OPABIN SAND AND GRAVEL INC v TSUU T’INA CONTRACTING LIMITED PARTNERSHIP

The underlying dispute arose from the Springbank Off-Stream Reservoir (the “SR1 Project”), a provincial public works construction project in which Opabin Sand and Gravel Inc (“Opabin”) supplied aggregate through a subcontracting chain ending with Vinci Geoinfrastructure Canada Limited (“Vinci”) as general contractor.

After Opabin stopped receiving purchase orders, it filed a substantial claim under the Public Works Act, RSA 2000, c P-46 (the “PWA”), alleging losses based on representations of continued supply work (the “PWA Claim”). As a result, the Crown withheld Vinci’s progress payments in an amount equal to the PWA Claim. Vinci advised Opabin that they were not a recognized claimant under the PWA, that the PWA Claim was out of time, and that the PWA Claim sought damages not permitted by the statute. Opabin then commenced an Action against Vinci and others in the Court of King’s Bench (the “ABKB Claim”), alleging it relied on representations of further work and suffered resulting losses.

Vinci filed a Counterclaim which denied liability and alleged, abuse of process on the basis that Opabin used both the PWA Claim and the ABKB Claim to exert improper economic pressure, and conversion as Opabin’s wrongful PWA Claim caused Vinci to be deprived of its progress payments. An Applications Judge struck the counterclaim under Rule 3.68(2)(b) for disclosing no reasonable cause of action. Vinci appealed, arguing that its pleadings satisfied the low threshold necessary to survive a striking application.

Justice Mandziuk’s analysis centered on whether the Applications Judge correctly applied Rule 3.68, reiterating that the threshold for striking a claim is extremely high, applying only where it is beyond doubt that the claim must fail. Mandziuk J. confirmed that on such applications, no evidence may be considered, and all material facts pleaded must be assumed true unless they are speculative, patently absurd, or incapable of proof. Justice Mandziuk highlighted that pleadings must be read generously, and where multiple interpretations exist, the Court must prefer the interpretation that supports the claim’s viability. The Court also emphasized that deficiencies in detail or particulars are not grounds to strike, as the appropriate remedy is to order better particulars.

Applying these principles, Mandziuk J. held that the Applications Judge erred in striking Vinci’s abuse of process claim. Vinci pleaded that the ABKB Claim was the legal process being misused and that it was filed to intensify financial pressure created by the PWA Claim. While acknowledging that settlement leverage alone is not improper, Justice Mandziuk noted that Vinci advanced a distinct, arguable theory that Opabin used litigation to reinforce economic pressure generated by the PWA process. Further, Mandziuk J. found that Vinci sufficiently identified the filing of the PWA Claim as the act outside the litigation said to be abusive and pleaded special damages, including investigation and financing costs. Given the mixed case law on several elements, Justice Mandziuk determined that none of the allegations could be deemed hopeless.

Mandziuk J. applied similar reasoning to the conversion claim. Although the Applications Judge held Vinci lacked a property interest in the withheld progress payments, Mandziuk J. highlighted that Vinci pleaded a legal entitlement to those funds, and section 15 of the PWA characterizes them as due and payable to the contractor. Vinci further alleged that the filing of the PWA Claim foreseeably resulted in the withholding of these funds, amounting to a wrongful interference. Justice Mandziuk emphasized that even if novel, this theory was not doomed to fail at the pleadings stage.

In the end, the Court held that the Applications Judge applied Rule 3.68 too narrowly. As both the abuse of process and conversion claims were arguable on their face, Justice Mandziuk found that Vinci’s Counterclaim should not have been struck. Consequently, the Appeal was allowed, and Vinci’s Counterclaim was permitted with Costs in its favour.