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Monday Morning Case Bites for October 4, 2021

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

Edited by Steven Graham

Matthews v Lawrence, 2021 ABQB 776
Long Delay | Rule 4.33 | Rule 4.34

The Plaintiffs appealed a master’s order striking their claim for long delay. At issue was whether the service of a Notice of Appointment for questioning advanced the action significantly to avoid the application of Rule 4.33.

The Plaintiffs had retained new counsel who wrote to counsel for the Defendants and served a notice of appointment for questioning to take place on the day before the three year period was to expire. The Defendants responded by advising that since one of the Plaintiffs and one of the Defendants had died, the action was stayed pursuant to Rule 4.34 of the Rules of Court and would remain stayed until further order from the Court. Counsel for the Defendants confirmed they would not acknowledge the notice of appointment or participate in questioning until such an order was obtained.

In response to the Defendants’ refusal to participate in questioning, the Plaintiffs did nothing further to advance their action; no order compelling the Defendants to attend questioning was ever sought and nothing was done to address the Rule 4.34 stay. The Chambers Justice cited the prevailing authorities for the principles that actions must be advanced significantly and that the ‘functional approach’ remains valid:

[18]           Our modern Rules are not concerned with whether parties have done things on checklists. Rather, they ask whether truly substantial steps have taken place. This is often referred to as the “functional approach” to assessing “the nature, quality, genuineness, timing and outcome of the steps taken”: XS at paras 8-9; Ro-Dar Contracting Ltd v Verbeek Sand & Gravel Inc2016 ABCA 123 at para 21.

[19]           As Master Hanebury noted in Ziegler Estate v Green Acres (Pine Lake) Limited2018 ABQB 921 at para 12:

The rule requires the Court to undertake a functional approach to determining whether a step alleged to be a “significant advance in an action” actually moved the lawsuit forward in a meaningful way. The Court is to consider the nature, value, importance and quality of the step taken. Its genuineness and the timing of the step are also relevant. All of these factors are to be considered in the context of the particular action. The focus is on the substance of the step taken and its effect on the litigation rather than on its form. The goal is not necessarily whether the action is moved closer to trial, but rather whether it is moved closer to resolution, as the Court recognizes that a resolution, not necessarily a trial, is the ultimate goal: Weaver v. Cherniawsky2016 ABCA 152, para. 18Huerto v. Canniff2014 ABQB 534, para. 14, (aff’d 2015 ABCA 316); Phillips v. Sowan2007 ABCA 101, para. 5Flock v, Flock Estate2017 ABCA 67, para.17; Ursa Ventures Ltd. v. Edmonton (City)2016 ABCA 135, para’s 19, 23, 37; Top Grade Solutions Inc. v. Flying Pizza 73 Inc.2009 ABQB 492, para. 20.

[20]            It also is important to remember that the Plaintiff has the ultimate responsibility for prosecuting its claim: XS at para 7.

[21]           The real question in this case is whether service of the Notice, coupled with the Defendant’s refusal to comply with it, amounts to a sufficiently significant advancement of the litigation to satisfy the substantive purpose of Rule 4.33. I conclude that it does not.

 The Chambers Justice emphasized that while questioning will normally significantly advance an action, the mere attempt to commence questioning is insufficient:

[23]           The law in this respect was summarized by Lee J in Nelson v Emsland2007 ABQB 571 at paras 28 to 31:

[28] The Defendants by Counterclaim acknowledge its Counsel was served with the Appointment. However, serving an appointment for examination for discovery and conduct money does not automatically or materially advance an action: Co‑operators Life Insurance Co. v. Rollheiser1998 ABQB 874 (Alta. Q.B.) at paras. 5‑6Morasch v. Alberta, [2004] A.J. No. 41; Tire City & Auto Inc. v. Harrison2002 ABQB 592 (Alta. Q.B.) At paras. 63-64.

[29] In Rollheiser my colleague Kent, J. comments as follows at paragraphs 5 – 6:

The question then is whether or not filing and serving an Appointment for Examination for Discovery is a thing which materially advances the action. . . . The thing which is done must be shown as something which moves the law suit closer to trial and does so in a meaningful way. An Examination for Discovery which occurs clearly advances the action. Setting a date for Examinations for Discovery does not materially advance the action. It barely advances the action.

[30] The Rollheiser decision was followed by the Alberta Court of Appeal in Morasch v. Alberta, where Justice Fruman states the following at paragraph 13:

The thing must “move the law suit closer to trial. . . in a meaningful way”… Advancing the action is not sufficient; the action must be materially advanced. . . Setting a date for an examination for discovery, by itself, probably would not.

[31] Consequently the Appointment itself was not a thing that materially advances an action. As nothing has been done to materially advance the counterclaim in over five years, the counterclaim should be dismissed pursuant to Rule 244.1.

While the Justice found that the Defendant’s citation of Rule 4.34 did not correctly support their position, it was still available to the Plaintiffs to seek an order to move the action forward, and they did not do so. The Court considered the timing of the notice as well and found that scheduling questioning for the day before the three year period expired was indicative of the Plaintiff’s intentions to simply buy themselves more time rather than meaningfully advance the action.

The Justice also provided an opinion as to the operation of Rule 4.34, which sets out:

[32]           Rule 4.34 provides as follows:

Stay of proceedings on transfer or transmission of interest

4.34(1) If at any time in an action prior to judgment the interest or liability of a party is transferred or transmitted to another person by assignment, bankruptcy, death or other means, the action is stayed until an order to continue the action by or against the other person has been obtained.

(2) If a transfer or transmission of the interest or liability of a party takes place while an application or proceeding in an action is pending, an interested person may, on filing an affidavit verifying the transfer or transmission of the interest or liability and without notice to any other party, request the Court to order that the action continue.

(3) An order to continue the action must be served on each of the other parties as soon as it is received by the party requesting the order.

(4) If an order to continue an action is not made within a reasonable time after the date on which the action is stayed, the defendant or respondent may apply to the Court to have the action dismissed for delay under rule 4.31.

At issue was whether Rule 4.34 stays the entire action or only as against those parties whose interests were transferred; the Chambers Justice concluded the latter was the proper interpretation:

[34]           It makes little intuitive sense that the death of one of 22 Plaintiffs, and one of 15 Defendants, would stall an entire proceeding. Indeed, the individual Defendant died well before the remaining Defendants served their Affidavit of Records, and yet their solicitors appear never to have turned their minds to this.

[35]           While this facet of Rule 4.34 has not directly been considered by a Court in Alberta, the effect of virtually identical wording in Ontario’s R 11.01 has been. In Green Bay Packaging Inc v Meco Group Inc, [1999] OJ No 3120 (Sup Ct J) at para 22, Nordheimer J (as he then was) reached the following conclusion:

I do not accept that a fair or reasonable reading of rule 11 leads to the conclusion that the whole proceeding is stayed. I believe that rule 11 fairly read is referring to the proceeding as regards the party whose interest or liability is concerned. The reference in the rule to obtaining an order to continue the proceeding against the person reinforces my view that this is the proper interpretation to give to the rule.  It makes no sense to me that where there are multiple parties and one of those parties becomes bankrupt the entire proceeding would be stayed. Rather, in such a situation, I would view the reasonable result to be that the proceeding estate against banker party but can proceeding as the others. The opposing party would then, presumably, either obtain an order to permit the action to proceed against banker party with simple except that the action is stated and just deal with the parties remaining.

[36]           I find this reasoning compelling. In multiparty actions of this nature, there is no good or practical reason why the litigation cannot proceed apace despite the death of one individual, whose involvement may well be peripheral. For instance, if such a party passed away on the eve of a major motion being argued, or other step being taken, it would be both unnecessary and slightly absurd to hold that the entire process must automatically be put on hold, potentially resulting in significant costs and time being wasted.

 The Justice acknowledged some differences between the current Ontario rule 11 and Alberta’s Rule 4.34, but noted the prior version of Ontario’s rule was identical to Alberta’s, which was in force when the above Green Bay Packaging decision was rendered.

The Court ultimately determined the action had not been advanced by the notice and dismissed the appeal.