Biocomposites Group Inc v, 2021 ABQB 820

Court of Queen’s Bench of Alberta Citation: Biocomposites Group Inc v 0975138 BC Ltd (DH Manufacturing), 2021 ABQB 820 Date: 20211013 Docket: 1703 02005 Registry: Edmonton Between: Biocomposites Group Inc. Respondent - and - 0975138 BC Ltd. operating as DH Manufacturing Applicant - and - Daniel Madlung Third Party Respondent _______________________________________________________ Endorsement of the Honourable Mr. Justice J.S. Little _______________________________________________________

I. Introduction [ 1 ] By desk application, DH Manufacturing Inc. (DH) seeks leave to file a counterclaim, after the close of pleadings, in an action commenced in 2017. [ 2 ] Biocomposites Group Inc. (BCG) filed a statement of claim in 2017 alleging default by DH under a sublease agreement. [ 3 ] When it filed its defence in 2017, DH third partied a Mr. Madlung, who until the action was filed was a shareholder and/or director in both plaintiff BCG and defendant DH. In this application, DH submits that the third party claim in 2017 dealt with Mr.

Madlung’s conduct at the time the lawsuit started and that the proposed counterclaim deals with his conduct after the litigation started. [ 4 ] BCG and Mr. Madlung resist the application on several grounds including that the counterclaim relates to new claims not related to the original pleading and that therefore the limitation period has long expired for a claim against it and Mr. Madlung: DH in its application states that the last offensive conduct of which it is aware was in September, 2018. [ 5 ] While DH’s application refers mostly to the conduct of Mr.

Madlung, there are allegations against both him and BCG, particulars of which include: Power Shut-Off: Madlung shut off power to the premises in June, 2017 Physical Interference: Madlung and BCG interfered with DH’s ability to heat the premises in September, 2017. Water Shut-Off: Madlung and BCG shut off water to the premises in October, 2017. Interference by Interim Order: An interim injunction preventing DH from occupying certain parts of the premises made them less fit for its purposes.

Other: Madlung shut off an air compressor in January, 2017, held himself out as a representative of DH to charge the rental of a floor cleaner in March, 2017, trespassed on the premises in July, 2017, and generally interfered with DH’s business operations up to September, 2018. II. Test [ 6 ] The bar for leave to amend as confirmed in Attila Dogan , 2014 ABCA 74 at para 25 is low: Assuming some modest amount of evidence is provided in support, any pleading may be amended, no matter how careless or late the party seeking the amendment, subject to four major exceptions:

a) The amendment would cause serious prejudice to the opposing party, not compensable in 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; or

d) There is an element of bad faith associated with the failure to plead the amendment in the first instance. Foda at para. 10; Dow Chemical Canada Inc. v Nova Chemicals Corp. , 2010 ABQB 524 at paras. 20-21 , 35 Alta LR (5th) 51, 495 AR 338. III. Analysis [ 7 ] Here, there is no serious prejudice to Madlung or BCG, both of whom are already parties to the lawsuit, that cannot be

compensated with costs. [ 8 ] There is no real assertion of bad faith. [ 9 ] The issues engaged are whether the amendment is hopeless and whether it is barred by the expiry of a limitation period. [ 10 ] As to the first issue, the substance of the original lawsuit is a dispute over leased premises. The proposed counterclaim, with an exception discussed below, is that in the course of that dispute, the landlord, BCG, and one of its principals, Madlung, engaged in conduct that caused DH to suffer damages. It is not my function here to weigh the evidence of that conduct.

If it were, the outcome might well be different since the evidence is scant. But there is some evidence that the conduct of BCG and/or Madlung during the term of the lease or after its termination caused DH to suffer damages, so the counterclaim itself is not hopeless. [ 11 ] One component of it, though, is hopeless. DH in paragraphs 19 through 23 of its draft counterclaim claims that it suffered damages as a result of an Interim Order granted by this court and which DH claims was improperly obtained.

Seeking recourse against parties as a result of a court order is a hopeless claim. [ 12 ] As to the second issue, again with some minor exceptions, the allegations in the counterclaim relate to the substance of the original lawsuit respecting the leased premises and therefore are not barred by what would otherwise be the expiry of a two year limitation period. [ 13 ] The exceptions are: [ 14 ] Paragraph 25 in which DH alleges that Madlung held himself out as a representative of DH to rent a floor cleaner at a rental shop.

That is not a contractual claim tied to the dispute over the leased premises. [ 15 ] Paragraphs 30 and 31 in which DH alleges that Madlung stole a security camera and called DH employees derogatory Soprano-like names. That is not a contractual claim tied to the dispute over the leased premises. [ 16 ] Paragraph 35 in which DH alleges that Madlung stole dunnage and used it to support bales of fibre material strategically placed to obstruct DH’s vehicles from the building.

The theft allegation, if a tort, cannot survive the limitation period, though the claim of obstruction is related to the dispute over the leased premises. IV. Conclusion [ 17 ] Within 30 days of delivery of these reasons, DH is entitled to file and serve its counterclaim in the form attached to its application with the deletion of paragraphs 19 through 23, 25, and 30 through 31. Paragraph 25 is to be amended to delete the reference to theft. V. Costs [ 18 ] Counsel for BCG and Madlung request leave to speak to costs if all or part of the counterclaim is allowed.

He argues that a number of steps in the litigation will need to be repeated, and that these costs should be borne by the party seeking leave. Rather than attempt to predict which steps may need to be repeated, I will grant BCG and Madlung costs of $2700 each for filing a defence or defences to the counterclaim (based on Column 3: DH seeks damages of $653,000).

Those costs are to be paid concurrently with service upon them of the counterclaim. [ 19 ] If DH does not file and serve its counterclaim as per IV above, BCG shall be entitled also to costs of $1685 for the preparation of its brief for this application. [ 20 ] The costs associated with other steps required to be repeated are more appropriately dealt with by the trial judge. Received on the 8 th day of October, 2021. Dated at the City of Edmonton, Alberta this 13 th day of October, 2021. J.S. Little J.C.Q.B.A.

Appearances: Mathieu LaFleche Bennett Jones LLP for the Respondent and Third Party Respondent Coady MacEachern Giddings MacEachern Law for the Applicant