|
Citation: 2005TCC136
|
|
Date: 20050225
|
|
Docket: 2003-1672(IT)G,
2003-1686(IT)G,
|
|
BETWEEN:
|
|
SANDIA MOUNTAIN HOLDINGS INC.
and ELIZABETH KULLA,
|
|
Appellants,
|
|
and
|
|
|
|
HER MAJESTY THE QUEEN,
|
|
Respondent.
|
____________________________________________________________________
Counsel for the Appellants: Richard Fitzsimmons and
Greg Baba (Student-at-law)
Counsel for the Respondent: Bobby Sood
____________________________________________________________________
REASONS FOR ORDER
(Delivered orally from the Bench at
Toronto, Ontario, on December 15,
2004)
Miller J.
[1] At the outset of an application by
the Appellants, Sandia Mountain Holdings Inc. and Elizabeth
Kulla, for the striking of portions of the Respondent's
Amended Reply pursuant to Rule 53, the Respondent raised
the applicability of Rule 8, which reads:
8 A motion to attack a
proceeding or a step, document or direction in a proceeding for
irregularity shall not be made,
(a) after the expiry of a
reasonable time after the moving party knows or ought reasonably
to have known of the irregularity, or,
(b) if the moving party has taken
any further step in the proceeding after obtaining knowledge of
the irregularity,
except with leave of the Court.
It was the Respondent's position that Rule 8
applied to these matters, and that the Appellants' motion
could not be made, as it was not brought within a reasonable time
after the Appellants knew of the irregularities in the pleadings.
In any event, the Appellants had taken several other steps in the
proceedings.
[2] The Appellants' position was
that Rule 8 refers to irregularities, and what the
Appellants believe are improper pleadings go far beyond
irregularities. Consequently, Rule 8 does not apply, and I
should proceed to hear their application on the merits.
[3]It is helpful to review the time line of the proceedings in
this matter to date. The Appellants filed their notices of appeal
on April 30, 2003. The Respondent filed the Reply on July 7,
2003. On July 28, 2003, the Appellants filed demands for
particulars and notices of motion to strike portions of the
Replies. I note that many of the portions requested to be struck
in July 2003 are the same as in the current motion from the
Appellants.
[4] The Respondent responded to the
demand for particulars by September 5, 2003 and filed amended
Replies on October 1, 2003. On October 15, the Appellants
withdrew their motions to strike portions of the pleadings. In
January 2004, the Appellants served their list of documents. In
February the Respondents served its lists of documents. In April,
2004, Mr. Sood replaced Mr. Calabrese as counsel for the
Respondent.
[5] The Parties held examinations for
discovery on June 22 and June 23, 2004, with the Respondent
discovering Ms. Kulla for two days and the Appellants discovering
the Respondent's witness, Mr. Maciel, for two-and-one-half
hours one evening. Undertakings were exchanged by the end of
August 2004. On November 30, 2004, the Appellants filed
notices of motion to strike portions of the amended Replies.
[6] I find the Appellants have waited
too long and undertaken too many steps for this Court to grant it
leave pursuant to Rule 8. I am satisfied that Rule
8 can apply to a motion brought pursuant to Rule 53; that
is, that an application to strike out portions of pleadings is
subject to what is called the fresh-step rule.
[7] Justice Rip, in Gee v. The
Queen,[1] after
referring to Rule 8, stated:
Where an applicant has delayed for as long as the appellant has
in bringing a motion to strike or has taken fresh steps after
being served with a pleading, I normally would reject the
applicant's motion. ...
Similarly, Justice Bowman, in Imperial Oil Limited et al.
v. The Queen,[2] indicated:
The "fresh-step" rule is one that has been part of the
rules of practice and procedure in Canada and the United Kingdom
for many years. There is a great deal of jurisprudence on what
constitutes a fresh step but the rule is based on the view that
if a party pleads over to a pleading this implies a waiver of an
irregularity that might otherwise have been attacked.
...
Yet both Justice Rip and Justice Bowman went on to consider
the motion to strike the pleadings and did not apply Rule 8.
Justice Rip said in Gee:
... However, in the matter before me, the Reply is so
deficient that to dismiss the motion would lead to fractious
examinations for discovery and lengthen unduly the trial of the
appeal. ...
Justice Bowman put it this way:[3]
... a rather wide-ranging attack on the appellants right
to appeal, including allegations that this court has no
jurisdiction, that the appeals are frivolous, vexatious, and an
abuse of process is hardly an attack on an irregularity.
I conclude that my colleagues consider gross deficiencies to
be something more than irregularities, and for that reason
Rule 8 does not come into play.
[8] Are the Appellants' concerns
with the Respondent's pleadings in this case such that they
go well beyond irregularities, justifying an application to
amend, after both a list of documents have been exchanged and,
indeed, examinations have been conducted?
[9] One of Justice Rip's concerns
was that to preclude the application to strike pleadings would
lead to fractious examinations. It appears the strategy of the
Appellants was to conduct the fractious examinations first, and
now seek to amend. I am concerned that the Appellants had their
opportunity at an appropriate time -- that is, back in the summer
of 2003 -- and decided at that time not to continue with their
application to strike, but to proceed with the next two steps of
the proceeding.
[10] At this stage, to rekindle that
application, I suggest, would require such a serious, substantial
breach of the rules of proper pleading, such that it would indeed
constitute an abuse of process.
[11] So let us look at the Appellants'
concerns with respect to the pleadings. While they raised
nine points of argument attacking the propriety of the pleadings,
I glean four major thrusts of criticism: (i) the Respondent's
submissions do not completely correspond to the Appellants'
allegations; (ii) inappropriate pleading of conclusions of law
when placing them in assumptions or not supporting them by facts;
(iii) vagueness with respect to misrepresentations, and
specifically the term "personal expenses"; and (iii)
irrelevancy.
[12] First, I will deal with admissions that
do not totally correspond with the allegations. For example,
where the Appellants alleged making year-end adjusting debits,
the Respondent admitted the year-end adjustments, but added the
words "to reduce its income", which is not part of the
Appellants' allegations. While this may be inappropriate
pleading, I do not see it as anything more than an irregularity,
and certainly something that a trial judge could easily
distinguish.
[13] Second, with respect to the conclusions
of law, regrettably, this is not an uncommon error in pleadings.
In this case I do not find the Appellants' claims of
inappropriate pleadings of conclusions of law significant or
severe. By way of example, the Appellants object to the
Respondent's assumption of a conferring of shareholder
benefits on the Appellants. The Appellants' position is that
whether or not such benefits were conferred is a conclusion of
law. The Respondent submits this is more a question of fact.
[14] I raise this example not for the
purpose of determining the issue, but to illustrate that the
objection is not one that I would clarify as so deficient as to
constitute an abuse of process. The other concerns in this area
are of a similar nature. Looking at the pleadings which the
Appellants claim fall in this category as a whole, I find they
are more readily characterized as irregularities.
[15] Third, the Appellants' attack on
the pleadings for vagueness would have been more readily handled
by a demand for particulars. This concern revolves around the
Respondent's use of the term "personal expenses".
For example, assumption 15(s) reads:
(s) the year-end
entries resulted in Sandia expensing the Appellants' personal
expenses in its books in the 1993 and 1994 taxation years.
Even if I were to find that was vague, again, it is not such
an egregious error as would warrant sidestepping Rule
8.
[16] Finally, with respect to those
objections on the basis of not being relevant, I disagree with
the Appellants' assertion that such pleadings are scandalous.
Indeed, I do not believe as a motions' judge I am in the best
position to even determine the relevance.
[17] I note the comments of Justice Bowman
in Niagara Helicopter v. Canada,[4] where he found it was inappropriate
for a motions judge who has heard no evidence to decide on the
relevance of the allegations in the pleadings, indicating that
should best be left to the trial judge.
[18] When I look at the Respondent's
reply as a whole, considering all of the Appellants'
objections, I simply do not find such oppressive or vexatious
errors that justify giving the Appellants a second chance to
strike the pleadings. Yes, there may be irregularities, but the
Appellants made a decision a year ago to not attack these
provisions. I believe they must now abide by the consequences of
that decision, and that Rule 8 does preclude them from
bringing an application at this stage to strike portions of the
Reply.
[19] For these reasons, the Appellants'
motion to strike is dismissed. Costs of this application to the
Respondent.
Signed at Ottawa, Canada, this 25th day of February, 2005.
Miller J.
Email this Content