Date: 20230113 Docket: 1403-15558, 2023 ABKB 25

Court of King’s Bench of Alberta Citation: PR Construction Ltd v Colony Management Inc, 2023 ABKB 025 Between: Date: 20230113 Docket: 1403-15558 Registry: Edmonton Colony Management Inc. Defendant (Plaintiff by Counterclaim) - and - Kevin Lacroix, 0989842 BC Ltd., PR Construction Ltd., and Paul Ronald Plaintiffs (Defendants by Counterclaim) _______________________________________________________ Ruling on a Non-Suit Application of the Honourable Justice Tamara L. Friesen _______________________________________________________ I.

Introduction and Background [1] In 2012 PR Construction Ltd. ( “PR Construction”) subcontracted to Colony Management Ltd. ( “Colony”) to perform steel erection and related work on the Syncrude Canada Ltd ( “Syncrude”) Mine Replacement Project at Mildred Lake, Alberta.

At the time, Colony was itself subject to a subcontract to Kiewit Management Co. ( “Kiewit”) which was in turn, subcontracted to Fluor Canada Ltd. ( “Fluor”), the Project Manager of the Mine Replacement Project. [2] During the relevant time periods, Kevin Lacroix, a professional engineer, was acting as Colony’s project manager and reporting to David Thompson, the Owner and Director of Colony. Paul Ronald, the owner and director of PR, worked primarily with Lacroix.

Page: 2 [3] PR’s contract with Colony was terminated on March 17, 2014 following a suspension of work by PR Construction which occurred in March of the same year. A few months prior to termination, in January of 2014, Lacroix quit his job with Colony to work for PR Construction and Ronald. [4] On October 24, 2014, PR Construction sued Colony in contract for failure to pay certain amounts owing for work done up to the date of suspension. Colony defended and on December 22, 2014, filed a countersuit against PR Construction, Ronald, Lacroix and 0989842 BC Ltd.

The counterclaim sought damages for costs incurred to complete the work remaining in PR’s scope at the time of termination, and for additional damages related to allegations that Lacroix performed various unauthorized acts favouring PR Construction, to Colony’s detriment including, but not limited to: fraud, bribery, and conspiracy. [5] PR Construction, Lacroix and 089842 BC Ltd. defended; and further, the Lacroix parties applied under r 3.68 of the Alberta Rules of Court, Alta Reg 124/2010 to strike portions of the counterclaim as abusive, vexatious, and without basis in fact.

In reasons released May 26, 2016, Justice Sulyma ordered four paragraphs of the counterclaim to be struck out but dismissed the bulk of the application: PR Construction Ltd v Colony Management Inc, 2017 ABQB 600 at para 57 (PR Construction #1) . [6] The trial proper proceeded before me from November 15 to December 10, 2021. The Plaintiffs (Defendants by Counterclaim) PR Construction Ltd. and Paul Ronald (collectively the “PR Defendants”) called their evidence first. The Defendant (Plaintiff by Counterclaim) Colony called its evidence second.

Unfortunately, the trial did not conclude in the allotted time, and the second set of Defendants by Counterclaim, Kevin Lacroix and 0989842 BC Ltd. (collectively the “Lacroix Defendants”) were unable to call evidence. [7] Continuation dates were initially obtained for February of 2023; however, the Court is no longer able to accommodate those dates and new dates will need to be set. [8] The PR Defendants subsequently brought an application for a non-suit under r 8.20 of the Alberta Rules of Court, Alta Reg 124/2010 with respect to Colony’s counterclaim.

The Lacroix Defendants brought a largely similar application for a non-suit also under r 8.20. [9] For the following reasons, the non-suit applications are denied. II. Preliminary Issues [10] The parties raise two preliminary issues that must be dealt with before deciding the non- suit application. First, Colony asks to amend its pleadings under r 3.65 of the Alberta Rules of Court . Second, the PR Defendants allege that Colony has not adequately pleaded its claim in fraud, while the Lacroix Defendants argue that Colony has not adequately pleaded its claim in conspiracy. 1 .

Amendments to Pleadings [11] Colony asks to amend its pleadings under r 3.65 of the Alberta Rules of Court . Specifically, Colony asks to amend its Counterclaim to remove the following claims that it is not pursuing past this point: 1. Copyright infringement; 2. Improper solicitation of Colony’s employees; Page: 3 3. Theft of materials; 4. Unfair competition; 5. Unjust enrichment, as against Lacroix and 0989842 BC Ltd.; 6. Constructive trust; and 7. Intentional interference with economic relations. [12] Colony also asks to correct a typographical error in its Amended Statement of Defence, filed March 13, 2015.

Specifically, at paragraph 54(b), there is a reference to “Colony” that should be a reference to “PR Construction”. [13] Rule 3.65 gives the Court wide latitude to allow a party to amend its pleadings. That rule provides:

3.65(1) Subject to subrule (5), before or after close of pleadings, the Court may give permission to amend a pleading.

(2) If the Court gives permission for a pleading to be amended, the Court must specify the time period within which the amended pleading must be filed and served.

(3) An order giving permission to amend a pleading under this rule ceases to have effect unless the amended pleading is filed and served within the time specified by the Court.

(4) If the Court directs or allows a pleading to be amended at trial, (

a) the amendment must be recorded in writing by the court clerk, and (

b) no order need be filed.

(5) This rule does not apply to an amendment to a pleading to add, remove, substitute or correct the name of a party to which rule 3.74 applies. [14] The presumption is that the Court will grant an amendment sought under this rule: Kosteckyj v Paramount Resources Ltd, 2022 ABCA 230 at para 41 ; Pace v Economical Mutual Insurance Co, 2021 ABCA 1 at paras 49-54 ; AARC Society v Canadian Broadcasting Corp, 2019 ABCA 125 at para 8-11 . Traditionally, there are four exceptions to the presumption in favour of amendment: 1. The amendment would cause serious prejudice to the opposing party, not compensable in costs; 2.

The amendment requested is "hopeless" (an amendment that, if were in the original pleadings, would have been struck); 3. Unless permitted by statute, the amendment seeks to add a new party or a new cause of action after the expiry of a limitation period; and 4.

There is an element of bad faith associated with the failure to plead the amendment in the first instance. (Eon Energy Ltd v Ferrybank Resources Ltd, 2018 ABCA 243 at para 18 ; D-Line Holdings Ltd v Ahlstrom, 2016 ABCA 351 at para 10 ; Attila Dogan Construction and Installation Co v AMEC Americas Ltd, 2014 ABCA 74 at para 25 ; Castledowns Law Office Management Ltd v FastTrack Technologies Inc, 2012 ABCA 219 at paras 16-17 ).

Page: 4 [15] The Defendants by Counterclaim do not oppose the typographical correction to the Amended Statement of Defence and, as such, it should be allowed (when referred to collectively, the PR and Lacroix Defendants will be referred to as “the CC Defendants”).

They do, however, oppose the proposed amendment to the Counterclaim, arguing that it is too late to withdraw the claims and that Colony should bear the cost consequences of pursuing the claims to this point. [16] The CC Defendants’ arguments do not identify any of the recognized exceptions to the presumption that requested amendments to pleadings should be allowed. They have not identified any harm to a legitimate litigation interest that cannot be compensated by costs; rather, they agree that costs may be an appropriate way remedy to such an amendment.

Finally, the CC Defendants have not asserted any bad faith on Colony’s part. [17] Therefore, subject to the following comments, Colony’s application to amend its Statement of Claim to remove the identified claims is granted. [18] In my view, the amendments sought in this case effectively amount to a discontinuance of substantive aspects of Colony’s claim against the other parties. As such, the more appropriate rule to apply under would have been r 4.36 of the Alberta Rules of Court .

That rule provides, in part: 4.36(1) Before a date is set for trial, a plaintiff may discontinue all or any part of an action against one or more defendants.

(2) After a trial date has been set but before a trial starts, a plaintiff may discontinue all or part of an action against one or more defendants only (

a) with the written agreement of every party, or (

b) with the Court’s permission.

(3) After the trial starts, a plaintiff may discontinue all or part of an action only with the Court’s permission. . . . [19] Pursuant to r 4.36(4), a defendant is entitled to a costs award against the plaintiff for having defended against a discontinued claim, after the plaintiff has met the filing and service requirements under the rule. [20] Colony cannot shield itself from the potential costs consequences that could flow from a midtrial abandonment of substantive aspects of its original claim simply by choosing to proceed under r 3.65 rather than r 4.36.

The effect is the same: Colony is allowed to remove the enumerated claims from its Statement of Claim, and the CC Defendants are accordingly entitled to assert a claim for costs for defending against those claims up to the date of release of these reasons. [21] This is not to say that costs will issue. The ultimate determination of entitlement to costs for any of these parties will of course, need to be determined later, and will depend on the outcome of the trial proper. Page: 5 2 .

Insufficient Pleadings by Colony [22] The CC Defendants argue that Colony has not provided sufficient particulars of fraud or sufficiently pleaded its claim of breach of confidence. In addition, the CC Defendants allege that Colony has not sufficiently pleaded its claim in conspiracy because Colony has not pleaded any agreement between the CC Defendants or any acts taken pursuant to an agreement. The Lacroix Defendants argue that Colony has not pleaded its claim for breach of Lacroix’s employment contract.

The PR Defendants argue that Colony has not pleaded its claim for inducing breach of contract or for unjust enrichment. [23] The CC Defendants frame their arguments as part of their non-suit application. However, a non-suit is not the appropriate remedy for dealing with insufficient pleadings. By presenting their arguments in this way, the parties are effectively asking the Court to strike the pleadings for not disclosing a cause of action, which is an application which should have been brought under 3.68, before trial.

[24] Indeed, the Lacroix Defendants understand this very well having previously attempted to have certain causes of action struck pursuant to r 3.68 with mixed success: PR Construction #1. The CC Defendants now make remarkably similar arguments with respect to insufficiency of pleadings, albeit in the context of a non-suit application under r 8.20. [25] However, the test for sufficiency of pleadings does not change with the hearing of evidence. As set out earlier in this judgement, in general, a poorly drafted pleading should be amended rather than struck.

Likewise, if a pleading is deficient because it lacks particulars, the remedy is to order particulars rather than strike the claim.

Ameliorative steps such as adjournment for additional preparation time, or costs may follow. [26] With that in mind, I will deal with the issue of sufficiency of pleadings raised by the CC Defendants prior to dealing with their non- suit applications. [27] The legal tests for establishing the various causes of action are relevant to the question of sufficiency of pleadings but will be described in the subsequent sections in relation to the specific related nonsuit applications to avoid repetition. a.

Fraud [28] Under rules 13.6 and 13.7 of the Alberta Rules of Court , a pleading must give particulars of an allegation of fraud.

The purpose of these rules is to prevent a party from being taken by surprise and to allow a full response to the allegations: Luan v ADP Canada Co, 2020 ABQB 387 at paras 217-18 [Luan] ; Toronto Dominion Bank v Whitford, 2020 ABQB 802 at para 68 ; Kent v MacDonald, 2019 ABQB 669 at paras 123-24 , rev’d on other grounds 2021 ABCA 196 . [29] If fraud has not been pleaded with sufficient particulars, the remedy is to order particulars rather than striking the claim: Huff v Zuk, 2019 ABQB 691 , aff’d 2021 ABCA 60 at para 115 ; Luan at para 219 ; 1664992 Alberta Ltd v 1260055 Alberta Ltd, 2018 ABQB 367 at para 20 ; Stangar Holdings Ltd v Barrow, 2009 ABQB 182 ; see also Song (Guardian ad litem of) v Alberta, 2021 ABCA 361 at para 39 .

The overall goal is that by the time the claim gets to trial, the specific allegations are pleaded with sufficient particularity to allow a defence: Huff v Zuk at paras 118-19.

Page: 6 [30] Therefore, the question is really whether the CC Defendants knew the “real issues in dispute” prior to trial and could fully respond to those issues in the calling of their evidence, thus resulting in a fair and just resolution of the claim: see r. 1.2 of the Rules. [31] The CC Defendants argue that Colony has not provided sufficient particulars on: • Whether the CC Defendants knew or ought to have known the alleged misrepresentations were false; • Whether the CC Defendants intended that Colony rely on the alleged misrepresentations; • Whether Colony did rely on the alleged misrepresentations; and • Whether Colony suffered damages as a result. [32] The CC Defendants also argue that the allegations of a meeting in early December 2012 where Kiewit raised the idea of potentially starting Colony’s work one month early, the allegation that Lacroix concealed Change Order 15 and told David Thompson that Kiewit approved his methodology were not pleaded. [33] Colony sets out its allegations of fraudulent activities in paragraph 26 of the Counterclaim.

The specific allegations against all the CC Defendants, but primarily aimed at Mr.

Lacroix include: • • • Unauthorized amendments to the start date for the commencement of work by PR Construction (26(a)(vi)) ; Creation and submission of false Change Orders in relation to the PR Contract (26(h)) ; Wrongful approval and processing of Change Orders submitted by PR Construction in relation to the PR Contract. [34] Paragraph 26 concludes “... and such further and other fraudulent activities as may be proven at the trial of this action.” At paragraph 53 of the Counterclaim, Colony alleges that the CC Defendants carried out the alleged fraudulent activities to cause Colony to make overpayments to PR.

These overpayments are described in paragraph 52 as higher payments than were contemplated or permitted by the PR Contract and approved by Kiewit. [35] In their response to the non-suit application, Colony submits that evidence heard at trial supporting the fraud claim included: a meeting in early December 2012 where Kiewit raised the idea of potentially starting Colony’s work one month early, that Lacroix concealed Change Order 15, and that Lacroix told David Thompson that Kiewit approved his methodology. [36] In my view this all fits within the broad reference to “further and other fraudulent activities.” While it is not evidence specified in paragraph 26, it is also not evidence that is new or surprising; rather, the CC Defendants were simply unaware Colony would be relying on that evidence to prove its case in fraud.

In other words: the CC Defendants have not been surprised by the evidence; rather, they have been surprised by the argument. [37] The remedy for this, if one is needed, is to allow Colony to amend that paragraph to include the specified items of evidence, and/or grant an adjournment to give the CC Defendants sufficient time to respond to the new argument or strategy, in the interests of trial fairness. Costs may follow. Page: 7 [38] The trial was adjourned over a year ago. The parties have had plenty of time to readjust to the case to meet.

As a result of the Court’s need to adjourn the February dates, they will now have additional time to prepare. If they wish to make an application to reopen their case because they were taken by surprise by the response to the nonsuit, then they could do so. Indeed, at the beginning of the trial, we left open the possibility for PR Construction calling additional evidence after the close of Colony’s case.

Conspiracy [39] The CC Defendants have made a similar argument with respect to Colony’s pleadings with respect to its claim in conspiracy. They argue Colony has not pleaded an agreement between the CC Defendants or any acts taken pursuant to such an agreement. [40] Colony sets out its claim in conspiracy throughout the Counterclaim. In paragraph 22, Colony alleges that Lacroix, Ronald, and PR were part of an improper relationship.

In paragraph 23, Colony sets out the details of the asserted improper relationship, which consist of a series of promises between Lacroix, Ronald, and PR to advance each others’ interests. In paragraph 26, Colony sets out a series of fraudulent activities that it alleges Lacroix, acting in concert with Ronald and PR, engaged in while involved in the improper relationship.

In paragraph 51, Colony alleges that all the other allegations detailed in the Counterclaim were carried out pursuant to the conspiracy. [41] Admittedly, the Colony’s allegations do not provide many details about the alleged improper relationship. However, in Exchange- A-Blade Ltd v Ber-Zel Building Materials Ltd, 2017 ABQB 648 , Master Robertson explained that it is inherent in the nature of conspiracy that the plaintiff does not know all of the specifics of the alleged conspiracy: at para 15; see also Newland Construction Ltd v Brookes, 2018 ABQB 655 at para 7 .

I agree. [42] I find Colony’s pleadings provide sufficient detail to support its claim of conspiracy. [43] Colony alleges in its pleadings that “[a]t the time of entering into the PR Contract, Lacroix, Ronald, and PR Construction were part of an improper relationship that was actively concealed from Colony.” The CC Defendants argue that the pleadings are insufficient because Thompson admitted at trial that he approved the terms of the PR Contract.

They argue Colony has not asserted, in its pleadings, a conspiracy that started after the signing of the contract, which is the conspiracy they are arguing now. [44] Again, this is not really an argument about particularization: the CC Defendants do not think Colony should be allowed to argue a conspiracy that started after the signing of the contract, because its not fair to allow them to do so this late in the litigation process, particularly given that Colony has already been given the opportunity to provide further particulars. [45] I do not think the pleadings should be interpreted that strictly.

In any case, in its filed particulars, Colony claims that “at all material times Lacroix promoted PR’s interests at Colony’s expense with an expectation of financial gain, which promises were made to Lacroix by PR and Ronald.” Furthermore, there has been no assertion by the PR Construction Defendants that the evidence Colony seeks to rely on to prove conspiracy somehow took them by surprise. [46] Again, this is an issue that could be dealt with in the usual way through amendment, the calling of further evidence, and costs.

Page: 8 Breach of Confidence [47] The CC Defendants argue that Colony has not pleaded sufficient facts to ground its claim for breach of confidence. [48] I note that the Lacroix Defendants already raised this argument unsuccessfully in front of Sulyma J in PR Construction #1 at paras 34-37. I see no reason to depart from that previous holding, especially given the facts pleaded in paragraphs 37 and 38 of the Counterclaim.

Paragraph 37 alleges that Lacroix wrongfully appropriated and disclosed Colony’s confidential information, and paragraph 38 specifies that this included legal advice provided to Colony in relation to the contractual issues between the parties. Breach of Employment Contract [49] The Lacroix Defendants argue that Colony has not pleaded its alleged breaches of Lacroix’s employment contract, as they relate to Change Order 15 and the winter work methodology. [50] In paragraph 45 of the Counterclaim, Colony alleges that Lacroix breached his employment agreement by participating in the alleged fraudulent activities.

In paragraph 26, Colony sets out the alleged fraudulent activities, including that Lacroix worked with PR to prepare Change Orders to be submitted on behalf of PR; created and submitted false Change Orders purportedly in relation to the PR contract; and wrongfully approved and processed Change Orders. [51] On a generous reading, I am satisfied that Colony properly pleaded its claim that Lacroix improperly approved Change Order 15. Inducing Breach of Contract [52] The PR Defendants argue that Colony has not sufficiently pleaded its claim for inducing breach of contract.

Colony sets out its claim for inducing a breach of Lacroix’s employment contract in paragraphs 47-48 of the Counterclaim. [53] While this is a bare pleading of the elements of inducing a breach of contract, I am satisfied that, when read in the context of the remainder of the Counterclaim, there are sufficient facts pleaded to ground a claim for inducing breach of contract. Unjust Enrichment [54] The PR Defendants argue that Colony has not sufficiently pleaded its claim for unjust enrichment.

Colony sets out its allegation of unjust enrichment in paragraph 56 of the Counterclaim. [55] While this is a bare pleading of the elements of unjust enrichment, I am satisfied that, when read in the context of the remainder of the Counterclaim, there are sufficient facts pleaded to ground a claim for unjust enrichment. b. Conclusion [56] The trial process is fluid and unpredictable. Witnesses may make unexpected admissions on the stand. Essential pieces of evidence may not come out as clearly as anticipated.

To ensure that claims are fairly and justly resolved, plaintiffs must be entitled to pursue their claims even Page: 9 when things do not go entirely as planned, or as pleaded. This is one of the reasons pleadings are generously interpreted, and why generally speaking, amendments to pleadings are easily obtained, even when sought late in the litigation process.

[57] At the same time, it is crucial that parties understand the case to meet: “at the end of the day, a defendant must be left in no doubtabout precisely what is claimed.”: Lax Kw'alaams Indian Band v. Canada, 2011 SCC 56 at para 45. The pleadings in this case appear tobe imprecise where they perhaps should have been more precise: for instance, the broad referent to an “improper relationship”.

Theparticularization provided in October of 2015 improves on the pleadings, but the Defendants’ criticisms of those pleading are notunjustified. [58] However, the answer is not to strike those pleadings when an amendment would solve the problem. While I have indicated myreason for not requiring amendments to the pleadings, if Colony wishes to apply to amend, they may do so in writing. Thereafter, the PRConstruction Defendants may apply to call any additional evidence that was not called due to their

interpretation or understanding of thepleadings. Costs may follow. III. Non-suit application [59] Under r 8.20 of the Rules, at the close of the plaintiff’s case, a defendant can request that the Court dismissthe action on the grounds that no case has been made out. A defendant does not have to elect to call evidence or not prior to making anapplication for a non-suit.

This makes sense, as in many cases it is the success or failure of the non-suit application itself that informs thedefendant’s decision whether or not to call evidence. [60] In their non-suit applications, the CC Defendants allege that Colony has not made out a prime facie case with respect to severaldifferent causes of action set out in their counterclaim. As I have granted Colony’s application to remove or abandon some of thechallenged causes of action, I need only consider the non-suit applications in relation to the following causes of action: i. Breach of duty of fidelity (Lacroix only), ii.

Breach of fiduciary duty (Lacroix only), iii. Conversion of confidential information(Lacroix only), iv. Provision of knowing assistance (PR Construction only), v. Intentional interference with contractual relations (PRConstruction only), vi. Unjust enrichment (PR Construction only), vii. Fraud (both parties), and viii.

Conspiracy (both parties). [61] InBruen v Univ of Calgary, 2019 ABCA 211 (leave dismissed (SCC)) at para 11 the Alberta Court of Appeal adoptedthe test for a non-suit set by the Ontario Court of Appeal in Prudential Securities Credit Corp, LLC v Cobrand Foods Ltd, 2007 ONCA425 at paras 35-36: On a non-suit motion, the trial judge undertakes a limited inquiry. Two relevant principles that guide this inquiry are these. First, if aplaintiff puts forward some Page: 10 evidence on all elements of its claim, the judge must dismiss the motion.

Second, in assessing whether a plaintiff has made out a primafacie case, the judge must assume the evidence to be true and must assign ‘the most favourable meaning’ to evidence capable of givingrise to competing inferences. In other words, on a non-suit motion the trial judge should not determine whether the competing inferences available to the defendant onthe evidence rebut the plaintiff's prima facie case. The trial judge should make that determination at the end of the trial, not on the non-suit motion. See John Sopinka, Sidney N. Lederman and Alan W.

Bryant, The Law of Evidence in Canada, 2d ed. (Toronto: ButterworthsCanada, 1999) at 139. (Capital Estate Planning Corporation v Lynch, 2011 ABCA 224 at para 19) [62] To decide if an application for a non-suit has been madeout, the Court does not evaluate issues of credibility that might have arisen during the giving of evidence or determine whether to acceptor reject the evidence heard: Bruen at para 11; Mallet v Administrator of the Motor Vehicles Accidents Claim Act, 2002 ABCA 297 atpara 33.

Rather, the Court “must assume that the plaintiff’s evidence is true and draw all reasonable inferences from it”: Lynch at para20; Bruen at para 11. [63] A prima facie case is one where “there is evidence against the respondents with respect to the elements of each cause of action,which, if left uncontradicted, a reasonable trier of fact could find in its favour”: Lynch at para 3.

While the evidentiary bar the plaintiffmust reach is a low one “...a mere iota of evidence for the plaintiff is not enough to dismiss the non-suit motion; it must be enough togive the plaintiff a prima facie case” (Stevenson and Côté, Civil Procedure Encyclopedia (Edmonton: Juriliber, 2003) at 48-25).

Background [64] Before entering into an analysis of the non-suit applications, it is important to further contextualize the parties’evidence and arguments. [65] As I understand it, Colony’s theory of the case to date is that Lacroix, while working as a key employee for Colony, agreed orconspired with Ronald to take certain actions which improperly benefitted Ronald’s company, PR Construction, to Colony’s detriment. [66] Colony’s allegations of fraud, conspiracy and breach of fiduciary duty are multi-faceted, but relate primarily to one major incident:the signing of Change Order 15 in June of 2013 by Lacroix and Ronald, also referred to as the “Winter Work Order.” [67] At a very basic level, the terms of Change Order 15 allow PR Construction to charge Colony extra fees based on an agreed-uponmethodology which recognizes and compensates for the extra challenges created by performing steel construction work in the deep coldof northern Alberta – challenges that PR Construction claims were not accounted for in their original contract with Colony. [68] Thompson asserts that he did not agree to the terms or methodology set out in Change Order 15, because without a correspondingchange to Colony’s contract with Kiewit, Colony risked paying out additional funds to PR Construction which it might not be able torecover from Kiewit.

Page: 11 [69] Lacroix and PR Construction assert that without Change Order 15, PR Construction would not have been able to complete the steelframework on time, and indeed, would have refused to start the work that had been scheduled to begin on November 1, 2013. It wastherefore in both companies’ best interests to agree to the terms and methodology set out in Change Order 15. For that reason, Lacroix

signed off on Change Order 15 despite Thompson’s instructions not to do so. [70] While there are many other issues in play, the dispute over Change Order 15 lies at the heart of this trial. The PR Defendants’ claimthat Lacroix had the authority to enter into Change Order 15 and it is enforceable.

Colony breached the contract between them when itfailed to pay PR’s invoices for winter work billed according to the methodology set out in Change Order 15. [71] Colony claims that Change Order 15 is unenforceable, and PR Construction was unjustified in terminating the contract by refusingto finish the work it had been hired to perform.

The allegations of fraud, conspiracy, and breach of fiduciary duty etc. by either or boththe Lacroix and PR Defendants are therefore important to proving both Colony’s defence and counterclaim. [72] With that very basic context in mind, I will now turn to the issues, beginning with those specific to Lacroix: breach of fidelity,breach of fiduciary duty, and conversion of confidential information. Colony’s assertion of an “improper relationship” between Lacroixand PR Construction is not a cause of action known in law and as such, I will not be addressing it other than in the context of the othercauses of action. 1.

Breach of duty of fidelity, and fiduciary duty [73] The Lacroix Defendants argue that Colony has not put forward evidence to make outits claim for a breach of the duty of fidelity, or breach of fiduciary duty Duty of fidelity [74] The duty of fidelity or loyalty is an implied common law duty imposed on all employees to obey lawful andreasonable orders of their employer, so long as those orders are within the scope of employment: Secretary of State for Employment vASLEF (No 2), [1972] 2 All ER 949 (CA); Lucas v Premier Motors Ltd (1928), (AB CA), 23 Alta LR 567 (CA).Further, the duty places an obligation on employees to reasonably advance their employer’s best interests: RBC Dominion Securities Incv Merrill Lynch Canada Inc, 2007 BCCA 22 at para 129, aff’d 2008 SCC 54; Geoffrey England, Individual Employment Law (Toronto:Irwin Law, 2008) at 58. [75] An employee may breach their duty of loyalty by acting contrary to their employer’s direct orders, even if they think they are actingin the employer’s best interests: Buxton v Lowes (1915) (AB KB), 23 DLR 848 (ABCA).

An employee will breach theduty of loyalty where they are working for a competitor during the term of employment: England at 73. [76] In general, the duty of fidelity is limited to the period of employment: Globex Foreign Exchange Corp v Kelcher, 2011 ABCA 240at para 25 [Globex Foreign Exchange]. Fiduciary duty [77] An employee may owe their employer a fiduciary duty, depending on the specific nature of their relationship.

Thebasic framework for deciding if a fiduciary relationship exists was set Page: 12 out in Frame v Smith, (SCC), [1987] 2 SCR 99 and modified by Alberta v Elder Advocates of Alberta Society, 2011SCC 24 at para 36: 1. A fiduciary has scope for the exercise of discretion or power; 2. The fiduciary can unilaterally exercise that discretion or power so as toaffect the beneficiary's legal or practical interests; 3. The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holdingthe discretion or power; and 4.

The fiduciary has given an undertaking to act in the best interests of the beneficiary. [78] Whether an employee is a fiduciary depends on their role: RBC Dominion Securities Inc v Merrill Lynch Canada Inc, 2008 SCC 54at para 50; Evans v Sports Corp, 2013 ABCA 14 at para 34.

Usually, an employee in a fiduciary relationship with an employer occupiesa high-level position; however, it is not necessary that the employee be an officer or director of a company to be a fiduciary: Lynch atpara 49. [79] The undertaking to act in the best interests of the employer may be inherent in the relationship, such as when a person agrees tobecome a key employee: HRC Tool & Die Mfg Ltd v Naderi, 2016 ABCA 334, leave to appeal to SCC refused, [2016] SCCA No 559 atpara 19. [80] I find that Lacroix was clearly in a fiduciary relationship with Colony, given that he was a Senior Project Manager and wasresponsible for negotiating and executing contracts and change orders with Colony’s subcontractors and for approving their invoices.

Hewas therefore a key employee who was able to affect Colony’s legal and financial interests and he impliedly gave the undertaking to actin Colony’s best interests when he agreed to work for them in that capacity.

Analysis: [81] Colony argues that it has established a prima facie case that Lacroix breached his duty of fidelity, and his fiduciary dutiesin the following ways: • • • • • • Lacroix admitted to Mike Manning, another Colony employee, that he ignored David Thompson’s instructions and shared things aboutThompson with Ronald that he knew he should not have; Lacroix entered into Change Order 15 with the PR Defendants despite beingexpressly told by Thompson not to do so; Lacroix knew that the Kiewit change orders were slow, so that, by signing the Change Order,he exposed Colony to risk; Lacroix and the PR Defendants incorporated a methodology into Change Order 15 that was not and could nothave been supported by Kiewit; Lacroix told Thompson that Kiewit had agreed to the methodology, when this was not the case; andLacroix prepared invoicing on behalf of PR when he was employed by Colony. [82] The Lacroix Defendants argue that Lacroix was justified in making the Winter Work Order, because it was necessary due to thelong delays in the start of the Mildred Lake project, Lacroix’s engineering ethics required him to do so, Lacroix had the authority to sign

the work order, and because Thompson accepted Lacroix’s explanation and gave evidence that it appeared to him that Lacroix wasalways acting in the best interests of Colony. Page: 13 [83] The Lacroix Defendants argue that the methodology in the Winter Work Order was based on the methodology from Kiewit. Further,it was Lacroix’s job to work with PR to ensure their invoices were accurate, and, moreover, Lacroix’s last day at Colony was December2, 2013: any invoices he worked on after that were not in conflict with Colony’s interest.

The Lacroix Defendants argue that Lacroix wasoffered an ownership stake in PR in January 2014, which was after Colony terminated his employment. [84] Overall, the Lacroix Defendants’ arguments are the type of arguments that should be made at the close of trial as in some instances,they require inferences and the weighing of evidence; for example, the argument that Lacroix’s actions were justifiable. [85] The evidence to date establishing that Lacroix did not follow Thompson’s instructions when entering into Change Order 15 issufficient to meet the threshold for a prima facie case of breach of fiduciary duty, while the evidence that Lacroix prepared invoices onbehalf of PR while still technically employed by Colony is sufficient to meet the threshold for a prima facie case of breach of fidelity. [86] I therefore dismiss the non-suit application with respect to breach of fidelity and breach of fiduciary duty. 2.

Conversion of confidential information [87] The Lacroix Defendants argue that Colony has not put forward any evidence to support itsclaim for the conversion of confidential information. [88] In addition to the employment duties already discussed, every employee owes his or her employer an implied contractual duty not toreveal confidential information: Canadian Aero Service Ltd v O’Malley, (SCC), [1974] SCR 592 [Canadian AeroService]. The content of the duty differs depending on whether the employee is a fiduciary or not.

Specifically, if the employee is afiduciary, then there is an automatic breach of the duty if the employee reveals confidential information: Canadian Aero Service. Bycontrast, if the employee is not a fiduciary, then the employer must also show a loss to prove a breach of the duty not to revealconfidential information: ibid; see also Lac Minerals Ltd v International Corona Resources Ltd, (SCC), [1989] 2 SCR574.

In either case, the duty to not misuse confidential information survives the term of employment: Globex Foreign Exchange at para25; Physique Health Club Ltd v Carlsen, 1996 ABCA 358 at para 4. [89] In Jetco Heavy Duty Lighting v Fonteyne, 2018 ABQB 34 at para 146, this Court set out the factors to consider when deciding ifinformation is confidential enough to attract protection: [90] (

a) The extent to which the information is known outside the business; (

b) The extent to which it is known by employees and othersinvolved in the business; (

c) Measures taken to guard the secrecy of the information; (

d) The value of the information to the holder of thesecret and to its competitors; (

e) The effort or money expended in developing the information; (

f) The ease or difficulty with which theinformation can be properly acquired or duplicated by others; and (

g) Whether the holder and taker of the secret treat the information assecret. As well, in employment-related cases, the Court may also consider whether: (

a) the employer possesses a trade secret; Page: 14 (

b) the employee knew it was a secret; (

c) the employee acquired knowledge of it during his/her employment; (

d) the employee has ...used of this knowledge improperly. (ibid). [91] Colony argues that the following facts are evidence that Thompson breached his duty of confidence: • • • • Shortly after meeting with David Thompson and Colony’s lawyer about the PR Contract, Lacroix called Ronald and disclosed the legaladvice they had received; Thompson did not authorize Lacroix to disclose their discussions to the PR Defendants; Ronald knew DavidThompson and Lacroix were meeting with Colony’s lawyer to get advice on the PR Contract; and Ronald had no reason to believe thatLacroix was authorized to share the confidential legal advice. [92] The Lacroix Defendants assert there is no evidence that what Lacroix communicated to Ronald was communicated to Lacroix inconfidence or that it was misused by Lacroix, and no evidence that what Lacroix communicated was an accurate reflection of whatColony’s lawyer said in any event.

Finally, the Lacroix Defendants argue that it was part of Lacroix’s role to communicate the results ofthe meeting to Ronald. [93] Communications between lawyer and client are de facto subject to solicitor-client privilege. Here, the client was Colony, andLacroix was Colony’s key employee. There is therefore evidence of a solicitor-client relationship, and no evidence provided to date thatsolicitor-client privilege was waived.

Colony has no way to prove accuracy of the information shared that would not force it to alsowaive that privilege. [94] The further question of whether it was an implied or necessary part of Lacroix’s job to communicate the results of the meeting toRonald, or that he was expected to do so, would require me to draw inferences from the evidence, which I cannot do on a non-suitapplication. [95] As I have already found that Lacroix was Colony’s fiduciary, it follows that by disclosing information that was subject to solicitor-client privilege without evidence of waiver or permission Lacroix potentially violated his duty of confidentiality.

[96] I therefore find that the non-suit application in relation to this cause of action must be dismissed. [97] I note that the question of proof of any damages arising solely from the disclosure of that confidential information was not addressed by either party in its submissions.

Lacroix and Thompson acting together [98] The bulk of the remaining causes of action – knowing assistance with breach of an employee’s fiduciary duty to their employer, interference with an employment contract, fraud and conspiracy against Colony – represent increasingly serious allegations which all flow from essentially the same assertion: that Lacroix and Thompson acted together to benefit PR Construction, and to cause damage to Colony.

Page: 15 [99] The asserted facts Colony relies on in relation to each of these causes of action are the same, and include the following, in addition the facts set out above in relation to proof of breach of fiduciary duty: • • • • • • • • • • • Lacroix frequently complained about Thompson to Manning. Lacroix promised Ronald and PR that he would protect their interests during the Mine Replacement Project.

In a recorded conversation between Ronald and Lacroix which took place on December 12, 2012, Ronald told him “I’ve got lots to give you ...[o]nce we get through this shit it will be just you, me, and Joel...[a]s long as the money’s working”. Lacroix altered an email from Ronald to Lacroix in which Ronald offered Colony a credit for equipment that was improperly charged before forwarding it to Thompson and Manning without the offer.

Prior to signing the original contract in January of 2013, Lacroix told Thompson that at a meeting in December of 2012, Kiewit had given direction for PR to start March 1, 2013 rather than April 1, 2013, which was not true. In May of 2013, Lacroix told Manning he would resign from Colony unless his salary was increased and he had job at PR waiting for him if that did not happen. In a recorded conversation June 4, 2013, after disclosing confidential legal advice from Colony’s’ lawyer, Ronald told Lacroix “I appreciate your efforts, man. I really do. And I’ll make it up to you somehow.

Lacroix responded “I’ll give you an opportunity to do that.” Lacroix was subsequently offered a 25 percent stake in PR Construction. Lacroix and the PR Defendants entered into Change Order 15 in June of 2013, without a corresponding change order from Kiewit, and contrary to Thompson’s instruction, and then engaged in acts which could be construed as designed to conceal it from Thompson. In relation to Change Order 15, Lacroix told Thompson that Kiewit had agreed to the methodology developed by Lacroix and Ronald, when this was not the case.

In December of 2013, while on working notice and being paid by Colony, Ronald and PR provided Lacroix with a company laptop and email address which Lacroix used to assist PR with invoicing Colony and other work. [100] I now turn to the separate causes of action anchored in this common-foundation evidence. 3.

Fraud [101] To make out a claim in civil fraud, the Plaintiff must show: • • • • Page: 16 A false representation by the defendant; Some level of knowledge of the falsehood of the representation by the defendant, whether knowledge or recklessness; The false representation caused the plaintiff to act; and The plaintiff’s actions resulted in a loss. (Bruno Appliance and Furniture Inc v Hryniak, 2014 SCC 8 at para 21 ). [102] With respect to the first step, ordinarily, it is not a

misrepresentation to merely remain silent, as parties do not generally have a duty of disclosure: Xerex Exploration Ltd v Petro-Canada,2005 ABCA 224 at paras 56-57 [Xerex Exploration]; Motkoski Holdings Ltd v Yellowhead (County of), 2010 ABCA 72 at para 60[Motkoski Holdings]. However, the duty to speak may arise where there is a special relationship between the parties, such as a fiduciaryrelationship, which creates an obligation to disclose information: Opron Construction Co v Alberta (1994), (ABKB), 151 AR 241 (QB) [Opron Construction].

Additionally, silence may equate to misrepresentation when it renders a previousrepresentation inaccurate: Xerex Exploration at paras 56-57. Likewise, a partial representation may constitute a misrepresentation ifomitting related information is misleading: ibid.

This is particularly the case where one party to a contract “asks a direct question of theother party concerning a matter.”: NEP Canada ULC v MEC OP LLC, 2021 ABQB 180 at para 760. [103] Knowledge of the misrepresentation may be proven through proof of actual knowledge, recklessness or wilful blindness (a type ofrecklessness): proof of mere negligence is not sufficient.

The Court of Appeal explained that, in the context of civil fraud, recklessnessmeans the false representation was made “without caring whether it was true or false”: Precision Drilling Canada Limited Partnership vYangarra Resources Ltd, 2017 ABCA 378 [Precision Drilling], at para 33, citing Motkoski Holdings at para 58.

A person who, inmaking a false statement "shut his eyes to the facts, or purposely abstained from inquiring into them” is also acting recklessly, andtherefore, fraudulently: Precision Drilling at para 764. [104] Colony argues that it has put forward some evidence of fraud, emphasizing the following subset of the evidence outlined above: • • • • Lacroix altered an email from Ronald to Lacroix in which Ronald offered Colony a credit for equipment that was improperly chargedbefore forwarding it to Thompson and Manning without the offer; Lacroix and the PR Defendants entered into Change Order 15 withouta corresponding change order from Kiewit and then concealed it from Thompson; Lacroix told Thompson that Kiewit had agreed to themethodology developed by Lacroix and Ronald, when this was not the case; and Lacroix told David Thompson that Kiewit had givendirection for PR to start in March, which was not true. [105] In general, the PR Defendants argue that David Thompson admitted at trial that he approved the terms of the PR Contract and thatthe fact the Change Orders were prepared by Lacroix using Microsoft Word rather than in the usual format was irrelevant.

As such, therewas no fraudulent activity. The PR Defendants further argue that the other alleged fraudulent activities were in fact part of and includedin the PR Contract or not proven to be fraudulent. Page: 17 [106] The Lacroix Defendants also rely on David Thompson’s testimony about the PR Contract to rebut Colony’s allegations of fraud.

Inaddition, all of the CC Defendants put forward specific arguments in response to the evidence identified by Colony as supporting itsclaim for fraud. [107] In what follows, I will discuss the arguments about each of the pieces of evidence put forward by Colony and whether they aresufficient to establish a prima facie case in fraud. In doing so, I note that Colony claimed that these are “just some examples of evidencein support of a case in deceit”.

However, Colony does not identify any other evidence that it relies on to show a prima facie case of fraud. [108] In responding to the non-suit applications, Colony had an obligation to specifically identify the evidence relied on, or risk failure indefending against the non-suit. This is especially important in a case like this one where both sides have entered an extensive number ofdocuments into evidence, while only referring to a small portion of those documents in relation to the vive voce evidence called.

For thatreason, I will not take up Colony’s invitation to engage in an evidentiary treasure hunt; rather, I will consider the non-suit applicationsbased only on the evidence that was highlighted by Colony as supporting its case in fraud, considered in the context of all the otherevidence and arguments contained in their written materials. a.

E-mail [109] With respect to the allegation that it was “on its face fraudulent” for Lacroix to change an e-mail before sending it toThompson, the PR Defendants point out that Colony admits in its particulars that Lacroix told David Thompson about the credit,therefore, there was no misrepresentation.

There is also no evidence of damage, given that Kiewit paid Colony for the work PR didunder the field work instruction related to the email. [110] The Lacroix Defendants argue that Lacroix was acting in accordance with his professional ethics when he changed the e-mail.They further argue that there is no evidence that the statement was false or that any damage flowed from the altered e-mail. [111] I agree. There is no evidence that Lacroix’s actions in relation to the impugned email resulted in any provable damage or loss toColony. b.

Concealment of Change Order 15 [112] While Thompson was not personally advised that Lacroix had signed off on Change Order 15,Change Order 15 was entered into Timberline within days of its completion. [113] Timberline was Colony’s internal record keeping system and was therefore accessible to Thompson. The PR Defendants argue thatColony was aware of the Change Order immediately, even if Thompson was not.

Indeed, there was no way to hide it from him, norwould it have made sense to do so given that PR Construction would be sending invoices based on that Change Order. [114] Further, there is no evidence that Thompson (or Colony) relied on their temporary ignorance of the Change Order to take anyaction, or refrain from acting, or that Colony suffered any damage related to that specific act. They also argue that Thompson acceptedLacroix’s explanation for the Winter Work Order and, moreover, agreed that Lacroix had the authority to issue the Order. Page: 18

[115] Again, I agree. Even if I accept that the intention was to “conceal” the signing of Change Order 15 temporarily, the fact Thompson was not immediately advised that Change Order 15 had been signed by Lacroix on behalf of Colony is not – on its own - evidence of fraud. [116] Further, there is no logical basis for Colony’s additional argument that the fact that the Change Order was signed prior to receiving a corresponding Change Order from Kiewit is somehow evidence of fraud. It is indeed an important fact, but not one which is relevant to the issue of fraud. c.

Methodology [117] With respect to the allegation that Lacroix told Thompson that Kiewit had approved his methodology, the PR Defendants argue that Colony confuses Kiewit’s agreement to the methodology with an agreement to give Colony a Change Order without Fluor approval. The PR Defendants also argue that nothing turned on the letter sent by Thompson to Kiewit. [118] The Lacroix Defendants argue that there is only very weak evidence that the false statement was made or that it was false.

Further, there is no evidence that Lacroix knew the statement was false or that Kiewit had not approved the methodology in principle before the Change Order was approved. There is also no evidence of any damage flowing from the alleged false statement: Thompson conceded in cross-examination that Colony had to pay PR for winter work and the only difference was whether it was during the contract or at its end.

To the contrary, there is evidence that if the methodology was not agreed to, then PR would have terminated its contract and Colony would not have met its obligations to Kiewit. [119] Weak evidence of a false statement is still “some evidence” which is the standard applicable in a non-suit application.

That said, I find that Colony has not provided proof of “even a single dollar of damage” flowing from the actions Thompson took as a result of relying on the purportedly false statement regarding Kiewit’s acceptance of the methodology. [120] If, for example, Thompson had agreed to Change Order 15 based on that alleged misrepresentation, that would be a different story. He did not. The actions he took in sending the letter to Kiewit were after-the-fact, designed to ameliorate the financial risk to Colony that resulted from the Change Order. d.

Start Date [121] The PR Defendants argue that Lacroix’s behaviour with respect to the altered start date is not fraudulent because there is evidence showing that Kiewit ordered the change and further, that Thompson admitted he directed Lacroix to move the start date. [122] The Lacroix Defendants argue further that there is no evidence that the statement was false or that Lacroix knew the statement was false at the time. [123] I agree. On its own, this is not evidence of fraud.

Conclusion [124] Considered individually, the items set out above as evidence of fraud would not meet the prima facie standard for proof of fraud; however, these items must be considered in the context of all the other evidence at trial. For example, on the question of damages or “actions resulting in a loss”, those losses, if there are any, would flow from the financial and other impacts of Change Order 15.

While the question of losses remains a live issue, it would be foolish to argue that Page: 19 Colony has not provided any evidence in support of its case for damages based on Change Order 15 when much of case was devoted to doing exactly that. [125] I agree with the Applicants that Colony has not provided or referenced any direct evidence of fraud in its written materials; however, I agree with Colony that it has provided sufficient circumstantial evidence to establish, at a minimum, a prima facie case of fraud. • • • • The Defendants made false representations (they told Thompson that Kiewit approved the methodology, delayed disclosure that Change Order 15 had been signed, and did not disclose to him their “improper relationship”) The Defendants knew those representations were not true (the methodology was not approved, they had in fact signed the contract, there existed an “improper relationship” at this time) The Plaintiff acted on those representations ( “Colony” signed Change Order 15, Thompson did not take steps to stop that from happening as he was unaware of the “improper relationship”) and The plaintiff’s actions resulted in a loss (assumes Change Order 15 resulted in damage to Colony). [126] It may be weak case with respect to the assertion of fraud.

It is not so weak that it can be dismissed at the non-suit stage, particularly given that I cannot, at this stage, weigh evidence or make credibility findings. Therefore, this aspect of the application is also dismissed. 4. Conspiracy [127] The CC Defendants argue that Colony has not put forward evidence to make out its claim in conspiracy. [128] A claim in conspiracy is made out where there is: • An agreement between two or more persons; • Concerted action taken pursuant to the agreement; • If the action is lawful, evidence that the conspirators intended to cause damage to the plaintiff; • If the action is

unlawful, evidence that the conspirators knew or ought to have known their action would injure the plaintiff; and • Actual damage suffered by the plaintiff. (D ’Agnone at para 21; Mraiche Investment v McLennan Ross, 2012 ABCA 95 at paras 40-42 [Mraiche Investment] ). [129] It is necessary to prove an actual agreement between the parties, rather than a presumed “ought to know” state of mind: Mraiche Investment at para 43 . That said, the agreement does not need to be in any specific form or even constitute a binding contract: D’Agnone at para 22.

It is rare that there will be direct evidence of the agreement that forms that conspiracy: Mraiche Investment at para 42 ; D’Agnone at para 22; Lynch at para 81 . [130] To be a party to the conspiracy, a defendant must know the facts of the alleged agreement and intend to be a party to it: HSBC Bank Canada v Fuss, 2013 ABCA 235 at para 27 . The defendants must then act in concert, by agreement or with a common design: ibid.

For unlawful Page: 20 act conspiracy, the unlawful act can be a crime, a tort, a breach of contract, a breach of statute, or a breach of fiduciary duties: Erika Chamberlain & Stephen GA Pitel, eds, Friedman’s The Law of Torts in Canada, 4th ed (Toronto : Thompson Reuters Canada, 2020). [131] The PR Defendants argue that, since there was no fraudulent activity, there was no improper relationship at the time of the PR Contract and, consequently, there cannot have been any fraudulent activities carried out pursuant to the improper relationship as alleged by Colony.

They argue that the claim in conspiracy is not made out as a matter of law. [132] The Lacroix Defendants argue that there is no evidence on the record to show an agreement between the CC Defendants and, moreover, that the evidence Colony points to as showing an agreement is too vague to support any inference about what the CC Defendants might have agreed to. The Lacroix Defendants also point to Thompson’s evidence that he approved the PR Contract as showing that there is no evidence of any action taken pursuant to the alleged agreement.

The Lacroix Defendants also argue that Lacroix’s actions were per his duties to Colony or were in furtherance of Colony’s contracts with PR and Kiewit.

Finally, the Lacroix Defendants argue that there is no evidence that Colony suffered damage or evidence that Lacroix intended to injure Colony. [133] In response, Colony argues that an agreement can be inferred from the evidence given at trial, including that: • • • • • • • • Lacroix frequently complained about Thompson to Manning; Ronald told Lacroix that Lacroix had lots to give him, and that it would be just them and Joel “[a]s long as the money’s working”; Ronald thanked Lacroix after Lacroix disclosed Colony’s legal advice and said he would make it up to him; Lacroix and Joel Prior were each offered a 25% stake in PR after Lacroix ceased employment with Colony; Lacroix told Ronald he would work with him and that if things went poorly it would be between Thompson and Kiewit, not PR and Colony; In May 2013, Lacroix said he would resign from Colony unless he was paid more and that he had a job at PR waiting for him; Lacroix and Ronald communicated via Lacroix’s personal e-mail account and on his non-company cell phone; and In December 2013, Lacroix assisted PR with invoicing Colony and updating PR’s change order spreadsheets when he was still on working notice with Colony. [134] All other arguments and assertions aside, I agree that there is at least “some” evidence that Lacroix and PR Construction had an agreement.

Writ large, that agreement was for Lacroix to take actions or make decisions on behalf of Colony, which would provide the maximum lawful benefit to PR Construction, even if it meant Colony suffered some amount of financial damage as a result. More specifically, both Lacroix and PR Construction agreed to the terms of Change Order 15, despite understanding Thompson’s concerns and knowing his instructions and directions. [135] The challenge Colony faces is proving that in so doing, Lacroix and PR Construction intended to injure or damage Colony.

Has a key employee who agrees to “sweeten the pot” for a key client, without telling their employee about that agreement, engaged in a civil conspiracy Page: 21 with that client to intentionally injure their employer? I find this highly unlikely, considering these kinds of “agreements” are simply part of the capitalist enterprise in many business contexts. [136] Does it make a difference that in this case, there is some evidence that Lacroix stood to obtain a personal future benefit from the “sweetening of the pot” when he eventually started working for PR Construction? It might.

That evidence could very well call into question Lacroix’s intention, which the Lacroix Defendants argue was simply to provide a present benefit to PR Construction in order to establish good relations between the two companies, and further secure their business relationship [137] For that reason, I find I am unable to accede to the non-suit in relation to the allegation of conspiracy. Colony has met the low bar for proving a prima facie case of conspiracy, and this aspect of the application is therefore dismissed. 5.

Knowing assistance [138] The PR Defendants argue that Colony has not put forward any evidence to make out its claim for knowing assistance against the PR Defendants with respect to the alleged breach of fiduciary duty by Lacroix. [139] To make out a claim in knowing assistance, the plaintiff must show: • The existence of a trust or fiduciary relationship; • The trustee or fiduciary’s fraudulent or dishonest breaches of his or her equitable duty; • The stranger has knowledge of the misconduct; and • The stranger assists in the fraudulent or dishonest design.

(Air Canada v M& L Travel Ltd, (SCC), [1993] 3 SCR 787 at 811[Air Canada]; Abt Estate v Cold Lake Industrial ParkGP Ltd, 2019 ABCA 16 at para 76). [140] The dishonest and fraudulent intent of the trustee does not mean fraud in the criminal sense, but rather the taking of a wrongful riskresulting in prejudice to a beneficiary: Air Canada at 826; Condominium Corp No 0321365 v 970365 Alberta Ltd, 2012 ABCA 26, 2012 ABCA26 at para 94 [Condo Corp]. The stranger to the fiduciary relationship does not need to act dishonestly or in badfaith: Air Canada at 825; Condo Corp at para 94.

The knowledge requirement may be met by actual knowledge, recklessness, or wilfulblindness: Air Canada at 811; D’Agnone v D’Agnone, 2017 ABCA 35 at para 25 [D’Agnone]. [141] Colony argues that it has put forward some evidence on each of these elements, because the PR Defendants knew about Lacroix’smisconduct and, moreover, they assisted by participating in the alleged improper relationship, including by offering Lacroix anownership interest in PRConstruction.

Colony relies on the evidence it argues supports the claims for fraud and breaches of Lacroix’semployment contract. [142] I agree that Colony has made out a prima facie case for knowing assistance with Lacroix’s alleged breaches of fidelity andfiduciary duty, and confidentiality.

For example, Ronald knew Lacroix was working for PR Construction while still employed byColony, and Page: 22 facilitated or assisted him in that work by providing him with he information he needed to prepare invoices, as well as PR Constructionemail address and a computer. [143] The nonsuit application with respect to “knowing assistance” is therefore dismissed. 6.

Intentional interference with contractualrelations [144] The PR Defendants argue that Colony has not put forward any evidence to support its claim for intentional interferencewith contractual relations, also referred to as induced breach of contract. [145] The elements of the tort of induced breach of contract are stated in Brae Centre Ltd v 1044807 Alberta Ltd, 2008 ABCA 397 atpara 19 [Brae], citing Klar, Tort Law, 3d ed (Toronto: Thompson Canada Limited, 2003) at 610-20: (

i) The existence of a contract; (ii) The defendant intended to cause a breach of the contract; (iii) Knowledge by the defendant of thecontract; (iv) The defendant’s conduct induced the breach; (

v) Damage to the plaintiff; and (vi) Lack of justification for the defendant’sconduct. [146] To prove intention, it is necessary to show that the defendant acted with the desire to cause a breach of contract or with substantialcertainty that a breach of contract would result from the defendant’s conduct: Brae at para 27; see also 269413 Alberta Ltd vPocklington, 2000 ABCA 307 at para 43 [Pocklington]. Wilful blindness or recklessness will suffice to prove intention: Pocklington atpara 41. However, mere foreseeability is not enough: 698828 Alberta Ltd v Elite Homes

(1998) Ltd, 2020 ABCA 154 at paras 52, 123-24. [147] The defence of justification is available if the defendant caused the breach while acting under a duty imposed by law: Brae at para33; Pocklington at para 57. This will include officers and directors acting on behalf of a corporation and in the best interests of thecorporation: Brae at para 23.

However, where an officer or director’s conduct is fraudulent, it may result in personal liability: Brae atpara 25. [148] Colony argues that the PR Defendants were aware that Lacroix had an employment contract with Colony and that theyintentionally induced Lacroix to breach that agreement. Colony relies on the evidence it argues supports the formation of an improperagreement, fraud, and breaches of Lacroix’s employment contract. [149] I agree that there is at least some evidence of this; for example, the implied offer contained in the recorded conversation betweenin Lacroix and Ronald.

The non-suit application with respect to this cause of action also fails. 7. Unjust Enrichment [150] The PR Defendants argue that Colony has not put forward evidence to make out its claim for unjustenrichment. [151] The elements of unjust enrichment are well known: 1. The defendant was enriched; 2. The plaintiff suffered a correspondingdeprivation; and Page: 23 3.

The defendant’s enrichment and the plaintiff’s corresponding deprivation occurred in the absence of a juristic reason. (Moore v Sweet, 2018 SCC 52 at para 37). [152] The first two elements are dealt with according to a straightforward economicapproach; that is, there are no moral or policy considerations behind them (ibid at para 41). The enrichment and the deprivation mustcorrespond, which means they are “the same thing from different perspectives” or “essentially two sides of the same coin”: ibid. [153] The third element requires a two-step analysis.

First, the plaintiff must show that there is no recognized legal reason for thedefendant’s retention of the benefit conferred by the plaintiff: ibid at para 54. Second, the defendant may show a residual reason to denyrecovery by the plaintiff, having regard to the parties’ reasonable expectations and to public policy: ibid at para 58. [154] Colony argues that it has put forward some evidence on each of the elements of unjust enrichment. It relies on the evidence itargues supports the formation of an improper agreement, fraud, and breaches of Lacroix’s employment contract.

Colony argues that thepresence of fraud vitiates any juristic reason for the unjust enrichment.

[155] This case is essentially about contracts. Either PR Construction breached the contract, or Colony did. If PR Construction breached, then there is simply no need to argue unjust enrichment. If Colony breached, then that breach constitutes the juristic reason for PR Construction’s subsequent enrichment by way of damages awarded for the breach.

Colony seeks to extend the analysis one step further by arguing that the asserted acts of collusion, fraud and breach of employment contract somehow negate that juristic reason, and (if I understand correctly) therefore offsets any damages that might otherwise be awarded against Colony. [156] It is certainly a creative argument. I understand why the opposite parties are frustrated by it and why they have put such time and effort into trying to counter it. However, I cannot, at this stage in the proceedings, say that it has zero chance of success.

With at least some evidence presented on the underlying “potentially negating” causes of action, the unjust enrichment pleading anchored on them has, by definition, at least some prospect of success. The application with respect to unjust enrichment is also dismissed. ix. Conclusion [157] The insufficient pleadings and non-suit applications by the CC Defendants are dismissed in their entirety. The application by Colony to amend its pleadings is granted. [158] Costs of this application will be dealt with at the close of trial. Dated at the City of Edmonton, Alberta this 13 th day of January, 2023.

Page: 24 Tamara L. Friesen J.C.K.B.A. Appearances: Matt Pruski Brian McLean and Robert Fleming for the Plaintiffs (Defendants by Counterclaim) James G. Thorlakson and Aiyaz Alibhai for the Defendant (Plaintiff by Counterclaim)