3.2: How to start an action

Case Summary

George Venini (“George”), David Venini (“David”), Eugene Venini (“Eugene”), and Mary Ann Lyons (“Mary Ann”) were each 25% shareholders in John G Venini Investments Limited (“JGVI”), a family business started by their father. Eugene was the sole employee of JGVI. George and David (the “Applicants”) brought an Originating Application seeking an Order that Eugene was prohibited from voting at directors’ meetings with respect to his employment pursuant to section 120(6) of the Alberta Business Corporations Act, RSA 200 c. B-9 (“ABCA”) and an Order that Eugene’s employment with JGVI be set aside pursuant to section 120(9) of the ABCA.

The Court noted that Rule 3.2 provides that a Statement of Claim must be used to start an Action unless there is no “substantial factual dispute” and, even when there is no substantial factual dispute, the Court has significant discretion as to how Originating Applications proceed. Justice Marion held that Alberta Courts have harmonized the Originating Application process with the Summary Judgment process by confirming that the test for whether a matter is appropriate for Summary Judgment also applies to Originating Applications. In considering the Originating Application, Marion J. found that the proper approach was to consider the test for summary disposition set out by the Alberta Court of Appeal in Weir-Jones Technical Services Incorporated v Purolator Courtier Ltd, 2019 ABCA49.

Justice Marion held that there was no substantial factual dispute as to whether Eugene had voted on his employment with JGVI. There was evidence that all four directors were present at the meeting and that both George and Eugene’s evidence confirmed there was a vote on Eugene’s employment with JGVI. It was incumbent on Eugene “to put his best foot forward if he disputes this evidence”, which he did not do. The Court, accordingly disposed of the issue, finding that Eugene was prohibited from voting on his employment pursuant to section 120(6) of the ABCA.

With respect to whether Eugene’s employment contract should be set aside, the Court held that while there was a dispute about the scope and compensation of Eugene’s role, it did not give rise to a genuine issue requiring a Trial and therefore did not constitute a substantial factual dispute. This was, in part, because the decision on the issue before the Court did not require the Court to make findings as to whether Eugene’s employment or compensation was reasonable, or determine the appropriate scope or time required for Eugene’s employment, which was disputed between the parties. Accordingly, the disputed facts were not substantial for the purposes of the Application. The Court declined to set aside Eugene’s employment contract but noted that no findings were being made on the disputed matters on the record, and that the parties could decide whether they wished to continue to litigate those issues.

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