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Monday Morning Case Bites for July 27, 2020

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

Edited by Amanda Kostek & Steven Graham

2008570 Alberta Ltd v Cedar Peaks Mortgage Investments Inc, 2020 ABCA 275
Security for Costs

Patel v Certas Direct Insurance Company, 2020 ABQB 426
Advance Payment | Fair Practices Regulation

2008570 Alberta Ltd v Cedar Peaks Mortgage Investments Inc, 2020 ABCA 275

The Alberta Court of Appeal acknowledged divided views on whether Section 254 of the Business Corporations Act supersedes or supplements Rule 4.22 of the Rules of Court on Security for Costs applications involving a business, but declined to decide the issue:

[10] There are divided views on whether section 254 supersedes or supplements Rule 4.22 in the case of an application for security for costs against a corporate plaintiff. It is not necessary to decide that issue as I am satisfied that the application should be granted, whichever test applies.

Patel v Certas Direct Insurance Company, 2020 ABQB 426

This was an application for an advance payment under the  Insurance Act and the Fair Practices Regulation. The application was dismissed on the basis that financial need had not been shown.  

 The parties positions were as follows: 

[6]               The plaintiff says he is so unable. He is unable to work as a pharmacy technician (his former field), is limited to sedentary and low-paying employment, has been unable to find any work since August 2019, is receiving employment insurance, is expected to lose those benefits at the start of August, has no other material income, has no material assets, is deeply in debt, and is unable to make contributions to mortgage payments and other expenses of the house where he lives with another person. 

[7]               The insurer argues that the plaintiff’s efforts to find employment have been lacklustre, that he is in a common-law relationship with his housemate, that her income and resources count in gauging his ability to pay for living expenses, that he has made inadequate disclosure of their household income and resources, that leaving the settlement amount a mystery represents further inadequate disclosure, and that his deep indebtedness does not stem from his “necessities” expenses or otherwise bear on his ability to meet those expenses. 

After outlining the relevant authorities at length, the Court concluded that household income is a factor to be considered in awarding an advance.   In this case, the Plaintiff’s fiancee’s finances had not been disclosed.  Without that information the claimant did not meet his burden of proof: 

[25]           The claimant has not provided any information about H’s income, expenses, assets (other than that she owns a house), or liabilities (other than that she has a mortgage on the house). 

[26]           As reflected in the above cases, the advance-payment scheme is intended as a stop-gap, to ensure injured persons are able to “cover the basics” where (at minimum) they have no other source of funding. 

[27]           Where a claimant is in a spousal or common-law relationship, the “necessities of life” equation requires an x-ray of household income and assets. If the outcome of a “no advance payment” decision is that the claimant’s “basics” will continue to be covered by his partner, the test for funding is not met. He may have some obligation to square up with her down the road – e.g. after any trial or settlement of this action – but that does not mean his “necessities” will not be covered in the meantime. 

[28]           Note again that the claimant earlier carried the expense load on his own, that his fiancée later shouldered the load on her own, that they agreed to half-half load-sharing when he had an income (albeit limited), that their engagement and living together continues, that we have no evidence of her income or resources generally, and that we have no evidence from which to predict H’s likely response to the claimant reaching the end of his EI benefits and (possibly) falling short in seeking advance payments. 

[29]            I cannot infer, from the available evidence, that his basic needs will go unmet in that scenario. 

The Plaintiff also resolved an earlier collision claim in June, 2019, but did not disclose the amount of the settlement due to privilege.  Although the Court accepted that it was privileged, the Plaintiff’s decision not to disclose it created a problem for him, as he had the burden of proving an inability to meet his needs: 

[55]           By choosing to leave the settlement amount out of the financial-means equation, the claimant has stymied the necessary x-ray of those means. 


[61]           By leaving the settlement amount out of the analysis here, the claimant leaves a mystery about that amount and how it was used by him. Those information gaps represent inadequate disclosure and accordingly another reason for the claimant not clearing the “necessities” bar. 

The Court also commented on the Plaintiff’s debt load, but commented that the evidence provided fell short of connecting his debt with his application: 

[63]           However, the records show no linkage between that indebtedness and any claimed financial hardship. First, the evidence was unclear about his indebtedness predating the accident here and how much of his post-accident borrowing was simply paying off old debts with newly borrowed monies. 

[64]           As well, the record shows that his post-accident borrowings have been limited to such “debt turnovers”[8] and making payments to his father overseas (discussed further below). None was applied to his living expenses, which have (most recently) been funded out of his EI benefits. 

[65]           As well, he has largely stopped servicing those debts (January 9, 2020 affidavit, paras 23-26 and 29, as well as the affidavit-questioning transcript of June 4, 2020 at pp 53-55, 57, 68-69, 70-71, 75-76, 84-85, 86-91, and 109-113). In any case, with his most recent living expenses being funded out of EI benefits, and with those benefits being applied only in that direction, and with no evidence of creditor action against those benefits (if even possible), and with no reported shortfall in meeting his living expenses out of those benefits, the claimant’s indebtedness is effectively a red herring here, as it has not prevented him from covering his living expenses.