Stein v Greene, 2017 ABQB 590

Court of Queen’s Bench of Alberta Citation: Stein v Greene, 2017 ABQB 590 Date: 20171002 Docket: 1301 00854 Registry: Calgary Between: Richard Stein and Marleen Stein Plaintiffs - and - Calvin Greene Defendant _______________________________________________________ Memorandum of Decision of A. R. Robertson , Q.C., Master in Chambers _______________________________________________________ Introduction [ 1 ] This application is to dismiss the claim for delay and consequential prejudice, pursuant to rule 4.31.

Although the application made reference to both rules 4.31 and the “drop-dead” rule 4.33, the applicant’s counsel concedes that this application is limited to rule 4.31. [ 2 ] The question is whether, in the unusual circumstances here, the defendant has suffered prejudice as a result of delays in the prosecution of this claim. If so, then the Court may dismiss the action. The question of whether the delay was “inordinate and inexcusable” is not central here, because the defendant does not rely on the presumption in rule 4.31(2).

The analysis here involves a consideration of delay in a related claim and the previous consequential dismissal for delay of that related claim. [ 3 ] In reply, the plaintiff says that the delay in this case was largely contributed to by the defendant, and he cannot rely on rule 4.31, or alternatively, discretion should be exercised in favour of allowing the action to continue.

[ 4 ] I have concluded that there was delay, that the defendant has suffered significant prejudice by the delay, and that the claim should be dismissed. The Facts Overview of the Facts [ 5 ] This is one of three related actions. They all revolve around investments in a gravel pit with a company called Diamond Valley Gravel Sales Inc. and an individual named Donald J. Beaton. [ 6 ] Mr. Beaton operated Diamond Valley, which operated a gravel pit on land that was owned by 1364059 Alberta Ltd. That numbered company was owned, at the outset, by the defendant in this claim, Calvin Greene, and by Mr. Beaton.

At a later point in time Mr. Beaton signed over his shares to Calvin Greene. I will refer to 1364059 Alberta Ltd. as the “ Land Company ” for convenience. [ 7 ] Calvin Greene is a medical doctor, and apparently now retired. I will refer to him as “ Dr. Greene ”, although his profession as a medical doctor has nothing to do with the facts. He was not actively involved in the operation of the gravel pit. [ 8 ] The plaintiffs, Mr. and Mrs. Stein, allege that they made an agreement with Mr.

Beaton in which they were to end up with an 8 ½ per cent interest in the gravel pit, perhaps in the company Diamond Valley Gravel Sales Inc., or perhaps in the underlying land. However, the underlying land was owned by the Land Company, and they had no communications with Dr. Greene. [ 9 ] Dr. Greene states that he was completely unaware of whatever arrangement may have been reached between Mr. Beaton and the Steins until he attempted to refinance the Land Company. He then discovered that the Steins had sued Mr. Beaton and others, including the Land Company. Dr.

Greene made enquiries and learned of the allegation of an agreement between the Steins and Mr. Beaton, and his counsel made arrangements with counsel for Mr. and Mrs. Stein to partially discontinue their action. That earlier action was action 1001-13414, brought by Mr. and Mrs. Stein against the Land Company, Diamond Valley Gravel Sales Inc., Mr. Beaton, and two other corporations. [ 10 ] Since the land was owned by the Land Company, a partial discontinuance as against that company allowed the refinancing. [ 11 ] The agreement was that once the re-financing was complete, Mr. and Mrs.

Stein could sue the Land Company all over again, and Dr. Greene would not assert a limitations defence resulting from that process. [ 12 ] However, the Steins never did sue that company again. Instead, they sued Dr. Greene in these proceedings. Over the next several years there was communication between counsel. There was then a protracted debate over the terms of the agreement that had been made between counsel that had led to the partial discontinuance. [ 13 ] Dr. Greene says that the agreement was never that he would be sued personally. The Steins wanted to add him to the claim against Mr.

Beaton and his companies. [ 14 ] Although there was much discussion, and a court application started but never heard, no new proceedings were brought against the Land Company. [ 15 ] In June 2017 the remaining defendants in action 1001-13414, being the original action to which the Land Company had been a party (but no longer was a party) sought an application to dismiss under rule 4.33, for long delay. They were successful.

That action was therefore over, because the entire claim that remained was dismissed for long delay. [ 16 ] I will refer to action 1001-13414 as the “ Original Action ” for clarity. [ 17 ] In a parallel application, Mr. and Mrs. Stein apply to set aside the partial discontinuance (which they had filed in 2011) in the Original Action. That application has been adjourned sine die pending the outcome of this application. [ 18 ] Dr. Greene applies to have this claim struck because (

a) nothing has happened for approximately 3 ½ years except an application he brought for

summary dismissal, and (

b) the entire dispute with the Steins arose out of an agreement that they say they made with Mr. Beaton, not with him and in the meantime they have allowed their claim against Mr. Beaton to be dismissed in its entirety because of their delay. [ 19 ] Mr. Beaton is the rogue as far as both Dr. Greene and Mr. and Mrs. Stein are concerned. Both are therefore left with an unresolved dispute arising from agreements that Mr. and Mrs. Stein say they made with Dr. Beaton. [ 20 ] Dr. Greene says he has suffered actual prejudice by this delay, particularly the prejudice that resulted when Mr.

Beaton and his company were released from litigation (by the dismissal of the Original Action for long delay) long after the limitation to sue had run. [ 21 ] Dr. Greene may, in theory, apply to obtain leave to issue a very late third party claim in these proceedings. He could still require Mr. Beaton to attend as a witness if that would help his case. These factors are part of the factual matrix I have considered in the context of determining whether there has been prejudice.

Detailed Chronology [ 22 ] I have prepared a detailed chronology using the various affidavits and pleadings filed in this action and the Original Action to try to understand how these claims have languished. Here is the chronology: May 9, 2007: Mr. and Mrs. Stein advance $125,000 to 752593 Alberta Ltd., with a due date of November 3, 2007 [the dates as set out in statement of claim in the Original Action].

September 13, 2010: The statement of claim in the Original Action is filed by Mr. and Mrs. Stein against the Land Company, Diamond Valley Gravel Sales Inc., Donald J. Beaton, 752593 Alberta Ltd. and JKR Excavating Ltd., asserting entitlement to shares and an interest in lands, including a right to buy 15 acres. September 22, 2010: Mr. and Mrs. Stein file an application, returnable October 7, 2010, for an order consolidating the Original Action with two other actions, one against JKR Excavating and one against Mr. Beaton. August 11, 2011: Mr. and Mrs.

Stein file an application, returnable August 19, 2011, for an order “freezing any further activity at the gravel pit owned by [the Land Company]” and appointing a receiver. August 17, 2011: Dr. Greene is served with copies of the application materials for the “freezing” application. September 16, 2011: Counsel for the Steins speaks by telephone with counsel for the Land Company and Dr. Greene and they work out an agreement to withdraw claim against the Land Company on a temporary basis to allow the re-financing fo the gravel pit lands.

September 27, 2011: The telephone agreement is recorded in writing by counsel for the Steins. It is limited to re-filing “against the company”. There is no hint of a claim against Dr. Greene personally being considered. December 14, 2011: The partial discontinuance of claim is filed, discontinuing the Original Action as against the Land Company October 20, 2011: Counsel for Dr. Greene reports that the re-financing has been successful, but also advises that he has instructions to sue the Steins on behalf of the Land Company for damages resulting from the delay. December 15, 2011: Counsel for Dr.

Greene forwards a copy of the filed partial discontinuance of action - and also encloses a statement of claim against the Steins. October 31, 2012: Mr. Stein files an affidavit setting out the communication between counsel relating to the amendment of pleadings in the Original Action to add both the Land Company and Dr. Greene as defendants to that action. January 21, 2013: The statement of claim is filed in this action (against Dr. Greene only). February 5, 2013: Counsel for Dr.

Greene consents to the order amending the claim to re-add the Land Company in the Original Action, but he requires as a trust condition that Dr. Greene’s costs for having to cross-examine Mr. Stein be paid. July 31, 2013: Counsel for the Steins writes to re-cap recent events. He has tried to amend the claim in this action to re-add the Land Company, but also add Dr. Greene; he received pushback; he sent a revised claim that did not include Dr. Greene; and Dr. Greene’s counsel insisted on the payment of costs before adding the Land Company even without Dr. Greene being added. He advises that he has sued Dr.

Greene directly [in this action] and arranged for service on him. He insists on compliance with the original agreement to re-add the Land Company as a defendant without the insistence on costs. However, he also states “and we will consent to the amalgamation of both actions so that the proper parties might be brought before the courts.” August 1, 2013: Counsel for Dr.

Greene sets out his views in an email and says, Please feel free to put this matter on the Chambers list should you so desire and be instructed as the writer is adamant that he is not in breach of the agreement which he had made with you concerning the filing of the Partial Discontinuance of Action way back then as it was you who breached such agreement by attempting to add Dr. Greene personally to such action and waited as long as you did before attempting to proceed with it. [Emphasis added.] September 4, 2013: Dr. Greene is served with the statement of claim in this action. October 25, 2013: Dr.

Greene files his statement of defence to the new claim against him. October 25, 2013: Dr. Greene files an application returnable November 8, 2013 for

summary judgment or alternatively

summary trial (the application is later amended on October 28, 2013 to refer to rule 3.68 as well). November 7, 2013: The application is adjourned sine die . November 22, 2013: Questioning of Dr. Greene takes place; objections are made. December 11, 2013: Mr. and Mrs. Stein file an application returnable December 12, 2013 for an order compelling answers. June 10, 2014: Dr. Greene files a brief in support of his

summary dismissal application, by now scheduled for July 7, 2017. June 26, 2014: Mr. and Mrs. Stein file their brief in opposition. July 7, 2014: Dr. Greene’s application for

summary judgment is dismissed. July 24, 2014: Counsel for Dr. Greene agrees to the order adding Dr. Greene in the Original Action, but with some conditions on cleaning up the pleadings and arrangements for a stay on enforcement of the costs award made against Dr. Greene. March 27, 2015: Counsel for the Steins writes and demands payment of the costs award resulting from their successful opposition to the

summary dismissal application, and states that there is no entitlement to impose conditions.

September 11, 2015: Counsel for the Steins writes, enclosing a draft order that would add both the Land Company and Dr. Greene to the Original Action, and would consolidates that action with this action and 1101-17069. His letter suggests that the costs debate is resolved or close to it. February 1, 2016: Mr. and Mrs. Stein file an application, returnable February 25, 2016, for an order consolidating three actions, including actions 1001-13414 and this one.

February 24, 2016: Counsel for the Steins confirms that the application has been adjourned for 60 days, “so that we have some further discussions.” April 29, 2016: Counsel for the Steins writes to counsel for Diamond Valley, Mr. Beaton, 752593 Alberta Ltd., and JKR Excavating, stating that Dr. Greene has agreed to the order adding both the Land Company and Dr. Greene as defendants to the Original Action, and also consolidating that action with both 1101-17069 and this action. This order was never signed by the court.

It seems clear that counsel for JKR Excavating did not consent, because of what happened next (although four months later). August 25, 2016: Diamond Valley Gravel Sales Inc., Donald J. Beaton, 752593 Alberta Ltd. and JKR Landscaping Ltd. file an application in the Original Action, returnable September 8, 2016 for dismissal for long delay under rule 4.33. It is adjourned to June 29, 2017. June 29, 2017: The Original Action is dismissed in its entirety. The Court also addresses the application by the Steins for consolidation, and adjourns the application sine die.

The order expressly states that the Land Company and Dr. Greene may not rely on the passage of time after June 29, 2017 in respect of an application brought pursuant to rules 4.31 or 4.33. August 11, 2017: Dr. Greene files this application returnable August 25, 2017 for dismissal for delay. August 18, 2017: Mr. and Mrs. Stein file an application, also returnable August 25, 2017, for consolidation of actions 1301-00854 and 1101-17069. Analysis [ 23 ] Rule 4.31 of the Alberta Rules of Court is as follows: 4.31(1) If delay occurs in an action, on application the Court may (

a) dismiss all or any part of a claim if the Court determines that the delay has resulted in significant prejudice to a party, or (

b) make a procedural order or any other order provided for by these rules.

(2) Where, in determining an application under this rule, the Court finds that the delay in an action is inordinate and inexcusable, that delay is presumed to have resulted in significant prejudice to the party that brought the application. [ 24 ] In Humphreys v Trebilcock , 2017 ABCA 116 , the Court of Appeal addressed an application to dismiss based upon both delay and also the presumption and consequential reverse onus that arises from sub-rule (2). [ 25 ] The Court first addressed the meaning of “delay” at paragraphs 115 and 116: “Delay is a relative concept” [citing Ursa Ventures Ltd. v.

City of Edmonton , 2016 ABCA 135 ]. It is the product of a comparison between the point on the litigation spectrum that the nonmoving party has advanced an action as of a certain time and that point a reasonable litigant acting in a reasonably diligent manner and taking into account the nature of the action and stipulated timelines in the rules of court would have reached in the same time frame. One measures progress in a specific action and compares it against the progress made by the comparator – the reasonable litigant advancing the same claim under comparable conditions.

Not all actions will advance in lockstep. A complex case, as opposed to a standard one, consumes more time at each stage and may have more stages. And some standard cases are likely to move along the litigation spectrum at a slower rate than others. A claim alleging breach of a detailed and complicated noncompetition promise by a defendant covering his tracks and vigorously resisting progress will take more time to prosecute than a simple debt action.

That is also the case if one is measuring the duration of a catastrophic personal injury action as opposed to a noncatastrophic personal injury suit. [ 26 ] The Court went on to address the meaning of “inordinate and inexcusable delay”, which triggers the presumption of prejudice under sub-rule 4.31(2). However, we are not dealing with the presumption here, and it is not necessary for the defendant, Dr. Greene, to show “inordinate and inexcusable” delay.

If “inordinate” or “inexcusable” delay were a requirement for the application of sub-rule 4.31(1), one would expect that the rule state that, particularly in light of the history of the “delay” rule generally but especially because it is expressly set out in sub-rule (2). Sub-rule (1) is in play when there is (

a) delay, and (

b) significant prejudice results from that delay. [ 27 ] The questions as posed by the Court of Appeal in Humphreys (but backing out the questions relating to the presumption), are these (beginning at paragraph 150): First, has the nonmoving party failed to advance the action to the point on the litigation spectrum that a litigant acting reasonably would have attained within the time frame under review? .... Sixth, if the moving party has met the criteria for granting relief under r. 4.31(1), is there a compelling reason not to dismiss the nonmoving party’s action? This question must be posed because of the verb “may” in r. 4.31(1).

[ 28 ] Accordingly, the question is firstly whether there has been delay, secondly whether there has been significant prejudice, and then thirdly whether there is a compelling reason, in the circumstances of the case, to militate in favour of allowing the claim to proceed. [ 29 ] It is in the context of the consideration of whether there is a “compelling reason” that the presence (or absence) of factors that might tend to show that the delay was “inordinate” or “inexcusable”, or both, is still relevant. [ 30 ] It has been approximately 10 years since the events occurred that gave rise to the dispute. [ 31 ] The plaintiffs did not sue Dr.

Greene in the original lawsuit started in 2010. Whatever their reasons were for not naming him in the first place, by January 21, 2013 at the latest they knew that they wanted to make a claim against him. That is when the statement of claim in this action was filed. [ 32 ] This claim was apparently only started as a backup plan to adding Dr. Greene to the original lawsuit. Although it was filed on January 21, 2013, it was not served until September 4, 2013. [ 33 ] It is clear that it became the Steins’ intention to include Dr. Greene in the Original Action that they had initially commenced without Dr. Greene.

That is why Counsel for Mr. and Mrs. Stein wanted to add him as a defendant to the Original Action and, once this claim was started, the Steins wanted the actions consolidated. By July 31, 2013 counsel for the Steins had indicated a clear intention of amalgamating “so that the proper parties might be brought before the courts.” [ 34 ] These clearly-stated intentions demonstrate an acknowledgement that the claims against Mr. Beaton and Dr. Greene should have been heard together. As a result of the dismissal of the Steins’ claim against Mr.

Beaton and his companies, the trial as envisioned by the Steins can no longer be held. [ 35 ] Dr. Greene has consistently argued that he had no place in either lawsuit. That is clear from the communication between counsel throughout, as well as the fact that, once served with the claim on September 4, 2013 Dr. Greene almost immediately (on October 25, 2013) applied for

summary dismissal. [ 36 ] The delays in moving the case to resolution revolved around both counsel attempting to impose requirements on the other that were not part of the original agreement to discontinue the claim as against the Land Company and reinstate it a later date. The Steins wanted to add Dr. Greene personally, and he wanted costs. [ 37 ] That debate lasted apparently from sometime in the fall of 2012 until, it would seem, September 11, 2015 when the matter seems to have been resolved but in any event no later than April 29, 2016 when the consent of counsel for 752593 Alberta Ltd. was sought.

When that consent was not forthcoming, the discussion seems to have fallen off the table yet again. [ 38 ] It seems clear that the delay overall was caused by the ongoing discussion, but lack of agreement, between counsel in working out the terms of their 2011 agreement. [ 39 ] The original insistence on getting Dr. Greene’s consent to be added to the original claim was, in my view, unreasonable (because he had never agreed to that). Perhaps not surprisingly, that demand led to an unreasonable response from Dr.

Greene - a demand for costs as a condition of doing what he had promised to do before - to allow his numbered company to be re-added as a defendant. [ 40 ] I see some fault on both sides. However, I do not see this as a case where there was an unfulfilled undertaking by the defendant (Dr. Greene) that caused delay, or where the defendant was otherwise unilaterally dragging out proceedings, only to complain of delay at the end. Counsel for Dr.

Greene had staked out his client’s position and invited counsel for the Steins to bring a court application if he disagreed. [ 41 ] But nothing actually happened that moved this claim towards resolution from July 2013 until August 2017 when this application was filed (although the last date I am to consider is June 29, 2017 in light of the order dismissing the original claim). The only intervening steps were Dr. Greene’s unsuccessful

summary dismissal application on July 7, 2014 and the resulting costs award being filed August 12, 2014. [ 42 ] He argues that he was sued because the Steins wanted to sue Mr. Beaton and his company, and felt it necessary to draw Dr. Greene in as well. All of the information seems to suggest that Mr. Beaton was the rogue, and that Dr. Greene is another victim. [ 43 ] To the extent that Dr. Greene eventually agreed to be added to a lawsuit, after years of debate, it was to be added to a lawsuit with Mr. Beaton as the lead defendant and with a consolidation of all the claims into one.

Throughout the entire period, his counsel expressed confidence that there was no proper claim against Dr. Greene. It is in the context of the claim by the Steins as against Mr. Beaton and his companies, and only after Dr. Greene was unsuccessful in seeking

summary dismissal, that Dr. Greene agreed to be party to the original lawsuit, as consolidated. [ 44 ] However, while all of this was going on, the plaintiffs did not take steps against Mr. Beaton and as a result they have lost their claim against him. At any time following (at the latest) February 5, 2013, when counsel for Dr. Greene attempted to impose the obligation to pay costs, the Steins could have applied for consolidation. [ 45 ] They also could have brought an application to add the Land Company re-added as a defendant to the Original Action with Dr. Greene added as well.

An invitation to do exactly that was expressly set out in Dr. Greene’s counsel’s email of August 1, 2013, quoted above. [ 46 ] However, all that happened following that was more discussion between the Steins’ counsel and Dr. Greene’s counsel, until the Original Action was dismissed for delay.

[ 47 ] The Steins still maintain an application (adjourned) to consolidate this claim with the Original Action - notwithstanding the fact that there is no action there to consolidate anymore. [ 48 ] The current circumstance in this action is this: (

a) after four years the pleadings are not yet completed (assuming a successful application to extend the time to file a third party claim), and (

b) there has been no

Part 5 disclosure. The only meaningful step that has been taken that might be said to have advanced the action was Dr. Greene’s 2014 application to dismiss the claim summarily. [ 49 ] There has been, using the relative approach indicated in Humphreys , delay. It should not take four years or more to get to the point of having the pleadings closed, the parties identified, and at least affidavits of records exchanged if not questioning done. [ 50 ] If this claim were left to proceed, what would the next steps be? Dr.

Greene would effectively have to seek leave to issue a late third party claim for indemnity (the deadline was April 25, 2014) - long after the Steins’ claim directly against Mr. Beaton and his companies had been struck. If leave were granted, that would have the effect of bringing Mr. Beaton and his companies back into thedispute, but as third parties - without a direct claim by Mr. and Mrs. Stein against the party that appears to be the rogue. [ 51 ] That would have the curious result of effectively consolidating all of the claims into one.

It would have the effect of essentially undoing the order dismissing the claim as against Mr. Beaton and his companies. It would be a very odd result, indeed. [ 52 ] And it would make Dr. Greene the ham in the sandwich. The Steins’ primary claim would now be against him, and he would have to take the risk of being able to draw Mr. Beaton and his companies back into the fray. If judgment were granted against him, and he is able to advance a late third party claim, he would have to take the risk of actually recovering over against Mr. Beaton. [ 53 ] An alternative analysis is that Dr.

Greene was always only a defendant in this action. He could have brought a third party claim against Mr. Beaton long ago. How is that prejudice? [ 54 ] However, the opportunity to claim over against Mr. Beaton was present only in the context of the circumstance where an application that the plaintiffs had repeatedly indicated an intention to ask for a consolidation of actions, and it was never the intention of the plaintiffs to pursue Dr. Greene alone. This claim was clearly filed as a back-up plan if the consolidation did not happen, presumably because of limitation concerns. The argument by Dr.

Greene was always that he should not have been sued at all. But if the claim were going to proceed, he did not oppose the consolidation. [ 55 ] Dr. Greene had, by April 29, 2016 expressly indicated a willingness to agree to both being sued in the Original Action and having this action consolidated with the Original Action. [ 56 ] Until July of 2017, a third party claim in this action would have been seen as redundant. [ 57 ] It should not be forgotten that the claim advanced by Mr. and Mrs. Stein is based on an oral agreement with Mr. Beaton, not with Dr.

Greene, that they said they made almost 10 years prior to June 29, 2017. Their claim here is that when Mr. Beaton transferred his shares in Land Company to Dr. Greene he should have known that Mr. Beaton did not own all of them. That is, this is not primarily a “documents case”, although no doubt there are many important documents. This appears to be a case of what was said to whom, without Dr. Greene present, and what Dr. Greene should have known about it.

Fading memories are a primary reason for the delay rules 4.31 and 4.33. [ 58 ] In my view, the delay in the original action leading to its dismissal has resulted in significant prejudice to Dr. Greene. It has completely re-formulated the relative positions of the parties, putting risk on Dr.

Greene that he should not have to accept, particularly in relation to a claim that has its basis in oral agreements to which he was not a party. [ 59 ] The fact that the prejudice is a direct result of the delay by the Steins in the Original Action is an important factor in considering whether there is a “compelling reason” not to dismiss the claim. [ 60 ] In these very unusual circumstances it is appropriate to dismiss the claim. Conclusion [ 61 ] Accordingly, the application is allowed, and the action against Dr. Greene is dismissed. [ 62 ] If the parties cannot agree upon costs, they may approach the Court.

Heard on the 25 th day of August, 2017. Dated at the City of Calgary, Alberta this 2 nd day of October, 2017. A. R. Robertson, Q.C. M.C.CQ.B.A.

Appearances: Richard Dudelzak, Q.C. Dudelzak & Company for the Applicant (Defendant) Russell Patterson Schuettlaw for the Respondents (Plaintiffs)