3.68: Court options to deal with significant deficiencies

Case Summary

Two Actions related to the supply of pipe to Canadian Natural Resources Limited (“CNRL”) for one of its oil sands projects were commenced in March and April 2007. On November 29, 2007, CNRL commenced a Third Party Action against Fluor Canada Ltd. (“Fluor”) which was discontinued a month later. In June and July 2010, other Defendants in the two Actions issued Third Party Notices against Fluor. Fluor brought an Application in each Action to strike out the Third Party Notices pursuant to Rule 3.68, but the Applications to Strike were dismissed by the Case Management Judge. On Appeal, Fluor argued that the Case Management Judge erred in not striking out allegations that Fluor breached its contract with CNRL, allegations of a duty of care owed to CNRL, and allegations that Fluor breached a duty to warn or supervise the Defendants.

The Court referred to former Rule 129 and held that discretionary Decisions of a Case Management Judge, and Decisions related to whether a pleading should be struck, are reviewed on a reasonableness standard and should be given a high level of deference. However, the question of whether a pleading discloses a cause of Action is a question of law, reviewable on a correctness standard.

The Court held that, in an Application to Strike, the applicable test is whether, assuming the facts as pleaded are true, there is a reasonable prospect that the Claim will succeed. With respect to the independent duties alleged to be owed by Fluor to the Defendants, the Court stated that unless there is binding authority that either there was no cause of action in law as alleged, or that such a cause of action could not apply to the facts, it could not be said that the claim had no “reasonable prospect” of success. The Court further held that, although the claims related to a novel duty of care, whether there was any merit to the allegations was a question that could only be determined at Trial. Accordingly, the Court held that it could not be said that the Claim had no reasonable prospect of success.

Fluor further argued that the expiry of CNRL’s limitation period against Fluor barred contribution claims pursuant to the Tort-feasors Act, RSA 2000, c T-5. Fluor argued that no liability could be found against Fluor pursuant to Section 3(1)(c) of the Tort-feasors Act on the basis that, by the time the Third Party Notices had been filed, CNRL itself was precluded from commencing an Action against Fluor. The Court agreed and held that the Chambers Justice erred. However, the Court rejected Fluor’s position that any alleged breach by Fluor of its contract with CNRL could not found a claim for contribution at common law. Ultimately, the Court dismissed the Appeal, with the exception of any Claims for contribution against Fluor pursuant to the provisions of the Tort-feasors Act.

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