This was an Application pursuant to Rule 3.68 for an Order striking a Counterclaim. The Counterclaim arose within a receivership Action where the Applicants were the Interim Receiver and its representative. The Respondents cross applied to amend their Counterclaim and sought leave to pursue Actions against the Applicants.

Regarding the Respondents’ Application to amend the Counterclaim, the Court noted that leave was required because Pleadings had closed, pursuant to Rule 3.65. The Court also noted that the test for amending Pleadings was low. Two proposed amended Counterclaims were attached to the Application to amend the Counterclaim and the bench brief respectively; and the Court based its analysis on the second proposed amendment given the low bar to allow amendments to Pleadings. The Court further noted that while an Application under Rule 3.68 typically precludes evidence and limits analysis to what is pled, the Court must consider evidence when assessing leave to sue and ensure it supports the cause of action against the Applicants. The Court found that many of the Affidavits submitted by the Respondents contained hearsay, speculation, or conjecture, and cautioned against their use.

The Court then considered Rule 3.68, which allows for the striking of all or part of a claim where it does not disclose a reasonable claim. The Court noted that the question was whether an Action had a reasonable prospect of success when accepting pleaded facts as true, but Rule 3.68 should be applied sparingly.

The Court identified the claims made against the Applicants and found that they did not meet the test for leave to sue and should be struck. One of the causes of actions pled against the Applicants was conspiracy, but the Court found that the Pleadings resorted to broad allegations of conspiracy without specifying facts that would ground the claim, which was contrary to the requirement under Rule 13.7. This rule stipulates that allegation of fraud (by extension, conspiracy to commit fraud) must be particularized.

As a result, the Court allowed the Applicants’ Application to strike the Counterclaim, while dismissing the Respondents’ Cross Applications.