3.32: Additional options for defendant
3.56: Right to counterclaim
3.57: Contents of counterclaim
3.58: Status of counterclaim
3.60: Application of rules to counterclaims
3.62: Amending pleading
3.65: Permission of Court to amendment before or after close of pleadings
3.74: Adding, removing or substituting parties after close of pleadings

Case Summary

The Defendant, Reese McIntosh (“McIntosh”), sought an Order:

(a)    Permitting him to file a Counterclaim against the Plaintiffs, Gregory Binks, Sally Binks and Crystal Ridge Fuels Limited (“Crystal Ridge”); and

(b)   Compelling answers to Undertakings from Crystal Ridge.

McIntosh and Janice Pearce (“Pearce”) (McIntosh’s common-law spouse) were former employees of Crystal Ridge. After their resignation, the Plaintiffs alleged, inter alia, that:

(a)    McIntosh and Pearce had unlawfully and fraudulently misappropriated and converted to their own use funds belonging to Crystal Ridge;

(b)   McIntosh used funds belonging to Crystal Ridge to form Big Rock Petroleum Ltd. (“BRP”) with the intention of competing with Crystal Ridge;

(c)    McIntosh caused BRP to appropriate Crystal Ridge’s client base, revenue and good will;

(d)   McIntosh falsely claimed to own Crystal Ridge and improperly pledged its credit;

(e)   McIntosh breached his fiduciary duty to Crystal Ridge; and

(f)     BRP was unjustly enriched to the detriment of Crystal Ridge as a result of McIntosh’s breach of fiduciary duty.

The Action was commenced in 2004. The claims of Gregory Binks and Sally Binks had been previously struck. McIntosh now sought permission to file a counterclaim alleging, inter alia, that the Plaintiffs deliberately misrepresented his 2003 tax withheld in respect of his 2003 income.

The Court held that more than 2 years had passed since McIntosh knew of the injury. Therefore, for the Counterclaim to be allowed, one of the exceptions in the Limitations Act, RSA 2000, c L-12 (“Limitations Act”), would have to apply.

S. 6(2) of the Limitations Act allows for claims to be brought by a defendant in the proceeding against a claimant in the proceeding, and thus applied to the claim against Crystal Ridge. However, the Court held that s. 6(2) did not apply in relation to Gregory Binks or Sally Binks, as although part of the Action, they were no longer claimants as their claims had been struck.

However, the Court held that s. 6(4) of the Limitations Act applied. The Counterclaim related to events in the original claim, and Gregory Binks and Sally Binks:

(a)    Would be added as Defendants;

(b)   Received sufficient knowledge of the added claim within the applicable limitation period plus time for service (3 years in total); and

(c)    Would not be prejudiced in maintaining a defence to the counterclaim.

The Application to allow the filing of the Counterclaim was granted.

McIntosh also sought an Order requiring Crystal Ridge to provide answers to what he alleged were deficient responses to Undertakings. The Court dismissed this Application, and held that the appropriate remedy was for McIntosh to Question further on the Undertakings if he believed that the answers were inadequate. However, the Court awarded costs to McIntosh, holding that the Application would have been unnecessary if counsel for Crystal Ridge had replied to a letter from counsel for McIntosh that detailed the alleged deficiencies in the Undertakings.

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