422252 Alberta Ltd. v. Robert F. Macrae, 2013 ABQB 399

Court of Queen ’ s Bench of Alberta Citation: 422252 Alberta Ltd. v. Messenger, 2013 ABQB 399 Date: 20130712 Docket: 0003 22636 Registry: Edmonton Between: 422252 Alberta Ltd. and Robert F. Macrae Plaintiffs - and - Robert Messenger, Real Pro Consultants Ltd., Farris Vaughan Wills & Murphy (A Firm) and Felesky Flynn (A Firm) Formerly Known As Bell Felesky Flynn Defendants _______________________________________________________ Memorandum of Decision of W. S.

Schlosser, Master in Chambers _______________________________________________________ [ 1 ] This is an application to amend a Statement of Claim 23 years after the events that gave rise to the lawsuit. It is tempting to dismiss this application out of hand, given the long passage of time, but dealing with it is not as simple as it first appears. The first puzzle to solve is how this lawsuit could still be going on after 23 years. Facts

[ 2 ] In 1990, the Plaintiffs retained the Felesky Flynn firm to provide legal advice about a proposed transaction with the Defendants, Messenger and Real Pro. The Farris Vaughan firm acted for Messenger and Real Pro. [ 3 ] The Farris Vaughan Defendants provided an opinion directly to the Plaintiffs about whether the Plaintiffs would suffer tax exposure as a result of a separate transaction. [ 4 ] The deal went through.

Four years after the transaction, in 1994, the numbered company was disappointed to receive two unwanted and, (allegedly) unexpected Notices of Assessment, which claimed approximately $1.78 Million in taxes. The Plaintiffs say that the assessments were the result of the transactions. [ 5 ] The numbered company appealed the CRA ’ s assessment. They were substantially successful, but not until the cause of action had reached the age of majority. In 2008 it settled with the CRA for just over $l.0 Million. [ 6 ] The Statement of Claim was issued in late November of 2000.

That was in the middle of the transition period between the old Limitations of Actions Act and the new Limitations Act . [ 7 ] In March, 2001, the Farris Vaughan firm filed its Statement of Defence. Their Affidavit of Records followed in June of that year. The Felesky Defendants filed their defence in April of 2001. But their Affidavit of Records did not come until much later. [ 8 ] The Plaintiffs ’ Affidavit of Records came in May of 2010. The Felesky Flynn Affidavit of Records followed in August. Then the Questioning started. At the Questioning, Mr.

Kirby was produced as a representative of the Felesky Flynn firm and Mr. Hatton gave evidence for the Farris Vaughan firm. [ 9 ] The Plaintiffs refer to a standstill agreement during the 13 years it took to resolve the CRA appeals: 10. Commencing in or around 1995, Albertaco filed various objections to and appeals of the Reassessments issued by the Revenue Canada. It was not until June 25, 2008 that Albertaco and Revenue Canada settled the Reassessments in the total amount of $1,011,231.47, which sum was paid by Albertaco to Revenue Canada on November 12, 2008. 11.

During the lengthy 13-year appeals process, the Plaintiffs ’ Action against Felesky Flynn and Farris Vaughan was held in abeyance pursuant to a Standstill Agreement entered between the parties. [ 10 ] The Brief references the MacRae Affidavit, para. 8, which says: 8. The proposed amendments to paragraphs 15, 17-19, 27(a), (

b) and (d), 31-33 and 45- 47 reflect the fact that, after the Statement of Claim was filed on November 29, 2000, this action was held in abeyance pending the outcome of the Plaintiff Albertaco ’ s appeal of the Revenue Canada Notices of Assessment to the Tax Court of Canada . Attached hereto and marked as Exhibit “ B ” are documents from the Plaintiffs ’ production which show that, on or about June 25, 2008, Albertaco settled with Revenue Canada in the total amount of $1,011,231.47, which sum was paid to Revenue Canada on November 12, 2008. (emphasis added). [ 11 ] The standstill agreement is not in evidence.

However, there could be nothing to stand still until the claim was filed November 29, 2000. I am going to assume, for the purpose of argument, that there was a standstill agreement between November 29, 2000, when the Statement of Claim was issued and June 25, 2008, when the settlement was concluded with the CRA.

[ 12 ] The Plaintiff ’ s say the proposed amendments were prompted by evidence given at the Questioning, and the production of Records; though one of the key records had been produced in 2001. Some of the proposed amendments arise from a Plaintiff ’ s Expert Opinion obtained in 2012. [ 13 ] Mr. Kirby ’ s notes (for Felesky Flynn) are said to suggest that he was aware of a risk that had not been disclosed to the Plaintiffs by his firm. Similarly, Mr.

Hatton ’ s notes appear to disclose that the Farris Vaughan firm was aware of a tax risk (or at least one that was not fully investigated), that was not disclosed to the Plaintiffs. [ 14 ] Some of the proposed amendments are based upon Mr. Hatton ’ s record of a telephone conversation. The Memo appears to express the author ’ s resignation that timing precluded a proper review; which the memo seems to imply would have been futile anyway. The language of the memo is graphic and vulgar. It is not complimentary about the deal. Despite the strong language, the memo did not assist Mr.

Hatton ’ s memory when he was questioned. This was the record that had been available to the Plaintiffs in June, 2001, when it was disclosed in the Farris Vaughan ’ s Affidavit of Records. [ 15 ] Some of the proposed amendments are conceded: (Farris Vaughan concedes: 11, 15, 16, 17, 18, 19, 31, 32, 45 and 46. The Felesky Flynn firm concedes: 11, 13, 15-19, 27a, b and d). The Defendants have taken no position on the proposed amendments affecting each other. [ 16 ] Felesky Flynn oppose the following amendments: 24.

Particulars of the breach of contract, breach of fiduciary duty and negligence of Felesky Flynn include, but are not limited to, the following: (

f) Failing to advise MacRae and Albertaco of other investments available to corporate investors in 1990 which, if soundly structured, would have allowed Westridge and 400662 to shelter their entire taxable income for their respective 1990 taxation years (the “ alternative Investments ” ), thereby resulting in favourable tax consequences which include the following: (

i) Such Alternative Investments would not have been reassessed by the CRA and, therefore, there would have been no need for the Plaintiff, Robert MacRae, to incorporate Albertaco; (ii) Even if Albertaco were formed, there would be no tax reason for Westridge and 400662 to have paid the Subject Dividends to Albertaco in 1990 and to pay the Initial Tax in the aggregate amount of $1,933,331.00. (iii) Even if Albertaco were formed, and even if Westridge and 400662 had paid Subject Dividends to Albertaco in 1990, those dividends would have flowed to Albertaco tax free, and would not have been subject to tax under s. 160 of the Income Tax Act because Westridge and 400662 would not have had any unpaid tax liability for their respective 1990 taxation years; (

g) Failing to structure the transaction so as to incorporate one of the Alternative Investments which would have allowed for the Favourable Tax Consequences; and 27. As a result of the negligence, breach of duty of care, breach of fiduciary duty and breach of contract by Felesky Flynn, Albertaco has suffered monetary damages, which include, but are not limited to, the following: (

c) the value of the Favourable Tax Consequences the Plaintiffs would have received had Felesky Flynn either advised the Plaintiffs of or structured the transaction to incorporate one of the Alternative Investments, in the amount of $1,000,000.00, plus interest, or such other amount as shall be proved at the trial of this action; and

28 Further, Albertaco pleads that Felesky Flynn wholly failed to perform its contractual obligations and therefore claims a return of the legal fees paid to Felesky Flynn to provide legal advice regarding taxation issues, including taxation advice respecting the Westridge Agreement and the 400662 Agreement, in the amount of $30,000.00, plus interest, or such other amount as shall be proved at the trial of this action. [ 17 ] The Farris Vaughan Defendants oppose the following amendments: 41.

Further, on or before July 4, 1990, and therefore prior to the July 6, 1990, close of the Westridge Agreement and 400662 Agreement (collectively, the “ Agreements ” ), Farris Vaughan became aware of facts such that it knew or ought to have known that there was a risk that the confidential Transactions would result in tax liability to Albertaco or MacRae. Despite knowledge of these facts, Farris Vaughtan neither amended its July 6, 1990, Legal Opinion to render it true and accurate nor otherwise advised the Plaintiffs of this risk. 42.

Farris Vaughan ’ s actions, as set forth in paragraph 41, misled MacRae and Alertaco by causing them to believe that the Legal Opinion was true and accurate and induced MacRae and Albertaco to close the Agreements. 43. Farris Vaughan ’ s actions, in continuing to mislead MacRae and Albertaco regarding the truthfulness and accuracy of its Legal Opinion when Farris Vaughan knew or ought to have known that the confidential Transactions would result in tax liability to the Plaintiffs, were egregious and high-handed, and were designed to induce Albertaco and MacRae to close the Agreements. 44.

Farris Vaughan ’ s misconduct, as set forth in paragraph 41 through 43, caused Albertaco to close the Agreements and to later be reassessed significant tax and caused MacRae to suffer significant emotional and mental distress and anxiety for which he has sought medical treatment and advice since 2004. Farris Vaughan knew or ought to have known that its conduct would produce such a result. 48.

As a result of Farris Vaughan ’ s egregious and high-handed conduct as set forth in paragraphs 41 through 43, and the resulting emotional and mental distress and anxiety suffered by MacRae as set forth in paragraph 44, MacRae is entitled to general, or in the alternative, aggravated damages in the amount of $500,000.00 or such other amount as this Court deems appropriate. 49.

Further, the Plaintiffs plead that punitive damages in the amount of $1,500,000.00 should be awarded against Farris Vaughan in light of its high-handed and egregious actions. [ 18 ] Both Defendants oppose amendments to the Prayer for Relief, as follows: In Relation to the Defendant, Felesky Flynn, the Plaintiffs additionally claim: (

a) Damages in the amount of the legal fees paid to Felesky Flynn in an amount to be proven at trial, but currently estimated to be in the amount of $30,000.00; (

b) Damages in the amount of $1,000,000.00 for the Favourable Tax Consequences the Plaintiffs would have received had Felesky Flynn either advised the Plaintiffs of or structured the transaction to incorporate one of the Alternative Investments, or such other amount as shall be provided at the trial of this action; (

c) Interest pursuant to the Judgment Interest Act, and the regulations thereto, as amended; and (

d) Such further and other relief as this Honourable Court may order.

In Relation to the Defendant, Farris Vaughan, the Plaintiffs additionally claim: (

a) Punitive damages in the sum of $1,500,000.00; (

b) Interest pursuant to the Judgment Interest Act, and the regulations thereto, as amended; and (

c) Such further and other relief as this Honourable Court may order. In Relation to the Defendant, Farris Vaughan, the Plaintiff MacRae additionally claims: (

a) General or, in the alternative, aggravated damages in the amount of $500,000.00; (

b) Interest pursuant to the Judgment Interest Act, and the regulations thereto, as amended; and (

c) Such further and other relief as this Honourable Court may order. The Discretion to Allow Amendments [19] The applicable Rules are 3.62 and 3.65. In this case, pleadings have closed so leave of the Court or agreement of the parties isrequired. The rules are permissive but do not set out the test. Granting leave is discretionary. The test to be applied comes from thedecided cases. [20] Some of the law in this area is reasonably well settled.

The starting point is what is referred to as the ‘general rule’ or the‘classic rule’: “. . . that any amendment, however late or careless, should be allowed if there is no prejudice which cannot becompensated in costs”. Milfive Investments Ltd. v. Sefel, (1998) 1998 ABCA 161 , 216 AR 196 (CA) at para. 3, per Côté J.A. [21] The ‘general rule’ is picked up in Balm v. 3512061 Canada Ltd., 2003 ABCA 98 (per Côté, Hunt and Wittman JJA). It issubject to four exceptions: a. The amendment would cause serious prejudice to the opposing party, not compensable in costs; b.

The amendment requested is “hopeless” (an amendment that, if it were in the original pleadings, would have been struck); c. Unless permitted by statute, the amendment seeks to add a new party or a new cause of action after the expiry of a limitationperiod; and d. There is an element of bad faith associated with the failure to plead the amendment in the first instance. Dow Chemical Canada Inc. v. Nova Chemicals Corp. 2010 ABQB 524 per Wittmann CJQB (I note that a more detailed test was set outby Slatter J. (as he then was) in S. (C.H.) v.

Alberta of Child Welfare), 2006 ABQB 528, affd. 2006 ABCA 355, and see Hunter

Financial Group Ltd. v. Maritime Life Assurance Co., 2007 ABQB 263 at para. 11, per Thomas J., affd. 2009 ABCA 199, but thismore detailed test seems to have been eclipsed in popularity by the Dow test, above). Limitations [22] How the first ten years passed comes down to a limitations issue. [23] Under the old Limitations of Actions Act, RSA 1980 c. L-15, now repealled, the time for a claim in contract, (for example, acontract of retainer), was six years from the breach (section 4). “Discoverability” did not apply to actions in contract.

The cause of action,(the old Limitations Act was cause-of-action based), was complete at the breach. Neither the existence of damages nor knowledge ofdamages were necessary for the clock to begin to run. Costigan v. Ruzicka 1984 ABCA 234 , [1984] 33 Alta. L.R. (2d) 21. Afortiori, it was not necessary for the loss to be quantified for the cause of action to arise. Fidelity Trust Co. v. 98956 Investments Ltd.1988 ABCA 267 , [1988] 6 W.W.R. 427, 61 Alta. L.R (2d) 193, Luscar Ltd. v. Pembina Resources Ltd. (1991) (AB KB), 85 Alta L.R. (2d) 46 and 98.

The time limit to sue the Respondents in contract under the old Act expired in July 2006. [24] A claim in negligence under the old Act ran two years from the time that the Plaintiff knew or ought to have known of thecoincidence of a duty, breach and damages. The decided cases tell us there are concurrent causes of action in contract and in negligenceagainst lawyers. Litigants were free to chose whatever cause of action best suited them, Central and Eastern Trust Co. v.

Rafuse, (SCC), [1986] 2 S.C.R. 147, 31 D.L.R. (4th) 481. [25] There is no evidence that the CRA assessment could have been reduced to zero in the appeal process. It was always the casethat there would be some damages. It was just a question of how much.

The time limit in negligence under the old Act expired two yearsafter the unexpected assessment, in December, 1996. [26] It is difficult to see how limitations under the old Act in contract and negligence, which would have been the conventionalcauses of action against the lawyers, had not run by 2006; this was over six years from the breach of contract, and two years afterknowledge of the damages for the purposes of the tort claim. [27] However, the pleadings also raise breach of fiduciary duty. This equitable remedy would likely have been caught by

section 4of the old Limitations Act, which would mean a limitation of six years from the CRA assessment in December of 2004. But if thisremedy has application to the facts alleged in the Statement of Claim, it is hardly the most conventional choice. Perez v. Galambos, 2009SCC 48 , [2009] 12 WWR 193 at 210 paras. 35 et seq., per Cromwell, J., writing for the majority. [28] Similarly, the tort of negligent misstatement is raised against the Ferris Vaughan Defendants. The six year time limit underthe old Act would have expired in December, 2000.

This lawsuit is really about the negligent performance of a service which causedeconomic loss. The Hedley Byrne tort is typically geared (although perhaps not limited) to misstatements of fact made to someone whois not in a contractual relationship. [29] These two causes of action expired in December, 2000, which appears to have put the November, 2000 Statement of Claimjust under the wire. [30] The original Statement of Claim was filed in November, 2000, in the transitional period between the old and new Acts. Thenew Limitations Act, unlike the old, contained a ten year cap, the ‘Ultimate’ limitation period.

It provided: “3(1) Subject to

section 11, if a claimant does not seek a remedial order within . . . (

b) ten years after the claim arose, .. . the defendant on pleading this Act as a defence, is entitled to immunity from liability in respect ofthe claim.

[ 31 ] The Ultimate period is “ event-based ” , rather than “ knowledge based ” . Section 3(3) tells us: 3(3) For the purposes of [the Ultimate period]: (

b) a claim based on a breach of a duty arises when the conduct, act or omission occurs; (emphasis added) [ 32 ] The allegedly bad advice was given in July, 1990. On the face of it, the Ultimate period would have expired ten years later, in July, 2000; approximately five months before the original pleading was filed. [ 33 ] The new Limitations Act contains the following transitional provision: 2(2) Subject to sections 11 and 13, if, before March 1, 1999, the claimant knew, or in the circumstances ought to have known, of the claim and the claimant has not sought a remedial order before the earlier of (

a) the time provided by the Limitation of Actions Act , RSA 1980 c L-15, that would have been applicable but for this Act, or (

b) two years after the Limitations Act , SA 1996 cL015.1, came into force, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim. [ 34 ] The Farris Vaughan Defendants have raised a limitations defence in their Statement of Defence. The Felesky Flynn Defendants have not. I am assuming, for the purposes of this application, that the claim in equity for breach of fiduciary duty and the claim in actionable misstatement put the November, 2000 Statement of Claim just under the wire in terms of the old Act.

I am also assuming that the transitional provision in the Limitations Act trumps the Ultimate ten-year limitation during the transitional period. [ 35 ] So the first ten years can be marked down to a thoughtful use of limitations law and the benefit of the doubt (at least for now) for actions started in the transitional period after the ten-year cap had expired. The standstill agreement accounts for the next eight years. I suppose there is little point in observing that this might have been one of those rare occasions when splitting liability and quantum would have been a good idea.

The Exceptions to the General Rule (

i) Exception C: ‘ Unless permitted by statute, the amendments add a new claim after the expiry of a limitation period: ’ [ 36 ] Section 6(1) of the Limitations Act provides: 6(1) Notwithstanding the expiration of the relevant limitation period, when a claim is added to a proceeding previously commenced, either through a new pleading or an amendment to pleadings, the defendant is not entitled to immunity from liability in respect of the added claim if the requirements of subsection (2), (3) or (4) are satisfied.

[ 37 ] In this case section 6(2) is applicable. The added claim must be “ . . . related to the conduct, transaction or events described in the original pleadings . . . ” [ 38 ] “ The relevant limitation period ” , I would like to think, refers to the two year time limit in section 3(1)(a). However, the second relevant period that applies to this case is the Ultimate period; the ten year cap in section 3(3). [ 39 ] Even if we are to ignore the ten year cap for claims filed in the transitional period, it is not clear how the Ultimate period should be treated for the purposes of

section 6. The Act does not tell us how to reconcile the language of section 6(1) ( “ the relevant limitation period ” ) with, in these circumstances, two relevant limitation periods. [ 40 ] The Limitations Act is supposed to be a statute of repose. Repose might be suspended perpetually if ‘ the relevant limitation period ’ in

section 6 also means ignoring the Ultimate period. Allowing amendments after the ten year cap seems to fly in the face of the rationale (and justification) for the ten year cap in the first place. [ 41 ] In my respectful view, the question is not fully answered by Reports for Discussion No. 4, September, 1986, or the ALRI Final Report No. 55 in December, 1989. The learned authors of those reports acknowledge a conflict between permitting an amendment beyond the Ultimate period and the rationale for a limitation system based on economics or repose.

But these remarks are made in relation to what is now section 6(4) (adding defendants) which has the added requirement of ‘ sufficient knowledge so that the [added] Defendant will not be prejudiced in maintaining a defence on the merits. ’ This is not a requirement of section 6(2). We can only presume that the intent was that the existence of ‘ relatedness ’ for the purposes of section 6(2) should necessarily exclude prejudice. But this is not always the case in practice.

In my view, there is an uneasy, unreconciled tension inherent in reading ‘ the relevant period ’ to also include the Ultimate period for the purposes of section 6(2). [ 42 ] Limitation statutes are typically construed strictly because they have substantive consequences. They may not extinguish claims but they can have the effect of sterilizing a right. Consequently, the Applicants are entitled to the benefit of the doubt about whether ‘ the relevant limitation period ’ in section 6(1) of the Limitations Act includes both the universal “ discovery ” period and the Ultimate period.

On this basis, the proposed amendments survive the first hurdle to avoiding the third exception to the general or classic rule, but only barely. [ 43 ] The Limitations Act is no longer ‘ cause of action based ’ , so it does not avail us to ask whether the proposed amendments raise a new cause of action. I am interpreting the third exception to the general rule as stated in the Dow case from the perspective of a ‘ new claim ’ which is wider and much less precise than determining whether there is a new cause of action: Dow (above) at para. 69, 70-72; Greentree v.

Martin , 2004 ABQB 365 at para. 13 , per Clackson J.; Stolk v. 382779 Alberta Inc. , 2005 ABQB 440 at para 36 , per Langston J. and see Can Nat. Res. Ltd. v. Arcelormittal Tubular Products Roman SA , 2012 ABQB 679 , at para. 397 et seq ., per Hughes J. for a useful review of authority.

Section 6 of the Act tells us that the new claim must simply be “ related to the conduct, transaction or events described in the original pleadings ” . [ 44 ] In this case, the added claims are related in the broadest sense but they are troublesome because they are also transformational. As Mr. Hope aptly put it in argument on behalf of the Felesky Flynn Defendants, the original pleadings said that the Felesky Flynn Defendants had a duty to tell the Plaintiffs whether this particular transaction would attract tax.

The new pleadings say, in essence, that Felesky Flynn ’ s obligation was to tell the Plaintiffs all of the ways that they could avoid tax. [ 45 ] From the Farris Vaughan Defendants ’ perspective, the claim against them is recast; from an omission to something egregious, warranting punitive or aggravated damages. [ 46 ] Relatedness may not be unlimited, but given its breadth of meaning, I cannot say that the added claims are unrelated to the events originally pleaded. So the proposed amendments survive the second hurdle as well. [ 47 ] The intended effect of

section 6 of the Limitations Act was, evidently, to deprive a Defendant of a limitations defence, so as to remove any uncertainty about the scope of the rule in Weldon v. Neal and to codify the ‘ functional approach ’ to amendment of pleadings. (ALRI, Final Report No. 55, page 41 and 81 et seq. ).

[ 48 ] In Weldon v. Neal , (1887) 19 QBD 394 at 395, Lord Esher, M.R. said: We must act on the settled rule of practice, which is that amendments are not admissible when they prejudice the rights of the opposite party as existing at the date of such amendments.

If an amendment were allowed setting up a cause of action, which, if the writ were issued in respect thereof at the date of the amendment, would be barred by the Statute of Limitations, it would be allowing the plaintiff to take advantage of her former writ to defeat the statute and taking away an existing right from the defendant, a proceeding which, as a general rule, would be, in my opinion, improper and unjust. [ 49 ] However, a number of cases tell us that amendments may be permitted conditionally, allowing the Defendant to raise a limitations defence, eg. Hill v. Hill , 2007 ABCA 293 at para. 10 ; Madill v.

Alexander Consulting Group Ltd. , 1999 ABCA 231 at para. 24 . Whether or not the Courts have accepted the intended effect of

section 6 of the Limitations Act , it is clear that the Rules and the Court ’ s discretion about whether to allow a late amendment prevail over merely satisfying section 6(2) of the Limitations Act . That is, satisfying

section 6 is a necessary but not a sufficient condition for permitting amendments. That applies to the other three exceptions as well. In a manner of speaking, the Rules have the final say. [ 50 ] That leaves us to address the three other exceptions to the general rule. ii) Exception D: Bad Faith [ 51 ] There is no element of bad faith present in this case. The Plaintiffs ’ present (and third) counsel did not come on to the file until 2011.

The amendments are said to have been precipitated by information that came to light in that time frame. iii) Exception B: ‘ Hopelessness ’ [ 52 ] I have reservations about whether the original claim was in time. However, that issue is not squarely before me and, in my view, it would not be appropriate to refuse these amendments on the basis that they (along with the original pleading) would have been struck if they were there from the beginning. iv) Exception A : Serious prejudice [ 53 ] That leaves the first enumerated exception in the Dow case. [ 54 ] Some of the delay was agreed to.

However, about two-thirds of it was not. [ 55 ] If you or I were called upon to remember, with detail, an event that occurred in our professional or working life 23 years ago, the answer about whether asserting a claim for it now would give rise to serious prejudice would seem obvious. The mere passage of time, if there is enough of it, makes anyone but the most extraordinary or unusual Defendant, defenceless against claims that are old and stale.

This is one of the central tenants of a limitation system and the rationale for the ten year cap. [ 56 ] In its Report for Discussion, the Institute of Law Research and Reform said: 2.198 . . . The judicial system must, insofar as possible, ensure that the adjudicative process secures justice for claimants and defendants. By the time that ten years have passed after the occurrence of the events on which a claim is based, we believe that the evidence of the true facts will have so deteriorated that it will not be sufficiently complete and reliable to support a fair judicial decision.

At this point adjudication will as likely result in a judicial remedy for a claimant with a spurious claim as one with a meritorious claim. Adjudication

under these circumstances can only detract from the credibility of the judicial system and undermine its effectiveness. The judicialsystem is a human system, and we think it is counterproductive for a society to require it to attempt to do what it cannot do property. We quote from the opinion of Laycraft, J.A. in the Ruzicka [Costigan v. Ruzicka, (1984) 1984 ABCA 234 , 13 D.L.R. (4th) 368C.A.] case: Every trial judge is aware that stale claims with stale testimony produce bad trials and poor decisions.

Institute of Law Research and Report for Discussion No. 4, Limitations, September 1986 (emphasis added). [57] These remarks are repeated in the Final Report. [58] The evidence from the Questioning cited by the Plaintiffs makes it clear that owing to the passage of time, the Defendants areessentially defenceless against these new claims. The Ferris Vaughan Defendants are particularly vulnerable. The language of the memothat is said to have prompted their amendments is striking, and in being so, is far more prejudicial than probative.

It was quoted withrelish several times in the Brief and in argument, and waved about as if it were a still-smoking gun, presumably for this effect. [59] An inability to answer a claim is serious prejudice. Laasch v. Torenne, 2012 ABQB 566 at para. 68; 321665 Alberta Ltd. v.Mobile Oil Canada Ltd., 2010 ABQB 522. The passage of seven or eight years might be enough to have this effect: Hunter FinancialGroup Ltd. v.

Maritime Life Assurance Company, 2007 ABQB 263. [60] The onus is usually on the Defendant opposing an amendment to show serious prejudice and, for that, some evidence isusually required: 3216556 Alberta Ltd. v. Mobile Oil Canada Ltd. (above) at para. 17. However, if evidence is required it is apparentfrom the excerpts from the Questioning the Plaintiffs have put into evidence that the Defendants have a very limited, or no ability toanswer these new claims. We don’t need an Affidavit from the Defendants to show this. This is not a Milfive case where there is a tellingsilence (Milfive Investments Ltd. v.

Sefel, (1998) 1998 ABCA 161 , 216 A.R. 196, at para. 2). [61] That should be enough. But in this case I am willing to go even farther.

If we are to give any credence to the rationale for alimitations system and, in particular, if we are to acknowledge the logic supporting the Ultimate period, even though the Ultimate periodmay be sterilized by the effect of section 6(2) of the Limitations Act (or neutralized by the wording of the transitional provisions for newclaims) the fact that we are beyond the Ultimate period is an important consideration in determining whether the Court should exerciseits discretion to allow a late amendment.

Not only is there a natural inference of prejudice when the statutory time limit has passed (e.g.37850 Alberta Ltd. v. Mila, 2012 ABCA 373, paras. 24 and 25 - there, the one-year time limit to file a complaint to the Human RightsCommission), applications to amend beyond the Ultimate period in my view raise a rebuttable presumption of serious prejudice, which,in this case, happens to be borne out by the evidence. [62] It is offensive to the new Rules that parties should be litigating 23 years after the events that gave rise to the claim, let aloneseeking to amend their pleadings.

I do not see anything in the evidence to displace serious prejudice arising from these proposed changesto the pleadings. Except for those amendments of a housekeeping nature which are conceded by the Defendants, the Plaintiffs’application is dismissed. [63] I am indebted to counsel for their clear presentation of this interesting issue. Heard on the 28th day of March, 2013.

Dated at the City of Edmonton, Alberta this 12 th day of July, 2013. W. S. Schlosser M.C.C.Q.B.A. Appearances: Graham McLennan, Q.C. McLennan Ross for the Plaintiffs P. Smith, Q.C. Emery Jamieson for the Defendant, Farris Vaughan J. M. Hope, Q.C. and Vivian Stevenson, Q.C. Duncan & Craig for the Defendant, Felesky Flynn