This blog post will explain what a petition and action are in commercial litigation matters, and will provide an overview of the recent decision from the British Columbia Court of Appeal in Ai Kang Capital Inc. v. Xing, 2024 BCCA 175.

What is a Petition?

Petition is a civil proceeding in the Supreme Court of British Columbia when the disputed facts and law are relatively straightforward. Supreme Court Civil Rules 2-1 (2) outlined some of the circumstances under which a Petition may be used:

(a) only one person who claims a relief that does not involve another person;

(b) a legislation allows a petition to be brought before the court;

(c) the only, or the main question concerns the interpretation of a legislation, a will, an oral or written contract…

…

(f) the relief sought is for funds in court to be paid into or out of court…

None of the language in the  Supreme Court Civil Rules suggest that a Petition is the only form of proceeding to the exclusion of an Action – an Action leads to a trial that requires in-person testimonies.

The most important factor in choosing between a Petition and an Action is, logically, how complex the dispute is. In fact, Petitions are the exception as Rule 2-1 (1)  provided that unless a legislation or one of the Supreme Court Civil Rules allows a Petition to be used, otherwise all proceedings must be commenced in an Action using a Notice of Civil Claim.

Petition is Resolved in One Hearing

Because the relative simpler nature of the dispute using a Petition, Rule 16 of the Supreme Court Civil Rules outlined the procedure:

• all the Petitioner can file for the court to adjudicate on are the Petition itself, and affidavit evidence; and
• the Petition Respondent is also restricted as to what she can file which includes a Response and responding affidavit evidence.

The Petition then proceeds before a judge in one Petition hearing.

This procedure is usually faster than an action when the facts and law in dispute is not centered on credibility of the witnesses; if credibility is an issue that goes to the core of a controversy, then a trial where live testimonies are presented before the judge is a better form of proceeding.

When Should An Action Be Used?

Some of the considerations for a proceeding to be commenced by an Action can be the following:

• disputes involve a number of parties;
• disputes that have more than one cause of action (reasons to sue);
• the areas of the law are complex such as in trust disputes, civil frauds, construction law disputes…; and
• this legal difficulty is compounded by whose version of the facts is more reliable – if some or all of these factors are present, then the case is more efficiently handled by a trial.

In fact, the above factors to consider are the opposite of what is permissible in a petition as outlined by Supreme Court Civil Rules 2-1 (2) cited above.

Cautionary Tale in the British Columbia Court of Appeal’s Judgment Dated May 6, 2024

JA Grobeman delivered the appeal decision in Ai Kang Capital Inc. v. Xing, 2024 BCCA 175 that provided important reasons for avoiding costly hearings and appeals based on civil procedure.

The Aikang case was commenced by a Petition, wherein the 2 petitioners alleged that the conduct of the majority shareholder, being one of the petition respondents, was oppressive in managing their joint venture, the respondent company’s affairs. The petitioners also applied for permission of the court to start a derivative action, so that these two petitioners can act on behalf of the company against the majority shareholder.

In response, the majority shareholder applied to convert the petition into an action, due to the complexity of the matter – this is evidenced by Groberman JA using paragraphs 5-27 to describe the business relationships and how the dispute came about. Groberman JA is known to be expertly succinct in his writing. The facts alleged involved not only the usual shareholders’ dispute over distributions of funds, but also allegations of a “finder fee”, a “secret commission”… which more than likely call for some discoveries as opposed to simple affidavit evidence which will become a “what he said and what she said” situation.

The hearing of this application took 3 days in 2021 when the chambers judge dismissed the conversion to an action effort, having found that there was some oppressive conduct.

Chambers Application Proceeds Before the Supreme Court of British Columbia

Groberman JA summarized how the chambers application hearing unfolded before the Supreme Court of British Columbia:

[31] The judge decided to deal with the application to convert the petition into an action as a preliminary matter, and then hear full argument on the petition if he decided not to convert it to an action.

[32] I have some difficulty understanding how the parties expected the proceeding to unfold. If the judge found that there was a triable issue, of course, the matter would be converted into an action, and would never be heard as a petition. On the other hand, if the judge found that there was no triable issue, it is difficult to understand what purpose would have been served by hearing further argument on the petition, as the judge would already have determined that the petition respondents were bound to lose.

[33] The judge did, in fact, find that the petition respondents (the appellants) were “bound to lose” on the issue of whether there was oppression. This has led to some rather strained arguments on appeal. The appellants say that they have been denied procedural fairness because the judge did not fully hear their arguments on the petition before concluding that they were bound to lose. On the other hand, the respondents say that, while the petition was not technically heard, the finding that there is no arguable defence raises an issue estoppel such that the appellants would be precluded from making arguments on the petition itself.

[34] It seems to me that, given the strictness of the Saputo test, the judge’s decision to bifurcate the hearing was not the most efficient manner of proceeding, and was bound to lead to confusion.

The Court of Appeal makes several points in the reasoning here:

1. the fundamentals of a petition, is it is a summary, or put plainly, simplified one-step proceeding, designed for the court to efficiently adjudicate a matter (at paragraphs 32 and 33);
2. understandably, parties can ask the court to determine whether a petition is suitable, and the key is whether there are issues requiring a trial, but paragraphs 32 and 34 show the contradictions inherent in using petition as the form of proceeding: if there are no issues requiring a trial, then the petition hearing should proceed to a conclusion, as there is no reason why a separate trial is required to determine damages. These contradictions led to the confusion that the Court of Appeal found at paragraphs 34, 43-44. In particular, at paragraph 42, the Court of Appeal noted that the application judge did find that there were triable issues related to a suitable remedy, and remedy in an oppression case cannot be severed (at paragraph 43) from the petition.

Understanding the Importance of the Court of Appeal’s Decision

The Court of Appeal outlined several salient principles in civil procedure which a party must consider, in order to avoid pitfalls:

1. Procedure rules are designed for the trial court to tailor pre-trial procedures to be efficient (at paragraph 35 citing Hryniak v. Mauldin, 2014 SCC 7);
2. Efficiency means proportionality and access to justice (ibid.): in proportion denotes a procedure congruent with the complexity of the matter, and access to justice denotes shortened waiting time and reduced costs of proceeding;
3. The above guiding principles were reflected in Cepuran v. Carlton, 2022 BCCA 76, in which a 5-judge penal of the Court of Appeal modernized on a more flexible hybrid approach within a petition which since allowed limited discoveries in a petition proceeding.

Before Cepuran was released, trial judges already explored the flexibility within the Rules to save costs and time. In Ding v Ding, 2021 BCSC 1055, our client, the defendant, responded to a summary trial application by the plaintiff. Parallel to the Action, the plaintiff filed a separate Petition seeking oppression remedy: the Action and Petition bear on the same dispute, involving the same parties and the same transaction.

Court Dismisses Summary Trial Application; Orders Petition be Heard at the Same Time as the Action

In dismissing the summary trial application, Justice Horseman, then at the trial court, commented on a concern we raised, and she ordered the Petition to the trial list to be heard at the same time of the Action:

[47] I understand that the order was not drafted to include the Oppression Petition because counsel was uncertain as to the procedure for having a petition heard at the same time as an action when the petition is presumptively a summary procedure.

[48] In my view, any procedural difficulty can be overcome with an order that the Oppression Petition be referred to the trial list pursuant to Rule 22‑7(1)(d) of the Supreme Court Civil Rules, combined with an order that the three proceedings be heard at the same time. I do not take either party to dispute, and it appears incontrovertible to me, that the Oppression Petition raises disputed issues of fact that could not in any event be resolved summarily. Such an order is necessary to avoid inconsistency in the resolution of factual disputes that are common across the three proceedings.

On reflection, if the logic is true that within a complex matter headed for trial, and when there is sufficient evidence, the court can and should consider a summary trial which will save time and costs.

The Importance of Timely and Efficient Dispute Resolutions in Commercial Litigation

The converse is not necessarily true: a matter with some complexity should use the default Action proceeding which has built-in mechanisms to ascertain evidence. In the Aikang case, after the 3-day application, an interlocutory appeal, the Court of Appeal ordered it to be returned to the trial court to determine the matter: the application judge’s findings on oppressive conduct were a “preliminary finding” which does not dispose of the issue (at paragraph 46); further, the Court of Appeal specifically noted (at paragraph 38) that interlocutory appeal is apt to be time-consuming.

Since 2021 until 2024, this petition is still at its first step of the proceeding. The procedure used in it did not timely and efficiently bring the case to a conclusion; it caused, in fact, the opposite.

At Roland Law, we do not see the forms of the proceeding as a point of contention. The essence, instead, is to focus on the law and facts that help our clients to bring their dispute to a determination. Because of this principle, we advise our clients to use the most efficient and least costly processes. Ultimately, as JA Southin commented in as early as 1981 on shortening litigation in Bacchus Agents (1981) Ltd. v. Philippe Dandurand Wines Ltd., 2002 BCCA 138, that the axiom to be mindful of is “justice delayed is justice denied”.

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