DEBORAH THORNE First Plaintiff And: ALAN LUYT Second Plaintiff And: COLLEGE OF THE NORTH ATLANTIC Defendant, 2021 NLSC 74

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Thorne v. College of the North Atlantic , 2021 NLSC 74 Date : May 27, 2021 Docket : 201306G0131 Between: DEBORAH THORNE First Plaintiff And: ALAN LUYT Second Plaintiff And: COLLEGE OF THE NORTH ATLANTIC Defendant Before: Justice Katherine O'Brien Place of Hearing: Grand Bank, Newfoundland and Labrador Date of Hearing: March 2, 2021

Summary: The Court allowed the Defendant’s application to amend its Defence.

Appearances: Philip C.W. Whalen Appearing on behalf of the Plaintiffs J. David B. Eaton, Q.C. and Dana R. Martin Appearing on behalf of the Defendant Authorities Cited: CASES CONSIDERED: Thorne v. College of the North Atlantic, 2014 NLTD(G) 94; Thorne v. College of the North Atlantic, 2015NLTD(G) 63; College of the North Atlantic v. Thorne, 2015 NLCA 47; Thorne v. College of the North Atlantic, 2016 NLTD(G) 165;Thorne v. College of the North Atlantic, 2018 NLCA 33; Thorne v. College of the North Atlantic, 2019 NLSC 157; Butler v. KlosterCruise Ltd. (1992), (NL SC), 98 Nfld. & P.E.I.R. 138, 311 A.P.R. 138 (Nfld.

S.C.(T.D.)); Lacroix v. CanadaMortgage & Housing Corp., [2007] O.J. No. 1648, 2007 CarswellOnt 2582 (Sup. Ct.); 2038724 Ontario Ltd. v. Quizno’s CanadaRestaurant Corp., [2009] O.J. No. 4376, 2009 CarswellOnt 6371 (Sup. Ct.); Petten v. E.Y.E. Marine Consultants (1994), (NL SC), 120 Nfld. & P.E.I.R. 313, 373 A.P.R. 313 (Nfld. S.C.(T.D.)); Knight v. Imperial Tobacco Canada Ltd., 2011 SCC 42;Home Hardware Stores Limited v. R Home Supply Centre Ltd., 2015 BCCA 500; Telford v. Holt, (SCC), [1987], 2S.C.R. 193; Soulos v. Korkontzilas, (SCC), [1997] 2 S.C.R. 217; DeBourke v.

Eastern Regional Integrated HealthAuthority, 2019 NLSC 10 STATUTES CONSIDERED: Class Actions Act, S.N.L. 2001, c. C-18.1 RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c.42, Sch. D TEXTS: Prof. Jasminka Kalajdzic and Prof.

Catherine Piché, Class Actions: Objectives, Experiences and Reforms: Final Report(Toronto: July 2019), online: Law Commission of Ontario <https://www.lco-cdo.org/wp-content/uploads/2019/07/LCO-Class-Actions-Report-FINAL-July-17-2019.pdf> REASONS FOR JUDGMENT O'Brien, J.: INTRODUCTION [1] The Defendant, College of the North Atlantic (“CNA”), has brought an application to amend its Defence pursuant to Rule15.02 of the Rules of the Supreme Court, 1986, S.N.L. 1986, c.42, Sch. D (the “Rules”).

The amendments sought can be generallycategorized in three groups: those that address the addition of the Second Plaintiff to the proceedings, those that provide details about acontract between CNA and the State of Qatar known as the Comprehensive Agreement (“CA”), and those that add a set-off to theDefence. The application is allowed for the reasons that follow. Background [2] The First Plaintiff filed an Amended Statement of Claim on October 3, 2013 under the Class Actions Act, S.N.L. 2001, c. C-18.1 (the “Act”). [3] A certification hearing was held and certification was granted on August 19, 2014 (Thorne v.

College of the North Atlantic,2014 NLTD(G) 94). [4] On January 30, 2015, the First Plaintiff filed an Application to expand the class definition to include people not resident inNewfoundland and Labrador. This application was heard and granted on March 20, 2015. [5] On February 20, 2015, CNA filed a Defence and Counterclaim. [6] On February 27, 2015, the First Plaintiff brought an Application to Strike the Counterclaim for disclosing no reasonable cause

of action. This application was heard and granted on May 1, 2015 (Thorne v. College of the North Atlantic, 2015 NLTD(G) 63). [7] Both the decision to certify the action and the decision to strike the counterclaim were appealed and the appeals were heardtogether. The appeal of the decision to certify was dismissed and the appeal of the decision to strike the counterclaim was allowed. Thedecision to strike was set aside because the applications judge had made a procedural error in law: College of the North Atlantic v.Thorne, 2015 NLCA 47 (“Appeal 1”).

In Appeal 1, the Court of Appeal stated that if CNA wanted to assert its counterclaim againstmembers of the certified class it would need to seek and obtain certification of the counterclaim under the Act. [8] On October 12, 2016, the counterclaim was certified by the Supreme Court Trial Division: Thorne v. College of the NorthAtlantic, 2016 NLTD(G) 165. That decision was appealed. The Court of Appeal allowed the appeal and struck CNA's Counterclaim: Thorne v.

College of the North Atlantic, 2018 NLCA 33 (“Appeal 2”). [9] On August 27, 2019, an application by CNA for further and better particulars of the Amended Statement of Claim was denied(Thorne v. College of the North Atlantic, 2019 NLSC 157). [10] On March 5, 2020, the Second Amended Statement of Claim was filed.

The Second Amended Statement of Claim added theSecond Plaintiff and included a new paragraph, paragraph 6(a), which is relevant to the present application and will be considered furtherin these reasons. [11] On January 5, 2021, CNA filed this application seeking to amend its Defence in response to the Second Amended Statement ofClaim. [12] Although certification was granted on August 19, 2014, the Certification Order has not yet been filed. Prior to this applicationbeing made, the parties had agreed on the form of Certification Order.

Currently, they are not agreed as to whether the outcome of thisdecision would require an amendment to that form. Dispute between the parties [13] The parties agree that CNA requires leave of the Court to amend its Defence pursuant to Rule 15.02(1)(

c) of the Rules whichallows the Court to grant leave on such terms as it thinks just. [14] The Plaintiffs do not object to the majority of the sought amendments, specifically those that either address the addition of theSecond Plaintiff or provide details about the CA.

The CA was the subject of CNA's counterclaim, now struck. [15] Although not previously referenced in the Statement of Claim or its first amendment, the CA is referenced in the SecondAmended Statement of Claim at paragraph 6(a): The Plaintiff is aware that there was a comprehensive agreement between the Defendant and the State of Qatar respecting the operationof the Defendant’s Qatar campus including funding.

By virtue of this comprehensive agreement or otherwise the Plaintiff asserts that theDefendant secured and/or received funds, and had an obligation to provide these funds to the benefit of employees including the Plaintiff,and the Defendant failed to do so in contravention of the terms of the individual contracts or employment between the Plaintiffs and theDefendant. [16] The Plaintiffs object to proposed amendments to the Defence which seek to add a set-off. These are paragraphs 13, 14, 15 and16(2) of the proposed amended Defence: 13.

To the extent, if at all, that, the First Plaintiff and Class Members are relying on the Comprehensive Agreement as creatingan entitlement, the compensation calculation contemplated therein and the Salary Cap provided must be applied. Any Class Memberwho relies on the CA or the Budget amount must also be governed by the appropriate compensation calculation and applicable limitscontemplated by the Budget and CA. 14. During the term of the First Plaintiff’s Second Employment Contract, the First Plaintiff received more than contemplated bythe CA and the applicable Salary Cap.

Other Class Members were similarly paid more than the applicable Salary Cap. 15. To the extent that the First Plaintiff or any Class Members received more than contemplated under the CA and the Budgetamount, the First Plaintiff or Class Members have received more than the asserted entitlement. CNA states that based on equitableprinciples, any amount received by the First Plaintiff or any Class Member in excess of the Salary Cap must be set-off against anyamount that it is determined that the Class Member would otherwise be entitled to receive. 16.

CNA requests that: 1) the claims be dismissed; or 2) Alternatively, should the claims not be dismissed, that any amounts received by any Class Member above the Salary Cap be set-off against any amount that is determined that a Class Member is otherwise entitled to receive. Law [17] Both counsel rely on Butler v. Kloster Cruise Ltd. (1992), (NL SC), 98 Nfld. & P.E.I.R. 138, 311 A.P.R.138 (Nfld. S.C.(T.D.)) as the leading case on the amendment of pleadings under Rule 15.02(1)(c). In Butler, the defendant sought toamend its defence to raise significant new issues less than one month before trial.

At paragraph 12, Russell J. wrote: The power to amend is discretionary and a number of authorities have referred to four principles to be applied when determining whetherto allow an amendment. To be allowed, an amendment (1) must not cause injustice to the other side, (2) must raise a triable issue, (3)must not be embarrassing, and (4) must be pleaded with particularity. (See 385925 Ontario Ltd. v. American Life Insurance Co. et

al. (1984), (ON SC), 48 O.R.(2d) 142; Shore v. Cantwell & Cantwell (1975), (NS SC), 21 N.S.R.(2d) 288; 28 A.P.R. 288.) [18] These four principles, which I will refer to as the Butler principles, ensure that a proposed amendment complies with the otherrules of pleadings. This is a matter of efficiency and prevents the court from allowing an amendment that, upon application, could bestruck on other grounds. The Butler principles have been adopted and applied repeatedly by courts in this province in determiningwhether to exercise their discretion to allow an amendment to pleadings. [19] I am not aware of any cases that have dealt with Rule 15.02(1)(

c) in the context of class action proceedings. Rule 7A of theRules deals with class actions and relevant sections of that rule include: 7A.01

(3) The rules of court and the general practice and procedure of the General Division shall apply to class proceedings unless theyare inconsistent with the Act or this rule.

(4) The rules of court, including Rule 7A, and the procedures to be followed with respect to class proceedings shall beinterpreted and applied to achieve the objects of the Act, and in particular (

a) to promote the effective and economical use of the judicial system; (

b) to make the court system more accessible to the public; and (

c) to ensure that parties responding to a class proceeding are able to present their case fairly to the court. 7A.08. After a certification order has been granted, a party may only amend a pleading filed by that party with leave of the court. [20] In other jurisdictions, courts have determined that they will not apply normal amendment procedures in the class action context[1]. For example, an amendment to the pleading of a certified action cannot be used as means to avoid the certification criteria fora new cause of action or for a new or expanded class of plaintiffs. In 2038724 Ontario Ltd. v.

Quizno’s Canada Restaurant Corp.,[2009] O.J. No. 4376, 2009 CarswellOnt 6371 (Sup. Ct.), the court held that a key factor in determining whether to allow an amendmentto a pleading in a class action is whether the amendment: (

a) just contains a further allegation that does not fundamentally change thenature of the action or (

b) fundamentally changes the nature of the action and would require reconsideration of all the matters consideredon the first application. [21] Rules 7A.01(4) and 7A.08 signal that similar considerations should be applied in this jurisdiction.

While the principles ofjudicial economy, access to justice, and fairness are important in all cases before the courts, Rule 7A.01(4) directs us to give themparticular consideration when deciding procedural matters in the class action context. [22] That being said, I do not believe that the unique context of class actions requires an approach completely different from thatarticulated in Butler.

The context of class actions and the certification process can be considered in the application of each Butlerprinciple, and particularly with respect to the first Butler principle which requires an examination of the potential injustice to theresponding party. I will thus apply the Butler principles to this application with particular consideration to the class action context.

Analysis Will the proposed amendments cause injustice to the Plaintiffs? [23] In Butler at paragraph 16, Russell J. wrote that an amendment will not cause injustice where the applicant is acting in goodfaith and no injury is done to the other party that cannot be compensated by costs or otherwise. [24] CNA submits that it has acted in good faith and that there is no prejudice to the Plaintiffs.

CNA notes that although a numberof years have passed since the Certification Application, this action is still at an early stage in the proceedings as the parties have not yetexchanged documents and no discoveries have taken place. CNA notes that the issue of set-off was first raised by them at theCertification Hearing (although it was not dealt with by the certification judge) and that it was specifically addressed in obiter dicta bythe Court of Appeal in Appeal 2.

In short, CNA submits that its claim of set-off is nothing new to these proceedings and a legitimateresponse to the recently filed Second Amended Statement of Claim. CNA submits that this amendment would not necessitate any changeto the form of the Certification Order. [25] The Plaintiffs submit that there is prejudice in that the claim for set-off will necessarily add time and effort to the proceedings. The Plaintiffs also submit that the form of the Certification Order may need to change if this application is allowed, although they didnot give any specifics.

The Plaintiffs assert that the claim for set-off is “baseless” such that this time and effort should not be necessaryand, moreover, given the particular regime for costs under the Act, the prejudice cannot be compensated for by costs. [26] I am satisfied that CNA is acting in good faith so the issues to be assessed with respect to the first Butler principle are prejudiceand its compensability.

The Plaintiffs allege prejudice of delay and cost. [27] Weighing against a finding of prejudice, I note that regardless of whether the set-off is permitted to proceed, the CA will be akey document in this litigation and time and effort will be spent exploring it and its consequences. Additionally, notwithstanding thatthis action was commenced in 2013, it is at an early stage given that documentary and witness discovery have not yet taken place. Thusthere is no risk that these procedural steps would have to be repeated.

[28] Weighing in favour of a finding of prejudice, given that the parties currently disagree on the issue, there is at least a possibilitythat the Certification Order and the Notice of Certification, both previously settled as to form, may have to be revisited. While I acceptthat adding a set-off does not affect the definition of the common issue or the plaintiff classes, it does add an additional defence to theproceedings which will necessarily add some time and expense to the litigation.

I do not find, however, that it would fundamentallychange the nature of the action. [29] Having considered the above, I find that allowing the amendment would cause some, but not significant, prejudice to thePlaintiffs in terms of delay and expense. [30] If this was not class action litigation, there would be good argument that this prejudice is of a type that can be compensated bycosts. What then is the effect of it being class action litigation? [31] Costs awards in class action litigation in this province are the exception, not the rule.

Section 37 of the Act addresses costs: 37

(1) The Trial Division and the Court of Appeal shall not award costs to a party to an application for certification undersubsection 3 (2) or

section 4 , to a party to a class action or to a party to an appeal arising from a class action at any stage of theapplication, action or appeal.

(2) Notwithstanding subsection (1), the Trial Division and the Court of Appeal may award costs to a party in respect of an applicationfor certification or in respect of all or part of a class action or an appeal from a class action where the court considers that (

a) there has been vexatious, frivolous or abusive conduct by a party; (

b) an improper or unnecessary application or other step has been made or taken for the purpose of delay or increasing costs orfor another improper purpose; or (

c) there are exceptional circumstances that make it unjust to deprive the successful party of costs. [32] Costs regimes in class action litigation are not uniform across the country. Newfoundland and Labrador is one of the provincesthat has taken a “no costs”, or more accurately, a “rare costs” approach from the certification application onward. This approach isgenerally supported by plaintiff stakeholders in class action litigation as it is seen to increase access to justice and public interestlitigation[2]. [33] By its very nature, the policy choice underlying

section 37 of the Act will sometimes favor and sometimes disadvantage a party. However, I am not convinced that one of the disadvantages should be to prevent a party from amending its pleadings simply because acost award is not readily available. The primary purpose of allowing pleading amendments is to ensure that the court can determine thereal questions in controversy between the parties (see Petten v. E.Y.E. Marine Consultants (1994), (NL SC), 120Nfld. & P.E.I.R. 313, 373 A.P.R. 313 (Nfld.

S.C.(T.D.)) at para. 87) and this goal is as desirable in class action litigation as it is in non-class action proceedings. [34] As a result, in the class action context, I find that the unavailability of costs to compensate delay except in accordance withsection 37(2) of the Act is not a bar to amending pleadings.

However, given that costs are not generally available, the effects of anyprejudice should be given particular consideration and assessed in light of the goals of judicial efficiency, access to justice and fairness. [35] Here, I find that that the anticipated additional time and cost of allowing the amendment is not significant and that allowing theamendment would not impact greatly on judicial efficiency or access to justice. Fairness is better served when the real issues betweenthe parties are adjudicated. As such, I would not disallow the amendment on this basis.

Do the proposed amendment raise triable issues? [36] The Plaintiffs submit that there is no merit whatsoever in CNA’s claim for set-off. CNA submits that the set-off defence doesraise a triable issue, the threshold is low, and that at this stage I should not assess the merits of the defence. [37] In Petten, Green J. (as he then was), reviewed the Butler principles and gave guidance with respect to the triable issuerequirement.

He wrote: [98] In saying that the party proposing an amendment must pass the threshold requirement of being able to show that the amendmentdiscloses a reasonable cause of action, it is well to remember that the court must not try the merits of the claim. The threshold test is alow one. It is the same as that which is applied when an application is taken under rule 14.24 to strike out a pleading because no cause ofaction is disclosed: McGauley v. B.C. (1989), (BC CA), 39 B.C.L.R.(2d) 223 (C.A.) per Cumming, J.A., at pp. 245-246.

That test, simply stated, is that it must be “plain and obvious” that the proposed pleading discloses no reasonable claim and that it iscertain to fail: Hunt v. Carey Canada Inc. (SCC), [1990] 2 S.C.R. 959; 117 N.R. 321; 4 C.C.L.T. (2d) 1; 43 C.P.C.(2d)105; 49 B.C.L.R.(2d) 273; 74 D.L.R.(4th) 321, per Wilson, J., at p. 980; Nfld. and Labrador Housing Corp. v. Clarke (1993), (NL CA), 105 Nfld. & P.E.I.R. 11; 331 A.P.R. 11 (Nfld. C.A.) or to borrow from the words of Goodridge, C.J.N., in BondArchitects and Engineers Ltd. v.

McNamara Corp. of Newfoundland (1988), (NL CA), 69 Nfld. & P.E.I.R. 229; 211A.P.R. 229 (Nfld. C.A.), at p. 231, a proposed amendment ought not to be refused on this basis unless the court is satisfied, not that itmay not succeed, but that it “cannot succeed”. Thus, if there is doubt as to whether the proposed amendment as pleaded may disclose areasonable cause of action, then the amendment ought not be refused on that basis alone. [38] The “plain and obvious” test has more recently been revisited by the Supreme Court of Canada in Knight v. Imperial Tobacco

Canada Ltd., 2011 SCC 42. In Knight, the court stressed the importance of taking a generous approach and erring on the side ofpermitting a novel but arguable claim to proceed to trial. This approach recognizes that the law is not static and unchanging. As notedat paragraph 21 of Knight: Actions that yesterday were deemed hopeless may tomorrow succeed. [39] Green J. approached his task in Petten by setting out the elements of each cause of action that was sought to be added and thenconsidering whether the material facts supporting the cause of action were pleaded.

I will follow a similar approach bearing in mind theguidance of Knight. The defence of set-off [40] A set-off is addressed by Rule 14.19 of the Rules: 14.19. Where a claim by a party to a sum of money, whether the amount is ascertained or not, is relied on as defence to the whole or partof a claim made by an opposing party, it may be included in a defence and set-off against the claim, whether or not it is also added as acounterclaim. [41] In Appeal 2, Hoegg J.A. gave consideration to a set-off in this case: [35] A counterclaim is distinctly different from a set-off.

A set-off is part of a defence pleaded by a defendant against a plaintiff indefence to the whole or part of a claim made by the plaintiff. […] [36] In Home Hardware, Justice Newbury described the defence of set-off as an equitable defence that goes directly to impeach theplaintiff’s demands (paragraph 10).

If proved, the amount of the set-off may be subtracted from any amount awarded to the plaintiff tothe extent of the plaintiff’s award, potentially reducing the plaintiff’s award to zero. [37] In other words, if the plaintiff succeeds in proving his or her claim, and the defendant succeeds in proving his or her defence ofset-off, the defendant will be able to deduct the amount of its set-off up to the amount of the plaintiff’s award but not amounts in excessof the plaintiff’s award.

This is in contrast to a counterclaim, which, because it is an independent cause of action, is “not governed bythe same rules or subject to the same limitations” as a set-off (Beddall v. Maitland, [1879] 17 Ch. D. 174 at 178). […] [67] A similar triangle of parties is at play in CNA’s counterclaim. CNA, like the plaintiff in Humby, is relying on a contract it haswith Qatar, to which Ms. Thorne and the class members are not party. In its counterclaim CNA has not pleaded any material facts whichentitle it to a remedy in contract against the plaintiff class.

CNA’s pleadings do not allege that members of the plaintiff class had acontractual relationship with Qatar or that the members of the class were bound by the terms of the Comprehensive Agreementrespecting salary caps. Neither does CNA allege any breach of the employment contracts it had with the members of the plaintiff class. Moreover, there is no indication in the record or the pleadings that such a breach of contract could be pleaded. CNA’s assertion thatmembers of the plaintiff class were mistakenly overpaid is not a breach of contract by the members of the plaintiff class.

Accepting thatmembers of the plaintiff class were overpaid, there is no further pleading as to how or why this fact entitles CNA to recover theoverpayments. This is not to say that CNA would never be able to take some sort of action to recover monies it mistakenlyoverpaid to members of the plaintiff class. Rather, it is to say that such an action could not be based on a breach of the contractsbetween CNA and members of the plaintiff class based on the Comprehensive Agreement. […] [72] Finally, the possibility of CNA pleading the defence of set-off arose during the appeal hearing.

Pleading the defence of set-offwould not engage the requirements of sections 3 or 5 of the Act in the way a counterclaim would. Nor would it enable CNA to pressuremembers of the class who were allegedly overpaid in the way that a counterclaim could, because the reach of set-off extends to and endsat the amount awarded to a plaintiff.

CNA frankly acknowledged at the appeal hearing that its reason for counterclaiming rather thanpleading the defence of set-off was that counterclaiming gave it a tactical advantage over the class members by setting up the prospectthat class members could end up owing more to CNA than they would recover from CNA if they succeeded in their class action, therebypressuring the class members to abandon their class action out of fear that they would end up owing more than they would recover.

Inany event, even if CNA were to plead the defence of set-off, CNA would still have to prove the defence, and if it were pleaded incontract, such proof would require CNA to prove that members of the plaintiff class were bound by the terms of theComprehensive Agreement including the salary cap – something which they do not appear to be able to do. [emphasis added] [42] Hoegg J.A.’s comments were in obiter dicta but they provide guidance. [43] In oral submissions on the present application, CNA's counsel was clear that CNA was not pleading a legal set-off but rather itwas claiming in equity.

Equitable set-off was described in Home Hardware Stores Limited v. R Home Supply Centre Ltd., 2015 BCCA500 (the case cited by Hoegg J.A. in Appeal 2) as follows: [10] As the chambers judge noted, the law is clear that a cross-claim that can be advanced by way of equitable set-off (a concept notdiscussed in Rizkalla) does constitute a “defence” to a claim. On this point, he quoted from Coba Industries Ltd. v. Millie’s Holdings(Canada) Ltd. (1985) (BC CA), 65 B.C.L.R. 31 (C.A.) at 35-6. The Court in that case referred to three types of

situations in which set-off is permissible, the third being where a court of Equity would regard the cross-claim as “entitling the defendantto be protected in one way or another against the plaintiff's claim”. (Citing Morris L.J. in Hanak v. Green [1958] 2 Q.B. 9 (C.A.)). Thecircumstances in which Equity will be so engaged were described in Cam-Net Communications v. Vancouver Telephone Co. Ltd., 1999BCCA 751: The law recognizes a distinction between what may be termed abatement and equitable set-off.

The former, a product of the commonlaw, applies to cases in which a defendant can show that as a result of the plaintiff’s breach, the goods, services, or work provided by theplaintiff are diminished in value. The latter, a product of equity, refers to cases in which a defendant raises a cross-claim which goesdirectly to impeach the plaintiff’s demands, i.e., which is so closely connected with the plaintiff’s claim that it would be unjust to allowthe plaintiff to enforce payment without taking into account the cross-claim.

The latter involves damages other than a diminution of thevalue of the goods or services provided. [At para. 33; emphasis added.]. [44] The leading case of equitable set-off from the Supreme Court of Canada is Telford v. Holt, (SCC), [1987], 2S.C.R. 193. At paragraph 34 of Holt, Wilson J. reviewed the following principles of equitable set-off from Cobra Industries (cited abovein Home Hardware): 1. The party relying on a set-off must show some equitable ground for being protected against his adversary's demands: Rawson v.Samuel, [1841] Cr. & Ph. 161, 41 E.R. 451 (L.C.). 2.

The equitable ground must go to the very root of the plaintiff's claim before a set-off will be allowed: [Br. Anzani (Felixstowe) Ltd. v.Int. Marine Mgmt (U.K.) Ltd., [1980] Q.B. 137, [1979] 3 W.L.R. 451, [1979] 2 All E.R. 1063]. 3. A cross-claim must be so clearly connected with the demand of the plaintiff that it would be manifestly unjust to allow the plaintiff toenforce payment without taking into consideration the cross-claim: . . . [Fed. Commerce and Navigation Co. v. Molena Alpha Inc.,[1978] Q.B. 927, [1978] 3 W.L.R. 309, [1978] 3 All E.R. 1066]. 4.

The plaintiff's claim and the cross-claim need not arise out of the same contract: Bankes v. Jarvis, [1903] 1 K.B. 549 (Div. Ct.); Br.Anzani. 5. Unliquidated claims are on the same footing as liquidated claims: Nfld. v. Nfld. Ry. Co., [1888] 13 App. C. 199 (P.C.)]. [45] The Plaintiffs submit that CNA has failed to plead material facts sufficient to establish that they have a “claim” against thePlaintiffs, which the Plaintiffs assert is a required element of equitable set-off. CNA submits that they have pleaded material factssufficient to establish an equitable claim.

Although the words are not used in the proposed amended Defence, CNA submits that thefacts they have pleaded support an equitable claim of unjust enrichment.

The heart of CNA’s submission is that payments theymistakenly made to the Plaintiffs in excess of the Salary Caps set in the CA are so closely related to Plaintiffs’ claims for other amountsthe Plaintiffs say are due to them by virtue of the CA, that it would be unfair to require CNA to pay the Plaintiffs any amounts related toCNA’s entitlements under the CA without accounting for them. [46] Although it may have been preferable for CNA to use the words “unjust enrichment” in their proposed amended Defence ifthey intend to rely on that doctrine, I am mindful of the words of McLaughlin J. (as she then was) in Soulos v.

Korkontzilas, (SCC), [1997] 2 S.C.R. 217 at paragraph 34: Equitable remedies are flexible; their award is based on what is just in all thecircumstances in the case.

I am also mindful that at paragraph 43 of Korkontzilas, where the Supreme Court was dealing with the relatedequitable doctrine of constructive trusts, McLaughlin J. emphasized that there was room for the law in this area to develop and forgreater precision to be attained, as time and experience may dictate. [47] Having considered the above, recognizing that the threshold is low and taking a generous approach, I cannot find that it is“plain and obvious” that CNA's defence of equitable set-off cannot succeed.

Their entitlement to money that they already paid to thePlaintiffs may not be a strong claim, but I cannot say at this stage that it does not exist. Are the proposed amendments embarrassing? [48] In DeBourke v.

Eastern Regional Integrated Health Authority, 2019 NLSC 10, Whelan C.J. described the third Butler principleregarding embarrassing pleadings as follows: [13] In determining whether a proposed amendment to a pleading is embarrassing, the Court is not concerned with whether theopposing party is embarrassed in the ordinary sense of the word i.e. that the proposed amendment is shameful or humiliating to theopposing parties.

This is an example where we use words in our legal lexicon that have definition only through legal precedent, and itslegal definition is not connected to the meaning that the words would normally be ascribed in modern language. [14] In the present context, the word embarrassing is used to capture a broad range of material defects in a pleading or proposedamendment. For instance, in Duryea v. Kaufman (1910), 21 O.L.R. 161 at 165 (Ont. S.C.), Justice Riddell, relying on Stratford Gas Co.

v. Gordon (1892), 14 P.R. 407 (Ont. C.A.) ; Heugh v. Chamberlain , [1877] 25 W.R. 742 (Eng. C.A.); and Knowles v. Roberts (1888), 38 Ch. D. 263 (Eng. C.A.) , noted that a pleading will be embarrassing to the opposing party where it alleges facts that are wholly immaterial to the outcome of the case, or where the proposed amendments "are so irrelevant that to allow them to stand would involve useless expense and would prejudice the trial of the action by involving the parties in a dispute that is tangential to the main claim".

As would pleadings that "fail to state a real issue between the parties in an intelligible way" ( Dempsey v. Envision Credit Union , 2006 BCSC 750 (B.C. S.C.), at para. 86 ; see also Lundrigan v. Short , 2000 CarswellNfld 242 (Nfld. T.D.) ), per Russell, J., at para. 4).

Still other cases have found that a proposed amendment would be embarrassing where it, "brings forward a claim that the plaintiff is not entitled to make use of", "leaves out particular facts which would give the defendant the knowledge of what the basis of the plaintiff's case is and on which the plaintiff will have to rely at trial in order to make out a case", or "does not comply with the minimum requirements of the rules of pleading" in some way ( Petten , at para. 97 ). In Lacroix v. Macdonald and Hoffe Appraisals Ltd. , 2015 NLTD(G) 85 (N.L.

T.D.), Murphy, J. stated that pleadings will be embarrassing where the opposing party will be left to speculate as to the legal and factual basis for the claim (para. 25). [ 49 ] The proposed amended Defence includes considerable detail about the CA, the Salary Cap, the cost of living allowance that was referred to in Appeal 2 and in other prior decisions in this matter, and the employment contracts between CNA and members of the plaintiff class. The interrelation and development of these elements is also well described.

The material facts underlying CNA's defence of equitable set-off are set out such that there should be no need to speculate about the nature of their claim. There are no facts pleaded that are wholly immaterial or irrelevant to the outcome of the case. In short, I find that the proposed amendments are not embarrassing.

Are the proposed amendments pleaded with particularity ? [ 50 ] In Petten , after discussing the requirement that a proposed amendment disclose a triable issue, Green J. addressed the fourth Butler principle, whether the proposed amendment contains the necessary particulars of the claim, as follows: [99] It is otherwise, however, with respect to particulars.

The party seeking an amendment especially at or near the trial, ought to be scrupulous in presenting the amendment, in such a way that all reasonable particulars, as may be required by the rules of pleading or which may be required by a defendant acting reasonably, are provided.

It is not appropriate to allow an amendment which, though not capable of being refused because it has no chance of succeeding is nevertheless otherwise deficient in supplying appropriate particulars in a way that the other side would be prejudiced in being able to respond properly and would likely lead that other party to apply subsequently for those particulars, thus further delaying the trial. [ 51 ] I have already indicated the detail in which particulars are provided in the proposed amended Defence.

I am satisfied that there is sufficient particularity for the Plaintiffs to understand the basis for CNA’s defence and to be able to respond to it. As such, I find that this Butler principle is also met. DISPOSITION [ 52 ] Having evaluated the Butler principles in the context of class actions, I am satisfied that the proposed amendments should be permitted. I thus allow CNA’s application to amend its Defence as proposed. [ 53 ] In accordance with the costs regime established in

section 37 of the Act , I make no order as to costs. _____________________________ Katherine O'Brien Justice