jeffrey j

3.68: Court options to deal with significant deficiencies

Case Summary

Two related Actions were under case management. One of the Actions was brought by shareholders and former employees of the Defendant, alleging that the Defendant had breached the Unanimous Shareholders’ Agreement (“USA”). The other Action alleged fraudulent preference, oppression, that the Defendants breached a Share Purchase Agreement (“SPA”), and breached the USA. The USA contained an arbitration provision that directed that any disagreement between the parties that was in respect of the USA or any matter arising thereunder was to be directed to Arbitration. The SPA contained no arbitration clause. The Defendants in both Actions applied to strike the Actions in their entirety under Rule 3.68 on the basis that the parties had agreed to Arbitration, but the Plaintiffs had failed to commence the Arbitration within the time required by the Limitations Act, RSA 2000, c L-12.

Jeffrey J. noted that a Claim may be struck under Rule 3.68(a) when it is plain and obvious or beyond reasonable doubt that the Claim cannot succeed. In an Application under Rule 3.68, evidence can be admitted and the Court is not to assume that every fact pleaded is true. Rather, where the record is sufficiently clear to fairly decide an issue, the Court can make findings of fact without the need to defer the issue to Trial.

Justice Jeffrey considered the terms of the USA and held that the majority of the claims brought by the Plaintiff were subject to the arbitration clause; however, those claims were brought outside the two year limitation period. Additionally, the Court had no jurisdiction to extend the limitation period for those claims. For the claims that fell outside of the USA arbitration clause, and the claims for breach of the SPA, the Plaintiff was not bound to proceed by Arbitration and those claims were permitted to continue. The Defendants’ Application was granted in part: the portions of the Actions which were subject to Arbitration were struck.

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