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Monday Morning Case Bites for June 17, 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

Rashiq v Derrick Golf and Winter Club, 2019 ABQB 435
Trial | Negligence | Nuisance | Flood

Nelson & Nelson v Condominium Corporation No. 0013187, 2019 ABQB 426
Third Party Claim | Limitation Period | Document listed in Affidavit of Records

Rashiq v Derrick Golf and Winter Club, 2019 ABQB 435

This was a Trial decision for the Plaintiffs’ property damage caused by flooding, which was successfully defended against by Damian Shepherd and Christie Dewar of CBM Lawyers. The Plaintiffs brought an action in negligence and nuisance as a result of flooding of their property following a heavy rainstorm. They alleged that the Defendant golf course owed them a duty of care to ensure that the golf course was constructed and maintained in a fashion that would prevent flooding of adjacent property.

The Court noted that the City’s drainage system was constructed in the 1960s, and it was constructed to prevent a 1 in 5 year flood event, whereas the current practice was to construct drainage systems to prevent a 1 in 100 year rain event. The Plaintiffs’ home was at a low point and the golf course was constructed on higher ground.

The Court concluded that the fact that the golf course could have taken steps to mitigate flooding, and in fact did take those steps after the loss did not establish an obligation to do so, because the golf course’s activities did not cause the flooding. As a result, subsequent action did not create a duty of care, and it did not inform the correct standard of care on the part of the golf course:

[28] The fact that the Derrick could have taken steps to mitigate flooding on the Rashiq land – and the fact that they did so by subsequently building dry ponds at the request of the City – does not establish that they had any obligation to do so. The Derrick’s activity was not causing the flooding. Any storm greater than a 1 in 5-year event would cause the flooding. The City recognized that the way to resolve the issue with flooding in this low area was to increase storm sewer capacity or build dry ponds to delay the flow rate to the sewer system. Building dry ponds was an extraordinary remedy – that was not incumbent on the Derrick to build. The Derrick could have chosen to do nothing. Choosing to assist those who experience flooding at lower levels does not impose a duty, nor does it inform the standard of care required of the Derrick.

The Court accepted that the golf course had a duty to maintain its property in a manner that would not cause flooding, but the Court concluded that the golf course did not play a role in this loss:

[29] I accept the Rashiq’s submission that the Derrick owed them – and other neighbours – a duty of care to ensure the Derrick property was constructed and maintained in a manner that would not cause flooding. But the question for me is whether the Derrick had some role to play in avoiding the eventuality that would occur with a storm greater than a 1 in 5-year event. I find it did not.

[32] But, given that I have not found a breach of the standard of care, I do not need to spend undue attention on the issue of causation. As I just found, the Derrick’s activity was not negligent. Moreover, such activity was not a necessary cause of the flooding of the Rashiq property; instead, the flooding stemmed from the fact that that property is located at a sag or low point in the area and from the inability of the storm sewer to handle a 1 in 100-year storm event like the one that occurred on July 18, 2012. This falls far short of meeting the “but for” test for causation (Clements v Clements, [2012] 2 SCR 181, 2012 SCC 32 (CanLII)). As the SCC stated in Clements, at para 21, “to allow recovery where the injury was the result of neutral factors would neither further the goals of compensation, fairness and deterrence, nor comport with the theory of corrective justice that underlies the law of negligence.”

The Court concluded that the law of nuisance had no application on the following basis:

[36] Nuisance has been found where there has been interference with the natural flow of surface water that results in that water running off to a neighbour’s land (Smed v Priddis Greens Golf & Country Club, 2011 ABQB 5 (CanLII); Peter Ballantyne Cree Nation v Canada (Attorney General), 2016 SKCA 124 (CanLII) at para 126, leave to appeal refused 2017 CanLII 38581 (SCC); Manhas v Michael Landon Homes Ltd, 1998 CarswellBC 1511 at para 25). But here, I do not find that there has been interference by the Derrick with the natural flow of the surface water. The surface water drains to the low point behind #87 Fairway Drive and there was no evidence to show that the Derrick’s changes to the green and the removal of trees 90 feet away caused the water to change its course to the low point. The water was going to the low point in any event.

[37] I find that there was no unreasonable use of the Derrick’s land having regard to the “character of the neighbourhood where the nuisance is alleged, the frequency of the occurrence of the nuisance, its duration and many other factors which could be of significance in special circumstances.” (Royal Anne at para 13) The drainage system could not handle the volume of water. It was not the Derrick’s actions that resulted in this fact.

[38] This is not a case like Segal v Derrick Golf & Winter Club, 1977 CanLII 656 (AB QB), [1977] 4 WWR 101, 76 DLR (3d) 746 (AltaSC), where golf balls were interfering with the neighbours’ enjoyment of their property. The water, although used by the Derrick, was a naturally occurring phenomena – the Derrick was not in control of it. The July 18, 2012 rain event was not part of the Derrick’s use of the land. Even though the Derrick could have been a part of the solution earlier, that does not mean that they had an obligation to be part of the solution at all.

The claim was dismissed.

Nelson & Nelson v Condominium Corporation No. 0013187, 2019 ABQB 426

This was an unsuccessful summary judgment application to dismiss Third Party Claims issued against one party. The issue in this case was whether certain Third Party Claims were statute barred.  It was argued that notice or knowledge of the Third Party Claims was not provided within the three years as required by section 6(4)(b) of the Limitations Act, which allows actions to be added to a proceeding after the limitation period has expired.   The Court accepted that in  “order for a prospective third party to have sufficient knowledge of a claim, the party making the claim must also, obviously, have sufficient knowledge of its claim.”

In this case the key evidence was a ledger, which was listed in the Affidavit of Records.  As a result access to the ledger and notice of its relevance occurred on the date the Affidavit of Records was served:

[33]           Nelson did not produce his trust ledger to Mr. DeVore nor Aviva’s counsel, despite requests therefor throughout 2013 and 2014. Mr. DeVore says he received a copy of the ledger in July of 2015, although he did not really look at it until 1½ years later in December 2016 while preparing for Questioning. Notwithstanding that Nelson may have resisted producing the ledger initially and the fact that no real notice was taken of the ledger until December of 2016, it was listed in the Affidavit of Records of Condo Corp served on Aviva on December 11, 2014, meaning both of them had access to the ledger as of that date and notice of its relevance to the litigation.

The Court accepted that a claim need not be quantifiable in order for a limitation period to run:

[36]           It is correct that a claimant need not be able to precisely quantify a claim before a limitation period will begin to run but such claimant must know there is a loss or injury attributable to an identifiable entity or person; Rotzang at para.13.

[37]           In the recent Court of Appeal case, Geophysical Service Incorporated v Encana Corporation, 2018 ABCA 384 (CanLII), the Court reversed the chamber judge’s decision dismissing a limitations argument, saying that she had focussed improperly on whether the claimant had knowledge of a cause of action as opposed to knowledge of an injury; para.31. In that case, GSI was alleging unauthorized use of its seismic data. The Court of Appeal found that, at a date certain and outside the limitation period, GSI knew that Encana had accessed its data, although it might not have recognized at that point that the injury was also a breach of its agreements with Encana; paras.29-31

[38]           The GSI case makes it quite clear that a limitation period runs when the party bringing an action is possessed of enough facts to recognize that it has an injury that is either actionable or which warrants further investigation which the claimant fails to take. As the Court of Appeal said in another recent case, Lay v Lay, 2019 ABCA 21 (CanLII), “A claimant who has sufficient knowledge about a possible claim is obliged to make reasonable inquiries about their rights”; para.30.

However, sufficient facts to connect the defendant to the injury are required to trigger the limitation:

[39]           However, there must still be enough facts to connect the prospective defendant to that injury. Nothing in GSI v Encana abrogates from the chamber judge’s findings, repeated in the Court of Appeal judgment, that in November, 2001, GSI had knowledge that it had suffered an injury that warranted bringing a proceeding but did not yet have knowledge that “the injury was attributable to the conduct of the defendant” [emphasis added]; para.25.

[40]           Certainly, in the case at bar, the parties knew of an injury sometime in 2014, when multiple lawsuits began appearing. One might reasonably say that Aviva and Condo Corp ought to have had suspicions at that stage about Nelson’s involvement, although it appears that the first lawsuits involved allegations of mismanagement of the remediation work and failure to pay lienholders. More importantly however, there is evidence that the Respondents did begin to investigate, including Aviva’s continued requests for Nelson’s trust ledger. While I do not place undue weight on Nelson’s resistance to producing his ledger, given the possible solicitor-client privilege questions, the fact is that Aviva continued to request the ledger in order to ascertain whether the losses or portions thereof could be traced to payments made to Dominion.

Ultimately the Court concluded that the limitation period on the Third Party Claim commenced on the date the document was listed in the Affidavit of Records:

[44]           Therefore, for the purpose of calculating a limitation period, the material date is December 11, 2014 and the limitation for notice of the third party claim is December 11, 2017.

The Court also concluded that the Third Party Defendant had sufficient notice of the claims within the 3 year period required by section 6 of the Limitations Act, because other Third Party Claims arising out of the same issues were served in time:

[45]           Did Nelson have notice, or “sufficient knowledge” of a potential third party claim before December 11, 2017?  I find that he did.

[46]           All but one of the third party claims were filed before December 11, 2017 and so notice of those claims to Nelson is not an issue. The remaining third party claim was filed by Aviva in Action No: 1501-03590 on January 29, 2018.  However, this was still subsequent to Nelson taking a number of more active steps as far back as April of 2015, when he ceased to act for Condo Corp because of a conflict of interest, or July of 2015 when he provided an updated ledger to Aviva’s counsel or January, 2018 when he reported a potential claim against himself to his insurer. Given this evidence, I find that Nelson had notice of all the third party claims at issue within the limitation period.

[47]           Accordingly, the third party claims survive the limitations argument.

Finally, the Court also considered the requirement for a Third Party Claim to be filed within six months of the Statement of Defence. Although this was not met for the Third Party Claims in this case, the parties can apply to the Court to extend this timeline. The Court found that a delay of 1-2 years and in the context of the breadth and complexity of these multiple actions, the explanation for the delay sufficed. The Court also considered prejudice, and found that although few records were kept and memory had faded, this was also true even at the outset.