Executive Summary: Key Legal and Evidentiary Issues

• The chambers judge dismissed an amendment application because it relied on breaches of court orders, which she ruled do not constitute a cause of action.

• The proposed paragraph 26 alleged unauthorized expenditures from mortgage-derived funds, in violation of specific court orders and an undertaking.

• Appellant argued these facts supported claims of misappropriation and embezzlement, not merely breaches of orders.

• The Court noted pleadings must state material facts and may support a cause of action even without explicitly naming it.

• Established jurisprudence supports allowing amendments that raise arguable issues and do not cause injustice.

• The Court of Appeal found the proposed amendments met the low threshold for pleadings and allowed the appeal.

Facts of the case

The appellant, the Estate of Nora MacDonald Stackard, sought to further amend its amended amended statement of claim against 1256009 Alberta Ltd., Rosa Elan Dorath, and the Estate of Arthur John Jerome Stackard. The chambers justice had previously denied this application, stating the proposed amendments were based on breaches of court orders, which are not recognized as independent causes of action.

In its proposed amendment (paragraph 26), the appellant detailed unauthorized disbursements from mortgage-derived funds intended for Nora Stackard’s benefit. Specifically, it alleged that:

• $152,094.74

• $19,688.36

• $222.10

were spent to pay tax obligations of 1256009 Alberta Ltd. without the prior consent of plaintiff’s counsel or court approval. These payments were allegedly made in violation of:

a) the Order of Justice Miller (filed February 7, 2012), prohibiting use of mortgage proceeds except for Nora’s needs;
b) the Order of Justice Brooker (pronounced December 11, 2016), requiring two weeks’ prior notice before payment from the 125 account;
c) directions from Justice Jones (October 10, 2017), requiring an application on notice for using disputed funds to pay 125’s tax liabilities; and
d) an undertaking from defence counsel (May 10, 2018), not to release funds without plaintiff counsel’s consent or a court order.

The appellant argued these expenditures further demonstrated misappropriation and supported its allegations of embezzlement and breach of contract. The existing claim (dated October 19, 2021) had already alleged failure to pay Nora’s living expenses and embezzlement of between $156,000 and $192,000.

Lower court decision

The chambers judge ruled that the proposed amendments did not disclose a valid cause of action because they described breaches of court orders. As a result, she dismissed the application to amend the pleadings.

Policy and procedural discussion

The Court of Appeal, led by Justice de Wit, reviewed Rule 13.6(2) of the Alberta Rules of Court and reiterated that pleadings must contain material facts but need not specify legal conclusions or causes of action. Relying on precedents such as Wi-Lan Inc. v. St. Paul Guarantee Insurance Co., Balm v. 3512061 Canada Ltd., and Rieger v. Plains Midstream Canada ULC, the Court emphasized that if pleaded facts could entitle the plaintiff to a legal remedy, the claim should not be struck. Even doubtful or arguable claims should be permitted if they do not prejudice the proceedings.

The Court clarified that just because a fact might also constitute a breach of a court order does not mean it cannot support other actionable claims like misappropriation or breach of contract.

Outcome

The Court of Appeal concluded that the proposed paragraph 26—though involving breaches of court orders—contained factual allegations relevant to actionable claims. It therefore allowed the appeal and ordered that paragraph 26 and the uncontested amendments in paragraphs 11, 12, 27, 28, 30, and 33 be included in the pleadings.

The appeal was heard on May 13, 2025, and the memorandum was filed in Calgary, Alberta, on May 14, 2025. The panel consisted of Justices Dawn Pentelechuk, Kevin Feehan, and William T. de Wit.

No monetary award specified at this stage.