Montreal Trust Company of Canada v Talcorp Limited, 2013 ABQB 398

Court of Queen ’ s Bench of Alberta Citation: Montreal Trust Company of Canada v Talcorp Limited, 2013 ABQB 398 Date: 20130712 Docket: 8501 09968 Registry: Calgary Between: Montreal Trust Company of Canada Plaintiff/Respondent - and - Talcorp Limited, Kingside Minerals & Investments Ltd, Consolidated Talcorp Limited, 423904 Alberta Ltd, Camvec Corporation, Sound Insight Enterprises Ltd, and Canadian Occidental Petroleum Ltd Defendants/Applicants - and - AMJ Campbell Inc as successor to Talcorp Limited, Kingside Minerals and Investments Ltd, Consolidated Talcorp Limited, Camvec Corporation and Sound Insight Enterprises Ltd Applicants _______________________________________________________ Reasons for Judgment of the Honourable Mr.

Justice A. G. Park

_______________________________________________________ [ 1 ] All of the Defendants, save and except Canadian Occidental Petroleum Ltd, apply for an Order to dismiss the within action as against each of them based upon long delay pursuant to Rules 4.33 and 15.4 of the Alberta Rules of Court , and in the alternative apply for an Order to dismiss the within action against each of them based upon delay that has resulted in significant prejudice to each of them pursuant to Rule 4.31 of the Alberta Rules of Court .

Each of the Applicants seeks costs of this application and costs of the within action. [ 2 ] In support of the application the Affidavit of Kris Orlowski, the Vice-President of Finance for AMJ Campbell Inc (AMJ), sworn on June 19, 2012, was filed. He swore he had virtually no institutional knowledge with respect to the claim other than what appears in the pleadings, court record and historic documents. [ 3 ] The Plaintiff/Respondent filed an Affidavit sworn on March 14, 2012 by Mary Hammer, the Manager Oil Royalties Department of Computershare Trust Company of Canada (Computershare).

Computershare is the present Trustee of the Moodie Royalty Trust (the Trust) as the ultimate successor to the original Trustee, Crown Trust Company. [ 4 ] A further Affidavit of Hammer sworn on August 31, 2012 was filed by Computershare.

Hammer was cross-examined on the latter Affidavit by Counsel for the Applicants. [ 5 ] The following facts are not disputed by the parties respecting the claim and the litigation steps. [ 6 ] Agnes Moodie, the registered owner of the mineral rights associated with 3 parcels of land in the Province of Alberta, executed a Petroleum and Natural Gas Lease with Rundle Oils Limited on April 4, 1952. Moodie was the lessor and Rundle Oils Limited was the lessee.

The lease provided that Moodie be reserved a gross royalty interest substantially equivalent to 12.5% of the substances produced and saved from the lands during the term of the lease. [ 7 ] In 1953 Moodie executed a Deed of Trust wherein she granted her 12.5% royalty interest to Crown Trust Company as Trustee of the Moodie Royalty Trust. Crown Trust filed a caveat against title to those lands a short time later. The caveat remains registered against those lands at the present date. [ 8 ] Upon Moodie’s death the mineral rights passed to her beneficiaries.

A series of transactions subsequently occurred and the Defendants received 20% of those mineral rights. [ 9 ] In 1983 production of oil and gas commenced on part of the lands. The Trustee alleges no royalty was paid to it from the Defendants’ 20% interest. In 1984 the Trustee wrote the Defendants and requested payment of the royalty. [ 10 ] On April 24, 1985 the predecessor to the Plaintiff, commenced the present action seeking enforcement of its alleged 12.5% royalty interest from the Defendants’ 20% interest in the mineral rights. [ 11 ] On November 1, 1995 an Order of this Court was granted.

The Order gave the Plaintiff leave to file an Amended Statement of Claim wherein Montreal Trust Company of Canada (Montreal Trust) was named as the Plaintiff. It further amended the Statement of Claim to include those Defendants who are presently named in the action. Finally, the Order directed that a 12.5% royalty be paid to the Trustee from the 20% interest of the Defendant, 423904 Alberta Ltd 423904 Alberta Ltd is now a wholly owned subsidiary of the Applicant, AMJ. In addition the Trustee was directed to pay into Court to the credit of this action that 12.5% royalty payment until the trial of this action.

[ 12 ] In the prayer for relief in the Amended Statement of Claim Montreal Trust sought a declaration that it had a valid and enforceable interest and charge in the lands and in the substances produced therefrom in accordance with the provisions of Moodie Royalty Trust. The Amended Statement of Claim further sought a declaration that the Plaintiff be entitled to receive in priority to the Defendants a 12.5% gross royalty on any substances produced from the lands. The Amended Statement of Claim further sought an accounting of monies received by the Defendants since production commenced on the lands.

Finally it sought a judgment against three of the Defendants in an amount found to be owing. [ 13 ] On January 30, 1996 a Statement of Defence was filed by all of the Defendants. It contested, inter alia , the validity of the Trustee’s entitlement to the royalty. [ 14 ] At the end of August, 2012 the current balance of the monies paid into court under the Order was $1,493,566.34. [ 15 ] There had been some delay between the years 1993 to 1996 with the agreement of the parties in order that some test cases involving certain similar issues could be litigated. These decisions were rendered in and around 1996.

In 1996 the action began to move forward again. [ 16 ] By January, 1998, document production and examinations for discovery were completed. [ 17 ] In December, 1998, a Record of Pleadings and Certificate of Readiness was filed on behalf of the Trustee. [ 18 ] A trial date was set for the week of April 26, 1999. [ 19 ] On April 1, 1999, the trial was adjourned sine die . [ 20 ] On February 26, 2003, the Trustee filed an application for case management. The application was adjourned with the consent of the Defendants on several occasions in 2003 until finally in August of 2003 when it was adjourned sine die .

In and about that time frame the parties jointly retained an independent expert who was a production accountant. The purpose of the retainer was to obtain some information in order to attempt to resolve the issues between them. The expert report did not prove to be any assistance in resolving the issues. [ 21 ] Through 2005 and 2006 the parties through their respective counsel met and exchanged information in an attempt to settle the outstanding issues.

The information exchange was provided to reinvigorate a possible settlement proposal in a potential meeting to be held shortly after December 6, 2006. [ 22 ] In due course on March 22, 2007 a without prejudice settlement meeting was held between both litigation counsel and representatives of the parties. Present on behalf of the Plaintiff was Mary Hammer while the Defendants were represented by Richard Smart, the Chief Financial Officer of AMJ and Mike Shaik, an Accountant with AMJ. [ 23 ] Ms.

Hammer in her August 31, 2012 Affidavit deposed that at the end of the meeting the parties had reached an agreement on the principal issues in dispute, and had agreed on the terms of a settlement of the 20% of the 12.5% royalty.

The outstanding issues were the calculation of the interest claim on the settlement amount, the requirement of approval of the Unit Holders of the Moodie Trust, and an issue that arose as to whether the Moodie Trust was being paid the correct amount by another party, ConocoPhillips Energy (“Conoco”). [ 24 ] She admitted under cross examination on her Affidavit that Computershare Trust Company of Canada (Computershare), being the successor to the Plaintiff, Montreal Trust, could not make an agreement without the support of the Unit Holders, who were not present at the March 22, 2007 meeting.

As a result Computershare did not have the authority at the meeting to make any final binding agreement. It needed the final approval of the Unit Holders to make it a final binding settlement agreement.

[ 25 ] Immediately following the March 22, 2007 meeting Counsel for Computershare emailed Counsel for AMJ advising Computershare would make a calculation demonstrating what amount, including interest, AMJ would need to pay to Computershare. The email suggested the calculation would be provided to AMJ in hopeful anticipation of a final settlement.

It went on to note a future meeting of the Computershare Unit Holders would be called to see if their agreement on the proposed settlement would be provided. [ 26 ] Four days later on March 26, 2007 Counsel for AMJ emailed Computershare’s Counsel; Hammer; Smart and Shaik and noted an agreement on the proposed numerical mid-point of the royalty monies owing to the Trustee by AMJ was reached as set out in Computershare’s March 22, 2007 email.

AMJ’s Counsel further noted additional confirmation checks on volume amounts would be necessary to confirm the amounts put forward by both parties in arriving at the proposed settlement amount.

The email noted AMJ’s understanding of its hope all calculations would be agreed between it and Computershare in order that a draft form of notice could be provided to the Computershare Unit Holders for their review in the next few weeks. [ 27 ] On April 2, 2007 AMJ’s Counsel emailed Computershare’s Counsel; Hammer; Smart and Shaik and asked if the production volumes had been confirmed and final sign off could be made on the calculations for approval by AMJ’s management and Computershare Unit Holders. [ 28 ] On April 17, 2007 Smart emailed AMJ’s Counsel; Computershare’s Counsel; Hammer and Shaik noting he had not heard anything yet about the agreement reached on March 22, 2007 and wondering what could be done to move the matter forward. [ 29 ] On April 19, 2007 Smart emailed Hammer and posed a question respecting an accounting of monies paid under the Moodie Royalty Trust. [ 30 ] On April 19, 2007 Hammer emailed Smart with copies to AMJ’s Counsel and Computershare’s Counsel and set out Computershare’s

interpretation of its accounting information in response to Smart’s question. [ 31 ] It must be noted Hammer in her Affidavit deposed further that Smart of AMJ was advised that it would take some time for the Trustee to obtain approval of the settlement and obtain instructions from the Unit Holders of the Moodie Trust on the agreement and remaining issues rated to interest on the outstanding amount. [ 32 ] On May 11, 2007 Smart emailed Computershare’s Counsel asking for a copy of the draft letter sent to Computershare’s Unit Holders respecting the AMJ proposal in order to present it to the AMJ Executive to demonstrate closure is potentially imminent. [ 33 ] On May 11, 2007 Computershare’s Counsel emailed Smart; Shaik; and AMJ’s Counsel and advised he had passed on to 3 of the major Computershare Unit Holders the “settlement proposal” recently forwarded to him by AMJ’s Counsel.

That email advised Computershare had not made a recommendation on the proposal. Rather Computershare expressed a concern over the interest proposed to be paid to it and invited AMJ to prepare a further interest calculation to be used as a basis for future discussions. [ 34 ] On May 13, 2008 Computershare held a meeting of the Unit Holders for a vote on a resolution directing and authorizing Computershare to make a settlement proposal to Talcorp Limited (AMJ).

At the meeting a resolution was passed instructing Computershare to draft a modified resolution to be voted on by the Unit Holders in the future as a result of the discussion held in the May 13, 2008 meeting. [ 35 ] Exchanges of email occurred on May 26, 2008 between the parties’ Counsel. Computershare’s Counsel advised he was awaiting instructions from the Unit Holders respecting a formal offer of settlement [ 36 ] On June 18, 2010 Computershare held a meeting of the Unit Holders. A resolution was passed that Computershare make a settlement proposal to Talcorp (AMJ) based on terms discussed in the meeting.

[ 37 ] There was no communication after May 26, 2008 between Computershare or its Counsel and AMJ or its Counsel. [ 38 ] On February 27, 2012 Computershare’s Counsel wrote AMJ’s Counsel and made a without prejudice unilateral offer in confirmation of the 2007 settlement reached on the principal issues and further in finalization of outstanding matters.

The letter indicated the offer was intended to confirm, encompass and replace all previous settlement offers and proposals. [ 39 ] AMJ or its Counsel never responded to the February 27, 2012 letter sent by Computershare’s Counsel. [ 40 ] On March 14, 2012 Computershare filed an application returnable on March 21, 2012 in this Court for the following Order: 1. The Plaintiff (Applicant) respectfully seeks an Order: (

a) declaring that the Deed of Trust made between Agnes Girdwood Moodie and the Crown Trust Company (the “Trust Agreement”) is valid and binding and of full force and effect and applies to a 12.5% gross royalty share (the “Royalty”) on all petroleum, natural gas and related hydrocarbons (the “Substances”) that have been, are and may be produced from the lands to which the Trust Agreement relates including (without limiting the generality of the foregoing) the lands legally described as the East ½ of

Section 1, Township 22, Range 29, West of the 4th Meridian, and any lands that were, are, or ever will be pooled, unitized or otherwise combined therewith for the purposes of drilling for or producing the substances (the “Lands”); (

b) declaring that sulphur is a Substance for all effects and purposes and is captured by the Trust Agreement; (

c) declaring that caveat number 1019GP, originally registered by the Crown Trust Company at the Land Titles Office for the South Alberta Land Registration District of Calgary on April 22, 1953, is valid and subsisting; (

d) directing Computershare Trust Company of Canada (“Computershare”) to certify the amount of royalties interpled to the credit of this Action (including interest earned thereon) with respect to the Moodie Royalty Trust and direct the Clerk of the Court to pay that amount to Computershare; (

e) directing Computershare to distribute royalties and interest received to the beneficiaries of the Moodie Royalty Trust, as their interests may appear; (

f) directing Computershare to distribute all future royalties received by Computershare, with respect to the subject lands, to the unit holders of the Moodie Royalty Trust; and (

g) making such ancillary directions this Court may deem just and appropriate. 2. To the extent necessary, the Plaintiff (Applicant) seeks leave to bring this Application. 3. Alternatively, the Plaintiff (Applicant) seeks the direction of this Honourable Court in setting a trial date further to Rule 8.5, or directing the court clerk to do so. 4. Alternatively, the Plaintiff (Applicant) seeks the direction of this Honourable Court in respect of designating a program or process under Rule 4.16 for dispute resolution in this Action.

[ 41 ] On cross examination on her Affidavit filed in support of that application, Hammer admitted the application was filed due to AMJ’s lack of response to the February 27, 2012 letter and Computershare’s concern respecting the five year time issue between the March 22 nd , 2007 meeting and the filing of the application. Applicant ’s Argument [ 42 ] AMJ brings its application to strike the action under Rule 15.4(1)(

b) of the Alberta Rules of Court on the basis more than five years have passed since the last thing done to significantly advance the Action. It further brings its application under Rule 4.31 of the Alberta Rules of Court for reason of delay that has resulted in significant prejudice to it. [ 43 ] Rule 15.4(1) currently states: Dismissal for long delay: bridging provision 15.4(1) Unless subrule (2) applies, the Court, on application, must dismiss the action as against the applicant if (

a) after the coming into force of this rule, 3 years has elapsed since the last thing done to significantly advance the action, or (b) 5 years has elapsed since the last thing done to significantly advance the action. whichever comes first. [ 44 ] Another applicable rule is Rule 4.33, it states: Dismissal for long delay 4.33

(1) If 2 or more years has passed after the last thing done that significantly advanced the action, the Court, on application, must dismiss the action as against the applicant, unless (

a) the parties to the application expressly agreed to the delay, (

b) the action has been stayed or adjourned by order, an order has extended the time for doing the next thing in the action, or the delay is provided for in a litigation plan, (

c) the applicant did not respond to a written proposal by the respondent that the next thing in the action not occur until more than 2 years after the last thing done that significantly advanced the action, or (

d) an application has been filed or proceedings have been taken since the delay and the applicant has participated in them for a purpose and to the extent that, in the opinion of the Court, warrants the actions continuing.

(2) If the Court refuses an application to dismiss an action for delay, the Court may still make whatever procedural order it considers appropriate. [ 45 ] Rule 15.4(1)(

a) is not applicable as at the date of this application 3 years has not elapsed since the coming into force of this Rule on November 1, 2010. Further Rule 4.33, will not come into force until November 1, 2013. If the Applicant is to be successful, it must demonstrate Rule 15.4(1)(

b) is applicable. [ 46 ] In its brief AMJ submitted that the last step that was taken by the Plaintiff to advance this litigation was the filing of a Certificate of Readiness on behalf of the Plaintiff on September 16, 1998. In oral argument Counsel for AMJ conceded the 2004 delivery date of the jointly retained expert production report was a step or thing done to significantly advance the action. However, he noted a thing completed in 2004 was still outside the five year period. AMJ Counsel argued the last thing significantly done was that step in 2004 and the five year clock started to run from that date.

He submitted the March 22, 2007 without prejudice meeting and the various emails in 2007 back and forth in connection with that meeting were not events which could be classified as things done to significantly advance the action. AMJ Counsel pointed out that nobody in attendance at the March 22, 2007 meeting had the authority to settle the action. AMJ required the ultimate approval of its management and Computershare needed approval from its Unit Holders.

He further noted Computershare made no subsequent recommendations to its Unit Holders and if it had, the Unit Holders were not bound to follow any such recommendations. It was argued Computershare made no recommendations because there was no binding settlement agreement reached at the March 22, 2007 meeting. In this connection it was further argued that at the May 13, 2008 meeting of the Computershare Unit Holders they were being asked to make a settlement proposal to the Defendants and were not being asked to confirm the settlement agreement, because there was not a settlement agreement.

In his submissions he observed nothing occurred after the March 22, 2007 without prejudice meeting until the Plaintiff’s offer to settle the action in its February 27, 2012 letter. Finally he noted the Plaintiff’s application brought returnable on March 21, 2012 was to confirm the validity of the trust agreement and to direct the Clerk of the Court to release the monies in court to the Plaintiff.

AMJ’s Counsel submitted the March 21, 2012 application was a blatant attempt to fit within the five year period based upon the Plaintiff’s position the March 22, 2007 meeting was a thing done to significantly advance the Action. In contrast to the Plaintiff’s position AMJ’s Counsel argued, as confirmed by the cross examination of Hammer, the March 22, 2007 meeting did not produce a settlement agreement and nor did anything occur in that meeting which bound the parties to a settlement.

As a consequence AMJ argued the meeting could not constitute a thing done by any party to advance the litigation and the action must be struck due to lack of activity since 2004. [ 47 ] AMJ further argued Rule 4.31 of the Alberta Rules of Court is applicable to its application. It submitted use of Rule 4.31 is not required in any event, as its argument must be successful under Rule 15.4(1)(b).

However if Rule 4.31 is to be applied, AMJ submitted the delay was inordinate; the delay was inexcusable; and the delay has resulted in significant prejudice to it. [ 48 ] Rule 4.31 states: 4.31 If delay occurs in an action, an application the Court may (

a) dismiss all or any part of a claim if the Court is satisfied that the delay has resulted in significant prejudice to a party, or (

b) make a procedural order or any other order provided for by these rules. [ 49 ] AMJ argued the Court can infer from the court record the delay has caused serious prejudice to its ability to defend the claim. See Hudson v Garreck , 2012 ABCA 111 . [ 50 ] Finally, in response to Computershare’s argument that the action is one based in foreclosure and that

Part 49 in the former Alberta Rules of Court excludes foreclosure applications from the application of the five year drop dead rule (Rule 15.4(1)(b)), AMJ argued the nature of the action as set out in the Amended Statement of Claim and in particular the Prayer for Relief does not reveal an action based in foreclosure or specific performance. As a result AMJ submitted either Rule 15.4(1)(

b) or Rule 4.31 applies. Respondent ’s Argument

[ 51 ] The Respondent pointed to the content of the without prejudice meeting held on March 22, 2007. It was the Respondent’s position that settlement discussions willingly occurred between the parties resulting in the material resolution of primary issues in the action. Those issues included liability and quantum. Issues of the amount of interest accrued on the quantum; a confirmation both of the parties were not underpaid on the gross royalty trust over the years; and a final approval by AMJ’s management and the Unit Holders, were left outstanding at the meeting’s conclusion.

The Respondent submitted the resolution of these primary issues by both parties materially advanced the action at the May 22, 2007 meeting despite its without prejudice nature. According to the Respondent the March 22, 2007 meeting was a material thing and the five year clock should start running on that date.

The next material step taken in the Respondent’s submission was its February 27, 2012 settlement offer which confirmed the principles of the earlier settlement agreement and offered an additional settlement inclusive of outstanding interest, deduction of prior royalty payments made to the Trustee and an undertaking by the Defendants to use their best efforts to ensure that all outstanding well production proceeds will be paid to the Trustee.

The Respondent argued its Notice of Motion filed on March 14, 2012 asking for certain relief from this Court due to AMJ’s failure to respond to the settlement letter of February 27, 2012 should be regarded as the next material step. [ 52 ] The Respondent submitted the Applicant has not demonstrated any delay was inordinate, which is inexcusable, under Rule 4.31.

Further and in any event the Respondent argued if the Court was to find the delay inordinate and inexcusable, the evidence revealed that it has demonstrated a legitimate doubt that serious prejudice has occurred to the Applicant. [ 53 ] Finally the Respondent noted former Rule 244.1 (the five year “drop dead”) rule did not apply to actions which fell under

Part 49 or Rules 754 to 757 of the former Alberta Rules of Court . Rule 244.1(1) and (2) stated: 244.1(1) Subject to Rule 244.2, where 5 or more years have expired from the time that the last thing was done in an action that materially advances the action, the Court shall, on the motion of a party to the action, dismiss that portion or part of the action that relates to the party bringing the motion.

(2) This Rule does not apply in respect of an action commenced under

Part 49 or Rules 754 to 757. [ 54 ] The Respondent submitted the action was based on specific performance of the Trust and Trust Agreement and further the relief asked for the recovery of monies secured by an encumbrance. In particular the Respondent noted Rule 683 of the former Rules of Court under

Part 49 which is headed “Foreclosure and Specific Performance Actions”. Rule 683 states: 683 In this Part, (a) “foreclosure action” includes the following: (

i) proceedings for recovery of money secured by a mortgage, agreement for sale or encumbrance; (ii) proceedings for enforcement of any provision of a mortgage, agreement for sale or encumbrance; (iii) proceedings for sale, foreclosure, redemption or specific performance with respect to land, with or without other security, that is subject to a mortgage, agreement for sale or encumbrance; (b) “mortgaged property” means the land and any collateral security referred to in a foreclosure action; (c) “order for foreclosure” includes an order cancelling or determining an agreement for sale; (d) “order nisi” includes an order for specific performance.

[ 55 ] The Respondent argued in that the action falls within the definition under

Part 49, there is no five year time limit imposed in this action under former Rule 244.1. Reasons [ 56 ] Under the provisions of Rule 15.4(1)(

b) I must decide what was the last thing done to significantly advance the action. Was it the completion of the 2004 jointly retained production report as conceded by AMJ’s Counsel or was it the March 22, 2007 without prejudice meeting held between the representatives of the parties and their respective Counsel? I am aware nobody in attendance at the meeting had authority to settle the action. That authority had to be provided subsequently by AMJ’s senior management and the Computershare Unit Holders.

I am further aware Computershare subsequently made no recommendations to its Unit Holders and the Unit Holders were not bound to follow any such Computershare recommendations had they occurred. I am cognizant that there was no binding settlement agreement reached at the March 22, 2007 meeting.

I remind myself that nothing occurred after the March 22, 2007 meeting until the letter of February 27, 2012 from Computershare’s Counsel on behalf of the Unit Holders to AMJ’s Counsel. [ 57 ] I recognize in JK Campbell & Associates Ltd (Trustee of) v Lethbridge General and Auxiliary Hospital , 2000 ABQB 331 , 264 A.R. 107 (Alta. Q.B.).

Clarke, J decided that “without prejudice” settlement negotiations are not things which materially advance an action because such negotiations do not bring the litigation closer to trial. [ 58 ] Similarly Slatter, J (as he then was) in 525812 Alberta Ltd v Purewell , 2004 ABQB 938 at para. 16 stated: It is difficult to envision how settlement discussions can materially advance an action. If the settlement discussions are successful, the action will be settled, and the matter is at an end. If the settlement discussions are unsuccessful, they accomplish nothing, and do not materially advance the action.

Since the policy of the Court favours settlement, it would be unfortunate if merely entering into settlement discussions with the other party would in effect extend the time under the drop dead rule. Ths would discourage, rather than encourage settlement discussions. There is the possibility that the action might not be settled in whole, but that the settlement discussions might produce a narrowing of the issues, an agreement on certain facts, or an agreement on parts of the action (such as quantum or liability).

In the latter case settlement negotiations might amount to things that materially advance the action, but there is nothing like that in this case. [ 59 ] However it is my view that the settlement discussions in the March 22, 2007 meeting did cause a narrowing of the issues. There was an agreement in principle on certain key aspects of the litigation. The evidence provided there was an implied agreement in principle on AMJ’s liability to pay the royalty under the terms of the Trust; an agreement in principle on the quantum of the royalty; an agreement in principle that sulphur was to be included in the royalty.

There was an agreement in principle on certain critical issues which potentially narrowed the scope and duration of a trial. Outstanding issues to be resolved included interest calculations, volume reports and a final check with the well operator to ensure both the Plaintiff and the Defendants had not been underpaid to that date on the well’s production. Confirmation of those agreements in principle can be seen in the emails of March 22, 2007 from Computershare’s Counsel to AMJ’s Counsel and the email reply of March 26, 2007 from AMJ’s Counsel to Computershare’s Counsel with copies to Hammer, Smart and Shaik.

The latter email expressly employs the words “Agreed re: the $255,000 mid point”. Most importantly Smart in his email of April 17, 2007 to both Counsel, Shaik and Hammer stated: “I have yet to hear anything about the agreement we reached in John’s office on March 22” [ 60 ] It is evident an agreement in principle was reached subject to final calculations on interest, volumes and approval from AMJ management and Computershare Unit Holders. [ 61 ] This agreement narrowed the issues and the scope and duration of the litigation.

It was an agreement reached at a “without prejudice” meeting to negotiate possible settlement. It was an agreement which is a thing done to significantly advance the action. [ 62 ] In reaching my conclusion I am aware the settlement meeting was held on a “without prejudice” basis. However the communications made in that meeting are admissible for the purpose of considering whether the communications were things which materially advanced the action within the 5 year period. Both Clarke, J in JK Campbell , supra , and Greckol, J in Webber v Canada (Attorney General) , 2005 ABQB 718 , 385 A.R. 209 (Alta.

Q.B.) found that “without prejudice” communications were admissible for the

purposes of determining whether they were a thing which materially advanced the action. [ 63 ] Further I note the subsequent emails between the parties and their Counsel were not drafted or sent on a “without prejudice” basis.

It is my view those emails are admissible for the purposes of determining whether the settlement negotiations resulted in agreements of principle which narrowed the litigation issues in scope and duration and in turn constituted things which materially advanced the action. [ 64 ] Consequently I hold the meeting of March 22, 2007 and the subsequent emails up to and including April 17, 2007 were things which genuinely furthered the litigation in a meaningful way. [ 65 ] The next step completed in this litigation was the without prejudice unilateral settlement offer of Computershare through its Counsel’s letter of February 27, 2012 to AMJ’s Counsel.

Although I note it was sent on a “without prejudice” basis, it can be observed this new offer was predicated on many of the agreements in principle reached by the parties in the March 22, 2007 meeting. The proposed interest calculation was not so predicated but no initial agreement in principle on the interest calculation was ever reached at the March 22, 2007 meeting. [ 66 ] I might add in reaching my final opinion I took into consideration the Alberta Court of Appeal’s instructions to interpret Rule 15.4(1) in a way most favourable to preserving the right to litigate.

Rule 4.31 [ 67 ] The Applicant applied for dismissal of the Respondent’s claim under this Rule as well. For success the Applicant must show inordinate delay which is inexcusable and has caused significant prejudice to it. The delay which occurred on the facts in this case can only be classified as inordinate. It is delay in excess of what is reasonable having regard to the nature of the issues and the circumstances of the litigation.

From the finding of inordinate delay I draw the inference that a delay of almost 5 years for final calculations to be made and presented to the Defendants is inexcusable. [ 68 ] However I cannot find that the Applicant has suffered significant prejudice. The Respondent has raised a legitimate doubt sufficient to rebut any presumption of significant prejudice. This legitimate doubt is founded on the evidence of the Respondent and the lack of any evidence from the Applicant in this area.

The evidence of the Respondent demonstrated a desire to settle the litigation based on certain prior agreements in principle through which a settlement offer was made, albeit late. However the Applicant was well aware of the agreements in principle and it, despite no obligation to do so, in turn never took any further steps to advance the litigation. I note on the evidence before me on this application that on May 11, 2007 Computershare’s Counsel in his email to Smart, Shaik and AMJ’s Counsel invited AMJ to prepare a further interest calculation to be used as a basis for further discussions.

The evidence before me does not disclose whether AMJ prepared such a further interest calculation or responded to the invitation. Further there is no evidence that AMJ has been prejudiced through fading memories of witnesses, loss of any critical or material witnesses through non-availability or death, or loss of any relevant and material documents. The litigation revolves around the validity of the Trust Agreement and any accounting of any royalty owed. There is money in Court to the credit of this action to pay or partially pay the successful party.

There are no apparent impediments to a successful trial of this action. The passage of time has not demonstrated any serious roadblocks to a successful resolution by trial. [ 69 ] The Respondent argued Rule 15.4(1) is not applicable due to the fact that its predecessor rule (Rule 244.1) did not apply to actions commenced under former Alberta Rules of Court

Part 49 or former Rules 754 to 757 inclusive. In the case at bar the Respondent argued its Amended Statement of Claim was based in specific performance of the Trust and Trust Agreement and further asked for the recovery of money secured by an encumbrance. The Respondent referenced former Rule 683 which defined a foreclosure action and submitted the action fell within the definition.

As a result the Respondent submitted the action was not subject to the 5 year time limit under the former Rule 244.1. [ 70 ] However based upon my rulings that the Applicant’s motions to dismiss the action are not successful either under Rule 15.4(1) or Rule 4.31, I decline to make a ruling on the Respondent’s argument respecting the applicability of

Part 49. [ 71 ] Accordingly the application of the Applicant is dismissed.

[ 72 ] Counsel may make an appointment with me to speak to costs if necessary. Heard on the 12 th day of September, 2012. Dated at the City of Calgary, Alberta this 12 th day of July, 2013. A. G. Park J.C.Q.B.A. Appearances: Derek Pontin for the Plaintiff/Respondent Howard A Gorman/Kyle D Kashuba of Norton Rose Canada LLP for the Defendants/Applicants