Donaldson v. Farrell, 2011 ABQB 11

Court of Queen ’ s Bench of Alberta Citation: Donaldson v. Farrell, 2011 ABQB 11 Date: 20110107 Docket: 0903 01031 Registry: Edmonton Between: Lesley Dawn Donaldson Respondent (Plaintiff) - and - Brian Farrell, Brian Farrell Professional Corporation, James M. Gillespie, Gillespie Inc., Gillespie Farrell Chartered Accountants LLP, Karen M. Rackel, Karen M. Rackel Professional Corporation, Bernard Lavallee, Bernard D.

Lavallee Professional Corporation, Lavallee Rackel LLP, Laura Dawn Bibby, Irene Denise Telfer, John Doe and Jane Doe Applicants (Defendants) _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice R.A. Graesser _______________________________________________________ Nature of Application [ 1 ] The Defendants Brian Farrell, Brian Farrell Professional Corporation (collectively “Mr. Farrell”) and Laura Dawn Bibby apply pursuant to Rule 3.68 to strike the Statement of Claim against them.

The Statement of Claim was filed January 22, 2009 and was served on the Defendants in December, 2009.

[ 2 ] The basis of the application for Mr. Farrell is that the claims against him other than as they relate to the allegations of intentional infliction of mental suffering are already being litigated in connection with the passing of accounts in the Estate of Patrick John Bibby, Action SES03 126079, and therefore this action is an abuse of process. As to the claim relating to mental suffering, Mr. Farrell argues that the Statement of Claim does not disclose a cause of action against him. [ 3 ] Ms. Bibby argues that the Statement of Claim discloses no cause of action against her.

Background [ 4 ] Patrick John Bibby died on January 5, 2007. The administration of his estate has led to many unhappy differences between the Plaintiff, her sister Ms. Bibby, the Executor, Mr. Farrell, the Estate solicitor, Karen Rackel, and Mr. Bibby’s companion Irene Denise Telfer. I am case managing the passing of accounts in the Estate action, and have directed that certain issues between Ms.

Donaldson and the Executor be tried. [ 5 ] The Statement of Claim in this action was issued before, but served after, my decision of February 25, 2009, Re Bibby Estate , 2009 ABQB 111 and my decision of May 25, 2009, Re Bibby Estate , 2009 ABQB 321 dealing with Ms. Donaldson’s claims against Mr. Farrell. In those decisions, I directed that certain claims against Mr. Farrell as Executor be tried pursuant to s. 47 of the Administration of Estates Act , RSA 2000, C. A-2. A number of claims being advanced by Ms. Donaldson were expressly not directed to be tried. [ 6 ] There is also separate litigation between Ms.

Donaldson and Ms. Telfer, being action 0903 00068 relating to issues arising out of Mr. Bibby’s death. [ 7 ] The application to strike was brought by Mr. Farrell under the old Rules of Court (Rule 129) in February, 2010. Ms. Donaldson subsequently brought her application to strike, but through scheduling difficulties, the application was not heard until December 15, 2010. Rule 3.68 [ 8 ] Rule 3.68, which is the rule relied on by the Applicants, provides: 3.68(1) If the circumstances warrant and a condition under subrule (2) applies, the Court may order one or more of the following: (

a) that all or any part of a claim or defence be struck out; (

b) that a commencement document or pleading be amended or set aside; (

c) that judgment or an order be entered; (

d) that an action, an application or a proceeding be stayed.

(2) The conditions for the order are one or more of the following: (

a) the Court has no jurisdiction;

(

b) a commencement document or pleading discloses no reasonable claim or defence to a claim; (

c) a commencement document or pleading is frivolous, irrelevant or improper; (

d) a commencement document or pleading constitutes an abuse of process; (

e) an irregularity in a commencement document or pleading is so prejudicial to the claim that it is sufficient to defeat the claim. [ 9 ] Rule 3.68 is similar to old Rule 129, which provided: 129(1) The court may at any stage of the proceedings order to be struck out or amended any pleading in the action, on the ground that (

a) it discloses no cause of action or defence, as the case may be, or (

b) it is scandalous, frivolous or vexatious, or (

c) it may prejudice, embarrass or delay the fair trial of the action, or (

d) it is otherwise an abuse of the process of the court, and may order the action to be stayed or dismissed or judgment to be entered accordingly. [ 10 ] However, the Rule 3.68 must be viewed through the lens of the foundational rule, Rule 1.2, which provides: 1.2(1) The purpose of these rules is to provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost-effective way.

(2) In particular, these rules are intended to be used (

a) to identify the real issues in dispute, (

b) to facilitate the quickest means of resolving a claim at the least expense, (

c) to encourage the parties to resolve the claim themselves, by agreement, with or without assistance, as early in the process as practicable, (

d) to oblige the parties to communicate honestly, openly and in a timely way, and (

e) to provide an effective, efficient and credible system of remedies and sanctions to enforce these rules and orders and judgments.. Issues 1. Are the claims against Mr. Farrell other than those relating to infliction of mental suffering an abuse of process? 2. If such claims are an abuse of process, should the Statement of Claim be struck, should it be amended, or should the action be stayed?

3. Do the claims against Mr. Farrell and Ms. Bibby relating to the intention of mental suffering fail to disclose a cause of action? 1. Abuse of Process [ 11 ] Mr. McCoy, on behalf of Ms. Donaldson, concedes that “any portion of the Claim that has already been addressed by the Surrogate Court must be struck; however, such an action is wholly premature until such time as the Surrogate Court process is concluded”. [ 12 ] I am not persuaded that the Statement of Claim against Mr. Farrell raises any new policy considerations relating to the conduct of executors in the administration of estates.

Neglect and breach of fiduciary duty can be addressed (and is being addressed) under the Administration of Estates Act . Edwards v. Law Society of Upper Canada , 2001 SCC 80 and Childs v. Desormeaux , 2006 SCC 18 , cited by Mr. McCoy, do not save the duplicated claims from being stayed or struck. [ 13 ] As such, the issue here is as to remedy. Mr. Belzil, on behalf of Mr. Farrell, wants the duplicated claims struck. Mr. McCoy, on behalf of Ms. Donaldson, argues that the duplicated claims should be stayed. Both are possible remedies under R. 3.68. 2.

Remedies - Struck, amended or stayed? [ 14 ] Here, the lens of the foundational rules must be applied. How best can the issue be dealt with to see that Ms. Donaldson’s claims, and Mr. Farrell’s defences are “fairly and justly resolved in a timely and cost-effective way”? Achieving that objective is a balancing act as “fair and just” is not necessarily accomplished in a “timely and cost-effective way”. Hence the challenge of balancing the objectives, and applying proportionality to issues as mandated by R. 1.2(4):

(4) The intention of these rules is that the Court, when exercising a discretion to grant a remedy or impose a sanction, will grant or impose a remedy or sanction proportional to the reason for granting or imposing it. [ 15 ] I was referred to Edmonton Northlands v. Edmonton Oilers Hockey Corporation , [1993] A.J. No. 1000 (Q.B.) , which in turn cites German v. Major , (1985), 62 A.R. 14 (C.A.) for the proposition that “commencing a second action while one is currently pending is an abuse of process.” (At para. 26).

Having regard to the foundational rules, those cases remain good law and their rationales are strengthened. [ 16 ] Little purpose is achieved by staying the duplicated claims. Here, a stay of the claims may invite some later uncertainty as to what was included in the Estate action and what was not. At a minimum, it likely requires that some steps be taken after the Estate action has been resolved. That may be some time away, and thus “timely and cost effective” are both offended by a stay. [ 17 ] There is nothing unfair or unjust about striking the duplicated claims now.

That is the inevitable result of the completion of the Estate action, which is intended to deal with all claims of neglect and breach of trust on Mr. Farrell’s part that have been allowed to proceed under s. 47 of the Administration of Estates Act . There has already been a screening process (similar to R. 129) of claims by Ms. Donaldson against Mr. Farrell in the Estate action, and it would be an abuse of process to revisit those matters now, or worse yet stay such issues to be dealt with years down the road. [ 18 ] As a result, the appropriate remedy is to strike the duplicated claims.

To some extent, when only some of the claims in a Statement of Claim are being struck, that involves amendments to the Statement of Claim (which is also one of the remedies under R. 3.68). [ 19 ] Here, the particulars of negligence and breach of trust or breach of fiduciary duty against Mr. Farrell are also particulars of the intentional or negligent infliction of mental suffering on Ms. Donaldson. As such, as against Mr. Farrell, paragraphs 12(a)(

i) and 12(a)(ii) are struck. Portions of paragraph 31 (prayer for relief) are also struck against Mr. Farrell, being 31(

b) and 31(c).

3. Cause of action [ 20 ] Ms. Donaldson alleges that the conduct of Mr. Farrell and Ms. Bibby (and Ms. Rackel and Ms. Telfer) amounted to a negligent or intentional infliction of metal suffering on Ms. Donaldson. She seeks general damages of $500,000, punitive or aggravated/exemplary damages of $500,000 plus interest and costs. [ 21 ] Both Mr. Farrell and Ms. Bibby rely on the Supreme Court of Canada decision in Mustapha v. Culligan of Canada Ltd. , 2008 SCC 27 , and argue that Ms. Donaldson’s claims in relation to her mental suffering cannot succeed. [ 22 ] Both Mr. Belzil, on Mr. Farrell’s behalf, and Ms.

Sadownik on Ms. Bibby’s behalf, argue that the infliction of mental suffering claims against their clients do not disclose a cause of action because Mustapha held that defendants in such claims are entitled (in terms of forseeability) to assume that plaintiffs are of ordinary fortitude. There is no indication here that Ms. Bibby is other than of ordinary fortitude. They argue that none of the allegations in the Statement of Claim relating to the infliction of mental suffering would cause mental suffering to a person of “ordinary fortitude”. [ 23 ] With respect, the arguments advanced by Mr. Belzil and Ms.

Sadownik are arguments that might be made on a

summary dismissal application, where the merits or strength of the cause of action can be considered. They are not applicable to arguments that the Statement of Claim discloses no cause of action. [ 24 ] The commentary in W.A. Stevenson’s and J.E. Côté’s Alberta Civil Procedure Handbook (Edmonton: 2010, vol.1) at p. 3-100 & 3-101 on Rule 3.68 (3) is appropriate and consistent with the foundational rules: “More time and money is wasted over this Rule than any other. There are two reasons for that. The first reason is smaller.

Even where there is some small hope of disposing of a suit summarily, it can almost always be done under R. 7.3 and usually more easily. The grounds for the two Rules are very different, but almost any fatal flaw in an opponent’s pleading would also give ground for

summary judgment under R. 7.3. The second reason is very large. Rarely is there a fatal flaw which falls within R. 3.68. Therefore, the most common misuse of R. 3.68 is trying to strike out claims which are only probably bad, not certainly bad. Aside from rare cases of true abuse of process, the only other paragraph of R. 3.68(2) offering any real hope is (b), disclosing no cause of action (if the statement of claim is under attack), or disclosing no ground of defence (if the statement of defence is). Paragraph (

c) is not really an independent ground of attack, because it is probably impossible to have any relevant pleading disclosing a cause of action (or defence) which would fit within (c). What is more, even when attacks under (

c) or (

d) succeed, they usually only remove or amend a short passage in the impugned pleading, and that does little to help the party attacking the pleading. There are some rare types of abuse of process discussed below, falling under para. (

d) of R. 3.68(2). Sometimes a motion to strike out a statement of claim is based on it being frivolous, vexatious, embarrassing or an abuse of process, rather than on absence of cause of action. Nevertheless the plaintiff can still plead anything arguably relevant, and the court should still be cautious and only strike out in a clear case.” [ 25 ] Additionally, Mustapha deals with foreseeability and remoteness in relation to psychological injuries.

It does not purport to otherwise limit the cause of action for negligent or intentional infliction of mental suffering. [ 26 ] Mustapha was a trial decision, not a motion to strike. There, the Supreme Court found that the plaintiff had failed to prove that it was foreseeable that a person of ordinary fortitude would suffer injury from seeing flies in a bottle of drinking water he was about to instal.

[27] Importantly for this case, the Supreme Court noted at paras. 16 and 17: 16 To say this is not to marginalize or penalize those particularly vulnerable to mental injury. It is merely to confirm that the law of tortimposes an obligation to compensate for any harm done on the basis of reasonable foresight, not as insurance. The law of negligenceseeks to impose a result that is fair to both plaintiffs and defendants, and that is socially useful. In this quest, it draws the line forcompensability of damage, not at perfection, but at reasonable foreseeability.

Once a plaintiff establishes the foreseeability that a mentalinjury would occur in a person of ordinary fortitude, by contrast, the defendant must take the plaintiff as it finds him for purposes ofdamage. As stated in White, at p. 1512, focusing on the person of ordinary fortitude for the purposes of determining foreseeability “is notto be confused with the ‘eggshell skull’ situation, where as a result of a breach of duty the damage inflicted proves to be more seriousthan expected”. Rather, it is a threshold test for establishing compensability of damages at law. 17 I add this.

In those cases where it is proved that the defendant had actual knowledge of the plaintiff’s particular sensibilities, theordinary fortitude requirement need not be applied strictly. If the evidence demonstrates that the defendant knew that the plaintiff was ofless than ordinary fortitude, the plaintiff’s injury may have been reasonably foreseeable to the defendant. In this case, however, there wasno evidence to support a finding that Culligan knew of Mr.

Mustapha’s particular sensibilities. [28] I do not see that forseeability is a matter the plaintiff must plead, or put another way, I do not see that the failure to pleadforseeability by a plaintiff is fatal to pleading the essential elements of the cause of action of infliction of mental suffering. I leave thatfor another day and another application. Ordinarily, lack of forseeability or remoteness were matters that were plead by defendants asdefences to plaintiffs’ claims.

Having regard to Mustapha, some plaintiffs may choose to plead forseeability; others may also continuethe old practice of waiting to see if the defendant brings it into issue. The latter course may be more appropriate now, having regard tofoundational Rule 4-2 relating to the identification of the real issues in the dispute. The new rules should not be interpreted as requiringprolix pleadings. The opposite is intended.

Get to the issues and get them resolved fairly, but quickly and economically. [29] At this stage of the lawsuit, it is not obvious that all of the allegations in paragraphs 14 and 15 of the Statement of Claim (asregards Mr. Farrell) and paragraphs 11, 18 and 19 (as regards Ms. Bibby) are incapable of causing mental distress or psychological harmto a person of ordinary fortitude. It is also not obvious that Mr. Farrell and Ms. Bibby did not know, or should not have known, about anyfrailties or sensibilities Ms.

Donaldson had which may have made psychological injury foreseeable. [30] The claims in that regard are not bound to fail. I do not see that the new rules have modified or lessened the test for strikingout pleadings. As stated at para. 7 in Mackay v. Farm Business Consultants Inc., 2006 ABCA (quoting from Korte v. Deloitte Haskins& Sells, (1993), 1993 ABCA 78 , 8 Alta. L.R. (3d) 337), “the test for striking pleadings under Rule 129 is not in issue.

It iswhether it is plain and obvious or beyond reasonable doubt that the claim cannot succeed.” [31] That test is consistent with countless other cases on the subject, including the cases cited on Ms. Donaldson’s behalf of whichOdhavji Estate v. Woodhouse, 2003 SCC 69 , [2003] 3 S.C.R. 263 is the most prominent. [32] I cannot say that the Statement of Claim fails to disclose causes of action against Mr. Farrell and Ms. Bibby for psychologicalharm including intentional or negligent infliction of mental suffering.

While some of the specific allegations in the various paragraphs ofthe Statement of Claim may not support the damage claim, I doubt that the Applicants want to go through the exercise mentioned inStevenson & Cote: turning the judge into a free lawyer for the opponent and improving the opponent’s pleadings. [33] The Applicants have other remedies available to them such as

summary dismissal proceedings if they consider that some ofMs. Donaldson’s claims are hopeless. The Applicants’ applications to strike the intentional or negligent infliction of mental sufferingclaims are dismissed. Road Ahead

[ 34 ] Mr. McCoy had proposed that the 2009 action be stayed pending the conclusion of the Estate litigation. As noted above, my conclusion on remedies under R. 3.68 is that a stay should be reserved for exceptional cases. There are undoubtedly cases where a stay makes perfect sense. But in other cases, it may simply be putting off the inevitable. Here, having regard to the obvious animosity between the two sides to the dispute, there is merit in requiring the 2009 action to proceed parallel with the Estate litigation. While Ms.

Bibby is not a direct party to the Estate litigation, she is clearly interested in the outcome. And while Mr. Gillespie, Ms. Rackel and Ms. Telfer are not parties to the Estate litigation, the results of that litigation will inform the claims against them. [ 35 ] The Estate litigation is in case management. It is my view that the 2009 litigation and the lawsuit between Ms. Donaldson and Ms.

Telfer should be case managed with the Estate litigation, and should likely be tried with or consecutively to the Estate litigation before the same trial judge, for efficiency, economy and to avoid potentially inconsistent results. I will recommend to the Associate Chief Justice that I be appointed case manager of this lawsuit and the Donaldson v. Telfer lawsuit. [ 36 ] If appointed, I will convene a case management conference to develop a litigation plan with the parties to effectively manage these disputes to resolution. Costs [ 37 ] There has been mixed success on the applications.

Portions of the Statement of Claim have been struck as against Mr. Farrell. Mr. Farrell and Ms. Bibby have been unsuccessful in having the infliction of mental suffering claims dismissed. Ms. Bibby’s participation in the applications did not add significantly to the length or complexity of the proceedings. Costs of this application should therefore be in the cause. Heard on the 15 th day of December, 2010. Dated at the City of Edmonton, Alberta this 6 th day of January, 2011. R.A. Graesser J.C.Q.B.A. Appearances: C.D. McCoy McCoy Law for the Respondent, Leslie Dawn Donaldson

Louis M. H. Belzil Rackel Belzil LLP for the Applicant, Brian Farrell Melissa Sadownik Wheatley Sadownik for the Applicant, Laura Dawn Bibby