Bahcheli v. Yorkton Securities Inc., 2010 ABQB 824

Court of Queen ’ s Bench of Alberta Citation: Bahcheli v. Yorkton Securities Inc., 2010 ABQB 824 Date: 20110415 Docket: 0401 03126 Registry: Calgary Between: T ü mer Salih Bahcheli Appellant (Plaintiff) - and - Yorkton Securities Inc. and Orion Securities Inc. Respondents (Defendants) Corrected judgment: A corrigendum was issued on April 15, 2011; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice L.D. Wilkins _______________________________________________________

Appeal from the Decision by Laycock, Master in Chambers Dated the 30 th day of April, 2010 (Docket: 0401 03126) [ 1 ] The Plaintiff (Bahcheli) commenced an action for wrongful dismissal against his employer Yorkton Securities Inc. and Orion Securities Inc. (Yorkton) on February 26, 2004. Yorkton filed a Statement of Defence on April 30, 2004.

From January 27, 2005 nothing was done in the action to materially advance it until February 1, 2010 when Yorkton applied to strike the claim pursuant to Rule 244.1. [ 2 ] That application was heard before Master Laycock in Special Chambers April 30, 2010 after which he granted an Order dismissing the action under the drop dead Rule. Bahcheli appealed the Master’s Order on May 10, 2010 and the matter was heard before this Court on November 1, 2010. Issues 1. Do the new Rules of Court apply to this appeal? 2.

Did the Master commit a palpable and overriding error in determining that the proceedings before the Investment Dealers Association (IDA) were not inextricably linked to the action and could not therefore materially advance the action?

Bahcheli’s Argument [ 3 ] Counsel for Bahcheli argued that from his termination by Yorkton in March 2002 to the conclusion of the regulatory proceedings before the IDA on September 12, 2007, Bahcheli was continuously involved in the proceedings which were closely related to and inextricably linked to this action. [ 4 ] Counsel further argued that the result of those proceedings has materially advanced this action. [ 5 ] Counsel argued that the Master had erred in law in concluding that Justice Mahoney had applied, as was required by the Court of Appeal, a “functional analysis” in Angevine v.

Blue Range Resource Corp. , 2007 ABQB 443 . The Master erroneously applied the strict list of factors set out by Mahoney, J. for determining whether a related action is inextricably linked to the primary action. Rather it is argued, the Master should have applied a broad perspective to assess whether an action genuinely furthers the litigation in a meaningful way as was contemplated in Calgary (City) v.

Chisan , 2000 ABCA 313 . [ 6 ] The recent rule change to substitute “significantly” for “materially” in the old rule is suggested to be a further indication of an intention to adopt this broad test. [ 7 ] Here the IDA proceedings followed an investigation to determine whether Bahcheli had “breached securities law” which was one of the stated cause for dismissal alleged by Yorkton. The IDA found no such breaches. [ 8 ] The IDA proceedings should be found by this Court to be inextricably linked to this law suit and to have significantly

[ 8 ] The IDA proceedings should be found by this Court to be inextricably linked to this law suit and to have significantly advanced these proceedings. In his oral submissions, Counsel argued that the Court of Appeal in Phillips v. Sowan , 2007 ABCA 101 issued on March 26, 2007 did not require that a decision of a tribunal or other Court had to be binding or determinative before this Court in order to be found inextricably linked.

That decision asks the question “Did the particular action taken during the relevant period genuinely further the litigation in a meaningful way?” Counsel further argued that whether something was done that materially advanced the action demands functional analysis as stated in Phillips ( supra ). [ 9 ] Counsel argues the decision in Angevine , was wrongly decided, in that, rather than engage in a functional analysis, that Court set out four factors that are to be considered in determining if a related action is inextricably linked.

Yorkton’s Argument [ 10 ] Yorkton argued that the determination of the Master was correct in concluding that the IDA proceedings could not materially or significantly advance the primary action. To do so, those proceedings must be legally or factually determinative of one or more of the issues between the parties in the primary action. [ 11 ] Yorkton argued that the charges before the IDA had to be determined on a standard akin to that in a criminal proceeding.

Such a determination by the IDA would be irrelevant as to whether or not Bahcheli was dismissed by Yorkton for cause. [ 12 ] Yorkton further argued that the finding of the Master that participation by Bahcheli in the IDA proceedings failed to materially advance the present action was a finding of mixed fact in law demanding a review standard of “palpable and overriding error” by this Court. See Phillips , supra . [ 13 ] Yorkton argued that the issue for this appeal is as to the correctness of the decision of Master Laycock which concerned the

interpretation of former Rule 244.1 which he was bound to apply. Yorkton argued that Master Laycock properly applied the law of Alberta as stated in Angevine ( supra ) and found the IDA proceedings were not inextricably linked with the Plaintiff’s claim in this action.

In his judgment, Master Laycock stated: “If the evidence and the outcome of the administrative hearing is not admissible in the civil action to help determine any relevant issue, then it could not possibly further this action in a meaningful way”. [ 14 ] In Angevine ( supra ) Mahoney, J. was considering the effect of indistinguishable proceedings to those of the IDA, conducted by the Alberta Securities Commission. He found that no determination by that commission would be in anyway binding on the Court in the primary action.

Mahoney, J. concluded that although the proceedings may be related, they are not inextricably linked and that nothing determined by the Commission could qualify as a barrier at law to proceedings in the present case. [ 15 ] Counsel for Yorkton argued that the related proceedings will only materially advance the primary action where they are inextricably linked such that the related action is legally or factually determinative of an issue raised in the primary action. Malcolm v.

Canada , 2006 ABQB 152 . [ 16 ] Counsel further submitted that the change of wording of the drop dead rule from “materially advance” to “significantly advance” in the new rule was a distinction without a difference. Standard of Review [ 17 ] Counsel for the Appellant did not address the standard of review in its brief filed. In oral submissions Counsel stated that it was not necessarily clear that the Respondent’s submissions on standard of review were correct. Counsel went on to argue that the Master erred in his application of the principles set out in Chisan and Phillips v. Sowan .

[ 18 ] Counsel for the Respondents stated in its brief and oral argument that the standard of review to be applied by this Court by this appeal on the record was one of correctness on a matter of law or one requiring a palpable and overriding error on a matter of law and fact. Issue 1: Do the new Rules of Court apply to the determination of this appeal? [ 19 ] This appeal is slightly complicated by the fact that the new Rules of Court came into effect on the date of the hearing of the appeal November 1, 2010. [ 20 ] There can be no doubt that the new rules apply to the hearing of this appeal.

Rule 15.2(1) states that apart from certain exceptions that do not apply to this appeal “these rules apply to every existing proceeding”. [ 21 ] Accordingly this appeal of the Master must be governed by the provisions of Rule 6:14(3) which states: 6:14(3) - An appeal of a Master’s judgment or Order is an appeal on the record of proceedings before the Master and, if the Judge permits, may also be based on new evidence that is significant enough that it could have affected the Master’s decision. [ 22 ] Bahcheli did not seek to introduce any new evidence so this appeal must be determined strictly on the record. [ 23 ] The Master was of course applying the former drop dead rule 244(1) to the hearing before him.

That rule states: “Subject to Rule 244.2, where 5 or more years have expired from the time the last thing was done in an action that materially advanced the action, the Court shall, on motion of a party to the action, dismiss that portion or part of the action that relates to the party bringing the motion.” [ 24 ] The current drop dead rule - Rule 15.4(1) states: “Unless subrule (2) applies, the Court on application, must dismiss the action as against the applicant if (b) 5 years have elapsed since the last thing done to significantly advance the action.” [ 25 ] It was not argued by either Bahcheli or Yorkton that a different result in this appeal could flow from the application of either rule. [ 26 ] It is not disputed that more than 5 years had elapsed since any step or thing had been done by Bahcheli in this action which could be found to have either “materially advanced” or “significantly advanced” the action. [ 27 ] Accordingly, I find there is no significant or material difference between the two rules which would affect the determination of this appeal.

There can be no different result if a thing or step is found to have been “significantly advanced” than if that thing or step is found to be “materially advanced”. [ 28 ] I have also concluded that the jurisprudence relating to the former “drop dead” rule continues to be applicable to the new rule.

Issue 2: Did the Master commit a palpable and overriding error in determining that the proceedings before the Investment Dealers Association (IDA) were not inextricably linked to the action and could not therefore materially advance the action? [ 29 ] It is the conclusion of this Court that no palpable or overriding error was committed by the Master in his decision.

Accordingly this appeal must be dismissed. [ 30 ] In reaching his decision the Master followed the decision of Mahoney, J. in Angevine ( supra ). [ 31 ] Bahcheli argued before this Court that that decision was wrongfully decided because it failed to consider the decision of the Court of Appeal in Phillips ( supra ) which had preceded Angevine by only a matter of months and was not argued before Mahoney, J. [ 32 ] This argument was also advanced before the Master who found that Mahoney, J. had made a functional analysis when he reviewed the evidence and considered the four factors set out in his decision.

The Master found that the substantive facts in Angevine were indistinguishable from this case and accordingly that he was bound by the decision of the Court of Queen’s Bench and found as a result that the IDA proceedings were not inextricably linked to the present action and therefore did not materially advance this action. [ 33 ] It is not now open to this Court to engage in an analysis of whether the decision in Angevine was correctly decided. I have no jurisdiction to do so.

This Court is solely charged with determining whether the Master erred in law concluding that the proceedings before the IDA did not materially advance this action. I find the Master did not so err. [ 34 ] I feel I must also address the arguments raised in para. 15 and para. 30 of the Bahcheli brief where it is stated: 15. “The result of those proceedings has materially advanced this action. Yorkton alleged breach of securities laws as grounds for dismissal. The regulatory authority with jurisdiction discharged Mr. Bahcheli from those allegations.

It is submitted that this Court will admit evidence of those findings and will find it to be compelling evidence of the application of the standards of the Investment Dealers Association. 30.

Generally speaking, evidence of the decisions of self-regulatory organizations does not create issue estoppel or res judicata, however, there is no doubt that the evidence of the results of the IDA proceedings will be received by the Court and will be considered both relevant and material.” [ 35 ] Regrettably, no authority for those propositions is cited apart from the decision of Erb, J. who accepted expert evidence of regulatory standards in a negligence case.

That case has no relevance to the present case. [ 36 ] In the absence of such authority I consider that argument to be unsustainable, precisely because the results of the IDA proceedings are unlikely to be received by a Court in that they are most likely to be found neither relevant nor material to any issues before the Court. [ 37 ] If the parties are unable to resolve any issues of costs arising from this application they are at liberty to contact my Assistant to arrange for further directions from the Court.

Heard on the 01 st day of November, 2010. Dated at the City of Calgary, Alberta this 15 th day of April, 2011. L.D. Wilkins J.C.Q.B.A. Appearances: Perry R. Mack, Q.C. for the Appellant Virginia A. Engel, Q.C. for the Respondents _______________________________________________________ Corrigendum of the Memorandum of Decision of The Honourable Mr. Justice L.D. Wilkins _______________________________________________________ Para. 17 will be deleted in its entirety and the following paras. will be substituted as follows: [17] Counsel for the Appellant did not address the standard of review in its brief filed.

In oral submissions Counsel stated that it was not necessarily clear that the Respondent’s submissions on standard of review were correct. Counsel went on to argue that the Master erred in his application of the principles set out in Chisan and Phillips v. Sowan . [18] Counsel for the Respondents stated in its brief and oral argument that the standard of review to be applied by this Court by this appeal on the record was one of correctness on a matter of law or one requiring a palpable and overriding error on a matter of law and fact.