Berlinic v Peace Hills General Insurance Company, 2016 ABQB 104

Court of Queen’s Bench of Alberta Citation: Berlinic v Peace Hills General Insurance Company, 2016 ABQB 104 Date: 20160224 Docket: 0603 13898 Registry: Edmonton Between: Mitch Berlinic and Lez Berlinic Plaintiffs - and - Peace Hills General Insurance Company, Drayden Insurance Ltd., New West AdjustersLtd., John Doe and ABC Inc. Defendants _______________________________________________________ Reasons for Judgment of W.S. Schlosser, Master in Chambers _______________________________________________________ [1] This is the Defendants’ application to strike for delay.

Autorities Cited: Alberta Rules of Court, Alta Reg 124/2010 Wilson v Board of Trustees of Aspen View Regional School, 2014 ABQB 741 Nash v Snow, 2014 ABQB 355 , [2014] AJ No 625 Huerto v Canniff, [2014] AJ No 938 Morasch v Alberta, 2014 ABCA 24 Pomedli v Allied Machinists Limited, 2015 ABQB 146

Donnelly v Brick Warehouse Corp, 2013 ABQB 621 Lamont Highway Service Ltd v Scraba, 1999 ABQB 1057 Steparyk v Alberta, 2014 ABQB 367 Brar v Pawa, 2010 ABQB 779 By the Court: Chorney v Thompson, 2014 ABQB 410 Phillips v Whyew, 2014 ABQB 495, aff’d 2015 ABQB 365 General Principles of Canadian Insurance Law, B Billingsly 1st Edition, LexisNexis pg 127 et seq Fine's Flowers Ltd v General Accident Assurance Co of Canada, (1977) (ON CA), 17 OR (2d) 529 (ONCA) Fletcher v.

Manitoba Public Insurance Co, (SCC), [1990] 3 SCR 191 Weatherill (Estate) v Weatherill, 2003 ABQB 69 Canadian Natural Resources Ltd v Arcelormittal Tubular Products Roman S.A., 2013 ABQB 439 Dow Chemical Canada ULC v Nova Chemicals Corp, 2014 ABCA 244 Talisman Energy Inc v Flo-Dynamics Systems Inc, 2015 ABQB 100 Hepworth v Canadian Equestrian Federation, 2000 ABCA 327Fletcher Alexander v Sun Life Assurance Co of Canada, 2016 ABCA 2 Treitel, The Law of Contract, 6th Edition, pg 16 et seq W.

L Prosser, The Law of Torts (4th Edition, 1971) 205 Salmond and Heuston on the Law of Torts, 18th Edition at pg 18, et seq Facts [2] The Berlinic’s house burned to the ground November 5, 2005. The limit of their insurance policy ($506,000) was paid byFebruary 2007. In the meantime, the Berlinic’s had sued (November 2006), seeking damages on the basis that they were underinsured. [3] About five years after the lawsuit was started, one of the Defendants brought an application to compel answers to thePlaintiffs’ undertakings given at Questioning. The application was returnable October 28, 2011.

A Consent Order was obtained onNovember 1, 2011, requiring that Mr. Berlinic provide answers by November 28, 2011. [4] Then, nothing happened in the action for nearly three years. As the 12th hour approached, the Berlinics took out anapplication, returnable one day before three years was up, requiring that the Defendants provide answers to undertakings that either hadnot been fully answered, or that had been refused or taken under advisement. The Plaintiffs also provided a Form 37 Request to Schedulea Trial Date.

Perhaps for good measure, they swore a Supplementary Affidavit of Records; though it merely listed documents thePlaintiffs had produced in answer to an undertaking in November 2011. [5] Defence Counsel were not available on the return date of the application, so the matter was adjourned sine die. But, for thepurposes of this application, time is frozen as at the day before the three years was up; November 27, 2014. Issues [6] There are two issues: 1. As at November 27, 2014, was the ‘drop dead period’ three, or, five years? 2.

If the application had gone ahead then, would it, or the other events of late November 2014, have advanced the actionsignificantly? Three or Five Years? [7] The Respondent argues that the events leading up to the coming into force of Rule 4.33, on November 1, 2013, areconfusing and that either the Rule should not be given retroactive effect, or that the period in question should be five years.

[ 8 ] There are many decided cases on what would appear to have been a relatively straight-forward bright-line rule. The history of this Rule is reviewed in Chorney and Philips (above). [ 9 ] Rule 4.33 plainly has retroactive effect. It applies to actions that were in existence when it came into force. The Rule came about after much consultation with the Bar.

The interplay between transitional Rule 15.4 (Rule 15.6) and Rule 4.33 is summarized in Philips and Chorney . [ 10 ] I acknowledge that there is a reference to a five year period in Madam Justice Crighton’s decision in Steparyk but, in my view, and, with respect, that remark appears in the context of inexcusable delay for the purposes of Rule 4.31. The remark was also made in the context of an application that applied (then) Transitional Rule 15.4. [ 11 ] The drop dead period after November 1, 2013, and the time period in force for the purposes of this application is three years.

The Rule has retroactive affect at least to the extent that it applies to this action. Has the action been significantly advanced?

i) New Events [ 12 ] In so far as the events undertaken by the Plaintiffs are concerned: 1. Applications do not advance an action unless they are heard and determined: ( Morasch ). 2. A request for a trial date is not a significant advance, unless a trial date is actually secured ( Morasch , Pomedli ). 3. A supplemental Affidavit of Records, simply listing additional documents already provided is usually (as here) just housekeeping and not a significant advance ( Donnelly , Huerto and Lamont ). ii) Undertaking Responses and the Application to Compel. [ 13 ] This leaves the sufficiency of undertaking responses.

The disputed questions are as follows: Craig Skowronski and Drayden Insurance: Undertaking #7 Question : Produce any company bulletins that mandate the use of the RCT [residential replacement cost calculator] or that it is acceptable to Peace Hills. Answer : Unable to locate any Peace Hills’ Bulletins regarding the RCT for the time frame referenced. Undertaking #8 Question : Produce the cost data from the MSB [Marshall, Swift and Boeckh, the software provider (not a party)] that goes into the RCT. Answer: The Information is no longer available in Drayden’s records.

Undertaking #9 Question : Produce the RCT manual or booklet from 2005, particularly from April 2005. Answer : Unable to locate the RCT manual or booklet from 2005. (emphasis added) [ 14 ] The issue for undertakings 7, 8 and 9 is whether Drayden Insurance had an obligation to obtain and produce the documents indicated in order to answer their undertakings properly. Al Dyck and New West Adjusters Ltd. Undertaking #2 To advise of any agreement that exists between Peace Hills and New West relative to their adjustment engagement. Answer: To my knowledge, there is no written contract with Peace Hills. (emphasis added)

Mr. Mowat for Peace Hills General Insurance Company Undertaking #13 Please produce all of the New West accounts. Answer : Copies of all accounts will be requested from New West. (emphasis added)

a) Drayden Insurance [ 15 ] Drayden’s disputed answers are about the production of records. I am mindful of the Court of Appeal’s recent admonition that the Court is first to look at relevance and materiality before ordering production: Alexander v Sun Life Assurance Company of Canada , 2016 ABCA 2 . As I see it, this issue should be approached as follows: [ 16 ] First, new Rule 5.2(1) and old Rule 186.1 are similar and the old cases are useful: Arcelormittal . [ 17 ] The starting point for determining relevance and materiality is the pleadings: Weatherill at paras 16-17 and Talisman Energy .

It is the pleadings that define the claims ‘properly brought forward by the parties in the proceedings’ and, therefore, the scope of the remedies available to them: ( Judicature Act, RSA 2000 CJ-2 s 8). But it is here that the simplicity seems to end. [ 18 ] Rule 5.2(1) provides: 5.2(1) For the purposes of this Part, a question, record or information is relevant and material only if the answer to the question, or the record or information, could reasonably be expected

a) to significantly help determine one or more of the issues raised in the pleadings, or

b) to ascertain evidence that could reasonably be expected to significantly help determine one or more of the issues raised in the pleadings. (emphasis added) The Rule puts a condition on relevance and materiality: it must (or must reasonably be expected to) ‘significantly help determine [an] issue raised in the pleadings’. [ 19 ] Relevance is said to relate primarily to the scope of the pleadings: materiality to the proof of facts ( Dow Chemical, para 17). ‘Issues’ are what the pleadings define and what the parties are to identify and narrow over the course of the lawsuit (eg Rule 1.2).

Many pleadings ignore this Rule and in their breadth and comprehensiveness make it virtually impossible to resist questioning or production on anything remotely related to the lawsuit. [ 20 ] In any lawsuit there are several layers of issues; starting with the facts in issue, and ending with legal causes of action that the facts pleaded give rise to. Elements of the cause of action may be questions of law, fact, or mixed fact and law. Pleadings allege facts. The facts alleged will sometimes give rise to more than one cause of action.

Unless it is caught by the technical Rules (eg 13.6, 13.7), a cause of action need not be specifically pleaded. [ 21 ] Some issues are cause-of-action dependant. For example, some causes of action are actionable per se and do not require proof of damages, (though, presumably, quantum would be in issue). The nature of the cause of action will also determine whether the issue is one of fact or law: for example, the existence of a duty in a negligence is primarily a question of law; the existence of a contractual duty is primarily a question of fact, as are the terms of a contract (Salmond, Prosser, Treitel).

Implied terms in contracts are questions of mixed fact and law (Treitel). The standard of conduct required to establish a breach of a duty in contract or in negligence is a question of fact for which expert evidence is admissible (Prosser). [ 22 ] It goes without saying that it is pointless to question regarding issues of law. That is for the Court and the decided cases but not for the witness. [ 23 ] If the information or evidence sought goes to the proof of a fact pleaded it is always relevant and material.

However, there is no point in tendering evidence for facts that are admitted, or issues that are not in dispute. [ 24 ] Disputes about the propriety of questions are rarely something as straightforward as proof of an alleged fact in issue. Often, the question is coloured by overriding issues of admissibility; such as whether there can be questioning that discloses extrinsic evidence intended to be used to interpret a contract. In most cases, it is a question of balancing the fairly wide scope usually given to the questioning ( Hepworth ) with ‘abusive and unnecessarily expensive discovery’; Weatherill .

The Starting Point to Identify the Issue in Dispute: [ 25 ] The cardinal rule is that if the dispute is not as simple as a fact in issue (or the proof of a fact in issue), identifying the issue in dispute should be the starting point for this type of application. Relevance, materiality and ‘significant assistance’ or, for that matter, primary and secondary burdens are not of much help until the issue is identified. In many cases the issue might not jump off the page. I note that in this case the Statement of Claim is 24 pages long and there are three very comprehensive defences.

[ 26 ] However, in this lawsuit the production issue is relatively straightforward. The Plaintiff says that the insurance coverage was too low. The Defendants say that even if it was, they did not breach their duty because they met the applicable standard of care by using an industry-standard method of calculation. [ 27 ] The RTC and the (then) software it employed are put directly in issue by the pleadings. If the Defendant wishes to rely on this defence then records have to be produced in the lawsuit.

It is not enough to give oral evidence under oath: there is an ongoing obligation to disclose and produce all relevant and material records. Production Issues [ 28 ] In this case, there is an overriding consideration. A party has an obligation only to produce records within their control (Rule 5.6). A review of the transcript shows that Drayden would not undertake to produce (or seek) records outside their possession. There is , further, no evidence that Drayden had any legal right to their co-defendant Peace Hills’ bulletins from the 2005 timeframe.

Those would be for Peace Hills to produce, if they had them. [ 29 ] There is similarly no evidence that Drayden has any legal right to the non-party MSB’s system that provided the basis of the calculation software for that time period. Accordingly, the Plaintiff’s remedy would be a Rule 5.13 application to compel production directly from MSB. [ 30 ] Even though the records sought in undertakings 7, 8 and 9 are relevant material, and would significantly help determine an issue raised by the pleadings, Drayden would not be ordered to produce them. This result would not have significantly advanced the action.

a) Al Dyck and New West Adjusters [ 31 ] Mr. Dyck’s response to undertaking #2 is not entirely responsive. The question was whether there was an agreement between Peace Hills and New West and the answer only indicates that there is no written contract. However, I do not see that a more fulsome response would make any difference. Mr. Dyck and New West adjusted the loss and the limits of the policy were paid out on this basis, it appears that even if there were a verbal agreement between the adjuster and the insurer, it is irrelevant or moot. It is not clear why any action remains against the adjuster.

b) Peace Hills Insurance [ 32 ] The answer to undertaking #13 was that accounts would be requested from New West. Although the answer provided does not show it, the accounts had already been produced in Peace Hills’ Affidavit of Records in 2007. That these were the only invoices was confirmed by New West answer to undertaking #3 which was provided in 2011. So the answer is already there. Ordering Peace Hills to put it on record would only have been a formality and would not have significantly advanced the action in any way.

Disposition [ 33 ] This case illustrates the difficulty of trying unilaterally to revive a long-dormant action. It was a valiant attempt. But if the application to compel had gone ahead in November of 2014, the result would not have significantly advanced the action. [ 34 ] The action has not been advanced in the time permitted by the Rules . In these circumstances it is not within the Court’s discretion to allow the action to continue (Rule 4.33). The action is dismissed for delay. Heard on the 30 th day of November, 2015. Dated at the City of Edmonton, Alberta this 24 th day of February, 2016. W.S.

Schlosser M.C.C.Q.B.A. Appearances:

Christopher J. Skrobot Jomha Skrobot LLP for the Plaintiffs Anne L. Kirker, Q.C. Norton Rose Fulbright Canada LLP for the Defendant, Peace Hills General Insurance Company Debra G. Woodske Chomicki Baril Mah LLP for the Defendant, Drayden Insurance Ltd. James L. Hutson Dean Duckett Carlson LLP for the Defendant, New West Adjusters Ltd.