Kellie Seaman

Following a trial judgment awarding over $16 million to the plaintiff in a commercial dispute, the court determined the appropriate costs award and prejudgment interest.

The court held that although the plaintiff’s Rule 49 offer was served slightly outside the formal timing requirements, it could still be considered under Rules 57.01 and 49.13.

Substantial indemnity costs were awarded from the date of the settlement offer and for work responding to a serious trading‑manipulation allegation later abandoned by the defendant.

However, the court found the plaintiff’s claimed hours excessive and reduced the requested fees.

The court fixed total fees at $1,400,000 inclusive of taxes, allowed disbursements of $191,813, and awarded prejudgment interest at the statutory rate from the date the cause of action arose.

The plaintiff, a junior oil and gas exploration company, sued the defendant underwriter for breach of a 'bought deal' engagement letter.

The defendant failed to close the transaction, arguing the letter was merely an agreement to agree and relying on 'out clauses' due to a drop in oil prices.

The court found the engagement letter was a binding contract and that the defendant could not rely on the out clauses, as it had not negotiated an underwriting agreement and the drop in oil prices did not constitute a material adverse change or disaster.

The plaintiff was awarded over $16 million in damages, representing the difference between the contract price and the replacement financing price, plus interim loan costs.

During the first week of trial, the defendant moved to amend its statement of defence and counterclaim to add new factual allegations and a mitigation defence relating to transactions undertaken by the plaintiff after the alleged breach of a share purchase agreement.

The court considered whether the proposed amendments disclosed a tenable defence, including arguments that damages should be assessed at the date of trial due to the plaintiff’s claim for specific performance and that subsequent transactions mitigated any losses.

The court held that damages for breach of contract would normally be assessed at the date of breach and that the proposed allegations concerning the plaintiff’s later transactions were irrelevant to the proper measure of damages.

The proposed amendments concerning the Red Willow transaction and complete mitigation did not raise a tenable defence and were refused.

The plaintiff sought leave to commence a secondary market misrepresentation action under the Securities Act and to certify a class proceeding against the defendants for misrepresentation, conspiracy, and oppression.

The plaintiff alleged that the defendants fabricated a financial crisis by including a 'going concern' note in the company's financial statements to artificially depress the share price, allowing insiders to acquire shares cheaply.

The court dismissed the motion for leave, finding no reasonable possibility of success at trial, as the financial disclosures were factual, required by GAAP, and made after reasonable investigation.

The court also refused to certify the conspiracy claim due to a lack of factual basis and struck the oppression claim, ruling that the Ontario Superior Court lacked subject-matter jurisdiction over an oppression remedy under the British Columbia Business Corporations Act.