2022 ONSC 7130
COURT FILE NO.: CV-21-00000240
DATE: 2022-12-16
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Bending Lake Iron Ore Corporation
Henry Wetelainen Jr.
Henry Wetelainan Jr. as a Shareholder in
Bending Lake Iron Group Limited
Clayton Wetelainen
Robert McRae, counsel of record for the Plaintiffs (not appearing)
Plaintiffs
- and -
Ambershaw Metallics Inc.
Fladgate Exploration Consulting Corporation
Alen Raoul
D.P.S. Rajan
A. Farber & Partners Inc.
Legacy Hill Resources Ltd.
C. Ryan Bodnar for the Defendants, Ambershaw Metallics Inc., Alen Raoul, D.P.S. Rajan and Legacy Hill Resources Ltd.
Defendants
HEARD: September 29, 2022
at Thunder Bay, Ontario
Mr. Justice J.S. Fregeau
Endorsement on Motion to Dismiss
INTRODUCTION
[1] Bending Lake Iron Group Limited (“BLIG”) is an early-stage iron ore mine development company whose major asset was a mine site located northwest of Thunder Bay, Ontario in the Kenora Mining Division (the “Mine Site”). BLIG owned 100% of the iron ore deposit at the Mine Site.
[2] BLIG was founded by Henry Wetelainen Jr., who was at all material times the President, CEO and a major shareholder of BLIG. Clayton Wetelainen was at all material times a director and officer of BLIG. Mr. Wetelainen Jr. incorporated Bending Lake Iron Ore Corporation (“BLIOC”).
[3] On September 11, 2014, the defendant A. Farber & Partners Inc. (“Farber”) was appointed as receiver of the assets, undertakings and properties of BLIG.
[4] On November 27, 2015, Farber entered into an asset purchase agreement (the “APA”) with the defendant, Legacy Hill Resources Ltd. (“Legacy Hill”), a subsidiary of the defendant, Ambershaw Metallics Inc. (“Ambershaw”). The APA included the sale of certain disputed drill core samples (the “disputed core samples”) included among the assets of BLIG.
[5] The defendant, D.P.S. Rajan (presumed to be Saradhi Rajan) is the CEO of Legacy Hill. Alen Raoul (presumed to be Allen Raoul) is a geologist formerly employed as an independent contractor by Ambershaw.
[6] On this motion, the defendants Ambershaw, Legacy Hill, Allen Raoul and S. Rajan (the “moving defendants”), ask for an order striking out the Statement of Claim for failing to disclose a reasonable cause of action and for being improperly pleaded.
[7] The plaintiffs have not filed any materials on this motion. Mr. MacRae, counsel of record for the plaintiffs, has not responded to communications from counsel for the moving parties on this motion. Mr. MacRae has not appeared at the hearing of this motion.
[8] Mr. Wetelainen Jr. appeared today, advised the court that Mr. MacRae was in the hospital and requested an adjournment of the motion to retain alternate counsel. This adjournment request was denied.
BACKGROUND
[9] Mr. Wetelainen Jr. unsuccessfully opposed the November 27, 2015, APA entered into between Farber, in its capacity as receiver, and Legacy Hill. On April 19, 2019, Ambershaw commenced an action, Court File No. CV-19-0210, seeking interim and permanent possession of the disputed core samples included in the APA and which were in the possession of Henry Wetelainen Sr. and 1584859 Ontario Inc. (“158”), a corporation controlled by Henry Wetelainen Jr.
[10] In a series of court appearances in CV-19-0210, Ambershaw was granted an order for interim possession of the disputed core samples and also awarded three costs orders totaling $4,500.00. In these proceedings, 158 was held not to have standing due to its failure to maintain required corporate filings. At present, 158, BLIG and BLIOC remain in default of their required annual corporate filings.
[11] The plaintiff, Bending Lake Iron Ore Corporation (“BLIOC”), a company controlled by Mr. Wetelainen Jr., brought a motion in CV-19-0210 to add BLIOC as a party to that proceeding. Its motion was dismissed.
[12] On March 22, 2022, counsel for the moving defendants on this motion wrote Mr. MacRae, counsel of record for Mr. Wetelainen Jr., 158, BLIG and BLIOC, asking that he confirm his authority to have commenced this proceeding. Mr. MacRae failed to respond to this request.
THE POSITION OF THE MOVING DEFENDANTS
[13] The moving defendants submit that both BLIG and BLIOC are in default of their annual corporate filings and have been for many years. It is submitted that these parties are therefore precluded from initiating this proceeding without leave of the court, which has not been sought.
[14] The moving defendants further submit that Mr. MacRae has failed to comply with their request pursuant to Rule 15.02(1), namely provide confirmation of the plaintiffs having authorized the commencement of the proceeding. It is submitted that the court should stay or dismiss the proceeding pursuant to Rule 15.02(2) as a result of Mr. MacRae’s failure to comply with Rule 15.02(1).
[15] In regard to the Statement of Claim in the context of Rule 25 and the rules of pleadings, the moving defendants suggest that the claim fails to specify which claim each plaintiff has against each defendant contrary to the mandatory provisions of Rule 25.06(9)(a). The moving defendants submit that paragraph 1 of the Statement of Claim should therefore be struck.
[16] The moving defendants also contend that the claim seeks an “interim order requiring the Defendants to pay to the Plaintiffs $20,000,000.00”, without seeking such payment as a final order, without pleading facts which support this request in an interim or final order and without pleading on what basis and which of the defendants should be required to pay the plaintiffs (or any one of them) damages of $20,000,000.00.
[17] D.P.S. Rajan (presumably S. Rajan, the CEO of Legacy Hill), is barely mentioned in the claim and it is submitted that there are no facts pled which would support piercing the corporate veil to attach liability to Mr. Rajan personally. It is submitted that any claim against this defendant be dismissed as an abuse of process.
[18] Alen Raoul (presumably Allen Raoul) is also barely mentioned in the claim. It is submitted that there are no facts pled which could possibly support a finding that Mr. Raoul is liable for damages in relation to the five plaintiffs. It is submitted that the claim against Mr. Raoul should be dismissed as an abuse of process.
DISCUSSION
[19] In the Statement of Claim, the plaintiffs name “Alen Raoul” and “D.P.S. Rajan” as defendants. In paragraph #1 of the claim, the plaintiffs claim, among other things, “recovery of all items seized and removed by Fladgate, Ambershaw and Allen Raoul from 201 and 203 Hardistry Street, Thunder Bay”. Mr. Raoul is not otherwise named in the prayer for relief. The prayer for relief makes no specific claim pertaining to Mr. Rajan.
[20] Mr. Raoul is identified as a “MNDM Staff member” in paragraph 10 of the claim. He is also identified as “Ambershaw’s employee and Representative” at paragraph 75 of the claim. Mr. Rajan is identified in paragraph 42 of the claim as having completed an “affidavit of Consideration” on behalf of Legacy Hill and Ambershaw, apparently in relation to the APA.
[21] At paragraph 70 of the claim, the plaintiffs allege that Mr. Rajan, Mr. Raoul, Legacy Hill, Ambershaw and Fladgate “are parties to the acts of Conversion and Detinue with respect to” the disputed core samples.
[22] The plaintiffs’ claim appears to be directed toward the issue of the disputed drill cores, sold to Ambershaw by Farber pursuant to the APA and in possession of Ambershaw, to the knowledge of the plaintiffs’ pursuant to the May 2, 2019, order of Newton J. in CV-19-0210. The plaintiffs fail to plead on what basis relief is sought against Mr. Rajan, Mr. Raoul and Legacy Hill in regard to property known by the plaintiffs to be in the possession of Ambershaw. In particular, the claims against the personal defendants are not supported by any factual underpinning.
[23] In general terms, the Statement of Claim fails to clarify what cause or causes of action are being advanced. The plaintiffs have claimed, among other things, “an interim order…requiring the Defendants to pay to the Plaintiffs” $20,000,000.00. The plaintiffs have not indicated which plaintiff is advancing which cause or causes of action and/or which cause or causes of action are being pursued against which of the named defendants.
[24] In my view, the complete lack of clarity in the claim and its overall irregularity results in the claim failing to disclose a reasonable cause of action against the moving defendants. The claim is also in general violation of the rules of pleadings and, in my opinion, amounts to an abuse of process. Further, BLIG and BLIOC have been in default of required corporate filings for years and are therefore precluded from commencing this proceeding without leave of the court. Finally, Mr. MacRae, counsel of record for the plaintiffs, has failed to comply with a request made pursuant to Rule 15.02 to confirm his authority to have commenced this proceeding.
[25] The plaintiffs’ claim is struck in its entirety as against the moving defendants.
COSTS
[26] Three separate motions, comprising all defendants, have been brought in this action. The decisions on the three motions have disposed of the plaintiffs’ claim against all defendants and all defendants have sought their costs on a substantial indemnity basis in various amounts, jointly and severally as against all defendants.
[27] The three motions all sought similar relief and were, in my view, of similar complexity. It is obvious to me that a significant amount of time was required by all counsel in drafting the comprehensive and well-organized materials for this motion.It is appropriate in these circumstances that the costs awarded be in similar amounts.
[28] I order that the plaintiffs pay to the moving defendants, on a joint and several basis, the costs of this motion fixed in the amount of $9,000.00, inclusive of fees, disbursements and HST.
The Honourable Mr. Justice J.S. Fregeau
Released: December 16, 2022
2022 ONSC 7130
COURT FILE NO.: CV-21-00000240
DATE: 2022-12-16
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Bending Lake Iron Ore Corporation et al
Plaintiffs
- and –
Ambershaw Metallics Inc. et al
Defendants
ENDORSEMENT ON MOTION TO DISMISS
Fregeau J.
Released: December 16, 2022
dg/