Patricia Stremich Appellant - v. -, 2016 ABQB 397

Court of Queen’s Bench of Alberta Citation: Stremich v Pefanis, 2016 ABQB 397 Date: 20160712 Docket: 1401 03750 Registry: Calgary Between: Patricia Stremich Appellant - and - Constantine J. Pefanis and Pefanis Horvath Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice A.D. Macleod _______________________________________________________

Appeal from the Order by A.R. Robertson, Q.C., Master in Chambers Filed on the 25 th day of April, 2016 Dated the 19 th day of April, 2016 [ 1 ] This is an appeal from a Master’s order dated April 19, 2016. The learned Master dismissed the Statement of Claim (the “Claim”) of the Appellant, Patricia Stremich (“Ms. Stremich”), pursuant to rule 3.28 of Alberta Rules of Court , Alta Reg 124/2010 [ Rules ]. For the reasons that follow, I would allow this appeal and I would grant an extension of time for service of the Claim pursuant to rule 3.27(1) (

c) of the Rules . [ 2 ] On April 20, 2016, Her Majesty the Queen in Right of Alberta discontinued its claim against Constantine J. Pefanis (“Mr. Pefanis”) and Pefanis Horvath (together, “the Respondents” in this action). As such, Her Majesty the Queen in Right of Alberta is no longer a party to this action. I. Facts [ 3 ] On April 4, 2014, Ms. Stremich, an unrepresented litigant, filed the Claim alleging professional negligence on the part of Mr. Pefanis, her former lawyer, and Pefanis Horvath, her former law firm. [ 4 ] On March 30, 2015, Ms. Stremich hired a process server, Ron Reinhold (“Mr. Reinhold”).

She instructed him to serve the Respondents with the Claim. Mr. Reinhold was aware of the one-year time limit for service of the Claim. [ 5 ] On April 1, 2015, Mr. Reinhold attended at the office of Pefanis Horvath to serve the Claim. According to Mr. Reinhold’s affidavit evidence, he attempted to serve the Claim on the Respondents by serving it on Anne Hill (“Ms. Hill”), a legal assistant with Pefanis Horvath. His evidence is that after some discussion and attempts to serve the documents, Ms. Hill “refused” service. [ 6 ] According to Ms. Hill’s affidavit evidence, Mr.

Reinhold approached her desk on April 1, 2015 with an unmarked envelope. She was unaware of what was inside the envelope. She was never made aware of what was inside the envelope nor of its time-sensitive nature. She formed the impression that Mr. Reinhold wanted to deliver the papers to Mr. Pefanis personally. She advised Mr. Reinhold that Mr. Pefanis was on holidays and invited him to return in one week. She denies “refusing” service. [ 7 ] I do not believe that Ms. Hill deliberately “refused” service.

I do believe that there was confusion and a lack of communication around the important and time-sensitive nature of the documents. Regardless of what exactly was said or understood on April 1, 2015, all of the parties agree that Mr. Reinhold left Pefanis Horvath that day without actually serving the Claim. [ 8 ] On April 10, 2015, Mr. Reinhold again attended at the office of Pefanis Horvath and personally served Mr. Pefanis and Pefanis Horvath with the Claim. At no time prior to April 10, 2015, did Mr. Pefanis have personal knowledge of the Claim. II. Issue [ 9 ] Does rule 3.27(1)(

c) apply in this case to allow this Court to grant an extension of the time for service of the Claim? III. Standard of Review [ 10 ] The standard of review on appeal from a Master to a Judge, on all issues, is correctness: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 . IV. Law [ 11 ] The relevant rules are rules 3. 26(1), 3.27(1)(

c) and 3.28(a), which provide as follows: 3.26(1) A statement of claim must be served on the defendant within one year after the date that the statement of claim is filed unless the

Court, on application filed before the one - year time limit expires, grants an extension of time for service. 3.27(1) The Court may, at any time, grant an extension of time for service of a statement of claim in any of the following circumstances: (

c) special or extraordinary circumstances exist resulting solely from the defendant's conduct or from the conduct of a person who is not a party to the action. 3.28 If a statement of claim is not served on a defendant within the time or extended time for service, (

a) no further proceeding may be taken in the action against a defendant who was not served in time , and [ 12 ] One of the purposes of rule 3.27(1)(

c) is to “cover other circumstances where it would be unfair not to let a plaintiff serve a statement of claim despite the passage of time”: Sanderson Estate v. Potter , 2012 ABQB 593 , at para 29 [ Sanderson ], citing Consultation Memorandum No. 12.14 of the Alberta Law Reform Institute

(2004) Alberta Rules of Court Project: Miscellaneous Issues, at para 94 [ ALRI ]. However, rule 3.27(1)(

c) should not be used, “too loosely and grant extensions in less than exceptional circumstances, thereby undermining the legislative intent of Rule 11 to eliminate procrastination and delay”: Sanderson , supra at para 29 , citing ALRI, supra at para 95. [ 13 ] Based on the above policy objectives, rule 3.27(1)(c) “should be limited and that the words "special and extraordinary circumstances" should be interpreted narrowly”: Sanderson , supra at para 31 . [ 14 ] In McGowan, the Alberta Court of Queen’s Bench (ABQB) set out a two-step test for analyzing rule 3.27(1)(c): McGowan v.

Lang , 2014 ABQB 403 , at para 32-35 , aff’d 2015 ABCA 217 [ McGowan ]. The first step was described as follows: 32 In my view, the analysis under Rule 3.27(1)(

c) requires a two-step process. The Plaintiff must first bring itself within the requirement that special or extraordinary circumstances exist resulting solely from the defendant's conduct or from the conduct of a person who is not a party to the action. As part of that first step, the Plaintiff must demonstrate that the special or extraordinary circumstances are connected in some way to the lack of service. [ 15 ] The second step requires the court to consider whether it is appropriate in the circumstances to exercise its discretion to extend time for service: McGowan , supra at para 33 .

It is at this point in the analysis that policy considerations of the limitations legislation and prejudice are considered: McGowan , supra at para 34 . According to the ruling in Sanderson at paragraph 46 , the court should consider 5 factors with respect to prejudice: (

a) would the extension cause prejudice to the defendant; (

b) has the plaintiff proven that the defendant would not be prejudiced by the extension; (

c) has the defendant provided evidence to show some details of prejudice which would flow from an extension of the time for service; (

d) has the defendant created prejudice by failing to do something that it reasonably could have or ought to have done; and (

e) is the prejudice caused by the delay? [ 16 ] I will now determine whether the facts in this case meet the two-step test to obtain an extension under rule 3.27(1) (

c) of the Rules . V. Analysis a. Special or Extraordinary Circumstances [ 17 ] Rule 3.27(1)(

c) was argued briefly before Master Robertson. The Respondents drew Master Robertson’s attention to the Alberta Court of Appeal’s (ABCA) decision in McGowan for the same propositions outlined below. The Respondents did not, however, draw Master Robertson’s attention to the ABQB decisions in Sanderson or Nixon v. Timms , 2012 ABQB 315 , rev’d on other grounds 2013 ABCA 84 [ Nixon ] . As such, he did not have all of the relevant case law before him. [ 18 ] A process server, despite being an agent for the Plaintiff, is considered “a person who is not a party to the action”: Sanderson , supra at para 40 .

Furthermore, in Nixon , the ABQB found that the Applicant’s reliance on a process server’s fraudulent affidavit of service was an “extraordinary” circumstance as contemplated by rule 3.27(1) (c): Nixon , supra at para 47 . Similarly, in Sanderson , the ABQB found that the Applicant’s reliance on a process server’s careless (possibly negligent) affidavit of service was a “special” circumstance as contemplated by rule 3.27(1) (c): Sanderson , supra at para 43 . [ 19 ] The facts in McGowan are quite different.

In McGowan , the ABCA found that the statement that the insurance adjuster made to the plaintiff’s lawyer, “that he would file a statement of defence if he did not soon receive the documents in support of the damage claim” was not “special or extraordinary”: McGowan , supra at paras 23, 27 (cited to the ABCA decision).

In addition, it found that it was the plaintiff’s lawyer’s neglect, and not its reliance on the insurance adjuster’s statement, that led to the failure of service: McGowan , supra at paras 27 (cited to the ABCA decision). [ 20 ] I find that the facts of this case align closest with those in Sanderson and Nixon and are distinguishable from those in McGowan . On March 30, 2015, Ms. Stremich hired Mr. Reinhold, a process server, to serve the Respondents with the Claim. He was aware of the one-year time limit for service of the Claim. On April 1, 2015, Mr. Reinhold attended and then inexplicably left the office

of Pefanis Horvath without serving the Claim. Whether or not Ms. Hill accepted or refused service is not the issue. Had Mr. Reinhold simply opened the envelope and left the Claim on the counter, he would have effected service. Mr. Reinhold’s conduct on April 1, 2015 was careless, if not negligent. [ 21 ] Ms. Stremich relied on Mr. Reinhold to perform his job as a process server reasonably and not carelessly or negligently. She was entitled to do so in this case. Mr. Reinhold’s failure to leave the Claim at Pefanis Horvath on April 1, 2015 was the special circumstance that resulted in the failure of service. Therefore, I find that rule 3.27(1) (

c) applies to the facts in this case. b. Discretion [ 22 ] It is appropriate in the circumstances for me to exercise my discretion to extend time for service. I find that an extension of time under rule 3.27(1) (

c) would not prejudice the Respondents. Ms. Stremich has shown that the Respondent’s received the Claim mere days after the Claim’s one-year expiry date. The Respondents, on the other hand, have not provided any evidence with respect to how an extension would prejudice them. VI. Disposition [ 23 ] Accordingly, I grant this appeal. I am extending the time for service of the Claim to April 10, 2016. Therefore, the Claim was validly served on the Respondents. Ms. Stremich is entitled to costs in the amount of $500.00 including disbursements. Heard on the 27 th day of June, 2016 .

Dated at the City of Calgary, Alberta this 12 th day of July, 2016. A.D. Macleod J.C.Q.B.A. Appearances: Ms. Patricia Stremich, Self-Represented the Appellant Mr. Murray T. Suderman, Field Law for the Respondents