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Monday Morning Case Bites for October 29, 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

Gao v. Dietrich, 2018 BCCA 372
Past loss of Income l Standard of Proof for Hypothetical Events l Capital Asset Approach

Jacobs v McElhanney Land Surveys Ltd, 2018 ABQB 867
Dismissal for Long Delay l Adjourned Summary Judgment Application l Material Advance l Obstructive Defence Counsel

Judgment Highlights

Gao v. Dietrich, 2018 BCCA 372

This was a British Columbia Court of Appeal decision that reduced the award of $100,000 for past loss of income to $0.

The Plaintiff was a 29 year old Financial Services Representative with CIBC. She missed one day of work, but alleged that but for the collision, she would have become a Financial Advisor. Instead, she made a lateral move to Mortgage Underwriter, so that she did not have to deal with customers. At the time of Trial she had been promoted to the Assistant Branch Manager position. She claimed loss of income from the lost opportunity to work as a Financial Advisor until the time she became the Assistant Branch Manager. The Court of Appeal affirmed the following test for hypothetical events:

[33] In this case, there was no transparent income loss: Ms. Gao missed only one day of work and she became a Mortgage Underwriter, a position which paid more than her position as a Senior Financial Services Representative. The finding that there was a loss of capacity entailing a real and substantial possibility of past income loss involved the proof of both past facts and past hypothetical events.

[34] With respect to past facts, the standard of proof is the balance of probabilities. With respect to hypothetical events, both past and future, the standard of proof is a “real and substantial possibility”. The standard of a “real and substantial possibility” is a lower threshold than a balance of probabilities but a higher threshold than that of something that is only possible and speculative.


[37] If the plaintiff establishes a real and substantial possibility, then the court must weigh the hypothetical or future event according to its relative likelihood: Athey at para. 27. For example, “if there is a 30 percent chance that the plaintiff’s injuries will worsen, then the damage award may be increased by 30 percent of the anticipated extra damages to reflect that risk” (Athey at para. 27). In determining a fair and reasonable damage award, a court should make an assessment rather than a purely mathematical calculation: Grewal v. Naumann, 2017 BCCA 158 (CanLII) at para. 54.

[38] In contrast, past events must be proved on the balance of probabilities, and once they are proved, they are treated as certainties: Athey at para. 28; Rousta at para. 17. A court’s conclusion regarding past events cannot be weighted according to its likelihood or probability: Athey at para. 28.

The Plaintiff’s supervisor testified that it was possible that the Plaintiff could have become a Financial Advisor. However, that position was not available, and no evidence on the frequency of it coming available was tendered. At the time, the Plaintiff lacked the qualifications for the position. No expert evidence was proffered. The only evidence on what the Plaintiff would have earned if she had obtained that position was anecdotal and vague. The Court concluded that the capital asset approach in determining past losses should not be used where evidence should have, but was not, tendered:

[62] The capital asset approach may be appropriate in circumstances where the loss is not easily quantified. However, in my view, the approach is not a panacea for situations where what could have been proven, or at least given some evidentiary foundation, was not proven or given an evidentiary foundation. That was the situation here, where the earnings of Financial Advisors were not explored in any meaningful way.

The Court commented on the type of evidence the Plaintiff needed to tender:

[63] Given that no position as a Financial Advisor was available, that Ms. Gao would have to persuade her employers to create one, that remuneration in that role depended on having and growing a portfolio or “book”, and that Ms. Gao would require on-the-job learning to meet the required qualifications, it was incumbent on her to adduce evidence of what the earnings of a newly-appointed Financial Adviser could be during the period of on-the-job learning to establish there was a real and substantial possibility of loss.

[64] For example, it was necessary to adduce some evidence of how a Financial Advisor acquired a portfolio or book, and how that would apply to the circumstances of Ms. Gao, at that stage in her career. It was inadequate to refer to the average earnings of a Financial Advisor without providing a basis for applying that evidence to the circumstances before the court.

[65] In her factum Ms. Gao argues that there was a path or paths in the evidence that could establish loss. The evidence that the judge might have accepted, argues Ms. Gao, concerning average earnings, was from an exhibit marked for identification purposes, not entered for the truth of its contents, and only referred to in cross-examination. There was no evidence of how an average could be applied to the circumstances before the Court.

As a result, the Court of Appeal concluded that the past loss of income was speculative at best:

[66] Considered as a whole, the evidence simply did not rise to the necessary threshold of a real and substantial possibility of past income loss. Whether there was such a loss was at best speculative. I would vary the order below to dismiss the loss of past earnings claim

Jacobs v McElhanney Land Surveys Ltd, 2018 ABQB 867

This was an unsuccessful Application to dismiss an action for long delay under Rule 4.33. The issue for the Court was whether an Application for Summary Judgment that filed and served, but not ultimately heard materially advanced the action. In this case the Plaintiff filed a Summary Judgment Application, which was then met with the Defendant’s application for an adjournment. When the Plaintiff followed up with Defence Counsel to reschedule the Application for Summary Judgment, he was met with silence. Frustrated with the litigation process, the self-represented Plaintiff let the claim go stagnant.

The Court concluded that Steparyk v Alberta, 2014 ABQB 367 (CanLII), does not stand for the proposition that every application that is filed but not heard does not advance the action, and that different factors apply when the application is for Summary Judgment:

[53] I do not think that Steparyk should be interpreted as saying that no unresolved application can advance the action.

[55] Here, the underlying application had the prospect of resolving the lawsuit. It was not merely a procedural application but rather an application that could have resulted in a final judgment in the matter. The application required a significant amount of work by Mr. Jacobs, and had him articulate his entire case and provide the evidence by which he intended to prove his case.

[56] It was brought at the earliest opportunity in the litigation: shortly after pleadings had closed and the parties had exchanged affidavits of records.

[57] This was not a strategic move on Mr. Jacobs’ part but rather him attempting to resolve the matter in the most efficient and timely manner possible. It was not a “hail Mary” application brought at the last minute to avoid the tolling of the three-year drop dead rule. It was an application brought early in the litigation, not after three years of inactivity as in Steparyk v Alberta.

The Court concluded that the filing of a Summary Judgment Application, though it was not heard, did materially advance the action on the following basis:

[64] Using the functional approach, the question to ask here is “what was happening at the time of the application?” A summary judgment application is certainly something that has the potential to advance the action very significantly. If successful, it ends the action. If unsuccessful, it may still narrow the issues and focus the parties on the real (remaining) issues in dispute. Processes like summary judgment (and summary dismissal) are to be encouraged, following Hryniak v Mauldin, 2014 SCC 7 (CanLII).

[67] My conclusion is that the filing of the summary judgment application on July 21, 2014 was something that advanced this litigation in a material way. It is not as if Mr. Jacobs filed the application and then did nothing about it. McElhanney brought a cross-application to adjourn the summary judgment application and its own application to enjoin Mr. Jacobs from contacting McElhanney employees about his claim.

[68] From a functional approach, in June and July 2014, this matter was moving very rapidly towards a summary judgment application. To say that nothing happened in the action that materially advanced it after the filing of McElhanney’s affidavit of records would have us revert to the “step” approach which has essentially been abandoned with the 2010 Rules of Court.

[69] My interpretation of Steparyk is that things done in an application that cannot itself materially advance the action do not materially advance the action. Those were the facts in that case, and that case should not be expanded beyond its facts. I do not think that there is much different between a serious application being advanced but for some reason not proceeding, and the same application proceeding but being dismissed.

[70] It would be very surprising if a dismissed summary judgment application resulted in all of the time being spent on the application being held to have not moved the action in a significant way. If that were the case, it would be extremely risky to bring a summary judgment application, especially now as the process to bring a special application in Masters Chambers, appeal that decision to Queen’s Bench, then appeal that decision to the Court of Appeal, and then bring a Supreme Court leave application would in any complicated case very likely exceed the three-year drop dead period.

[71] Where active steps are being taken to advance an application that has a likelihood of advancing the action, especially one like summary judgment, I do not think it can be said that all of those steps do not count, and none of them advance the markers unless the application actually proceeds, let alone succeeds. In my view, the markers are moved until the application is heard, or until active steps to move the application along cease.

The Court also concluded that Court ordered correspondence concerning the scheduling of the Summary Judgment Application materially advanced the action:

[76] The action was further advanced by the correspondence between the parties (directed by Master Wacowich on July 29) trying to come to agreement on scheduling the summary judgment application. Those steps ended on October 2, which I find was when the action stopped being advanced by Mr. Jacobs relating to his summary judgment application. At that stage, the clock started ticking, waiting for the next thing to happen to advance the action.

In addition, the Plaintiff had served a Notice to Admit facts. Defense counsel responded flippantly. The Court was critical of this approach:

[84] McElhanney replied to the Notice to Admit by saying “no application has been filed or served for Summary Trial” and that “the Plaintiff has not made himself available for his cross-examination.”

[85] I do not think that the refusal to reply to the Notice to Admit was proper based on Mr. Jacobs referring to his application as one for “summary trial” instead of “summary judgment.” Notices to Admit may be served in aid of a summary judgment application. This sort of game- playing over semantics should not be countenanced by the Courts, and is the sort of conduct that the Foundational Rule is aimed at. If McElhanney genuinely believed it did not have to respond in a meaningful way to the Notice to Admit because Mr. Jacobs referenced “summary trial” instead of “summary judgment,” they should have made an application to set the Notice aside under Rule 6.37(8).

The Court directed that Defence counsel could not rely on its own lack of cooperation in an application for long delay, and concluded that the Notice to Admit also advanced the action:

[87] McElhanney could have simply responded that the facts are not admitted. The case law says that non-admission is not significant advancement. But responding in the manner chosen by McElhanney is like a defendant not showing up for a properly scheduled questioning. A defendant cannot rely on its own wrong.

[88] In this regard, the sticks were moved forward to June 1, 2015 (the Notice to Admit date) or June 16, 2015 (the reply date). Serving the Notice to Admit on McElhanney advanced the action significantly, because McElhanney provided no meaningful response, and no response within the scope of Rule 6.37(3).

The Court was critical of Defence counsel’s tactics in delaying the claim:

[97] In that regard, I have concerns about the manner in which McElhanney dealt with Mr. Jacobs following the filing of the summary judgment application. In my view, its approach is what might be described as “old school defence.” That is essentially an approach based on making things as difficult for the plaintiff as possible using the Rules of Court as a shield.

[98] Instead of agreeing to pay Mr. Jacobs conduct money for questioning or cross-examination on his affidavit (and thereby making some use of Mr. Jacobs’ presence in Edmonton for the July 30 application), McElhanney refused and required the conduct money issue to be dealt with by the Master.

[99] After the Master adjourned the summary judgment application on McElhanney’s request for cross-examination of Mr. Jacobs, McElhanney took no steps (for nearly three years) to do so.

[100] After the Master directed the parties to try to agree on a date for the summary judgment application, Mr. Jacobs gave up trying. The communications speak for themselves in that regard. McElhanney responded to Mr. Jacobs’ emails, but would not assist in any way in scheduling.

[101] When served with a Notice to Admit, McElhanney refused to respond in a meaningful way. Instead, they relied on semantics over the use of “summary trial” instead of “summary judgment” to say they did not have to respond, as well as falsely stating that Mr. Jacobs had not made himself available for cross-examination when they had taken no steps to schedule a cross-examination or enquire when Mr. Jacobs might be available.

[102] With the Interrogatories, they simply refused to participate.

[103] Finally, when Mr. Jacobs wrote in October, 2016 to obtain dates for the summary judgment application (and referencing the three-year time limit on moving the matter along), McElhanney’s counsel did not respond at all.

The Court concluded that Defence counsel was obstructive. As a result, the Plaintiff’s attempts to move forward with the action through correspondence and a Notice to Admit Facts were steps that advanced the a action:

[110] Both parties have responsibilities. Since the new Rules came into effect in 2010, the Courts have minimized defendants’ responsibilities to move the action along. But they have also held that the defendant cannot “obstruct, stall or delay” the plaintiff. In my view, forcing the plaintiff to make applications at every procedural step of the way does nothing to facilitate the quickest means of resolving the claim at the least expense. Requiring the plaintiff to file applications or take proceedings that do not further speedy and economical resolution also runs afoul of the rule, and forcing the plaintiff to make procedural applications that could easily be avoided with a reasonable measure of courtesy and cooperation is certainly a waste of publicly funded court resources.

[113] Using a functional approach in looking at the defendant’s actions, I see a pattern of delay and obstruction once Mr. Jacobs posted the security for costs he was ordered to put up. The response to the Notice to Admit was clear obstruction. Failing to answer Mr. Jacobs’ correspondence of October 2016 and replying instead in July 2017 with an application to dismiss for delay is not tardiness, but it evidences purposeful delay. Under the pre-2010 rules regarding delay, this behaviour might have had no consequences for McElhanney. But following November 2010, there are responsibilities on defendants in the foundational rule 1.2, and the approach of “make me do it” (by having to repeatedly make court applications to get the defendant to do something) is not behaviour that should be rewarded.

[114] In my assessment, because of McElhanney’s conduct, the time limits on Jacobs were reset in June 2016 on account of the response to his Notice to Admit, and then again sometime after October 2016 and well before July 2017 on account of McElhanney ignoring Mr. Jacobs’ correspondence. Ignoring correspondence for many months until after an arguable drop dead date has passed is not appropriate and should not be countenanced.