Padget Estate (Re), 2014 ABQB 750

Court of Queen’s Bench of Alberta Citation: Padget Estate (Re), 2014 ABQB 750 Date: 20141208 Docket: 1303 07147 Registry: Edmonton Between: Donald Paget, Co-Executor and Co-Trustee of the Estate of Ronald Padget, Deceased Plaintiff / Applicant - and - Stewart Padget, Co-Executor and Co-Trustee of the Estate of Ronald Padget, Deceased and Penelope Beardsley Defendants / Respondents _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice S.J. Greckol _______________________________________________________ I.

Introduction [ 1 ] The Plaintiff, Donald Padget, is a co-executor and co-trustee of the estate of his father, Ronald George Padget, with his brother, the Defendant Stewart Padget. The Defendant Penelope Beardsley is the former wife of Stewart. Ronald Padget passed away on May 17, 2011. Stewart, Donald, and their sister Susan are equal residuary beneficiaries of the estate of their father. [ 2 ] Donald has filed a statement of claim alleging Stewart and Penelope wrongfully took the father’s money prior to his death.

The central allegation is that a cheque for $4000 was written in favour of Penelope on May 5, 2011, shortly before Ronald’s death. A document written by Penelope and purporting to account for the monies is attached to Donald’s affidavit filed October 3, 2014 in support of this application. A dispute over this sum, as well as another cheque for $1000, is at the heart of the lawsuit.

[ 3 ] Donald did not serve the statement of claim on Penelope within a year of filing as required by the Alberta Rules of Court . He applied to the Master and was granted an extension of three months to serve her. The Defendants appealed that ruling successfully before me. Donald now applies under Rule 9.13 for a variation or change of that decision on the basis that an error was made in applying Rule 3.27 rather than Rule 3.26 in my review of the Master’s decision. II. Facts [ 4 ] Donald filed the statement of claim on May 17, 2013.

After receiving service on January 14, 2014, the Defendant Stewart filed a statement of defence on February 14, 2014. The one year allowed for service of the statement of claim expired on or about May 20, 2014. As that date approached, the Defendant Penelope had not yet been served. Donald brought application to extend the time permitted to serve Penelope.

Two affidavits were filed in support of the application to extend time: one sworn by a process server swearing that he made unsuccessful efforts to serve Penelope on May 13, 2014; the second sworn by Donald swearing that inquiries at her place of work revealed she was expected to be at a conference in Canmore from at least May 13 to May 26, 2014. [ 5 ] On May 15, 2014, the Master granted an order extending time for service of the statement of claim by three months. [ 6 ] On June 3, 2014, counsel for Penelope appealed the Master’s order. The matter came before me in regular chambers on June 16, 2014.

The Clerk’s notes reveal that the application was the 64th on the justice chambers list that day; the application was up at 12:45 p.m. and counsel were permitted to proceed to advocate their cases until 2:10 p.m. when special chambers matters began, since the parties could not obtain a date in special chambers until December 2014. [ 7 ] No transcript of those proceedings has been provided; suffice to say I allowed the appeal because the test for granting an extension of time under Rule 3.27 was not satisfied.

This case demonstrates the risks of accommodating counsel advancing a special chambers application in regular justice chambers, though we are often called upon to do so due to the length of time it would take to obtain a special chambers application. [ 8 ] Following the hearing, counsel for Penelope circulated a proposed judgment reflecting the decision. Donald Padget apparently let her know he had a dispute with the order. She wrote on June 24, 2014 that as she had not heard back with respect to the proposed order, she would seek signing and entry of the judgment without consent.

Later that day, he wrote a letter to the Court, copied to counsel, indicating he intended to bring an application under Rule 9.13 to resolve his issues with the order and asking that I refrain from signing or entering the order pending the application. [ 9 ] The application to vary the judgement under Rule 9.13 was not filed until October 3, 2014, though in fairness to Donald, the vacation period intervened accounting for some of the delay. [ 10 ] Donald Padget argues that Rule 3.26 applied rather than Rule 3.27, since the application to extend time was made within a year of filing the statement of claim.

He argues that the threshold for an application under Rule 3.26 is low, while that under Rule 3.27 is higher, as it is intended for applications made after the year for service has passed and the statement of claim has expired. Donald filed extensive materials to persuade me that my decision was wrong and must be varied to uphold the Master’s decision. [ 11 ] The Defendants in the underlying action, Respondents Stewart and Penelope, defend my decision to allow the appeal of the Master’s order and resist Donald Padget’s application to vary my decision. III.

Legislation [ 12 ] The Alberta Rules of Court Rule 9.13 sets out the authority of the Court to deal with an application to set aside a judgment or order: 9.13 At any time before a judgement or order is entered, the Court may (

a) vary the judgment or order, or (

b) on application, and if the Court is satisfied there is good reason to do so, hear more evidence and change or modify its judgment or order or reasons for it. 9.5(1) Subject to subrule (2), every judgement and every order is entered by filing it with the court clerk, who must make a note in the Court file of the entry and the date of entry. ... [ 13 ] Applications to extend time for service of a Statement of Claim are governed by Rules 3.26 and 3.27: 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 [Variation of time periods] 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 [Variation of time periods] does not apply unless different or new circumstances. [ 14 ] The interpretative principals for the Rules are set out in Rule 1.2. Purpose and intention of these rules 1.2(1) The purpose of these rules is to provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost-effective way.

(2) In particular, these rules are intended to be used (

a) to identify the real issues in dispute, (

b) to facilitate the quickest means of resolving a claim at the least expense, (

c) to encourage the parties to resolve the claim themselves, by agreement, with or without assistance, as early in the process as practicable, (

d) to oblige the parties to communicate honestly, openly and in a timely way, and (

e) to provide an effective, efficient and credible system of remedies and sanctions to enforce these rules and orders and judgments.

(3) To achieve the purpose and intention of these rules the parties must, jointly and individually during an action, (

a) identify or make an application to identify the real issues in dispute and facilitate the quickest means of resolving the claim at the least expense, (

b) periodically evaluate dispute resolution process alternatives to a full trial, with or without assistance from the Court, (

c) refrain from filing applications or taking proceedings that do not further the purpose and intention of these rules, and (

d) when using publicly funded Court resources, use them effectively.

(4) The intention of these rules is that the Court, when exercising a discretion to grant a remedy or impose a sanction, will grant or impose a remedy or sanction proportional to the reason for granting or imposing it. IV. Issues [ 15 ] The issue is whether I should exercise my discretion under Rule 9.13 to vary the decision of June 16, 2014, because there is good reason to do so; an error in reviewing the Master’s order by reference to the applicable principles under Rule 3.27 rather than those under Rule 3.26. V.

Analysis Rule 9.13 [ 16 ] In Paniccia Estate v Toal , 2012 ABQB 11 , 521 AR 73, Shelley J identified the benefits of Rule 9.13 and noted that the Rule gives judges broad authority to vary judgments before entry. The judgment at issue here has not yet been entered. [ 17 ] In Paniccia , Shelley J considered whether to revisit a paragraph in her reasons for judgment. She determined the paragraph contained an incorrect statement of the law and used her authority under Rule 9.13(

a) to vary it. She noted that Rule 9.13 gives a broad authority to vary a judgment that did not exist under the old Rules . She remarked on the benefits of Rule 9.13(a), at para 39, and concluded:

Here I act on my own authority, which I conclude is only restricted by the purpose of the Rules , as expressed in Rule 1.2. If I conclude that paragraph 47 is incorrect, and that revision of that part of the Trial Decision meets the objectives of the Rules , then I am permitted, if not obliged, to revise the Trial Decision accordingly. [ 18 ] In Lewis Estates Communities Inc v Brownlee LLP , 2013 ABQB 731 , [2013] AJ No 1394, Brown J (as he then was) considered a Rule 9.13(

a) application. At paras 22-26, he explored the differences between Rule 9.13(

a) and (

b) and whether there is a difference between the “vary” of Rule 9.13(

a) and the “change or modify” of Rule 9.13(b), as he was concerned that Rule 9.13(

b) narrows the scope of what can be done under Rule 9.13(a). Without resolving this issue, Brown J decided that even when an applicant meets the threshold, judges reserve discretion to choose whether a judgment should be varied (at paras 29-33). To do so could undermine finality and certainty, and the Rule 1.2 objectives of fairness and cost effectiveness could just as easily weigh against granting a Rule 9.13(

a) application (at para 32). Rule 9.13(

a) should not be used to seek a reconsideration of a judgment since the only remedy for that lies in an appeal (at para 33). [ 19 ] In concluding that the applicant had not supplied sufficiently compelling reasons for him to exercise his discretion to vary under Rule 9.13(a), Brown J set a high threshold for Rule 9.13(

a) applications, at para 34: [T]he evidence and law put before the Court ought to make an applicant’s case so compelling that the likelihood that it has correctly identified an error is very high. This is, I note, essentially the test for obtaining

summary judgment. [ 20 ] Based on these authorities, if I am satisfied that the Applicant Donald Padget has demonstrated the likelihood of error is very high, I have the authority under Rule 9.13 to vary the decision that I made. The jurisprudence is clear that the threshold to attain a variation of a decision is high and this power should be used sparingly.

In the final analysis, such applications will be successful if a variation is necessary to observe the law and therefore, do justice between the litigants as Rule 1.2 requires. [ 21 ] On all issues, the standard of review on an appeal from a Master’s decision is correctness: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 at para 30 , 524 AR 382. Therefore, the issue on appeal was whether the Master was correct to grant the Plaintiff a three-month extension to serve of the statement of claim on Penelope Beardsley, under Rule 3.26. A.

Does an application to extend time to serve a statement of claim brought under Rule 3.26 before expiry of one year from the date of filing, involve Rule 3.27 criteria? [ 22 ] In my view, there is a high likelihood that the Applicant’s view of Rules 3.26 and 3.27 is correct. First, a plain reading of Rules 3.26 and 3.27 reveals a two-tier scheme that depends on the timing of the application.

Second, with one exception, the cases cited by the counsel for the Respondents do not provide support for the proposition that applications for extension of time for service brought within the one year time frame are subject to the criteria of Rule 3.27. [ 23 ] A plain reading of Rule 3.26(1) indicates that a plaintiff must serve a statement of claim on a defendant within one year from the date of filing “unless the Court, on application filed before the one year time limit expires , grants an extension of time for service” (emphasis added). [ 24 ] Rule 3.26(2) states that “[t]he extension for service under this rule must not exceed 3 months.” In my opinion, the reference to “under this rule” indicates that the extension referred to in Rule 3.26(1) may be granted under Rule 3.26 alone when a plaintiff applies “before the one year time limit expires.” In other words, Rule 3.26 is self-contained. [ 25 ] Whereas Rule 3.26 contemplates extensions “before the one year time limit expires,” Rule 3.27 provides that “[t]he Court may, at any time , grant an extension of time for service of a statement of claim” (emphasis added).

Therefore, while Rule 3.26 extensions are limited to applications made before the expiry of one year, Rule 3.27 applications may be granted at any time. [ 26 ] The threshold is higher under Rule 3.27: the guidelines to be used are more elaborate as canvassed by Read J in Sanderson Estate v Potter , 2012 ABQB 593 , 550 AR 33 at paras 27 to 32 . In that case, the plaintiff noted the defendant in default when no statement of defence was filed because the statement of claim was served on the wrong person.

The statement of claim was filed May 8, 2012 and the Plaintiff’s counsel brought application to extend time on September 24, 2013, relying on the allowance for extraordinary circumstances under Rule 3.27 (1). [ 27 ] Counsel for Penelope and Stewart relied on Sanderson Estate . Read J found that Rule 3.27 lists the occasions for extension in situations formerly covered by old Rule 11(9) (at para 27) which specifically provided for extension applications brought before expiry.

At the original hearing of the appeal from the Master’s decision before me, Counsel relied upon this indirect support for the proposition that extensions under Rule 3.26 must satisfy the guidelines under Rule 3.27. [ 28 ] The Applicant, Donald Padget submits that Sanderson Estate is irrelevant as it does not concern the issue of Rule 3.26 extensions. [ 29 ] The cases are generally consistent with the idea that Rule 3.26 is intended for applications brought within one year of the claim being filed and that the terms of Rule 3.27 are intended for applications brought any time after the one year has elapsed.

For instance, in obiter in Marcil v Ellefson , 2014 ABCA 169 , [2014] AJ No 527, aff’g 2014 ABQB 18 , the Court of Appeal implied that there are two different thresholds depending on whether the application is made before or after expiry: “[h]ad counsel applied to extend the Amended Statement of Claim prior to expiry, that application would probably have succeeded” (at para 33). [ 30 ] This

interpretation reflects the Queen’s Bench decision Marcil where Browne J wrote, “[t]he guidelines governing renewal or extension of the Statement of Claim outside the one year life of a claim under Rule 3.27(1) are stricter than those applicable to a Rule 3.26 extension” (at para 35). In Wardill v Peebles , 2012 ABQB 303 at para 7 , 75 Alta LR (5th) 182, Master Smart cites an Alberta Law Reform Institute discussion on the two-part approach for extending time for service found in Rules 3.26 and 3.27.

[ 31 ] The cases dealing with Rule 3.27 are consistent with the Marcil approach. In Brousseau v Janz Estate , 2014 ABQB 136 , 2 Alta LR (6th) 311, there is a useful history of Rule 3.27, but no discussion of an application to extend under Rule 3.26 because, in that case, there was no service until after expiry.

In McGowa v Lang , 2014 ABQB 403 , [2014] AJ No 697, the plaintiff did not serve the defendant until 68 days after expiry and, therefore, the statement of claim could only have been extended under Rule 3.27; the issue of the relationship between Rules 3.26 and 3.27 did not arise. [ 32 ] In my view, the weight of authority indicates that extensions brought within a year of filing the statement of claim are dealt with under Rule 3.26 and do not engage the considerations applied under Rule 3.27. I am satisfied that the Applicant has demonstrated that the likelihood of error in my decision is very high.

Therefore, I have the authority under Rule 9.13 to vary the decision. It is then incumbent upon me to consider the appeal from the Master’s decision to extend time with that understanding of the law in mind. B.

What is the threshold for granting an extension under Rule 3.26 and was it met? [ 33 ] The decision in Wardill uses the following principles for Rule 3.26 extensions (paras 9-10): a. there should be some evidence showing attempts to serve; b. ideally, there should be some explanation for why the defendant has not been served; c. the purpose of renewal cannot be to delay ( Franssen v Thule Towing Systems LLC , 2012 ABQB 657 , 84 Alta LR (5th) 316, also requires sufficient information to know that an extension would not constitute a delay tactic); and d. there should be no prejudice arising to the defendant. [ 34 ] In this case, there was evidence showing attempts to serve Penelope.

There was some explanation for why she was not served earlier: Donald wanted to await the marital separation affecting the Defendants to see whether Stewart would come to his senses and support him on this issue. Also, Penelope was out of Edmonton attending a conference in Canmore as the time for expiration of the statement of claim approached. Donald says he also wanted to avoid the cost and possible embarrassment to Penelope of serving her at the conference. [ 35 ] The next question is whether the purpose for the renewal was delay. There is significant delay in this probate matter.

Ronald Padget died May 17, 2011 and the statement of claim against Stewart and Penelope was not filed until two years later on May 17, 2013, the time frame when limitation periods become an issue. The attempt to serve Penelope, too, was made as the last possible day approached, almost a year later, May 13, 2014 – now three years after the death of the father. I note that Donald still did not serve the statement of claim on Penelope even after the initial extension granted by the Master. [ 36 ] Probate of Ronald Padget’s estate remains in limbo.

It is valued at about $400,000; only $100,000 has been disbursed while this litigation grinds on. It is my view that the lawsuit brought by Donald Padget against Stewart and Penelope has been pursued in a dilatory fashion. [ 37 ] The Defendant Stewart and the third beneficiary, Susan, are prejudiced by Donald’s dilatory approach to the prosecution of the lawsuit in that they have not yet, and will not for some time, receive their share of the estate.

The Defendants Stewart and Penelope are prejudiced because they cannot be expected to remember all of the relevant and picayune details of the impugned transactions that occurred over three years ago. However, the type of prejudice that must be shown to defeat an application for extension of time brought within the year is prejudice caused by the three month extension itself.

Such prejudice has not been shown. [ 38 ] The objective of the Rules , as stated under Rule 1.2, are to facilitate the quickest means of resolving a claim at the least expense and to encourage the parties to resolve the claim themselves, by agreement, with or without assistance, as early in the process as practicable. [ 39 ] At the hearing, I proposed that the bulk of the estate could be disbursed pending the conclusion of the litigation, holding back enough to satisfy any judgment.

Donald Padget responded by reliance on Carling Development Inc. v Aurora River Inc , 2005 ABCA 267 , 371 AR 152, which involved the delay of seven years in winding up an estate due to outstanding litigation between two sisters about estate assets. In that case, the chambers judge declined the application to change the executor but ordered, of her own motion, that the estate be wound up “subject to the litigation.” Slatter JA for the Court wrote, at para 7 and 9: On the other hand, we are unable to agree that the order that the estate be wound up “subject to the litigation” is practical.

Until the litigation is resolved, it is impossible to know what is in the estate, and until the contents of the estate are finalized, it is impossible to distribute it. ... Even in a case where the appropriate remedy might be comparatively modest, or comparatively uneconomical to litigate, that is a decision for the plaintiff to make, not the court. If a party suffers a wrong and is entitled to any remedy in law or equity (beyond the entirely trivial), he is entitled to sue and get his remedy. Sometimes nominal damages or a declaration of breach are appropriate.

It would be a rare case where a complete breach of trust conditions would be trivial, whether or not loss resulted. ... [ 40 ] Therefore, I need not be overly troubled by the relatively small amount at stake in the law suit, the slow train Donald Padget is taking to his destination, and the strain on resources that will be occasioned en route . [ 41 ] I am also mindful of the observation by Conrad JA in Oberg v Foothills , 1999 ABCA 76 , 232 AR 263 at para 16 , that “[t]here is no need to serve earlier than the one-year limitation, so the reasons need not address why it was not served earlier.” In Wardill , the Master interpreted Oberg such that affidavit evidence showing an attempt to serve before the one-year expiry was sufficient to show that the purpose of the extension was not to cause delay.

[ 42 ] Despite my views of Donald’s dilatory approach to this litigation, the relatively modest sum involved, and the potential prejudice to the Defendants in trying to recall precisely where the money was spent, I am constrained by the low threshold required to warrant an extension of time under Rule 3.26 and the observations of the Courts in Carling and Oberg . The desire to achieve practical results in an expeditious manner must give way to the right of the Plaintiff Donald Padget to have his day in court. C.

Does the law on Rule 9.13 support variance? [ 43 ] An application under Rule 9.13 requires that the Court be satisfied there is a compelling reason to review its decision; a very high likelihood that the Applicant has correctly identified an error. I am satisfied that I should exercise my authority under Rule 9.13 because there is a high likelihood of error in review of the Master’s decision to extend time to serve the statement of claim according to the terms of Rule 3.27 when the application was brought within a year of filing the statement of claim.

The Master correctly extended time under the terms of Rule 3.26. [ 44 ] Therefore, under Rule 9.13, I vary my decision and dismiss the appeal brought by Stewart and Penelope. VI. Conclusion [ 45 ] Once again, I urge the parties to find a method of alternative dispute resolution since proceeds of Ronald’s life efforts, intended for his three children, will be spent in this fight. [ 46 ] Donald Padget argues he should have costs for the appeal argued in June, and of this application to vary my decision under Rule 9.13, argued in November.

In Hogarth v Rocky Mountain Slate Inc , 2013 ABCA 116 , 87 Alta LR (5th) 108, the Court writes that “a self-represented litigant should generally not receive costs unless that would serve one of the policy reasons for which costs awards are made” (at para 9). There is no policy basis for an award of costs in favour of Donald in this case; his is counsel in his own cause. [ 47 ] The application to vary my decision under Rule 9.13 is granted and the appeal from the Master’s order to extend time, dismissed. Heard on the 26 th day of November, 2014.

Dated at the City of Edmonton, Alberta this 5 th day of December, 2014. S.J. Greckol J.C.Q.B.A. Appearances: Donald Padget, for the himself as Plaintiff/Applicant Francois Belzil for the Defendant/Respondent Stewart Padget Eliza Maynes For the Defendant /Respondent Penelope Beardsley