Winram v. Engleder, 2011 ABQB 467

Court of Queen ’ s Bench of Alberta Citation: Winram v. Engleder, 2011 ABQB 467 Date: 20110714 Docket: 0814 00256 Registry: St. Paul Between: Jane Winram Plaintiff - and - Robert Engleder, Barb Engleder, Louise Johnson, Realty Executives Cold Lake, 1031258 Alberta Ltd. Operating As Realty Executives Cold Lake, Kathleen Aline Pilon, Kathleen Aline Pilon Also Known As Kathleen A. Harrison, Kathleen Aline Pilon Also Known As Kathleen A. Harrison Operating As Realty Executives Cold Lake Defendants _______________________________________________________ Memorandum of Decision of W.

Breitkreuz, Master in Chambers _______________________________________________________ [ 1 ] This is an application by all of the defendants except Robert and Barb Engleder to set aside the amended amended statement of claim against them. They were referred to in the briefs and arguments as the RECL Defendants and I will also do that in this Memorandum. [ 2 ] The application is to set aside the order adding the RECL Defendants on the ground that it is out of time.

The action arises out of a contract for the sale and purchase of an acreage property in the Bonnyville area by the Engleder defendants to the plaintiff.

[ 3 ] The plaintiff’s statement of claim against the Engleder defendants was issued on August 20, 2008. The time for service of that statement of claim expired on August 20, 2009. [ 4 ] The amendment to add the RECL Defendants was filed on March 3, 2010. This means that unless the amendment is saved by either s. 3(1) or s. 6(4) of the Limitations Act , c.

L-12, RSA 2000, the amendment adding the RECL Defendants must be set aside. [ 5 ] The position of the RECL Defendants is that the action against them is barred because of the operation of s. 3(1)(iii) of the Limitations Act on the ground that the plaintiff must have known far earlier in the proceedings that at least part of the injury warrants bring a proceeding against the RECL Defendants. [ 6 ] Alternatively, if that argument does not prevail, the RECL Defendants say that the plaintiff’s claim is not saved by s. 6 because the added claim is not related to the conduct, transaction or events described in the original pleadings, and even if it is, the RECL Defendants did not receive sufficient knowledge during the time provided for issuing proceedings plus the extra year permitted for service of the statement of claim. [ 7 ] Section 3(1)(iii) provides as follows: 3(1) Subject to

section 11, if a claimant does not seek a remedia order within (a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known, . . . . . (iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding, [ 8 ]

Section 6 of the Limitations Act provides as follows: Claims added to a proceeding 6(1) Notwithstanding the expiration of the relevant limitation period, when a claim is added to a proceeding previously commenced, either through a new pleading or an amendment to pleadings, the defendant is not entitled to immunity from liability in respect of the added claim if the requirements of subsection (2) (3) or (4) are satisfied. (Subsection 2 and 3 are not relevant)

(4) When the added claim adds or substitutes a defendant, or changes the capacity in which a defendant is sued, (

a) the added claim must be related to the conduct, transaction or events described in the original pleading in the proceeding, and (

b) the defendant must have received, within the limitation period applicable to the added claim plus the time provided by law for the service of process, sufficient knowledge of the added claim that the defendant will not be prejudiced in maintaining a defence to it on the merits.

(5) Under this

section (

a) the claimant has the burden of proving (

i) that the added claim is related to the conduct, transaction or events described in the original pleading in the proceeding, and (ii) that the requirement of subsection 3(

c) if in issue, has been satisfied, and (

b) the defendant has the burden of proving that the requirement of subsection 3(

b) or 4(b), if in issue, was not satisfied. [ 9 ] Regarding s. 3, the evidence is clear that the realtor Louise Johnson persuaded the plaintiff to remove the subject to condition regarding the non-compliance of the sewer system on the ground that the male vendor defendant was a county councillor, and that the plaintiff could follow up the question of the grandfathering letter the defendants presumably had from the county regarding the non-compliance of the sewer system. [ 10 ] In addition, the evidence supports the plaintiff’s position that the defendant Louise Johnson advised the plaintiff to waive the subject to condition relating to repairs of certain matters that plaintiff’s counsel has characterized as patent defects, including completion of renovations in the bathroom and solarium. [ 11 ] When the plaintiff realized the grandfathering letter regarding the sewer system would not be provided, and that the Engleder defendants would not complete the deficiencies as agreed upon, she ordered a home inspection and received it on July 30, 2008. [ 12 ] In my opinion that is when time starts running against the plaintiff because she knew, or ought to have known, at that point that at least some of the injury she alleges she sustained was attributable to the conduct of the RECL Defendants, and warranted bringing a proceeding against them. [ 13 ] That means the plaintiff must be able to bring herself within s. 6(4) both sub (

a) and sub (b), failing which she is out of time. [ 14 ] Consequently the question is, dealing firstly with subsub (a), is the added claim related to the conduct, transaction or events described in the original claim. [ 15 ] There is no doubt that the amended amended statement of claim is much broader in scope and certainly because of the additional defendants named, it pleads a much wider range of breaches of duty by the new defendants, which were not included in the original statement of claim.

In my opinion it is not too far a reach to say that the allegations against the RECL Defendants arise out of the same transaction, i.e., the real estate transaction, which gave rise to the claim against the original defendants. [ 16 ] In Calgary Mack Sales Ltd. v. Shah , 2005 ABCA 304 , Côtè, J.A. stated at para. 14 that: The phrase “related to” has a very broad meaning.

[ 17 ] Turning now to the question of whether these new defendants, i.e., RECL Defendants, had sufficient knowledge of the added claim within three years after the plaintiff knew or ought to have known that the circumstances warranted bringing a proceeding against the RECL Defendants. [ 18 ] It must be noted that the sufficient knowledge referred to in s. 6(4)(

b) pertains to the added claim, not the claim generally. ( McLaughlin v. Broddy , 2006 ABQB 914 (Wachowich C.J.) ) [ 19 ] It is clear from the cross-examination of Louise Johnson that she knew, but wouldn’t admit it, and that she passed it on to the other added defendants. This is the exchange that is transcribed at pages 36 and 37 of the cross-examination of Louise Johnson: Q MS. McMAHON: So then, this matter at some point was reported to RE EX, correct? A That is correct. Q So, was it you that reported this matter to RE EX? A I can’t speak for Kathy. Q Okay. Why would this matter be reported to RE EX? MS.

PIVOVAR: Don’t answer that. Q MS. McMAHON: To the best of your knowledge why would this matter be reported to RE EX? MS. PIVOVAR: Don’t answer that. Q MS. McMAHON: Is there a form that would be submitted to RE EX? MS. PIVOVAR: Don’t answer that. Can we go off the record? (DISCUSSION OFF THE RECORD) Q MS. McMAHON You have stated earlier that this matter was reported to RE EX, correct? MS. PIVOVAR: She did not state that. She said she could not recall. [But see the question at line 3 and the answer at line 5]

MS. McMAHON; Okay. Then we will move on. As this matter was reported to the Real Estate Insurance Exchange you must have known a lawsuit was coming, correct? MS. PIVOVAR: Don’t answer that. [ 20 ] It is manifestly obvious that the refusal to answer these questions demonstrates knowledge by the RECL Defendants that they can expect a lawsuit. [ 21 ] I am aware that the normal procedure would be for the plaintiff to have brought an application to require those questions to be answered.

In my view, in the interest of fairness and justice that procedure should be bypassed in this instance and an adverse inference should be drawn against the defendants, the consequences of which are fatal to the RECL Defendants’ position denying sufficient knowledge of the added claim. [ 22 ] Of course I am not aware of the reason for the objection to the questions defence counsel instructed the witness not to answer; I can only surmise that possibly counsel thought some form of privilege might attach to any information passed on to RE EX, but the difficulty is that this goes right to the heart of the application before me.

A conclusion that the report to RE EX was for any other purpose than the potential existence of a claim in this real estate transaction is difficult to justify. [ 23 ] One further matter needs to be dealt with, namely whether the RECL Defendants are prejudiced by the added claim at this stage. There is evidence in Louise Johnson’s cross-examination that her file was destroyed by a flood so her ability to properly defend is prejudiced. [ 24 ] According to s. 5(

b) the onus is on the RECL Defendants to show that they will be prejudiced in defending this added claim. [ 25 ] It seems to me that the timing here is important. If the file was destroyed during the period of time after it was saved by s. 6 of the Limitations Act, it could arguably be a valid defence against the amendment.

However, there is no evidence at all in the affidavit of Louise Johnson about the file being destroyed and only a passing reference to it in her cross examination, without establishing a date of the destruction of the file. [ 26 ] The RECL Defendants have not discharged the burden of proving that they will be prejudiced in maintaining a defence on the merits. [ 27 ] Accordingly the application is dismissed with costs on the appropriate column to the plaintiff. Heard on the 2 nd day of May, 2011. Dated at the City of Edmonton, Alberta this 14 th day of July, 2011.

W. Breitkreuz M.C.C.Q.B.A. Appearances: Crystal McMahon Emery Jamieson LLP for the Plaintiff Jacklynn Pivovar Duncan & Craig LLP for the Defendants