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Monday Morning Case Bites for January 28, 2019

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

Edited by Amanda Kostek & Christie Dewar

Wilson v Alberta Motor Association Insurance Company, 2019 ABCA 28
Coverage l Material Misrepresentation l Primary Residence

Abt Estate v Cold Lake Industrial Park GP Ltd, 2019 ABCA 16
Negligent Misrepresentation l Reliance

Viallon v Bumper Development Corporation Ltd, 2019 ABQB 5
Service Ex Juris l Validate Service l Retroactive Application

Trademark Calgary Holdings Inc v Hub Oil Company Ltd, 2019 ABQB 42
Inordinate Delay l Explanation for Delay l Waiver

Sorrell v eQube Technology and Software Inc, 2019 ABQB 31
Amendment of Pleadings l Prejudice l Close of Trial

Wilson v Alberta Motor Association Insurance Company, 2019 ABCA 28

This was an appeal of a successful summary dismissal application, and the findings were upheld on appeal. The Insured Plaintiff appealed the dismissal of his claim against AMA for material misrepresentation. The Insured indicated on his application for insurance that his primary residence was a home he moved out of prior to submitting his application. The Court concluded that this was a material misrepresentation.

Abt Estate v Cold Lake Industrial Park GP Ltd, 2019 ABCA 16

This was an appeal of a lower court decision finding damages in excess of $800,000 arising out of a failed real estate investment. There were a number of appeals within the decision, some of which were successful. All Defendants appealed the issue relating to the Pierringer agreement entered into with Sun Life on the first day of Trial. The formal judgment of the Court from the Trial decision identified the Pierringer including the amount, but it did not apply the funds received from Sun Life under the Pierringer settlement to the judgment awarded to the Plaintiffs. The Court of Appeal confirmed credit must be given for the amounts received. The Plaintiffs conceded this point of each appeal.

The real estate appraisers also argued on appeal there was no reliance at all by the Plaintiffs on their representations or at least no reasonable reliance. The appraisers prepared a valuation on the subject lands based on four extraordinary assumptions. The Plaintiffs had never read any of the appraisals at any point and only heard from other Defendants the land had been appraised for over $8,000,000. The Court of Appeal found the Plaintiffs relied on the misrepresentations made by the other defendants that the valuation represented fair market values and confirmed such misrepresentations were not made by the appraisers. The Court of Appeal found though the valuations may have been suspect, absent a finding by the trial judge the appraisers knew or ought to have known their valuations would be misrepresented to be fair market value, the appraisers could not be liable for the Plaintiffs’ loss. The Trial Judgment against the appraisers was set aside.

Viallon v Bumper Development Corporation Ltd, 2019 ABQB 5

This was an unsuccessful application to cure a defect in serving a Defendant in the United States. Under the Alberta Rules of Court a Plaintiff is required to obtain an order for service ex juris prior to serving a claim outside Canada. The Plaintiffs served the claim without obtaining the required Order for service ex juris. The Court noted that existing “case law does not favour granting retroactive orders where a commencement document is served, without permission, outside of Canada.” It noted the following:

[18] In Metcalfe Estate v Yamaha Motor Canada Ltd., 2012 ABCA 240 (CanLII), 2012 CarswellAlta 1756, the plaintiff had obtained an order for service ex juris, and then served the defendant in question in Japan. However, the order for service ex juris only authorized service by the Hague Convention, and service was not made in a manner authorized by the Hague Convention. The plaintiff sought to validate that service under Rule 11.27 but were denied that validation. The Court of Appeal took a very narrow approach to Rule 11.27, and its reasoning clearly does not support a retroactive approach to service ex juris.

[19] The legislature responded to the Metcalfe decision by adding subsection 4 to Rule 11.27, which reads as follows:

(4) Subrules (1) to (3) apply despite

(a) any previous order that permitted or directed service of the document by a particular method, and

(b) the fact that the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters applies to service of the document.

The Court ultimately concluded that although service can be validated, it is necessary to first obtain an order for service ex juris:

[22] Given the amendment adding Rule 11.27(4) it may well be that a plaintiff who first obtains an order for service ex juris may be able to validate service where a different method is used than set out in the order.

[23] However, where no order for service ex juris is obtained in advance, the decisions in BTI Corp., Venture Helicopters, and Metcalfe make it clear that an order retroactively validating service ex juris cannot be obtained. If retroactivity is to be permitted, much clearer language would be required in Rule 11.27.

Trademark Calgary Holdings Inc v Hub Oil Company Ltd, 2019 ABQB 42

This was a successful application to dismiss the claim for inordinate delay. The Plaintiff argued strenuously that a five day Trial could be obtained this year. The Court noted that if that was the case, then 17 years would have passed since the commencement of the litigation:

[59] Assuming, without really being convinced, that the trial could possibly proceed in June of this year, the Defendant will have waited 17 years, 5 months, and 6 days, for a short 5 day trial. This cannot be reasonable by any rational or reasonable measure.

The Plaintiff relied on the three year drop dead rule and argued that this gave counsel licence to do very little over a three year period. This was categorically rejected by the Court:

[63] Indeed, a particular aspect of the culture of complacency manifested itself during oral argument, when the Plaintiff made the suggestion that in civil matters, as opposed to criminal matters, the Plaintiff is permitted to go three full years without doing a single thing such as, for example, telephoning or contacting opposing counsel. The Plaintiff’s suggestion was that such activity was unnecessary because of the protection provided by the “drop dead” provision found in Rule 4.33.

[64] This submission, however, fundamentally misconstrues the purpose of Rule 4.33(2). This rule, simply put, requires the court beyond the “drop dead” date to dismiss an action if three or more years have passed without a significant advance in that action, unless certain enumerated conditions have been met.

[65] The Plaintiff’s suggestion is contrary to Rule 1.2, which obliges the parties to openly communicate, and seeks to promote the timely and cost effective resolution of claims. It is also an abdication of the responsibility of the parties to manage the dispute in a timely and cost effective way under Rule 4.1, nor does the Plaintiff’s suggestion reconcile with Rule 4.2 which requires the parties to act in a manner that furthers the purpose and intention of the rules described in Rule 1.2.

[66] Rule 4.33(2), to be clear, is not an invitation to a party litigant to purposively do nothing to advance the action, with any shred of confidence that the rule will provide immunity or in some way operate to shield a dilatory plaintiff from the failure to advance its action right up to the three years contemplated by the “drop dead rule”.

The Court confirmed that the issue on applications to dismiss for inordinate delay is not whether the Defendant can show prejudice, but whether the Plaintiff can explain the delay:

[71] In consideration of the Defendant’s application under Rule 4.31 the Court recognizes, at a minimum, should the parties succeed in getting this matter to trial this year, that the overall delay incurred since the filing of the initial Statement of Claim is over 17 years, and likely at least 17 and a half years before this trial, which the Court would describe as being of moderate complexity, might be heard. As the Court of Appeal observed in Humphreys, the analytical approach to the Defendant’s application should not begin with an examination of whether the Defendant has demonstrated that the Plaintiff has caused it prejudice.

[72] Instead, the Court first considers whether the Plaintiff has provided an explanation, let alone any adequate explanation, for the delay. The Plaintiff has provided no explanation, let alone any adequate explanation, for the delay. The Plaintiff suggested instead that the Defendant has tolerated the delay, and in its acquiescence has implicitly waived its right to complain of the delays that have been endured.

The Court pointed out that litigation prejudice caused by the delay of the action is sufficient to establish prejudice. It is not sufficient to argue that the claim relies primarily on experts:

[81] This Court is satisfied that the Defendant has made out a case of significant litigation prejudice. The Court also finds that the Plaintiff has not met its onus to rebut the presumption under Rule 4.31(2). Therefore, the rebuttable presumption of law created by Rule 4.31(2) is activated, and it has not been displaced.

[82] Although the Defendant here has not asserted that witnesses have died or disappeared, or that there has otherwise been the loss of documents or other evidence, the Court makes the simple observation that the present litigation is over 17 years old, and it is unrealistic to conclude that the evidence the Court will be called upon to assess and weigh at trial will not be impaired by the passage of time and the failure of memories.

[83] The Plaintiff asserts that any prejudice will be attenuated because the action will proceed largely upon expert opinion evidence, and that the experts have reports or other documentary evidence that will assist in recollecting previous events. In other words, the Plaintiff submits that this is a “documents” case and not a “memory” case.

[84] While this Court accepts the Plaintiff’s submission as having merit, and more particularly accepts that such evidence poses fewer dangers than a case depending upon the memory of witness unaided by such documentary evidence, in the Court’s view, it is unrealistic after 17 years to conclude that even expert witnesses will have documented everything needed to refresh their collective memories in cross-examination. It is also unrealistic that the Defendant would possibly know, even at this late stage, where the evidentiary gaps in the litigation reside. As the Court of Appeal recognized in Humphreys, at para 35, the existence of a paper trail does not adequately reduce the prejudice that the Defendants will more than likely experience in defending itself at a trial, that is at best, 17 years later. It is difficult to know after so much time what lacunae might remain unanswered by a trial.

Finally, the Court confirmed that mere silence by a Defendant is not acquiescence to the delay:

[90] I do not accept that in the context of a delay application under Rule 4.31 that mere silence might permit the Court to conclude that the Defendant has impliedly waived its right to complain of delay. Here the Plaintiff makes no suggestion of any explicit wavier.

The Court also noted that setting a Trial date might amount to a waiver of delay:

[93] Even if waiver can be inferred in some circumstances, there must be something in the evidence which supports such an inference. Agreeing to set a trial date might be one such example. In the Court’s view, silence without more is not enough.

Sorrell v eQube Technology and Software Inc, 2019 ABQB 31

At the close of Trial the Plaintiff sought to amend the claim once it became apparent that the Pleadings were deficient. The application was dismissed as prejudicial.