The dispute arose after the death of one shareholder of a heavy equipment corporation. The corporation’s unanimous shareholder’s agreement (“USA”) required that the corporation repurchase a deceased owner’s shares, in “an amount equal to the amount received by the [c]orporation on the insurance held by it on the life of the deceased [s]hareholder.” Following the shareholder’s death, the corporation received payment under two separate insurance policies. Those funds were forwarded to the Estate as taxable dividends, though an election could have been made to provide non-taxable dividends, as the corporation’s receipt of the insurance proceeds had increased the capital dividend account.

The Plaintiff/Respondent brought a claim for breach of the USA, or in the alternative, oppression of the deceased shareholder’s interests. The Defendants/Applicants denied that the USA required the corporation’s director to pay insurance proceeds as a non-taxable dividend, and further denied that there could be a reasonable expectation that the corporation pay insurance proceeds as a non-taxable dividend, as the corporation was duty-bound “to preserve the benefit of the increase to the [capital dividend account] for the [c]orporation”. A Counterclaim was filed for the amount paid under the second insurance policy, arguing that the payment had been made upon erroneous legal advice. The Defendants/Applicants brought an Application under Rule 7.3 for Summary Dismissal of the Statement of Claim, and Summary Judgment of the Counterclaim.

Justice Sulyma first considered the admissibility of hearsay statements within the parties’ Affidavit evidence, in light of Rule 13.18 which precludes final determination based on hearsay. While the Court noted that hearsay evidence may be admissible in responding to an Application for final determination, the Court declined to consider the hearsay advanced by any party.

Her Ladyship then considered summary disposition of the claims pursuant to Rule 7.3. While the parties were in substantial agreement on the relevant law, the Alberta Court of Appeal clarified that law subsequent to the Application but prior to Judgment, in Weir-Jones Technical Services Incorporated v Purolator Courier Ltd, 2019 ABCA 49 (“Weir-Jones”). The principles relied upon by the parties were not disturbed by Weir-Jones, and that case was not cited.

In reviewing the factual record with respect to the Claim, Justice Sulyma held that the evidence of various parties, and a weighing of various parties’ credibility, would be necessary to “make fact findings on representations that relate to advice on the use of insurance proceeds, the payment of such from the [capital dividend account], and the tax free benefit to the estate of the deceased shareholder.” As such, Justice Sulyma resolved that Her Ladyship could not make the necessary findings of fact, and moreover, that the evidence was not of the kind that would permit fair and just summary determination.

In reviewing the factual record with respect to the Counterclaim, Justice Sulyma was again not able to make necessary findings of fact, as various parties’ representations would need to be ascertained to decide whether an honest belief in a mistake of fact resulted from erroneous legal advice.

The Application for Summary Dismissal of the Statement of Claim and Summary Judgment of the Counterclaim was dismissed.