Ex parte applications always carry the extra burden of full and frank disclosure by the applicants — they are expected to put forward all relevant evidence, including potential defences. The question in a recent Alberta Court of Appeal case was whether that principle extended so far as to exclude relevant evidence at a comeback hearing for review of the ex parte order.
In Guillevin International Co. v. Barry, 2022 ABCA 144, the Alberta Court of Appeal found that the chambers judge unreasonably rejected fresh evidence on the comeback hearing. The decision affirms that fresh evidence introduced by applicants on a comeback hearing for an ex parte order should not be automatically excluded.
Guillevin and Rexel, the appellants, were both companies that alleged they were victims of similar frauds perpetrated by two former employees: Brian King and Ralph Schwanke. While employed for each company, King and Schwanke, along with numerous others, generated false purchase orders and invoices from shell companies that were paid by the appellants, although no goods or services were ever provided.
Guillevin obtained an ex parte attachment order, which was later extended to cover Rexel’s claim. The ex parte order directed a comeback hearing on notice to the respondents.
Prior to the comeback hearing, Rexel and Guillevin attempted to introduce fresh evidence, including corroborating evidence from another defendant who admitted involvement in fraud, and a notice to conduct an examination under oath of Schwanke
The chambers judge denied admission of this new evidence, granting an order preventing the appellants from filing the cooperating defendant materials, as well as a blanket order preventing any additional evidence from being filed in the future. The chambers judge also set aside the notice to conduct an examination of Schwanke on the basis that it was an abuse of process.
As a result, the comeback hearing was heard with significant portions of the appellants’ evidence having been excluded. The chambers judge concluded that the appellants had not met the test that there was “a reasonable likelihood that the claimant’s claim against the defendant will be established” and set aside the attachment order.
Judicial discretion for fresh evidence
In refusing to allow the new evidence, the chambers judge relied on the leading decision of Tiger Calcium Services Inc. v Sazwan, 2017 ABCA 216. In Tiger Calcium, the Alberta Court of Appeal stated that fresh evidence tendered by applicants for on comeback hearings for ex parte orders should be “treated with caution,” and that the duty of an applicant on an ex parte application to present all evidence, including available defences, means that such evidence should form part of the original application.
The Court of Appeal disagreed with the decision to exclude the evidence. While the Court of Appeal acknowledged that allowing “bootstrap” evidence can undermine the obligation of the ex parte applicant to make full and complete disclosure, the Court of Appeal reiterated that allowing the evidence is a discretionary decision.
The Court of Appeal clarified that while fresh evidence tendered by an applicant on a comeback hearing of an ex parte order should be “treated with caution,” it should not be automatically excluded; the entire context of the fresh evidence must be considered. With respect to Guillevin, there were substantive allegations of fraud backed up by forensic evidence, and charges laid by the police.Yet in the face of this evidence, the respondents elected to stand silent. These considerations weighed heavily in favour of allowing the fresh evidence to be entered.
The Court of Appeal found that the decision to exclude the cooperating defendant’s affidavit was unreasonable, as the evidence was highly relevant and material. The appellants could not have possibly been expected to know, at the time of the ex parte application, that one of the defendants would provide such a frank admission that would have such probative value.
Additionally, it was an error in principle for the chambers judge to make a blanket order excluding any further evidence before even knowing what that evidence was. While the chambers judge reasoned this order was necessary to avoid any adjournment of the comeback hearing, the Court of Appeal held that any issues about delay and adjournment should be with if and when they arise, rather than pre-emptively.
Finally, the Court of Appeal held there was no basis for the chambers judge to set aside Schwanke’s examination. This evidence would have been highly relevant and probative, and as with the blanket order, it would be an error to exclude the evidence before knowing what it was. There was no incongruence with the application of the Tiger Calcium principles because the evidence could not possibly have been available at the time the ex parte application was initially brought.
Proceeding with caution
The Court of Appeal has emphasized the need to properly exercise judicial discretion when new evidence is sought to be introduced on a comeback hearing for an ex parte application. While the court must protect against abuses of the ex parte process by treating new evidence with caution, fresh evidence should never be automatically excluded. The court’s truth finding function requires it to view evidence in its full context before it decides whether the evidence is accepted or rejected.
In ex parte matters, it is important to try to collect as much information as possible before a court appearance. However, if new and important information arises after obtaining an ex parte order but prior to a required return date, the Court of Appeal has made it clear that its admission must be carefully considered.