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From the Bench: Court Exercises their Discretion with Extension of Time for Service

An adjuster should always make it clear to the plaintiff or counsel any discussions respecting settlement do not eliminate the requirement for service within the legislated period.

Day v Swindells, 2018 ABQB 34

Case Facts

This matter arises from a rear-end collision on May 30, 2014. The Plaintiff’s property claim was settled by the Defendant’s insurer and her personal injury claim was filed April 21, 2016.

The claim was not served within one year of filing and there was no order to extend service prior to its expiry. The Plaintiff applied to the court to extend the time for service of the Statement of Claim pursuant to Rule 3.27 of the Alberta Rules of Court:

Extension of time for service

3.27(1) The Court may, at any time, grant an extension of time for service of a statement of claim in any of the following circumstances:

(a) if a defendant, anyone purporting to be a defendant, or a lawyer or other person purporting to negotiate on behalf of a defendant, has caused the plaintiff or the plaintiff’s lawyer to reasonably believe and to rely on the belief that

(ii) liability is not or will not be contested, or

(iii) a time limit or any time period relating to the action will not be relied on or will be waived;

At issue before the Court was whether in the circumstances the Plaintiff’s lawyer reasonably believed liability would not be contested or the period for service would not be relied upon.

Did the adjuster cause the plaintiff’s lawyer to reasonably believe and rely on the belief that liability would not be contested?

The Plaintiff’s lawyer had significant communications with the Defendants’ insurance adjuster after he was retained. These communications continued until July 2017 when the adjuster raised the issue of service as the one year period had elapsed.

There was no evidence the adjuster advised the Plaintiff’s lawyer liability was not in issue. The Plaintiff’s lawyer, however, believed liability was not in issue as this was a rear-end collision, the Plaintiff had received payment for the property damage and had ongoing negotiations with the adjuster.

Master Mason was unable to find the adjuster led the Plaintiff’s lawyer to believe liability was not in issue. Although payments were made for property damage, this was not an admission of liability. Similarly, negotiations and requesting medical information is insufficient to form the basis for belief liability is not in issue:

[10] In Meyer v Vasiu, 2002 ABQB 182 (CanLII) at paragraph 10, Belzil J observed that insurers make payments for a variety of reasons, often for nuisance value to avoid litigation. He went on to state at paragraphs 10-11 that:

…a payment made for property damage surely does not mean that a party or its insurer thereafter agrees to pay damages for personal injury and associated claims, particularly bearing in mind that the later amounts are often significantly larger.

It is simply not reasonable for a lawyer to believe that payments for property damage, without more, are equivalent to an admission of liability or an undertaking not to contest liability.

[11] Similarly, merely conducting negotiations and requesting medical information are not sufficient to found a reasonable or objective basis for a belief that liability is not in issue … A negotiating defendant may be exploring possible outcomes without accepting liability … a desire for information about injuries may suggest that the insurer has concerns about the extent of injuries, causation, mitigation and the like.

Did the adjuster cause the plaintiff’s lawyer to reasonable believe and rely on the belief the time limit relating to service would not be relied on?

The Plaintiff’s lawyer had been in communication with the adjuster for over a year prior to the filing of the Statement of Claim. His correspondence indicated the Statement of Claim had been filed to preserve the Plaintiff’s claim; however, it would not be served as they were negotiating a settlement.

The adjuster was silent with respect to the service period and continued to participate in negotiations even after the service period had expired indicating an intention to continue negotiations.

Considering the totality of the situation, Master Mason found it was reasonable for the Plaintiff’s lawyer to believe and rely on the belief the time limit related to the service of the claim would not be enforced. Coming to this decision, Master Mason noted a previous decision had found similar circumstances to those at hand constituted a standstill agreement and there would be no prejudice against the adjuster:

[15] … Mr. Scott did give conscious thought to service of the claim and determined that he would not be serving in view of the ongoing discussions. He notified the adjuster of the filing, provided a copy of the claim and expressly advised that he would not be serving it in favour of continuing the negotiations. The adjuster remained silent in regard to this express intention communicated by Mr. Scott and continued participating in the negotiations, even after the time to serve had passed.

[17] In Dewindt v Sandalwood Homes Ltd., 2002 ABQB 316 (CanLII) at paragraph 20, Clackson J described similar circumstances as constituting a standstill agreement.

[19] The decision under rule 3.27 is discretionary. The presence or absence of prejudice may inform the exercise of that discretion. Here, the adjuster received a copy of the claim shortly after it was filed. There is no suggestion or evidence of prejudice

In Conclusion

This case provides clarity for when a Court will exercise their discretion and permit the extension of time for service after the period for service expires. In relation to a personal injury matter, it is insufficient for the plaintiff or their counsel to believe liability is not in issue simply because the property damage was settled and the defendant has requested medical documents. It must be clear liability is not in issue.

If an adjuster is silent with respect to enforcing the period for service and continues negotiations past the expiry date this may be sufficient to constitute a standstill agreement in certain circumstances. Where it is clear plaintiff counsel is alive to service issues, unless the intention to enforce the period for service is made clear by the defendant, the Court may extend the period for service after it has expired if it is not prejudicial.

This decision emphasizes the importance of clarity in communications. An adjuster should always make it clear to the plaintiff or counsel any discussions respecting settlement do not eliminate the requirement for service within the legislated period. It is also critical not to admit liability when discussing the matter with either the plaintiff or counsel. Instead it should be made clear the adjuster’s intent is to discuss quantum of the claim with the view to early resolution while advising liability is a separate issue to be addressed later. In so doing, it will reduce the likelihood the Court may exercise their discretion and deny the defence of failure to serve the Statement of Claim within the prescribed periods.