Executive Summary: Key Legal and Evidentiary Issues

• Defendants applied under R. 9-5(1)(a) of the Supreme Court Civil Rules to strike the plaintiffs' 76-page Amended Notice of Civil Claim, and the court also engaged subrules (1)(b) and (1)(c) in its analysis.

• Plaintiffs conceded that the claims directly arising out of alleged bullying and harassment, and the defamation claims of Breanne Humphrey, are time-barred under the Limitation Act.

• The ANOCC impermissibly pleaded evidence rather than material facts, contrary to the requirements of R. 3-1(2)(a) and R. 3-7(1).

• Defamation claims relied on pleas of "innuendo" but failed to properly distinguish between false innuendo and true (legal) innuendo, rendering the pleadings either improper or insufficient under R. 3-7(21)(a).

• Whether H6 Enterprises Ltd., a corporation, could benefit from the limitation period suspension based on its directing mind's disability raised a question influenced by the Supreme Court of Canada's decision in Scott v. Golden Oaks Enterprises Inc., 2024 SCC 32.

• The court stayed the action pending the filing of a further amended notice of civil claim that comports with the Rules and awarded the defendants their costs of the application in any event of the cause.

Background and the parties involved

This case arose from a dispute over the management of a campground/resort on Vancouver Island owned by the defendant B.L. Resort Ltd. ("BLR"). The personal defendants — Cory Manton, David Buettel, Twyla Biller, Casey Koster, Janice Koster, Matthew Woods, and Wanda Falck — are shareholders in BLR. The plaintiffs, James Lyman Humphrey ("Mr. Humphrey"), his company H6 Enterprises Ltd. ("H6"), and Breanne Catherine Humphrey ("Ms. Humphrey"), were also shareholders. Mr. Humphrey provided management services under contract to BLR through H6.

The plaintiffs' allegations

The plaintiffs alleged they sustained damages and loss due to a wide range of alleged misconduct on the part of the defendants. These allegations included bullying and harassment; numerous specific incidents of defamation of each of the plaintiffs, chiefly occurring in the second half of 2019 and in particular during the BLR annual general meeting on October 5, 2019; wrongful termination of H6's management contract, and termination of H6's exclusive rights, in or about February and March 2020; unjust enrichment; and conversion. In parallel, Mr. Humphrey and H6 brought parallel proceedings in the Court by way of Petition under Victoria Registry No. S230654, claiming oppression remedy relief under s. 227 of the Business Corporations Act, S.B.C. 2002, c. 57.

The defendants' application to strike

The original Notice of Civil Claim was filed in December 2022, and the defendants filed Responses to Civil Claim in January and February 2023. Among the defences raised was that the claims are time-barred under the Limitation Act, S.B.C. 2012, c. 13. In response, in January 2024 the plaintiffs filed their Amended Notice of Civil Claim ("ANOCC"), which pleaded postponement of the limitation period governing the defamation claims of Mr. Humphrey and H6, citing three circumstances: the suspension of the running of time for a period when Mr. Humphrey was under a disability; further suspensions due to various COVID-related Acts, Orders-in-Council, and Ministerial Orders; and Mr. Humphrey being the principal and operating mind of H6. The plaintiffs took the position that cumulatively, these factors led to the running of time being suspended for up to 18 months. The defendants applied under R. 9-5(1)(a) to strike the ANOCC. They argued it violated the requirements of R. 3-1(2)(a), that a notice of civil claim contain a concise statement of material facts, and R. 3-7(1), that a pleading not contain evidence. They submitted that it contained unnecessary narrative of events going back decades and confused allegations that are clearly statute-barred with those that are not. They asked that the ANOCC be struck in its entirety, with the plaintiffs being at liberty to restructure their pleas, or alternatively, to have select portions struck as either time-barred or disclosing no reasonable cause of action.

The court's assessment of the pleadings

Justice A. Saunders found the ANOCC to be "anything but concise," describing it as "dense, prolix, and not well-structured." It was 76 pages long, with Part 1, the Statement of Fact, consisting of 330 paragraphs spanning 66 pages, and Part 3, the Legal Basis, comprising 40 paragraphs spanning a further six pages. The court noted that it contained scattershot allegations of wrongdoing which, in some cases, did not clearly delineate which of the plaintiffs had been wronged by which defendants, and which of the various legal theories advanced those alleged wrongs related to. Some allegations referred to the plaintiffs collectively, which was problematic given the plaintiffs' concession as to Ms. Humphrey's claims being time-barred. The court found that the plaintiffs' approach to the pleading revealed a lack of understanding as to the distinction between pleading a material fact, which is proper, and pleading evidence, which is not. For example, the court observed that facts about Mr. Humphrey's expectations arising from the relationship between H6 and BLR "ought to be capable of being concisely summarized within two or three paragraphs, not dozens." Similarly, while the claims of Ms. Humphrey were conceded to be time-barred, the plaintiffs argued the details of bullying and harassment were still relevant to Mr. Humphrey's defamation claim; however, the court held this was an impermissible pleading of evidence.

The defamation and innuendo issue

The court scrutinized the defamation claims set out in paragraphs 152–225 and 242–245 of the ANOCC, comprising 31 pages of pleadings. These paragraphs set out lengthy particulars of multiple alleged defamatory statements of each of the personal defendants, but also extensive narration as to the circumstances in which those statements were made. The court further noted that in some cases it was difficult to comprehend how certain statements attributed to various defendants could possibly attract any liability. The plaintiffs argued the level of detail was necessitated by R. 3-7(21)(a) to support defamation claims by way of innuendo. However, the court found that what the plaintiffs actually pleaded appeared merely to be "false innuendo" — inferential meaning arising out of the natural and ordinary meaning of the words used — to which R. 3-7(21)(a) has no application. That rule only applies to "true" or "legal" innuendo, where the words alleged are contended to bear special meaning, other than their natural and ordinary meaning, because of extrinsic facts or circumstances. The court noted that if the plaintiffs did mean to plead true innuendo, the pleading was insufficient, as their claim must identify those particular statements alleged to be defamatory in their innuendo, must specify which of the plaintiffs is alleged to have been defamed, and must identify both the innuendo and the particular facts or matters which give rise to it.

The limitation period and the corporate attribution question

A significant issue concerned whether H6, as a corporation, could benefit from the suspension of the limitation period that applied to Mr. Humphrey due to his disability. The defendants submitted that while Mr. Humphrey may have been a person under a disability, such that the limitation period governing his claims was suspended for a period of up to 18 months, H6 cannot benefit from the same suspension, as such provisions are only available to natural persons. Chief Justice Hinkson relied on this principle in his April 2, 2024 decision in the Petition, disallowing amendments that would have pled postponement of the limitation period in respect of H6's claims. However, after those reasons were pronounced, the Supreme Court of Canada issued its decision in Scott v. Golden Oaks Enterprises Inc., 2024 SCC 32, in which the Court affirmed the Ontario Court of Appeal's ruling that the trial judge had improperly failed to exercise her discretion whether to attribute to a one-shareholder corporation in receivership, for the purpose of determining whether or when a limitation period had commenced, the knowledge of its shareholder. Justice Jamal, delivering the majority opinion, stated that there is no rule that the knowledge or state of mind of the directing mind of a one-person corporation must invariably be imputed to the corporation, and that context and purpose always serve as the primary considerations. Justice Saunders was persuaded that Scott raised considerations that remove the limitations defence in the present case, as it applies to H6, from the category of "plain and obvious" cases, and declined to order that the H6 claims be dismissed.

The ruling and outcome

Justice Saunders found the ANOCC as a whole to be embarrassing or scandalous within the meaning of R. 9-5(1)(b) and (c), and ordered the action stayed pending the filing by Mr. Humphrey and H6 of a further amended notice of civil claim that comports with the requirements of the Rules as to pleading. The parties did not address the mechanics of how the claims of Ms. Humphrey are to be concluded, and will be at liberty to apply for directions if necessary. The defendants were awarded their costs of this application in any event of the cause. No specific monetary amount was determined, as this was a procedural ruling on the adequacy of pleadings rather than a final adjudication on the merits.