3.68: Court options to deal with significant deficiencies
7.3: Summary Judgment (Application and decision)
7.5: Application for judgment by way of summary trial

Case Summary

The Plaintiff commenced an Action on behalf of a proposed class consisting of former shareholders of one of the Corporate Defendants, Wave Energy Ltd (“Wave”). The Plaintiff alleged that all of the Defendants conspired to divert certain petroleum and gas rights to another corporate entity Coral Hill Energy Inc. (also a Defendant), thereby depriving the Wave shareholders. The Defendants applied to dismiss the proceedings pursuant to Rule 7.3; and, in the alternative, to strike the proceedings pursuant to Rule 3.68. The individual Defendants also applied for Summary Trial.

Martin J. considered whether Summary Dismissal should be granted pursuant to Rule 7.3. The parties agreed that the test for Summary Dismissal was whether the Defendant Applicants could show, on a balance of probabilities, that there was no genuine issue of material fact requiring Trial. If the Defendants succeeded, the burden shifted to the Plaintiff to counter the Defendants’ evidence and demonstrate that there was a genuine issue for Trial. The Plaintiffs and the Defendants did not dispute the bare facts of the case but did dispute the explanations and motivations underlying the facts.

Justice Martin reviewed whether the Action was properly pursued as a class action on behalf of the Wave shareholders, or whether it should have been commenced as a derivative Action. The Defendants argued that the Action was properly a derivative Action and that Summary Dismissal should be granted pursuant to Rule 7.3 because the Plaintiff did not have the legal right to pursue the requested remedies. Justice Martin noted that the case law was not clear, but an overlap existed between derivative actions and claims of oppression. Overall, it was not plain and obvious that a Court would not allow a derivative action as a remedy for oppression in this case. The Defendants had not established that they were entitled to Summary Dismissal on the basis that the Plaintiff lacked the legal right to proceed.

Her Ladyship considered the various disputed contractual clauses and concluded that the Defendants had provided a satisfactory explanation for the clauses and the basis for them. Martin J. held that there was no genuine issue of material fact in respect of the inclusion of the contractual provisions; this was so whether the Action was a derivative claim or a claim in oppression. Justice Martin held that sufficient evidence to meet the Plaintiff’s burden was lacking. Additionally, Justice Martin held that there was no genuine issue of material fact with respect to the Plaintiff’s claim respecting lack of disclosure of portions of the asset transaction, and the Plaintiff had provided no evidence to show that there was a genuine issue. Justice Martin also held that there was no evidence of conspiracy as between the Defendants or unjust enrichment by the Defendants.

Her Ladyship concluded that:

The Defendants have tendered evidence that provides a cogent, non-nefarious explanation of the events in question. That evidence satisfies me that there is in this case no genuine issue of material fact requiring trial. The burden therefore shifts to Fisher to provide this Court with evidence that there is a genuine issue for trial here. That he has not done.

Justice Martin briefly stated that, in light of the conclusions respecting Rule 7.3, the Defendants’ application to strike out the Plaintiff’s claim pursuant to Rule 3.68 did not need to be addressed. Similarly, the conclusions respecting Summary Dismissal made it unnecessary to address the Application for Summary Trial. The Defendants’ Application for Summary Dismissal was granted.

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