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Monday Morning Case Bites for August 27, 2018

Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.

Edited by Amanda Kostek & Christie Dewar

Piikani Nation v Kostic, 2018 ABCA 275
Reargue Appeals l Extraordinary Remedy

Toronto-Dominion Bank v Leadbetter, 2018 ABQB 611
Vexatious Litigant l Court Access Restrictions

Duke’s Cleaning Services Inc v United Cleaning Services Limited, 2018 ABPC 198
Breach of Contract l Limitation Period l Duress

Judgment Highlights

Piikani Nation v Kostic, 2018 ABCA 275

The self-represented Applicant unsuccessfully applied to reargue an appeal. The Alberta Court of Appeal confirmed that the reargument of appeals is an extraordinary remedy, and the test is stringent:

[2] The reargument of an appeal is an extraordinary remedy that is rarely granted. The test was set out in WestJet v ELS Marketing Inc., 2014 ABCA 372 (CanLII), 13 Alta LR (6th) 181:

3 Appeals may be reargued in exceptional circumstances, but the test for reargument is high. The purpose of reargument is to address situations where the Court has been misled in regard to the record before it or the nature of the issues, or where it appears that the Court overlooked or misapprehended the evidence in a significant respect, or where patent errors are found in the decision or calculations: Webb v Birkett, 2011 ABCA 170 (CanLII) at paras. 2-3, 505 AR 311; Equitable Trust Co. v Lougheed Block Inc., 2012 ABCA 171 (CanLII) at para. 3, 533 AR 71; Toliver v Koepke, 2013 ABCA 390 (CanLII), 566 AR 24 additional reasons at 2013 ABCA 398 (CanLII), 566 AR 27. A rehearing is not meant to allow counsel to make or remake arguments that might have been or were made on the original hearing of the appeal: Keller (Next friend of) v Penkoske, 2004 ABCA 267 (CanLII) at para. 5; Watts Estate v Contact Canada Tourism Services Ltd., 2001 ABCA 135 (CanLII) at para. 8, 281 AR 290.

The Applicant also argued that some respondents were not entitled to costs, because they had the ability to recover their legal expenses from third parties. This was rejected:

[13] Ms. Kostic argues that some of the respondents are not entitled to costs, because they have an ability to recover their legal expenses from third parties. The ability of a party to recover legal expenses from others has no bearing on the entitlement to costs of these appeals: Armand v Carr, 1927 CanLII 4 (SCC), [1927] SCR 348; Hill v Hill, 2013 ABCA 313 (CanLII) at para. 12, 561 AR 50. The third parties actually funding the litigation may well be subrogated to the litigant for any costs that are recovered. No further argument on this issue is warranted.

Toronto-Dominion Bank v Leadbetter, 2018 ABQB 611

This is a case where the Court took the unusual step of declaring a party a vexatious litigant on its own motion without the appearance of any parties or counsel. The Court then imposed court access restrictions on that party. In addition to directing when and how actions could be commenced by the vexatious litigant, the Court also precluded that individual from assisting others or acting as an agent for others in Court proceedings.

Duke’s Cleaning Services Inc v United Cleaning Services Limited, 2018 ABPC 198

This matter arose out of the breach of a cleaning contract. The Court confirmed the following test for contractual interpretation handed down by the Supreme Court:

[38] In Sattva Capital Corp. v Creston Moly Corp 2014 SCC 53 (CanLII), the Supreme Court of Canada described the modern approach to contractual interpretation at paragraph 47:

“…the interpretation of contract has evolved towards a practical, common sense approach not dominated by technical rules of construction. The overriding concern is to determine “the intent of the parties and the scope of their understanding”…To do so, a decision maker must read the contract as a whole, giving the words their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning.”

[39] In Sattva, the Court noted further at paragraph 48:

“The meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement.”

However, in interpreting the Contract the Court could look to the surrounding circumstances, but only objective evidence should be considered:

[40] While the focus will be on the written language of the contract and the objective meaning of the terminology used, a court, in interpreting a contract, may consider the surrounding circumstances. In Sattva, the Court noted at paragraphs 57 and 58:

“[57] While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of that agreement (Hayes Forest Services, at para. 14; and Hall, at p. 30). The goal of examining such evidence is to deepen a decisionmaker’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract. The interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract (Hall, at pp. 15 and 30¬32). While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement (Glaswegian Enterprises Inc. v. B.C. Tel Mobility Cellular Inc. (1997), 1997 CanLII 4085 (BC CA), 101 B.C.A.C. 62).

[58] The nature of the evidence that can be relied upon under the rubric of “surrounding circumstances” will necessarily vary from case to case. It does, however, have its limits. It should consist only of objective evidence of the background facts at the time of the execution of the contract (King, at paras. 66 and 70), that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting. Subject to these requirements and the parol evidence rule discussed below, this includes, in the words of Lord Hoffmann, “absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man” (Investors Compensation Scheme, at p. 114). Whether something was or reasonably ought to have been within the common knowledge of the parties at the time of execution of the contract is a question of fact.”

Upon reviewing the Contract the Court determined that payment was due under a number of invoices issued.

The Defendant also argued that some of the claim was barred under Section 3 of the Limitations Act. The Court noted multiple cases involving unpaid invoices where the limitations period was considered to start not from the date the invoice was issued, but when it was clear that it would not be paid. After reviewing the terms of the Contract, the Court determined that the limitations period had not expired when the claim was issued even though it was issued more than 2 years after services were rendered.

Another issue raised in the case was whether the Defendant could rely on a release signed in respect of some of the invoices partially paid. The Plaintiff suggested that he signed the release under duress, because he needed the money. The Court relied on the following tests for unconscionability and economic duress:

[95] In Kassian, the test for unconscionability was set out in Paragraphs 33 to 38, and includes:

a. The party invoking the document must show proof of inequality in the position of the parties arising out of ignorance, need or distress of the weaker, which left him in the power of the stronger (inequality of positions);

b. Proof of substantial unfairness of the bargain obtained by the stronger (improvident bargain); and

c. There must be an overwhelming imbalance in the relationship between the parties.

[96] In GE Canada Asset Financing Holding Company v JM Wood Investments Ltd, 2009 ABQB 501 (CanLII), the Court considered whether the facts supported claims of either economic duress, or unconscionability. Two requirements were identified at paragraph 13 to support economic duress including: (1) “pressure amounting to compulsion of the will of the victim”; and (2) “the illegitimacy of the pressure exerted”.

[97] In GE Canada, at paragraph 15, 4 requirements necessary to find unconscionability were set out: (1) “a grossly unfair and improvident transaction”; (2) “the victim’s lack of independent legal advice or other suitable advice”; (3) “overwhelming imbalance in bargaining power caused by the victim’s ignorance of business, etc.”; and (4) the other party knowingly taking advantage of this vulnerability”. All 4 elements must be present.

[98] The test for economic duress is further set forth in Attila Dogan Construction and Installation Co Inc v AMEC Americas Limited, 2014 ABCA 74 (CanLII), at paragraph 18:

“The test for economic duress in a commercial setting requires a) an illegitimate form of pressure, b) which was sufficient to overcome the will of the protesting party, such that it vitiated any consent or agreement, and c) which caused the entering into of the challenged transaction.

The Court ultimately concluded that the test for economic duress or unconscionability had not been made out. As a result, invoices to which the release applied were not included in the Judgment.