2012 ABQB 224, 2012 ABQB 224

Court of Queen ’ s Bench of Alberta Citation: Urban Landmarks Master Builder Inc. v. Lloyd ’ s Underwriters, 2012 ABQB 224 Date: 20120404 Docket: 0703 16316, 0903 11005 Registry: Edmonton

Between: Urban Landmarks Master Builder Inc. operating as Urban Landmarks Inc. and as Urban Landmark Incorporated, and MacEwan Gardens (II) Inc. Plaintiffs - and - Lloyd ’ s Underwriters, Jardine Lloyd Thompson Canada Inc. and United Protection Services Inc. Defendant - and - Price Forbes & Partners Limited and Insolutions Limited formerly known as Price Forbes Limited Third Parties And Between: Urban Landmarks Master Builder Inc. operating as Urban Landmarks Inc. and as Urban Landmark Incorporated, and MacEwan Gardens (II) Inc. Plaintiffs - and - United Protection Services Inc. Defendant _______________________________________________________

Memorandum of Decision of the Honourable Mr. Justice R.A. Graesser _______________________________________________________ Introduction [ 1 ] The Defendant in Action 0903-11005 (the “Second Action”), United Protection Services Inc. (“United”) seeks an order striking the Plaintiffs’ Amended Statement of Claim as being an abuse of process. [ 2 ] Urban, as Plaintiff in Action 0703-16316 (the “First Action”), seeks an order consolidating the two actions. [ 3 ] Both actions arise out of the same circumstances. I have been case managing the First Action for some time as it works its way towards trial.

Background [ 4 ] The Plaintiff (“Urban”) was in the course of constructing an apartment complex in Edmonton, Alberta. It had hired United to provide security services at the jobsite. Urban had obtained a builder’s risk insurance policy protecting the project against fire and other perils from Lloyd’s Underwriters (“Lloyd’s), having gone through its broker, Jardine Lloyd Thomson Canada Inc. (“Jardine”) to obtain the insurance coverage. [ 5 ] A fire destroyed the apartment complex on July 27, 2007.

In December, 2007, Urban commenced the first action against Lloyd’s, Jardine and United, seeking judgment in the amount of $7,924,949.54 plus general, aggravated and punitive damages. The Statement of Claim was amended in December, 2010 to increase Urban’s claim to $14,227,961.39 plus damages. [ 6 ] By the time of the filing of the Statement of Claim in the first action, Lloyd’s had denied coverage on the basis that Urban had failed to comply with the “watchman’s warranty” provisions of the policy.

The insured’s warranties under the policy included a warranty that: ...the Assured shall provide a full time watchman/patrol service, at the project location)

s) insured under this Policy, upon commencement of “framing” activities and continuing until the project is completed and no longer at the risk of the Assured. [ 7 ] Under the policy, the watchman was to: patrol the perimeter of the construction site on a regular hourly basis, during nights, from the cessation of regular construction work in the afternoon until resumption of work the following morning and at all times during which construction activities are suspended. [ 8 ] The allegations and claim against Urban was limited to para. 15 which states:

In the alternative, if the Plaintiffs failed to comply with the Builders Risks Warranties concerning required site security services, which is denied, such failure to comply was caused by the negligence or breach of contract of United who for valuable consideration contracted to provide the site security services required under the policy, but failed to do so. [ 9 ] The First Action was proceeding through record production and examinations for discovery (I will use the old terminology for steps taken under the old Rules of Court ).

At a case management conference on June 12,2009, Urban was attempting to compel answers to questions asked of United’s officer on discovery relating to allegedly negligent performance of their services under their contract with Urban. [ 10 ] In rejecting Urban’s submissions with respect to this line of questioning, I stated at page 22, lines 36 - 37: ...negligent performance of the services, I do not think is really raised by the pleadings yet, and I am not encouraging any amendment either. [ 11 ] And later I stated at page 24, lines 28 - 31: So you know, it really is if you had sued UPS independently or that there was a full claim against them in negligence, that the fire resulted from their negligent performance of the services or damage resulted from the negligent performance or breach of contract of their services, then all of these questions would be just fine...but with the very specific pleading, I just think that your real focus is what was the contract here?

And is somehow UPS obliged to perform exact – you know, were they expressly or impliedly contracted to perform the exact services required by the watchmen clause... [ 12 ] Case management continued on other issues on July 15, 2009. [ 13 ] On July 17, 2009, Urban filed its Statement of Claim in the Second Action.

The Statement of Claim alleges that United: ...was negligent in the performance of the services and failed to perform the same in a competent manner and further, that the Defendant is in breach of contract in the performance of security services to MacEwan Gardens, which negligence and breach of contract caused or contributed to the occurrence of the fire. [ 14 ] Urban did not immediately serve the Statement of Claim in the Second Action against United, and amended it in June, 2010 along with the Statement of Claim in the First Action to increase the amount of its claim to $14,227,961.39.

United learned of the new Statement of Claim and the Second Action on June 24, 2010 after both Statements of Claim had been amended. [ 15 ] Between July 17, 2009 and June 24, 2010, further steps in the First Action took place, without Urban advising United of the new Statement of Claim and the commencement of the Second Action. United Application to Strike New Statement of Claim [ 16 ] United argues that the Second Action constitutes an abuse of process and the Amended Statement of Claim in the Second Action should be struck out, pursuant to Rule 3.68 of the Rules of Court . [ 17 ] Rule 3.68 provides:

(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.

(3) No evidence may be submitted on an application made on the basis of the condition set out in subrule (2)(b).

(4) The Court may (

a) strike out all or part of an affidavit that contains frivolous, irrelevant or improper information; (

b) strike out all or any pleadings if a party without sufficient cause does not (

i) serve an affidavit of records in accordance with rule 5.5, (ii) comply with rule 5.10, or (iii) comply with an order under rule 5.11. [18] United relies on the principle that there is only one cause of action for a single wrongful or negligent act and damagesresulting from that negligent act must be claimed and assessed in one proceeding, relying on Cahoon v. Franks, (SCC),[1967] S.C.R. 455 and Earl Poulett v. Viscount Hill, [1893] 1 Ch. 277 (U.K. Ch. Div.). [19] Multiplicity of actions has been held to constitute an abuse of process since Earl Poulett v.

Viscount Hill (supra) and thatprinciple has been followed in Kybich v. Mangus, (AB KB), [1919] 3 W.W.R. 532 (Alta. S.C.), Edmonton Northlandsv. Edmonton Oilers Hockey Corp., (AB KB), [1993] A.J. No. 1001 (Q.B.), aff’d 1994 ABCA 40 , [1994]A.J. No. 138 (C.A.), Whitehead v. Taber, [1985] A.J. No. 442 (C.A.) and Balm v. BHC Securities, Inc., 2003 ABQB 773. [20] United notes that I ruled in Donaldson v. Farrell, 2011 ABQB 11 that “commencing a second action while one is currentlypending is an abuse of process”, referring to German v.

Major, (1985), 1985 ABCA 176 , 62 A.R. 2 (C.A.), and that the oldcase law under the previous abuse of process rule, Rule 129, applied to similar proceedings under the new Rules of Court (at para. 15). [21] In Donaldson v. Farrell, I directed that the offending, duplicated claims, be struck. I expressly refused to simply stay the

duplicated claims on the basis that a stay might create some future uncertainty as to what was duplicated and what was not (at para. 16). [22] Urban argues that there is no duplication between the claims in the two actions. The First Action involves a claim that Unitedwas contractually obliged to perform the watchman services specified in the policy, and failed to do so. It ties United’s breach ofcontract or negligence in the performance of its services under the contract to the loss of insurance coverage by Lloyd’s.

It makes noallegation that United’s negligent performance of its services caused or contributed to the damages caused by the fire. [23] The new Statement of Claim was issued after that

interpretation of the First Action was given by me in case management;thus the Second Action which alleges that United’s negligent performance of their services caused or contributed to the occurrence of thefire. The Second Action also alleges misrepresentations by United as to the nature and extent of the services it was to perform under thecontract. Analysis [24] Cahoon v. Franks involved the striking of a second action for damages arising out of a motor vehicle accident. An action hadbeen commenced for the value of the damaged automobile.

After the limitation period for commencing action (1 year under the oldVehicles and Highway Traffic Act, 1955 R.S.A. c. 356) had expired, the Plaintiff sought to amend the Statement of Claim to include aclaim for personal injury damages. The Supreme Court of Canada held that “there is only one cause of action for a single wrongful ornegligent act and damages resulting from the single tort must be assessed in the one proceeding” (at page 3). The Supreme Court heldthat the amendments “did not set up a new cause of action” (at page 6).

The defendant in that case unsuccessfully argued that there weretwo separate causes of action - the action for injury to goods (the car) and for injury to the person, to raise a limitation defence against thepersonal injury claim. [25] Earl Poulett v. Viscount Hill involved a new claim for arrears of interest when an action had already been started inforeclosure.

There, the House of Lords stated at page 282: When an action has been brought by which the plaintiff can recover everything to which he is entitled, he ought not to bring another. [26] As a result, the order obtained in the second action was set aside. [27] In Kybich v. Mangus, the Master struck an action where the relief sought in it was the same as was asked by the party by wayof a counterclaim in an action between the same parties. He held that it was an abuse of process to allow the second action to continuewhile the first was pending.

Otherwise, he noted, “there is no end to the number of actions the plaintiff may bring for the same relief.”(At page 2). [28] In Edmonton Northlands v. Edmonton Oilers Hockey Corp., Edmonton Northlands had issued a statement of claim againstthe Edmonton Oilers Hockey Corp. Because of concerns that it may have prejudiced its ability to continue with that action, EdmontonNorthlands commenced a second action “identical in form and substance” to the first action. [29] Moore C.J. held at paras. 26 - 28: 26 The courts of Alberta generally recognize a rule against multiple prosecution.

It is trite law that commencing a second action whileone is currently pending is an abuse of process: German v. Major (1985), 1985 ABCA 176 , 62 A.R. 14, 39 Alta.L.R. (2d) 270,20 D.L.R. (4th) 703, 34 C.C.L.T. 257 (C.A.).

27 Since the same relief can be obtained in the first action, Northlands is not entitled to bring a second action while the first is stillpending: Great Pacific Contracting Ltd. v. Hahn Properties (1981), (BC SC), 29 B.C.L.R. 145, 21 C.P.C. 280 (S.C.). 28 In my view, the second action must be set aside. I note that counsel agreed there was no legal impediment to the use of the affidavitevidence produced for the second action, to resolve the applications on the first action, as all requirements as to notice were met. [30] In Whitehead v.

Taber, a statement of claim seeking to litigate “precisely the same matters as were the subject of theproceedings in Provincial Court and now before the Court of Queen’s Bench by way of appeal.” The Court of Appeal noted that the onlydifference between the two actions was the amount claimed, and ruled that the second action would be an abuse of process “to allow theplaintiffs to maintain an action involving all the same issues that were litigated in the Provincial Court proceedings and are now beforethe Court of Queen’s Bench by way of appeal.” (at para. 4). [31] Balm v.

BHC Securities, Inc. dealt with both striking claims for abuse of process and consolidation of actions. As forstriking for abuse of process, the Court held that as the second action was based on the same facts and was seeking essentially the samerelief, the second claim should be struck. At para. 31, Power J. stated: Abuse of process of the court clearly applies where there is a multiplicity of proceedings such as two or more lawsuits for virtually thesame matter. The courts of Alberta generally recognize the rule against multiple prosecution.

It is trite law that commencing a secondaction when one is currently pending is an abuse of process. [32] I struck duplicated claims in Donaldson v. Farrell, although non-duplicated claims involving the same parties were allowedto proceed. [33] In its brief in support of its application, United argues that: The allegations with respect to negligence and breach of contract in the Duplicate Action are no different in substance than theallegations in the First Action. It is alleged that due to the negligence or breach of contract the Plaintiff sustained loss.

The loss is thesame in both actions. [34] I disagree that the Second Action duplicates the claims against it in the First Action. Indeed, United resisted questioning inthe First Action on negligent performance of the services other than as performance related to the services described in the watchmanwarranty.

I disallowed questioning on other aspects of negligence because other aspects had not been plead. [35] The negligence alleged in the new Statement of Claim is entirely different, and while the amount of damages is the same(although there is no claim for aggravated or punitive damages in the Second Action), the theory of damages is entirely different. [36] United also seeks to strike the Second Action on the basis that Urban should have included such claims in the Statement ofClaim in the First Action because there should only be one action arising out of the same events - the fire.

It relies specifically onCahoon v. Franks in that regard. [37] Clearly, a multiplicity of actions or duplication of actions arising out of the same circumstances is problematic and in manycases amounts to an abuse of process. Whether there is an abuse of process will depend on a careful analysis of the various claims. [38] Here, there is no clear duplication.

In the First Action, Urban sued United on the basis that if Urban’s insurance coverage wasvoided because of the absence of a watchman in accordance with the policy requirements, United should be liable for Urban’s loss ofinsurance (and resulting loss) because it agreed to provide the necessary watchman’s services. There was no attempt to tie United’sperformance to the fire, or the damage to the project caused by the fire.

[ 39 ] The Second Action, against only United, alleges a connection between United’s performance to the fire and the damage to the project caused by the fire, as well as a claim in misrepresentation as to the nature of the services to be performed by United. [ 40 ] The parties are the same; the contract is the same; the fire loss is the same; however, the mechanism of loss is different. [ 41 ] This is not the same situation as in Earl Poulett , Kybich , Edmonton Northlands , Whitehead , Balm and Donaldson where the second action advanced exactly the same claims. [ 42 ] Essentially, the First Action might be characterized as an insurance action.

Urban sued its insurer and its broker, alleging that the loss is covered by insurance, or that its broker failed to advise Urban as to important policy requirements. United’s involvement is as an alternative claim, blaming the potential loss of insurance on United’s failure to perform the services required under the watchman’s warranty. In the insurance action, it is essentially irrelevant whether United did a good job of providing security services; their liability depends on whether they actually had a watchman patrolling the site’s perimeter on an hourly basis (and whether they were obliged to do so).

Even though “negligence” is used, the claim against United is a contractual claim, depending on what the contract was and whether United performed the nature of services required under the contract, not whether United performed the services in a proper or non- negligent manner.

United’s negligence is alleged to be its failure to perform the nature of the services is was required to perform, not the quality of its performance. [ 43 ] The Second Action might be characterized as a negligence action, relating to the quality of performance and alleged misrepresentations as to the nature and quality of its services. [ 44 ] There is no overlap as to the negligent performance or misrepresentation claims in the Second Action, as that was clearly not raised in the First Action.

I accepted United’s submissions in that regard in case management, and they have not argued on this application that I erred in doing so. [ 45 ] In the First Action, the damages are the result of United’s alleged failure to have a watchman patrol the project perimeter on an hourly basis, regardless of whether that had any connection to the fire and resulting damage. In the Second Action, the damages are the result of United’s negligence in performing its duties such that the fire would not have occurred or damage would not have resulted but for United’s negligence.

The loss in the First Action is the loss of insurance proceeds; the loss in the Second Action is the loss of the project. [ 46 ] That does not automatically mean that the Second Action is not an abuse of process. A defendant should generally face only one lawsuit by a claimant arising out of the same incident. But an incident may give rise to a number of causes of action, and theoretically each cause of action may support an individual claim. [ 47 ] Cahoon v.

Frank is unaffected by the new Rules, and it is certainly arguable that it has been reinforced by the new Rules, and the imperative to get to the real issues between the parties and resolve the issues in a fair, effective, efficient and cost effective manner. Multiple lawsuits rarely if ever satisfy any of those needs. [ 48 ] There is a strong argument that the allegations in the Second Action should have been put forward by way of amendments to the Statement of Claim in the First Action, rather than by starting a new action. As noted above, the parties are the same and many aspects of the claims are the same.

However, the mechanisms of loss are different, and the damages are different (unless Urban can establish that there would have been no fire, or no damage from the fire, had United properly performed its services). [ 49 ] The timing of the commencement of the Second Action is significant. It was filed two days before the standard limitation period expired against United. It is arguable that Urban should have amended its Statement of Claim in the First Action rather than commencing a new action.

It is unclear whether Urban could simply have filed an amended Statement of Claim under old Rule 130 (if pleadings had not closed) or if it would have required leave under old Rule 132. This was not then a situation of adding a new party, or adding a new cause of action outside the limitation period which might have made obtaining leave more difficult.

[ 50 ] The choice of issuing a new Statement of Claim and amending or seeking to amend the existing Statement of Claim is to some extent a judgment call and a matter of strategy for counsel. I do not see that issuing a new Statement of Claim, alleging new causes of action against one party only, rather than include these new issues in an action where records had been produced, many days of discovery had taken place, and a number of court applications had been made, as being so outside the range of reasonable strategic choices available to counsel as to make it an abuse of process.

In my view, that would be taking Cahoon v. Franks to an extreme that is not made out in that case itself or in subsequent cases. Abuse of process can be addressed in many ways, and not just by striking a pleading. [ 51 ] In any event, I do not find that the commencement of the Second Action by way of separate Statement of Claim was an abuse of process. [ 52 ] Had Urban proceeded by way of amendment, there would have been no apparent basis for objection. If the amendment required anything to be redone, that would have been an issue for costs.

Delay in Service [ 53 ] I do have concerns about the decision to sit on the Second Action and not serve the new Statement of Claim immediately. The First Action was being actively litigated. It was in case management. Case management highlighted the potential for the causes of action in the Second Action to be plead, and confirmed that they were not included in the existing litigation among the parties.

Instead of immediately serving the new Statement of Claim, Urban sat on it for nearly a year before amending it and serving it on United. [ 54 ] Steps were taken in the First Action, including further examinations for discovery. It is possible that Urban had not decided whether it would actually proceed with the new claims and had filed the new Statement of Claim to protect its position before the expiry of the limitation period, and would take some time to consider its ongoing strategy.

That may be a legitimate strategy, but it was a strategy that took advantage of the court process. [ 55 ] From United’s point, it was required to participate in steps in the First Action, unaware of the existence of the Second Action. Whether it would have done anything differently in the First Action had it been aware of the Second Action is unclear.

However, that is a matter that can be addressed by costs, if there is anything that must be redone as a result of the Second Action, or which was less efficient than it might have been had United been aware of the Second Action. [ 56 ] The new Statement of Claim should have been immediately served. That would have given United the opportunity to consider the new claims, before taking any further steps in the First Action. [ 57 ] The delay in serving the new Statement of Claim is what is arguably an abuse of process, rather than the filing of the new Statement of Claim.

But that is not something which should be addressed under Rule 3.68. That is not a basis to strike the new Statement of Claim. Apart from possible duplication of steps between the filing of the new Statement of Claim in July, 2009 and its service in June, 2010, or some inefficiencies, I do not see any prejudice to United that cannot be remedied in costs. Costs are always in the discretion of the Court, and there is an ongoing jurisdiction to deal with costs in the Second Action, as well as in the First Action as it may be impacted by the Plaintiffs’ conduct. Consolidation [ 58 ] Urban relies on Munro v.

Munro , 2011 ABCA 279 , in relation to its application to consolidate the two actions. That case confirms that consolidation is a discretionary order. There, the majority of the Court of Appeal upheld a chambers decision refusing consolidation of matrimonial property issues with child support issues on the basis of a finding of prejudice by the chambers judge. Consolidation was discussed by Slatter J.A. in his dissenting reasons, referencing Mikisew Cree First Nation v. Canada , 1998 ABQB 675 . His discussion is unaffected by the majority decision.

He concluded at para. 28 that the new Rules of Court have not changed the underlying principles as expressed in Mikisew Cree .

[ 59 ] United argues that the Statement of Claim in the Second Action be struck, and that Urban be left to applying to amend the Statement of Claim in the First Action to include the new allegations. That is a possible remedy here, but is one which is not required to have the parties address the real issues among them. [ 60 ] The remedy here is found in Rule 3.72(1) which provides: The Court may order one or more of the following: (

a) that 2 or more claims or actions be consolidated; (

b) that 2 or more claims or actions be tried at the same time or one after the other; (

c) that one or more claims or actions be stayed until another claim or action is determined; (

d) that a claim be asserted as a counterclaim in another action. [ 61 ] I do not see that it is necessary that the actions be consolidated. That may involve amendment of pleadings and other procedural steps. Consolidation sounds easy, but is generally much more complicated when dealing with pleadings, record production, existing discoveries or questioning and other procedural issues. [ 62 ] A stay of the Second Action would be inappropriate, and United opposes the granting of a stay. United should not be subjected to a second action if the First Action fails.

Additionally, there would be the risk of inconsistent judgments. Judges in the two actions could view United’s contractual obligations differently, with inconsistent results. [ 63 ] United opposes the granting of a remedy under R. 3.72 on the basis that Urban has provided no evidence in support of its application. It cites my decision in P.L. v. Alberta , 2011 ABQB 772 . That case dealt with the “no evidence no amendment” principle, and exceptions to it. [ 64 ] This is not an amendment application, it is a consolidation application. I do not see that evidence is necessary on an application to consolidate actions.

It may be necessary if the basis for consolidation is not obvious from the pleadings. The arguments here have turned on the pleadings, and I see no need to require Urban to put forward evidence to support its position, or for the court to be able consider appropriate remedies under Rule 3.72. [ 65 ] Here, the appropriate remedy is to order under R. 3.72(1)(

b) that the two actions be tried at the same time, or one after the other. [ 66 ] This action is in case management. The Second Action should in my view be added to case management. The most appropriate and effective matter of having all issues get ready for trial and be tried by the same judge in the same or consecutive trials should be worked out in the case management process. I will ask the Associate Chief Justice to put the Second Action in case management with me, with the First Action.

It is especially important, in my view, that the two actions be part of the same dispute resolution process under Rule 4.16. Conclusion [ 67 ] United’s application to strike Urban’s second Statement of Claim is dismissed. Urban’s application to consolidate the two actions is also dismissed. Instead, I direct that the two actions be tried at the same time or one after the other, as may be directed by further order of the court.

[ 68 ] Urban is responsible for any duplicated costs resulting from the delay in serving the second Statement of Claim relating to any steps that took place between its filing in July, 2009 and its service in June, 2010. Urban may also be responsible for additional costs to the extent that the overall proceedings have been made inefficient by serving the Statement of Claim in the Second Action nearly a year after it had been issued, and after other steps had been taken. Those costs may be spoken to when United considers that it is in a position to calculate such costs.

The nature and extent of them may only become apparent as the matters progress. [ 69 ] I will advised the parties as to the Associate Chief Justice’s decision on adding the Second Action to the existing case management involving the First Action, and will leave it to the parties to make arrangements for the next case management conference. [ 70 ] Urban is not entitled to any costs of opposing United’s application. It was not unreasonable for United to bring an application to address its concerns over the existence of two actions against it by the same plaintiff arising out of the same incident.

While it was unsuccessful in the main, it succeeded in establishing an entitlement to costs if there turns out to be duplication of effort or inefficiency resulting from the failure to serve the second Statement of Claim in a timely way. [ 71 ] The appearance on March 1, 2012 should instead be treated as a case management conference, with costs for that appearance in the cause. Heard on the 01 st day of March, 2012. Dated at the City of Edmonton, Alberta this 4 th day of April, 2012. R.A. Graesser J.C.Q.B.A. Appearances: Matt A. Pruski Ogilvie LLP for the Plaintiffs - Urban Landmarks Master Builder Inc. David C.

Bishop Gowling Lafleur Henderson LLP for the Defendant - United Protection Services Inc. Havelock B. Madill, Q.C.

Brownlee LLP for the Defendant - Lloyd’s Underwriters William G. MacLeod MacLeod & Company for the Defendant - Jardine Lloyd Thompson Darin J. Hannaford Miller Thomson LLP for the Third Party - Price Forbes & Partners Limited