Executive Summary: Key Legal and Evidentiary Issues

• The appeal centered on whether the motion judge committed a reviewable error in striking Precision Weather Solutions Inc.'s intellectual property counterclaim.
   
• Findings showed that Precision Weather Solutions Inc. failed for five years to comply with its disclosure obligations.
   
• Two prior court orders addressing disclosure, document production, and expert reports had gone unheeded.
   
• Precision Weather Solutions Inc. argued the motion judge set an unduly low threshold and overlooked less severe remedies such as an adjournment.
   
• Farmers Edge Inc. maintained that the non-compliance was persistent and incompatible with a fair trial given the imminent trial dates.
   
• Deference to discretionary case-management decisions was central to the Court of Appeal's review, absent legal error or palpable overriding error.
   

Facts of the case

Farmers Edge Inc. (FE) and Precision Weather Solutions Inc. (PWS) were engaged in litigation stemming from events dating back to 2014. PWS advanced a counterclaim against FE and three individuals — Wade Barnes, Curtis MacKinnon, and Trevor Armitage — alleging misappropriation of intellectual property, passing off, and breach of trust. In September 2023, the parties agreed to set the action down for trial in October 2025. Over the following five years, PWS failed to meet its disclosure obligations despite repeated requests from FE through discoveries, undertakings, and interrogatories, and despite two court orders requiring disclosure, production of documents, delivery of responses to undertakings, answers to interrogatories, production of expert reports, and quantification of PWS's damages claim. At the time the motion to strike was argued, neither party had formally sought an adjournment of the trial. Although PWS supplied some additional responses shortly before the motion, key information needed to prove its liability and damages claims, including expert reports, remained outstanding. The motion judge, who also served as case management judge for the proceeding, struck PWS's intellectual property counterclaim, and PWS appealed that decision.

Policy and legislative provisions at issue

The parties agreed that the governing legal principles were set out in Cobbe's Plumbing & Heating Ltd v Westfair Properties Ltd, 2004 MBQB 31, and Falcon Lumber Limited v 2480375 Ontario Inc (GN Mouldings and Doors), 2020 ONCA 310, both addressing when a court may strike a pleading for non-compliance with disclosure obligations. Because the decision to strike a claim falls within a motion judge's case-management authority, appellate review is guided by a deferential standard, as confirmed in "Iglesia Ni Cristo" Church of Christ v Canadian Broadcasting Corporation, 2026 MBCA 45. Under that standard, a discretionary case-management decision will only be disturbed where the judge made a legal error, a palpable and overriding error of fact, or failed to exercise discretion judicially.

Reasoning and analysis

PWS argued that the motion judge misapplied the governing principles, effectively setting an unduly low threshold for striking the intellectual property claim, and failing to consider less draconian remedies such as an adjournment of trial. It further contended that the motion judge erred in finding that its conduct caused FE both actual and inherent prejudice, including impairing FE's ability to defend against PWS's allegations. FE responded that the motion judge correctly characterized PWS's non-compliance as persistent, inadequately explained, and incompatible with a fair trial given the imminent trial dates, and that his findings on prejudice were sound. The Court of Appeal noted that the motion judge had turned his mind to the seriousness of striking a pleading, recognizing that doing so would deprive PWS of its day in court and should be used cautiously, while also recognizing that FE should not be unfairly constrained by PWS's non-compliance. In balancing these interests, the motion judge found that PWS's conduct was closer to deliberate than inadvertent, that its failures were clear and unequivocal, that no reasonable explanation had been offered, that the non-compliance was material and extensive, and that FE had suffered actual and inherent litigation and non-litigation prejudice. He also found that PWS had not made a credible commitment to cure its non-compliance quickly. The Court of Appeal held that these findings, though discretionary, were reasonably supported by the evidence, and that PWS had not established any palpable and overriding error.

Ruling and overall outcome

Having found no basis to interfere with the motion judge's exercise of discretion, the Court of Appeal dismissed PWS's appeal. Farmers Edge Inc. was the successful party, and the appeal was dismissed with costs, though the written reasons do not specify a monetary amount for those costs.