3.62: Amending pleading
3.74: Adding, removing or substituting parties after close of pleadings
4.11: Ways the Court may manage action
4.22: Considerations for security for costs order
7.3: Summary Judgment (Application and decision)

Case Summary

The Plaintiff was employed as a trader by the Defendant, Twin Cities Power-Canada, ULC (“TC Canada”), by way of an employment contract. He was terminated from his employment without cause. The other Defendants, collectively, Twin Cities USA (“TC USA”) were related to TC Canada.

There were four Applications before the Court: (1) TC USA applied for Summary Dismissal of the Action by the Plaintiff for damages for wrongful dismissal; (2) the Plaintiff applied to amend its Pleadings; (3) the Plaintiff sought an Order for Security of Costs against TC USA and TC Canada (collectively, the “Defendants”); and (4) the Plaintiff sought Security for Judgment against the Defendants.

TC USA applied for summary dismissal of the Action on two grounds. First, TC USA submitted that the issue was res judicata. Second, TC USA submitted that it was not the Plaintiff’s employer and thus the argument was without merit and could not succeed.

The Court recognized that Rule 7.3 of the Rules of Court provided for Summary Judgment when there was no merit to a claim. As a general rule, outstanding Applications to amend Pleadings are resolved before considering a Summary Judgment Application on its merits (Condominium Corp No 0321365 v 970365 Alberta Ltd, 2012 ABCA 26). However, leave to amend will not be granted if the claim could be successfully struck, such as if the claim was res judicata (Alberta Treasury Branches v Opsteen, 2012 ABCA 153).

Based on the above, the Court first determined whether the Application was res judicata. The Court held that the previous Summary Judgment entered against TC Canada as the Plaintiff’s employer did not constitute a finding that the Plaintiff had only one employer. It also did not preclude a finding that TC USA or any of the proposed new Defendants would also be liable as an employer. The Court dismissed the Application of TC USA for Summary Judgment sought on the basis of res judicata.

In determining if amendments to Pleadings should be allowed, the Court relied on Rules 3.62 and 3.74(3). In addition, the Court summarized the following principles regarding amendments:

1.      An amendment should be allowed no matter how careless or late, unless there is prejudice to the other side, and even that is no obstacle if it is repaired;

2.      The threshold to allow amendments is very low except in cases of alleged fraud. Very significant evidence and the evidence of the intent to commit fraud is required; and

3.      A modest degree of evidence justifies an amendment to Pleadings within the limitation period.

The Court held that there was no prejudice in this case as the existing Defendants and the proposed Defendants were closely related entities. Further, the existing Defendants were represented throughout the litigation by common counsel who also represented the proposed Defendants. There was a standstill agreement respecting limitation periods. The Court reviewed the amendments on a case-by-case basis, allowing some amendments and disallowing others.

The Plaintiff sought Security for Costs and Security for Judgment against the Defendants as a condition of their continued defence. Rule 4.22 of the Rules of Court allowed for Security for Costs as a discretionary Order. The Court granted Security for Costs against TC Canada for several reasons including:

1.      TC Canada had ceased operations and had no assets in Alberta - the Plaintiff had no ability to enforce his existing Judgment, any future Judgment or any Order for Costs against TC Canada;

2.      TC Canada’s defence continued to be funded and the evidence did not show that an Order for Security would preclude it from continuing to defend the Action against it, or unduly prejudice its defence;

3.      With regard to the merits of the claim, the Court noted that the Plaintiff had a final judgment against TC Canada and TC Canada had not posted Security as directed by the Alberta Court of Appeal; and

4.      There was insufficient evidence to draw the conclusion that the Plaintiff was responsible for the closure of TC Canada.

The Court held that the unpaid final Judgment, the damages for wrongful dismissal and the Plaintiff’s unpaid bonus were all strong claims. Taking into account all of the factors relevant to Rule 4.22, the Court held that Security for Costs against TC Canada was appropriate.

Although Security for Judgment was an extra-ordinary remedy to be granted only in exceptional cases, the Court held that those circumstances existed here because:

1.      TC Canada enjoyed the benefit of revenue gathered by the Plaintiff, but chose not to pay the Plaintiff his bonus;

2.      TC Canada did not honour the Judgment that it said it would;

3.      TC Canada raised an unsubstantiated FERC investigation defence;

4.      TC Canada had ceased its operations, thus making it difficult, if not impossible, for the Plaintiff to collect; and

5.      TC Canada continued to be involved in the litigation and there was no evidence that it could not arrange to post security.

With regard to Security for Costs and Judgment against TC USA, the Court held that the corporation had no assets in the jurisdiction against which the Plaintiff could enforce a Judgment. The Court also held that there was no basis to conclude that an Order for Security for Costs, or for Judgment, would prejudice its ability to continue its defence, or that it could not post security. However, on the evidence before the Court, the Court held that the claims against TC USA were not as strong as the claims against TC Canada.

Pursuant to Rule 4.11, the Court has discretion to enforce terms and conditions, and make any Order with respect to practice or procedures. The Court noted the following relevant circumstances:

1.      The Plaintiff had not been paid the bonus the Court had determined he was entitled to;

2.      TC USA, or at-least some of the Defendants under TC USA, decided to cease operations in Canada and remove its assets from Alberta;

3.      TC USA controlled the flow of money in and out of TC Canada;

4.      TC USA did not use any of its monies, including any profits earned, after terminating the Plaintiff to pay the Plaintiff his bonus;

5.      TC USA had benefitted from the services of the Plaintiff for which he had not been paid; and

6.      It would not be just and equitable, as a result of TC USA and TC Canada arranging its affairs, that the Plaintiff not be able to enforce Judgment in Alberta.

The Court held that exceptional circumstances existed that would make it just and equitable that both Security for Costs and Security for Judgment be posted by TC USA, despite the uncertainty respecting the merits of the Plaintiff’s claim.

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