Court of Queen ’ s Bench of Alberta Citation: 926 Capital Corp v Petro River Oil Corp, 2016 ABQB 194 Date: 20160401 Docket: 1401 01161 Registry: Calgary Between: 926 Capital Corp. Plaintiff - and - Petro River Oil Corp. Defendant _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice J. Strekaf _______________________________________________________ I. Introduction [ 1 ] These cross appeals from a decision of a Master amending a Statement of Claim and summarily dismissing a claim as statute- barred raise some interesting questions in relation to the Limitations Act , RSA 2000, c L-12, as amended.

II. Relevant Facts [ 2 ] The relevant facts are not in dispute. [ 3 ] The defendant Petro River Oil Corp (formerly known as MegaWest Energy Corp) (“Tenant”) entered into a lease agreement for office space with the plaintiff 926 Capital Corp (“Landlord”) for a period of seven years commencing October 1, 2007 (“Lease”). A plumbing line ruptured on January 3, 2010 causing a flood and damage to the premises forcing the Tenant to vacate the premises.

The Landlord took steps to remediate the premises but a dispute arose between the parties as to whether those steps were sufficient or whether the premises were contaminated by mould. The Tenant took the position that it was entitled to an abatement of rent and did not reoccupy the premises or pay any rent after the flood. [ 4 ] The Landlord served the Tenant with written notice of default on June 7, 2010.

However, the Landlord did not proceed with an action against the Tenant at the time as it concluded that its expected recovery from suing the Tenant would not justify the cost of a lawsuit as the Tenant was in financial difficulty, was incurring substantial losses, had liabilities that exceeded its assets and had secured debt that attached to substantially all of its assets. [ 5 ] On January 31, 2012 the Landlord posted a Notice of Repudiation on the door of the premises which advised the Tenant that the Lease was terminated, that the accumulated rent arrears at the date of termination was $756,593 (“Rent Arrears Claim”) and that the Tenant would be held responsible for damages for the abandonment of the premises including the loss of rent for the unexpired term of the Lease (“Future Rent Claim”).

A replacement tenant, Bridgewater Bank, took possession of the premises on February 1, 2012, pursuant to an Offer to Amend Lease dated November 25, 2011. [ 6 ] The Tenant’s financial difficulties continued. However, on June 27, 2012 the Tenant announced that it had entered into a form of reverse takeover with Petro River Oil, LLC, a privately held Delaware limited liability company.

The reverse takeover transaction occurred on April 23, 2013, at which time the Tenant’s balance sheet improved dramatically, showing shareholders’ equity exceeding $17 million US. [ 7 ] On January 30, 2014, the Landlord commenced this action to recover the Rent Arrears Claim. [ 8 ] On October 14, 2014, the Tenant applied for

summary dismissal of the Rent Arrears Claim on the basis that it was statue barred under the Limitations Act . That application was adjourned as the Landlord retained external counsel. [ 9 ] On June 4, 2015, the Landlord applied to amend its Statement of Claim to add the Future Rent Claim. On June 15, 2015, Master Mason directed that the amendment application be heard concurrently with the

summary dismissal application, which proceeded before Master Prowse on June 25, 2015. [ 10 ] On July 3, 2015 Master Prowse issued a written decision allowing both the Landlord’s Amendment application adding the Future Rent Claim and the Tenant’s

summary dismissal application dismissing the Rent Arrears Claim: 2015 ABQB 431 . [ 11 ] The Landlord has appealed the dismissal of the Rent Arrears Claim and the Tenant has appealed the amendment adding the Future Rent Claim. III. Issues [ 12 ] There are three issues to be determined on this appeal: 1. Which application should have been, and which appeal should be, determined first; the application/appeal relating to the amendment or to the

summary dismissal? 2. Should the appeal granting

summary dismissal of the Rent Arrears Claim be allowed? 3. Should the appeal granting the amendment to add the Future Rent Claim be allowed? IV. Standard of Review [ 13 ] The parties agree that an appeal from a Master is de novo and that the standard of appeal is correctness. V. Analysis A. Order of Proceeding [ 14 ] The general rule where an application to amend pleadings and an application for

summary judgment are heard concurrently is that the amendment application should be heard first. [ 15 ] The Alberta Court of Appeal stated in Elbow River Marketing v Canada Clean Fuels Inc , 2011 ABCA 258 , 513 AR 315 at para 3 : In our view, the Queen’s Bench judge should have dealt with the amendment motion first before determining the motion for

summary

judgment. His failure to do so was reversible error. [ 16 ] This approach was reiterated in Condominium Corporation No 0321365 v MCAP Financial Corporation , 2012 ABCA 26 , 519 AR 322, at para 3 : …Prior to hearing the

summary judgment application, the chambers judge dealt with and granted, with the consent of counsel for MCAP, an outstanding application to amend the Statement of Claim. Once that was concluded and the amendment allowed, he dealt with the

summary judgment application on the basis of the Amended Statement of Claim. This is the proper procedure and one that ought to be followed as a matter of good practice. That is to say, outstanding applications to amend pleadings should be resolved prior to a chambers judge's considering a

summary judgment application on its merits: Elbow River Marketing v. Canada Clean Fuels Inc. , 2011 ABCA 258 at para 3 . [ 17 ] The Tenant acknowledges the general rule but submits that it should not be followed in this case because doing so creates the possibility that the Future Rent Claim could be added to a Statement of Claim which only contains claims that are statute-barred. Whether this would be permissible is an issue that has yet to be resolved by the Courts of this Province.

The Alberta Court of Appeal in WAR v Alberta (Attorney General) , 2006 ABCA 219 , 391 AR 91, at paras 49 – 50 acknowledged that this was an open question: Therefore, I would read s. 6(1) of the Limitations Act as allowing amendments to add new related claims which could have been sued separately at the date of issue of the original statement of claim. I would not interpret it to allow adding new claims dead on that date.

If all of the original claim were statute-barred when it was first sued, whether s 6(1) would allow one to add something to it, and so escape the ordinary limitation period, is an interesting question. But it is not necessary to decide it in this case. [emphasis in original] [ 18 ] More recently, this issue was again raised but not decided in Hur v 726913 Alberta Ltd , 2013 ABQB 208 , by Brown J (as he then was) at paragraphs 61 – 63: This question of whether a statute-barred Statement of Claim can be amended under

Section 6 has not yet been resolved by the Courts of this Province. In W.A.R. v. Alberta (Attorney General) , 2006 ABCA 219 at para. 50 , Côté J.A. for our Court of Appeal raised it as "an interesting question", but found it unnecessary to address on the facts of that case. The logic that one time-barred claim cannot be added to save a claim that is itself time-barred is appealing, if only to avoid the absurdity of an otherwise statute-barred claim being saved by an amendment under

Section 6. Perhaps for that reason, the excerpt [sic] cited above from the 1989 report of the Alberta Law Reform Institute on "Limitations" expressly conditioned its proposals on the proceeding having "been started by a timely claim ...." The state of the evidence before me is not, however, sufficiently clear to allow me to determine that the Statement of Claim was statute- barred. [ 19 ] As a result, the Tenant submits that in the unique circumstances of this case, the

summary dismissal application should be determined first. If that is not done then the Tenant suggests that the amendment application should be conditional on the Court determining that there was still a “proceeding” for the new claim to be added. The Tenant acknowledged that even if the amendment application was dealt with first, it would be appropriate for the Court to consider the potential implications of a successful

summary dismissal application in the course of the amendment application. [ 20 ] In my view, the Master correctly applied the general rule and considered the amendment application first, which approach I will follow on this appeal. However, in the course of doing so I will consider the implications of a successful

summary dismissal application. B. Appeal of the Amendment Adding the Future Rent Claim [ 21 ] The Master granted the amendment sought by the Landlord to add the Future Rent Claim, stating at paragraphs 23 -25: It is not my purpose to determine whether or not the landlord's claim for damages for the balance of the term is barred by the Limitations Act . My conclusion is simply that, at this time, the tenant has not demonstrated that the damages claim is out of time. As a result, I will not refuse the amendment based on the tenant's assertion that the damages claim is out of time.

This conclusion does not prevent the tenant from filing a defence to the amended claim, asserting that the damages claim is barred by the Limitations Act .

That defence can be adjudicated in the future as the action progresses. [ 22 ] He also concluded that the amendment was not brought in bad faith (paras 26 – 30). [ 23 ] The Tenant acknowledges the general rule is that amendments to pleadings should be allowed, subject to limited exceptions, as outlined in Foda v Capital Health Region , 2007 ABCA 207 at para 10 : Generally, pleadings can be amended at any time, subject to the following exceptions: it causes the opposing party serious prejudice not compensable by an award of costs; the amendment is hopeless; unless permitted by statute, it adds a new cause of action or adds a new party outside the statutory limitations period; the failure to amend earlier is indicative of bad faith, see The Honourable William A.

Stevenson and The Honourable Jean E. Côté, Alberta Civil Procedure Handbook 2007 (Edmonton: Juriliber, 2007) at pp. 142-146 which summarizes the authorities in its annotations to Rule 132. [ 24 ] The Tenant submits that amendment to add the Future Rent Claim falls within the exceptions to the general rule permitting amendments at any stage of the proceeding for the following reasons:

a) The Future Rent Claim was statute-barred on January 30, 2014;

b) The Future Rent Claim is not sufficiently related to the allegations in the original Statement of Claim for purposes of section 6(2)of the Limitations Act;

c) The amendment application was brought in bad faith; and

d) The Future Rent Claim should not be added to the Rental Arrears Claim, which was already statute-barred. i. Was the Future Rent Claim Statute-Barred on January 31, 2014? [25] The Tenant submits that the Future Rent Claim was itself statute-barred when the Statement of Claim was filed on January 30,2014 because it crystalized when the agreement with the new tenant was signed on November 25, 2011.

The Landlord denies that theFuture Rent Claim was statute-barred because the limitation period did not commence until the Lease was terminated on January 31,2012. [26] The Master dealt with this issue by noting that he was not proceeding to determine whether the Landlord’s Future Rent Claimwas barred but simply determining that the Tenant had not demonstrated at this point that the claim was out of time.

He noted thatallowing the amendment would not prevent the Tenant from asserting this defence, which could be adjudicated as the action progressed. [27] I agree that this is a sensible approach as I find that the Tenant has not satisfied me at this time that the Future Rent Claim wasstatute-barred on January 31, 2014. However, the Tenant should be given the opportunity to raise this as a defence in the action so that itcan be determined in due course if the amendment is allowed. ii.

Section 6(2) of the Limitations Act [28] The Tenant submits that the Future Rent Claim does not fall within the scope of section 6(2) of the Limitations Act because itis a “new claim” that is not “related to the conduct, transaction or events described in the original pleading in the proceeding.” Section6(2)(

b) of the Limitations Act states: 6(2) When the added claim … (

b) does not add or substitute a claimant or a defendant, or change the capacity in which a claimant sues or a defendant is sued, the added claim must be related to the conduct, transaction or events described in the original pleading in the proceeding. [29] The Rental Arrears Claim and the Future Rent Claim both arise out of alleged breaches of the Lease by the Tenant; the formerrelated to damages arising prior to January 31, 2012 for the Tenant’s failure to pay ongoing rent whereas the latter relates to damagestriggered by the Landlord’s termination of the Lease.

Two distinct remedies available to a landlord upon a breach by a tenant - insistingon performance or electing to terminate - were recognized in Highway Properties Limited v Kelly, Douglas & Co Ltd, (SCC), [1971] SCR 562 at 570. [30] The Alberta Court of Appeal in De Soto Resources Limited v EnCana Corporation, 2010 ABCA 110, 487 AR 138, at paras 8and 10 provided guidance on the meaning of the phrase “related to the conduct, transaction or events described in the original pleading”for the purposes of section 6(2) of the Limitations Act: Whether a new pleading arises from the same "conduct, transaction or events" must be based on an assessment of the whole factual andlegal context.

No firm line can be drawn between an unrelated new claim, and what has previously been pleaded. Too general adefinition would give the plaintiff an unlimited ability to add statute-barred claims: C.H.S. v. Alberta (Director of Child Welfare),2006ABQB 528,403 A.R. 103,34 C.P.C. (6th) 378 at para. 32, aff'd 2006 ABCA 355, 401 A.R.

Section 6 allows the addition of new claims because the defendant will not be prejudiced or surprised since they arise out of the sameconduct, transactions and events. Therefore, one test of whether a new claim is involved is to examine the extent to which a new set ofconduct, transactions and events would have to be proven at the trial. The documents and other evidence that would be needed to provethe appellant's new allegations would differ significantly from those required to prove the originally pleaded facts. [31] The nature of what constitutes an added claim for the purpose of section 6(2)(

b) was also considered by Brown J in Hur atpara 55, where he stated in part: … Any permissible amendment to the Statement of Claim must be sufficiently specific to its alleged formation, part performance orrepudiation in order to be “related to” it. Had the Plaintiffs sought permission to make an amendment that was related to the allegationsregarding the Asset Purchase Agreement, they would have satisfied Section 6(2)(b).

Instead, “the conduct, transaction or events” in theAmended Claim relates to the alleged formation, part performance and breach, probably in September 2008, of a Share PurchaseAgreement made in April 2007. This is not an “added claim” to the original pleading in the proceeding. … [32] The Rent Arrears Claim and the Future Rent Claim both arise out of the same Lease, and both claims were triggered by theTenant’s failure to pay rent. Both claims were outlined in the termination notice delivered on January 31, 2012.

In my view the FutureRent Claim is sufficiently “related to the conduct, transaction or events described in the original pleading in the proceeding” to fallwithin section 6(2)(b). iii. Bad Faith

[33] The Tenant submits that the amendment application was brought in bad faith one and a half years after the original Statementof Claim was filed, seven and a half months after learning of the application for

summary judgment, 21 days before the application wasto be heard, and without a satisfactory explanation why the Future Rent Claim was not plead in the first instance when the Statement ofClaim was filed on January 30, 2014. [34] In Hur, Justice Brown acknowledged that the onus is on the party alleging bad faith to show it.

He reproduced the followingexcerpt from paragraph 17 of CS v MS (2007), (ON SC), 38 RFL (6th) 315 (Ont SCJ) describing what constitutedbad faith for the purposes of the Ontario costs provisions: In order to come within the meaning of bad faith in sub-rule 24(8), behaviour must be shown to be carried out with intent to inflictfinancial or emotional harm on the other party or other persons affected by the behaviour, to conceal information relevant to the issues orto deceive the other party or the court.

A misguided but genuine intent to achieve the ostensible goal of the activity, without proof ofintent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisiteintent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person'sintent.

At some point, a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that theymust be taken to know their behaviour is causing the other party major financial harm without justification. [35] Justice Brown found bad faith established in that case stating at para 84: Taking into consideration (1) the absence of any explanation for the Amended Claim, (2) the inconsistency and contradiction betweenthe Amended Claim and Mr.

Hur's own sworn evidence, (3) the Plaintiffs' categorical insistence in their Reply that the Asset PurchaseAgreement was the only agreement between the Plaintiffs and the Defendants, and (4) the eleventh-hour timing of the Plaintiffs'application to amend, I infer the proposed amendment is motivated by the sole purpose of frustrating the Defendants' entitlement tosummary judgment, thereby causing unnecessary expense and delay, and not by some sudden realization (of which there is no evidencein any event) by Mr. Hur of "the true nature of the relationship". [36] The circumstances in this case are very different.

While there may have been comparable delays, the Landlord provided aplausible explanation why the failure to initially advance the Future Rent Claim was not a strategic decision, but a slip by its previous in-house legal counsel who had been disciplined by the Law Society and terminated. There was no evidence of the Landlord contradictingits previous testimony, unlike what was found to have occurred in Hur. [37] I agree with the Master who concluded that the Landlord’s delay in advancing the Future Rent Claim may be due to“carelessness and lack of forethought”, but not bad faith. iv.

Already a Statute-Barred Claim [38] The Tenant submits that it would be prejudicial for the Landlord to be able to avoid a limitations defence with respect to theFuture Rent Claim, which was statute-barred by the date that the amendment application was brought on June 4, 2015, by permitting thatclaim to be added to a claim that was itself statute-barred.

For the purpose of analyzing this submission I will assume that the RentalArrears Claim is statute-barred. [39] The Tenant’s argument suggests that there should be a difference if all the claims in the original Statement of Claim werestatute-barred, than if that were not case. In the latter case, it is not disputed that a claim could be added pursuant to section 6(2) of theLimitations Act. The question becomes what additional prejudice would be suffered by the Tenant in the former circumstances.

Forexample, if the Statement of Claim had been issued on December 31, 2013, rather than on January 30, 2014, then the claim for the onemonth of rent due on January 1, 2012 would not have been statute-barred. In that case, the Future Rent Claim could proceed on theTenant’s analysis. It is unclear how the Tenant would suffer greater prejudice if the Future Rent Claim were to proceed on thisapplication than if it were to proceed in those circumstances. [40] Applications should not generally be determined by the order in which they were heard or which application was filed first.

Arace to the court house is to be avoided. In particular, where the order of dealing with an application would result in denying a party theopportunity to pursue its claim, the Court should be reluctant to proceed in that fashion, unless there is good reason why that would beappropriate. While both the Landlord and Tenant may each assert that they could be prejudiced by the order in which the applicationsproceed, the impact on each must be compared.

The Landlord could lose the opportunity to pursue the Future Rent Claim whichconstitutes real prejudice, as compared with the Tenant who would simply lose the procedural ability to deprive the Landlord theopportunity to rely on the statutory relief contemplated in

section 6. [41] In a case like this, where cross-applications were simultaneously before the Court and no bad faith has been established, itwould not be appropriate to have the order in which the applications were decided result in an action being statute-barred. This isparticularly so where the order of doing so sought by the Tenant would be the exception to the usual rule of dealing with the amendmentmotion first, before a substantive cross-application. [42] The Tenant also submits that its

interpretation is based on the language in section 6(1). Section 6(1) requires that when aclaim is added to “a proceeding previously commenced” that “the added claim must be related to the conduct, transaction or eventsdescribed in the original pleading in the proceeding”. The Tenant argues it is implicit that the reference in this

section is to a live,existing or ongoing proceeding, not one where all of the claims advanced have been, or will be found to be statute-barred, and summarilydismissed. The Landlord submits that the Tenant’s

interpretation adds words to the

section that are not there and that the “proceeding”still exists, even if the claims have been, or are subject to being, determined to be statute-barred. [43] I am of the view that the word “proceeding” in

section 6 is broad enough to include an action that has existing causes of actionat the time that the application to amend was brought. For the purposes of this application, I need not decide if an action had beendismissed in its entirety (on limitations grounds or otherwise), whether months or years later a party could seek to amend its pleadingsand add a statute-barred claim to that proceeding pursuant to

section 6.

[ 44 ] The Master did not err in granting the amendment and the appeal on this issue is dismissed. C. Appeal of the

Summary Dismissal of the Rent Arrears Claim [ 45 ] Section 3(1) of the Limitations Act states: 3(1) Subject to subsections (1.1) and (1.2) and

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, or (b) 10 years after the claim arose, whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim. [ 46 ] In granting the Tenant’s application for

summary dismissal on the basis that the claim was statute-barred pursuant to section 3(1) of the Limitations Act , Master Prowse noted, at paras 35 – 40: The landlord made a decision not to pursue a claim for rent because a legal dispute over mold contamination would be very expensive, and any potential recovery would be minimal or speculative. The landlord says that the tenant's financial position went from dire to flush on or about April 23, 2013 when the tenant was a party to a "reverse takeover" in which Petro River Oil LLC became the tenant's wholly owned subsidiary.

This change in the tenant's financial circumstances caused the landlord to re-evaluate the economics of bringing a proceeding against the tenant. The landlord concluded that bringing a claim for unpaid rent was now warranted. This action for unpaid rent was commenced on January 30, 2014.

The landlord argues that, in deciding whether the bringing of an action is warranted pursuant to section 3(1)(a)(iii) of the Limitations Act , the court should engage in a calculation of the cost of litigation relative to the expected recovery from a fiscally challenged defendant in order to determine whether the bringing of a proceeding is warranted. The landlord's argument is contrary to a recent decision of the Alberta Court of Appeal in Smiechowski v. Preece , 2015 ABCA 105 , where the court stated: On its proper

interpretation, the promissory note does not provide that payments are only to be made out of bonuses. The appellant's best position is that the default on the promissory note arose on December 6, 2009, when the payment due on that date was not made. Under the terms of the note that default accelerated the entire balance, and there were no later payments or acknowledgments of the debt. No later than then he would have realized he had a claim worth pursuing, because neither impecuniosity of the debtor nor poor prospects of collecting on the judgment affect whether the "injury" in existence "warrants" a claim.

On that basis, the statement of claim was issued out of time. [emphasis in original] Accordingly, the landlord's claim for unpaid rent is barred by the Act and I grant partial

summary judgment, dismissing the landlord's claim for unpaid rent. [ 47 ] The Statement of Claim advancing the Rent Arrears Claim was filed on January 30, 2014. It relates to the rental arrears that accrued up to January 31, 2012, when the Lease was terminated. “Injury” is defined in

section 1 (

e) of the Limitations Act as follows: 1(e) “injury” means (

i) personal injury, (ii) property damage, (iii) economic loss, (iv) non-performance of an obligation, or (

v) in the absence of any of the above, the breach of a duty; [ 48 ] The injury, being the failure to pay rent, arose when the rent was due on the 1st day of each month. The Landlord knew or ought to have known that the injury occurred ( section 3(1) (a)(i)) and that it was attributable to the conduct of the Tenant (section 3(1)(a) (ii)) such month on the 1 st of January when the rent was not paid, which in each case was more than two years prior to the issuance of the Statement of Claim.

The issue is whether the Landlord’s concerns about the practicality of bringing a claim in light of the Tenant’s financial circumstances delayed the commencement of the limitation period until the Landlord became aware that due to the dramatic improvement in the financial circumstances of the Tenant, the injury now justified bringing proceedings for the purposes of section 3(1) (a)(iii) of the Limitations Act .

[49] The Alberta Court of Appeal in Gayton v Lacasse, 2010 ABCA 123, 482 AR 179, stated at paras 20 – 21: Finally, the test for determining when a claimant has discovered, or ought to have discovered, the enumerated criteria in section 3(1)(a)was discussed by this court in J.N. v. Kozens, 2004 ABCA 394, 361 A.R. 177 at paras. 14-16. The court adopted the test described byMcLachlin J. (as she then was) in Novak v.

Bond, (SCC), [1999] 1 S.C.R. 808, 172 D.L.R. (4th) 385, a case dealingwith British Columbia's limitation legislation, in which she described the test as a "restrictive subjective/objective approach" which asksthe question "in light of his or her own circumstances and interests, at what point could the plaintiff reasonably have brought an action?"Thus, while the test is objective, in that it employs the "ought to have known" standard, the test is applied having regard to a claimant'spersonal circumstances.

In Alberta, given the decision in Kozens, this test applies to all three of the criteria set out in section 3(1)(a). 21 In

summary, therefore, in Alberta the legislative scheme must be applied to the facts of a given case when determining thecommencement date for a limitation period. A claimant is not required to bring a claim for a remedial order until two years afterdiscovery of the three criteria enumerated in section 3(1)(a) - namely, when the plaintiff first knew, or in the circumstances ought to haveknown, of the injury, that the injury could be attributed to the respondent, and that the injury warranted bringing the action.

Moreover,these three criteria must be examined taking into account the circumstances, including the personal circumstances of the claimant. [50] The rationale for limitations defences was outlined by the Alberta Court of Appeal in Boyd v Cook, 2013 ABCA 27, 542 AR160, at para 4: Limitations statutes exist for a purpose. They are not mere tidiness, nor a trick to give defendants windfalls or bargaining points.Limitations legislation, so-called "statutes of repose" exist to give some certainty in their lives to all those who may at some time besued.

That is not only true of businesses and professional people, but also ordinary citizens who can ill afford the mental and emotionalstress of threats or lawsuits. It is a nuisance and an expense to have to keep voluminous records in perpetuity. Allowing large potentialthreats to hang over heads for a generation sterilizes capital and impoverishes businesses. What is worse, it is unjust to sue people oncetheir former ability to defend themselves has evaporated. In many types of claim, a prima facie case is easy to prove. [51] In that case, Mr. Cook induced Mr.

Boyd to enter into an investment that became seriously insolvent. Mr. Boyd commencedan action against Mr. Cook on June 16, 2011, who argued that the lawsuit was out of time. Mr. Boyd argued discoverability. The issuebecame whether Mr. Boyd knew or ought to have known by June 16, 2009 that the injury, assuming liability on the part of the defendant, warrant[ed] bringing a proceeding…Liability is not something which theplaintiff had to know; it is assumed.

What he had to know, or in the circumstances ought to have known, is just that the injury warrantedsuing. (para 10) [52] The Court went on to state at paras 13 and 16: There might be a number of things which might mean that a lawsuit for an undoubted injury caused by a defendant would not bewarranted. We will not attempt any exhaustive list. But one is obvious, and is the only one argued here. Some lawsuits are, or appear tobe, uneconomical. The likely legal fees and disbursements may be less than the likely recovery. Maybe a big risk of paying costs to theother side is also relevant.

And sometimes the amount of work which the plaintiff would have to put into the suit and preparing for itwould be undue in relation to the likely recovery. …In any event, the statute asks whether the injury (assuming liability) warrants bringing a proceeding. It does not ask whether theparticular statement of claim suit which later was finally issued had warranted filing at the relevant time. It asks about whether somecourt proceeding had been warranted. A plaintiff cannot bypass the limitation period by suing for part of his claim, and it is not clear atall that Mr. Boyd has done that.

The sum invested, over $1.3 million, is obviously worth suing for. Nor does s 3 of the Act ask whetherthe plaintiff would be certain of collecting his judgment were he to get judgment. [53] When these passages are read together, it appears that the Court of Appeal is distinguishing between recovery (being thequantum of the judgment awarded) and collection of that judgment. [54] This is reinforced by the following language used by the Court at paragraph 22: Counsel for Mr. Cook argues that the test is laxer: whether recovery from the suit would be minimal or speculative.

We need not decidewhether that is the legal test, given our conclusion that the likely size of recovery (amount in issue) here is far higher than that. [55] A similar approach appears to be adopted in Smiechowski v Preece, 2015 ABCA 105 where the Court stated, at para 2: On its proper

interpretation, the promissory note does not provide that payments are only to be made out of bonuses. The appellant's bestposition is that the default on the promissory note arose on December 6, 2009, when the payment due on that date was not made. Underthe terms of the note that default accelerated the entire balance, and there were no later payments or acknowledgments of the debt. Nolater than then he would have realized he had a claim worth pursuing, because neither impecuniosity of the debtor nor poor prospects ofcollecting on the judgment affect whether the "injury" in existence "warrants" a claim.

On that basis, the statement of claim was issuedout of time. [56] The Landlord may be correct that the comments in Boyd and Smiechowski may be obiter to the extent that it is not apparentin either case that it was argued, as it is here, that the likely inability to collect on a judgment could delay the commencement of thelimitation period.

However, I am of the view that this is neither the correct nor a sensible approach. [57] The language used in section 3(1)(a)(iii) is whether the “injury” warrants bringing a proceeding, which focuses on the natureof the injury to the plaintiff, rather than the likelihood of obtaining judgment against the defendant or the prospect of collecting on ajudgment. The Landlord’s

interpretation would add a great deal of uncertainty to the commencement of the limitation period if dependentupon the point in time when the plaintiff became aware, or could have become aware, of particular details regarding the defendant’sfinancial circumstances. In my view, such an

interpretation is not reasonably contemplated by the language in section 3(1)(a)(iii). It is

also inconsistent with applying the test of “having regard to a claimant's personal circumstances” ( Gayton , para 20 ), Gayton makes no mention of the defendant’s financial circumstances, and recognizes that “(t)he public policy reflected in the Limitations Act is not served by creating uncertainty over whether the time for bringing an action has expired” (para 59). As outlined in Boyd , the rationale for limitation periods is “to give some certainty in their lives to all those who may at some time be sued” (para 4). [ 58 ] The appeal from the

summary dismissal of the Rental Arrears Claim is dismissed. VI. Conclusion [ 59 ] The appeal and cross-appeal are both dismissed. It appears that success has been divided. If the parties are unable to agree costs should be addressed they may provide me with their written submissions within 30 days. Heard on the 16 th day of March, 2016. Dated at the City of Calgary, Alberta this 1 st day of April, 2016. J. Strekaf J.C.Q.B.A. Appearances: Theodore Stathakos for the Plaintiff Eugene J. Bodnar for the Defendant