Rough v Cold Lake First Nations, 2016 ABQB 153

Court of Queen ’ s Bench of Alberta Citation: Rough v Cold Lake First Nations, 2016 ABQB 153 Date: 20160316 Docket: 1314 00302 Registry: St. Paul Between: Julie Rough Respondent - and - Cold Lake First Nations Appellant _______________________________________________________ Memorandum of Oral Decision of the Honourable Mr. Justice Eric F. Macklin _______________________________________________________ I. Introduction

[ 1 ] On September 24, 2013, the Plaintiff, Julie Rough, issued a Statement of Claim against the Defendant, Cold Lake First Nations (“CLFN”). It was purportedly served on the Defendant on October 22, 2013. The Defendant was noted in default on November 1, 2013. An Application for

Summary Judgment was filed on behalf of the Plaintiff on November 27, 2014. The

Summary Judgment Application was delivered to CLFN on December 15, 2014. [ 2 ] Upon receiving the

Summary Judgment Application on December 15, 2014, the Defendant contacted its counsel who, in turn, contacted counsel for the Plaintiff and advised that CLFN intended to defend the Plaintiff’s claim. [ 3 ] The Defendant says that it was unaware of the Statement of Claim and Noting in Default until it was served with the

Summary Judgment Application on December 15, 2014. [ 4 ] The Defendant brought an application on August 24, 2015 before the Master for an Order to open up the Noting in Default. The application was dismissed. The Defendant appeals from that Order of the Master. II. The Parties [ 5 ] The Plaintiff is a member of Cold Lake First Nations and has sued CLFN for breach of contract. [ 6 ] CLFN is a signatory to Treaty Six and a Band as defined in s 2(1) of the Indian Act , RSC 1985, I-5. III. Background [ 7 ] CLFN is a First Nations Band near the City of Cold Lake, Alberta. The Plaintiff is a member of CLFN.

The Plaintiff alleges that on May 10, 2013, she entered into a one-year contract for janitorial services with the Defendant. While the Plaintiff did sign the “Contract for Janitorial Services”, she purported to do so on behalf of English Bay Janitorial Services, a business licensed in 2013 to carry on business “within the limits of the City of Cold Lake”. [ 8 ] The alleged contract was signed by one Daniel Paul, an employee of CLFN.

CLFN has no record of a Band Council Resolution (“BCR”) authorizing the contract and CLFN says that Paul did not have the authority to execute the contract on behalf of CLFN. [ 9 ] The Plaintiff says that the director of technical services for CLFN repudiated the contract on May 17, 2013 and provided the Plaintiff with a letter dated May 22, 2013 repudiating the contract.

The Plaintiff had been paid for the first two pay periods and following the letter of May 22, 2013, the Defendant hired another company to perform the work allegedly contracted to the Plaintiff. [ 10 ] Counsel for the Plaintiff had forwarded a demand letter on June 7, 2013 and a further letter dated July 17, 2013 advising that they were instructed to initiate legal proceedings against CLFN. [ 11 ] On September 24, 2013, counsel for the Plaintiff issued a Statement of Claim against CLFN.

The Plaintiff claims damages in her Statement of Claim for the balance of the one-year term of the alleged contract. [ 12 ] The Plaintiff says that the Statement of Claim was served on CLFN by registered mail addressed to “PO Box 1769, Cold Lake, Alberta T9M 1P4 (the “PO Box”)”. The PO Box is not located at the CLFN Band office. It is located in a Canada Post Office in the City of Cold Lake. [ 13 ] CLFN says that the Statement of Claim was never brought to the attention of either the Band Council or its lawyers.

CLFN says that had it been brought to their attention, it would have been forwarded to their lawyers with instructions to defend. [ 14 ] CLFN was noted in default on November 1, 2013 but was not served with a copy of the Noting in Default. On November 27, 2014, more than one year later, the Plaintiff filed an application for

summary judgment which was delivered to CLFN on December 15, 2014. CLFN says that prior to this date, it was unaware of the Statement of Claim and the noting in default. [ 15 ] On December 18, 2014, counsel for CLFN requested a copy of the Statement of Claim and proof of service. It received these documents on January 6, 2015.

On January 29, 2015, counsel for CLFN sought the Plaintiff’s consent to set aside the Noting in Default and on February 10, 2015 CLFN was advised that the Plaintiff would not consent. [ 16 ] On February 10, 2015, counsel for CLFN requested dates from counsel for the Plaintiff for an Application to Set Aside the Noting in Default. On March 10, 2015, the application was scheduled to be heard on the next available Chambers date which was August 24, 2015. [ 17 ] On August 24, 2015, the Application was heard by Master Schulz and dismissed. The Defendant appeals that Order. IV.

Issue [ 18 ] The sole issue to be determined is whether the noting in default should be set aside and CLFN permitted to file a Statement of Defence. V. Analysis A. Standard of Review [ 19 ] The standard of review on an appeal from a Master’s Judgment or Order, on all issues, is correctness. The hearing is de novo and the judge may substitute their own view for that of the Master. No deference need be accorded the Master’s decision. B. Test for Setting Aside a Noting in Default

[ 20 ] Rule 9.15 (3) of the Alberta Rules of Court provides: The Court may, on any terms the Court considers just, (

a) permit a defence to be filed by a party who has been noted in default . . . [ 21 ] For a Court to set aside a noting in default, the applicant must show: 1. An adequate explanation as to why a Statement of Defence was not delivered; 2. Whether there was any delay in applying to set aside the default and, if so, whether there was a satisfactory explanation accounting for that delay; and 3.

Whether the material discloses a meritorious defence, that is, a triable issue of fact of law. (See Gottlieb v Nahal, 2011 ABQB 355 at para 68 ). [ 22 ] I will consider each of these factors in light of the evidence brought forward by the parties in this Application. 1.

Adequate explanation as to why a statement of defence was not delivered. [ 23 ] The Defendant says that a Statement of Defence was not delivered within the appropriate time as firstly, the Statement of Claim was not properly served in accordance with the Rules of Court and secondly, the Band itself had no knowledge of the Statement of Claim. [ 24 ] The Rules of Court prescribe two methods of service of commencement documents. First, Rule 11.4 provides that: Unless the Court otherwise orders or these rules otherwise provide, a commencement document must be served in Alberta and in accordance with (

a) a method of service provided by an enactment, or (

b) this Division [service of commencement documents in Alberta]. [ 25 ] There is no enactment that prescribes a particular method for service of commencement documents on a First Nations. Accordingly, Rule 11.4 (

a) does not apply. [ 26 ] The Rules of Court provides for service on statutory and other entities in Rule 11.14 (1): A commencement document may be served on an entity established by or under an enactment, or an entity not otherwise described in this Part, that is capable of being the subject of an action, (

a) by being left (

i) with an officer or administrator of the entity who appears to have management or control responsibilities with respect to the entity, or (ii) with an individual who appears to have management or control responsibilities with respect to the entity at the entity’s principal place of business or activity in Alberta, or at the entity’s place of business or activity in Alberta where the claim arose, or (

b) by being sent by recorded mail, addressed to the entity, to the entity’s principal place of business or activity in Alberta. [ 27 ] The Plaintiff purported to serve the Statement of Claim on CLFN by sending it by registered mail to the mailing address recorded on CLFN’s letterhead, the contract, CLFN’s website as well as the website for signatories of Treaty Six and the Government of Canada website. [ 28 ] The difficulty from the perspective of the Plaintiff is that the mailing address that may be on its letterhead or various other locations as described does not mean that the address is the principle place of business and activity.

It is simply just that, an address to which mail can be sent. [ 29 ] In this case, the Band Office is the principle place of business and it is located on the LeGoff Reserve, outside of the City of Cold Lake. Band council and the administration for CLFN both operate out of that office. The Band office is open to the public and notably, the Plaintiff would have known these facts as she is a member of the CLFN.

Accordingly, service of the Statement of Claim by way of recording mail to a post office box in the City of Cold Lake is not effective service on the principle place of business or activity in Alberta. [ 30 ] Further, the Statement of Claim was not left with an officer or an administrator of CLFN who appeared to have management or control responsibilities nor was it left with an individual who appeared to have management or control responsibilities at the CLFN’s place of business or activity. It easily could have been as Ms. Rough both lived and worked on the CLFN.

As acknowledged by counsel, it is not a big area. It could easily have been handed to someone with actual or apparent management or control responsibilities. [ 31 ] In short, the Plaintiff failed to comply with the service requirements under the Rules of Court for service of a Statement of Claim on a Defendant. It was not properly served.

[32] The Plaintiff could have applied for an Order for substitutional service under Rule 11.28 but likely would not have met thepreconditions necessary for such an Order. Alternatively, the Plaintiff could have applied under Rule 11.29 for an order dispensing withservice but again, would not likely have met the preconditions necessary for such an Order.

Finally, no application was brought to haveservice of the Statement of Claim deemed good and sufficient. [33] While the failure to properly serve a Statement of Claim is a sufficient and adequate explanation as to why a Statement ofDefence was not filed, I would go on to point out that the evidence also does not support the Plaintiff’s position that the Chief and one ofthe Counselors on the Band Council had actual knowledge of the Statement of Claim.

In support of her position, the Plaintiff relies onevidence that she heard the Chief refer to “legal proceedings” and also submits the evidence of a witness, one Lesley Scanie, whodeposes that she heard the Chief say that the Plaintiff had a “lawsuit” against CLFN. I do not consider these comments, even if they wereactually made by the Chief, to be confirmation that he or the Band was aware that a Statement of Claim had been actually issued andwhat the Statement of Claim necessarily alleged.

The comments may simply relate to knowledge of a dispute over the alleged contract orthreats from the Plaintiff to commence legal proceedings or a lawsuit. [34] The Plaintiff also says that evidence that the Chief directed administrative staff not to release a pay cheque to her because ofon-going litigation is evidence that CLFN had knowledge. Further, in May 2014 Councillor George Noel allegedly advised her that hewanted to settle her claim out of Court. Again, the Plaintiff says that this evidences knowledge of the Claim.

In my view, neither of theseincidents, even if true, evidence knowledge that a Statement of Claim had, in fact, been issued.

At most, they would support an allegationof knowledge that the Plaintiff was claiming something from the Band but not necessarily that she had issued a Statement of Claim.Further, knowledge that CLFN might have been aware of a potential claim and the likelihood of a lawsuit before it was commenced doesnot mean that it was aware that a lawsuit had, in fact, been commenced by the issuance of a Statement of Claim. [35] Cecil Janvier, a Band councillor, states in his Affidavit that the Statement of Claim was never brought to the attention of theChief and Council until December 15, 2014.

He further states that had it come to their attention, CLFN would have defended the action.I am concerned that, in his Affidavit, Mr. Janvier purports to speak on behalf of the Chief and the other councillors when he says thatthey had no notice of the Statement of Claim prior to December 15, 2014. It would have been preferable and more appropriate for theChief to have said so himself or for Mr. Janvier to have averred that he had received that information directly from the Chief andbelieved it to be true.

Nevertheless, the other concerns I have expressed are sufficient for the first arm of the test to be satisfied. [36] Quite simply, while there is a clear dispute as to whether the Chief and the Band had notice of an action having beencommenced, the evidence of CLFN specifically addresses knowledge of the issuance of a Statement of Claim while the evidence of thePlaintiff does not. Given that service was not properly effected, I have no hesitation in finding that this part of the test for opening up aNoting in Default has been met by the Defendant. 2.

Did CLFN delay in applying to set aside the Noting in Default? [37] CLFN says that it first learned of the Noting in Default on December 15, 2014 when it was served with the

SummaryJudgment Application. It contacted its counsel on the same day and its counsel advised that it intended to defend the claim. OnDecember 18, 2014, counsel requested a copy of the Statement of Claim and proof of service which were received on January 6, 2015.On January 29, 2015, counsel for CLFN sought the Plaintiff’s consent to set aside the Noting in Default and on February 10, 2015,counsel was advised that the Plaintiff refused to provide her consent. Counsel for CLFN then immediately requested dates for thescheduling of an Application to set aside the Noting in Default.

The application was scheduled on March 10, 2015. [38] In my view, there was no delay on the part of CLFN in moving to set aside the Noting in Default. It must also be noted thatthe Noting in Default occurred on November 1, 2013 and yet, the Plaintiff took no steps to proceed to judgment until she served theSummary Judgment Application on December 15, 2014, 13 ½ months later. It is, indeed, curious that the Plaintiff did nothing about thisclaim for over one year. This failure speaks to the lack of prejudice to the Plaintiff should the Noting in Default be set aside.

There isnothing to indicate that the Plaintiff would suffer any prejudice if the Noting in Default were set aside and the issues properly litigated. [39] I am satisfied that the Defendant has met this arm of the test and there was no delay in bringing an application to set aside theNoting in Default once it was aware that it had been noted in default. 3.

Meritorious defence [40] In order to satisfy this arm of the test, the Defendant must show that if the facts it alleges are proven, it might well succeed.The Defendant must exhibit a genuine wish to defend the action and not merely an attempt to further delay or defeat a valid claim. [41] The Plaintiff says that she entered into a contract with CLFN for the daily cleaning of the CLFN buildings. The contract wasexecuted by the Director of Technical Services and, the Plaintiff says, with the blessing of two Councillors, one of whom later becameChief.

I would also note that the Plaintiff purported to execute the contract on behalf of English Bay Janitorial Services, a business whose2013 Business License specifies that it is licensed to carry on the business of “residential and commercial janitorial services within thelimits of the City of Cold Lake”. [42] The Defendant says that a Band Council may enter into a commercial contract on behalf of the Band but they must exercisetheir discretion making authority in accordance with the Indian Act (Telecom Leasing Canada (TLC) Ltd v Enoch Indian Band (1994) (AB KB), 1CNLR 206). [43] The Plaintiff says, however, that cleaning the buildings is an administrative decision within the realm of the Director’spowers. [44] The Indian Act provides as follows: 2

(3) Unless the context otherwise requires or this Act otherwise provides,

. . . (

b) a power conferred on the council of a band shall be deemed not to be exercised unless it is exercised pursuant to the consent of amajority of the councillors of the band present at a meeting of the council duly convened. [45] It was held in the Heron Seismic Services Ltd v Peepee Kisis Indian Band, (1990) (SK KB), 74 DLR (4th)308 that a valid Band council resolution, made by a quorum at a duly convened meeting, is required in order to bind a Band to a contract.In Rath and Company v Stoney First Nation, 2013 ABQB 255 it was held that a Band was not the law firm’s client due to an absence ofresolution from the Band council. (The Plaintiff, however, says that the case is distinguishable as there was evidence before the Courtthat retaining counsel was a decision only made by Chief and Council and Justice Hawco held at para 7 that the tribal council makesdecisions with respect to retention of lawyers, approval of legal fees, budgets and arguments to be made on legal matters.

These are notadministrative decisions under the authority of the tribal administration.) Further, in W Downer Holdings Ltd v Red Pheasant FirstNation, 2012 SKQB 468, it was held that a settlement agreement signed by a majority of the Band councillors was invalid because therewas no proper meeting of the council as contemplated by s 2 (3)(

b) of the Indian Act. The failure to meet was fatal to the validity of thesettlement agreement. [46] In his Affidavit, Mr. Janvier deposed that there was no record of a Band Council Resolution that either approved anagreement between CLFN and the Plaintiff or authorized Mr. Paul to enter into or approve an agreement between CLFN and thePlaintiff. [47] While the Plaintiff argues that all of the cases referred to are distinguishable, they do raise a meritorious defence and can onlybe resolved by a trial judge on the hearing of proper evidence.

Further, there may well be an issue as to whether the Plaintiff herself wasentitled to enter into a contract on behalf of a business licensed only to carry on that business in the City of Cold Lake. The question ofwhether these defences can succeed is a question for a trial judge and not one that can be determined definitively in an application to setaside a noting in default. [48] Finally, the Plaintiff is seeking judgment for the gross amount of the contract less the payments actually received. If this werethe only defence, then the Defendant would be entitled to contest the amount under r 7.3(1)(

c) of the Rules of Court. However, I believethat there is a meritorious defence on the substantive issue and accordingly, it is unnecessary to consider whether this would provide anadequate remedy for the Defendant. VI. Conclusion [49] On the basis of the evidence before this Court, I am satisfied that: 1. The Defendant has provided an adequate explanation as to why a Statement of Defence was not delivered; 2. There has been no delay on the part of the Defendant in applying to set aside the Noting in Default; 3.

The Defendant has a meritorious defence, that is, a triable issue of fact or law. [50] Accordingly, I find that the decision of Master Schulz was not correct and the appeal by the Defendant is allowed. The Notingin Default shall be set aside and the Defendant shall have 14 days from the setting aside within which to file a Statement of Defence. [51] The Plaintiff is entitled to all thrown away costs including the costs of the Application before the Master and this Applicationas well as any travel costs for that Application and this one if any were incurred. Heard on the 10th day of March, 2016.

Delivered orally on the 10th day of March, 2016. Dated at the Town of St. Paul, Alberta this 10th day of March, 2016. Eric F. Macklin J.C.Q.B.A. Appearances: Patrick Stratton

of Witten LLP for Cold Lake First Nations Hart R.Spencer of Grey Munday Wowk LLP for Julie Rough