The Appellant, The Guarantee Company of North America (“GCNA”), had entered into a written guarantee which guaranteed the obligations of a general contractor in relation to a construction contract. A separate bond agreement (the “2004 bond agreement”) was subsequently executed between GCNA, the Respondent, HOOPP Realty Inc. (“HOOPP”), and the contractor when a dispute arose with respect to the construction of the floor of the building. The 2004 bond agreement preserved HOOPP’s ability to claim losses for Costs and interest which might arise due to the floor replacement.

HOOPP commenced separate Actions against the contractor for damages under the construction contract, and against GCNA pursuant to their performance guarantee and the 2004 bond agreement. The contractor successfully applied to strike the Claim against it. GCNA then applied to strike HOOPP’s Action against it pursuant to Rule 3.68(2)(b). GCNA’s Application was dismissed and they appealed.

The Court of Appeal held that, pursuant to Rule 3.68(3), the Chambers Judge was required to determine whether HOOPP’s Claim had a “reasonable prospect of success”. The Chambers Judge was not to consider any evidence, but was required to consider the entirety of the Pleadings. However, the Court held that the Chambers Judge did not err by considering factors other than evidence, even when outside the contents of the Pleadings; therefore, consideration of the underlying litigation context of the Claim was not incorrect. The Court concluded that an Application to strike is not the “proper vehicle for engaging in a definitive interpretation of complex contractual provisions”, but it was arguable that the provisions of the 2004 bond agreement created a reasonable claim within the wording used in Rule 3.68(2)(b). The Appeal was dismissed.