McKay v Prowse, 2017 ABQB 694

Court of Queen’s Bench of Alberta Citation: McKay v Prowse, 2017 ABQB 694 Date: 20171116 Docket: 0903 13422 Registry: Edmonton Between: John Russell McKay Plaintiff - and - John Cameron Prowse and Prowse Chowne LLP Defendants _______________________________________________________ Reasons for Decision of S.L. Schulz , Master, Court of Queen's Bench of Alberta _______________________________________________________ [ 1 ] This is an application for dismissal of an action for long delay pursuant to Rule 4.33. For the reasons that follow, I grant the application and dismiss this action.

It should be noted that counsel appearing for the Plaintiff on this application is not the counsel who had carriage of the file when the events in question occurred. Background [ 2 ] An action was commenced in August of 2009 claiming breach of contract and duty of care arising from the handling of a patent infringement case in the Federal Court of Canada. The Plaintiff had also commenced a patent infringement lawsuit in the United States which was ultimately settled.

[ 3 ] Various steps were taken in this action including an Affidavit of Records on February 2, 2010; a Supplementary Affidavit of Records on November 18, 2010; and a Supplemental Supplemental Affidavit of Records attaching 14 documents on November 13, 2015. A Response to Notice to Admit was filed on July 12, 2013. [ 4 ] The application pursuant to Rule 4.33 was filed and served on November 24, 2016.

Issues [ 5 ] Does the Supplemental Supplemental Affidavit of Records of November 13, 2015 re-start the clock for the Rule 4.33 application? [ 6 ] Does the active pursuit of settlement in the three years prior to the filing of the application re-start the clock for the Rule 4.33 application? Rule 4.33 [ 7 ] Rule 4.33(2) governs this application:

(2) If 3 or more years have passed without a significant advance in an action, the Court, on application, must dismiss the action as against the applicant, unless (

a) the action has been stayed or adjourned by order, an order has been made under subrule (9) or the delay is provided for in a litigation plan under this Part, or (

b) 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. Judicial Consideration of Rule 4.33 [ 8 ] Justice Topolnisky summarized some of the fundamental principles underlying Rule 4.33 in St. Jean Estate v Edmonton (City) , 2014 ABQB 47 and Nash v Snow , 2014 ABQB 355 . These principles were summarized and quoted with approval by Justice Shelley in Weaver v Cherniawsky, 2015 ABQB 157 at para 7 (“ Weaver QB ”).

The Court of Appeal approved the decision of Justice Shelley and the analysis of Justice Topolnisky and summarized the test to be applied in assessing Rule 4.33 as the functional approach. [ 9 ] The functional approach or test requires the Court to determine if there has been a significant advance in the action that actually moves the lawsuit forward in a meaningful way considering its nature, value, importance and quality.

The genuineness and the timing of the step are also relevant with the focus being on the substance of the step taken and its effect on the litigation, rather than on its form ( Weaver v Cherniawsky , 2016 ABCA 152 at para 18 (“ Weaver CA ”). [ 10 ] In Weaver QB , Justice Shelley specifically examined the production of documents in the context of Rule 4.33: [20] R 5.10 provides that a party must give notice of new documents found, created, or in its control to the other parties. Under the old Rules, R. 197 had the same effect.

The Courts have found this to be a duty (see for example Manufacturers Life Insurance Co. , Re , 2011 ABQB 733 (Alta. Q.B.) (at para39), but in my view this continuing obligation is not a mandatory “step” that constitutes a “thing” that advances an action. The rule reflects a “ continuing obligation”, rather than a discrete procedural step each time a new document is disclosed.

Filing the Affidavit of Records is a mandatory step, but meeting the duty to continue to disclose documents is not . [21] As Justice Topolnisky noted, a functional analysis is required to determine whether newly disclosed documents significantly advance the action. In Huynh v Rosman , 2013 ABQB 218 (Alta. Q.B.), Justice Gates noted (at para 36) that a review must be made of the value of the document in the litigation and whether it moved the matter closer to resolution . In this case, the information in the Note consisted of notations made by the Plaintiff regarding a telephone conversation between her and Mr.

Cherniawsky. The Note appears to be incomplete; it was made in 2004 and therefore should properly have been in the original Affidavit of Records, and its contents had already been extensively considered in questioning. In fact, Defendants’ counsel immediately informed Plaintiff’s counsel that there was no need for further examination regarding the Note. The Note did not narrow the issues or assist the Defendants in assessing the strengths or weaknesses of the case.

Weaver QB at para 20-21 ; Emphasis added. [ 11 ] In addition to the foregoing, the Court of Appeal has recently summarized and confirmed the approach to be taken on applications pursuant to Rule 4.33 in Flock v Flock Estate , 2017 ABCA 67 at para 17 ; leave to appeal to the SCC denied (“ Flock ”). Review of the Documents

[ 12 ] The test requires the Court to carefully review the documents in question to determine if the test has been met. [ 13 ] The Applicants argue that production of these documents did not significantly advance the action because the documents provided were either not new or newly discovered, or are not relevant to this action. No explanation for the late disclosure of these documents has been given.

The Applicants rely on Weaver QB , Weaver CA and the Court of Appeal in XS Technologies Inc v Veritas DGC Land Ltd , 2016 ABCA 165 at para 13 and 17 in support of their application. [ 14 ] A review of the documents attached to the Supplemental Supplemental Affidavit of Records indicate that the documents noted fall into one of the following categories:

a) dated prior to the date of the first Affidavit of Records (documents 000365-000379);

b) produced in the Federal Court of Canada action which forms part of the factual context for this action and therefore available for disclosure earlier in the litigation (documents 000365 and 000366)

c) a duplicate of a document which was previously disclosed in the first Supplementary Affidavit (documents 000344 and 000367)

d) produced and examined on at Questioning in October 2011 (documents 000344 and 000367);

e) dated or in the possession of the Plaintiff before the date of the first Supplementary Affidavit of Records dated November 18, 2010 (documents 000371, 000372, 000376 and 000377); or

f) adds nothing to the action (document 000374 being a cover letter from 2007 accompanying the 2009 DVD which DVD had already been disclosed). [ 15 ] Based on the analysis in Weaver QB and Weaver CA and in the XS Technologies cases, these documents do not pass the test. [ 16 ] Of the remaining documents that were created after 2010 (the date of the Affidavit of Records) or are undated:

a) Documents 000378 and 000379 are part of the public record and available on the public website. The Plaintiff takes the position that these documents were produced to further quantify the Plaintiff’s claim. There is no explanation as to why these documents were not provided previously or how they serve to quantify the claim or advance the action toward resolution. There is no explanation of how these documents add anything to that which was already known, produced, or examined on.

b) Documents 000380 to 000384 are letters between the Plaintiff and Plaintiff’s U.S. counsel dated August and September of 2012 (after the Supplemental Affidavit of Records). According to the Plaintiff, these documents comment on the demonstrative testing in the Federal Court action and explain the difference in the results in the Federal Court action and the US action. However, these documents do not pass the relevancy test as there is no reference to the U.S. action in the pleadings.

c) Document 000364 is an undated and unattributed chart that on its face is not relevant. The Plaintiff states that this document details the overhead incurred by the Plaintiff in the U.S. action. Again, the U.S. action has not been pled and therefore is not relevant.

d) Documents 000385 to 000466 are a heavily redacted expert report dated September 2013 prepared for the U.S. action. The Plaintiff argues that despite the heavy redactions, the reports provide a lengthy written analysis significant because the same process is the subject of both the U.S. action and the Federal Court of Canada action. However, the U.S. action is based on different facts. The U.S. action has not been pled and therefore by definition it is not relevant.

Further, given that the test set out in Weaver QB requires the Court to consider “the nature, value, importance and quality” of the document (paragraph 7) and requires the Court to examine “the value of the document in the litigation and whether it moved the matter closer to resolution” (paragraph 21). I find that the heavy redactions preclude this document from being a significant advance in the action, especially since there is a Protective Order from the U.S. action that precludes the use of this document in this action.

Counsel for the Plaintiff argues that the failed application to vary the protective Order should be considered an advance, but that begs the question. This document does not narrow the issues or assist the Defendants in assessing the strengths or weaknesses of the case. It does not advance the action. [ 17 ] In conclusion, none of the documents attached to the Supplementary Supplementary Affidavit of Records serve to materially advance the action.

Settlement Discussions [ 18 ] The parties attended a settlement meeting in November 2013, following which there was an exchange of correspondence about JDR or mediation and numerous requests for documentation to substantiate the claim being advanced by the Plaintiff.

While the Court encourages the parties to participate in settlement discussions, the case law is clear: unsuccessful settlement discussions, or settlement discussions that do not narrow the issues or obtain agreement on some of the factual issues such as quantum or liability, are not a material advance in the action ( See 525812 Alberta Ltd v Purewal , 2004 ABQB 938 at para 16-17 (Slatter, J. as he then was); Krieter v Alberta , 2014 ABQB 349 at para 18 (Master Hanebury); Huynh v Osman , 2013 ABQB 218 at para 23 (Gates, J.). Similarly, the mere scheduling or the attempt to

schedule such a step is not an advance ( Weaver QB at para 11-15 ). [ 19 ] Counsel for the Plaintiff urges that the repeated correspondence surrounding the settlement discussions and the attempts to set up either JDR or mediation take this case outside the ambit of Rule 4.33, a rule that was intended to capture cases that have languished for a period of three or more years.

He argues that Rule 4.33 was intended to remedy a situation where a case has been abandoned, not a situation as here where the parties were actively trying to determine a method of out-of-court resolution (See Turek v Oliver , 2014 ABCA 327 at para 5 ; Ursa Ventures Ltd v Edmonton (City), 2016 ABCA 135 at para 10 ) [ 20 ] In Flock at para 19-26 , the Court of Appeal addressed this argument, referring it to as “lulling” the Respondent into waiving

reliance on Rule 4.33. The Court points out that a standstill agreement cannot be inferred; it must be express. Silence does not amount to acquiescence to delay. Attempts at settlement that do not narrow the issues or obtain agreement on factual issues do not justify a delay or amount to a standstill agreement. Simply put, the case law does not interpret Rule 4.33 in the manner that counsel urges it to be interpreted. While I might sympathize with counsel who is attempting to move a matter along through settlement, the case law is clear.

Counsel must practice with one eye on settlement and another on the requirements of the Rules of Court . Conclusion [ 21 ] Neither the documents nor the settlement discussions have served to significantly advance this action. [ 22 ] The application is granted and the action is dismissed pursuant to Rule 4.33. [ 23 ] The Applicant is entitled to costs of the application and the action under the appropriate column of

Schedule C, to be assessed unless the parties can agree on the amount. Heard on the 4 th day of October, 2017. Dated at the City of Edmonton, Alberta this 16 th day of November, 2017. S.L. Schulz M.C.Q.B.A. Appearances: Corinne Petersen Kingsgate Legal for the Plaintiff/Respondent J. Patrick Peacock, Q.C. and Elena Semenova Peacock Linder Halt & Mack LLP for the Defendants/Applicants