [ 70 ] The Giselbrechts and 2134960 Alberta submit that as a remedy for the plaintiffs’ failure to comply with the April 6, 2021 procedural order, I should strike certain paragraphs from the fourth amended statement of claim.

The plaintiffs confine their submissions to whether they complied with the procedural order and make no submissions regarding the appropriate remedy if they did not. [ 71 ] The Giselbrechts and 2134960 Alberta rely on r. 3.68: 3.68(1) If the circumstances warrant and a condition under subrule (2) applies, the Court may order one or more of the following: (

a) that all or any part of a claim or defence be struck out; (

b) that a commencement document or pleading be amended or set aside; (

c) that judgment or an order be entered; (

d) that an action, an application or a proceeding be stayed.

(2) The conditions for the order are one or more of the following: (

a) the Court has no jurisdiction; (

b) a commencement document or pleading discloses no reasonable claim or defence to a claim; (

c) a commencement document or pleading is frivolous, irrelevant or improper; (

d) a commencement document or pleading constitutes an abuse of process; (

e) an irregularity in a commencement document or pleading is so prejudicial to the claim that it is sufficient to defeat the claim. [ 72 ] I have found that the fourth amended statement of claim constitutes an abuse of process, so I may take any of the steps set out in r. 3.68(1). I also have broad powers as the case management judge: r. 4.14. [ 73 ] I could order the plaintiffs to file a fifth amended statement of claim complying with the April 6, 2021 order, but I already did that and it that could further delay matters.

I could older a stay of the second action, but that would leave the defendants with a $5 million claim against them in suspended animation. [ 74 ] I find that the most appropriate remedy is to strike the offending portions of the fourth amended statement of claim. The plaintiffs will retain the ability to amend their pleading with the defendants’ consent and to apply to amend: r. 3.62 and 3.65. 5.

Disposition [ 75 ] The following paragraphs and sub-paragraphs are struck from the fourth amended statement of claim: 35, 36, 38, 39(c)(iv), 39(d), 40, 43, 44, 45, 46, 47, 50(f), 51, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 70(f), 70(g), 70(h) [ 76 ] Counsel for the Giselbrechts and 2134960 Alberta should draft an order attaching a copy of the fourth amended statement of

claim showing the strike-outs. If the plaintiffs’ counsel approves it, the clerk may sign it. [ 77 ] If the parties are not able to agree on costs, they may seek a date to speak to costs at the next case management meeting, which is presently scheduled for August 19, 2021. Heard by written submissions received on the 12 th day of July and the 3 rd day of August, 2021. Dated at the City of Edmonton, Alberta this 13 th day of August, 2021. G. S. Dunlop J.C.Q.B.A. Appearances: Richard J. Cotter, QC and Kurtis Letwin for the Plaintiffs Robert P.

James and Alexander Witt Parlee for the Defendants Russell Giselbrecht, Amy Giselbrecht and 2134960 Alberta Ltd. Brian E. Wallace Duncan Craig for the Defendant Master Paving Alberta Ltd. _______________________________________________________ Corrigendum of the Endorsement of The Honourable Mr. Justice Dunlop _______________________________________________________

In paragraph 19 the word allegedly was inserted as follows: “It allegedly owns Kichton Sask.”