Sucker Creek First Nation v. Canada (Attorney General), 2012 ABQB 460

Court of Queen ’ s Bench of Alberta Citation: Sucker Creek First Nation v. Canada (Attorney General), 2012 ABQB 460 Date: 20120713 Docket: 9603 06439 Registry: Edmonton Between: Sucker Creek First Nation and Chief James Badger Acting on His Own Behalf and on Behalf of All Other Members of the Sucker Creek First Nation Plaintiffs - and - The Attorney General of Canada, and Her Majesty the Queen In Right of Alberta Defendants _______________________________________________________ Memorandum of Decision of L. A.

Smart, Master in Chambers _______________________________________________________ Introduction [ 1 ] The Defendants The Attorney General of Canada (Canada) and Her Majesty The Queen In Right of Alberta (Alberta) apply for an order dismissing the Plaintiffs ’ action as against them pursuant to Rule 15.4 (1) of the Alberta Rules of Court on the basis that the Plaintiffs (Sucker Creek) did nothing to significantly advance the action for five years prior to the date upon which this application was filed.

[ 2 ] The Statement of Claim in these proceedings was issued on March 22, 1996 and amended on March 19, 2004. On October 25, 2004 Canada filed a Demand for Particulars, and on November 1, 2004, Alberta filed a Request for Information pursuant to s. 20 of the Proceedings Against the Crown Act and a Demand for Particulars. On November 29, 2004 Sucker Creek wrote to Canada and Alberta confirming an agreement to establish a timeline for the completion of upcoming steps in the litigation. Among other things it contemplated the filing of the Reply(

s) to the Demand(

s) for Particulars by March 31, 2005 with defences being filed on or before September 1, 2005 some five months later. Correspondence was exchanged on March 31, April 1 and April 6, 2005 among the parties as the Reply(

s) had not been completed agreeing that there would be an extended comparable timeframe to defend as determined by the actual date upon which the Reply(

s) were filed. [ 3 ] On February 8, 2006 Sucker Creek filed the Reply(

s) to the Demand(

s) for Particulars and advised Canada and Alberta that receipt of the defences was expected by July 8, 2006. Canada had been improperly named as her Majesty the Queen in Right of Canada and by way of letter dated February 22, 2006, Canada made Sucker Creek aware of the misnomer and the need for an amendment.

On April 21, 2006 Sucker Creek advised Canada and Alberta that it agreed to amend the pleadings, however, it stated that there appeared to be no reason that this “ procedural matter ” should affect the timeline and the deadline of July 8, 2006 for defences was affirmed. [ 4 ] Canada wrote Sucker Creek on July 7, 2006 confirming that counsel for Sucker Creek actually had not as yet received instructions to amend but that it was agreed that it made practical sense that the amendment be made prior to filing of a defence, agreed to an extension of time for the defence to the end of August 2006, that the aim was to have their defences completed by the end of summer and that if Canada was ready to file a defence before hearing from Sucker Creek ’ s counsel, Canada would advise counsel before filing the defence.

On the same day Alberta wrote advising it would prefer to file its defence at the same time as Canada due to document production deadlines and would be amenable to following whatever timelines Sucker Creek set for Canada and as such requested the same extension of time to file its defence. Sucker Creek agreed to this on July 25, 2006.

Similar extensions were requested and granted in September 2006 and again on November 8, 2006 when it was confirmed that Alberta and Canada need not file their respective defences until the amendments were completed. [ 5 ] No further correspondence was exchanged until the dismissal applications were filed on February 22, 2011. On March 24, 2011 Sucker Creek served Canada and Alberta with the Amended Amended Statement of Claim correcting Canada ’ s description along with further substantive amendments. Discussion [ 6 ] The relevant part of Rule 15.4 provides as follows: 15.4

(1) Unless subrule (2) applies, the Court, on application, must dismiss the action as against the applicant if (b) 5 years has elapsed since the last thing done to significantly advanced the action...

(2) The Court must not dismiss the action if (

a) the parties to the application expressly agreed to the delay,... [ 7 ] Rule 15.4 is the successor to Rule 244.1(1). The jurisprudence under the former rule continues to be applicable to Rule 15.4 and there is no difference between the term “ significantly ” advanced under the new rule and “ materially ” advanced previously used ( Bahcheli v. Yorkton Securities Inc. , 2010 ABQB 824 ). [ 8 ] If it is established that a thing has not been done to significantly advance the action for over five years, the court must dismiss the action upon application ( Morasch v. Alberta , 2000 ABCA 269 ). Given the effect of the rule upon the right to litigate, the

interpretation most favourable to preservation of that right should be adopted. The inquiry is for the court to look back five years from the date of the filing of the notice of motion ( Filipchuk v. Ladouceur , 2001 ABCA 26 ). [ 9 ] The motions were filed by Canada and Alberta on February 22, 2011. They take the position that the last material thing done was the filing of the Reply(

s) to the Demand(

s) for Particulars on February 8, 2006. Sucker Creek says that the parties entered into

a series of letter agreements starting April 21, 2006 with the last on November 8, 2006 which should be considered in the context of the agreed timeline of upcoming litigation steps as confirmed in the November 29, 2004 correspondence. The essence of the agreement was that Sucker Creek agreed to amend the style of cause in their Statement of Claim and extended the time for filing defences until after the Statement of Claim was amended.

It argues that the letters amount to a standstill agreement, or alternatively, that each individual extension for the filing of the Defence should be tacked on to the five year drop dead period. [ 10 ] The question is whether there was an express agreement. Discussion at paragraphs 8, 9, 17, 18 and 19 in Bugg v. Beau Canada Exploration Ltd. , 2006 ABCA 201 deals with this issue: 8. Rule 243.1(1) dictates that a standstill agreement must be “ express ” . Black ’ s Law Dictionary defines that term as follows: Clear; definite; explicit; plain; direct; unmistakable; not dubious or ambiguous.

Declared in terms; set forth in words. Directly and distinctly stated. Made known distinctly and explicitly, and not left to inference .... Manifested by direct and appropriate language, as distinguished from that which is inferred from conduct. The word is usually contrasted with “ implied ” . 9. In the context of R. 243.1(1), express means that the parties ’ intention is clear and not left to inference: Webber v. Canada (Attorney General) , 2005 ABQB 718 (Alta. Q.B.) at para. 54 . A standstill agreement cannot be implied from conduct: 525812 Alberta Ltd. v. Purewal (2004), 366 A.R. 1 , 2004 ABQB 938 (Alta.

Q.B.) at para. 13 . At the very least, the evidence must establish the basic elements of an agreement: for example, the identity of the parties to the contract, when the standstill began and its essential terms. 17. Moreover, according to Fridman, an express term of a contract is one that has been “ specifically mentioned, and agreed upon by the parties, and its form, character and content expressed in the oral or written exchanges between the parties to the contract at the time the contract was made ” (G.J.L.

Fridman, The Law of Contract in Canada , 3 rd ed. 2006 CarswellAlta 787 , 2006 ABCA 201 , [2006] A.W.L.D. 2233 , [2006] A.W.L.D. 2232 [2006] A.W.L.D. 2225 , 61 Alta. L.R. (4 th ) 104 , 377 W.A.C. 208 , 391 A.R. 208 . 18. It follows that a standstill agreement can be written, oral, or partly written and partly oral, as long as it is express and not based on intent or inference. This

interpretation is consistent with Webber , supra and 525812 Alberta Ltd. , supra. Because it will be more difficult to prove an oral agreement, the best course of action is to reduce the agreement to writing and specifically set out its terms. This Court has said: “ when a standstill agreement is entered into, it would be preferable to describe it as such, and to state precisely what steps in the litigation process are waived or suspended pending the exploration of settlement ” : Weasyleshko v. Chamakese (1999), 228 A.R. 384 , 1999 ABCA 47 (Alta. C.A.) . 19.

Bugg ’ s third ground of appeal questions the effect of a standstill agreement and, in particular, whether the time during which the action is suspended under a standstill agreement can be added or tacked on to the five-year time period. In a slightly different context, this Court decided that parties can create a “ clock-stopping, time-tacking ” standstill agreement by contract; however, not all agreements that remove the need to take an immediate step automatically add the time to the end of the period. The

interpretation must arise from the words used, or must be a reasonable implication or inference from them. In each case, the terms of the actual agreement must be considered: Martinez v. Hogeweide (1998), 209 A.R. 388 , 1998 ABCA 34 (Alta. C.A.) ; Kapki v. Palacz (1999), 228 A.R. 373 , 1999 ABCA 40 (Alta. C.A.) at para. 5 . [ 11 ] Canada and Alberta say that these circumstances are more akin to the “ usual courtesies ” requested at the beginning of a file. This was raised in Bugg at paragraphs 10 and 11 : 10.

Beau filed a fresh evidence application in this appeal proceeding, which consisted of an affidavit from Beau ’ s officer, appending a 2001 letter from Bugg ’ s former lawyer to Beau ’ s present lawyer. The letter indicated Bugg ’ s lawyer ’ s understanding that their clients were speaking and a statement of defence was not required at this time, but asked Beau ’ s lawyers to let him know if he was mistaken and a pleading was required. Bugg cross-examined on the affidavit of Beau ’ s officer. By agreement of the parties, the evidence was admitted for consideration by this Court. 11.

The evidence filed in this case is insufficient to establish that the parties entered into a standstill agreement shortly after the

statement of claim was filed. The statement in the affidavit of Beau’s officer, on which the chambers judge relied, does not establish thebasic elements of an express standstill agreement. It contains only vague assertions with no details about the essential terms.Accordingly, the chambers judge erred in concluding that the parties entered into a standstill agreement in 2000.

The fresh evidence, alawyer’s letter which merely asks for the usual courtesies, adds little and does not change this conclusion. [12] Although the November, 2004 agreed timeline was almost 7.5 years after the filing of the Statement of Claim nothing ofconsequence had occurred to that point. The amendment to the Claim in March, 2004 gave the litigation a “fresh” face. An analogy tothe “usual courtesies” is compelling but it seems more was addressed by the earlier correspondence.

Some vestiges of the November,2004 agreed timelines were carried forward to subsequent correspondence in 2006 and future timelines. [13] Sucker Creek argues an analogy to the Bugg circumstances as described at paragraphs 13 and 14: 13. In our view, a standstill agreement was in place at the time of the R. 244.1 application. The standstill agreement was entered intoas a result of the September 16, 2005 letter from Taylor, and the September 20, 2005 letter from Beau’s lawyers. The correspondencecontained Bugg’s undertaking to file a statement of defence in the action.

A statement of defence is a “thing that materially advances theaction” and, therefore, filing a statement of defence would restart the five-year time period under R. 244.1: Morasch v. Alberta (2000),250 A.R. 269, 2000 ABCA 24 (Alta. C.A.), at para. 6. Having undertaken to do something that would materially advance the action andrestart the five-year clock, Bugg was contractually bound not to do something inconsistent; he was precluded from bringing anapplication under R. 244.1 to dismiss the action for want of prosecution on the basis of the passage of time.

At the same time, Beau wasprecluded from taking the next step and restarting the clock, because the next step would be to note Bugg in default and Beau had agreednot to do that. It is clear from the correspondence that Beau was relying on Bugg’s undertaking to defend the action and had deferredfiling a notice of default because of it. The last correspondence from Beau’s counsel, the October 18, 2005 letter, indicated that Beau wasstill operating under that assumption. 14. Presumably, either party could have terminated the standstill agreement on reasonable notice.

Bugg’s counsel (either McCoyTaylor & Beaver LLP or MacPherson Leslie & Tyerman LLP) could have written Beau’s counsel advising that they had now beeninstructed not to file a statement of defence. Similarly, Beau’s lawyers could have written Bugg’s counsel advising that they had beeninstructed not to grant further time extensions to file a statement of defence. The notice would have to be reasonable: both sides wouldhave to give a brief period before the notice became effective.

What Bugg could not do was turn his back on the undertaking to file adefence given by his counsel on his behalf, and, without notice to Beau, rely on the five-year rule. [14] It is an attractive argument for Sucker Creek in that the correspondence from Canada and Alberta is susceptible to beinginterpreted as an express undertaking to file a Statement of Defence when called upon. Conclusion [15] If there is a general standstill agreement or a “time-tacking” arrangement found, the action will survive. In either case theremust be an express agreement.

In Bugg the definition of “express” from Black’s Law Dictionary is cited together with the decisions inWebber and Purewal. The guidance given in Wasyleshko is also recited. The court found that an undertaking to file a defence, a thingwhich would materially advance an action, included a contractual obligation not to do something inconsistent thereby precluding thebringing of an application under Rule 244.1. At the same time the Plaintiff Beau was precluded from taking the next step (noting indefault) thereby re-starting the clock as Beau had agreed not to do that.

Further a standstill agreement had been created that“presumably” either party could terminate on reasonable notice. [16] There was nothing in the exchange of correspondence nor apparently in any telephone communications between counsel thatcreated the standstill agreement setting out that Bugg would not do something inconsistent, not rely on the passage of time nor how the“agreement” would be terminated. There was also nothing said about the consequences of any prejudice arising from delay.

Thepenultimate paragraph of the decision sheds some light on what express means under the rule when concluding that it was by “clearimplication” that at least some of its terms were established. Further assistance is given in the discussion surrounding standstillagreements said to contemplate tacking of time on to the five year period. In those situations when determining whether or not there is atacking agreement, the

interpretation must arise from the words used or must be a reasonable implication or inference. [17] There appears to be an inherent contradiction between the authorities cited and the decision but it is not for Masters toquestion the correctness of Court of Appeal decisions nor for those of the Court of Queen’s Bench. Master Funduk aptly described theplace where Masters fit in the hierarchy in South Side Woodwork v. R.C. Contr. (1989) (AB KB), 95 A.R. 161:

.... I am bound by decisions of Queen ’ s Bench judges, by decision of the Alberta Court of Appeal and by decisions of the Supreme Court of Canada. Very simply, Masters in Chambers of a superior trial court occupy the bottom rung of the superior court ’ s judicial ladder. I do not overrule decisions of a judge of this Court. The judicial pecking order does not permit little peckers to overrule big peckers. It is the other way around. [ 18 ] Master Funduk ’ s perspective has been recently reinforced in Bahcheli v.

Yorkton Securites Inc . ( 2012 ABCA 166 ) which in effect concludes that Master ’ s decisions regardless of their character are to be given no deference by the superior courts. Indeed to do so it would seem would be an error of law subject to review on a standard of correctness. Regardless, I am tasked with reaching the correct decision and will endeavor to do so. [ 19 ] The Reply(

s) to the Demand(

s) were things that materially advanced the action as of February 8 th , 2006. There was no express agreement for a standstill or tacking agreement as defined by Black ’ s. Nonetheless, I may find by way of implication or inference an agreement. In examining the words used in the exchange of correspondence although there was never an express undertaking to defend, in my view the exchange and agreements reached on timing for filing the defences were tantamount to such an undertaking.

There was never any doubt that Alberta and Canada would defend. [ 20 ] Although it is difficult to resist reaching the conclusion that in every case where there is an undertaking to defend a standstill agreement arises, I understand Bugg to say that I must consider whether or not the facts and circumstances support such an inference. Agreements to file defences and the setting of timelines, without more, are not in every case an agreement for a standstill agreement.

In this case is there a clear implication that Alberta and Canada agreed to be contractually bound not to do something inconsistent to its undertaking to defend, that is, bring an application to dismiss under the drop dead rule? It is true that Sucker Creek agreed not to note in default although ostensibly it could do so at any time upon giving reasonable notice (perhaps one month being the last agreed period for filing a defence before the open ended timeframe later established by the November 8 th , 2006 correspondence).

The undertaking in this case was initially given as early as the November, 2004 in the correspondence agreeing to timelines well before Reply(

s) had been delivered. Sucker Creek was not then in a position to enter default albeit timelines were re-confirmed and amended on a number of occasions when they were in a position to enter default. In addition, the undertakings were last given some eight months following a material advance in the action or conversely some 51 months before the drop dead aspect of the Rules would come in to play.

Futhermore, the extension was requested by Alberta and Canada but granted by Sucker Creek to permit Sucker Creek an opportunity to correct a material defect in their Amended Statement of Claim. [ 21 ] In light of the foregoing factual circumstances and context, in the absence of any supportive wording, I do not see a basis upon which I am able to clearly (or at all) find by inference or implication a standstill agreement by time tacking or otherwise. According the application of Canada and Alberta is granted and the action is dismissed. Dated at the City of Edmonton, Alberta this 13 th day of July, 2012. L. A.

Smart M.C.C.Q.B.A. Appearances:

Pat Peacock Peacock Linder for the Plaintiffs Tom Rothwell and Sierra Lopetinsky Alberta Justice for the Defendant, Her Majesty the Queen in Right of Alberta Cynthia Dickins and Jane Conly Department of Justice Canada for the Defendant, The Attorney General of Canada