Brar v. Pawa, 2010 ABQB 779

Court of Queen ’ s Bench of Alberta Citation: Brar v. Pawa, 2010 ABQB 779 Date: 20101206 Docket: 0001 09502 Registry: Calgary Between: Makhan Brar Plaintiff - and - Surinder Pawa Defendant And Between: Surinder Pawa Plaintiff by Counterclaim and Makhan Brar and Gabor Zinner Defendants by Counterclaim _______________________________________________________ Memorandum of Decision

of J.B. Hanebury, Master in Chambers _______________________________________________________ [ 1 ] This is an application by the defendant in a counterclaim to strike the counterclaim under the “drop dead rule”, the rule that provides that if nothing has been done to materially, or as it is now termed, significantly advance the action for a period of five years, the action must be dismissed. This application raises the question of whether it is necessary to advance the action against a specific defendant or if it is sufficient to advance the action in general.

Both approaches to the rule have been adopted by the courts in the past. FACTS [ 2 ] Mr. Brar, as vendor, and Ms. Pawa, as purchaser, entered into transactions relating to the purchase of two movie theatres. Mr. Zinner was allegedly counsel for both parties and involved financially in the transaction. Ms. Pawa has been sued by Mr. Brar. She defended and counterclaimed against Mr. Brar and Mr. Zinner. Mr. Zinner now seeks to strike the counterclaim against him pursuant to rules 4.33(1) and 4.31. [ 3 ] The transaction at issue occurred in 1996. The claim arose in 2000 and was commenced the same year.

Since then the following things in the action have occurred: (

a) August 9, 2000, Ms. Pawa filed a statement of defence and a counterclaim against Mr. Brar and Mr. Zinner; (

b) December 21, 2000, Mr. Zinner filed a defence to counterclaim; © October 15, 2002, Ms. Pawa was examined for discovery by counsel for Mr. Brar and all of the parties agreed that transcripts could be used by those adverse in interest; (

d) October 15, 2002, Mr. Zinner was examined for discovery by Ms. Pawa’s counsel; (

e) August 19, 20, 2003, Ms. Pawa was further examined by counsel for Mr. Brar. This examination occurred after several prior reschedulings. Counsel for Mr. Zinner had previously been advised Mr. Zinner’s attendance was not necessary and he was not advised of the new date. However shortly after the examination counsel for Mr. Zinner received from counsel for Ms. Pawa a

summary of Ms. Pawa’s undertakings. (

f) March 15, 2004, counsel for Mr. Zinner sent counsel for Ms. Pawa the answers to most of Mr. Zinner’s undertakings; (

g) February, 2005, counsel for Ms. Pawa served counsel for Mr. Zinner with a motion and affidavit for the consolidation of this action with another action related to the non-payment of rent by a tenant of the theatre, a company controlled by Mr. Brar’s family. Counsel for Mr. Zinner indicated that he may wish to examine Ms. Pawa on her affidavit, however ultimately determined that he would not do so. The application did not proceed; (

h) August 4, 2005, counsel for Ms. Pawa wrote to counsel for Mr. Zinner with respect to some proposed amendments to her statement of defence and counterclaim;

(

I) September 29, 2005, counsel for Ms. Pawa and Mr. Zinner spoke about the proposed amendments, which amendments were not made; (

j) mid-2005 a foreclosure action was started for payments in relation to one of the theatres. Mr. Zinner wrote directly to counsel for Ms. Pawa about the legal bill for this action and advised that as he was involved in providing ongoing legal advice to the Brar family he felt an obligation to assert a position that would benefit both Mr. Brar and Ms. Pawa. The action was resolved when the arrears were paid. (

k) June 7, 2006, counsel for Ms. Pawa requested another copy of Mr. Zinner’s answers to undertakings; (

l) in 2006 answers to undertakings were exchanged by Ms. Pawa and Mr. Brar, comprising over 100 answers and, apparently in the case of Ms. Pawa, her answers comprised three binders of documents; (

m) April 28, 2009, counsel for Ms. Pawa served an appointment for August 20, 2009, for the continued examination of Mr. Zinner; (

n) May 8, 2009, counsel for Mr. Zinner advised that he was seeking instructions to bring this application; (

o) May 22, 2009, counsel for Ms. Pawa sent counsel for Mr. Zinner the binders containing answers to his client’s undertakings given at her October 15, 2002, examination; (

p) November 4, 2009, this application was filed. [ 4 ] From mid-2005 to present, there were ongoing communications between counsel for Mr. Brar and counsel for Ms. Pawa in relation to: outstanding undertakings; rental arrears; offers to purchase received on one of the buildings; back taxes; updates by Mr. Brar to his undertakings; and the setting down of the matter for trial which resulted in a determination that doing so would be premature given the need of Mr. Brar to hire a handwriting expert and various other outstanding matters. Ms. Pawa had hired her handwriting expert in 2004. ISSUES [ 5 ] Mr.

Zinner argues that the action should be dismissed as nothing had been done for five years to either materially or significantly advance the action. In the alternative he argues that the action should be dismissed for inordinate, inexcusable delay that has caused him serious prejudice. [ 6 ] This application has been adjourned several times and as a result comes to be considered under the new Rules of Court. However, the parties agreed that the time period to be considered under rule 4.33(1), the drop dead rule, remains at 5 years for the purposes of this application.

The parties also agreed that the provision by counsel for Ms. Pawa of the answers to undertakings after notice that this application might be brought should not be considered in the analysis of the drop dead rule. ANALYSIS Rule 4.33(1)

[ 7 ] The appointment to examine Mr. Zinner was served on April 28, 2009, and promptly objected to by counsel for Mr. Zinner who then filed this motion. [ 8 ] Was there a five year gap prior to the service of this appointment during which nothing was done by Ms. Pawa to materially or significantly advance the action? [ 9 ] A “thing” is usually grounded in the Rules of Court, even if it is not an actual procedural step and it must “move the law suit closer to trial in a meaningful way”: Morasch v.

Alberta 2000 ABCA 24 , para. 15 . [ 10 ] It is acknowledged that the motion to consolidate the actions did not proceed. The courts have held that the mere filing of an application, without more, is insufficient to materially advance an action: Horne v. Sioux Oilfied Consultants Ltd. (1999) 1999 ABQB 109 (CanLII) , 240 AR. 50 (Master). [ 11 ] Ms Pawa’s argues that the affidavit filed in support of that motion provided information useful to Mr. Zinner in relation to understanding the nature of her claim and therefore materially and significantly advanced the action.

This argument is unsupported by any legal precedent. [ 12 ] A review of the affidavit indicates that it deals primarily with the outstanding issues in a second lawsuit related to unpaid rent for one theatre, and its elucidation of the issues in this action is less detailed than that found in the statement of defence and counterclaim. Furthermore, Ms. Pawa had already been discovered twice prior to the swearing of this affidavit and it had been agreed that the transcripts could be used by parties adverse in interest. [ 13 ] Ms.

Pawa failed to convince this court that anything in this affidavit advanced the action against Mr. Zinner in a meaningful way. [ 14 ] Ms. Pawa also argues that the appointment to continue the examination of Mr. Zinner, served April 28, 2009, was sufficient to avoid the drop dead rule. [ 15 ] By the time that appointment was served, nothing had been done to advance the action against Mr. Zinner for more than five years. Mr. Zinner’s counsel responded by advising that he was seeking instructions to bring this application. There was no acceptance of the appointment or waiver of the already-existing five year delay.

The service of an appointment is insufficient to avoid the effect of the drop dead rule. [ 16 ] Ms. Pawa argues that Mr. Zinner acquiesced or participated in the delay. He was engaged in the action. His counsel considered examining Ms. Pawa on her affidavit in 2005, and ultimately did not do so, which added to the delay. In addition, Mr. Zinner, on his own initiative, contacted her counsel in relation to the foreclosure action as he was acting for the plaintiff’s family. Therefore, she argues, he acquiesced in the delay: Trout Lake Store Inc. v.

Canadian Imperial Bank of Commerce , 2004 ABCA 259 para. 27-28 ; Young (Next Friend of) v. A. Dei-Baning Professional Corp (1996) 1996 ABCA 213 (CanLII) , 39 Alta. L.R. (3d) 93; Johnston v. Wawanesa Mutual Insurance Co. 2002 ABCA 80 . [1] [ 17 ] These actions do not constitute participation or acquiescence. [ 18 ] There was nothing done by Ms. Pawa in relation to her counterclaim against Mr. Zinner during that period that could be seen to advance the action either materially, the word used in the former drop dead rule, or significantly, the word used in the present rule. [ 19 ] Mr.

Zinner says that this ends the matter and the action should be dismissed

[ 20 ] However, Ms. Pawa also argues that the steps she has taken in relation to the action as a whole can be considered. [ 21 ] She points to the ongoing negotiations; the exchange of voluminous undertakings in 2006; correspondence dealing with the rental arrears by Mr. Brar’s company, the foreclosure on one property, and the payment of back taxes; the decision of the plaintiff to retain a handwriting expert; and, the discussions about the readiness for trial. [ 22 ] As I noted in Danek v.

Calgary (City) 2006 ABQB 807 , the court has been divided on the question of whether steps taken in relation to one party can be considered when an application under the drop dead rule is brought by another party. In that case one defendant had been left uninvolved in the action for over five years. I reviewed the divergent case law and noted the balancing by the court of competing policy objectives: the expeditious advancement of litigation and the preservation of the right to litigate. In that case I dismissed the city’s action against the co-defendant. [ 23 ] Justice Clackson, in Heikkila v.

Alberta (Workers’ Compensation Board Appeals Commisson) 2010 ABQB 55 , noted Danek .

He too reviewed the divergent case law and commented that “it is not particularly helpful to focus on whether a step was taken either in the action or against a specific defendant [as] doing so can lead to an unfair result.” He preferred to focus on the plaintiff’s actions in the context of the particular litigation and what one would expect of a reasonable plaintiff in that litigation. [ 24 ] The Court of Appeal has noted the importance of adopting a functional approach when undertaking an analysis to determine if the things done in an action move it in a material way toward trial: Phillips v.

Sowan 2007 ABCA 101 . [ 25 ] Ms. Pawa argues it would result in an injustice to strike her claim. She points out that as a defendant and plaintiff by counterclaim she was not in a position to drive the litigation. Mr. Brar was the party primarily responsible for the delay in large part by failing to expeditiously retain a handwriting expert.

Mr Zinner, she says, is a key player in the action and no other lawyer acted for the parties. [ 26 ] A functional analysis must be undertaken of the facts in each case where a party seeks to strike a claim under the drop dead rule. [ 27 ] Most applications to strike under the drop dead rule are brought by a defendant against a plaintiff. [ 28 ] In Trout Lake Store Inc. v. Canadian Imperial Bank of Commerce 2003 ABCA 259 , the court considered an application by a plaintiff and defendant by counterclaim to strike the counterclaim.

There was no cross-application by the defendant and plaintiff by counterclaim to strike the main action. Nothing had occurred to advance the counterclaim in a meaningful way for five years, and it appeared that nothing had occurred during this time in relation to the action as a whole. The court struck the counterclaim and noted that the applicant, Trout Lake, had agreed that it would be inequitable to leave its action alive if the counterclaim were struck. Therefore the main action was struck as well. [ 29 ] Turning to Ms. Pawa’s actions in the context of this action, she was not in control of the litigation.

There is no evidence that Ms. Pawa was not responsive as the defendant in the main action. In fact she hired her handwriting expert in 2004, a step that apparently took Mr. Brar, the plaintiff, a further five years to accomplish. It appears Mr. Brar could have done more to keep the litigation moving toward trial quickly. Quite simply, Ms. Pawa was not in the driver’s seat. [ 30 ] Furthermore, Mr. Zinner continued to be aware of the litigation both through his counsel, who considered examining Ms. Pawa, and personally as counsel to the Brar family, as evidenced by his direct email contact with Ms.

Pawa’s lawyer about a foreclosure on one of the properties in issue. This is not a situation where Mr. Zinner was left totally in the dark for over five years. [ 31 ] On these facts, it would be inequitable to look only at the things done in relation to Ms. Pawa’s counterclaim against Mr. Zinner. It is appropriate to examine what was done in the entire action. If the action as a whole was being moved toward trial so as to defeat an application under rule 244.1, Mr. Zinner’s application should be dismissed.

[ 32 ] Ms. Pawa points to the exchange of undertakings between her and Mr. Brar that occurred in 2006 to argue that there was no five year gap in the action. In Ravvin Holdings Ltd. v. Ghitter 2008 ABCA 208 , the Court of Appeal considered whether the provision of undertakings sufficed to defeat a drop dead application. It noted at paragraph 30: In

summary, therefore, a response to an undertaking is generally a thing that advances an action, unless it is perfunctory or designed to thwart, rather than advance, resolution of the litigation. Whether a particular response materially advances the action is a question of mixed fact and law for the chambers judge. I note that Mr. Zinner acted for the successful appellant in that case. [ 33 ] In this case over 100 undertakings were responded to, involving in Ms. Pawa’s case some three binders of documents.

Furthermore voluminous correspondence was exchanged that dealt with more than superficial matters, and discussions were undertaken about the retention of an expert. It is clear from a functional perspective that steps were being taken by the parties during the alleged five year gap to materially and significantly move the matter toward trial. [ 34 ] The application under rule 433(1) is dismissed. Rule 4.31 [ 35 ] The new rule provides that an action may be dismissed if the Court is satisfied that the delay has resulted in significant prejudice to a party. [ 36 ] Mr.

Zinner argues that the delay is inordinate, without excuse and his memory has faded due to the passage of time. He alleges that sometimes he cannot come up with the names of people. [ 37 ] Ms. Pawa agreed that while the new rule does not mention the former requirements of inordinate, inexcusable delay, the court should examine the facts to see if there is such a delay which has caused prejudice to the defendant.

Counsel agreed that the test under the former rules applies and a finding of inordinate, inexcusable delay raises a presumption of serious prejudice, which if rebutted means that all of the facts must be examined. [ 38 ] Ms. Pawa says the fact is that Mr. Zinner has not been significantly prejudiced by the passage of time. His memory functions. He carries on a practice as a sole practitioner. He has acknowledged that he keeps extensive time records, and it was clear during questioning that his records can jog his memory. [ 39 ] Mr. Zinner acknowledges that he kept detailed time notes.

However, he argues that those do not document the contents of specific conversations and it is the effect of the delay on those memories that constitutes prejudice. [ 40 ] He relies on the decision of Rooke J., as he then was, in Cooke v. Calgary Civic Employees Benefit Society [2003] A.J. No. 1725 . In that case Rooke J. commented at paragraph 32 that it is the memory of what happened in relation to matters that aren’t otherwise documented that is important. Discoveries and the production of records, he noted, do not necessarily record all events that may be relevant to trial.

In that case the action commenced fourteen years prior and related to events five years prior to that. There was a delay of some 19 years in relation to some of the relevant events. [ 41 ] Subsequent to this decision the Court of Appeal considered this issue in Ravvin . It pointed out that the likelihood of serious prejudice must be attributable to the period of inordinate inexcusable delay. Time prior to the period of delay cannot be considered.

[ 42 ] Turning to the memory loss, the court in Ravvin noted that the memory loss being relied upon as evidence of prejudice was acknowledged to have existed prior to the period of inordinate, inexcusable delay. [ 43 ] The defendant in that case also argued that he had destroyed his records. The court noted that they had been destroyed prior to the period of inordinate inexcusable delay.

The court found that the plaintiff had maintained relevant records and the facts were not so convoluted as to be easily obscured by the passage of time as the claim alleged that the defendant lawyer had not given the plaintiff accurate advice about his claim or the effect of a release. The court said either the alleged poor advice happened or it didn’t. The court held that there was sufficient evidence to displace the presumption of serious prejudice.

The court then examined the whole of the evidence and found that the defendant had failed to prove a likelihood of serious prejudice. [ 44 ] Assuming that the delay in this instance was inordinate and inexcusable, did it result in serious prejudice? [ 45 ] Accepting the argument of the parties that the presumption of prejudice continues with the new Rules of Court, in this case there is sufficient evidence to displace the presumption. Mr. Zinner has kept extensive and detailed time records. Therefore the court must examine all of the evidence to determine if there is serious prejudice. [ 46 ] Has Mr.

Zinner proven a likelihood of serious prejudice resulting from the delay? [ 47 ] The period of inordinate, inexcusable delay is, at most, from the time Mr. Zinner provided his answers to his undertakings in March, 2004, until when he received an appointment to attend for his continued examination in April, 2009. [ 48 ] Mr. Zinner spoke of concerns about the dementia that has evidenced itself in his family and that his memory may be failing. [ 49 ] No medical evidence was presented that he was suffering from dementia. His concerns about memory loss are similar to the complaints made by many busy professionals.

There is nothing to indicate they are untoward. The courts have found that more is usually needed: Lethbridge Motors Co. v. American Motors (Canada) Ltd. 1987 ABCA 150 (CanLII) , [1987] 40 D.L.R. (4 th ) 544 (ABCA), para16. Mr. Zinner’s was able to answer questions put to him on examination and that can be considered: Oancia v. Rempel 2000 ABQB 810 , para. 75 . He says that he continues to carry on a competent legal practice. This argument is not sufficient to convince the court of serious prejudice. [ 50 ] Mr.

Zinner is left merely with the passage of time and his concern that he had not noted the specifics of conversations and therefore may not remember them. [ 51 ] At issue is this claim is the ownership of the properties in issue, the structure of which was apparently suggested by Mr. Zinner. The counterclaim against him is for a breach of his fiduciary duty, a breach of his contractual duty and negligence. Ms. Pawa says she has no recollection of signing certain documents allegedly prepared by Mr. Zinner and allegedly signed by her. These questions should be answered by Mr.

Zinner’s time records. [ 52 ] She alleges a failure to report and an inappropriate transfers of funds. The responses to these allegations should be found in Mr. Zinner’s files and trust records. [ 53 ] Ms. Pawa says that Mr. Zinner failed to warn her of certain liabilities or disclose certain facts. To respond to some of these allegations Mr. Zinner may need to rely on his memory as details may not be found in his time records.

Is his concern about his possible failure to remember the specifics of conversations tied to the period between 2004 and 2009, and if so, is it sufficient to establish significant prejudice? [ 54 ] First, it is not certain that his memory is failing or will fail him. He attended his cross-examination in July, 2010, without first reviewing his file and upon being presented with documents his recall was impressive. Assuming there is some loss of memory, some of it can likely be tied to the period from 2004 to 2009. However, as noted earlier in these reasons, he continued to act for the Brar family

and was involved in the property in issue during that five year period. [ 55 ] Mr. Zinner speaks in his examination of the need to “flush” the particulars of a file from his memory, but this was not a single transaction done in the normal course of a lawyer’s business where memory would gradually fade over time as new matters intervened. Mr Zinner was personally involved in the transaction at issue as he had apparently financed it. It is alleged he at one point sought to purchase one property and put his offices on the second floor.

Mr Zinner continued to be involved in the property as counsel acting for the Brar family who were managing at least one of the properties in issue at the relevant time. [ 56 ] Mr. Zinner has not satisfied the court that the five year period in issue has caused memory loss to a degree that significant prejudice would arise. CONCLUSION [ 57 ] The application to strike the action under rules 4.33(1) and 4.31 is dismissed. [ 58 ] If the parties cannot agree, they may speak to costs within 30 days of the issuance of these reasons. Heard on the 23 rd day of November, 2010.

Dated at the City of Calgary, Alberta this 6 th day of December, 2010. J.B. Hanebury M.C.C.Q.B.A. Appearances: Robert D. Maxwell Fasken Martineau DuMoulin LLP for the Applicant / Defendant by Counterclaim, Gabor Zinner Steven L. Major Bennett Jones LLP for the Defendant / Plaintiff by Counterclaim, Surinder Pawa

[1] I note that this final case is very brief and it is not clear that it is dealing with rule 244.1.