Nixon v Gruschynski, 2017 ABQB 135

Court of Queen ’ s Bench of Alberta Citation: Nixon v Gruschynski, 2017 ABQB 135 Date: 20170227 Docket: 1303 09954 Registry: Edmonton Between: Jason Nixon Plaintiff - and - Mark Gruschynski and Covert Investigations Inc. Defendants/Respondents - and - Ahlstrom Wright Oliver & Cooper LLP and Teri Lynn Bougie Third Party/Applicants _______________________________________________________ Reasons for Decision of Sandra L. Schulz , Master in Chambers _______________________________________________________ [ 1 ] This is an application by the Third Parties for an order summarily dismissing the Third Party Claim against them. For the reasons that follow, I grant the

summary dismissal application. Background

[ 2 ] Jason Nixon (“Nixon”) commenced an action (the “Original Action”) against Timms for damages arising from a failed real estate transaction. A Default Judgment was obtained, based on an Affidavit of Service sworn by the process server, Mark Gruschynski of Covert Investigations Inc. (collectively referred to as “Gruschynski”). Once collection procedures were commenced, Timms protested that he had not been served. A trial and appeal ultimately determined that Timms had not been served, the Statement of Claim could not be revived and Nixon could no longer pursue his claim against Timms (reported at Nixon v Timms , 2012 ABQB 315 (Acton, J.); reversed in

part 2013 ABCA 84 ). [ 3 ] Nixon then initiated this action against Gruschynski, claiming damages for breach of contract, deceit, negligent misrepresentation, vicarious liability, breach of fiduciary duties, plus aggravated and punitive damages. [ 4 ] Nixon did not sue the lawyer or the law firm involved in the Original Action.

The limitation period has now expired for Nixon to directly sue the lawyer and the law firm. [ 5 ] Gruschynski filed an Amended Third Party Claim naming the lawyer and the law firm (collectively “Bougie”) claiming, inter alia , vicarious liability, professional negligence, misrepresentation, and encouraging or inducing Gruschynski to swear a false affidavit. [ 6 ] The Third Parties now bring an application for

summary dismissal of the Third Party Notice. When this application was initially heard, an issue arose with respect to whether the findings of Madam Justice Acton in the Original Action were binding on this Court in this action. The issue related to issue estoppel, collateral attack, and abuse of process; essentially whether the Defendants are bound by the findings in the Original Action or whether the facts can be re-litigated in this action. [ 7 ] The

summary dismissal application was adjourned for further written submissions and further oral argument on that point. The issue was ultimately resolved by agreement between Counsel that the Affidavit of Service would be referred to as a false affidavit without relying on any evidence from the Original Action. [ 8 ] Accordingly, the only evidence before the Court on this application is the agreement of the parties that the Affidavit of Service from the Original Action is false, the Affidavit of Bougie and the cross-examination on the Bougie Affidavit.

Gruschynski has chosen not to file any evidence. [ 9 ] There is no application by Gruschynski for an adjournment for further information, Questioning, or documents in the possession of a third party, although they allude to these concerns in their written materials. I.

Summary Dismissal The Test [ 10 ] A number of cases have set out the modern approach to

summary judgment and

summary dismissal: Hryniak v Mauldin , 2014 SCC 7 , [2014] 1 SCR 87; 776826 Alberta v Ostrowercha , 2015 ABCA 49 (“ Ostrowercha ”); Windsor v Canadian Pacific Railway Ltd , 2014 ABCA 108 ; Canada (Attorney General) v Lameman , 2008 SCC 14 (“ Lameman ”); Beier v Proper Cat Construction Ltd , 2013 ABQB 351 (“ Beier ”); Whitecourt Power Limited Partnership v Elliott Turbomachinery Canada Inc , 2015 ABCA 252 ; P Burns Resources Ltd v Patrick Burns Memorial Trust (Trustee of), 2015 ABCA 390 ; Pyrra Design Inc v Plum and Posey Inc , 2016 ABCA 12 . [ 11 ] For the purpose of this application, the relevant principles can be summarized as follows: A.

Summary Dismissal can be granted if a disposition that is fair and just to both parties can be made on the existing record. B.

Summary Dismissal can be granted where there is no merit to the claim. To have merit, there must be a genuine issue of a potentially decisive material fact. C. The key is whether the circumstances require viva voce evidence in order to properly resolve the case, or conversely whether the claim or defence is so compelling that the likelihood it will succeed is very high such that it should be determined summarily. D. The mere assertion that something will turn up at trial or at Questioning is not sufficient to refuse the

Summary Dismissal application. E. The Respondent must put its best foot forward at the

Summary Dismissal application. Effect of Failure to file affidavit by Respondent [ 12 ] The absence of an Affidavit in opposition to the

Summary Dismissal Application is not a factor to be held against Gruschynski. Counsel is entitled to rely on the Bougie Affidavit filed in support of this application and the cross-examination thereon to defend the application. Counsel may be taking a risk by doing that, but it is a calculated risk from which no adverse inference will be drawn . ( See Wakeling, J., as he then was, in Beier ). Timing of the

Summary Dismissal Application [ 13 ] Counsel for Gruschynski takes the position that the evidence has not been sufficiently developed to permit a final disposition based on the record before the Court. Questioning has not occurred, just an examination on the Bougie Affidavit, and accordingly it is

premature to allow

summary dismissal when all of the information with respect to the negligence of the Bougie Parties is in thepossession of the other parties. [14] This argument is contrary to the position taken by the Court in Lameman as referenced in paragraph 11 of Ostrowercha: asummary dismissal application is based on the evidence before the Court, not on the evidence that one party hopes to find or discover.Here, there was no application before the Court for

Part 6 Questioning, no application for the production of records in the possession ofother parties or entities that might prove the case for Gruschynski or at least raise a meritorious issue that requires a trial, and no requestfor an adjournment to obtain same. There is just the bald assertion that there is evidence in the possession of other parties or entities thatwould be relevant. (See P Burns Resources Ltd v Memorial Trust (Trustee of), 2015 ABCA 390 for a discussion of when disclosure ofdocuments might be grounds for an adjournment of a

summary judgment or

summary dismissal application.) [15] Accordingly, I do not find this argument to be a reason to refuse to hear the

summary dismissal application. [16] Counsel further argues that the claim against Gruschynski is currently at a standstill while Gruschynski proceeds with anaction against his insurer for coverage. They argue that it is most appropriate to allow the whole matter to wait until that action isconcluded and then proceed in due course to get all of the information and determine the liabilities at that point. However, there is noevidence that demonstrates that the action involving the insurer will finally resolve this matter or will necessarily produce evidence thatwill be determinative of this action.

The two actions stand alone. Accordingly, I do not find this argument to be a reason to refuse to hearthe

summary dismissal action. Best Foot Forward [17] Counsel for Gruschynski alludes to needing documents in the possession of other parties and the fact that Questioning has notbeen completed. Gruschynski has not brought applications in this regard. Since the Defendant is presumed to put its best foot forward inresponse to this the

Summary Dismissal application, those applications should have been made if there is any serious need for these stepsin order for a fair and just determination to be made, or at the very least, an adjournment of this application should have been requested inorder to allow Counsel to bring such an application. I therefore conclude that these steps are not needed for this application to proceed. Merit [18] The Amended Third Party Notice claims contribution and indemnity from the Third Parties, raising a number of claimsfounded in negligence.

Some of the claims relate to duties owed to the Plaintiff, and some relate to duties owed to the Defendants. A. Duty to Plaintiffs [19] The common law allows a Defendant to bring a Third Party proceeding to enforce duties owed to the Defendant by the ThirdParty; however, the Defendant cannot use the common law to enforce a duty that the Third Party owes to the Plaintiff (See Double NEarthmovers Ltd v Edmonton (City), 2005 ABCA 104 at para 62; cited with approval in Burndred v Topley and Sanders InvestmentsLtd, 2009 ABQB 541 at para 16).

Master Funduk, relying on the Alberta Court of Appeal, states the principle clearly: Third party notices serve to enforce duties which the third party owes to the defendant issuing the third party notice, not to enforce a dutyby the third party to the plaintiff: Metz v Breland, 1990 ABCA 303 , 76 Alta L.R. (2d) 397 (C.A.)... Dechant v McKechnie Agency Ltd, 1999 ABQB 734 at para 5 [20] Accordingly, in so far as the claims in the Amended Third Party Notice are an attempt to enforce a duty owed by the ThirdParty to the Plaintiff, those portions of the Amended Third Party Notice are without merit. B.

Duty to Defendants [21] The remaining claims in the Amended Third Party Notice are allegations of a duty directly owed to the Defendants by theThird Parties.

These allegations include, inter alia, failure to advise Gruschynski to get independent legal counsel, encouraging orparticipating in the production of a false Affidavit of Service, failure to move the original action ahead in a timely manner, and failure tosupervise Gruschynski, and failure to provide adequate instructions or information about Timms’ location to Gruschynski. [22] The relationship between Bougie and Gruschynski was that of principal/agent: Gruschynski was not Bougie’s client.Accordingly, Bougie does not owe a solicitor/client duty to Gruschynski unless it can be established that the relationship was of“sufficient proximity” to create a duty of care.

Sufficient proximity occurs where... 59 ...the solicitor has, for the most part, undertaken to apply his or her skills for the assistance of others knowing that the other party islikely relying on those skills. Filipovic v Upshall, [1998] OJ No 2256 at para 59 [23] There is no evidence before the Court that Bougie undertook to apply her skills for the benefit of anyone other than her client,Nixon. Furthermore, there is no evidence before the Court that Gruschynski relied on Bougie’s skills or that Bougie knew or ought tohave known that Bougie was relying on her skills.

If Bougie did not know that the Affidavit of Service was false, she cannot be found tohave known or ought to have known that Gruschynski was relying on her skills. [24] Gruschynski argues that the pre-trial discussions in the Original Action, including preparation of Gruschynski for questioningand trial as well as discussion about whether an additional affidavit should be drafted, result in sufficient proximity to create a duty ofcare. However, Gruschynski was being prepared as a witness, not as a client.

I accept the evidence that Bougie did not know that theAffidavit of Service was false until Gruschynski’s evidence was impeached on cross-examination at trial. Any duty to advise Grushynski

could not arise until Bougie was aware that Gruschynski was being untruthful. It was at that point that Gruschynski arguably became adverse in interest to Nixon. It was too late at that point for Bougie to do anything to assist Gruschynski. [ 25 ] Gruschynski claims that an adversarial relationship arose as soon as the allegation that Timms was not served arose.

That may be possible theoretically, but given that Gruschynski maintained that service had been achieved right up until cross-examination at trial, it didn’t actually arise until that point. [ 26 ] This is not a situation of “sufficient proximity”. [ 27 ] It could be argued that Bougie owed a duty, as principal, to Gruschynski not to provide him with misleading information. The evidence shows that Bougie made the usual inquiries, including contacting the realtors involved in the failed real estate transaction, and then provided Gruschynski with all of the information in her possession.

This point is reviewed extensively in the very thorough cross- examination of Bougie. I am satisfied that Bougie provided all of the information in her possession to Gruschynski plus instructed Gruschynski to perform a locate. There is no evidence before the Court that Bougie provided misleading or incomplete information. [ 28 ] Counsel for Gruschynski further argues that Bougie failed to take steps to determine if Timms found out about service through some other source such as Ms. Rundle or Gruschynski’s former solicitor, Mr. Hall.

Bougie exercised her professional judgment based on the information in her possession. She was entitled to rely on the affidavit of a professional locate and process server. The information that the person served kicked the documents into the hall or denied being Timms, is not so unusual a circumstance in a contentious matter that Bougie should have been alerted to a problem, especially in light of an affidavit of service from a professional locate and process server.

Perhaps she should have obtained an order validating service, but again, all of the evidence pointed to the person being served was Timms so there was no need at that point to apply to have service validated. I note that Masters frequently hear applications where Defendants are evading service by doing everything from refusing to answer the door to denying they are the Defendant. Frequently it is only the hard work of the locate service or process server that turns up a lead on the location of the Defendant, often at a different location or place than originally thought.

There was nothing unusual about this service that should have tipped off the solicitor. This is not negligence. [ 29 ] Finally, it could be argued that Bougie owed a duty to Gruschynski not to condone, participate in, encourage or induce Gruschynski to swear a false affidavit. There is no evidence to that effect, rather the evidence shows Bougie relied on the judgment of the professional locate and process server to put all of the relevant information into the Affidavit of Service. [ 30 ] As a result, I conclude that Bougie did not breach any duty that might have been owed to Gruschynski. C.

Standard of Care [ 31 ] Counsel for Gruschynski argues that there should have been expert evidence before the Court of the standard of care that should have been met by Bougie with respect to service. A Master of the Court of Queen’s Bench is an expert in matters of service, given that he/she hears a multitude of substitutional service and validation of service applications each time he/she sits. I am satisfied that a Master has sufficient knowledge in this area that an expert is not required. D.

Contribution, Indemnity and the Tort-Feasors Act [ 32 ] If I am wrong and there is a duty owed and Bougie was negligent, can Gruschynski claim contribution and indemnity from Bougie pursuant to the joint and several liability provision found at

section 2 of the Contributory Negligence Act , RSA 2000 c C-27?

Section 2 of the Contributory Negligence Act sets out the general rule where two or more people are found to be at fault. [ 33 ] The short answer is no. Section 3(1) of the Tort-Feasors Act takes precedence over

section 2 of the Contributory Negligence Act ( Viridian Inc v Dresser Canada Inc , 1999 ABQB 415 at para 28 ): 3(1) When damage is suffered by any person as a result of a tort,... (

c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is or would, if sued, have been liable in respect of the same damage , whether as a joint tort-feasor or otherwise, but no person is entitled to recover contribution under this

section from any person entitled to be indemnified by the person first mentioned in respect of the liability regarding which the contribution is sought. Emphasis added Tort-Feasors Act , RSA 2000, c T-5 [ 34 ] The Gruschynski Parties were the agents of the Bougie Parties. The law on liability between agent and principle is clear: [44] ...[A] principal must indemnify its agent for any losses or liabilities that arise from the agent discharging its duties express or implied...[but] [45] The agent is not entitled to indemnification where it acted negligently or outside its scope of authority.

Canada Deposit Insurance Corp v Canadian Imperial Commercial Bank , 2000 ABQB 440 at para 44 (“ CDIC ”) [ 35 ] The circumstances of this case fall squarely within the second half of section 3(1) (

c) of the Tort-Feasors Act . The swearing of a false affidavit is negligent and certainly outside the scope of Gruschynski’s authority. Gruschynski is not entitled to contribution from Bougie because Bougie is entitled to indemnification from Gruschynski, the negligent agent who acted outside the scope of his authority.

( See : CDIC quoted with approval in Burndred v Topley and Sanders Investments Ltd , 2009 ABQB 541 at para 37 .) [ 36 ] There is also the issue of whether the Third Party claim is for the “same damage” as advanced in the Statement of Claim. Arguably, it is not, and again the claim for contribution and indemnity fails on that basis. [ 37 ] Finally, the limitation period to add Bougie as a Defendant has passed. The Court of Appeal has held that contribution and indemnity cannot be claimed by the Third Party where the Plaintiff’s limitation period to sue the Third Party directly has lapsed.

This would amount to an impermissible extension of a statutory limitation period ( Wallace v Litwiniuk , 2001 ABCA 118 ). Conclusion [ 38 ] Based on the record before the Court, a fair and just determination can be made without the need for viva voce evidence and forensic testing of the evidence by trial. I conclude that there is no reasonable prospect that the Third Party Claim will succeed. I therefore summarily dismiss the Third Party Claim filed in this action. Costs [ 39 ] The Third Party seeks enhanced costs due to the nature of the allegations raised in the pleadings.

The allegations are very serious and are unfounded. The claim in this matter places it under column 4. I award enhanced costs of the action under column 5. Dated at the City of Edmonton, Alberta this 27 th day of February, 2017. Sandra L. Schulz M.C.C.Q.B.A. Appearances: Phyllis A. Smith, Q.C. Emery Jamieson LLP for the Applicants Stephanie A. Wanke DLA Piper (Canada) LLP for the Respondents