Court of Appeal Refuses to Strike Amended Amended Statement of Claim

A Statement of Claim stands as the initial pleadings in a legal dispute. These pivotal documents serve as the cornerstone of any civil litigation action and lay the foundation upon which further litigation will unfold. A Statement of Claim contains, among other things, pleaded facts, remedies sought, and the law on which such positions are based on. However, parties involved in a lawsuit may find themselves at a juncture where the precision and clarity of the initial claim is called into question. As such, a defending party may ask the court to strike the plaintiff’s Statement of Claim due to factual inaccuracies, insufficient legal grounds, or procedural irregularities.

In a recent case before the Court of Appeal of Alberta, several employees and officers of a corporation were sued, however, they filed an application to have the claims against them dismissed on the basis that they had no chance of succeeding.

Company claims

In the matter of Co-Solve Solutions Inc v Purdy, 2023 ABCA 324 the respondent and original plaintiff, Co-Solve Solutions Inc., filed a lawsuit against the defendant, Fluid Energy Group Ltd., which was not a party to the appeal, alleging defamation and intentional interference with economic relations. In response, Fluid Energy Group Ltd., filed an application to strike the Amended Statement of Claim of the respondent, arguing that there was no reasonable claim against them in their personal capacities. In response, the respondent sought to file an Amended Amended Statement of Claim, which would include additional details and claims. Both applications were heard at the same time.

The applications judge declined to strike the pleadings, but allowed the Amended Amended Statement of Claim to be filed, in part because the law is unsettled. Fluid Energy Group Inc. appealed this decision to the Court of King’s Bench, however, the initial decision was affirmed. They then asked the Court of Appeal of Alberta to review both lower courts’ decisions.

Understanding Defamation and Intentional Interference With Economic Relations

Defamation is a term used to describe statements and communications that negatively and unfairly affect one’s reputation. For example, if a person spreads lies about another person or company to others, they may be held liable for damages. Defamation can occur through various means, including online comments or spoken gossip.

Intentional interference with economic relations refers to one’s unlawful interference with another’s economic interest that results in economic harm. For example, a joint property owner who intentionally creates problems for their co-owners who are trying to sell the property to a third party may be found liable for intentional interference with the co-owners’ economic relations.

What is an “Amended Amended Statement of Claim”?

A party’s Statement of Claim sets out the legal principles and material facts to support the basis of their claim. In theory, a Statement of Claim should comprehensively set out a party’s claims and their legal foundations. However, between new developments surfacing and human error, documents may need to be updated. This can be accomplished by filing an “Amended” Statement of Claim, according to the Alberta Rules of Court.

In this case, Co-Solve Solutions Inc. filed an “Amended Amended Statement of Claim,” which meant that their original Statement of Claim was once amended, and the updated version was subsequently amended again.

Legal Actions Against Individuals vs. Corporations

To strike a legal document means to have it thrown out or ruled invalid. In this case, Fluid Energy Group Ltd. argued that the arguments against them had no reasonable chance of succeeding in their personal capacities, as they were claims made against the employees and officers of the company, not the company itself, which is an important distinction in corporate litigation.

A corporation is a legal entity that is capable of forming contracts, assuming debts, owning property, and may even go bankrupt. However, the fundamental premise of a corporation is that it is distinct from its owners and shareholders. Therefore, a corporation limits personal liability. The term “corporate veil” refers to the legal boundary between a corporation and the physical humans who participate in it; such as shareholders, or like the appellants in this case, employees and officers. This distinction is very significant because it speaks to the raison d’etre of the corporation itself; only in very obvious and serious situations can the constituent persons working on behalf of the corporation be held liable for actions undertaken in its name, which is what Co-Solve Solutions Inc. was attempting to do.

Fluid Energy Group Ltd. argued that, because of the corporate veil, they cannot be legally held responsible, and as such, according to Rule 3.68(2)(b), Co-Solve Solutions Inc.’s Amended Amended Statement of Claim contained no reasonable claims against them. Accordingly, they asked the court to strike Co-Solve Solutions Inc.’s claim.

Court of Appeal Declines to Strike Amended Amended Statement of Claim

In its decision, the Court of Appeal for Alberta cited its earlier decision in Driving Force Inc. v I Spy-Eagle Eyes Safety Inc, 2022 ABCA 25, which held that:

“While it is recognized that corporations can only act through their human agents, and often a corporate tort will involve those human agents, concurrent liability is not always appropriate. There is no fixed rule that a tort by a corporation always involves a concurrent tort by one of its human agents. Further, “control” of the corporation does not necessarily mean there was personal involvement in the tort. However, to date no unifying test has been identified for determining when concurrent personal liability will be imposed for corporate torts…”

In short, the Court determined that whether personal liability can be established in such a case will depend on a number of factors, with particular consideration of the criteria established by previous decisions. In consideration of previous case law, the Court found that there have been cases where persons working for a corporation may be found legally responsible for damages, and thus the claims filed were not “hopeless”, and therefore, Co-Solve Solutions Inc.’s claim should not be struck.

The Court also noted that a pleading is only “hopeless” if there is no triable issue. However, in this case, even if there was a significant burden to meet, Co-Solve Solutions Inc.’s Amended Amended Statement of Claim was not so outlandish that it should be struck without the opportunity to be heard in the first place. In fact, it specifically identified several individuals as being involved in acts that form the bases of the various claims. As such, the Court held that it was “not clear and obvious” that there were no triable issues.

Contact DBB Law in Calgary for Exceptional Representation in Commercial Disputes and Civil Litigation

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