Kulusic v Carpan, 2016 ABQB 129

Court of Queen ’ s Bench of Alberta Citation: Kulusic v Carpan, 2016 ABQB 129 Date: 20160303 Docket: 1203 07241 Registry: Edmonton Between: Milka Kulusic Plaintiff - and - Michael Carpan, Maria Golub, Brian Edward McConnell, B.M.C. Mortgage & Investments Ltd., Craig Edward Finnman operating as RE/MAX Advantage, Elite Ownership Group Ltd. operating as RE/MAX Elite Wayne R. Lovatt and Lovatt LLP Defendants _______________________________________________________ Reasons for Judgment of L.A. Smart , Master in Chambers _______________________________________________________ Relief Sought [ 1 ] The Defendants Wayne R. Lovatt and Lovatt LLP (collectively Lovatt) apply for

summary dismissal of the claim by Milka Kulusic (Kulusic) on the basis that it was brought outside the time permitted by the Limitations Act, RSA 2000 c. L-12. Back g round [ 2 ] Kulusic is an 84-year-old widow of Croatian origin with a grade four education. She can read, write, and speak some English, but not very well. She met the Defendant Golub who is also Croatian about 40 years ago and they became friends. Golub introduced her son, the Defendant Michael Carpan to Kulusic in March 2009 who told her about a government program that would pay for home renovations to her roof, window and electricity.

On September 8, 2009, Kulusic along with Golub and Carpan attended an office represented to her by them as a government office where she was to execute documents for the program. A draft for $59,191.55 was received and negotiated by Kulusic. From that amount and on the same day, $35,000 was paid by Kulusic to Carpan. Subsequently,

there were numerous attendances by Golub and Carpan at Kulusic’s home to execute further documents represented as being required by the government program and additional cash payments were given to Carpan. [ 3 ] The documentation signed for the “government program” was a mortgage arranged by Carpan from a Mr. Finnman through a mortgage broker, the Defendant B.M.C Mortgage and Investments Ltd (BMC). Instructions for preparation and registration of the mortgage were given by BMC to Lovatt. The “government office” was in fact Lovatt’s office. The documents were executed before Mr. Lovatt’s assistant.

A reporting letter dated September 10, 2009 containing the mortgage proceeds was prepared and was “To Be Picked Up”. That report letter contained copies of the documents signed including a pre-authorized debit for payments through the Bank of Montreal. The letter also set out the funds received under the mortgage and how they were distributed that included an amount for interest adjustment.

Oddly the report letter says that the file will be closed as soon as the 12 postdated cheques for the first year are received. [ 4 ] By correspondence dated October 6, 2009, Lovatt reported to Finnan (sic) indicating, inter alia , that 13 cheques were enclosed being 12 postdated cheques and one for interest adjustment. The report attached to the correspondence only refers to 12 postdated cheques. [ 5 ] Kulusic says that Carpan had redirected mail and otherwise misled her as to the true nature of the transaction. Carpan contracted with Alartco Industries Ltd to complete renovations on behalf of Kulusic.

Invoices were not paid by Carpan for the work completed and a Civil Claim was issued as against Kulusic on September 1, 2010. As no defence was filed a judgment was entered as against her on November 29, 2010, for the amount of $16,678.39. Kulusic says she discovered in May, 2010 that Carpan and Golub had received the funds from her as a consequence of their fraudulent conduct. Furthermore, she had no knowledge that the documentation she executed included a mortgage in favour of Mr. Finnman until September 2012 when her house went into foreclosure.

It was not until January 2013 when her lawyer at the time received a copy of the mortgage that she discovered Lovatt had acted on the mortgage transaction. A Statement of Claim against Carpan and Golub was issued on May 11, 2012, in relation to their fraudulent conduct and the obtaining of loans. On May 9, 2013, the Statement of Claim was amended to add Lovatt as a Defendant for his alleged negligence.

Finally, Kulusic says that she had no way of finding out the information that would’ve indicated that a lawyer had breached a professional duty of care in relation to the mortgage transaction and did not know that the breach was, in particular, attributable to Lovatt’s conduct before May 2, 2011. Discussion [ 6 ] The first issue that must be determined is whether or not the claim added against Lovatt related to the conduct, transaction or events described in the original pleading so as to preserve it under section 6(4) of the Limitations Act . Or, alternatively, under

section 3 of the Limitations Act , did Kulusic seek a remedial order within 2 years after the date on which she first knew or ought to have known that she had been injured by Lovatt and that the injury warranted bringing a proceeding? [ 7 ] Lovatt argues that the claim for negligence against him is not sufficiently related to the conduct, transaction or events described in the original pleading. Kulusic says that the principles for

interpretation of these requirements are established in Calgary Mack Sales Ltd v Shah , 2005 ABCA 304 , that is, in particular, “related to” has a very broad meaning. In Calgary Mack an action had been brought against Shah and his insurer. Following denial of coverage by the insurer, Shah sought to add its insurance broker to the proceedings by way of Third Party. There was no reference in the original pleading to the duties of an insurance agent or any breach thereof. Notwithstanding, the amendment adding the insurance agent was allowed.

Lovatt refers to Barker v Budget Rent-A-Car of Edmonton Ltd, 2012 ABCA 76 as contra authority to Calgary Mack. Poelman J in McDonnell v Csaki, 2014 ABQB 452 noted that Barker did not refer to Calgary Mack nor he concludes does it purport to establish a principle for the

interpretation and application of

section 6 as was done in Calgary Mack. In my view, based on the guidance of Calgary Mack , the role of Lovatt and his potential liability for negligence arises out and is therefore related to the alleged course of fraudulent conduct of Carpan and Golub. No argument was made by Lovatt that he would be prejudiced in maintaining a defence on the merits. [ 8 ] Having reached the above conclusion it is unnecessary for me to decide whether or not

section 3 of the Limitations Act applies. Much of the argument in that regard centered around whether or not Kulusic ought to have known that she had been injured by Lovatt. Counsel for Lovatt made compelling arguments on that issue. Nonetheless, based on the whole of the record and having particular regard to the active concealment of the true nature of the transaction by Carpan and Golub, it is doubtful I would be able to summarily make a fair and just determination of the issue. Conclusion [ 9 ] The application to summarily dismiss this action against Lovatt is dismissed. Kulusic shall have her costs of the application. Dated at the City of Edmonton, Alberta this 3 rd day of March, 2016.

L.A. Smart M.C.C.Q.B.A. Appearances: Damian Shepherd for the Applicant Martin Stoyanov for the Respondent