3.2: How to start an action
10.31: Court-ordered costs award

Case Summary

The Applicant filed an Originating Application seeking a declaration that he was a shareholder in the Respondent Company. The Application was based on an agreement purportedly signed by the Applicant and a Principal of the Respondent Company. The Principal swore an Affidavit in which she stated that she did not recall discussing or signing the agreement. The Action proceeded through Questioning on the Affidavits and was set down for Argument. One week before Argument was set to commence, the Respondent filed a Statement of Claim against the Applicant.

Justice Kent noted that Rule 3.2 sets out how an Action may be commenced. Rule 3.2(2) provides that an Action must be commenced by Statement of Claim, unless one of several conditions is met. Unlike the former Rule, there is no provision in Rule 3.2(2) that permits an Action to be commenced by Originating Notice if the Claim is based on a written instrument where there are no material facts in dispute.

Justice Kent held that the Statement of Claim gave rise to issues beyond simply whether there was an agreement to give shares to the Applicant, including issues relating to consideration and limitations. Justice Kent held that while the Originating Application may have been the appropriate document at the time it was filed, the operative document in the matter had become the Statement of Claim.

In this context, Justice Kent declined to grant the Applicant the declaration sought in the Originating Application. However, Justice Kent further held that the Applicant was not precluded from seeking other Summary Relief in the future, provided additional issues raised in the Statement of Claim were addressed. Finally, Justice Kent held that although the Respondents were successful, thrown away Costs would be awarded to the Applicant.

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