McGowan v. Lang, 2013 ABQB 699

Court of Queen ’ s Bench of Alberta Citation: McGowan v. Lang, 2013 ABQB 699 Date: 20131128 Docket: 1212 00032 Registry: Wetaskiwin Between: Randy Blake McGowan Plaintiff - and - James S. Lang Defendant _ ________________________________________ ______________ Reasons for Judgment of S. L. Schulz , Master in Chambers _________________________________________ ______________ [ 1 ] This is an application by the Defendant in a motor vehicle collision action to declare the Statement of Claim expired pursuant to rule 3.26.

There is a cross-application by the Plaintiff to declare the Defendant estopped from raising any issues with respect to service of the Statement of Claim and to retroactively validate service on the insurance adjuster; alternatively to either dispense with service of the Statement of Claim or extend time for the service of the Statement of Claim. [ 2 ] Counsel appearing for the Plaintiff on this application is not Counsel who had conduct of this matter.

Background [ 3 ] This matter arises from a Claim by the Plaintiff for compensation for personal injuries sustained in a motor vehicle collision which occurred at an uncontrolled intersection on February 5, 2010. Negotiations between the Plaintiff and the insurance adjuster commenced within days of the collision. Between February 17, 2010 and May 18, 2011, the insurance adjuster contacted the Plaintiff approximately 25 times to discuss resolving the claim, including making a settlement offer, but at no time did the insurance adjuster and the Plaintiff discuss liability.

By way of a letter dated May 18, 2011, the insurance adjuster advised the Plaintiff that a Statement of Claim “... must be filed by February 2, 2012 [ sic ]. After that date the claim expires.” [ 4 ] On September 20, 2011, the Plaintiff retained counsel. A Statement of Claim was filed on January 27, 2012 and forwarded to the insurance adjuster advising that a defence was not required at that time.

Service of the Statement of Claim on the Defendant Lang was not discussed. [ 5 ] Settlement discussions continued between the insurance adjuster and Plaintiff Counsel, with numerous requests from the insurance adjuster for either further medical information or a settlement proposal. The insurance adjuster did not request documents related to liability. [ 6 ] From September 2012, Plaintiff Counsel collected information in support of the Plaintiff’s Claim.

Around Christmas of 2012, the insurance adjuster advised that they would be filing a Statement of Defence if they did not receive the substantiating documents soon. Plaintiff counsel continued collecting information until February 22, 2013. [ 7 ] On February 15, 2013, 19 days after the time for service pursuant to rule 3.26 had expired, the insurance adjuster advised the Defendant Lang that a Statement of Claim had been filed and asked whether he had been served personally.

Lang denied knowing about the claim or being served. [ 8 ] On April 5, 2013, approximately 2.5 months after the time set out in rule 3.26 for the service of the Statement of Claim, the Defendant was personally served with the Statement of Claim without an application having been made to extend the time for service of the Statement of Claim.

Applicable Rules Time for Service of Statement of Claim 3.26(1) A statement of claim must be served on the defendant within one year after the date that the statement of claim is filed unless the Court, on application filed before the one year time limit expires, grants an extension of time for service.

(2) The extension of time for service under this rule must not exceed 3 months.

(3) Rule 13. 5 does not apply to this rule or to an extension of time ordered under this rule. Extension of Time for Service 3.27(1) The Court may, at any time, grant an extension of time for service of a statement of claim in any of the following circumstances: (

a) if a defendant, anyone purporting to be a defendant, or a lawyer or other person purporting to negotiate on behalf of a defendant, has caused the plaintiff or the plaintiff’s lawyer to reasonably believe and to rely on the belief that (

i) the defendant has been served, (ii) liability is not or will not be contested, or (iii) a time limit or any time period relating to the action will not be relied on or will be waived; (

b) if an order for substitutional service, an order dispensing with service or an order validating service is set aside; (

c) special or extraordinary circumstances exist resulting solely from the defendant’s conduct or from the conduct of a person who is not a party to the action. (2) if an extension of time is granted under subrule (1), no further extension of time may be granted under this rule and rule 13.5 does not apply unless different or new circumstances described in subrule (1) are established to the Court’s satisfaction. Effect of not serving the Statement of Claim in time 3.28 If a statement of claim is not served on a defendant within the time or extended time for service, (

a) no further proceedings may be taken in the action against a defendant who was not served in time, and (

b) a statement of claim served on any defendant in time is unaffected by the failure to serve any other defendant in time.

Issues [9] Rule 3.26 clearly sets out the time for service of a Statement of Claim and when an application to extend service must bemade. In this case, service did not occur within one year of filing and an application to extend the time for service was not made beforethe one year time limit expired. The Plaintiff cannot use rule 13.5 to extend the time for service. However, the Plaintiff may, at any timeand under specified circumstances, apply under rule 3.27(1) to extend the time for service. Accordingly, the issues for this applicationare: 1.

Whether a person purporting to negotiate on behalf of a Defendant caused Plaintiff Counsel to reasonably believe and rely on thebelief that liability will not be contested (Rule 3.27(1) (a) (ii) ); 2. Whether a person purporting to negotiate on behalf of a Defendant caused Plaintiff Counsel to reasonably believe and rely on thebelief that the time limit for serving the Statement of Claim will not be relied on or will be waived (Rule 3.27(1) (a) (iii) ); 3.

Whether there are any special or extraordinary circumstances resulting solely from the conduct of a person who is not a party tothe action that permit the Court to extend the time for service (Rule 3.27(1) (c) ) Discussion Issue 1. Whether a person purporting to negotiate on behalf of a Defendant causedPlaintiff Counsel to reasonably believe and rely on the belief that liability will not becontested (Rule 3.27(1) (a) (ii) ) [10] There is no question that the insurance adjuster falls within the definition of a “person purporting to negotiate on behalf of aDefendant”.

Indeed the role taken on by most insurance adjusters is akin to that of a lawyer negotiating on behalf of a client. Here, theinsurance adjuster negotiated extensively with the self-represented Plaintiff, and then subsequently with Plaintiff Counsel. During thesediscussions, the insurance adjuster indicated that he was treating this as a capped claim. The adjuster requested documentationsubstantiating the medical claims but did not ask for any documents with respect to liability.

Neither liability nor a reduction of damagesfor contributory negligence was discussed during the negotiations or in the settlement proposal from the insurance adjuster. [11] Based on these facts, and on his

interpretation of the law governing uncontrolled intersections, Plaintiff Counsel states that hebelieved that liability would not be contested. [12] Was this a reasonable belief and was it relied on by Plaintiff Counsel? A mere request for medical information by an insurer isnot sufficient to found a reasonable or objective basis for a belief that liability is not at issue (Massen v Horvath, 2010 ABCA 271 atpara. 22; Lally v Yukes, 2006 ABCA 346 at paras. 5-11; Wasyleshko v Chamakese (1999), 1999 ABCA 47 , 228 AR 384 atparas. 8-13).

Nor does the mere fact that the insurer entered into negotiations objectively lead to the conclusion that liability was not inissue (Lally v Yukes, supra at para. 11). [13] I am bound by these decisions and in the absence of something more, the evidence is not sufficient to grant relief on the basisof rule 3.27(1) (ii). Issue 2.

Whether a person purporting to negotiate on behalf of a Defendant causedPlaintiff Counsel to reasonably believe and rely on the belief that the time limit forserving the Statement of Claim will not be relied on or will be waived (Rule 3.27(1) (a)(iii) ) [14] By way of a letter dated May 18, 2011, the insurance adjuster quite properly warned the Plaintiff about the two year limitationperiod and the effect of not filing a Statement of Claim in time.

This is evidence that the insurance adjuster was aware of the proceduralsteps required to pursue a personal injury claim and that he intended to rely on those rules and limitations. In response to that letter, thePlaintiff retained counsel. On September 20, 2011, Plaintiff Counsel provided a copy of the Statement of Claim to the insurance adjuster,advising that a Statement of Defence was not required at that time. Negotiations continued between Plaintiff Counsel and the insuranceadjuster.

In December of 2011, the insurance adjuster advised that he would be filing a Statement of Defence if he did not receive themedical information or a settlement proposal. Service of the Statement of Claim was not addressed at this time. The one year for serviceexpired without extension on January 27, 2013. [15] There is no doubt that the continued negotiations and requests for information and documents caused Plaintiff Counsel tothink that after filing the Statement of Claim, it was only a matter of negotiation and the matter would be resolved.

However, there is noevidence that Plaintiff Counsel made a conscious decision about service of the Statement of Claim. In fact, the evidence is that theservice limitation was not noted on the file’s diary system and that Plaintiff Counsel simply did not address the issue of service untilasked by the insurance adjuster if the Defendant had been served. The belief that service was not required within the time limits needs tobe consciously held before it can be said that it was relied upon.

This was not the case here. [16] Can it be said that the insurance adjuster waived the requirement to serve the Defendant personally? The insurance adjusterwas not asked to accept service and did not advise that he would accept service on behalf of the Defendant. Service was not discussed. Asstated by Master Breitkreuz in Duperron v Landry, 2011 ABQB 114 , 2011 ABQB114, at para. 13(h): “The cases are clear that

waiver cannot be foisted on someone. It must be a conscious act.” Here, there was no conscious act and waiver cannot be found. [ 17 ] Accordingly, I do not grant relief on the basis of rule 3.27(1) (iii). Issue 3.

Whether there are any special or extraordinary circumstances resulting solely from the conduct of a person who is not a party to the action that permit the Court to extend the time for service (Rule 3.27(1) (c) ) [ 18 ] In determining whether special circumstances exist or whether the Court should exercise its discretion to extend the time for service of the Statement of Claim, the Court must have regard to the policy considerations in the Limitations Act , RSA 2000, c. L-12 and any prejudice arising as a result of the expiration of a particular limitation period ( Nixon v.

Timms , 2013 ABCA 84 at para. 10 ). [ 19 ] According to the Institute of Law Research and Reform, now known as the Alberta Law Reform Institute, limitations exist for a variety of reasons including the preservation of evidence; the peace and repose of society and individuals; and the economic cost of uncertainty. (Institute of Law Research and Reform, Limitations, Report for Discussion No. 4 , September 1986, 370 pp. at pp. 2-4) 1.49 ...

A limitations system must give claimants a reasonable period of time after the occurrence of events to discover whether or not their rights have been violated by the conduct of others, to negotiate settlements and, if need be, to seek remedies. At the same time the limitations system must require that claims be brought within a period of time which is reasonable in terms of the interests of both society and defendants.

In particular, it must not tolerate an excessive risk that claimants advancing stale claims will obtain remedies when their rights have not been violated by defendants who have lost the capacity to defend themselves. Obviously, the limitations system must strike an appropriate balance . 1.50 ...

In making the judgments required to fashion a limitation system, all that can be done is to be mindful of the injustice which will be done to either claimants or defendants by an improper balance, and to attempt to strike the balance which will achieve the most justice with the least injustice . [ Emphasis added] Limitations, Report for Discussion No. 4 , supra, at pp.39-40, at paras. 1.49-1.50. [ 20 ] When considering the specific time limitation set out in the precursor of the current rule 3.26, the General Rewrite Committee of the Alberta Law Reform Institute further stated that the legislative intent behind the rule was to eliminate procrastination and delay . (Alberta Law Reform Institute Consultation Memorandum No. 12.14 , October 2003, page 36 at para. 95). [ 21 ] From these policy considerations, the Nixon v Timms case, supra , and the wording of rule 3.27 (1) (c), I conclude as follows: In determining whether special circumstances exist or whether the Court should exercise its discretion to extend the time for service of the Statement of Claim under rule 3.27 (1) (c), the Court should:

a) aim to eliminate procrastination and delay in litigation;

b) consider whether there is any prejudice to any of the parties as a result of the limitation issue;

c) determine if the special or extraordinary circumstances result solely from the Defendant’s conduct or the from the conduct of a person who is not a party to the action; and

d) strike an appropriate balance of the interests of the parties in order to achieve the most justice with the least injustice. Procrastination and Delay [ 22 ] This claim was pursued conscientiously by the insurance adjuster, the Plaintiff, and Plaintiff Counsel. Moreover, Plaintiff Counsel and the insurance adjuster attempted to resolve this matter in a timely and cost-effective way as early as possible, as encouraged by the foundational rules of the Rules of Court. There is no evidence of procrastination and delay. Prejudice [ 23 ] Justice Read outlined the factors the Court should consider when assessing prejudice:

a) The Court should only extend the time for service where there is no prejudice to the defendant;

b) The plaintiff bears the onus of proving that the defendant would not be prejudiced by the extension;

c) The defendant has at least an evidentiary obligation to provide some details of prejudice which would flow from an extension of the time for service;

d) The defendant cannot create prejudice by failing to do something that it reasonably could have or ought to have done;

e) The prejudice must have been caused by the delay. Sanderson Estate v Potter , ABQB 593 at para.46 [ 24 ] Here, the insurance adjuster was provided with a copy of the Statement of Claim shortly after it was filed. I agree with Master

Wacowich: Certainly making the insurer aware of the Claim and providing it with a copy of the pleadings helps defeat any argument of prejudice on their part where service is not strictly complied within the lifetime of the pleadings. Makar v Luedy, 2013 ABQB 189 , at para.11 [ 25 ] I also consider the fact that the Defendant himself received notice of the Claim within 19 days of the expiration of the time for service and was personally served within 68 days of the expiration.

This brings actual service to within the 3 month period allowed for an extension under rule 3.26 (2) if an application to extend the time had been brought as contemplated by that rule. The cases suggest that little if any evidence need be produced on an extension application other than the date of filing and the lack of service (See: Master Breitkreuz in Gangl v Burns, 2001 ABQB 822 ; relying on Oberg v Foothills Provincial General Hospital , 1999 ABCA 76 ); Syvenky v Woo, 2003 ABQB 764 at para 17 , Burrows, J.).

If the Plaintiff had applied for an extension before the 12 months expired, he would almost surely have been granted an extension. [ 26 ] Given that the failure to serve was noticed and rectified quickly, and given that the insurance adjuster was aware of this claim within days of the collision and was actively assembling the information needed to assess, defend and resolve the claim, there is no prejudice to the Defendant. Actions of Insurance adjuster [ 27 ] Negotiations were ongoing throughout.

Of particular significance is that shortly before the time for service expired, the insurance adjuster advised Plaintiff Counsel that he would be filing a Statement of Defence if he did not receive the requested medical documents soon. In response, Plaintiff Counsel continued to collect the requested medical documentation. That comment, in the context of ongoing negotiations, is sufficient to create the impression that the adjuster was prepared to continue to negotiate, albeit on his terms.

It is also understandable that the comment would create the impression that the adjuster was satisfied with service as it stood and intended to proceed directly to a Statement of Defence. While the comment falls short of being a standstill agreement, it was relied upon by Plaintiff Counsel who continued to collect the requested documentation. [ 28 ] The comments of the adjuster, made in the context of ongoing negotiations and shortly before the time for service expired, resulted in special circumstances within the meaning of rule 3.27(10(c).

Balancing the Interests of the Parties [ 29 ] There is no evidence of procrastination and delay by Plaintiff Counsel. [ 30 ] There is no prejudice to the Defendant or his insurance adjuster. [ 31 ] It is abundantly clear that the intention of both sides was to negotiate a resolution if possible. Indeed they were in the thick of negotiations when the time for service of the Statement of Claim passed. [ 32 ] Both sides were sloppy.

There was undoubtedly some sloppiness on the part of Plaintiff Counsel which caused him to miss the service date, and it is equally clear that the insurance adjuster was sloppy when making his comment about filing a Statement of Defence. [ 33 ] Service was accomplished within the three months generally granted for an extension, which almost certainly would have been granted if applied for. [ 34 ] It would be unfair in these circumstances to end an otherwise valid claim because of a technical defect. To achieve the most justice with the least injustice, the balance tips in favour of the Plaintiff.

Conclusion [ 35 ] Having carefully weighed all of these factors, I find there are special circumstances within the meaning of rule 3.27(1) (

c) such that the Court’s discretion to renew the Statement of Claim should be exercised in favour of the Plaintiff. Relief [ 36 ] The time for service of the Statement of Claim is hereby extended to include April 5, 2013, being the date of personal service. Costs

[ 37 ] The parties may speak to costs within 30 days if they are unable to reach an agreement on same. Heard on the 2 nd day of October, 2013. Dated at the City of Edmonton, Alberta this 28 th day of November, 2013. S. L. Schulz M.C.C.Q.B.A. Appearances: J. Faye Garries Chomicki Baril Mah LLP for the Plaintiff Kathleen Kenny Chatwin LLP for the Defendant