222 & 223 BASELINE ROAD INC v WORLD HEALTH EDMONTON INC, 2021 ABQB 22
3.68: Court options to deal with significant deficiencies
3.72: Consolidation or separation of claims and actions
4.22: Considerations for security for costs order
5.6: Form and contents of affidavit of records
6.25: Preserving or protecting property or its value
9.24: Fraudulent preferences and fraudulent conveyances
The Defendant sought an Order striking a Statement of Claim in which the Plaintiff relied on information inadvertently disclosed by the Defendants in another Action.
The Plaintiff was landlord to the Defendant. The Plaintiff commenced an Action for breach of lease. The Defendant disclosed an unsworn Affidavit of Records which included an Asset Purchase Agreement between the Defendant and a non-arms length party. Before Questioning, counsel for the Defendant attempted to remove the Asset Purchase Agreement on the grounds it was not relevant. The Plaintiff commenced a second Action alleging a fraudulent conveyance based partly on information gleaned from the Asset Purchase Agreement.
The Plaintiff brought an Application seeking a further and better Affidavit of Records under Rule 5.6, and an Order that the two Actions be tried simultaneously under Rule 3.72. The Defendant brought a cross-Application for an Order striking the Plaintiff’s Statement of Claim in the second Action pursuant to Rule 3.68, or for an Order for Security for Costs pursuant to Rule 4.22.
The Defendants submitted that the Statement of Claim filed in the second Action was an attempt to obtain prejudgment relief and should properly have been brought in the first Action, pursuant to Rule 6.25. The Plaintiff submitted that they were not seeking prejudgment relief, and they relied on Rule 9.24 to support the position that a Judgment is not a requirement when enforcing against property when there are allegations of a fraudulent conveyance. Master Birkett found that the Statement of Claim in the second Action disclosed a reasonable claim and did not seek disclosure or remedies prior to a Judgment in the first Action.
Master Birkett found that the second Statement of Claim was not improper because it was not based on facts solely gained from the Asset Purchase Agreement. The second Statement of Claim’s statement of facts was also based on public information and facts discovered during Questioning. The circumstances did not warrant striking the second Statement of Claim pursuant to Rule 3.68. The second Statement of Claim was not a mere duplication, and contained further allegations and a new, reasonable, cause of action.
Master Birkett concluded that the Asset Purchase Agreement must be disclosed pursuant to Rule 5.6(1)(b), and held that due to the allegations in the second Statement of Claim, the Asset Purchase Agreement was relevant to the allegations of a fraudulent conveyance.
Master Birkett further found that pursuant to Rule 3.72, both Actions should be tried simultaneously as they contained common questions of fact and arose from the same transaction or series of occurrences. Finally, Master Birkett found Security for Costs to be unwarranted under Rule 4.22, as the Plaintiff had significant assets in Alberta.View CanLII Details