Mintage Financial Corporation v Altenhofen, 2013 ABQB 486

Court of Queen ’ s Bench of Alberta Citation: Mintage Financial Corporation v Altenhofen, 2013 ABQB 486 Date: 20130823 Docket: 0103 08894 Registry: Edmonton Between: Mintage Financial Corporation Plaintiff - and - William Altenhofen, 486203 Alberta Ltd., 759630 Alberta Ltd. carrying on business as W.J. Mountain Truck and Trailer Leasing, and Janice Altenhofen, Jeff Barton also known as Roland G. Barton also known as Roland Geoff Barton, Joan C. Barton and Geoff Lake Holdings Ltd. Defendants _______________________________________________________ Memorandum of Decision of W.S.

Schlosser, Master in Chambers _______________________________________________________ [ 1 ] This is a Rule 4.31 application for dismissal for delay. There are cross applications for

Summary Judgment by the Plaintiff and one of the Defendants.

[ 2 ] In general terms, Mintage agreed to purchase equipment from W.J. Mountain, and lease it back to William Altenhofen and 486, with an option to purchase. Altenhofen and 486 paid an advance. W.J. Mountain issued an invoice. Mintage paid. [ 3 ] Things would have been fine except that the equipment Mintage bought didn ’ t exist. [ 4 ] The principal amount of the loan was $107,806.95. Contractual interest accumulated at 21 percent. [ 5 ] A Statement of Claim followed on April 9, 2001 after the fraud was discovered.

The amount had grown to $115,914.29. [ 6 ] An Ex Parte Attachment Order was obtained against property held by the Defendant, Janice Altenhofen, on the same day the Statement of Claim issued. The Order was expressed to expire in accordance with

Section 19 of the Civil Enforcement Act , unless terminated earlier by court order. [ 7 ] Geoff Barton was a Defendant from the start but his wife, Joan, was not. The two of them owned the (now) Defendant company, Geoff Lake Holdings Ltd. [ 8 ] On July 6, 2001 Geoff Lake Holdings Ltd. transferred some real property to Joan and Geoff Barton. [ 9 ] Joan Barton and Geoff Lake Holdings were added as Defendants in the spring of the following year.

An Attachment Order, attaching the property that Geoff Lake Holdings had transferred to Joan and Geoff Barton, was granted on March 11, 2002, the day before the Statement of Claim was amended.

Geoff Barton died April 13, 2011. [ 10 ] The allegations against Janice Altenhofen are: 6 The Defendant Janice Altenhofen ( “ Janice ” ) is the spouse of the Defendant Altenhofen and resides with him at or near Calgary in the Province of Alberta. 29 The Defendants Altenhofen and Janice have unlawfully and fraudulently conspired and agreed to defraud the Plaintiff by reason of the misrepresentations made by Altenhofen to the Plaintiff.

Altenhofen and Janice have further conspired to defraud the Plaintiff and to prevent the Plaintiff recovering sums due to it under any judgment that may be granted. 30 In pursuant of the conspiracy, Altenhofen and Janice have caused to be placed in the name of Janice all property, real or personal, with the exception of certain shares in the Defendant 486203, in an effort to thwart the Plaintiff ’ s pursuit of judgment against Altenhofen. These allegations are continued in the Amended Statement of Claim. [ 11 ] The allegations against Joan Barton are as follows: 5 The Defendants Joan C.

Barton ( “ Joan ” ) . . . resides at or near Airdrie, Alberta. 5a Geoff Lake Holdings Ltd. ( “ Geoff Lake ” ) is a body corporate incorporated pursuant to the laws of the Province of Alberta and conducts business in the City of Calgary and elsewhere in the Province of Alberta and is owned by the Defendants, Joan and Geoff.

32 On or about July 6 th , 2001, the Defendant Geoff Lake transferred its interest in the Lands to its shareholders, Geoff and his spouse the Defendant Joan with a view to hinder, delay or prejudice the efforts of the Plaintiff and other creditors in the pursuit of their claims. [ 12 ] Mrs. Altenhofen and Mrs. Barton have brought applications to dismiss the action for delay. Mrs. Altenhofen has also brought an application for

Summary Dismissal of the claim against her. The Plaintiff ’ s Case [ 13 ] To speak in general terms, the Plaintiff ’ s case is that William Altenhofen defrauded the Plaintiff and Geoff Barton helped him do it, or at least he facilitated the fraud. [ 14 ] The property that has been attached is property that was once owned jointly by Kimco Enterprises Inc. and Geoff Lake Holdings Ltd. The property consists of six lots in Calgary that W.J. Mountain sometime parked trucks on. [ 15 ] Janice Altenhofen worked as Kimco ’ s bookkeeper. In 2000, Kimco transferred its one-half interest in the lots to her for unpaid wages.

Janice Altenhofen had claimed these unpaid wages on earlier tax returns. Kimco was being wound up at the time of the transfer. [ 16 ] Geoff Lake Holdings owned the other half interest in the Calgary lots. That company was owned by Joan and Geoff Barton. Geoff Lake transferred a one-quarter interest to Joan and a one-quarter interest to Geoff. Geoff said that this was done for tax purposes, on the advice of their accountant.

Joan said it was to pay out her interest in Geoff Lake and for estate planning purposes. [ 17 ] Not to put too fine a point on it, the Plaintiff ’ s case is that the Defendants are a den of thieves, or at least unwitting dupes and that everything they owned ought to be available to them and exigible, even though the transfers and ownership are several steps removed from the underlying fraud. [ 18 ] The actual evidence falls somewhat short of proving this. The Plaintiff ’ s case relies on presumptions and inferences.

There have been no direct admissions that would entitle the Plaintiff to judgment against Janice Altenhofen or Joan Barton. [ 19 ] The Defendants go further and say that there is at least enough evidence to rebut the presumptions and require a trial. In Janice Altenhofen ’ s case, there is evidence of good consideration for the transfer.

Her involvement in the fraud is not particularized and I do not understand matrimony to be proof of conspiracy (without more). [ 20 ] There is no proof (or allegation) that Joan Barton facilitated the fraud, simply that she was the recipient of property that might once have been followed by the Plaintiff if it obtained judgment against Geoff Barton or Geoff Lake Holdings Ltd.

William Altenhofen may have been convicted of fraud but no case, apart from an inferential one, has been made out against Geoff Barton, or, for that matter, Geoff Lake Holdings Ltd. [ 21 ] The action proceeded as follows: April 9, 2001 Statement of Claim issued April 9, 2001 Attachment Order and Garnishee Before Judgment May 15, 2001 Statement of Defence filed Sept 20, 2001 Affidavit of Records filed by Mintage

Feb 26, 2002 Change of Solicitor Feb 26, 2002 Notice of Motion to Amend Statement of Claim filed Mar 12, 2002 Amended Statement of Claim issued Mar 12, 2002 Attachment Order April 9, 2002 Statement of Defence filed Apr 25, 2002 Affidavit of Records filed Apr 26, 2002 Change of Solicitor Nov 21, 2002 Notice of Appointment for Discovery filed Dec 17, 2002 Examination for Discovery of Mr. and Mrs. Altenhofen Dec 18, 2002 Examination for Discovery of Mr. and Mrs. Barton Aug 8, 2007 Affidavit of Tanya Bazian filed Nov 30, 2007 Notice of Motion filed for

Summary Judgment Dec 7, 2007 Miscellaneous Order Granted Feb 14, 2008 Rescheduled Application for

Summary Judgment Feb 20, 2008 Notice of Ceasing to Act Feb 28, 2008 Notice of Motion filed for Dismissal of Action July 14, 2009 Appointment for Examination of William Altenhofen served Sept 22, 2009 William Altenhofen is Cross-examined Jan 18, 2011 Judgment granted against William Altenhofen Feb 14, 2012 Application for

Summary Judgment filed [ 22 ] In December 2007, the learned Master ordered: 1.

The Plaintiff, Mintage Financial Corporation, has performed a “ thing ” which “ materially advances this action ” as against all of the Defendants in Action No. 0103 08894, within 5 years of when the last “ thing ” was done in the action, pursuant to Rule 244.1(1) of the Alberta Rules of Court and the Defendants may not rely on this Rule; which, in 2007, just saved the action from dropping dead. [ 23 ] There was a roughly five-year gap in the action between 2002 and 2007 before the just-mentioned Order, and another period of inactivity in the 2007-2009 time-frame.

William Altenhofen was convicted of fraud in March, 2003 and sentenced to two years ’ imprisonment. Judgment was not obtained against William Altenhofen until January, 2011, after he was cross examined in 2009. Geoff Barton died in April of 2011. There may have been some logistical difficulties with William Altenhofen being in jail but given that discoveries had occurred in 2002, there seems to be no reason this matter could not have proceeded to trial by 2005 or 2006, at the latest. [ 24 ] The Order, referred to above, was, more procedural than substantial.

It did not move the matter toward trial in any meaningful way. As against the Applicant Defendants, the action has essentially been dormant since discoveries were conducted in 2002. Delay [ 25 ] Rule 4.31 is as follows:

Application to deal with delay 4.31 If delay occurs in an action, on 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. [ 26 ] Dismissal for delay is the capital punishment of a civil action. It is not to be taken lightly. Despite the revision of the old rule, the old three-part test of inordinate, inexcusable delay and serious prejudice (from Allen v. Sir Alfred McAlpine & Sons [1968] 1 All ER 543 (CA) ; Lethbridge Motors Co. v. American Motors (Can) Ltd. (1987) 53 Alta. L.R. (2d) Alta. CA) still applies: Raven v Airdrie (City) 2012 ABQB 74 . However, it would be fair to say that the emphasis is now on prejudice. [ 27 ] Prejudice must be proved.

It is not like old Rule 244(4), when inordinate and inexcusable delay was prima facie evidence of serious prejudice. Raven (supra) at para 25-29 per Laycock, M.C.Q.B.A. and Wien v. Dewald, 2011 ABQB 400 (But see Alberta v Chang 2011 ABQB 595 per Lee, J. and Brar v. Pawa 2010 ABQB 779 ). [ 28 ] What counts as inordinate or inexcusable delay depends in part on the context of the action. Deis v Koch Oil Ltd. 2001 ABQB 997 per Brooker, J., and Kuziw v Kuchean Estate 2002 AJ No. 944 at para 31 , citing Wallersteiner v Moir [1974] 3 All ER 217 (Eng. CA) .

Inordinate Delay [ 29 ] In addition to the overall delay in the action, it is particularly striking that the Defendants ’ property has remained attached for over ten years. [ 30 ] In both cases the orders were obtained ex parte pursuant to

section 18 of the Civil Enforcement Act . The starting point for a

section 18 order is that it will expire after 21 days (section 18(2)), though the period may be extended under section 18(3). The attachment can remain in place until: the claim is dismissed or discontinued; 60 days after judgment; or until further order of the Court (all

section 19). In the circumstances I need not decide whether the attachments automatically expired 60 days after the judgment against William Altenhofen in 2011. The main point is whether sitting on attached property for over ten years is out of keeping with a pre- judgment attachment remedy and whether that informs the decision about whether the delay in this case is inordinate. [ 31 ] An attachment order obtained on notice typically requires an undertaking in damages or an indemnity (section 17(4)). There may be an express undertaking to prosecute the action diligently and with dispatch.

If such an undertaking is not given explicitly, one ought to be implied from the context. The time frame anticipated by an attachment order is measured in days or months, not decades. [ 32 ] The purpose of a pre-judgment Attachment Order is to make property available to the creditor when judgment is finally obtained. The Applicant need not show the claim ’ s success is ‘ plain and obvious ’ , or ‘ beyond doubt ’ ; only that there is a reasonable likelihood that it will be established. The remedy is extraordinary. It was not available at common law. It is vulnerable to abuse.

In some ways, it is like an injunction but easier to get. Once granted, the equitable clock for proof of the claim is ticking: Sun Life Assurance Co. of Canada v. Tom , 2003-1 Limited Partnership # 2 , 2000 ABQB 815 per Tilleman, J. at paras 17 and following (and the cases cited there) First Mortgage Fund Inc. v. Boychuk , 2003 ABQB 217 , 336 A.R. 319 per Romaine, J. at paras 14 (at seq.) [ 33 ] Put into this context, an overall delay of over ten years in proving a fraudulent preference is inordinate ; particularly when the property is attached.

Inexcusable Delay [34] The Plaintiff offers an excuse for a portion of the delay, saying that the action was on hold while Mr. Altenhofen served histime and then for a period of time afterwards. An indulgence granted to one Defendant is not much of an excuse for the failure toprosecute an action against the others, unless they agreed to it and especially when the claims against two of the Defendants are discreteand somewhat limited. Prejudice

i) Mrs. Barton [35] Mrs. Barton’s significant prejudice is obvious; which is the death of her husband, who plainly would have been a crucialwitness. However, the fact that a witness dies is not itself enough. The prejudice must be related to the delay. MacDormand v. Granger(1980) (AB KB), 13 Alta. L.R. (2d) 151 per Funduk, M. (at para. 10). But in this case it clearly was. The action hasbeen essentially inactive against Mrs. Barton since 2002 after which it could have gone to trial. This is enough to be decisive in her case:Megatrend Holdings Inc. v. Glenbow-Alberta Institute 2008 ABCA 25. ii) Mrs.

Altenhofen [36] The death of Mr. Barton likely would cause Mrs. Altenhofen some prejudice as well. However, the prejudice suffered byMrs. Altenhofen is attenuated as the late Mr. Barton’s evidence would be less crucial to her case. As far as we know, Mr. Altenhofen isstill alive and available. [37] Long delay may itself be sufficient evidence of prejudice: Raven (supra) para. 41; Wyant Estate v. St. Arnault (1986) 70 AR76 (CA); affirming (1985) 64 AR 91 (QB); or at least it might create a rebuttable presumption of prejudice.

What is long enough to havethis effect depends, in part, on the context of the action and whether it is a ‘documents case’ or a witness case. So far, there has been norule of thumb. So let me propose one. [38] In its Report for Discussion underlying the Limitation Act, 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 thetrue facts will have so deteriorated that it will not be sufficiently complete and reliable to support a fair judicial decision. At this pointadjudication will as likely result in a judicial remedy for a claimant with a spurious claim as one with a meritorious claim.

Adjudicationunder 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 properly. 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 [39] These remarks are repeated in the Final Report. The ten year cap made it into the legislation. In the present context it is auseful rule of thumb; a statutory ‘best before date’, after which there is a rebuttable presumption of significant evidentiary prejudice. Itmight be more. It might be less, depending on the type of case. But it is a useful guide post.

[ 40 ] The passage of time may create little prejudice if the case is primarily a “ documents case ” and all documents are produced and available. However, the Defendants ’ case here can be expected to be proved by a combination of documents and oral testimony. Credibility will probably be in issue. There will be third party advisor witnesses, some of whom might now have destroyed their files. [ 41 ] 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 Financial Group Ltd. v. Maritime Life Assurance Company , 2007 ABQB 263 . In my view, the overall passage of time can be inferred to have impaired Mrs. Altenhofen ’ s ability to defend this claim. At least we are beyond the evidentiary ‘ best before date ’ and the rebuttable presumption that the evidence is old and stale, giving rise to significant prejudice, has not been rebutted. Misc. Prejudice

i) Economic Prejudice [ 42 ] Mrs. Altenhofen also raises economic prejudice suffered by her as being significant prejudice for the purposes of Rule 4.31. She says that the interest clock has been running at 21% and her property has been tried up for nearly 12 years. The 2011 Judgment against William Altenhofen, which allowed interest to March 27, 2007, had grown, even then, to $430,838.23. Of this amount, $323,031.28 is interest. [ 43 ] Economic prejudice as significant prejudice is an intriguing proposition. A similar argument persuaded Master Bolton in B.C. ( Bank of Montreal v.

Csincsik , (1992) 9 CPC (3d) 137 . It might be a greater attraction here if Mrs. Altenhofen were a contracting party, as one learned Master in Alberta has concluded that the Court may not have the power to stop or reduce contractual interest: Scotia Mortgage Corp. v. Manzouri , 2012 ABQB 395 , and there would be a direct corelation between the ‘ prejudice ’ and the delay. [ 44 ] However, the claims against Mrs. Altenholfen (and Mrs. Barton) are not contractual, and, in my view, the Court is free to apply principles of mitigation or to make a Rule 4.31(

b) Order to avoid or reduce what could otherwise be significant economic consequences. This point might be instructive to high-interest lenders who think they can cool their heels and lick their chops, but it is unnecessary to decide that here. ii) Death of Counsel [ 45 ] Mrs. Barton argued that she had suffered significant prejudice as a result of the death of her longtime lawyer. Although I need not decide this based on the forgoing, in my view a death of counsel is a misfortune but not the significant prejudice contemplated by Rule 4.31.

Rule 7.3 [ 46 ] There is an alternate ground for dismissal against Janice Altenhofen. [ 47 ] The Plaintiff ’ s case against Janice Altenhofen relies on implication, inference and her proximity to the perpetrator. The uncontroverted evidence is that good consideration was given for the transfer and this is corroborated by her tax returns. There is no evidence of her direct involvement in the fraud. The mere fact that she was married to William Altenhofen is not enough. [ 48 ] It is trite law that the burden is on the Applicant throughout in a

summary judgment application. Once the evidentiary burden has been discharged the burden passes to the Respondent to show at least an arguable case. To do this, one must put their best foot forward. There is a great danger in not doing so.

[ 49 ] If no evidence is tendered to displace the onus the Court must assume that there is none. The evidence tendered by Janice Altenhofen is enough to rebut the inference relied on by the Plaintiff. There has been nothing further. Accordingly, I am forced to assume that the Plaintiff ’ s case against her is speculative or hopeless. I might also infer that if this were not the case it would have made it to trial long ago. Conclusion [ 50 ] The evidence on which the claim and defence are based is old and stale. The Plaintiff ’ s claim against Mrs. Altenhofen appears to be speculative, or without merit.

Accordingly, I am content to dismiss the action against her based on Rule 4.31 or Rule 7.3. [ 51 ] The applications to dismiss for delay are allowed. It follows that the attachments should be released as well. The Plaintiff ’ s Application for

summary judgment is dismissed. [ 52 ] If the parties cannot agree on costs, they may apply. Heard on the 24 th day of June, 2013. Dated at the City of Edmonton, Alberta this 23 rd day of August, 2013. W.S. Schlosser M.C.C.Q.B.A. Appearances: Natasha Sutherland, Duncan & Craig LLP for the Plaintiff Jonathan Selnes, Burnet Duckworth & Palmer LLP for the Defendant, Janice Altenhofen James Wachowich,

Wachowich & Company for Defendant, Joan C. Barton