Decore v Decore, 2016 ABQB 246

Court of Queen ’ s Bench of Alberta Citation: Decore v Decore, 2016 ABQB 246 Date: 20160429 Docket: 1303 16302 Registry: Edmonton Between: Lyndon Decore and Matthew Decore Plaintiffs - and - Karyn Decore, Nicole Decore, Maligne Lodge Ltd and Tonquin Inn Ltd Defendants And Between: Karyn Decore, Nicole Decore, and Decore Holdings Inc Plaintiffs by Counterclaim -and- Lyndon Decore and Matthew Decore Defendants by Counterclaim _______________________________________________________

Memorandum of Decision of the Honourable Mr. Justice Peter Michalyshyn _______________________________________________________ I. Introduction [ 1 ] In the prescient final paragraph of her will the testatrix Maureen Decore stated: I know that it will be difficult for my children to work together to resolve the distribution of my estate. I have tried to provide formulas and procedures in my will to ease the administration of my estate, but I cannot think of everything.

I encourage my children to treat each other in a respectful, reasonable, and courteous manner, to try to resolve matters by discussion and to submit any serious disputes to mediation… I cannot impose mediation on my children, because it only works if it is voluntary. [ 2 ] More than nine years after her passing, the beneficiaries of Maureen Decore’s estate remain sharply divided. Still now, after competing

summary judgment applications, they will be divided because these reasons unfortunately fail to resolve the beneficiaries’ differences completely. II. Background [ 3 ] The parties are Lyndon and Matthew Decore (“the Sons”) and Karyn and Nicole Decore, together with two corporations (“the Daughters”). Other entities are in play, including Decore Holdings Inc. (“DHI”), but none are parties to the Statement of Claim issued November 15, 2013. [ 4 ] The within action follows lengthy surrogate proceedings. Probate was granted on July 26, 2007, soon after the deceased’s passing.

No one has disputed the validity or core meaning of the will dated February 8, 2007 and codicil dated March 5, 2007. Maureen Decore died on March 8, 2007, just a month after the will, and three days after the codicil. [ 5 ] The surrogate hostilities first arose in an application brought on behalf of the Sons filed December 30, 2008. It was to be heard February 25, 2009.

The relief sought included the appointment of a case management justice to assist in what the Sons believed would be “numerous remaining issues arising in the administration of the Estate”. [ 6 ] On March 10, 2009, Justice Clackson was appointed to case manage the surrogate proceedings. (He continued in that role actively through the end of 2010, then it appears more nominally until a point in time in 2014 when an application for further case management was made.

Following an October 1, 2014 case conference, I became case management justice in both the still-unresolved surrogate proceedings (ES03 125382) and the more recently commenced civil action (1303 16302) which is the immediate subject of these

summary judgment applications.) [ 7 ] On the eve of the first application, brought long ago in the surrogate proceedings and then scheduled for a 5-day hearing, the parties entered into an agreement, dated November 27, 2009 (“the Agreement”). [ 8 ] Another application, again brought on behalf of the Sons, was filed about a year later, on October 21, 2010. It was meant to be heard December 13, 2010.

Again, days before that scheduled court appearance the parties entered into a second agreement, on December 8, 2010 (“the Supplemental Agreement”). [ 9 ] Both agreements were confirmed in a Consent Order signed by Justice Clackson, and dated December 13, 2010. [ 10 ] Two further agreements were reached (January 31, 2011 and March 5, 2012); they do not appear to be central to what is currently before the court. [ 11 ] It appears that the parties resorted to little other formal litigation from the time of the December 13, 2010 Consent Order to the commencement of the within action. III.

The current action [ 12 ] Whatever progress was made in the interim appears to have come to a halt with the current action. As noted, it is not styled as a surrogate proceeding as such. On its face it is a debt action.

The primary relief sought is a money judgment, failing payment of which then sale or foreclosure of certain mortgaged lands. [ 13 ] The parties disagree on the characterization of the current action vis-à-vis the long-standing surrogate proceedings. [ 14 ] Fundamentally, the Sons allege that the 2009 Agreement and 2010 Supplemental Agreement take any rights and obligations relating to equalization of certain hotel assets amongst the four beneficiaries out of the will. The Sons allege the agreements are stand- alone contracts and enforceable as such in their action, and in this

summary judgment application. The Sons argue that the within action has nothing to do with the will or the estate. They say that issues around the final distribution of estate assets are irrelevant to their action.

They are for another day. [ 15 ] The Daughters disagree. They say the Agreement and Supplemental Agreement do not stand-alone but rather stand along- side the will. What’s more, they say the agreements, on their face, were clearly intended to effect a distribution of the estate on an equal basis. They say the Consent Order of December 13, 2010, made in the surrogate proceedings, on its face reiterates that intention. [ 16 ] For reasons which follow, this issue of characterization is resolved in favour of the Daughters. [ 17 ] Further, however the Sons’ cause is characterized, again for reasons which follow they fall well short of proving a case for

summary judgment. [ 18 ] As to the Daughters’ counterclaim for alleged overpayment of interest on certain amounts, at the end of the day I am unable to make the necessary findings of fact to justify

summary judgment in their favour. The characterization issue [ 19 ] As noted, I have resolved this issue in favour of the Daughters. [ 20 ] Like the will, the 2010 Consent Order mentioned above was somewhat aspirational. It recognized, to that point in the proceedings at least, the parties’ apparent wish and concurrence to resolve all estate-related issues. So too the case management judge who, by virtue of the

preamble of the Order, was: …satisfied that the Settlement Agreements constitute an effective method of disposing of all of the various assets under the administration of the Executors to the satisfaction of the Beneficiaries and with the concurrence of the co-Executors. [ 21 ] The same

preamble refers to affidavits of Lyndon Decore, including an affidavit sworn December 9, 2010, which states at paragraph 3 that the parties “… have been working hard in months past to find a resolution to all of the outstanding issues in respect of this Estate”.

And at paragraph 6, states that certain third-party financing “… requires the existence of an agreement resolving all issues between [the beneficiaries] as a precondition to providing funding”. [ 22 ] The December 13, 2010 Consent Order and the affidavit of Lyndon Decore sworn in support of it support a finding that the agreements between the parties were tied inextricably to the administration of the estate and thus the surrogate proceedings. Neither supports an

interpretation that the parties – including the co-executors – intended that a debt action based on court-ordered security or otherwise, was to be ‘carved out’ of the administration of the estate/surrogate proceedings. [ 23 ] Coming long before the Consent Order, the original agreement of November 27, 2009, in its

preamble, states that “WHEREAS the parties desire to resolve their differences by agreements supplementing the Will” [emphasis added]. And as stated at paragraph 13, the parties agreed that the distribution of the Estate under the will, “as supplemented and modified” by the agreement, will on a best-efforts basis be wound up by a certain date (April 30, 2010).

Lyndon Decore said the same thing when cross examined, on December 9, 2014 (at paragraph 28). [ 24 ] This ‘supplements and modifies’ language, and the numerous references in the agreements to the will, and of the parties’ intention to wrap up the estate distribution as a whole, stands in contrast to the absence of wording, or statements of intent, that anything in the agreements was intended to or had the effect of creating a standalone contract, in effect to carve out of Maureen Decore’s will the two largest assets of her estate, and to give rise to a cause of action outside of the administration of the estate under the court’s surrogate jurisdiction. [ 25 ] The Sons focus on paragraph 5(3) of the Agreement, but it cannot be read apart from paragraph 5(2): 5(2) The Daughters will acquire the Maligne and Tonquin companies and will raise the maximum traditional bank or credit union financing they can using the assets and cash flows from those operations as the security for the loans.

The amounts so raised shall be paid to the Estate and dealt with and distributed promptly in accordance with the Will as amended by this Agreement; 5(3) To the extent that the amounts so raised are insufficient to pay the purchase price for all of the shares and the debt of Maligne Lodge Ltd. and Tonquin Inn Ltd., that balance shall be a debt of the Daughters to the Sons to the extent of half of the shortfall, and all indebtedness of the Daughters to the Sons shall be secured by way of mortgage on the assets of Maligne Lodge Ltd. and Tonquin Inn Ltd…. [ 26 ] Nor can paragraphs 5(2) and 5(3) be read in isolation from the “hotchpot” provisions set out at articles 2.27-2.33 of the will, and referred to elsewhere in the will from time to time.

I do not agree with the Sons’ contention that the agreements were intended to or had the effect of ousting the hotchpot which was fundamental to the testatrix’s intentions. I agree with the Daughters that I must have regard to the hotchpot provisions and references when I consider the Sons’ position regarding the existence of a standalone contract.

The hotchpot provisions were included in the will to enable the co-executors to effect an equitable distribution of all of the assets under Maureen Decore’s control or partial control, whether or not all of those assets formed part of Maureen Decore’s own estate as such. The agreements between the beneficiaries (and, importantly, the co-executors) are all consistent with the hotchpot provisions, and with the testatrix’s core intention of passing on, as near as possible, an equal distribution of her estate.

I agree that what is not consistent with any of this is a standalone contract that can be sued on outside the will and its administration. [ 27 ] Nor am I persuaded by the Sons’ argument that because in several respects the parties agreed to change the will’s “mechanics of distribution” – the Sons’ phrase – accordingly “it is clear that the [various ‘settlement’ agreements] took the entirety of the process of distribution of Maligne and Tonquin out of the mechanics of the Will” (para 28 of the Sons’ Brief filed September 11, 2015). Nor am I

persuaded that because the parties agreed to create a number of obligations not contemplated by the will, these various agreementscomprise a new contractual obligation, a standalone contract, independent of the will. [28] The Sons acknowledge that the various settlement agreements deal with a great many topics. But only some of those are‘standalone’ topics, in the Sons’ submission.

The Sons identify not fewer than eight other topics arising from the settlement agreementsthat are not standalone, or independent from the will. [29] This mixing and matching of what is in or out of the will tends to undermine the Sons’ position that “plainly” the partiesintended that certain provisions were meant to stand independently of the will. [30] Mindful of the fact that the parties were represented by counsel throughout – the Sons, Daughters and the co-executors – hadthey intended fundamentally to alter the will as suggested by the Sons, they could and would have said so in a deliberate and transparentmanner.

The Sons’

summary judgment application [31] If I am wrong with regard to the ‘characterization’ issue – or even if the Sons’ application can be re-styled as partial

summaryjudgment or the trial of an issue – I will now deal with the merits of the application. [32] No one disagrees with the legal test for

summary judgment. In Windsor v Canadian Pacific Railway Ltd., 2014 ABCA 108at para 13 the court endorses the following propositions laid out in Hryniak v Mauldin, 2014 SCC 7 , [2014] 1 SCR 87: 49 There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on amotion for

summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2)allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a justresult. The modern test for

summary judgment is therefore to examine the record to see if a disposition that is fair and just to both parties can bemade on the existing record. [33] More recently, in Pyrrha Design Inc v Plum and Posey Inc, 2016 ABCA 12 at para 19 the majority commented as follows: [19] This Court has recently made clear that

summary disposition is available where a fair process reveals there is no merit to aclaim: 776826 Alberta Ltd v Ostrowercha, 2015 ABCA 49 at para 13, 593 AR 391. “The question is whether there is in factany issue of ‘merit’ that genuinely requires a trial, or conversely whether the claim or defence is so compelling that the likelihood it willsucceed is very high such that it should be determined summarily”: WP v Alberta, 2014 ABCA 404 at para 26. [34] As noted I have found that the evidence falls well short of proving any particular sums owing to the Sons, whether as a debtas defined by the Agreement, or in the context of achieving equalization of the estate as a whole.

As such, the Sons’ application fails atthe first stage of the test for

summary judgment: the evidence does not allow me to make necessary findings of fact to support theircause. [35] Some further background is in order. More than half of Maureen Decore’s estate was comprised of two hotel properties inJasper, Alberta. In her will, Maureen Decore left Tonquin Inn Ltd. to the Daughters. By way of an option in the will, which the daughtersexercised, they were also left Maligne Lodge Ltd. [36] No one disagrees that Maureen Decore intended her four children to share in her estate as nearly equally as possible.

Giventhe value of the hotel properties, however, the Daughters needed to fund an equalization to the Sons to make them whole. This objectivewas largely the point of the Agreement and Supplemental Agreement.

And while these agreements departed in some respects from thewill, there was no overall departure from Maureen Decore’s core intention. [37] Again turning to paragraphs 5(2) and 5(3) of the Agreement, they provide that as a means to achieving equality the Daughterswould raise the maximum financing available using the hotel assets and cash flows; if that financing fell short of the purchase price forall of the shares and debt of the companies operating the hotels, then one half of that shortfall would become a debt of the Daughters tothe Sons.

That debt would be secured by a mortgage on the assets of the companies operating the hotels on terms that included interestat eight per cent per annum. [38] The Sons allege that on application of paragraph 5(3) of the Agreement the debt of the Daughters was $9,161,467 “as of thedate of the [November 27, 2009] Agreement”. This figure is one half of the following total, alleged at paragraph 6 of the Statement ofClaim, and at paragraph 10 in the November 20, 2014 affidavit of Lyndon Decore filed in support of this

summary judgment application: a. Value of Tonquin Inn Ltd. $13,736.896; b. Value of Maligne Lodge Ltd. $ 8,156,038 c. Bank of Nova Scotia debt ($ 3,570,000) TOTAL $18,322,934 [39] None of these figures appear in any agreement between the parties. Indeed, the only evidence of them is paragraph 10 ofLyndon Decore’s affidavit, mentioned above. And this evidence is unattributed; nowhere in his sworn evidence does Lyndon Decoreexpressly source the values set out above.

[ 40 ] Exhibit “E” to Lyndon Decore’s November 20, 2014 affidavit is a

schedule prepared November 4, 2014. That

schedule uses as a starting point the alleged $9,161,467 debt of the Daughters. Whatever else can be made of Exhibit “E”, it is not itself proof of the $9,161,467 figure. [ 41 ] What’s more, the only reference in Lyndon Decore’s affidavit to a sum now owing is at paragraph 16 and its reference to exhibit “E”. Paragraph 16 then calculates the sum of $1,849,630.95 still owing to the Sons by the Daughters as at November 4, 2014.

Again, whatever else can be made of this part of Exhibit “E”, it does not itself prove the fact of the $1,849,630.95 figure. [ 42 ] Karyn Decore deposes, at paragraph 15 of her January 15, 2015 affidavit, that the Daughters have never agreed with the figures set out in Lyndon Decore’s paragraph 10. Without more then, those facts are squarely in dispute. [ 43 ] Further, the Daughters disagree that Lyndon Decore’s ‘value of” figures are appraised values without regard for debt.

As the Daughters argue, paragraph 5(3) of the Agreement requires that there be evidence of “the purchase price for all the shares and the debt of Maligne Lodge Ltd. and Tonquin Inn Ltd…” The Daughters argue persuasively that no such evidence is before the court. [ 44 ] The Daughters argue further that “purchase price” is not defined, nor is there a method specified to determine it. They argue yet further that the Bank of Nova debt of $3,570,000 is not the debt that is referred to in paragraph 5(3) of the Agreement.

They dispute, correctly in my view, that the Agreement says anything about outstanding third party bank debt and/or its deductibility, as is argued by the Sons in their September 4, 2015 Brief. [ 45 ] The Sons’ September 4, 2015 Brief suggests that “of course” the debt referred to in the Agreement is “intercorporate debt” between Tonquin, Maligne, and Decore Holdings Inc. That is not admitted.

Nor is it found in any sworn or undisputed evidence before the court. [ 46 ] Later in their same September 4, 2015 Brief the Sons refer to schedules in an accounting report which, read together, purport to set out $5,141,860 as “advances from Decore Holdings Inc.” None of this is agreed to by the Daughters. None of it is referred to in any affidavit or exhibit thereto sworn squarely in support of the Sons’

summary judgment application. (The $5,141,860 figure does appear as described at TAB G of the Sons’ “Book of Evidence” filed September 4, 2015. The evidentiary value of the Book of Evidence was never made certain. And the admissibility and/or validity of the report at TAB G is not admitted by the Daughters.) [ 47 ] The Daughters object to the accuracy and/or relevance of the figures at paragraph 10 in Lyndon Decore’s affidavit. Regarding Tonquin in particular, Karyn Decore deposes that the testamentary documents set up a method for valuing its shares. Another method was devised in the Agreement. It is Ms.

Decore’s evidence that neither determination has been done. There is no sworn evidence to the contrary before the court. [ 48 ] There was some controversy whether the debt of $9,161,467 existed at the time of the November 27, 2009 Agreement. That was Lyndon Decore’s evidence in paragraph 10 of his November 20, 2014, sworn plainly and centrally in support of the Sons’

summary judgment application. [ 49 ] The Daughters say that contrary to the evidence of Lyndon Decore, the purchase price of the shares and debt of Maligne and Tonquin was not known at the time of the November 27, 2009 Agreement. Nor was the available financing. As such, the Daughters say, the amount of the debt could not have been known at the time of the Agreement. [ 50 ] Not surprisingly then, Lyndon Decore was cross-examined closely on paragraph 10 of his affidavit.

On the first such cross- examination, on December 9, 2014, he had little opportunity to answer questions around the figure before, through counsel, he agreed to undertake to provide the basis for his averment at paragraph 10. (In the same transcript there was the unsurprising acknowledgment that counsel had drafted the affidavit later sworn by Mr. Decore.) [ 51 ] Mr. Decore was then examined on his undertaking responses, on February 25, 2015. At that time, and after some clarification around how Mr.

Decore and his counsel had interpreted the undertakings, it emerged that ‘as at the November 27, 2009 Agreement’ Mr. Decore had nothing upon which to base his evidence of a $9,161,467 debt (with the exception of a document entitled “McNally 2007 Valuation”, which no one appeared to suggest was the basis for the debt figure). [ 52 ] The Sons state in their September 4, 2015 Brief that the Daughters are “quite right when they say that the actual indebtedness was not known as of the date of the original Settlement Agreement of November 27, 2009”.

In their September 11, 2015 Brief the Sons say the Daughters “make much” of this, as though to suggest it is a point unworthy of serious consideration. [ 53 ] Unfortunately, that the Daughters were “quite right” and now “make much” of the point, was by no means obvious on a plain reading of Lyndon Decore’s November 20, 2014 affidavit. That was only initially conceded, then made certain, after two cross examinations. [ 54 ] It is also no surprise that the Daughters pressed the point of the Sons’ knowledge of the debt. It was after all Mr.

Decore who said under oath, for whatever reason, that he knew the exact size of the debt as of the date of the November 27, 2009 Agreement. It is now clear that he did not. [ 55 ] And so it is fine to say now that ‘of course’ the Daughters’ debt could not have been known as at November 27, 2009. But who knew what Mr. Decore intended to say when he swore his November 20, 2014 affidavit? And that the point is now ‘clarified’ unfortunately does little to resolve the disquiet I have around the Sons’ evidence more generally for

summary judgment purposes. [ 56 ] The Sons represent at para 26 of their September 4, 2015 Brief that Karyn Decore agreed with certain adjustments that gave rise to the $8,156,038 figure for Maligne Lodge Ltd. This is not correct, on a plain reading of Karyn Decore’s examination on affidavit March 4 & 5, 2015. In fact, she denied any understanding of the accountant’s tax assumption and did not adopt the same accountant’s calculations. The Sons continued to misstate Karyn Decore’s evidence on this point at paragraph 16 of their September 11, 2015 Brief.

[57] Similarly, the Sons represent at para 31 of their September 4, 2015 Brief that Karyn Decore agreed that a certain process was“appropriate”. That is also incorrect. In her cross-examination Ms. Decore simply agreed that an accountant had performed certaincalculations to reach a $13,736,896 figure. She was not asked to adopt any process as appropriate, or otherwise. Nor was she asked toadopt the outcome of any process as correct. [58] There was much argument regarding Exhibit “E” to Lyndon Decore’s affidavit of November 20, 2014.

Whatever else can bemade of if, there appears to be little dispute that Exhibit “E” refers to estate assets offsetting certain alleged debt owed by the Daughtersto the Sons. The alleged debt mentioned in Exhibit “E” is the $9,161,467, the validity of which is objected to by the Daughters and, asnoted above, not proven before me.

Just on that basis Exhibit “E” loses most if not all of its force on the Sons’ application. [59] It is unnecessary then to deal with the Daughters’ submission that Exhibit “E” goes on to reduce the alleged indebtedness bysubtracting various distributions from the estate, most notably (but not limited to) the $1.7 million Castle Mountain distribution. [60] Whether or not the figures at Exhibit “E” are “entirely synthetic” – as argued by the Daughters’ counsel – I do not hesitate toconclude that for

summary judgment purposes Exhibit “E” fails to prove the quantum of any amount owing as at November 27, 2009, orat November 20, 2014, or at any other time material to the proceedings. [61] For the reasons given, the Son’s

summary judgment application is dismissed. IV. The Daughters’ counterclaims [62] No one suggested that the legal test for

summary judgment on a counterclaim is any different from the test set out earlier inthese reasons. [63] The Daughters each counterclaimed on March 14, 2014. [64] The counterclaim of Nicole Decore does not purport to add Decore Holdings Inc (“DHI”) as a claimant. It states however thatbetween January, 2011 and September, 2013 DHI made payments to the Sons on its own behalf, in relation to certain bonus monies, andon Nicole Decore’s behalf, in relation to her share of the Daughter’s debt to the Sons.

The counterclaim alleges an overpayment by DHIof $894,145.41, half of which ($447,072.70) Nicole Decore claims from the Sons. [65] Equally, Karyn Decore’s counterclaim, styled on her own behalf but also naming Decore Holdings Inc. (DHI) as a counter-claimant, alleges that DHI made payments on its own behalf and on behalf of the Daughters, the effect of which was to give rise to thealleged $894,145.41 overpayment. [66] Before I turn to the merits of the counterclaims, I will deal with two threshold arguments raised by the Sons.

The first is whatthe Sons themselves style a “technical defence” based on rule 3.56(1) of the Alberta Rules of Court. The second is a limitations issuethat arises only if the ‘technical defence’ is found to lack merit. The ‘technical defence’ [67] The defence is that DHI is not a proper party in the counterclaim as it was not named as a party in the Sons’ Statement ofClaim. [68] No one disagrees that DHI was the corporate person that made the overpayments alleged in the counterclaims.

While denyingthe alleged over-payment, the Sons do not deny receiving certain funds from DHI. [69] The Sons rely on Lil Dude Ranch Ltd v 1229122 Alberta Inc, 2014 ABQB 39, 5 Alta LR (6th) 154, for the proposition that asMaster Robertson said at paragraph 29: 29 It is manifestly clear that the former Rule 93(1) and Rule 3.56(1) say that only a defendant can advance a counterclaim.

Althoughthe wording of the new rule is slightly different than the former rule, they both say that a defendant can advance a counterclaim, and indoing so the defendant can add other parties as defendants-by-counterclaim in addition to the plaintiff. Neither the former rule nor thecurrent rule admit of the possibility of adding a stranger to the proceedings as a plaintiff-by-counterclaim. [70] The Master further noted the earlier authority, to the same effect, of Makarchuk v Pollard, (AB CA),[1957] AJ No 38, 23 WWR 617 (CA). That case held that a counterclaim made by a non-party is a nullity.

Makarchuk remains goodlaw in spite of numerous changes to the wordings of rules since the late 1950s.

It has been followed numerous times in the years thathave followed, e.g., Saskatchewan et al v Buskas Buskas et ux v Bruno et al, 1972 AJ No 111, [1973] 3 WWR at paras 13-16(ASCTD); Borgland v Kleefeld, [1978] AJ No 101 (CA) at para 5; JJ Catering Ltd v MGM Developments, (ABKB), [1986] AJ No 538, 45 Alta LR (2d) 318 (MC) at para 5; and Bhatt v Hoodstraat, (AB KB), [1989] AJ No 927,102 AR 336 (MC) at para 4. [71] The Daughters argue that Makarchuk was decided under an older rules’ regime; they argue that Lil Dude Ranch is notbinding, so that it is open to me to consider particularly the Rule 1.2 arguments advanced before the Master, as laid out at paras 34-36 ofhis decision. [72] Like the Master, I agree there is strong appeal to the concept of adding a new plaintiff by counterclaim to ensure that allnecessary parties are before the court.

But I also agree with the Master’s final conclusion that the proposed ‘re-interpretation’ of Rule3.56(1), in light of long-established authority, would in fact ‘re-write’ the rule.

[73] Two other approaches, not before the Master in Lil Dude Ranch, are before me. One arises on a consideration of s. 8 of theJudicature Act, RSA 2000 c. J-2, the other on a consideration of the reach of the Surrogate Rules of Court in the action before the court,commenced under the general Rules of Court.

Section 8 of the Judicature Act [74] Under the heading “General jurisdiction”, s. 8 of the Judicature Act states: 8 The Court in the exercise of its jurisdiction in every proceeding pending before it has power to grant and shall grant, either absolutelyor on any reasonable terms and conditions that seem just to the Court, all remedies whatsoever to which any of the parties to theproceeding may appear to be entitled in respect of any and every legal or equitable claim properly brought forward by them in theproceeding, so that as far as possible all matters in controversy between the parties can be completely determined and all multiplicity oflegal proceedings concerning those matters avoided. [75]

Section 8 was not considered by the Master in Lil Dude Ranch. The Daughters argue this alters the Rule 3.56(1) outcome inthe case before the court. [76]

Section 8 is commonly relied on, most often procedurally, to avoid both waste and a multiplicity of proceedings: Allard vShaw Communications Inc, 2010 ABCA 316 at para 9. [77] Any number of further authorities may be cited for the role of s. 8 in support of those objectives, including for example:Janhke v Wylie (1993), (AB KB), 144 AR 188 (QB), (reversed on appeal on other grounds, 1994 ABCA 350) at para104; WJY v SJB, 2011 ABCA 37; Klychak v Samchuk, 2012 ABQB 85, at para 36. [78] In RP v RV, 2012 ABQB 353, Hughes J discusses the inherent jurisdiction of the court and s. 8 and sets out a test for itsapplication in the context of whether the court can exercise its discretion to grant a restraining order: 17 In R v Caron, 2011 SCC 5, [2011] 1 S.C.R. 78 at para. 24, the Supreme Court of Canada quoted with approval I.

H. Jacob, "TheInherent Jurisdiction of the Court" (1970), 23 Curr. Legal Probs. 23, in describing inherent jurisdiction as: “a residual source of powers, which the court may draw upon as necessary whenever it is just or equitable to do so” ...

These powers arederived “not from any statute or rule of law, but from the very nature of the court as a superior court of law” ... to enable “the judiciary touphold, to protect and to fulfil the judicial function of administering justice according to law in a regular, orderly and effective manner”.[citations omitted] 20 This Court's inherent jurisdiction and authority to grant equitable relief has been codified in the Alberta Judicature Act, R.S.A.2000, c.

J-2, ss. 8 and 13(2).[…] [79] To a similar effect, Veit J’s reasons in Lee v Yoo, 2015 ABQB 522 at paras 32-35. [80] In 3S Resources Inc v Improvisions Inc, 2014 ABQB 746, at para 51, Greckol J, invoking s. 8, stated that she was also: …mindful of the purposes of the Rules as set out at Rule 1.2.

Those purposes include to “facilitate the quickest means of resolving aclaim at the least expense” and to provide “an effective, efficient, and credible system of remedies and sanctions.” However, theforemost purpose is stated in Rule 1.2(1): to “provide a means by which claims can be fairly and justly resolved.” The Courts’ powerunder

section 8 of the Judicature Act, RSA 2000, c J-2, is to grant all remedies, as far as possible, to completely determine matters incontroversy and avoid multiplicity of proceedings. [81] Finally, and not least, s 8 attracted further attention worth mentioning in the very recent case of Pyrrha Design Inc v Plumand Posey Inc, 2016 ABCA 12 at paras 8-10: [8] It is incontestable that a chambers judge possesses inherent jurisdiction to control its process: De Shazo v Nations Energy CompanyLtd, 2006 ABCA 400 at para 12, 401 AR 142; MacMillan Bloedel Ltd v Simpson, (SCC), [1995] 4 SCR 725at para 33, 130 DLR (4th) 385.

This jurisdiction is also expressly granted by s. 8 of the Judicature Act, RSA 2000, c J-2, which providesthe court with power to grant any appropriate remedy that is appropriate in the discrete circumstances of a case: Nafie v Badaway, 2015ABCA 36 at paras 97-98, 11 Alta LR (6th) 1; Bank of Montreal v Valerio, 2009 ABQB 578 at para 30, 480 AR 393. [9] Rule 1.3(1) of the Alberta Rules of Court is to like effect when it states that the Court may do either or both of: (

a) give any relief or remedy described or referred to in the Judicature Act; or (

b) give any relief or remedy described or referred to in or under these Rules or any enactment.

Rule 1.3(2) specifically states that a “remedy may be granted by the Court whether or not it is claimed or sought in an action.” [10] And, quite apart from avoiding the multiplicity of actions – the mischief sought to be avoided by s 8 of the Judicature Act and R1.3 of the Alberta Rules of Court, a proposition for which there is also ample case authority – the chambers judge properly adhered to theurging of the Supreme Court of Canada in Hryniak v Mauldin, 2014 SCC 7 , [2014] 1 SCR 87 to the effect that courts areobliged to resolve legal disputes in the most cost-effective and timely method available, provided the process selected ensures fairnessbetween the parties.

Here, the chambers judge is to be commended, not criticized, for pursuing a cost-effective, timely final resolution tothis litigation which was fair and just to the parties, as it simply serves no one’s interest to permit continuation of protracted and costlylitigation when it can be properly disposed of summarily and entirely.

[ 82 ] As noted, the Daughters argued s. 8 of the Judicature Act in their original submissions before me. I invited and in turn received further written submissions from the parties on the applicability of s. 8, and on the relevance, if any, of the Surrogate Rules. [ 83 ] I specifically invited submissions on the question of: … whether these applications are really in the nature of surrogate proceedings, rather than civil proceedings, and, if that is so, then via s. 8 of the Judicature Act or otherwise are they liable to being converted to and governed by the Surrogate rules process rather than the civil rules?

And if that is so, then does the “technical defence” necessarily remain? [ 84 ] Since inviting and receiving the parties’ further written submissions, I have obviously decided the issue of characterization.

That is to say, I have rejected the Sons’ contention of a standalone contract giving rise to a debt action; I have accepted the Daughters’ view that even though framed by general rules’ pleadings, the parties remain engaged squarely in estate litigation. [ 85 ] (I pause to note that no application is before me and I am not now deciding anything about the inherent validity of the Sons’ proceeding by way of Statement of Claim under the general Rules of Court. As neither side wins on

summary judgment, and failing agreement, the parties may need to seek further advice and direction on the future of the current proceedings.) [ 86 ] The Sons do argue persuasively and I accept that the reach of s. 8 stops short of affecting legislated rules ( R v Caron , [2011] 1 SCR 78, 2011 SCC 5 , at para 32 ; Wilson v Board of Trustees of Aspen View Regional School , 2014 ABQB 741 , at paras 17-33 ; 376599 Alberta Inc v Tanshaw Products Inc , 2005 ABQB 300 , at para 219 ).

As such, I agree that Rule 3.56(1) as interpreted by authority binding on me, stands in the way, without more, of a s. 8 Judicature Act remedy in the circumstances of this case. The reach of the Surrogate Rules [ 87 ] As noted, aside from s. 8 Judicature Act considerations, I had invited submissions with regard to the reach of surrogate rules process rather than the civil rules. [ 88 ] The Daughters have noted that by virtue of s. 4 of the Estate Administration Act SA 2014 c.

E-12.5 both the general Rules of Court and the Surrogate Rules apply to any application or matter that arises in the administration of an estate under the Act. [ 89 ] I agree with the Daughters that the closer question is whether I can have recourse to the Surrogate Rules in a case such as this. The Daughters refer to what they describe as the “broad curative provisions” of Surrogate Rule 2, which states: Rules of Court 2(1) The Alberta Rules of Court (AR 124/2010 ) apply to an application to the court if the matter is not otherwise dealt with under these Rules or the context indicates otherwise.

(2) The court may vary any rule in any case where the court decides it is appropriate to do so.

(3) Subrule (2) does not apply if the rule imposes a duty on the court.

(4) If provision for a procedure or matter is not made in these Rules or is not included in and cannot be analogized to the Alberta Rules of Court (AR 124/2010 ), the court may make any order concerning it that is necessary or appropriate in the circumstances. [ 90 ] In Bolt v Popke , 2003 ABCA 156 , at para 8 , the court recognized that Rule 2(2) of the Surrogate Rules preserves the court’s discretion to vary any rule “where the court decides it is appropriate to do so”. Bolt v Popke was a case about the formal proof of a will.

I do not read the Court of Appeal’s comment regarding Rule 2(2) to be limited to that context. The Court’s conclusion in the case before it, at para 9, is similar to the conclusion I have reached: In this case, the chambers judge carefully considered the issue of pleadings.

He reasons that in this type of litigation, reliance on pleadings would unreasonably protract and postpone the resolution of issues which were otherwise capable of being clearly and simply prescribed in the terms of the order. [ 91 ] In Bolt v Popke , 2003 ABCA 311 the court considered whether to give leave to re-argue certain issues decided in its earlier decision, including as to the application of Surrogate Rule 2(2).

Leave to re-argue was denied. [ 92 ] (For other authorities which address the broad and wide reach of the Surrogate Rules: Charles v Young , 2014 ABCA 200 , at para 6-7 ; Saraceni v Saraceni , 2013 ABCA 354 , at para 16 ; Quaintance v Quaintance (Estate) , 2006 ABCA 47 at para 18 ; Surrendi (Estate) v Surrendi , 2001 ABQB 1099 .) [ 93 ] On the authority of Bolt v Popke and other cases the door appears very much open to the exercise of judicial discretion to fashion procedure under Surrogate Rule 2(2) that most broadly stated serves the ends of justice – procedure very much in keeping with the dictates of s. 8 of the Judicature Act and with Hryniak v Mauldin .

Indeed, there is no reason to doubt that Hryniak v Mauldin and the many cases now following it, informs proceedings governed by the Surrogate Rules.

Equally, there is every reason to accept that where appropriate s. 8 of the Judicature Act may be invoked in surrogate proceedings. [ 94 ] Nevertheless, I hesitate to decide whether or not Rule 3.56(1) applies based solely on the broad terms of Surrogate Rule 2(2), at least without some further consideration of the balance of Surrogate Rule 2, and in particular 2(1) and 2(4), and without some further consideration of the history and purpose of the Surrogate Rules, alongside the general Rules of Court.

Surrogate Rule 2(1) [ 95 ] With regard to Surrogate Rule 2(1), in the circumstances here I find that rule 3.56(1) does not apply to the applications before the court because the matter in question – the participation of DHI as a plaintiff by counterclaim – is a matter capable of being dealt with otherwise under the Surrogate Rules’ broad ambit to fashion pleadings and procedure. Further, I find that the context of the applications supports that outcome. [ 96 ] Rule 3.56(1) is a very specific provision found at

Part 3 of the Rules of Court which deals broadly with “Court Actions”, and Division 3 thereof, (“Actions Started by Statement of Claim”), and Subdivision 7 thereof (“Counterclaims”). [ 97 ] The Surrogate Rules too deal broadly with pleadings and parties. In particular,

Part 2, Division 1 of the Surrogate Rules deals with “Contentious Matters”, which is clearly applicable here. The rules which follow have long established a unique process for estate and related litigation. These rules also grant the court broad powers to fashion the procedure to be followed in the determination of such matters. Surrogate Rule 64 for example speaks to proceedings in chambers: Procedure at hearing 64(1) The court, on hearing an application, may (

a) receive evidence by affidavit or orally; (

b) dispose of the issues arising out of the application as it considers appropriate; (b.1) direct a person to file a reply, accompanied with an affidavit, if evidence is to be submitted, or a demand for notice; (

c) direct a trial of issues arising out of the application; (

d) grant any relief to which the applicant is entitled because of a breach of trust, wilful default or other misconduct of a respondent; (

e) direct that notice of the court’s judgment or order be given to a particular person; (

f) dispense with service of notice on any person if, in the opinion of the court, service is impractical; (

g) subject to subrule (2), dispense with service of an order and order that a person is bound by the court’s order as if the person had received notice of it; (

h) order costs to be paid from the estate or by any person who is a party to the application; (

i) make any order that the court considers necessary in the circumstances. [ 98 ] Surrogate Rule 66 speaks to when the court orders the trial of an issue arising in a surrogate proceeding. In that event: …the court must order the procedure to be followed and the terms and conditions under which the trial is to take place. [ 99 ] I have decided that the

summary judgment applications before the court are in reality surrogate contentious matters. That they were brought under the form of the civil Rules of Court does not change that substantive finding. The Surrogate Rules, and in particular rule 64(1), are more than adequate to guide the commencement and unfolding of contentious surrogate matters. There is no good reason to import piecemeal certain provisions from the general Rules of Court, such as here, rule 3.56(1).

Put another way, had these applications been brought in the form required by the Surrogate Rules, it is hardly likely that the parties would be arguing about the effect of general rule 3.56(1) – or if they were, hardly likely that the conclusion regarding the application of that general rule would be any different. [ 100 ] What’s more, the context of these proceedings before the court supports that outcome. To avoid unnecessary repetition, on this point I refer to my comments made later in these reasons, under the heading of ‘The Limitations Act ’.

Surrogate Rule 2(4) [ 101 ] With regard to Surrogate Rule 2(4), again I find that the Surrogate Rules do provide an appropriate procedure and therefore it is unnecessary to “analogize” to the Alberta Rules of Court , and in particular to Rule 3.56(1) . [ 102 ] What’s more, and as stated in yet another version of Bolt v Popke , 2003 ABCA 305 , at para 11 , where two enactments arguably apply, the court should attempt to construe them to fit together.

Here, there is no reason to construe Rule 3.56(1) as applying when the broad powers under the surrogate process to fashion pleadings and procedure achieves an appropriate outcome. The history and purpose of the Surrogate Rules [ 103 ] In reaching my conclusion regarding Rule 3.56(1) vis-à-vis the Surrogate Rules, I have been informed by a review of the origins the Surrogate Rules, and of their long-standing status alongside the general Rules of Court.

[ 104 ] The starting point is the current Surrogate Rules, in force as Alberta Regulation 130/95 under the authority of the Judicature Act RSA 2000 c. J-2. The Alberta Rules of Court are in force separately, as Alberta Regulation 124/2010.

Section 28.1(1) (a)(

i) of the Judicature Act speaks to the Lieutenant Governor in Council’s authority to make rules governing the practice and procedure in the Court of Queen’s Bench. A separate provision, s. 28.1(1)(b)(i), speaks to the related authority to make rules governing surrogate matters in the Court of Queen’s Bench. [ 105 ] The two sets of Rules have long co-existed.

In its modern form this co-existence is recognized for example by the authors of the Alberta Civil Procedure Handbook (2016) who note that: Though R. 2 of the Surrogate Rules incorporates the general Rules of Court, R. 2(2) of the Surrogate Rules gives the court an express power to vary any Rule “where the court decided it is appropriate to do so” [citing Bolt v Popke , 2003 ABCA 156 , 327 AR 314].

Obviously that is confined to surrogate litigation. (at pp 1-13 to 1-14) [ 106 ] While the origins of surrogate jurisdiction can be traced back many, many hundreds of years, for now it is enough to look to the English Court of Probate Act, 1857 (Imp.), c. 77, which came into force in January, 1858.

That statute ended the jurisdiction of the ecclesiastical courts (in relation to personal property) and of the common law courts (in relation to real property) over grants of probate and administration, to the extent that jurisdiction had not already been ceded to the Court of Chancery. (A fuller history is found at F.A. Inderwick QC, The King’s Peace: a Historical Sketch of the English Law Courts , 1895, at pp 219-221; also Hull Cullity Probate Practice (3 rd ed., 1981) at pp. 1-19; and A.H.

Oosterhoff, Oosterhoff on Wills and Succession (7 th ed., 2011), pp. 1-12.) [ 107 ] Jurisdiction under the Court of Probate Act was exercised by the Court of Probate for close to two decades before in 1875 that court became part of England’s newly-centralized Supreme Court of Judicature, then as part of the Probate, Divorce and Admiralty division: Supreme Court of Judicature Acts, 36 & 37 Vict., c. 66; 38 & 39 Vict., c. 77). [ 108 ] Before centralization however the 1858 Court of Probate was a court of record and notably, for the purposes of this case, was given its own rule-making powers.

Rules were then brought into force in 1862. They defined, amongst other things, contentious and non-contentious business (Hull Cullity, at pp. 5-6, 13).

These expressions continue to be used today in modern surrogate rules; no such language appears now, if it ever has, in the general Rules of Court. [ 109 ] Generally speaking English law was received in Alberta’s precursor, the North-West Territories, as that law stood on July 15, 1870. ‘Generally speaking’, however, because that received law was in force only to the extent it had not been ‘repealed, altered, varied, modified or affected’ by subsequent legislation, and then only to the extent that it applied to the social and economic realities of what was then a sparsely-settled area such as Canada’s north-west territory (as more fully described by J.E.

Cote “The Introduction of English Law into Alberta” (1964) 3 Alta Law Rev. 262) [ 110 ] And so while useful to review, it is not a complete answer to rely on the English law received by the North-West Territories in the form of the 1857 Court of Probate Act and the 1862 rules.

Modification was already apparent for example as early as 1893, in what Ewing JA observed, in Re Rutherford Estate , at paras 21-22, was a “small body of rules relating to probate and letters of administration” in the North-West Territories Judicature Ordinance, 1893, No. 6. [ 111 ] From 1905 in Alberta, further modification of the law received from the North-West Territories took place by means of the Supreme Court Act, 1907, c. 3 , and the District Courts Act 1907, c. 4 . [ 112 ] At the superior court level, re-stated in full was the receipt of English law as at July 15, 1870 including the jurisdiction of “the judges of the Court of Probate in England” (ss. 5, 9(5)) and of the Court of Chancery (s. 11) being vested in the new Supreme Court of Alberta.

Any rules then existing in the North-West Territories were carried forward, subject to any contrary intention being stated in the 1907 Alberta legislation. [ 113 ] As to the then-new District Court of Alberta, a certain administrative jurisdiction was initially conferred to it in probate matters, as laid out in s. 41 of the District Courts Act . Contentious business was generally excluded, other than as to the validity of wills: s. 23 of the Act.

Section 34 of the Act created authority to make rules within that court’s jurisdiction, absent which the Supreme Court rules would apply. [ 114 ] It appears that legislatively the District Court jurisdiction over surrogate matters remained largely unchanged until 1967. In that year the Surrogate Court Act (SA 1967, c. 79) statutorily created the Surrogate Courts, one each for northern and southern Alberta. District Court judges became the judges of the Surrogate Court. District Court chief judges became also Surrogate Court chief judges.

In turn, Surrogate Court judges took on a broad jurisdiction over: … testamentary matters and causes, the issuing or revoking of grants of probate and administration and all matters arising out of or connected with the issue of revocation of grants of probate and administration. (s.12(1)) [ 115 ] What’s more, as of 1967 Surrogate Court judges were given broad powers over “testamentary matters and causes” (s. 12(1)) and all of the powers of superior court judges within that broad jurisdiction (s. 12(2)), including legal and equitable remedies (s. 15(b)). [ 116 ] The 1967 Act defined “rules” as the surrogate court rules: s. 2(h).

And s. 17(1) of the same Act provided that: Except as otherwise provided by this Act or the Rules, the practice, procedure and rules of the Supreme Court, including the course of proceedings and practice in chambers, so far as they are applicable and consistent with this Act and the Rules, apply to proceedings in a surrogate court. [ 117 ] This jurisdiction however was not exclusive: nothing in the Surrogate Court Act affected the Supreme Court of Alberta’s jurisdiction over surrogate matters, and in certain events cases could be removed to or from either of the courts: s. 21. [ 118 ] Questions of ‘shared jurisdiction’ between the District and Supreme courts became academic with the amalgamation of those

two courts in the newly-named (as of June 30, 1979) superior court, the Court of Queen’s Bench of Alberta. [ 119 ] Soon before the courts’ amalgamation, the Surrogate Court was described, in the 1978 Annual Report of the Attorney General for Alberta, as a: “…relatively low volume, little-known, and specialized court [which] … plays an important role in the administration of justice in the province.” [ 120 ] (Ironically, before amalgamation the last Chief Justice of the District Court of Alberta – and also then Chief Justice of the Surrogate Court of Alberta – was the litigants’ grandfather, the Hon. John N.

Decore.) [ 121 ] Soon after the 1979 amalgamation of the Supreme and District courts, the Surrogate Court was “continued” in the Court of Queen’s Bench, and the Surrogate Court Act repealed, on April 1, 2001: Justice Statutes Amendment Act , RSA 2000, c. 16. [ 122 ] Yet despite these changes, the Surrogate Rules remained a discrete collection of rules respecting surrogate practice, including contentious matters. [ 123 ] As noted above, before the 1967 Surrogate Court Act defined them, surrogate rules had long existed in England, in the North- West Territories, and in Alberta.

The 1914 Consolidated Rules of the Supreme Court of Alberta include, as a separate division, numbered 1-67, “Rules Relating to Applications for And Grant of Letters of Administration, Probate and Guardianship”. Subsequent volumes of rules carry this description forward (e.g., the rules as amended to 1923, then referring to surrogate rules as numbered 922- 989; as amended to 1954, then referring to surrogate rules as “Part 59” and numbered 983-1052; and as brought into force as The Supreme Court Rules in 1968 ( AR 390/68 ), then as

Part 62, rules 861-926. [ 124 ] It was on February 28, 1971, pursuant to s. 23 of the Surrogate Court Act, the Rules of the Surrogate Court first came into being (AR 20/71) and

Part 62 for the most part was struck out. The 1971 Surrogate Rules were then revisited some 20 years later, starting with the Alberta Law Reform Institute’s October, 1991 Report for Discussion No. 10, entitled “Revision of the Surrogate Rules”. [ 125 ] Under the heading “Philosophy” at page 5 the 1991 Report for Discussion states: An overall philosophy drives the recommendations for [surrogate rule] change.

That is that the system, although supervised by the court, is driven by the personal representative. [ 126 ] The 1991 Report also notes that beneficiaries must take some responsibility for protecting their own interests, and so notice to them (and indeed to others interested in the estate) is of the utmost importance. [ 127 ] The 1991 Report notes a “logical continuum” set out in the surrogate rules, from straightforward estates which require no court intervention – ie, governed by the ‘non-contentious’ part of the rules – to those estates which find themselves subject to the ‘contentious business’ part of the rules, which apply if “an estate needs the further intervention or supervision of the court” (at page 5): Different levels of court involvement may be required when the courts are asked to supervise any area of estate administration.

Most issues can be handled in the Chambers setting. Only in more complicated matters will the court supervision move to the more detailed level of trial. Appeal procedures remain unchanged. (at page 6) [ 128 ] It is worth noting that the 1991 Report raised the question of abandoning most of the surrogate rules’ approach in contentious matters, in favour of the general Alberta Rules of Court .

In the end, however, the 1991 Report recommended that the then-current surrogate rules be re-written to provide a specific procedure for all estate contentious matters (excepting Proof in Solemn Form and Passing of Accounts), subject to, as had always been the case, a ‘fall-back’ provision to the general Rules of Court (now s. 2, but in the 1971 Rules, s. 51, which then ‘fell back’ not only to the Alberta Rules of Court but also to “…the practice […] as in the Probate, Divorce and Admiralty Division of the High Court of Justice of England”). [ 129 ] The 1991 Report for Discussion led to ALRI’s May, 1996 Report No. 73 “Revision of the Surrogate Rules: Final Report”.

This report is styled a joint project of ALRI and of the Surrogate Rules Committee. [ 130 ] (The Surrogate Rules Committee had been struck in the mid-1970s by the Attorney General of Alberta, to review concerns and make recommendations relating to surrogate rules and practice. As noted, it played a key role in the mid-1990s Surrogate Rules’ revisions. It evolved by 2011 into the Surrogate Rules Advisory Committee, by Ministerial Order 22/2011.

It is advisory to the Rules of Court Committee, the existence of which is separately recognized by s. 28.2(1) of the Judicature Act .) [ 131 ] Again under the heading of “Philosophy”, the 1996 Report noted amongst other things that “one court should have carriage of all applications dealing with the administration of estates: There should be one estate file in court that builds all the estate information in one place.

This is not only efficient, it also removes the need to repeat information from one court to another and from one application to another. (at page 4) [ 132 ] Yet again under the heading “Philosophy”, the 1996 Report explained further that: We wanted a comprehensive set of procedures that govern the administration of the estates of deceased persons. (at page 6) … Secondly, we wanted a system that was driven by the personal representative of an estate with court intervention only when necessary. …

Thirdly, we needed some supervision of the personal representative that was not the court. We wanted to have a check on the personal representative to ensure that the estate administration began in a timely way and did not falter. Therefore, we gave responsibility to the beneficiaries to protect their own interests.

To do this, beneficiaries must have notice that they have an interest to protect. (at page 7) … Fourthly, should court intervention be necessary, the rules set out a standard procedure to get issues heard by the court whatever the nature of the application. (at page 7) [ 133 ] The ALRI/Surrogate Rules Committee work led to the enactment of new Surrogate Rules in 1995 ( AR 130/95 ). [ 134 ] Significantly, the Surrogate Rules were untouched by the reforms which led to the new Rules of Court, in force as of November 1, 2010 ( AR 124/2010 ).

One of the core principles in the new Rules of Court was that, on the whole, the parties were expected to manage their own litigation. [ 135 ] I take from this somewhat involved review of surrogate court and rule history, that for a very long time the legislature and others with rule-making powers and influence have honoured the distinction between rules for general civil litigation, and rules for contentious matters arising in the surrogate context including, as here, the administration of an estate. [ 136 ] Granted, this distinction is largely historical.

But of course history informs the present, and the future. [ 137 ] The distinction between the general and surrogate rules is also purposive: the courts’ broad discretion in surrogate matters to amongst other things fashion the pleadings and procedure is consistent with and serves the courts’ larger supervisory role in estate matters, to say nothing of guardianship/trusteeship matters. These are matters which often involve the validity and/or

interpretation of the last intentions of a person – the deceased – who is before the court only indirectly through a personal representative, and sometimes imperfectly so. Or they are matters which often involve competing claims from persons (e.g., dependents, creditors, beneficiaries) who were not themselves party to the testator’s expressed last wishes. Or in the case of intestacy, they are matters involving the

interpretation of legislation as it affects the unspoken wishes of the deceased, and the claims of would-be personal representatives, and dependants, creditors, beneficiaries. [ 138 ] None of this is to say that personal representatives, beneficiaries and others interested in an estate can never ‘manage their own litigation’ just as parties to general rules civil litigation are expected to do. But history and practice and the very nature of surrogate disputes suggests that there will be cases when the court is called on purposively to exercise its broad, supervisory jurisdiction under the Surrogate Rules.

I find that this is one of those cases. [ 139 ] I have accordingly rejected the Sons’ approach in this case as it attempts to re-characterize what is clearly a contentious matter under surrogate jurisdiction as debt litigation to which the general Rules of Court apply, including recourse to the ‘technical defence’ offered by Rule 3.56(1). [ 140 ] The Sons’ approach does not flow from any intention of the parties, either stated or flowing logically from their agreements. It is not consistent with the intention of the testatrix. It is not in keeping with sound surrogate practice.

If allowed, it would result in an unnecessary multiplicity of proceedings. It would tend to defeat the goal, stated in the 1996 Report mentioned above, that one court should have carriage of all applications dealing with the administration of estates. And not least, it would limit the court’s discretion under a long-standing and purposive surrogate process to fashion the pleadings and procedure to serve the ends of justice in the individual case. [ 141 ] In all of this, finally, I am mindful of the fact that the Sons are no strangers to the Surrogate Rules.

They have brought multiple applications under those rules in the action numbered ES03 125382, case managed initially by Justice Clackson, and now by me. The October 21, 2010 application in particular, sought much the same relief the Sons now seek in their ‘debt’ Statement of Claim. That surrogate application sought a declaration of security in favour of the Sons in respect of Maligne and Tonquin flowing from the November 27, 2009 Agreement. The security was to be an equitable mortgage. The application was supported by Lyndon Decore’s affidavit sworn October 21, 2010.

It was brought under Surrogate Rules 4 and 55-70. [ 142 ] The October 21, 2010 application led to the Consent Order of December 13, 2010, which amongst other things, gives the Sons the security on which they now sue. [ 143 ] This is not to say that the October 21, 2010 application brought under the Surrogate Rules is identical to the November 15, 2013 Statement of Claim brought under the general Rules of Court.

If only given the passage of time, the latter pleading raises the December 13, 2010 Consent Order and the December 8, 2010 Supplemental Agreement that came shortly before that Consent Order. [ 144 ] Again, however, none of this obviously makes the alleged indebtedness a standalone issue that the parties intended or agreed could/should be enforced outside of the estate proceedings. [ 145 ] Indeed, paragraph of 15 of the Statement of Claim suggests just the contrary: 15.

After applying all amounts received from the Estate, all payments made after repayment of the Bonus Monies, there remains owing, as at October 31, 2013, the sum of $1,708,618.37, which continues to accrue interest at 8% per annum, calculated and compounded semi-annually. [ 146 ] How that is not a claim inextricably bound to the estate and its administration is not something the Sons have satisfactorily explained in their application for

summary judgment. [ 147 ] Indeed, it is worth asking if the existence of October 21, 2010 application undermines the Sons’ contention that from the time of the November 27, 2009 Agreement they always believed they had a standalone contract that could be enforced outside the Will, and

litigated outside the Surrogate Rules. [ 148 ] I acknowledge the Sons’ argument that the Daughters’ counterclaim amounts to an ‘election’ to litigate under the general Rules of Court . I know of no authority that allows a party, without more, to ‘elect’ out of rules that appropriately govern their proceedings. [ 149 ] At the end of the day, I find for reasons stated, and in the absence of any evidence of prejudice, that the Sons’ ‘technical defence’ fails.

It follows, whether by way of a nunc pro tunc order (as suggested by the Daughters, citing Nafie v Badawy , 2015 ABCA 36 , [2015] AJ No 85, at paras 95-98 , or by resort to Surrogate Rules 2 and 55-70, that DHI should be added as a proper party to the proceedings before the court. The Limitations Act [ 150 ] In their recent written submissions, the Sons raise, for the first time, the Limitations Act RSA 2000 c.L-11, s. 3 . They note that more than two years has passed since DHI made any alleged overpayment to the Sons.

As such, they say DHI is out of time now to commence a separate proceeding. ( When the Sons defended the Daughters’ counterclaim, the limitation period had not yet passed, so logically it was not then pleaded.) [ 151 ] The Daughters respond by noting that the Sons’ Limitations Act argument is raised in violation of Rule 13.6(3)(q). [ 152 ] More importantly, the Daughters say, the Sons’ position ignores s. 6(3) of the Limitations Act , which states: Claims added to a proceeding 6(1) Notwithstanding the expiration of the relevant limitation period, when a claim is added to a proceeding previously commenced, either through a new pleading or an amendment to pleadings, the defendant is not entitled to immunity from liability in respect of the added claim if the requirements of subsection (2), (3) or (4) are satisfied. […]

(3) When the added claim adds or substitutes a claimant, or changes the capacity in which a claimant sues, (

a) the added claim must be related to the conduct, transaction or events described in the original pleading in the proceeding, (

b) the defendant must have received, within the limitation period applicable to the added claim plus the time provided by law for the service of process, sufficient knowledge of the added claim that the defendant will not be prejudiced in maintaining a defence to it on the merits, and (

c) the court must be satisfied that the added claim is necessary or desirable to ensure the effective enforcement of the claims originally asserted or intended to be asserted in the proceeding. [ 153 ] This provision has been interpreted plainly in Stout Estate v Golinowski Estate , 2002 ABCA 49 , 299 A.R. 13; 1036122 Alberta Ltd (c.o.b. AML Construction) v Khurana [2012] A.J.

No. 7, 2012 ABCA 10 . [ 154 ] I agree with the Daughters’ submission that each of the conditions in s. 6(3) is plainly satisfied in the circumstances of this case. [ 155 ] Regarding s. 6(3)(a), the May 13, 2014 counterclaim adding DHI clearly relates to the conduct, transaction or events described in the original pleadings.

The role of DHI runs throughout the evidence and arguments of the parties, e.g., the Sons’ Brief filed September 4, 2015, at para 78, mentioning that “practically” alleged debts of DHI and of the Daughters have been “dealt with as one debt”, and that the Sons had agreed with the Daughters’ proposal to take the shares of Tonquin and Maligne through DHI, and to accept payments from DHI as at least part of the estate equalization process. [ 156 ] Regarding s. 6(3)(b) – and mindful of the onus placed on the defendant Sons by s. 6(5)(

b) of the Limitations Act – there is no reason to doubt that within the limitation period and time for service the Sons had received sufficient knowledge of the added claim that they will not be prejudiced in maintaining a defence on the merits. [ 157 ] Finally, regarding s. 6(3)(c), I am satisfied that for the purposes of s. 6(3)(

c) the added claim is necessary and desirable. The merits of the Daughters’ application [ 158 ] The Sons’ technical defence and limitations issues having been dealt with, I now turn to the merits of the Daughters’ applications for

summary judgment on the counterclaims. For reasons which follow the applications fail. [ 159 ] The counterclaims each allege that between January, 2011 and September, 2013 the Daughters, through DHI, overpaid the Sons to the extent of $894,145.41. The Daughters allege they paid on the basis of calculations provided by the Sons; they further allege those calculations were incorrect or included amounts not payable to the Sons. [ 160 ] Neither of the counterclaims allege that on deciding the ‘interest-owing’ issue, all other claims on the estate will be resolved.

[161] Critical to the success of the Daughters’

summary judgment applications is whether I can find on the evidence that the partiesintended and agreed to be governed by a precisely enumerated ‘cash to close’ figure of $3,852,577.32, as laid out under the so-called“Deloitte column” of

Schedule A to the Supplemental Agreement of December 8, 2010. [162] As will be apparent from what follows, I am unable to make that finding. The applicable law [163] The parties all relied on Bhasin v Hrynew, 2013 ABCA 98, [2013] AJ No 395 (reversed at 2014 SCC 71, [2014] 3 SCR 494) astheir starting point for the

interpretation of an agreement such as the Supplemental Agreement before the court. [164] I have also had regard for the law as stated in Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53 , itself recentlyinterpreted in Vandal v Cousineau, 2015 ABCA 408, in particular on the role of so-called ‘context’ evidence. (No one in theseapplications argued for the admission of parole evidence as such.) In Valdal, at para 9, the majority stated as follows: [9] The decision in Sattva has expanded the type of evidence that is now admissible on the

interpretation of contract, but theadmissible evidence is still limited: 57 While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed tooverwhelm the words of that agreement (Hayes Forest Services, at para. 14; and Hall, at p. 30). The goal of examining such evidence isto deepen a decision-maker’s understanding of the mutual and objective intentions of the parties as expressed in the words of thecontract. The

interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract(Hall, at pp. 15 and 30-32). While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them todeviate from the text such that the court effectively creates a new agreement (Glaswegian Enterprises Inc v BC Tel Mobility CellularInc (1997), (BC CA), 101 B.C.A.C. 62). 58 The nature of the evidence that can be relied upon under the rubric of “surrounding circumstances” will necessarily vary fromcase to case. It does, however, have its limits.

It should consist only of objective evidence of the background facts at the time of theexecution of the contract (King, at paras. 66 and 70), that is, knowledge that was or reasonably ought to have been within the knowledgeof both parties at or before the date of contracting. . . . 59 It is necessary to say a word about consideration of the surrounding circumstances and the parol evidence rule.

The parolevidence rule precludes admission of evidence outside the words of the written contract that would add to, subtract from, vary, orcontradict a contract that has been wholly reduced to writing (King, at para. 35; and Hall, at p. 53). To this end, the rule precludes,among other things, evidence of the subjective intentions of the parties. . . . (emphasis added) Even Sattva does not permit a contracting party to testify: “I believe the words of the contract mean such”. Thus, the evidence of theappellant and the respondent about their subjective intentions is of limited assistance, if it is even admissible.

Evidence of the agreement [165] In addition to the Supplemental Agreement and attached

Schedule A, also before me are many hundreds of pages of ‘evidence’comprised of the affidavits (including exhibits) of Karyn Decore and Lyndon Decore, extensive cross-examinations on those affidavits,and voluminous undertaking responses from those cross-examinations.

Also before me are filed but unsworn volumes entitled “Book ofEvidence” (for the Sons) and “Key Documents and Authorities” (for the Daughters). [166] Much of this evidence is beyond the scope of what I can consider when attempting to interpret the Supplemental Agreement,including a Sattva consideration for the circumstances surrounding that agreement. [167] In their affidavits and evidence on cross-examination both Karyn Decore and Lyndon Decore speak to their subjective belief ofwhat they had or had not agreed to, and why.

As noted in Vandal v Cousineau, such evidence is of limited assistance, if it is evenadmissible. [168] Likewise, much of the documentary evidence before the court is of limited, if any, assistance. I acknowledge that many recordsare exhibited to sworn affidavits. They are nevertheless the records of third parties, in many cases the records of the parties’ counsel oraccounting experts.

Few of these records ‘speak for themselves’. [169] There is then a whole category of records, whether exhibited or otherwise, that are clearly inadmissible, on the basis that theyare records which post-date the December 8, 2010 agreement in question.

Once again, Sattva is clear that ‘context’ evidence isadmissible only regarding: …the background facts at the time of the execution of the contract (King, at paras. 66 and 70), that is, knowledge that was or reasonablyought to have been within the knowledge of both parties at or before the date of contracting. (at para 58, emphasis added) [170] The Daughters point to correspondence (and to a caveat, exhibited to Ms. Decore’s affidavit) that post-dates the SupplementalAgreement, correspondence they say supports their reliance on the ‘cash to close’ figure of $3,852,577.32.

However consistent thatcorrespondence may appear to be with the Daughters’ position, it does not properly inform my

interpretation of what the parties agreedto on December 8, 2010.

Schedule A to the Supplemental Agreement [ 171 ]

Schedule A is referred to at paragraph 7 of the Supplemental Agreement. Paragraph 7 states: A detailed review of the KPMG starting numbers, attached hereto as

Schedule “A”, will not be conducted and

Schedule “A” will be adjusted for actual cash balances, cash paid out, expenses incurred but not reflected, and expenses to be incurred with the amounts being filled in to the chart attached as

Schedule “A”, including the $500,000.00 referred to in paragraph 2, above. [ 172 ]

Schedule “A” has two columns, the first entitled “Per KPMG Draft Plan 14-May-10” (“the KPMG column”), the second entitled “Per Deloitte Proposed Changes 08-Jul-10” (“the Deloitte column”). [ 173 ] There is a line item in

Schedule “A”, described as “Share of DHI debt and shareholder loan – Cash to Close for Daughters less distributions made”. This line item indicates the figure $3,852,577.37 in the Deloitte column; the figure $6,196,517.48 appears in the KPMG column; [ 174 ] There is nothing in

Schedule “A” itself, or in the Supplemental Agreement itself, that further explains these discrepant figures in

Schedule “A”. [ 175 ] Nor are these the only such figures – most notably, the estimate of Estate value for distribution is more than $2 million apart (the KPMG figure being the higher of the two). There is much evidence, and argument on the evidence, attempting to explain these discrepancies. I find that little of it helps explain what the parties had agreed to , on December 8, 2010. [ 176 ] The Daughters note that so-called “Silvertip Shares” of $1.7 million, mentioned in the Deloitte column of

Schedule “A”, are the same as “Castle Mountain Chalets” mentioned at paragraph 1 of the Supplemental Agreement. The KPMG column does not include a value for “Silvertip Shares”. The Daughters argue accordingly that it must be the Deloitte column the parties intended to be bound by, because it includes the “Silvertip Shares” which are themselves mentioned in the Supplemental Agreement. [ 177 ] Unfortunately, without more I am unable to agree that this coincidence between paragraph 1 of the Supplemental Agreement and the Silvertip Share reference on

Schedule “A” leads clearly to the conclusion that the parties agreed to be governed by the Deloitte column. [ 178 ] What else is there to inform the ‘choice’ of column? [ 179 ] To begin, it must be asked – why the parties left unsaid in the Supplemental Agreement just which column – if either of them – they intended to govern? [ 180 ] Further, what meaning is to be given the phrase in paragraph 7 that “A detailed review of the KPMG starting numbers, attached hereto as

Schedule “A”, will not be conducted”? Arguably that speaks favourably to the KPMG numbers, not the other way around. [ 181 ] Unlike the KPMG column, nowhere is the Deloitte column even mentioned in the text of the Supplemental Agreement. [ 182 ] On their face both columns appear tentative: the KPMG column is called “draft”; the Deloitte column is called “proposed changes”. There is little if any context evidence around these descriptions. On their face, it is questionable that either are final and binding figures. [ 183 ] Granted, the Deloitte column comes chronologically after the KMPG column.

But as it is dated July 8, 2010, the Deloitte column is hardly contemporaneous with the December 8, 2010 agreement. [ 184 ] Of all the evidence before the court, admissible as ‘context’ evidence or otherwise, little of it speaks directly to the emergence of

Schedule “A” and to the choice of columns. [ 185 ] Doubtless the Supplemental Agreement came about as the parties wished to reach an overall resolution of the estate. However, paragraph 7 of the agreement is ample evidence that much was left to be worked out and agreed to. That included

Schedule “A” itself, as paragraph 7 of the agreement contemplated that certain amounts would be “filled in to the chart attached as

Schedule ‘A’”. [ 186 ] The Sons refer to a $750,000 sum in the KPMG column to the credit of the Daughters as at December 8, 2010. They note evidence that it was only subsequently that the Daughters agreed to give the Sons the same $750,000. This is some evidence, the Sons argue, for the KPMG column governing the parties. [ 187 ] I acknowledge that leading up to the Supplemental Agreement there is some evidence of an October 20, 2010 email between counsel for the parties. That email mentions amongst other things a $3,852,577.37 ‘cash to close’ figure.

It asks ‘are we close enough to write this up’? [ 188 ] I acknowledge further that the notion of a ‘closing’ arose long before the Supplemental Agreement; it was mentioned at paragraph 13 of the original 2009 Agreement.

That concludes nothing however as to which ‘cash to close’ figure – if either of them – the parties were bound to on December 8, 2010. [ 189 ] Karyn Decore testified in cross-examination on affidavit that she first recalled the use of ‘cash to close’ terminology, and the approximate figure of $3.8 million, around the time the Supplemental Agreement was negotiated and signed; she agreed that at least as of the

Schedule “A” attached to the December 8, 2010 Supplemental Agreement, the figure was “fixed” at $3,852,577.37; she stated it was the sum the Daughters were able to raise and had agreed to pay to the Sons, “on the shortfall from April, 2010”; that figure was meant to be part of the overall equalization of the estate proceeds between the beneficiaries, in particular on account of the Daughters exercising the option in the will to purchase the Maligne property.

[ 190 ] If Ms. Decore’s evidence on these points is admissible as ‘context’, or is more than her subjective understanding of the agreement, then so too is Lyndon Decore’s evidence given on cross-examination on affidavit. Amongst other things, Mr.

Decore testified that various references to ‘cash to close’ of $3,852,577.37 are to an arbitrary figure that the Sons did not accept as being the sum payable by the Daughters on account of the original November 27, 2009 Agreement. [ 191 ] In the end, the Daughters’ claim for the return of excess interest is grounded on proof of the starting point of the $3,852.577.37 cash to close. On reading the Supplemental Agreement as a whole, and mindful of the context evidence before me, I am unable to conclude on

summary judgment that the parties intended and agreed to be governed by the Deloitte column of

Schedule “A”, and in particular by the cash to close figure of $3,852.577.37. To paraphrase the test set out above in Pyrrha Design , at para 19, on the whole I am unable to accept that the Daughters’ claim is so compelling that the likelihood i

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