Kerr v McDonald & Bychkowski Ltd (CMB Insurance Brokers), 2016 ABQB 40

Court of Queen ’ s Bench of Alberta Citation: Kerr v McDonald & Bychkowski Ltd (CMB Insurance Brokers), 2016 ABQB 40 Date: 20160121 Docket: 0903 16992 Registry: Edmonton Between: Nancy Kerr Appellant/Plaintiff - and - McDonald & Bychkowski Ltd operating as CMB Insurance Brokers Respondent/Defendant _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice D.C. Read _______________________________________________________ Introduction [ 1 ] The Appellant’s action was dismissed by a Master for long delay under the so-called “drop dead” rule (R 4.33).

The Appellant appeals alleging the Master misapprehended when the last significant advance occurred and erred in failing to consider if correspondence from the Respondent or some other action or inaction should operate to deny the Respondent’s application to dismiss the action.

Facts [ 2 ] By Statement of Claim issued October 29, 2009, the Appellant Nancy Kerr (“Kerr”) sued the Respondent McDonald & Bychkowski Ltd., operating as CMB Insurance Brokers (“CMB”) alleging wrongful dismissal. [ 3 ] CMB filed a Statement of Defence on October 26, 2009. [ 4 ] Thereafter, the following steps were taken:

a) On June 17, 2010, Kerr filed her Affidavit of Records,

b) On August 19, 2010, CMB filed its Affidavit of Records,

c) On August 22, 2011, Kerr’s counsel questioned a representative of CMB,

d) On October 4, 2012, counsel for Kerr sent a letter to counsel for CMB requesting that he canvass his client respecting available dates for a JDR “over the next several months”.

e) On September 27, 2013, counsel for Kerr sent a further letter to counsel for CMB, copying him with the October 4, 2012 letter, and indicating “we would like to

schedule a JDR or trial, if your client is not willing to take steps to resolve this matter”

f) On October 10, 2013, counsel for Kerr received notice of withdrawal of counsel for CMB.

g) On May 15, 2014, counsel for Kerr sent a letter directly to CMB proposing specific dates for a JDR and requesting a reply,

h) On June 5, 2014, counsel for Kerr received a Notice of Change of Representation from new counsel for CMB, Mr. James. This letter said the following “I will be reviewing this matter in the not too distant future and thereafter providing a response to your May 15, 2014 letter” (“James Letter”),

i) On August 29, 2014, CMB filed an application to dismiss Kerr’s claim on the basis of delay,

j) On April 15, 2015, Kerr filed an application for an order to set the action for trial. [ 5 ] Both applications were heard by Master Schultz in morning chambers. Her decision was reserved and issued July 24, 2015. The Master concluded that the last significant advance in the action within the meaning of Rule 4.33 was the filing of CMB’s Affidavit of Records on August 19, 2010.

She concluded that the “clock started to run under Rule 4.33” on that date and because there was a delay of 4 years and 10 days, the action must be dismissed for delay pursuant to Rule 4.33. [ 6 ] The Appellant, Kerr appealed alleging that the Master had erred in determining that the last significant advance had occurred on August 19, 2010 and failed to consider the evidence that questioning had occurred on August 22, 2011.

As a consequence, the Master failed to consider the effect of the James Letter and specifically whether it was a cause of delay, constituted an agreement to the delay, constituted an acquiescence of the delay, or constituted a significant advance in the action. Issues [ 7 ] The Respondent CMB agrees that the Master overlooked the fact that questioning occurred on August 22, 2011 and agrees that this questioning was the last significant advance in the action.

The Respondent agrees the Master erred in determining otherwise. [ 8 ] Additionally, the parties are in agreement that the standard of review of a Master’s decision is correctness: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 at para 30 . [ 9 ] The only issue remaining for resolution is this: Did anything that occurred after August 22, 2011, particularly the James Letter, significantly advance the action, or did the James Letter constitute a standstill agreement or otherwise disable CMB from successfully making the application under R 4.33?

Legal Analysis [ 10 ] The relevant rule is Rule 4.33: Dismissal for Long Delay 4.33(1) If 3 or more years has passed without a significant advance in an action, the Court, on application, must dismiss the action as against the applicant, unless (

a) the parties to the application expressly agreed to the delay, (

b) the action has been stayed or adjourned by order, an order has extended the time for advancing the action, or the delay is provided for in a litigation plan,

(

c) the applicant did not provide a substantive response within 2 months after receiving a written proposal by the respondent that the action not be advanced until more than 3 years after the last significant advance in the action, or (

d) an application has been filed or proceedings have been taken since the delay and the applicant has participated in them for a purpose and to the extent that, in the opinion of the Court, warrants the action continuing.

(2) If the Court refuses an application to dismiss an action for delay, the Court may still make whatever procedural order it considers appropriate. (3) ...

(4) Rule 13.5 does not apply to this rule. [ 11 ] The rule uses the word ‘must’ and the Court of Appeal (interpreting the wording of the previous Rule 244.1 which uses “shall”) has confirmed that this makes the rule mandatory: Morasch v Alberta , 2000 ABCA 24 , at para 5 . [ 12 ] The relevant time-period is determined by the date of the application for dismissal: in this case the relevant date is August 29, 2014. [ 13 ] Three years and six days elapsed between the questioning and the application. [ 14 ] It is not seriously argued by the Appellant that anything done after questioning on August 22, 2011 constituted a “significant advance” in the action within the meaning of R 4.33. [ 15 ] The Appellant did send three letters to the Respondent October 4, 2012, September 27, 2013 and May 15, 2014, all of which suggested that the action be set down for JDR or trial but none of which resulted in either a JDR or a trial being held or even scheduled.

None of these significantly advanced the litigation. Nor did the James Letter significantly advance the litigation.

It did no more than indicate that new counsel would review their file and respond to the May 15, 2014 letter. [ 16 ] As the Respondent points out, a number of cases have affirmed that correspondence about setting a matter down for a JDR does not significantly advance an action: Milne v Dziadyk , 2014 ABQB 407 , at para 11 (Master); Fletcher Challenge Energy Canada Inc v Jonust Farms Ltd , 2014 ABQB 518 , at paras 41-44 (Master). [ 17 ] Nor does the fact that the Respondent changed solicitors constitute an advance in the action: Barnes v RBC Dominion Securities , 2006 ABQB 290 , at para 34 . [ 18 ] The Appellant does argue that the drop-dead rule should not operate in these circumstances.

She points out that the James Letter is dated and was presumably sent on June 5, 2014, over two months before the three-year deadline and says that this is not one of the cases to which the drop-dead rule was intended to apply. [ 19 ] The Appellant says the James Letter constituted a representation or promise to provide availability for a JDR following review of the file. She says that delay occasioned while new counsel for the Respondent reviewed the file is theirs and cannot be relied upon by the Respondent.

She cites Maligne Lodge Ltd v Stuart Olson Construction Inc , 2005 ABQB 451 , a decision of Master Breitkreuz, in support of this argument as well as a number of other cases which I will review below. [ 20 ] I disagree. To begin with, any delay occasioned by the James Letter was for less than three months (between June 5 and August 29), and this is an insignificant time-period when nothing had occurred in almost three years prior. The Appellant asserts that this delay occurred during a crucial time period, when the three year limit since anything had been done was about to expire.

The Appellant argues that because of this, the Respondent is estopped from bringing an application to dismiss having represented that its’ counsel would reply “in the not too distant future” to the May 15 letter. [ 21 ] Maligne Lodge Ltd is a 7 paragraph memorandum of decision by a Master and provides very little in terms of an outline of facts. It is not possible to determine if the facts in that case are analogous to those here. The case provides little analysis of the law.

It is not particularly helpful and I do not find it persuasive. [ 22 ] The Appellant relies as well upon Danek v Calgary (City) , 2006 ABQB 807 and Co-operators Life Insurance Co v Rollheiser , 1998 ABQB 874 . [ 23 ] In Danek , plaintiff’s counsel called defendant’s counsel after various other attempts to set the matter for discovery, and was told that defendant’s counsel was overwhelmed with work. Defendant’s counsel asked the plaintiff to take no further steps as she expected the file to be reassigned.

Thereafter, defendant’s counsel had a death in the family and a week-long trial and continued to advise counsel for the plaintiff that she was waiting for the file to be re-assigned. Some five months later, and after the then five year “drop dead” period had passed, the file was assigned to new counsel who never advised that the courtesy requested and agreed to was no longer necessary. Instead, new counsel made an application to dismiss under Rule 244.1.

Master Hanebury interpreted the request made by defendant’s counsel as constituting a stand-still agreement, although she said, alternatively, the defendant could rely on the doctrine of estoppel, citing Cooperators . [ 24 ] In Cooperators , plaintiff’s counsel scheduled examinations for discovery within the then five year drop dead period but was asked by counsel for the defendant to adjourn the discovery pending the outcome of an application to dismiss for want of prosecution under R 244. Counsel made no mention of Rule 244.1 (the drop-dead rule).

The defendant then made an application under Rule 244.1 for dismissal under the drop dead rule after the five years had passed. Justice Kent interpreted the letter to constitute an agreement that time would stop running from the date of the adjourned discovery – in other words she found a standstill agreement. But she posed, without really answering, the question whether the defendant was estopped from bringing the application under the drop-dead rule in the circumstances. Justice Kent found it significant that no Statement of Defence had been filed by the defendants at the time of the

application and the plaintiff was still in a position to demand one. [ 25 ] At the hearing, the Appellant provided a further case in support of her position. In Turek v Oliver , 2014 ABCA 327 , the Court of Appeal upheld the decision of a chambers judge who refused to grant a defendant’s R 4.33 application in the following circumstances. A plaintiff filed his affidavit of records but the defendant failed to do so leading the plaintiff to bring an application requiring production. Defendant’s counsel requested time to review the client’s documents.

A further extension was requested and granted but then counsel indicated he was leaving his previous law firm but would continue to represent the defendant, blaming an associate for the delays. In November of 2012, plaintiff’s counsel sent an email observing that the previously agreed to deadline for the affidavit of records had passed. Defendant’s counsel proposed a new date and undertook to file the affidavit of records by then. Plaintiff’s counsel agreed to the new deadline.

There were further follow up requests by the plaintiff but no affidavit of records was ever produced and instead the defendant made the application to strike. [ 26 ] Speaking for the Court, Slatter JA commented that the drop dead rule was never designed to encourage the sort of ambush, the word he used to characterize the actions of the defendant, he concluded had happened there “after months of courtesies by one side and obfuscation and unresponsiveness by the other” (at para 6). [ 27 ] All three of these cases are distinguishable from the case at bar.

In each, the defendants made a specific request to the plaintiffs not to take further steps and then moved to strike under the drop dead rule after the specific request for accommodation had been granted. In both Danek and Turek , it is clear that the court found the actions of the defendant to be egregious and constituting ambush after they had delayed and requested accommodation.

In Cooperators the court also found bad behaviour on the part of the defendant, who dismissed a planned discovery for one reason and then surprised the plaintiff with an application under the drop dead rule. [ 28 ] The case at bar is different. There is a history of delay but other than yearly letters suggesting the matter be set for JDR or trial, no real attempts were made by the Appellant to move the case forward. Nor, in my view, does the James Letter constitute a request for an accommodation.

It merely notes receipt of the May letter by the defendant, indicates that the author is now acting for them and indicates he will review the file and provide a response to the letter within the next “short while”. Further, the Appellant did not respond to the James Letter.

Thus, although it could be said the Appellant acquiesced by not taking any further step in the face of the letter, there was no express agreement to permit the Respondent time to do anything. [ 29 ] Where a plaintiff is trying hard to get the defendant to take a vital step and the defendant stalls and makes promises, and gets time extensions then the plaintiff should be able to rely upon the promises and the defendant cannot be permitted to ambush the plaintiff in the face of those promises and accommodations.

That may be termed estoppel by conduct or it may be termed a standstill agreement, depending on the situation. [ 30 ] The case law is not clear as to whether estoppel by conduct does apply in applications under R 4.33 but if it does, to have it apply here would extend its operation beyond any situation in which it has applied before. [ 31 ] The Appellant also argues that the James Letter constitutes a stand-still agreement, relying upon Neitz v Jordan , 2015 ABQB 732 and Bugg v Beau Canada Exploration Ltd , 2006 ABCA 201 . [ 32 ] Both of those cases have a fundamental difference from the case at bar.

In each there was a specific request by the defendant not to take any further steps without reasonable notice. In each this request was accompanied by a statement to the effect that no response would be taken as agreement. In each case the court interpreted this as an express standstill agreement based upon what was determined to be the clear intention of the parties to enter into such an agreement. Here the situation is different.

There was no express request by the Respondent that the Appellant take no further steps and no statement to the effect that no response would be taken as agreement to the proposed standstill agreement. [ 33 ] To find an express standstill agreement here, strains the meaning of Rule 4.33(1)(

a) to the point where almost any communication could be so construed. [ 34 ] The appeal is denied. Heard on the 15 th day of January, 2016. Dated at the City of Edmonton, Alberta this 20 th day of January, 2016. D.C. Read J.C.Q.B.A.

Appearances: Leah Anaka Simon Renouf Professional Corp for the Appellant/Plaintiff Gabriel Joshee-Arnal Parlee McLaws LLP for the Respondent/Defendant