42662871 Investments Ltd. v. Ashwani Khanna, 2014 ABQB 748

Court of Queen ’ s Bench of Alberta Citation: 42662871 Investments Ltd v Jomha, 2014 ABQB 748 Date: 20141210 Docket: 0603 12802 Registry: Edmonton Between: 42662871 Investments Ltd. and Ashwani Khanna Plaintiffs - and - Ahmed Jomha Defendant _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice Sterling M. Sanderman _______________________________________________________ [ 1 ] Pursuant to an order granted by Justice Ross on July 2, 2014, the parties seek to have an issue determined prior to trial pursuant to Rule 7.1.

The question posed is, “Does the Limitations Act , RSA 2000, c.L-12 provide the Defendant a complete or partial defence to the within claims against him?” Justice Ross’ order directed that this issue proceed by way of a Special Chambers application on the basis of an Agreed Statement of Facts and Exhibits. The Agreed Statement of Facts and Exhibits is set out below. 1.

On or about March 17, 1998, the Plaintiff, Ashwani Khanna (hereafter called "Khanna") retained the Defendant to assist with the purchase of a convenience store and an automobile gasoline sales outlet (hereafter called the "Service Station") from 678333 Alberta Ltd. (hereafter called the "Vendor").

2. The general nature of the retainer was to assist Khanna in incorporating a numbered company and then assist that company to acquire the assets to run the Service Station and to take over a lease for the Service Station. Ultimately the Plaintiff, 42662871 Investments Ltd. (hereafter called "426") was incorporated for this purpose. 3. The Defendant opened file number 13,425AJ on March 17, 1998 in connection with the services set out at paragraphs 1 and 2 above. 4.

Among the documents executed in connection with the takeover of the Service Station were the following: • An Assignment of Lease between the Vendor and 426 dated May 12, 1998. The Assignment of Lease is attached an Agreed Exhibit No. 1. • An Assignment of Lease between the Vendor, 426, 353764 Alberta Ltd. (hereafter the "Landlord") and a Guarantor dated July 3, 1998. The said Assignment of Lease is attached as Agreed Exhibit No. 2. 5.

At all times, Khanna and 426 made it very clear to the Defendant that they did not in any way want to be responsible for the replacement of the fuel tanks or any other related major expense equipment and the Defendant was instructed to take care of the Environmental Report aspect with the lawyer for the Vendor. 6. 426 commenced operating the Service Station on or about June 16, 1998. Upon 426 assuming conduct of the Service Station problems were almost immediately noted with equipment in poor working order. 7. The last time entry on File 13,425AJ was dated November 26, 1999.

The final account for File 13,425AJ was rendered May 30, 2000. The said account and cover letter is attached as Agreed Exhibit No. 3. 8. The Defendant's File 13,425AJ was closed on July 23, 2001. 9. The Plaintiffs experienced a variety of problems from July 15, 1999 onward due to fuel leakage and contamination of the area in and around the Service Station. Ultimately 426 ceased operation of the Service Station in March 2004.

The Defendant continued to act for 426 and Khanna to attempt to remedy the ongoing problems until October 28, 2004 when the Defendant filed a Notice of Ceasing to Act. 10. 426 became involved in litigation with the Landlord as a result of the problems set out in paragraph 9 above. On January 9, 2003 the Landlord issued a Statement of Claim against 426 in Court of Queen's Bench of Alberta Action No. 0303 15282 seeking recovery of unpaid rent and an Originating Notice as Action No. 0303 00515. The Landlord amended its Statement of Claim on September 18, 2003.

The Defendant filed on behalf of 426 a Statement of Defence and issued a Counterclaim in Action 0303 15282 on October 2, 2003. The Counterclaim was issued against the Landlord only and sought a remedy arising out of the issue of the contaminated fuel tanks. By September 2002, the Plaintiffs had retained the services of different legal counsel (Firm No. 1) in regards to the Service Station and issues regarding the underground storage tanks. 11. By October 2002, the Plaintiffs had retained Firm No. 2 to deal with the same issues. 12.

Ultimately, Khanna met with the Defendant on December 11, 2002 in regards to the ongoing issues with the Landlord. The Defendant opened a new file, number 14,962AJ on December 25, 2002. 13. On December 4, 2003, the Landlord applied to consolidate the two actions. The application was adjourned to Special Chambers. 14. On August 19, 2004, the Defendant brought an application for adjournment of the Special Chambers application on the basis that Khanna was ill. Correspondence from Khanna's family physician is incorporated into the Affidavit attached as Agreed Exhibit No. 4. 15.

The Special Chambers application was adjourned by the Court to obtain further information from Khanna's family physician. 16. Ultimately, the Defendant re-attended at Chambers on October 26, 2004 and an application for a stay of the action was denied and the Landlord's consolidation application allowed to proceed at a later date. The rationale for the later date was to allow the 426 and Khanna an opportunity to obtain new counsel. 17.

The Defendant filed a Notice of Ceasing of Act on October 28, 2004. 426 was served with the Notice of Ceasing to Act by November 3, 2004 and opposing counsel was served with the Notice of Ceasing to Act on November 10, 2004. 18. The within action was issued on October 12, 2006. The within Statement of Claim is attached as Agreed Exhibit No. 5. 19. The following pleadings are also attached: (

a) Amended Statement of Claim in Action No. 0303 15282 -Agreed Exhibit No. 6 (

b) Statement of Defence to Counterclaim in Action No. 0303 15282 - Agreed Exhibit No. 7 (

c) Selected materials re: Stay Application - Agreed Exhibit No. 8 (

d) Originating Notice in Action No. 0803 00515 -Agreed Exhibit No. 9 [ 2 ] The Statement of Claim initiating this action was issued on October 12, 2006. The two-year limitation period began in October of 2004 prior to the Defendant filing a Notice of Ceasing to Act in the last week of that month. In this application, the Defendant (Applicant) has the onus of establishing the limitation defence. It is settled law that the limitation period begins to run when a plaintiff knows, or ought to know, that the defendant has inflicted an injury upon him which warrants bringing a proceeding. When a plaintiff

ought to have known depends upon when he knew, or had the means of knowing of the existence of facts that would support a claim for relief. The limitation period certainly starts when the identification of the wrongdoer, injury and damages are known to the individual desiring to start the action. [ 3 ] An examination of the Statement of Claim reveals the injury complained of. The Plaintiffs are asking for compensation for business losses incurred by a combination gas station, car wash and convenience store as a result of inadequate legal work performed by the Defendant.

A clause-by-clause analysis of the Statement of Claim reveals when knowledge of the three components necessary to take action became known to the Plaintiffs. [ 4 ] The business was purchased in early 1998. It began operating in the month of June of that year. Right from the beginning, the operation of this business has been a terrible experience for the Plaintiffs. It has brought the Plaintiffs nothing but grief and has been the furthest thing from a rewarding endeavour. The business ceased operation on March 23, 2004.

The basic claim of the Plaintiffs against the Defendant is for business losses suffered prior to the date of cessation. [ 5 ] The Plaintiffs allege that this business ultimately failed because the Defendant failed to adequately protect their interests because of deficient legal advice. Paragraphs 5 to 22 inclusive set out the litany of complaints brought by the Plaintiffs in relation to legal services provided by the Defendant. They begin with the complaint that the Defendant failed to properly review the environmental history of the site upon which the business was located before the sale was completed.

It ends with the premises being abandoned on March 23, 2004. [ 6 ] Between the date of purchase in 1998 and the cessation of the operation in March of 2004, the Plaintiffs complain about a number of specific failures on the part of the Defendant to properly protect their substantial investment in the business. The Plaintiffs claim that instructions were given verbally and in writing that were not implemented by the Defendant to their detriment. [ 7 ] Specific instances are provided in the Statement of Claim. The Plaintiffs outline deficiencies in the conduct of the Defendant in relation to a number of matters.

They allege that he failed to ensure that the corporate plaintiff received the proper underground storage tank certificate required in order to carry on business. They allege that this led to gasoline supplies being cut off temporarily and eventually permanently in relation to one type of product. They allege that the Defendant failed to sue two other lawyers who assisted the Plaintiffs in dealing with certain business problems when he said he would. They allege that the Defendant’s handling of the landlord’s attempt to evict the Plaintiffs from the business premises was abysmal.

The Plaintiffs claim that the cumulative effect of the inadequate legal representation led to the failure of the business. [ 8 ] A review of the Statement of Claim and the Agreed Statement of Facts reveals that all of the information relied upon in the Statement of Claim issued October 12, 2006, was known to the Plaintiffs no later than the end of March of the year 2004. A reading of the Statement of Claim indicates that all of the information necessary to file the Statement of Claim was in the possession of the Plaintiffs at the time the business premises were abandoned.

In fact, a counterclaim by 426 filed October 2, 2003, in relation to the landlord’s attempts to evict the Plaintiffs from the business premises refers to many of the business losses attributed to the alleged negligence of the Defendant. All of the information relied upon by the Plaintiffs was known to them by the early spring of 2004. It is obvious that the Defendant has established that this action was started outside the period in which it could be initiated. [ 9 ] The Plaintiffs argue that two factors save the action and decide the matter in their favour.

They argue that these factors extend the time in which to commence the claim so that when the Statement of Claim was issued on October 12, 2006, it was within the time contemplated by the Limitations Act . [ 10 ] Firstly, the Plaintiffs point to the fact that the Notice of Ceasing to Act prepared by the Defendant was filed on October 28, 2004. The Plaintiffs argue that the two-year period runs from this date. They claim that it is the cessation of the relationship between the parties that starts the clock running in relation to the time in which the action must be commenced.

No authority was provided for this proposition. [ 11 ] I reject it. There is no special category established by the statute or the case law that supports this position. When lawyers are sued, they are treated like any other potential defendants. Section 3(1) of the Limitations Act is very clear. [ 12 ] It states: 3(1) Subject to

section 11 , if a claimant does not seek a remedial order within (a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known, (

i) that the injury for which the claimant seeks a remedial order had occurred, (ii) that the injury was attributable to conduct of the defendant; and (iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding. . . . the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim. [ 13 ] The filing of the Notice of Ceasing to Act does not start the period in which the action must be commenced. [ 14 ] The Plaintiffs further argue that

Section 1(

h) and Section 5(1) and 5(2) provide them with relief and extend the period of time in which the claim should have been commenced.

Section 1(

h) defines a “person under disability”. The

Section states:

1(h) “person under disability” means (

i) a dependent adult or a person in respect of whom a certificate of incapacity is in effect pursuant to the Dependent Adults Act , or (ii) an adult who is unable to make reasonable judgments in respect of matters relating to a claim. [ 15 ]

Section 5 states: 5(1) The operation of the limitation periods provided by this Act is suspended during any period of time that the claimant is a person under disability.

(2) The claimant has the burden of proving that the operation of the limitation periods provided by this Act was suspended under this section. [ 16 ] The evidence mustered by the Plaintiffs in order to satisfy their burden that Mr. Khanna was a “person under disability” is scant. It is comprised of a handwritten note provided by a physician on July 27, 2004. The medical opinion in its entirety is less than 40 words. It states: Please be advised that Mr. Khanna is under my care for a major depression for which he is undergoing treatment.

I have recommended that he avoid any court proceedings for the next 6 months. [ 17 ] On October 23, 2013, the physician swore an affidavit that adopted the opinion expressed in 2004. He was examined on the affidavit. That examination revealed that there were no follow-up visits by Mr. Khanna in order to deal with the “major depression”. He did not re-attend for treatment. Any of the information provided to the physician came from Mr. Khanna. There were no other sources of information that confirmed his claim. [ 18 ] Mr.

Khanna attended the physician’s office specifically in order to obtain a note that would allow him to ask for an adjournment in relation to ongoing litigation. The physician recalled that this explanation was given to him when the request for the note was made. Once the note was obtained, that ended the inquiry of the physician. He did not recall any follow-up visits made by Mr. Khanna in order to deal with the major depression referred to in the note. No medication was prescribed. No counselling was recommended.

The production of the note ended the matter. [ 19 ] A self-serving note requested in order to adjourn a court application that refers generically to an alleged difficulty falls far short of the standard of proof required to establish that Mr. Khanna was an adult who was unable to make reasonable judgments in respect to matters relating to a claim.

He has failed to establish that the Limitations Act was suspended for any period of time based upon the fact that he was a person under disability. [ 20 ] The Plaintiffs have failed to establish an evidentiary basis that would suspend the operation of the statutory limitation period. [ 21 ] In conclusion, this action is statute barred. It was commenced outside the period allowed for bringing such an action. Heard on the 28 th day of November, 2014. Dated at the City of Edmonton, Alberta this 9 th day of December, 2014. Sterling M. Sanderman J.C.Q.B.A. Appearances: Robert A. Speidel, Robert A.

Speidel Professional Corporation for the Plaintiffs Damian Shepherd, Chatwin LLP

for the Defendant