1226911 Alberta Ltd., 1047666 Alberta Inc. v. Let, 2012 ABQB 776

Court of Queen ’ s Bench of Alberta Citation: 1226911 Alberta Ltd. v. Redecopp, 2012 ABQB 776 Date: 20121219 Docket: 0801 02516 Registry: Calgary Between: 1226911 Alberta Ltd., 1047666 Alberta Inc. and Let ’ s Play Entertainment Ltd. Plaintiffs - and - Angela (Angie) M. Redecopp and Brian Redecopp Defendants Corrected judgment: A corrigendum was issued on February 21, 2013; the corrections have been made to the text and the corrigendum is appended to this judgment. ______________________________________________________ Reasons for Judgment of J.B.

Hanebury, Master in Chambers ______________________________________________________ [ 1 ] This application raises the question of whether the provision of a statement of claim with an acknowledgment that it “does not in any way constitute service of the claim” can be found to constitute service of a statement of claim. FACTS

[ 2 ] The plaintiffs sued Angela and Brian Redecopp as a result of the plaintiffs’ purchase of the Redecopps’ business. The sale occurred in March, 2006 and the claim was filed on March 5, 2008. [ 3 ] Counsel for the plaintiffs and Ms. Redecopp, who was a lawyer, had discussions to try to resolve the issues between the parties. [ 4 ] On May 26, 2008 Ms. Redecopp and the plaintiffs’ counsel discussed a settlement meeting scheduled for the next day. Mr. Freeman, counsel for the plaintiffs, had a copy of the statement of claim emailed to Ms. Redecopp. Before opening the document containing the claim, Ms.

Redecopp sent an e-mail to Mr. Freeman, stating: Please confirm that [the statement of claim] is being provided for my records only and in anticipation of my “without prejudice” meeting with Mr. Freeman tomorrow and does not in any way constitute service of the claim. [ 5 ] Mr. Freeman’s office sent an e-mail back stating that Mr. Freeman “confirms this is correct”. [ 6 ] Ms. Redecopp states that as a result, she did not believe that the plaintiffs were “engaging her legal rights” [1] nor that there was any need to respond to the claim.

She states that she would not have openly participated in the settlement discussions the next day had it been otherwise as she would have felt the need for legal counsel. [ 7 ] That discussion did not resolve the dispute. [ 8 ] On September 16, 2008 a letter was sent by Mr. Freeman to Ms. Redecopp stating that if he did not receive a reply to prior correspondence “[they] will have to formally serve the statement of claim and pursue litigation”. [ 9 ] Ultimately the matter was not settled. [ 10 ] The statement of claim was never served on Ms. Redecopp.

Furthermore, there is no evidence that it was ever served on Mr. Redecopp or that he was even aware of it, prior to its expiration in March, 2009. Ms. Redecopp was of the view that the statement of claim had expired and the plaintiffs did not intend to pursue their action. No statement defence was filed by Ms. Redecopp.

She says that as a result she did not take any specific steps to preserve her records. [ 11 ] On May 19, 2011, over two years after the expiration of the statement of claim, this application was filed asking that this Court validate service of the statement of claim pursuant to rule 11.27 which provides for validation where “the method of service used brought or was likely to have brought” the document to the intended recipient’s attention.

ANALYSIS [ 12 ] There has been considerable case law on the question of what constitutes service when a document is not served as provided in legislation or in procedural rules. [ 13 ] Case law referred to by counsel that deals with the Rules of Court prior to 1991 is not on point as it considers when an expired statement of claim should be renewed. That option was foreclosed with the 1991 amendment to the rules [2] . Prejudice was the primary consideration at that time: Cherry and Cherry v. Hurtig; Herman and Herman v. Toenders , [1980] A.J. No. 784 (AB QB) .

See as well: Alberta Commodities Exchange Ltd. and Bogoch v. Ulliac, Glais and Reddekop , [1985] A.J. No. 998 (Master) .

[ 14 ] Subsequent case law is of more assistance. [ 15 ] In Lapierre v. Andrew , [1993] CanLII 1035 (AB QB) the Court said that the object of service is to give notice to the opposite party so that he can defend himself. As a result, a defective form of service can be found to be good and sufficient if it is shown that the document came to the defendant’s knowledge and he received knowledge of the general nature of the claim being pressed against him. [ 16 ] In Hvozdanski (Estate) v.

Gasland Oil Ltd. , 1999 ABQB 964 (Master), the Court noted that service is just a synonym for giving a document to someone and the statement of claim can come to the defendant’s attention in many ways, including by way of a co- defendant, an officious stranger or by picking up a copy at the Court House: para 16, 17.

The Court found that it can relieve a plaintiff from serving a defendant as required in the Rules of Court if it is satisfied that the defendant has received the claim. [ 17 ] Where the claim was taped to the front door and the defendant was aware of the claim and aware that it was being “pressed against him”, service was found to have occurred: Hannan v. Hyland , [2003] A.J. No 1723, para. 17 . See as well: Eiffel Developments Ltd. v.

Paskuski , 2010 ABQB 619 (Master). [ 18 ] Where the former solicitor of record received a copy of the claim and forwarded it to the president of the defendant company, service was found to be effective: Yackel v. Sentinel Life Management Corp. 2007 ABCA 412 . [ 19 ] Several cases have considered the situation where the claim was provided to an insurer on the basis that it was not for the purposes of service. [ 20 ] In Proulx v. Hunt , 2003 ABQB 1041 a defendant’s insurer received the claim and expressly advised that he would not accept service on behalf of the defendant.

The plaintiff in that case sent it out for service by registered mail and it was picked up by someone other than the defendant and the defendant advised she had no notice of the claim in the period it was alive. The copy provided to the insurer did not suffice and the Court held that there had been no service. See as well: Cloutier (Estate) v. Caterpillar of Canada Ltd. [1997] A.J. No. 1009 (Master) . [ 21 ] A similar approach was taken by the Alberta Court of Appeal in Hansraj v. Ao , 2004 ABCA 223 .

In that case the letter to the adjuster accompanying the claim provided that the statement of claim was a courtesy copy and the claim was out for service. The letter stated that no statement of defence was required at that time and prior written notice would be given before taking any further steps. The Court said at paragraph 106: In my view, the phrase “courtesy copy” means a copy for information, not for action; it negates service… and the phrase “has now gone out for service” means that it is not yet served, and will be served by other means in the future. That too negates service.

The following sentence in the letter about not requiring a defence is not quite so clear, but it certainly does not do anything to negate the first sentence. In my view, viewed as a whole, this letter and enclosure plainly did not constitute service upon anyone. [ 22 ] Other jurisdictions have also found that when a document is provided with specific advice that it is a courtesy copy or service is not being effected, service does not occur. [ 23 ] In Baly v.

Barrett , (1989) 103 N.R. (HL), the Court refused to extend the time for service of a claim despite the fact a courtesy copy had been provided within the time for service to the solicitors for some of the defendants. At the time the courtesy copy was provided it was acknowledged that service would occur at a later date. [ 24 ] In Bennett v. Cultural Tours , [1991] B.C.J. No. 2552 (B.C.S.C.) the plaintiff, a lawyer, gave the defendant a copy of the Statement of Claim indicating that he was not officially serving it, but would do so if there was no settlement negotiated. The Court

found that the defendant had not been duly served. [25] What constitutes service has also been considered in a number of contexts where the Rules of Court were not engaged. [26] The Supreme Court of Canada considered the issue of what constitutes service in St. Peter’s Evangelical Lutheran Church(Ottawa) v. Ottawa (City), (SCC), [1982] 2 S.C.R. 616. The legislation under consideration in that case was the OntarioHeritage Act which provided for certain notice to be given of an intention to refuse a permit to demolish a building.

The required noticewas not given, however two representatives of the owners of the building were at the council meeting where the decision was taken. TheCourt found that it was an error to say that knowledge was the same as notice. Knowledge of the resolution of council was insufficient tofix the legal rights of the parties. [27] This case was referred to by the Alberta Court of Appeal in Zahmol Properties Ltd. v. Calgary (City), 2012 ABCA 89. Thequestion in that case related to service under the Expropriation Act Rules of Procedure and Practice, Alta. Reg. 187/2001.

The Courtcommented on what constituted service and stated at paragraphs 13 to 16: Personal service of originating process is fundamental to the jurisdiction of many courts and tribunals. The need for service of processarises from the principle that it is unfair to affect the legal rights of persons unless they are given fair notice that their rights are beingengaged by that process. Service is a specialized form of notice.

While “notice” is sometimes used as a synonym for “knowledge”, in this context noticeencompasses the conveying of knowledge or information with intention to affect legal rights.… … Service of legal process conveys the information that an action or proceeding has been commenced that may affect the rights of theperson being served, with an intention to affect or engage legal rights. The party served is put on notice that it must take steps to protectits rights, or the court or tribunal might adjudicate in its absence.

Sometimes legal processes are commenced in order to crystallizerights, without a final decision having been made as to whether the action will be triggered by service and prosecuted. Sometimesknowledge of an action or proceeding is conveyed without intending to affect legal rights, as when a “courtesy copy” of legal process isprovided. Where the knowledge of the legal process is conveyed without an intention to affect legal rights, there is generally no“service”.… [28] This case was referred to in Sandhu v.

MEG Place LP Investment Corp., 2012 ABCA 266, a case that considered service asrequired under the Bankruptcy and Insolvency Act. The Court noted at paragraph 20 that “so long as… documents came to the attentionof the respondents in a context that made it clear that rights were being engaged, service was effective.” [29] The Court in that case agreed with the decision under appeal that there were insufficient facts to reasonably conclude that therespondent “in fact had knowledge that this was a claim that was proceeding”.

As a result, said the Court, the second component ofservice, the engaging of legal rights, was unproven. The Court confirmed the distinction between “knowledge” of a claim and notice thatit will be prosecuted so as to impact legal rights. [30] Referring to Zahmoul Properties, the Court said at paragraph 23 that, to achieve service, “the documents must be conveyed ina context that makes it clear rights are being engaged.” It noted that the test is an objective test.

In other words, a party cannot arguethat it subjectively did not realize what the documents were or didn’t read them and so didn’t appreciate their legal effect. [31] The present Rules of Court provide in rule 11.27 (1) that “...the Court may make an order validating the service of a documentserved inside or outside Alberta in a manner that is not specified by these rules if the Court is satisfied that the method of service usedbrought or was likely to have brought the document to the attention of the person to be served.”

[ 32 ] There is no helpful case law on this specific rule. It received a brief comment in Metcalfe v. Yamaha Motor Powered Products Co. , 2012 ABCA 240 at para. 45 where the Court noted: Rule 11.27 permits validation of service when the manner was not specified in the Rules . As provided in the rule, the test of validation is whether the service used “brought or was likely to have brought the document to the attention of the person to be served”. [ 33 ] This rule has two requirements.

First there must be a method of service and second, it must have brought or been likely to bring the claim to the attention of the person to be served. The second criteria was met in this case. Ms. Redecopp does not deny that the claim was brought to her attention. It is the first requirement that is in issue. [ 34 ] The aforementioned Alberta Court of Appeal decisions dealing with service situations outside the Rules of Court have made it clear that mere knowledge is not enough to effect service. A party must understand that his or her legal rights are being engaged.

While some of that case law is in the context of property rights, an area where the Courts have enforced strict compliance with service requirements [3] , a similar principle can be found in the case law dealing with the Rules of Court. [ 35 ] Both Hansraj and Proulx held that when a claim is provided on a courtesy basis, or on the basis that it is not for the purposes of service, and it is understood that service will be later effected, service has not occurred.

While both of those cases dealt with insurance adjusters rather than the defendants, in my view the principle is also applicable to defendants. [ 36 ] As found in the British Columbia case of Bennett, service cannot be claimed where a statement of claim is provided to a defendant on a clear understanding that it is not being served. Plaintiffs, or their counsel, cannot play a game of “gotcha”. [ 37 ] In this case counsel for the plaintiff confirmed, quite clearly, that the statement of claim was being provided on an information basis and did “not in any way constitute service of the claim” [emphasis added].

The context indicates that when the claim was forwarded it was without any intention to affect legal rights. Nothing indicates otherwise. In fact, subsequently, it was acknowledged that formal service would be undertaken. [ 38 ] There was no method of service undertaken as required by the Rule. As a result, there was no service to validate. [ 39 ] While my determination is based on the case law, it is also in line with my view that the word of a lawyer is to be seen as his or her bond.

Counsel for the plaintiff acknowledged that the provision of the statement of claim did not “in any way” constitute service of the claim. He is no longer the counsel of record, however, that statement made by him was and continues to be binding upon his client. It is, in my view, entirely inappropriate for counsel, having made such a statement, to then seek to find that service has been effected by the informal provision of the claim. He is, in my view, going back on his assurance, which assurance was relied upon by Ms. Redecopp, a lawyer in her own right.

CONCLUSION [ 40 ] The application to validate service is denied. [ 41 ] The defendants are entitled to their costs.

Heard on the 15 th day of October, 2012. Dated at the City of Calgary, Alberta this 19 th day of December, 2012. J.B. Hanebury M.C.C.Q.B.A. Appearances: Ivan J. Derer, Q.C. Derer Law for the Applicants / Plaintiffs Michael A. Marion Borden Ladner Gervais LLP for the Respondents / Defendants _______________________________________________________ Corrigendum of the Reasons for Judgment of J.B. Hanebury, Master in Chambers _______________________________________________________ The following replaces the Appearances: Appearances: Ivan J. Derer, Q.C. Derer Law

for the Applicants / Plaintiffs Michael A. Marion and Landon Miller Borden Ladner Gervais LLP for the Respondents / Defendants [1]This turn of phrase indicates that Ms. Redecopp read the case law before swearing her affidavit. [2]Rule 3.27 is now the relevant Rule, and is not in issue before this Court. [3]See for example: Costello v. City of Calgary, (SCC), [1983] 1 S.C.R. 14.