Are you looking into filing an abuse of process claim in BC? We put together this blog that was explain about how a claim could look like. We also put together a response from the opposing party.
This claim was sent to us from someone in BC, and we changed all the details, took stuff out, and made other changes to make it anonymous. For this reason, some of the format is off.
Keep in mind, you should always hire a law firm when dealing with a complicated Action like an abuse of process claim.
It is no where near as common as say, a breach of contract claim. You need proper legal advice.
The Plaintiff in this action, Steve Smith (“Mr. Smith”) is an individual of British Columbia. Mr. Smith is also the lead plaintiff in another Supreme Court action, S-000000 (the “HJK Inc lawsuit”), in the Kelowna registry, and a defendant in a Nanaimo BC small claims action, #111111 (the “Small Claims Lawsuit”.)
UIO Ltd. is a plaintiff in this action, and is a company under Mr. Smith’s control, registered in British Columbia.
The defendant in this action Jack Nickleson is an individual of Nanaimo, BC. Jack Nickleson is also the executor of his father’s will, Mr. Alex Nickleson (“Mr. Nickleson”)
Nickleson’s estate, managed by Jack Nickleson, is the plaintiff in the Nanaimo BC small claims action.
Nickleson, Jack Nicholson, and a third party, Kyle Fernon (“Mr. Fernon”) own or owned a numbered company, 0000000 B.C. LTD (“Investment Co”), incorporated in British Columbia that made investments in various companies, including HJK Inc.
Overview of the Claim
This is an action against Jack Nickleson for committing the tort of abuse of process for commencing an action, based on what he knows to be fiction, in particular that his father had loaned the money to Mr. Smith, for the purpose of:
Putting pressure on Smith and UIO Ltd. to settle or file for discontinuance in the HJK Inc lawsuit.
Creating cost, potential embarrassment, difficulty in securing investor funding and a chilling effect on those who would otherwise do business with the parties.
Jack Nickleson started his small claims action instead of submitting for costs in the HJK Inc lawsuit. The funds that Mr. Nickleson provided were used for the HJK Inc lawsuit Supreme Court action.
It was easier and faster for Jack Nickleson to start a new claim, instead of waiting to submit for costs in the HJK Inc lawsuit. Jack Nickleson decided to “jump the line” and start his own claim, which was an abuse of process.
Abuse of Process BC
UIO Ltd., a direct competitor of HJK Inc, and a defendant in the small claims action, had no interactions with Nickleson. And yet, the company was named as a defendant. The plaintiffs plead that the object of the small claims action was to create cost or delay for the purpose of exerting economic pressure, or other coercing, the Small Claims defendants.
ERT Ltd. , a plaintiff in the HJK Inc lawsuit, and a defendant in the small claims action, had no interactions with Mr. Nickleson.
The tort of abuse of process can be made out in circumstances where a plaintiff knowingly advances a “baseless claim” for the purposes listed above or to coerce a defendant into an agreement.
The HJK Inc Investment
Smith and Investment Co invested in a British Columbia company, HJK Inc (“HJK Inc”) in various amounts in January and February 2012.
Smith invested in HJK Inc an amount more than $900,000.
Investment Co invested in HJK Inc in an amount in an amount of over $100,000.
The HJK Inc Lawsuit
In January 2015, Smith wanted to start a lawsuit against HJK Inc. Mr. Smith approached other investors in the company, including Mr. Nickleson saying that Mr. Smith wanted to hire a law firm to start the lawsuit.
Various law firms wanted to see each plaintiff’s documentation and evidence before moving forward.
On January 25, 2015, Nickleson sent his documentation to Mr. Smith so that it could be passed along to the law firms.
On January 27, 2015, Smith emailed Jack Nickleson, asking for $30,000 for Jack Nickleson and Mr. Nickleson’s contribution to the lawsuit.
On January 30, 2015, Nickleson asked for more details about how the funds were going to be used. Mr. Smith provided the answers.
Torts in British Columbia
On February 4, 2015, Mr. Nickleson confirmed to Smith that Mr. Nickleson would deposit $30,000 into a bank account that Mr. Smith had set up for the lawsuit.
Around mid-February 2015, Investment Co settled their dispute with HJK Inc without the need of litigation. The four company owners of Investment Co decided not to join the lawsuit.
On February 19, 2015, Mr. Nickleson told Smith that Mr. Nickleson decided he no longer wanted to be part of the lawsuit and asked Mr. Smith for the $30,000 back.
Smith had already provided the money to a law firm; therefore, the capital was spent.
On February 20, 2015, Nickleson again emailed Mr. Smith asking for his money back.
On February 22, 2015, Nickleson sent a demand to Mr. Smith to return his money.
On March 2, 2015, Nickleson again followed up with Mr. Smith to return his money. This was the last time Mr. Smith heard from Mr. Nickleson.
Tort of Abuse of Process In BC
On or around June 23, 2017, there was a settlement conference held for the small claims matter. Mr. Fernon received a phone call from Jack Nickleson shortly after the first settlement conference ended, telling X that Mr. Smith wanted to discuss settlement with HJK Inc in the HJK Inc lawsuit.
On or around June 25, 2017, Smith met with Jack Nickleson’s business partner, Mr. Fernon, to discuss settlement in the HJK Inc matter. Mr. Fernon updated Jack Nickleson on how the HJK Inc lawsuit settlement discussions went.
On August 13, 2017, Mr. Smith emailed Jack Nickleson’s legal counsel in the small claims matter to explain that Mr. Smith was planning to bring this abuse of process claim in BC court.
On August 18, Smith received an email from Mr. Fernon saying that he was aware that Mr. Smith planned to bring an abuse of process claim and that he was upset by it.
Information has flowed freely between Mr. Fernon, HJK Inc, Jack Nickleson, and Jack Nickleson’s legal counsel. All the parties have the same goal, which is to prevent the HJK Inc lawsuit from advancing. Mr. Fernon and Jack Nickleson are both investors in HJK Inc, as was Nickleson.
Potential Embarrassment Caused By The Lawsuit
Jack Nickleson claimed against UIO Ltd, a competitor of HJK Inc, to create cost, potential embarrassment, difficulty in securing investor funding, and to create a chilling effect on those who would otherwise do business with the company who has been sued. Part of investment due diligence is checking if there are any outstanding claims against the
Jack Nickleson claimed against Mr. Smith and ERT Ltd. to create cost or delay for the purpose of exerting economic pressure, or other coercing, the defendants into settlement.
Further, Jack Nickleson decided to start a new claim, instead of filing an application to receive costs in the HJK Inc lawsuit matter or waiting until the result of the trial.
On September 24, Jack Nickleson breached the terms of the Settlement Conference Order by failing to provide documents that support his claim, or indeed, any documents, the will-say statements, or case law as outlined in the Settlement Conference Order in the small claims matter.
Damages are in the amount of time Mr. Smith has put into defending the improper claim, time that could have been spent on growing UIO Ltd., and in lost investment opportunities for the company on those who would otherwise do business with the company.
Part 2: RELIEF SOUGHT
An order in the amount of $50,000 to compensate Smith and UIO Ltd. for the time he spent defending the improper claim and lost business opportunities.
Should the small claims matter still be ongoing, an order dismissing the small claims action due to the procedural fault of abuse of process which may ground the striking of pleadings, an elevated award of costs, and other procedural
Costs; and Special costs.
Response From Opposing Counsel Re: Abuse of Process In Canada
Your threat to file the proposed Abuse of Process Claim is a clear intimidation tactic and a deliberate attempt to coerce Mr. Nickleson to withdraw the small claims action filed against you.
The Abuse of Process Claim is a purposeful attempt by you to drive up the litigation costs by creating multiple proceedings dealing with the same subject matter. In addition to the increased costs, the multiplicity of proceedings creates the potential for inconsistent findings and results over the same subject matter and is a waste of valuable court resources.
The Abuse of Process Claim is frivolous, vexatious, an abuse of process, and is contrary to the stated purpose of the Supreme Court Civil Rules and the Small Claims Rules. In particular, the proposed Abuse of Process Claim is contrary to Rule 1-3(2) of the Supreme Court Civil Rules, which states that the object of the Rules is to “secure a just, speedy, and inexpensive determination of a proceeding on its merits”.
In considering whether the Abuse of Process Claim is contrary to the object of the Rules, the court will consider the proportionality of the claim, including, the amount involved in the proceeding, the importance of the issues in dispute and the complexity of the proceeding.
Considering the principles of proportionality and the object of the Rules, the Abuse of Process Claim is likely to be struck. Furthermore, it is highly unlikely that alleged damages in your the proposed Notice of Civil Claim are greater than the $35,000 threshold required for a Supreme Court action. The Abuse of Process Claim is properly within the jurisdiction of Small Claims Court and there is no valid reason for you to bring the claim in Supreme Court.
Abuse of Process BC
We note that pursuant to Rule 14-1(10) of the Supreme Court Civil Rules a plaintiff who recovers a sum that is within the jurisdiction of Small Claims is not entitled to costs unless there is a sufficient reason for bringing the proceeding in Supreme Court. Consequently, in the highly unlikely event that the Abuse of Process Claim is successful you would not be entitled to your costs.
The case law mentioned in the proposed Notice of Civil Claim reinforces the narrow scope of the tort and supports our position that the Abuse of Process Claim is, in and of itself, an abuse of process. In Oei v. Hui, 2020 BCCA 214, the court is clear that the tort is carefully circumscribed to avoid a proliferation of unmerited retaliatory lawsuits.
At para 36, the court says, “the tort of abuse of process is narrow, intentionally to foreclose the spawn of litigation wherein one failed action begets another action, which may beget another action, and so on”. It is our position that the Abuse of Process Claim is exactly the type of lawsuit the courts have sought to avoid in its narrow interpretation of the tort.
For the foregoing reasons, the Abuse of Process Claim is bound to fail and will be dismissed by the court.
You are hereby put on notice that if you file the Abuse of Process claim, we will seek instructions from our client to have the claim struck and seek an award of special costs against you. We reserve the right to bring this correspondence to the attention of the court with respect to our client’s submissions for costs.
We strongly recommend that you obtain independent legal advice before proceeding with your suggested course of action.
In conlusion of this blog, we hope you found this article interesting. If you need help with a Abuse of Process BC lawsuit, contact us. We will connect you with an attorney in British Columbia.