1406998 Alberta Ltd Plaintiff - v. -, 2017 ABQB 321

Court of Queen’s Bench of Alberta Citation: 1406998 Alberta Ltd v Dorbandt, 2017 ABQB 321 Date: 20170510 Docket: 1003 11803 Registry: Edmonton Between: 1406998 Alberta Ltd Plaintiff - and - Paul Dorbandt and Lisa Dorbandt Defendants _______________________________________________________ Reasons for Decision of W.S. Schlosser , Master, Court of Queen's Bench of Alberta _______________________________________________________ [ 1 ] This is a 4.33 with a 4.31 in aid. [ 2 ] The lawsuit is about the sale of recreational property near Olds.

The Plaintiff alleges that the Defendants represented that the property was free of “hazardous materials” and “contamination”. The Plaintiff’s say they discovered hazardous materials and contamination after they took possession. The sale took place in 2008. The lawsuit was started in July 2010.

The lawsuit had a reasonably vigorous existence until about 2012, when things started to slow down. [ 3 ] For the purposes of the Rule 4.33 application, there are three events under the microscope: some answers to undertakings and further production April 12, 2013, an October 17, 2013 JDR and an expert report on April 11, 2016. Authorities By the Parties: 1. Le v 1055168 Alberta Ltd , 2013 ABQB 431 ; 2. Nash v Snow , 2014 ABQB 355 ; 3. Ravvin Holdings Ltd v Ghitter , 2008 ABCA 208 ; 4. 525812 Alberta Ltd v Purewell , 2004 ABQB 938 ; 5. Montreal Trust Co of Canada v Talcorp Ltd , 2013 ABQB 398 ; 6.

Franchuk v Schick , 2013 ABQB 532 ;

7. XS Technologies Inc v Veritas DGC Land Ltd , 2016 ABCA 165 ; 8. Alberta Rules of Court , AR 124/2010; 9. Kurian v Alberta (Motor Vehicle Accident Claims Act, Administrator), 2007 ABQB 369 ; 10. Phillips v Sowan , 2006 ABQB 579 ; By the Court: 1. Ursa Ventures Ltd v Edmonton (City) , 2016 ABCA 135 ; 2. Weaver v Cherniawsky , 2016 ABCA 152 ; 3. Ro-Dar Contracting Ltd v Verbeek Sand & Gravel Inc , 2016 ABCA 123 ; 4. Gary D. Watson, “Amendment of Proceedings After Limitation Periods” (1975), 53 Can. Bar Rev. p 237; 5. Humphreys v Trebilcock , 2017 ABCA 116 ; 6. Alberta v Morasch 2000 ABCA 24 ; 7.

Kosowan v Ferrier , 2017 ABQB 276 . Analysis Rule 4.31 and The Functional Approach [ 4 ] Some recent cases: Ursa Ventures Ltd v Edmonton (City) , 2016 ABCA 135 ; Weaver v Cherniawsky , 2016 ABCA 152 ; Ro- Dar Contracting Ltd v Verbeek Sand & Gravel Inc , 2016 ABCA 123 ; and XS Technologies Inc v Veritas DGC Land Ltd , 2016 ABCA 165 , tell us that we are to apply the functional approach to events in a lawsuit as a measure of whether the event constitutes a significant advance for the purposes of Rule 4.33. [ 5 ] The ‘functional approach’ came into currency with the Watson

article listed in the authorities. It appeared in the context of gauging the Court’s power to amend pleadings after the expiry of a limitation period under the old limitations regime. (It is now partly codified in s 6 of the Limitations Act ). [ 6 ] The functional approach appears to have been inspired by an aphorism by the existential philosopher Nietzsche; paraphrased as: ‘the most common stupidity consists in forgetting what one is trying to do’ [1] . The ‘focus is now on function’ ( Nash at paras 29, 30 , per Topolniski J).

The functional approach is a useful measure for Rule 4.33 applications because it allows us to gauge progress by how well an event performs its function. A Convenient Approach to Rule 4.33 [ 7 ] As I see it, there are two categories of events in a lawsuit: primary and ancillary steps (though I am reluctant to use the term ‘steps’ or, for that matter, ‘things’ because of the historical baggage). Primary steps tend to be non-optional: at least to the extent that they constitute a right, or there are built in consequences for failing to perform.

Ancillary events are those that arise out of primary steps; such as answers to undertakings or further production. In some cases, they will complete the primary step; in other cases, they may add little or nothing. [ 8 ] The functional approach is most easily applied to primary steps in a lawsuit. Two examples will suffice. By contrast, the approach to ancillary steps is somewhat more difficult and requires something like the test for relevance and materiality under Rule 5.2. Primary Steps (

i) Questioning [ 9 ] A lecturer in civil procedure might tell you that the purpose of questioning is: ‘to find the facts’, ‘to fix the facts’ and ‘to see the other side’ [2] (at least that might be enough to get you a pass). Under the adversarial system, finding the facts and fixing the facts involves creating a record under oath centered on getting admissions against the interest of the party being examined.

Since this type of step in a lawsuit has multiple purposes, and since it would be virtually impossible to conduct questioning without accomplishing at least some of them, under the old law it was a convenient shorthand to begin with the presumption that an action was always advanced by a step required by the Rules ( Morasch at paras 6-8 , (dicta) referring to old Rule 244.1). Under the current law, this is a good bet but not a certain one. (ii) Pleadings

[ 10 ] The main purpose of Pleadings is to frame the issues, as mandated by Rule 1.2, and to engage

section 8 of the Judicature Act ; to determine the range of remedies open to the Court to give. (It is debatable whether some statements of defence that plead every conceivable option and essentially amount to a civil plea of ‘not guilty’ advance an action, or comply with Rule 1.2, other than to signal that everything is in dispute). A Demand for Notice admits the facts pleaded in the Statement of Claim and tells the plaintiff that the action is partially defended as to quantum. Inaction will also advance the lawsuit by default; taking a matter directly to judgment or to an assessment of damages.

Like questioning, this step typically involves very little functional analysis to test whether the lawsuit has been significantly advanced. Ancillary Steps [ 11 ] Rule 4.33 requires that an action be significantly advanced at least every three years. Primary steps like those noted above, will almost always accomplish this goal because engaging in the process almost necessarily achieves the purpose of that step; in some cases even by default. Ancillary steps, however, will only constitute a significant advance if they approach something like the test for relevance and materiality for the purposes of Rule 5.2.

By that I mean the event must be reasonably expected to significantly help determine one or more of the issues raised in the pleadings, or to ascertain further evidence that would have this result (cf Le at para 22). It is in this way that an ancillary step advances an action. [ 12 ] This sort of analysis applies to things like further production, updated affidavits of records, or answers to undertakings. Some of the older cases indicated that the advance had to bring a matter significantly closer to trial. However, in this post- Hryniak age, it need only bring it closer to resolution. Application to this Case (

i) Provision of Undertaking Answers – Further Production (photographs) [ 13 ] The Answers to Undertakings and the further production of photographs are ancillary events. On balance, they do not significantly help determine one or more of the issues raised in the Pleadings. They are really only a gloss on what has gone before (cf Ravvin at para 25). The Court cannot presume that a request for an undertaking, or a request for further records is significant just because it was asked. (ii) JDR [ 14 ] JDR’s/ADR’s were originally required by the Rules (Rules 4.16(1) and 8.4(3)(a)).

The requirement was suspended in a Notice to the Profession, dated February 12, 2013, because satisfying the requirement itself proved to be a source of delay. Booking dates were being snapped up quicker than Garth Brooks tickets with no extra concerts. The Court did not have the resources to handle the volume. [ 15 ] The purpose of a JDR is to: ... provide a party-initiated framework for a judge to actively facilitate a process in which the parties resolve all or part of a claim by agreement (Rule 4.17).

When it was a requirement, all that was required was good faith participation. (eg Rule 4.16(1)) [ 16 ] If parties participate in the JDR in good faith, it is still an advance even if it doesn’t resolve the lawsuit and even if there is no formal narrowing of issues. It is irrelevant whether there are full briefs or not (though the question is raised by Sulyma J, in Kurian at para 72 (dicta)). There are strong policy reasons to support this. Otherwise parties would be foolish to participate in a JDR (or, for that matter, a

Summary Judgment Application). Participation without resolution signals (at the very least) that matter cannot be determined summarily; that it must go to Trial if it is to be resolved at all. [ 17 ] I note that in this case the Respondent swears that there were full briefs and that participation in the JDR ‘narrowed the issues for trial’ (Caputo affidavit para 11) but without providing any detail. This type of evidence, with particulars, is helpful, but not necessary for a JDR.

It would be essential if a party were to claim that settlement negotiations constituted a significant advance (cf Purewell at paras 16-18 per Slatter J (now JA)), and Montreal Trust at para 59 per Park J). [ 18 ] JDR’s now exist in a gray area between primary and ancillary steps. Good faith participation in this JDR constituted a significant advance, even though it did not have the desired effect of resolving some or all of the issues in the lawsuit. Expert Report [ 19 ] Expert reports fall under

Part 5 of the Rules relating to disclosure of evidence. Though the purpose of expert reports is not specifically described by the Rules , their evidentiary function is plain. Their purpose is to persuade the Court that a certain state of affairs is more likely than not. They can also perform an essential function in the assessment of damages. [ 20 ] Expert reports are available for use either at trial or at an application (Rule 6.11). The Rules mandate the order of production of expert reports as a matter is readied for trial. It alerts the other side to the case that it will have to meet.

Expert reports may be mandatory from an evidentiary perspective in some cases, but they are optional procedurally. [ 21 ] The primary function of an expert report is to assist the Court in determining one or more issues in the pleadings. Otherwise it is irrelevant.

[ 22 ] The Plaintiff pleads: 11. The Plaintiff hereby seeks rescission of the Agreement, repayment of the purchase price in the amount of $840,000.00 plus reimbursement for the costs and efforts incurred with respect to the Property as outlined in paragraph 10 above. 12.

Alternatively, the Plaintiff has suffered damages as a result of the above breaches or Misrepresentations in an amount equal to the cost to remediate the Property plus out-of-pocket costs, loss of value and loss of use and enjoyment in an amount currently unknown. [ 23 ] This will require the Plaintiff to prove that the state of the property was so significantly different than what was bargained for that the Plaintiff is entitled to rescind. Alternately, it requires the Plaintiff to measure the level of contamination and to value the costs of remediation: which might indirectly serve the first function as well.

Opinion evidence is necessary for both these issues. [ 24 ] The report provided at the 11 th hour is a valuor’s opinion. The appraiser does not know the costs of remediation and does not purport to quantify the extent of contamination of the land. Instead, the appraiser purports to value the ‘stigma’ attached to the sale of polluted land. [ 25 ] The report reads (pg 45): ...it cannot be confirmed that the subject property is contaminated to levels which would exceed acceptable levels.

However, there are clearly concerns with the property and these concerns will lead to a lower value based on the concept of stigma which will be discussed below. And further: Remediation and Deferment Costs ... typically, damages under this scenario are analyzed on a ‘cost to cure’. No remediation costs have been quantified for the subject property. To date there has been no loss of use. The opinion purports to measure market sensitivity where contamination may be a concern . [ 26 ] The previous owner conducted a Phase One Environmental Status Assessment, which recommended further investigation.

This was never done. The Defendants do not admit that the land is contaminated (Statement of Defence paras 2, 4). [ 27 ] According to the expert report, the stigma translates into a 14% (upwards) reduction in value from a series of comparables identified as ‘case studies’. The land was purchased for $840,000 and is presently assessed to be worth $1 million dollars if it were free of the stigma of pollution. The appraiser is of the opinion that the stigma attached to this particular piece of property would reduce its value by 35%; lowering its current market value to $650,000.

No account is given for the fluctuations of real estate values between 2008, the year of the sale; which I take notice was roughly the market peak, and the present day. [ 28 ] I am going to assume for the sake of argument that this report is admissible and the expert is capable of being qualified to give the opinion contained in his report. [ 29 ] The question is then: ‘Is this report of any significant assistance in determining any of the issues in the Pleadings?’ In my view it is not. It is essentially an opinion that might serve another lawsuit, but not this one.

It is not ‘an important piece of evidence’ ( Phillips at para 17 ). It does not advance this action because it does not discharge the primary burden of proving the extent of contamination and the costs of remediation. It likely detracts from the rescission argument. [ 30 ] I acknowledge that an expert report is one of the few things a party can do to unilaterally advance a lawsuit. Most other events require the participation of the other side.

However, we are now roughly nine years after the fact and the amount of contamination and the costs of remediation, which are plainly the central issues in this lawsuit, have never been quantified. The importance of this is underscored by the thought that even if the parties disagreed on fault they might well have agreed on quantum. [ 31 ] There has been a gap greater than three years in this lawsuit without a significant advance and I regret to say that the Court is obliged to dismiss it. The merits of the lawsuit are not relevant.

Rule 4.31 [ 32 ] In the circumstances I need not consider Rule 4.31 and the interesting questions raised in most recent case from the Court of Appeal in Humphreys v Trebilcock , 2017 ABCA 116 . I am grateful to Respondent counsel for his submissions on this case. Disposition [ 33 ] The Defendants’ application is allowed. The action is dismissed. If the parties cannot agree on costs they may be spoken to. Heard on the 10 th day of April, 2017. Dated at the City of Edmonton, Alberta this 10 th day of May, 2017.

W.S. Schlosser M.C.Q.B.A.