Has Striking a Lawsuit Just Become Easier?
One way by which a defendant may obtain a quick resolution is to file an application for summary dismissal of the plaintiff’s claim. To do so, the defendant must show, on affidavit evidence, that it has a “very high” chance of success at trial because the claim has no merit. Another way by which a defendant may seek fast disposition is to bring an application to strike the claim on the basis that the claim (without even having regard to evidence) is not reasonable on its face. The latter approach is the focus of this blog.
A party seeking to strike a pleading, or a portion thereof, on the basis that the document wholly or partly does not disclose a reasonable claim must satisfy Rule 3.68, which provides at sub-section (3) that no evidence may be submitted in support of such an application. The panel of the Alberta Court of Appeal in the very recent decision of HOOPP Realty Inc. v. The Guarantee Company of America, 2015 ABCA 336 (“HOOPP Realty”) was comprised of Justices McDonald, Bielby and Wakeling. Justices McDonald and Bielby (the “Majority”) wrote the majority decision of the Court. Justice Wakeling, though concurring in the result, dissented on a critical point of law, namely the effect of Rule 3.68(3) (the “Dissent”).
Briefly, HOOPP Realty involved a developer seeking payment from a guarantor under a construction agreement in respect to damages allegedly caused by the general contractor. The crux of the guarantor’s application to strike the developer’s statement of claim under Rule 3.68 was that the Court of Appeal in a previous decision dismissed the developer’s claim against the general contractor. Both the Majority and Justice Wakeling in dissent dismissed the application to strike on the basis that the chambers judge’s decision was reasonable.
The Majority Decision:
The Majority concluded (see paragraphs 19-22) that Rule 3.68(3) does not bar the Court from considering factors “other than evidence, even when outside the contents of the Amended Statement of Claim”. Specifically, the Majority held that a chambers judge “must consider earlier reported decisions addressing aspects of the claim, including the result of companion litigation […]”. The Majority thus considered the Court’s prior decision to dismiss the claim against the general contractor.
The thrust of the Dissent (see in particular paragraphs 25 and 26) was that a chambers judge should not consider any evidence, broadly construed, including facts such as prior judicial decisions. Justice Wakeling emphasized that the judge should confine his- or herself to the very text of the pleading in question to the exclusion of all other facts or information.
The Bottom Line:
The Majority decision is now the law of the land. The interesting and unclear question centers on how far the decision goes. In other words, what are the “factors, short of evidence” that a Court may consider in determining whether a pleading discloses a reasonable claim? We now know of one such factor, namely prior decisions in companion litigation, but are there others? How is one to distinguish in a tangible way between what constitutes a “fact” versus “evidence”? Is not evidence required for a purported fact to be established as true?
My analysis of the case is that HOOPP Realty should be read narrowly. If a fact is other than a matter on which the Court can take judicial notice, such as past decisions in companion litigation, then proof of that fact will require evidence. If evidence is required to prove a material fact in support of an application to strike, then reliance on that evidence would pit the applicant squarely against the Rule 3.68 prohibition. If a party finds that it requires an affidavit in support of its application to “strike” a pleading for want of a reasonable claim, then it should consider whether it should be bringing an application under Rule 3.68 at all. It might be better served by bringing a summary dismissal application under Part 7 of the Rules instead.
Invitation for Discussion:
If you would like to discuss any this blog or any other business litigation matter, please do not hesitate to contact one of the lawyers in the Business Litigation group at Shea Nerland LLP.
Note that the foregoing is for general discussion purposes only and should not be construed as legal advice to any one person or company. If the issues discussed herein affect you or your company, you are encouraged to seek proper legal advice.