Reed v Reed, 2018 ABQB 960

Court of Queen’s Bench of Alberta Citation: Reed v Reed, 2018 ABQB 960 Date: 20181122 Docket: 1704 00507 Registry: Grande Prairie Between: Barry Vern Reed Plaintiff (Respondent) - and - Ruby Reed, Daniel Leslie Reed and The Registrar of Land Titles for the Province of Alberta Defendants (Applicants) Corrected judgment: A corrigendum was issued on December 3, 2018; the corrections have been made to the text and the corrigendum is appended to this judgment.

Corrected judgment: A corrigendum was issued on November 29, 2018; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Decision of W.S. Schlosser , Master in Chambers

_______________________________________________________ Introduction [1] This is an application to dismiss an action based on limitations. The Registrar of Land Titles did not attend and takes noposition on this application. [2] Barry (the Plaintiff) owned farm land with Ruby (Barry’s mother). They were joint tenants. The land was transferred to themby Vernon (Barry’s father) in 1983.

Historical title searches show that the land was transferred to Barry’s brother, Daniel, solely, in1991, and then, into the joint names of Daniel and Ruby in 1997. [3] Barry alleges that his signature was forged on the 1991 transfer and that he knew nothing about it until recently. [4] Ruby and Daniel applied to strike out Barry’s action based on the Limitations Act. Alternately, they ask for security forcosts. The Plaintiff argues that fraudulent concealment suspends the running of the limitation period and that there is merit to his case. List of Authorities 1. Limitations Act, Revised Statutes of Alberta 2000,

Chapter L-12; 2. P(

W) v Alberta, 2014 ABCA 404; 3. Ambrozic v Burcevski, 2008 ABCA 194; 4. Alberta Rules of Court, AR 124/2010 5. Paquin v Gainers Inc, (1989) (AB KB), 98 AR 39 QB; 6. Waquan v Canada, 2002 ABCA 110; 7. Weatherford Canada Partnership v Addie, 2016 ABQB 188 8. Wooddworks Design Ltd. v Forzani, 2016 ABCA 310, [2016] AWLD 5114; 9. Hryniak v Mauldin, 2014 SCC 7; 10. Alberta (Minister of Infrastructure) v Breitkreuz, 2016 ABQB 12; 11. Breitkreuz v Alberta (Minister of Infrastructure), 2017 ABCA 136; 12. Boyd v Cook, 2013 ABCA 27; 13. Hamill v Kudryk, 2013 ABCA 37; 14. 1400467 Alberta Ltd v Adderley, 2014 ABQB 439; 15.

Condominium Corp No 0321365 v 970365 Alberta Ltd, 2013 ABQB 471; and 16. Rathor v Singh, 2016 ABQB 498. Limitations [5]

Section 4 of the Limitations Act provides:

(1) The operation of the limitation period provided by section 3(1)(

b) or (1.1)(

b) is suspended during any period of time that thedefendant fraudulently conceals the fact that the injury for which a remedial order is sought has occurred.

(2) Under this section, the claimant has the burden of proving that the operation of the limitation period provided by section 3(1)(

b) or(1.1)(

b) was suspended. [6] The applicable factors are well established. In P(

W) v Alberta, 2014 ABCA 404 we find (at para 34): In short, to demonstrate fraudulent concealment, as alleged here, which suspends the running of the ultimate limitation period, theappellants must show (1) that Alberta (or its agents or servants) perpetrated some kind of fraud; (2) that the fraud concealed the fact oftheir injury; and (3) that the appellants each exercised reasonable diligence to discover the fraud.

[7] Similarly, in Ambrozic v Burcevski, 2008 ABCA 194 at paras 21 and 25: Fraudulent concealment that suspends a limitation period requires three findings: (1) that the defendant perpetrated some kind of fraud;(2) that the fraud concealed a material fact; and (3) that the plaintiff exercised reasonable diligence to discover the fraud: H.(V.A.) v.Lynch, 2000 ABCA 97 , 255 A.R. 359 [H.(V.A.) cited to ABCA]. . . . The third requirement looks at the plaintiff’s conduct. The limitation period will not be suspended if the plaintiff could have uncoveredthe fraud but did not make reasonable inquiries.

What constitutes reasonable diligence depends on the particular situation: H. (V.A.) atpara. 29. This element incorporates the doctrine of discoverability. The limitation period begins to run when, in the circumstances, theplaintiff ought to have discovered the facts material to the claim. [8] The central issue is whether the factual record is sufficient to enable the Court to make a fair and just determination on thelimitations issue, or whether the matter must go to trial. The use of Questioning Transcripts [9] A few comments about the evidence are necessary.

First of all, the Defendants have filed the Questioning transcripts of allof the parties in support of their applications. They are, of course, permitted to do this for their questioning of the Plaintiff, but, typically,only selected parts of the transcript are put into evidence. When the entire transcript is put in, all of the evidence goes in, and becomesevidence at large. [10] Rule 5.31 of the Alberta Rules of Court provides:

(1) Subject to rule 5.29 [Acknowledgment of corporate witness’s evidence], a party may use in support of an application or proceeding orat trial as against a party adverse in interest any of the evidence of that other party in a transcript of questioning under rule 5.17 [Peoplewho can be questioned] or 5.18 [Persons providing services to a corporation] and any of the evidence in the answers of that other party towritten questions under rule 5.28 [Written questions].

(2) Evidence referred to in subrule (1) is evidence only of the questioning party who uses the transcript evidence or the answers to thewritten questions, and is evidence only against the party who was questioned.

(3) If only a portion of a transcript or a portion of the answers to the written questions is used, the Court may, on application, direct thatall or each other portion of the transcript or answers also be used if all or any other portion is so connected with the portion used that itwould or might be misleading not to use all or any other portion of the transcript or other answers. (Emphasis added) [11] What this means is that you can use evidence and admissions you have obtained against the other side.

Ordinarily you cannotuse your own evidence by filing your own transcript even if your witness dies (eg Paquin v Gainers Inc, (1989) (ABKB), 98 AR 39 QB, and see Waquan v Canada, 2002 ABCA 110). [12] It is not like an examination on an affidavit where it all goes in and it is open to both sides to use. [13] The distinction between examination on an affidavit and questioning permits greater latitude at the questioning, and,generally, with impunity. It permits an exploration of the case against you.

That is why it used to be known as “discovery” before therules were improved. [14] In Weatherford Canada Partnership v Addie, 2016 ABQB 188 case, Veit J held: Relying on Rule 5.31(2), Artemis objects to Weatherford’s use of portions of Dunn’s questioning which have not been included inArtemis’ position. Naturally, Weatherford cannot use Dunn’s questioning in a self-serving way as, for example, an oath-helping device.On the other hand, Weatherford is entitled to ensure that any excerpt from Dunn’s evidence on which the applicants rely constitutes afair representation of Dunn’s evidence.

I consider that Weatherford’s reliance on additional portions of Dunn’s questioning is merelyWeatherford’s attempt to ensure fair representation of the evidence. [15] Using evidence to qualify or explain does not permit “carte blanche” use of your own transcript.

Usually it can only be used inconjunction with evidence that the other side has put in; provided that the Court can be persuaded that the evidence put in by the otherside would be misleading or incomplete on its own. [16] I acknowledge that evidence that the parties seek to rely on could be addressed with an affidavit and this procedural issuecould be cured. It is a less than desirable practise (used by some) to attach excerpts from a party’s own questioning as an exhibit to theiraffidavit and swear to its truth.

The issue here is really a formal one which could easily be corrected on appeal, or on an adjournment forsupplementary affidavits. It is important to be pragmatic at applications such as these. However, the questioning for discovery of RubyReed and Daniel Reed filed by the Defendants themselves are not admissible in their present form. They have filed their own affidavitsand I am not aware of any critical gaps in the evidence that need be filed by resort to these questioning transcripts. So I am not going tolook at them.

On the other hand, all of the Plaintiff’s questioning filed by the Defendants goes in ‘as is’ and becomes evidence at large. [17] What remains is to go through the elements of the concealed fraud test set out in the cases quoted above. Element 1: Fraud

[ 18 ] Barry said: On or about October 4, 1983, my father Vernon Reed transferred to me and my mother, Ruby Reed, as joint tenants, the land legally described as: MERIDIAN 6 RANGE 12 TOWNSHIP 73

SECTION 10 QUARTER SHOUTH EAST EXEPTING THEREOUT ALL MINES AND MINERALS AND THE RIGHT TO WORK THE SAME AREA: 64.7 HECTARES (160 ACRES) MORE OR LESS (hereinafter referred to as the “Farmland”) On December 20, 1991 the Farmland was transferred and registered by the Land Titles Office into the sole name of my brother, Daniel Reed. This was done without my knowledge or consent, and I did not sign the purported Transfer of Land, my signature was forged. (Emphasis added) [ 19 ] Barry said at Questioning: Q So who said what? A I couldn’t tell you.

I think Dan asked me if he could use it for collateral, and then Mom got on there I believe, and then Dad said, Son, you don’t have to sign this; you’re under no - - you don’t have to sign it, if you don’t want to; personally, I wouldn’t. So I got back on the phone with Dan I believe or mother, and I said No, I won’t sign it. And I didn’t sign it. Somebody signed it. [ 20 ] Ruby says (in her Affidavit): On December 20, 1991the Farmland was transferred into the sole name of my son, Daniel Leslie Reed (“Daniel”).

To the best of my knowledge, the Farmland was transferred to Daniel in 1991 so he could use i[t] as collateral. To the best of my knowledge, I remained at all material times the beneficial owner of the Farmland. I did not conceal the 1991 transfer from Barry. To the best of my knowledge , he signed the 1991 transfer to Daniel, as I did, although we did not sign the transfer at the same time. (emphasis added) [ 21 ] Daniel says (in his Affidavit): On December 20, 1991 the Farmland was transferred solely in my name, Daniel Leslie Reed.

At that time, I used the Farmland as collateral but to the best of my knowledge my mother, Ruby Reed, remained as the beneficial owner of the Farmland. To the best of my knowledge , Barry Reed signed the transfer of the Farmland to me in 1991, although we did not sign the transfer at the same time. (emphasis added) [ 22 ] At the time that the land was transferred into Daniel’s name alone, Barry was estranged from his family and not on good terms with Daniel. He was riding with an outlaw motorcycle club in the 1985 – 1997 timeframe. He was in and out of prison. He knew his brother’s wife.

At the Questioning, he said: A. I haven’t had a relationship with my family since my father died [1994] basically. Q. and you don’t know way? A. They don’t like my - - they don’t like what I was doing back in the day, but I haven’t been that - - that guy for many years. [ 23 ] Barry’s father is dead. His mother is 83. No one seems ready to welcome him back into the fold like the prodigal son in Luke, especially now there’s this lawsuit. [ 24 ] I do not want to imply that ill-feeling or financial gain necessarily provided a motive for what Barry alleges to have been a fraud.

It could also have been from a desire to protect the land. Daniel may well have needed it for collateral. The point I am trying to make is that it is not as if the Court would be unable to find motive, or that a transfer without Barry’s knowledge or consent would have been entirely out of context. You can see where this might go at trial. Foreign Expert [ 25 ] The Plaintiff tendered evidence from a Ms. Petty who purports to be a handwriting expert out of Duncan, Oklahoma. She goes through 13 documents with 15 known signatures of the Plaintiff and compares it to the signature on the 1991 transfer.

She concludes that

someone other than the Plaintiff signed Barry’s name on the transfer. [26] Ms. Petty’s opinion is not quite in Form 25. It does attach her CV. It is attached as an exhibit to Barry’s affidavit, though theopinion itself purports to be sworn. It is really only an enhanced form of hearsay.

This evidence would not be good enough if Barry werethe applicant, but as respondent, he is to show that he has a reasonable case, or, at least, that his lawsuit is not without merit. [27] In all the circumstances, I am willing to conclude – but only for the purposes of this application – that the Plaintiff has areasonable prospect of proving that the transfer to Daniel in 1991 was fraudulent.

Element 2: Concealment [28] It follows, in these circumstances, that if Barry’s signature were forged, the fraud would conceal a material fact (ie, that theland had been transferred to his brother) but this leads to the next point, and the point that, to my mind, both this application and thelawsuit may ultimately turn on. Element 3: Reasonable diligence to discover the fraud [29] Landowners are not expected to check their own titles from time-to-time to make sure they still own it.

Even if Land Titleswere to have sent out notification of the 1991 transfer, there is some explanation for why Barry might not have received it. [30] The evidence suggests that Barry was more invested in the property when his father owned it. After his father passed, aneighbor hayed the land (apparently through an agreement with Ruby) Provision was made for both hay and grazing. [31] The land would have attracted property taxes payable by its owners. There was an oil lease from about 1995 and apparentlyalso some earlier pipeline rights- of-way that may have generated income.

Barry says that he did not know, and did not inquire aboutwhether the revenue from the property (from the hay, grazing and oil leases) paid the property taxes or whether there was a surplus. Hismother would not talk about ownership. He assumed that revenue from the property paid the property taxes, and if there was a surplus,he was not concerned about it because he felt that it would have contributed to a more comfortable lifestyle for his mother. From time totime his mother would give gifts of money to the children.

Barry assumed that this was from revenue from the land. [32] Barry said that he had heard rumors that his brother, Daniel, wanted to sell the land so that he and his wife could spend moretime in Arizona. The turning point came about a year and a half ago. A friend who wanted to guide mule deer hunt on the land said thathis name was not on the county quarter

section map. After 1991, Barry occasionally visited the land and he had hunted on it but it hadnever occurred to him that he no longer owned it, until this happened. [33] Barry was examined on the issue of reasonable efforts at some length. But there is a turning point in the evidence: Barryadmits that he did not disclose his (assumed) ownership of the quarter on his solemn declaration of assets when he went bankrupt in2016. He explains that he wanted to ‘sneak it through’ the bankruptcy and did not want to lose the land saying (at questioning): Q Did you disclose the land as an asset? A No.

I actually hoped that we could sneak it through. Q And what do you mean by “sneak it through”? A I was hoping they wouldn’t be able to track it. Q Why not? A Well, I didn’t want to lose it. Q So you didn’t want to disclose it, even though you were supposed to? A yeah. He also admits that he did not disclose the land as an asset on a mortgage application. [34] There is some confusion in the materials about the dates of the Plaintiff’s bankruptcy. However, the documents produced inRuby’s affidavit show that the Plaintiff filed a Consumer Proposal in December 2015. Bankruptcy followed on January 22, 2016.

Thedocuments disclosed assets of $235,887.00 against liabilities at $285,215.00. An automatic discharge was granted October 23, 2016. Mr.Reed must have been a first time bankrupt with no surplus income. The documents do not record the trustee’s discharge. [35] There are four things that flow from Mr. Reed’s bankruptcy and this lawsuit: First, bankrupts are required to disclose assets bysection 158(

a) of the Bankruptcy and Insolvency Act. The failure to do so is, at best, an offence under the Act and, at worst, perjury, asthe declaration of assets is sworn. [36] Second, there is a continuing obligation to disclose assets (Lannigan (Re), (2008) 2008 NSSC 348 , 49 C.B.R. (5th)183 per Registrar Cregan). [37] Third, failure to disclose assets is a reason to annul the discharge and to have a trustee reappointed. (Carlson(Re), 2012

ABCA 173). It is a gross abuse of the system to enjoy the protection of the Act but to keep certain assets secret from your creditors. It isconduct that must not be condoned. The discharge in this case may essentially have been one obtained by fraud (sections 180(1)(3), Re De Grandpré, (1969), 15 C.B.R. (N.S.) 262 (Que. S.C.), Robson Estate, (ON CA), 22 C.B.R. 5th 1 (Ont.

C.A.) andthe Annotated Bankruptcy and Insolvency Act, Holden, Morawetz and Sarra, H §70). [38] I take notice that decent quarter sections might go for something in the area of $300,000.00. $150,000.00 would have gone along way to satisfy Barry’s creditors. I appreciate that title was not in the Plaintiff’s name over the course of his bankruptcy but that iswhat this claim is all about. He owned this asset, at least in his own mind. The action he now brings belonged first to the trustee or,failing that, to a creditor under

section 38 of the Bankruptcy and Insolvency Act. Only then, would the Plaintiff would be able to pursuein his own right and for his own benefit. [39] Lastly, this lie under oath and the Plaintiff’s admitted deceit goes a long way to defeating his credibility on this and any othermatter before the Court. [40] Barry’s credibility and the sufficiency of his efforts to have discovered the alleged fraud will be front and centre for the trialjudge.

On one hand, his evidence (on paper) seems candid and, with supreme irony, guileless, but it is all driven by self-interest; not onlyin terms of using past transgressions to provide a motive for fraud, but also the admission about lying under oath about ownership in hisbankruptcy which, only fortuitously, is presently true.

I am not able to say that the Court is able to summarily dismiss the claim on thefactual record that is presently before it, especially, now that there is the third party interests of the trustee and the creditors to consider.This is a case in which the Court must plainly see the witnesses to see where the truth lies. [41] Rule 7.3 does not give me many options. It is all or none. However, rule 1.4(2)(

h) permits the Court to stay the action. In myview it is appropriate the action be stayed so that these reasons and the materials on the Court file be provided to the bankrupt’s trusteefor consideration. Security for Costs [42] This is a near miss. Ordinarily, it would be appropriate to award security for cost on the basis of Hamill v Kudryk. However,there is evidence that Barry has assets and income such that he would be able to respond to a cost award, even an enhanced cost awardgiven the allegations in the lawsuit. It is appropriate that this portion of the application be adjourned.

Disposition [43] The action is stayed. The Defendant’s application is dismissed. Dated at the City of Grande Prairie, Alberta this 22nd day of November, 2018. W.S. Schlosser M.C.Q.B.A. Appearances: James P Bird of Gurevitch Burnham Law Office for the Plaintiff (Respondent) Stephanie L Ambrose of Lewis Chrenek LLP for the Defendants (Applicants)

_______________________________________________________ Corrigendum of the Reasons for Decision of W.S. Schlosser, Master in Chambers _______________________________________________________ The Appearances have been corrected to show: Stephanie L. Ambrose, For the Defendants (Applicants) _______________________________________________________ Corrigendum of the Reasons for Decision of W.S. Schlosser, Master in Chambers _______________________________________________________ First sentence in paragraph 42, the word cots was replaced with costs