National Bank Financial Ltd. v. Potter et al., (2008) 265 N.S.R.(2d) 67 (SC)

• Judge: Warner, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: May 07, 2008
• Jurisdiction: Nova Scotia
• Citations: (2008), 265 N.S.R.(2d) 67 (SC);2008 NSSC 135

Nat. Bk. v. Potter (2008), 265 N.S.R.(2d) 67 (SC);

    848 A.P.R. 67

MLB headnote and full text

Temp. Cite: [2008] N.S.R.(2d) TBEd. MY.015

National Bank Financial Ltd. (plaintiff) v. Daniel Potter, Starr's Point Capital Incorporated, Fiona Imrie, Gramm & Company Incorporated, 2532230 Nova Scotia Limited, 3020828 Nova Scotia Limited, Ronald Richter, Donald Snow, Meg Research.com Limited, 3027748 Nova Scotia Limited, Calvin Wadden, Raymond Courtney, Bernard Schelew, Blois Colpitts, Stewart McKelvey Stirling Scales, Bruce Clarke, 2317540 Nova Scotia Limited and Knowledge House Inc. (defendants)

(206439)

Bruce Clarke, Fiona Imrie, Gramm & Company Incorporated, 2532230 Nova Scotia Limited, 3020828 Nova Scotia Limited, Calvin Wadden, Bernard Schelew, Daniel Potter, Knowledge House Inc., Starr's Point Capital Incorporated, Donald Snow, Meg Research.com Limited, 3027748 Nova Scotia Limited and Raymond Courtney (plaintiffs by counterclaim) v. National Bank Financial Ltd., National Bank of Canada, Real Raymond, Jean Turmel, Michael LaBonte, Lorie Haber, Guy Roby, Eric Hicks, Barry Morse, David Mack and Bruce Clarke (defendants by counterclaim) and Daniel Potter, Blois Colpitts, Stewart McKelvey Stirling Scales and Bruce Clarke (defendants by cross-claim) and Knowledge House Inc. and Daniel Potter (plaintiffs) and Stewart McKelvey Stirling Scales, Andrew W. Burke, R. Blois Colpitts and James R. Cruickshank (defendants)

(174293; 193842; 208293; 216543; 227347; 2008 NSSC 135)

Indexed As: National Bank Financial Ltd. v. Potter et al.

Nova Scotia Supreme Court

Warner, J.

May 7, 2008.

Summary:

A complex series of multi-party actions arose out of the collapse of a publicly traded company, Knowledge House Inc. (KHI). National Bank Financial Ltd. (NBFL) applied to amend its statement of claim in the main action and defences, cross-claims, counterclaims and third party claims in the other related actions to remove any material fact allegations that its former employee, Clarke, participated in the alleged conspiracy to manipulate the stock price of KHI between 1999 and September 2001, or committed other wrongful acts.

The Nova Scotia Supreme Court dismissed the application.

Practice - Topic 2105

Pleadings - Amendment of pleadings - Prejudice or presumed prejudice - What constitutes - A complex series of multi-party actions arose out of the collapse of a publicly traded company, Knowledge House Inc. (KHI) - National Bank Financial Ltd. (NBFL) applied to amend its statement of claim in the main action and defences, cross-claims, counterclaims and third party claims in the other related actions to remove any material fact allegations that its former employee, Clarke, participated in the alleged conspiracy to manipulate the stock price of KHI between 1999 and September 2001, or committed other wrongful acts - The Nova Scotia Supreme Court dismissed the application - The court held that the prejudice that would be created by the consequential demands for particulars and reactive pleading amendments in what had already been a lengthy pleading process, would likely result in at least one or more of the defendants becoming incapable of presenting their case on its merits in an effective manner - That prejudice was not compensable by an award of non-punitive costs - See paragraphs 101 to 170.

Practice - Topic 2141

Pleadings - Amendment of pleadings - Re pleading of fraudulent intent - A complex series of multi-party actions arose out of the collapse of a publicly traded company, Knowledge House Inc. (KHI) - National Bank Financial Ltd. (NBFL) applied to amend its statement of claim in the main action and defences, cross-claims, counterclaims and third party claims in the other related actions to remove any material fact allegations that its former employee, Clarke, participated in the alleged conspiracy to manipulate the stock price of KHI between 1999 and September 2001, or committed other wrongful acts - The Nova Scotia Supreme Court dismissed the application - The court held that the proposed amendment would leave a large void in the requisite elements for pleading a civil conspiracy and fraudulent misrepresentation that was not in compliance with the letter or spirit of Civil Procedure Rule 14.12(1) (i.e., the requirement that the particulars of fraudulent intention be properly pleaded) - See paragraphs 101 to 170.

Practice - Topic 2143

Pleadings - Amendment of pleadings - Circumstances when amendment denied - A complex series of multi-party actions arose out of the collapse of a publicly traded company, Knowledge House Inc. (KHI) - National Bank Financial Ltd. (NBFL) applied to amend its statement of claim in the main action and defences, cross-claims, counterclaims and third party claims in the other related actions to remove any material fact allegations that its former employee, Clarke, participated in the alleged conspiracy to manipulate the stock price of KHI between 1999 and September 2001, or committed other wrongful acts - The Nova Scotia Supreme Court dismissed the application - The court held that: (1) in the context of these proceedings, bad faith could be inferred where NBFL presented no factual basis for seeking to remove the material fact allegations against Clarke and the evidence suggested that no such factual basis existed - Further, the timing of the application coincided with other proceedings in the litigation in respect of which the material fact allegations were detrimental to NBFL's interests; (2) the prejudice that would be created by the consequential demands for particulars and reactive pleading amendments in what had already been a lengthy pleading process, would likely result in at least one or more of the defendants becoming incapable of presenting their case on its merits in an effective manner - That prejudice was not compensable by an award of non-punitive costs; and (3) the proposed amendment would leave a large void in the requisite elements for pleading a civil conspiracy and fraudulent misrepresentation that was not in compliance with the letter or spirit of Civil Procedure Rule 14.12(1) (i.e., the requirement that the particulars of a fraudulent intention be properly pleaded).

Cases Noticed:

Consolidated Foods Corp. Canada v. Stacey - see Stacey v. Electrolux Canada.

Stacey v. Electrolux Canada (1986), 76 N.S.R.(2d) 182; 189 A.P.R. 182 (C.A.), refd to. [para. 2].

Scott Maritimes Pulp Ltd. v. Goodrich (B.F.) Canada Ltd. and Day & Ross Ltd. (1977), 19 N.S.R.(2d) 181; 24 A.P.R. 181 (C.A.), refd to. [para. 2].

Wall v. Horn Abbot Ltd. - see Wall v. 679927 Ontario Ltd. et al.

Wall v. 679927 Ontario Ltd. et al. (2000), 183 N.S.R.(2d) 383; 568 A.P.R. 383 (S.C.), refd to. [para. 2].

Gillis Construction v. Nova Scotia Power Corp. (1988), 86 N.S.R.(2d) 167; 218 A.P.R. 167 (T.D.), refd to. [para. 2].

DeGruchy v. Pettipas (2004), 222 N.S.R.(2d) 198; 701 A.P.R. 198 (S.C.), refd to. [para. 3].

Hardy v. Prince George Hotel Ltd. et al. (2003), 226 N.S.R.(2d) 1; 714 A.P.R. 1 (S.C.), refd to. [para. 3].

Lamey v. Wentworth Valley Developments Ltd. et al. (1999), 175 N.S.R.(2d) 356; 534 A.P.R. 356 (C.A.), refd to. [para. 4].

Ford et al. v. Kennie et al. (2002), 210 N.S.R.(2d) 50; 659 A.P.R. 50; 2002 NSCA 140, refd to. [para. 15].

Banco de Inversion Y Comercio Exterior S.A. v. Bank of Nova Scotia, [2005] N.S.R.(2d) Uned. 54; 2005 NSSC 109, refd to. [para. 14].

353903 Ontario Ltd. v. Nova Scotia (1998), 169 N.S.R.(2d) 88; 508 A.P.R. 88 (S.C.), refd to. [para. 14].

Kent Homes v. Balcom - see Irving (J.D.) Ltd. v. Balcom et al.

Irving (J.D.) Ltd. v. Balcom et al. (2005), 241 N.S.R.(2d) 59; 767 A.P.R. 59; 2005 NSSM 6, refd to. [para. 14].

Rowe v. New Cap Inc. et al. (1994), 134 N.S.R.(2d) 52; 383 A.P.R. 52 (S.C.), refd to. [para. 14].

Ryan et al. v. Kirby and Bothwell (1993), 112 Nfld. & P.E.I.R. 172; 350 A.P.R. 172 (P.E.I.T.D.), refd to. [para. 21].

Jeffrey v. Naugler (2006), 248 N.S.R.(2d) 372; 789 A.P.R. 372; 2006 NSCA 117, refd to. [para. 24].

Shore v. Cantwell and Cantwell (1977), 21 N.S.R.(2d) 288; 28 A.P.R. 288 (T.D.), refd to. [para. 26].

Jachimowicz v. Jachimowicz, 2008 NSSC 40, refd to. [para. 26].

Welsh v. Mont, 2002 CarswellNS 599 (S.C.), refd to. [para. 26].

Mikisew Cree First Nation v. Canada et al. (2002), 303 A.R. 43; 273 W.A.C. 43; 2 Alta. L.R.(4th) 1; 2002 CarswellAlta 603; 2002 ABCA 110, refd to. [para. 27].

Antipas v. Coroneos, 1988 CarswellOnt 358 (H.C.), refd to. [para. 28].

Maingot v. National Helicopters Inc., [2006] O.T.C. Uned. 240 (Sup. Ct. Master), refd to. [para. 28].

Mitsui & Co. (Point Aconi) Ltd. v. Jones Power Co. et al., [2001] N.S.R.(2d) Uned. 92; 2001 NSSC 178, refd to. [para. 31].

Merzbach v. McSween et al. (1997), 164 N.S.R.(2d) 113; 491 A.P.R. 113; 1997 CarswellNS 425 (C.A.), refd to. [para. 35].

National Bank Financial Ltd. v. Potter et al. (2005), 238 N.S.R.(2d) 237; 757 A.P.R. 237; 2005 NSCA 139, refd to. [para. 42].

BC Ferry v. T & N, 1993 CarswellBC 703, refd to. [para. 43].

Kamei Sushi Japanese Restaurant Ltd. et al. v. Epstein et al., [1996] B.C.T.C. Uned. 886; 1996 CarswellBC 1237, refd to. [para. 43].

Hughes v. Toronto-Dominion Bank, 2002 CarswellOnt 1544, refd to. [para. 43].

L&B Electric Ltd. v. Oickle (2005), 233 N.S.R.(2d) 244; 739 A.P.R. 244; 2005 NSSC 110, affd. (2006), 242 N.S.R.(2d) 356; 770 A.P.R. 356; 2006 NSCA 41, refd to. [para. 45].

Clark (H.) Ltd. v. Wilkinson, [1965] 1 All E.R. 934 (C.A.), refd to. [para. 48].

Wilson v. Sears Canada Inc. (1990), 96 N.S.R.(2d) 361; 253 A.P.R. 361; 1990 CarswellNS 452, refd to. [para. 48].

Canada Post Corp. v. Keymail Canada Inc., 2006 CarswellOnt 4108, refd to. [para. 49].

Canada Cement Lafarge Ltd. et al. v. British Columbia Lightweight Aggregate Ltd. et al., [1983] 1 S.C.R. 452; 47 N.R. 191, refd to. [para. 83].

Rose Park Wellsley Investments Ltd. v. Sewell, 1972 CarswellOnt 233 (Master), refd to. [para. 123].

Statutes Noticed:

Civil Procedure Rules (N.S.), rule 14.04 [para. 108]; rule 14.12(1) [para. 108].

Authors and Works Noticed:

American Law Institute, Restatement of the Law (Second) Contracts (1979), ¶ 125 [para. 130].

Annual Practice (1985), O. 20, rule 5(1) [para. 124].

Bullen, E., Leake, S.M., and Jacob, Jack I.H., Precedents of Pleadings (14th Ed. 2000), s. 50 [para. 121].

Odgers, Blake W., High Court Pleading and Practice (23rd Ed. 1991), p. 199 [para. 2].

Odgers on Civil Court Actions (24th Ed. 1996), ¶ 17.05 [para. 143].

Phipson, Sidney Lovell, The Law of Evidence (14th Ed. 1990), c. 16, Part 6, Part 9 [para. 131].

Rainaldi, Linda D., Remedies in Tort (2007 Looseleaf Update, Release 8), c. 3 [para. 122].

Supreme Court Practice - see Annual Practice.

Williston, W.B., and Rolls, R.J., The Law of Civil Procedure, generally [para. 26].

Whitebook - see Annual Practice.

Counsel:

David G. Coles, Q.C., James A. Hodgson, Joshua J. Santimaw and Robert E. Blair, for National Bank Financial Ltd. ("NBFL");

W. Dale Dunlop, for Michael (Ben) Barthe, Lutz Ristow, Craig Dunham, Derek Banks, Plastics Maritime Ltd., Lowell Weir, Blackwood Holdings, Helical Corporation, Carole McLauchlin-Weir, Calvin Wadden, Michael Mahoney and 3031775 Nova Scotia Ltd.;

John F. Rook, Q.C., for Stewart McKelvey Stirling Scales ("SMSS"), Andrew V. Burke and James K. Cruickshank;

George W. MacDonald, Q.C., and Cheryl Hodder, for 3058703 Nova Scotia Ltd. ("Keating");

Robert G. Belliveau, Q.C., for Staffing Strategists International;

Daniel Potter, for Daniel Potter, Knowledge House Inc. ("KHI") and Starr's Point Capital Inc.;

Mary Jane McGinty and Christine J. Doucet, for Gary Blandford, Julia Blandford and 3017804 Nova Scotia Ltd.

This application was heard on April 21 and 22, 2008, in Halifax, Nova Scotia, before Warner, J., of the Nova Scotia Supreme Court, who delivered the following decision on May 7, 2008.