Geopetrol International Ltd. v. Allianz Insurance Company of Canada, 2012 ABQB 613

Court of Queen ’ s Bench of Alberta Citation: Geopetrol International Ltd. v. Allianz Insurance Company of Canada, 2012 ABQB 613 Date: 20121003 Docket: 0103 22186 Registry: Edmonton Between: Geopetrol International Ltd. and Propak Systems Ltd. Plaintiff - and - Allianz Insurance Company of Canada and Marsh Canada Limited Defendants _______________________________________________________ Memorandum of Decision of L. A.

Smart, Master in Chambers _______________________________________________________ Background [ 1 ] This is application by the Defendants Allianz Insurance Company of Canada (Allianz) and Marsh Canada Limited (Marsh) for dismissal for long delay pursuant to Rule 15.4 of the Alberta Rules of Court. The Plaintiff Geopetrol International Ltd (Geopetrol) commenced this action on October 29, 2001. No defences have been filed. Marsh filed its Affidavit of Records on May 5, 2006 and served it on May 8, 2006.

Copies of all of its documents were forwarded to Geopetrol on May 26, 2006. [ 2 ] For ease of reference I set out the chronology from the brief of Allianz:

16. Since the filing of the original Statement of Claim on October 29, 2001, the action has proceeded as follows: a. June 6, 2001 to April 23, 2004 - the solicitors for the parties to the original action entered into a Standstill Agreement and the action remained at a standstill until about April 23, 2004 when running time was reinstated pursuant to counsel for Geopetrol giving the 120 days notice required in the Standstill Agreement. b.

April 16, 2004 - Barry Oland, counsel for Geopetrol, requested the relevant policy of insurance issued by Canadian Surety to Geopetrol from Canadian Surety ’ s counsel, John Carlson c. May 3, 2004 - Mr. Carlson notified Mr. Oland that he had requested the hard copy of the relevant insurance policy and would forward it upon receipt. Mr. Carlson also asked whether a Statement of Defence was required at that time. d. May 4, 2004 - Mr. Oland notified Mr. Carlson that he was in the process of making substantial amendments to the Statement of Claim. e.

August 25, 2004 - Geopetrol filed an Amended Statement of Claim, which added Propak Systems Ltd. as a Plaintiff, replaced Canadian Surety Company with its successor, Allianz Insurance Company of Canada, and added Marsh Canada Limited as a Defendant. The Amended Statement of Claim also made allegations of misrepresentation against both Allianz and Marsh. f. October 8, 2004 - Mr. Oland wrote to Mr. Carlson and to Everett Bunnell, Q.C., the solicitor for Marsh, enclosing the filed Amended Statement of Claim. Mr.

Oland suggested that counsel either produce their unsworn Affidavits of Records and have a meeting or file their Statement of Defence and move to Discovery. g. October 21, 2004 - May 5, 2005 - several letters went back and forth between counsel regarding the parties ’ Affidavit of Recorda and production of their documents. h. April 5, 2005 - Mr. Oland sent the Plaintiffs ’ unsworn Affidavit of Records to counsel for the Defendants. i May 13, 2005 - Mr. Carlson sent Allianz ’ s unsworn Affidavit of Records to Mr. Oland and Mr. Bunnell along with copies of the producible documents. Mr.

Carlson requested copies of Geopetrol ’ s producible documents. j June 3, 2005 - Mr. Oland forwarded copies of Geopetrol ’ s producible documents. k. August 23, 2005 - Mr. Carlson cancelled Examinations for Discovery of Allianz ’ s officer set for August 24, 2005 because Allianz did not have an appropriate officer available. l. November 30, 2005 - Mr. Oland cancelled Examinations for Discovery set for December 7, 8 and 9, 2005. m. May 8, 2006 - Mr. Bunnell forwarded Marsh ’ s filed Affidavit of Records. Copies of the producible documents followed on May 26, 2006. 17.

Since May 8, 2006, the action has proceeded as follows:

a. July 22, 2007 - Allianz filed a motion to have the Amended Statement of Claim struck, as it raised new causes of action past the limitation period. The Plaintiffs ultimately agreed to reflect the removal of the offending paragraphs in an Amended Amended Statement of Claim. As a result the motion did not proceed to a hearing. There were no examinations in relation to the motion. b. March 3, 2008 - Mr. Carlson requested that Mr. Oland confirm that the Plaintiff would withdraw the misrepresentation claims and agree to proceed to Chambers on the coverage issue. c. March 31, 2008 to August 4, 2008 - Mr.

Carlson sent 4 follow-up letters to Mr. Oland but did not receive any response from Mr. Oland. d. August 5, 2008 - Mr. Oland wrote Mr. Carlson that he was prepared to discuss removal of the offending paragraphs of the Amended Statement of Claim. e. August 28, 2008 - Mr. Carlson wrote to Mr. Oland for confirmation that Mr. Oland ’ s clients were agreeable to abandoning the misrepresentation claims and proceedings to Special Chambers for a coverage determination. f. August 29, 2008 to November 13, 2008 - Mr. Carlson did not receive any substantive response from Mr.

Oland despite following up with letters sent October 7, 2008 and October 31, 2008. g. November 14, 2008 - Mr. Oland responded that his clients were prepared to abandon the misrepresentation allegations. h. November 20, 2008 - Mr. Carlson indicated that Allianz consented to the amendments and requested that Mr. Oland forward the Amended Amended Statement of Claim and a Consent Order. Mr. Carlson undertook to file a Statement of Defence once the Amended Amended Statement of Claim was filed. i. November 21, 2008 to January 22, 2009 - Mr. Carlson twice requested a response to his November 20, 2008 letter. j.

January 23, 2009 - Mr. Oland forwarded an Amended Amended Statement of Claim for Mr. Carlson and Mr. Bunnell to review for accuracy. k. March 1, 2009 - Mr. Carlson indicated to Mr. Oland that the changes were properly reflected. l. March 3, 2009 - Mr. Bunnell indicated that he was seeking Marsh ’ s instructions to the amendments. m. March 17, 2009 - Mr. Oland requested Marsh ’ s response to the Amended Amended Statement of Claim. n. March 18, 2009 to November 5, 2010 - during this period of nearly 20 months, Mr. Carlson heard nothing at all from Mr. Oland. Mr. Carlson found out on November 6, 2010 that Mr.

Oland had sent follow-up emails to Mr. Bunnell on August 10 and August 27, 2010. o. November 6, 2010 - Mr. Carlson was forwarded an email from Mr. Oland to Mr. Bunnell requesting Marsh ’ s consent to the Amended Amended Statement of Claim.

p. November 26, 2010 - Mr. Oland sent the Amended Amended Statement of Claim to Mr. Carlson and Mr. Bunnell. q. February 2, 2011 - Mr. Oland requested that the signed Consent Order be returned to him. r. February 9, 2011 - Mr. Carlson indicated to Mr. Oland that Allianz had consented to the Order 2 years prior. s. February 14 and February 25, 2011 - Mr. Oland followed up with Mr. Bunnell for the signed Consent Order. On February 25, 2011, Mr. Bunnell forwarded the signed Consent Order to Mr. Oland. t. March 23, 2011 - Mr. Carlson indicated to Mr.

Oland that he would likely have to amend the Consent Order and Amended Amended Statement of Claim to comply with the new Rules of Court. On March 31, 2011, Mr. Oland rejected that advice and asked that the presented Consent Order be signed. On April 12, 2011, Mr. Carlson signed and returned the Consent Order in the old format. u. April 29, 2011 - Mr. Oland emailed Mr. Carlson and Mr. Bunnell to let them know that he would be preparing the Amended Amended Statement of Claim and the Consent Order in the new form and filing them promptly. Between April 29, 2011 and July 5, 2011, Mr. Carlson heard nothing from Mr.

Oland. v. July 5, 2011 - Mr. Carlson filed his application to have the Plaintiffs ’ action dismissed for long delay. w. July 8, 2011 - Mr. Oland forwarded the new form of Consent Order and Amended Amended Statement of Claim to Mr. Carlson and Mr. Bunnell on the same day that Mr. Carlson served his application on Mr. Oland. [ 3 ] In addition, on August 10, 2011 Mr. Bunnell on behalf of Marsh filed their application for dismissal. Other than identifying the amendment to the Statement of Claim on August 25, 2004, the chronology to May 26, 2006 primarily provides the full context.

It is Allianz and Marsh ’ s position that the question for determination is whether or not anything done subsequent to May 8, 2006 significantly advanced the action. In my view the proper date is May 26, 2006 when Marsh sent all of its documents to Geopetrol, however, nothing turns on that in this case. [ 4 ] As noted Geopetrol amended its Statement of Claim on August 25, 2004. This amendment added Propak Systems Ltd as a Plaintiff, and Marsh as a Defendant as well as updating the name of the original Defendant to its successor Allianz.

Although there were other complaints with respect to the method of amendment, the material objection arose in relation to allegations of misrepresentation against both Allianz and Marsh. [ 5 ] On July 22, 2007 Allianz brought an Application to summarily dismiss the action particularly as it related to the “ misrepresentation ” amendments. That Application never proceeded nor were there any examination on the affidavits filed in support of the motion. Ultimately, it was agreed that the Amended Statement of Claim would be amended by way of a Consent Order.

On January 23, 2009 a draft Amended Amended Statement of Claim was sent to counsel for Allianz and Marsh for review. In March 2009 Allianz agreed to the changes and counsel for Marsh advised he was seeking instructions. On August 10, 2010, a draft Consent Order was sent by Geopetrol for review and execution by counsel for Allianz and Marsh. [ 6 ] After much communication between and among counsel, the executed Consent Order was received by Geopetrol on April 12, 2011. As set out in the above chronology counsel for Allianz observed that the Consent Order was in the old format and may require amendment.

On April 29, 2011 counsel for Geopetrol advised it would be sending a new form of Consent Order which it did on July 8, 2011. Discussion

[ 7 ] Geopetrol sets out the following in its Brief of Argument: 33. To resolve the

Summary Judgment Application the parties, Geopetrol and both Marsh and Allianz, proceeded on a course of action which required the resolution of the contents of the Amended Amended Statement of Claim and the consent to an Order allowing it to be filed. That course of action started March 3, 2008 [Exhibit “ B ” of Affidavit of Barry Oland] and was finally concluded when the Consent Order was signed on behalf of Mr. Bunnell in February, 2011 and later signed by Mr. Carlson on or about April 12, 2011. [Exhibit “ S ” of Affidavit of Barry Oland].

That agreement on the contents of the proposed Amended Amended Statement of Claim and the agreement to the Consent Order was a thing which significantly advanced the action. More particularly: (

a) It would have crystalized the commencement document; (

b) When entered and served the Defendants would have been required to act pursuant to Rule 3.30 of the Alberta Rules of Court. Also, Mr. Carlson would have given his undertaking to file a Statement of Defence. [Exhibit “ D ” of Affidavit of Barry Oland]. 34. The agreement between counsel for the parties to resolve the

Summary Judgment Applicant and the ultimate agreement between counsel for all parties represents significant things that advanced this lawsuit. The ultimate result being elimination of allegations of misrepresentations against the Defendants. This was achieved by agreement between counsel rather than a contested application in Court, which would have resulted in a formal Order. [ 8 ] The resolution of this matter is somewhat confounded by its timing in that the Rules were amended on November 1, 2010.

When it was agreed to by Allianz that a Consent Order would be entered into, the Rules required an Order as it was a second Amendment. Under the “ new ” Rules no order is required as pleadings have not closed ( Rule 3.62(1)(a)). Examining the “ course of conduct ” and the timing, the obtaining of an Order to amend pleadings arguably would have been a thing which would significantly advance the action as it is grounded in the Rules and a fundamental requisite to defining the lawsuit.

Had the Consent Order been granted and entered (at least before the Rule changes) that would have ended the matter but that did not occur. [ 9 ] The Defendants take the position that because there was no merit to the initial amendments an Order effectively undoing those amendments does nothing to advance the action. Indeed, it is suggested that if the Court determines otherwise it opens the door for a great mischief potentially allowing plaintiffs to make scurrilous or unnecessary amendments simply to extend the life of the lawsuit and later remove them.

Perhaps that could occur, however, it is open for the court to examine amendments in each case and I query whether amendments to Statements of Claim now made without the necessity of an Order would constitute a thing that would significantly advance the action in any event.

Regardless, in sum, I am satisfied that the amendments were not made without merit in this case noting that much of the objection arose from limitations issues which must be raised by the party seeking immunity. [ 10 ] Even accepting that entry of the Order or an actual amendment could constitute a thing which materially advances an action under the new Rules, the answer lies in Geopetrol ’ s argument i.e. it “ would have ” crystallized the commencement document and it “ would have ” required a defence under Rule 3.30.

The Order wasn ’ t entered nor was an Amended Amended Statement of Claim ever filed and served. [ 11 ] At the application Geopetrol marshaled the argument that the “ course of conduct ” together with the undertaking to defend by Allianz on November 20, 2008 amounted to something in the nature of a standstill agreement. Although Marsh never gave an express undertaking having taken the unusual step of filing and serving an Affidavit of Records before a defence, I do not for purposes of these applications differentiate its circumstances from that of Allianz.

Regardless, the agreement must be express unless by inference or clear implication a standstill agreement can be found from the words used or other facts and circumstances (Bugg v. Beau Canada Exploration Ltd., 2006 ABCA 201 ) . These parties having entered into a written Standstill Agreement in 2001 were obviously familiar with the formal requirements. The exchange in correspondence centres around finalizing the Statement of Claim and the process for getting that done.

It does address filing of defences which could be taken as undertakings to defend but there is no supportive wording to suggest that a standstill was part of the discussion. Decision

[ 12 ] Defendants and their counsel must be able to communicate with plaintiffs counsel in relation to an action without fearing that any courtesy or acquiescence to delay amounts to a standstill. Rule 15.4 speaks of an express agreement to delay. Although Beau opens the door to find a standstill by implication, it does not require express negativing in every communication to avoid such a consequence. No Order or Amended Amended Statement of Claim was filed, consequently no “ step ” mandated by the Rules occurred. Having regard to the whole of the circumstances including the context of the

Summary Judgment application and its resolution by agreement, I find no clear basis upon which to find a Standstill Agreement. Accordingly, the applications for dismissal by Allianz and Marsh are granted. Dated at the City of Edmonton, Alberta this 3 rd day of October, 2012. L. A. Smart M.C.C.Q.B.A. Appearances: Lawrence W. Olesen, Q.C. Bryan & Company LLP for the Plaintiffs John Carlson Dean Duckett Carlson LLP for the Defendant, Allianz Insurance Company of Canada Everett Bunnell, Q.C. MacLeod Dixon LLP for the Defendant, Marsh Canada Limited