Eberle v Terroco Drilling Ltd, 2021 ABQB 207

Court of Queen’s Bench of Alberta Citation: Eberle v Terroco Drilling Ltd, 2021 ABQB 207 Date: 20210318 Docket: 1510 01508 Registry: Red Deer Between: Charles Eberle and Charles Eberle Consulting Ltd. Plaintiffs - and - Terroco Drilling Ltd., Terroco Drilling INT’L Ltd., Terroco Industries Ltd., Terroco Contracting Ltd., Viking Drilling Ltd., Tom Pettie and Terry O’Conner Defendants _______________________________________________________ Decision of the Honourable Mr. Justice N.E.

Devlin _______________________________________________________ Overview [ 1 ] The plaintiff worked for the defendant from 2003 to 2012. In late 2015 he filed a Statement of Claim seeking unpaid bonuses, mileage and finders’ fees. The learned Master granted

summary judgement against him on the basis of the Limitations Act , and he now appeals that decision. [ 2 ] The plaintiff’s unanswered evidence is that one or more of the defendants repeatedly told him that payment of his bonuses was being deferred, pursuant to their contract, until liability for a 2010 workplace accident was resolved. That factual matrix does not permit

summary judgment on a limitations basis. A defendant will not be heard to argue that a limitation period has run on a contractual obligation to pay during a period in which he himself has answered demands for payment by stating that the parties’ obligations under the contract remained indeterminate. [ 3 ] Therefore, on the record before me, the appeal is allowed to the extent that the plaintiff may continue his action for any bonuses allegedly accruing after the 2010 accident. The balance of the claims are limitation-barred as the learned Master found.

Facts [ 4 ] The plaintiff worked for the defendants as a drilling rig manager from sometime in 2003 to December 2012. At that point, the defendants ceased to do business and sold their physical assets to a third-party purchaser for value. There is some contention as to

whether the plaintiff worked as an employee or independent contractor, but that issue is not material to this application. [ 5 ] The contractual arrangements between the parties appear to have been quite informal. The plaintiff was paid in the ordinary course for the work he did. On two occasions he received bonuses in addition to his regular compensation. This occurred near the beginning of his employment and once again in 2006. He was not paid bonuses again after that point. [ 6 ] Over time, a dispute arose as to the plaintiff’s entitlement to three types of remuneration: (

i) bonuses; (ii) mileage reimbursement; and (iii) finders’ fees for work that he brought to the defendants by referral. The plaintiff claims he has never been paid these entitlements, which he asserts total over $226,000. [ 7 ] On December 9, 2015, the plaintiff filed a Statement of Claim seeking payment of these amounts. His claim covers sums he allegedly earned in the period beginning at the last payment of bonuses in 2006 and continuing up to his final day of work for the defendants.

All of the entitlements claimed by the plaintiff relate to work done prior to Terrocco’s cessation of business in December 2012. [ 8 ] The plaintiff states that, whenever he asked the defendants for payment, its officers, principally the President Terry O’Connor [“O’Connor”] would promise later payment, or simply ignore his requests. [ 9 ] The defendants filed a Statement of Defence, pleading only the Limitations Act , RSA 2000, c L-12 , and subsequently brought an application for

Summary Judgement before a Master on the basis of this defence. [ 10 ] The plaintiff has filed numerous affidavits in the

summary judgement proceedings. The defendants, through previous counsel, elected not to cross-examine on any of these, and did not provide their own factual version of the contractual relationship, any account for the amounts said to be owing, a response to the statements they allegedly made in response to the plaintiff’s requests for payment.

Consequently, the plaintiff’s factual version of events is largely unchallenged before this Court and is accepted: Elkow v Sana , 2020 ABCA 350 at para 10 . [ 11 ] A former officer of the defendant corporations, Tom Pettie [“Pettie”], filed a perfunctory affidavit asserting the limitation and was cross-examined. His affidavit said nothing germane to the substantive issues, though he was questioned on these to some limited extent. [ 12 ] On September 29, 2020 Master Farrington granted

summary judgement dismissing the claim, holding that the limitation had expired. The plaintiff appeals pursuant to rule 6.14. The contractual relationship between the parties [ 13 ] Prior to March 2010, the contract between the parties appears to have existed mostly on a hand-shake basis. The plaintiff says that he then signed a document entitled “Rig Manager Independent Contractor Agreement” [the “2010 Agreement”]. He asserts that this document governed the parties’ relationship after that point. The relevant portion of that contract is

Schedule “B”, which provides as follows:

SCHEDULE “B” RIG MANAGER – DISCRETIONARY SAFETY & PERFORMANCE BONUS RIG MANAGER – BONUS CALCULATIONS Rig Manager Bonus $150 available for each full day from spud to rig release, including stand-by days with crews on location. Rig Manager must adhere to all safety, drilling and performance requirements and practices to avoid deductions from the amount of bonus available. In the event an incident or incidents of non-compliance, deficiency and job performance or safety occur, then a deduction for each incident shall be made from the amount of the bonus available in accordance with the following

schedule deductions. Deductions shall be at the sole discretion of the President and Drilling Superintendent and their determinations of decisions shall be final and binding upon the Rig Manager . [emphasis added] [ 14 ] A “Schedule of Deductions” follows, listing dollar values attributed to various safety and procedural infractions. It appears that the defendants may contest whether this contract, or terms similar to it, were actually in place between them and the plaintiff.

The defendants did not, however, cross-examine the plaintiff on his sworn assertion that he signed this agreement in March 2010, and that it governed the parties’ working relationship thereafter.

Moreover, Pettie, was asked the following question, and gave the following answer, on cross-examination: Q: Is it fair to say, then, that for rig managers, their remuneration, their compensation was based off all the things discussed in these documents , so rig manager day rates, bonuses subject to discretion , truck use, some may have included mileage. [sic] Those were all part of the remuneration for rig managers question? [emphasis added] A: Yeah [ 15 ] Therefore, this application must be determined on the basis that the 2010 Agreement governed the relationship after the date on which the plaintiff claims to have signed it, including the terms under which the defendants were obligated to pay the plaintiff bonuses.

The plaintiff’s version of why he was not paid [ 16 ] The plaintiff states in his most recent affidavit that “I regularly asked for my bonuses throughout my employment period.” He describes how O’Connor and Pettie kept telling him to wait, and repeatedly promised that payment would be forthcoming. He says that

these promises went so far as a statement that his cheques were on someone’s desk awaiting signature. No payment, however, ever materialized. Despite the oral promises and statements, he attributes to the defendants, no written acknowledgement of the debt was ever made.

The defendants use a 2010 workplace accident as a pretense to delay payment [ 17 ] The plaintiff deposes that, at a point commencing in 2010, O’Connor and Pettie began to assert that further payments to him were contingent on the outcome of an investigation and legal proceedings related to an accident that had occurred on the plaintiff’s watch. [ 18 ] Specifically, on June 17, 2010, a rig hand was severely injured in an accident that occurred on one of the defendants’ drilling rigs in Manitoba while it was being managed by the plaintiff [the “2010 Accident”].

An Occupational Health & Safety investigation followed and charges were laid against the defendant companies. That matter was not finally resolved until the summer of 2015. [ 19 ] According to the plaintiff’s unchallenged evidence, after the accident the defendants began to use this outstanding contingency as a pretense to delay paying him his bonuses. In his affidavits he states: Terry O’Connor advised that he may apply deductions as per

Schedule “B” against my bonus. I informed him that the incident was not my fault, and he advised that we were to wait until the final results of the investigation and possible future judicial proceedings, if I’m found liable, a deduction would be applied and my bonuses paid out at that time . [emphasis added] [ 20 ] The plaintiff says he was persistent in his requests for his bonuses and other entitlements to be paid, but was continually told to wait, including on the pretense of the 2010 Accident still being unresolved.

The invoice and a final refusal to pay [ 21 ] Finally, in March 2015, the defendants’ lawyer, who was also, it appears, involved in the running of the company, told the plaintiff to send an invoice for all the outstanding amounts. The plaintiff did so on March 24, 2015. At the bottom of this invoice the plaintiff added the following annotation: This matter needs immediate attention. This is been going on since 2006 until business was sold . Promises have been made to pay but weeks of turned into months and months into years. This is [illegible].

Please take care of this matter. [emphasis added] [ 22 ] The plaintiff says that, in June 2015, he texted O’Connor insisting that they speak. He says that O’Connor called him back and, for the first time, flatly told him that no bonuses or further compensation would be paid. The Statement of Claim was filed on December 9, 2015. The relevant provisions of the Limitations Act [ 23 ] The Limitations Act bars claims from being bought brought more than two years after the plaintiff knew or ought to have known that they had suffered an injury and that the commencement of litigation was justified.

The portions relevant to this appeal are as follows: Limitation periods 3(1) Subject to subsections (1.1) and (1.2) and sections 3.1 and 11, if a claimant does not seek a remedial order within (a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known, (

i) that the injury for which the claimant seeks a remedial order had occurred, (ii) that the injury was attributable to conduct of the defendant, and (iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding, or (b) 10 years after the claim arose, whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim. ...

Acknowledgment and part payment 8(1) In this section, “claim” means a claim for the recovery, through the realization of a security interest or otherwise, of an accrued liquidated pecuniary sum, including, but not limited to a principal debt, rents, income and a share of estate property, and interest on any of them.

(2) Subject to subsections (3) and (4) and

section 9, if a person liable in respect of a claim acknowledges the claim, or makes a part payment in respect of the claim, before the expiration of the limitation period applicable to the claim, the operation of the limitation period begins again at the time of the acknowledgment or part payment.

(3) A claim may be acknowledged only by an admission of the person liable in respect of it that the sum claimed is due and unpaid, but an acknowledgment is effective (

a) whether or not a promise to pay can be implied from it, and (

b) whether or not it is accompanied with a refusal to pay.

(4) When a claim is for the recovery of both a primary sum and interest on it, an acknowledgment of either obligation, or a part payment in respect of either obligation, is an acknowledgment of, or a part payment in respect of, the other obligation.

Persons affected by exceptions for agreement, acknowledgment and part payment 9(1) An agreement and an acknowledgment must be in writing and signed by the person adversely affected. [emphasis added] The plaintiff’s arguments against the limitation defence [ 24 ] Before the learned Master, and again before this Court, the plaintiff attempted to avoid the application of the Limitations Act by arguing that the defendants were guilty of fraudulent concealment.

Specifically, he said that the defendants told him that the bonuses were completely discretionary, leading him to believe that he had no cause of action on them until a court ruling in a related action in 2015 held the contrary. He argued that this abuse of the defendants’ position – ie: misrepresenting the nature of the contractual obligation to pay bonuses – makes it unconscionable for them to rely on the limitation. The Master’s decision [ 25 ] Master Farrington rejected the plaintiff’s arguments and granted

summary judgement on the basis of the limitation defence. In the course of his reasons he stated: ...[the plaintiff’s claim] all relates to the time before termination of employment, but significant portions relate to time well before the termination of employment. The bonuses, on the evidence, had only been paid once in the prior history.

So at the time of the termination of employment, there was certainly knowledge that the plaintiff would have felt that some money was certainly owing, and indeed, that is consistent in the evidence. [ 26 ] The Master noted that there was no agreement in writing to extend the limitation period, nor any written acknowledgement of the debt. He concluded that there was no issue requiring a trial was there is no disagreement between the parties as to what their contract meant, no hiding of that contract, and that the only dispute is over non-payment. Consequently, he dismissed the action as statute-barred.

Standard of review [ 27 ] An appeal from a Master’s decision is conducted as a hearing de novo : Amik Oilfield Equipment & Rentals Ltd v Beaumont Energy Inc , 2018 ABCA 88 , at para 6 . Consequently, it falls to me to determine the issue afresh, taking into account the further affidavit evidence. Analysis [ 28 ] The amounts claimed by the plaintiff fall into three categories: (

i) finder’s fees and mileage entitlements; (ii) bonus payments accruing due before the 2010 Accident; and (iii) bonuses for work done after the 2010 Accident. Claims falling within the first two categories were brought out of time and are barred by the Limitations Act . I find, however, that claims in the third category may proceed. Finder’s fees and mileage entitlements [ 29 ] There is no doubt that the plaintiff knew he had done work, knew he was entitled to payment for that work, and made repeated assertions that he had not been paid all that he was owed. As Ms.

Olar astutely points out for the defendants, the plaintiff’s materials are replete with assertions that he kept asking about these payments from 2006 onwards. [ 30 ] Put simply, when somebody does work and is paid less than they think they are owed, the limitation will begin to run at the point where payment has not been made in the normal course of their contractual relationship.

For instance, if parties operate on net-60 day payment terms, the clock generally starts 61 days after an invoice is delivered: see discussion at paras 61-73 of 1402496 Alberta Ltd (cob Adventure Mountain) v Neustaeter (cob Greentree Outdoor Living) , 2020 ABQB 179 . [ 31 ] In this case, that point in time would be at some reasonable juncture after each piece of work was done and, at the latest, shortly after the working relationship between these parties ended in December 2012.

The plaintiff’s evidence is that he was not paid any amounts for mileage after March 2006 and was never paid a finder’s fee despite procuring work starting in 2008. By any rational

interpretation of the facts, and application of the criteria in 3(1)(

a) of the Act , the limitation period for these claims expired well before this action was filed in late 2015. [ 32 ] The plaintiff’s forbearance from suing to recover these amounts appears to have been a product of his moral character and desire to maintain his relationship with the defendants as his principal employer. Unfortunately, these factors do not assist him in avoiding the Limitations Act .

[33] The law in Alberta is clear that oral promises to pay in the future, or requests to wait for payment coupled with an impliedpromise that money will be forthcoming, do not extend limitation periods. This appears to be true irrespective of whether these promisesare intentionally false. [34] In Condominium Plan 9421549 v MainStreet developments Ltd, 2005 ABQB 218, this Court considered a situation in whichthe plaintiff had held-off commencing litigation on the basis of representations by the defendant that it would solve the underlyingdispute to the plaintiff’s satisfaction.

Ruling that the limitation had run, irrespective of these promises, Clackson J stated, at paras 12-13,that: There is nothing in s. 3 which suggests that an exception operates when negotiations for resolution of the dispute are ongoing. There isnothing in s. 3 which suggests that if the miscreant makes a promise, representation or does something that might lead to a settlement,the limitation clock does not start. Furthermore there is nothing in s. 3 that would assist in understanding when the clock would actuallystart if the miscreant’s promise, representation or action doesn’t pan out.

There are real problems with the plaintiff’s argument. What kind of promise will suffice? Was the promise reliable? By what standard isthat reliability measured? From whose perspective? Did the alleged promise actually occur? Was it reasonable for the plaintiff to believethat a promise had been made to it? By what standard is that matter judged? There are many other questions which could be raiseddepending upon the circumstances. The uncertainty that would result from accepting the Plaintiff’s argument is obvious.

In my view, itis precisely this kind of uncertainty that the New Act was designed to avoid. [emphasis added] [35] This formulation of the law was adopted by the Court of Appeal in Boyd v Cook, 2013 ABCA 27, at para 12, where it heldthat: Mr. Cook repeatedly told Mr. Boyd (after discovery of the fraud) not to worry, and that the investment would turn out all right in theend. Mr. Boyd did not really believe that, and no reasonable person would have believed that in these circumstances. Mr. Cook was afraudster according to all of Mr. Boyd’s evidence, and according to his later suit.

Case law says that such assurances and promises by thewrongdoer are irrelevant to the present question of subpara (iii), “warrants bringing a proceeding.” See Condo Plan 9421549 v Main StDev (#2), 2005 ABQB 218, 2005 CarswellAlta 384 (para 11). [emphasis added] [36] The resulting state of the law favours certainty over kindness. Empty promises to pay, only made orally, will not forestall therunning of the core two-year limitation period.

While an engaging policy debate may arise as to whether misrepresentations of this sort,if fraudulent, could or should give rise to an independent cause of action, that is an issue for another day. As the law presently stands, theLimitations Act requires that an obligation be acknowledged in writing before the plaintiff will be released from the ticking of thelimitations clock. [37] Therefore, irrespective of whatever promises to pay were made by O’Connor, Pettie, or anyone else on behalf of thedefendants, the finder’s fee and mileage claims are many years out of time and statute barred.

There are no uncertainties in the facts orlaw that would make it unfair to summarily resolve these aspects of the claim: Weir-Jones Technical Services Inc v Purolator CourierLtd, 2019 ABCA 49, at para 47. I affirm the learned Master’s dismissal of them. Bonus payments accruing due before 2010 Accident [38] The same reasoning applies to bar any bonus claims predating the 2010 Accident.

At some points in his materials, the plaintiffappears to be saying that he did not know that he could legally compel payment of the bonuses until after an Employment Standardsappeal in 2015 determined this entitlement for a similarly-situated rig manager: Terroco Drilling Ltd v Beal, (ABESA). He points to this as the triggering moment of knowledge for purposes of the limitation period. There is an unresolved tension inthe record, at this point, as to whether the bonuses were a matter of absolute discretion vested in O’Connor, or were governed bySchedule B.

That will be a matter for trial. [39] In any event, I respectfully disagree that this subsequent ruling has any impact on the limitation period applicable to theplaintiff for bonuses owing prior to the accident.

If he did not know how his own terms of employment worked, that is his problem.Ignorance of one’s contractual entitlements, in and of itself, cannot operate to extend a limitation period. [40] The plaintiff strenuously asserted that, since the defendants’ misrepresentations promoted his misunderstanding, their actionsare analogous to the false statements made by the employer in Halloran v Sargeant (2002), 217 DLR (4th) 3272002 CanLII 45029(ONCA) [“Halloran”].

There, the Ontario Court of Appeal found that misstatements by the defendant employer as to the nature andeffect of a severance agreement being tendered to an employee could operate to extend the employee’s limitation period to sue on thatcontract. [41] I find that the principle articulated in Halloran has no application in this case. In his earliest affidavit, the plaintiff claims thatthe terms of his engagement with the defendants were known, and indeed reduced to writing after he signed the 2010 Agreement.

Also,unlike Halloran, there were no actuarial mysteries at play here and no situational imbalance of power. [42] This is not a case of fraudulent concealment. The plaintiff could offer no basis for having held-off litigating these earlierentitlements, other than the ineffective promises to pay discussed above. [43] For these reasons, claims for bonuses accruing before the 2010 Accident are also limitation barred. Post-2010 Accident bonuses

[ 44 ] I reach a different conclusion in respect of bonuses for work done after the 2010 Accident. I find that, on the record before me on this de novo hearing, the limitation period for bonuses owing under the 2010 Agreement commenced in June 2015, when O’Connor finally told the plaintiff that his decision was to pay nothing under

Schedule B. [ 45 ] In a contractual claim, the injury which triggers commencement of the limitation period for the purposes of s 3(1)(a)(

i) is often the breach of the contract. The uncontradicted evidence on this

summary judgement application is that O’Connor persisted in asserting that a final conclusion to the Manitoba OHS proceedings was a necessary condition precedent for him to exercise his discretion under

Schedule B in respect of the plaintiff’s outstanding bonuses. Assuming that he said this to the plaintiff, O’Connor cannot now argue that the plaintiff knew or ought to have known that he (O’Connor) was in breach of his obligations under

Schedule B prior to him definitively telling the plaintiff that he was not going to pay anything. [ 46 ] The evidence before me is that O’Connor made clear representations that

Schedule B remained executory and that he was within his contractual rights to defer payment. I find that a plaintiff is entitled to rely on the defendant’s own characterization of the operation of the disputed contract as it relates to the triggering of the limitation period. The plaintiff is entitled to argue that a limitation period only began at the point where it would run on the defendant’s own asserted

interpretation of the contract, irrespective of whether the defendant was advancing that

interpretation insincerely and with fraudulent intent. [ 47 ] I accept that, on close examination of

Schedule B, it may be difficult to understand how a single incident on one rig could inform a properly exercised discretion to pay nothing in respect of all rigs on all drilling days. Indeed, in cross-examination, Pettie asserted that the defendants had determined the scope of the plaintiff’s responsibility in the 2010 Accident within a week of when it happened.

There is, however, no evidence that the plaintiff was ever told that O’Connor had all the information he needed to exercise his discretion over bonus-deductions. [ 48 ] Based on the record before me, I find that there was a continuing discussion over the payment of post-2010 Accident bonuses that remained unresolved until O’Connor’s refusal to pay in June 2015.

Until that date, the defendants left open the possibility that payment might be forthcoming in accordance with the terms of their contract , elongating the period before it can be said that a known injury occurred: Weitzman v SAP Canada Inc, [2009] OJ No 3619 at paras 16-17 (ONSC), (varied on other ground) 2010 ONCA 274 . [ 49 ] On an application to dismiss summarily, O’Connor will not be heard to have told the plaintiff that the bonuses he was asking for remained contingent and undetermined pursuant to the terms of their contract, and then say to this Court that the plaintiff knew or ought to have known that his assertions were false and warranted earlier commencement of litigation. [ 50 ] This reasoning does not apply to pre-2010 Accident bonuses as there is no evidence that the defendants asserted, or the plaintiff believed in, the presence of any outstanding contingency holding up calculation of bonuses for that period.

Prior to the 2010 Accident, the defendant simply wasn’t paying, and the plaintiff knew or ought to have known that. Conclusion [ 51 ] The Master’s

summary dismissal of the claim is varied to the extent that the plaintiff is permitted to pursue redress for any bonuses he proves were payable under his agreement with the defendants after the 2010 Accident. [ 52 ] The parties may speak to costs if they cannot be agreed. Heard on the 19 th of February, 2021. Dated at Red Deer, Alberta this 18 th day of March, 2021. Justice N.E. Devlin J.C.Q.B.A. Appearances: Lenci John Kadavil for the Plaintiffs Lavinia M. Olar

for the Defendants