Talbott v Talbott, 2021 ABQB 291

Court of Queen’s Bench of Alberta Citation: Talbott v Talbott, 2021 ABQB 291 Date: 20210415 Docket: 1901 00657 Registry: Calgary Between: Terry Talbott Plaintiff/Respondent - and - Marjorie Talbott also known as Marjorie Joan Klyne Talbott also known as Marjorie Joan Klyne-Talbott Defendant/Appellant Corrected judgment: A corrigendum was issued on April 20, 2021; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice P.R. Jeffrey _______________________________________________________

Appeal from the Chambers Endorsement of J.R. Farrington, Master in Chambers Filed on the 3rd day of February, 2021 Dated the 12th day of January, 2021 (Docket: 1901 00657) [1] The Master declined to set aside the noting in default of, and subsequent default judgment against, Marjorie Talbott (theAppellant). She appeals by means of her trustee and litigation representative. [2] The parties agreed to make their submissions entirely in writing. Another member of this Court approved that process bygranting the parties’ consent order.

Had I considered that approach unfair or otherwise inappropriate I could have changed it:Nieuwesteeg v Barron, 2009 ABCA 235 at para 10. [3] I consider the written process suitable to the appeal issues and the state of the record both parties are prepared to rely on. [4] The standard of review of a Master’s decision on appeal is correctness, on all issues: Bahcheli v Yorkton Securities Inc, 2012ABCA 166 at para 30. Further, additional evidence has been filed since the matter came before the Master. [5] Two grounds of appeal are advanced.

First, the Appellant says she is entitled as of right to have the default set aside becauseof a flaw in the Respondent’s process leading to the default judgment. Second, the Appellant says that she has satisfied the test for settingaside the default but that in any event it should be set aside on the grounds of fairness. [6] The test I am to apply in such applications is described in Kraushar v Kraushar, 2019 ABCA 186 at paras 5 and 6: [5] This appeal involves r. 9.15(3)(

a) and (

b) which deal with setting aside a noting in default and the granting of default judgment.These provisions may apply in two circumstances: (

a) Where there is a non-trivial flaw in the process leading up to the default judgment, the defendant, acting promptly, has a right tohave it set aside: Anstar Enterprises Ltd v Transamerica Life Canada, 2009 ABCA 196at para 13, 457 AR 68; Yehya v Thomas, 2019ABCA 164at para 11; and (

b) Where the procedure leading up to the noting in default is regular, the courts habitually refer to three criteria, which aresummarized in Palin v Duxbury, 2010 ABQB 833 at para 21, 15 CPC (7th) 191: (

i) an arguable defence; (ii) that the defendant did not intend to allow the judgment to go by default and offers some reasonable excuse for the default such asillness or a solicitor’s inadvertence; and, (iii) that once the noting in default came to the defendant’s attention, they promptly applied to set it aside. [6] Further, as the appellant conceded in oral argument, the judge hearing an application to set-aside under r. 9.15(3) retainsdiscretion to grant that relief where fairness requires it to be granted: see Don Reid Upholstery Ltd v Patrie (1995), (AB KB), 173 AR 233 at para 24, as applied by this Court in Paloma Investments Ltd v Yuen, 2016 ABCA 93at para 4, 616 AR 231. [7] The Appellant’s first ground of appeal says she is entitled to have the default set aside as of right because of a flaw in theprocess followed by the Respondent.

The flaw in the process asserted by the Appellant is non-compliance with Rule 11.25(1)(

b) by theRespondent Plaintiff. That rule says (underlining added):

(1) A commencement document may be served outside Alberta and in Canada only if (

a) a real and substantial connection exists between Alberta and the facts on which a claim in the action is based, and (

b) the commencement document discloses the facts in support and specifically refers to the grounds for service of the documentoutside Alberta and in Canada. The Appellant says the commencing document here, a statement of claim, failed to disclose the “grounds for service” as required by theunderlined portion above. [8] The Appellant says the flaw does not have to be “non-trivial” as suggested in Kraushar. The Court of Appeal added thatqualifier and it is binding on me.

A trivial flaw in process does not justify setting aside a default judgment; a non-trivial one does. [9] But regardless of that, the Appellant says the flaw here is “non-trivial”; she says the flaw here is fatal to the validity of thedefault judgment. The Appellant relies in that regard on Greenbuilt Group of Companies Ltd v RMD Engineering Inc, 2013 ABQB 346at para 103, which says (the wording in square brackets are in the original): [98] Next, the Court must ask three questions.

… [103] Third, does the commencement document “specifically ... [refer] to the grounds for service of the document outside Alberta and in Canada [set out in rule 11.25(3)]”, a requirement found in rule 11.25(1)(b). A careful pleader will have expressly asserted that the plaintiff makes a claim listed in rule 11.25(3). An omission of this critical assertion deprives the commencement document of a feature necessary to a finding that extraterritorial service is lawful. [ 10 ] With respect, that passage conflates the two separate requirements of Rule 11.25(1)(b).

By the insertion of the square bracketed portion, Wakeling J (as he then was) implies that “the grounds for service” requirement relates to the matters in 11.25(3), which addresses the basis for the Court’s jurisdiction over the litigation – the real and substantial connection to Alberta. [ 11 ] With respect, again, I disagree. Rule 11.25(3) itemizes “circumstances in which a real and substantial connection may exist” between Alberta and the claim’s allegations of fact.

Disclosing within the commencing document the “facts in support” of that real and substantial connection is the first requirement of Rule 11.25(1)(

b) and it is distinct from the second. The first requirement of Rule 11.25(1)(

b) must be satisfied by disclosure of facts in the commencing document supporting the real and substantial connection; the second requirement of Rule 11.25(1)(

b) must be satisfied by specific reference to the grounds for service outside Alberta but within Canada. [ 12 ] I consider the two to be addressing distinct requirements, not merely using different words to describe the same requirement, because: (

i) the first goes to the Court’s jurisdiction, the second does not; (ii) this

interpretation accords with the comparable approach in Rule 11.25(2)(

a) dealing with service outside Canada.

In that situation, the Court must be satisfied that a real and substantial connection exists (which necessarily entails an applicant adducing evidence on the point) and, separately, the applicant must separately provide “a document or affidavit that sets out the grounds for service of the document outside Canada”; and (iii) The old practice before the advent of Rule 11.25 in 2010, pursuant to then Rule 31(b), required an applicant seeking permission of the Court for service ex juris , to separately address where the party to be served might be found. [ 13 ] I note also from the jurisprudence at that time that the Court in considering such service ex juris requests placed the paramount importance on its jurisdiction over the lis , less so on the grounds for effecting service outside the jurisdiction.

This goes to whether any deficiency in disclosing the grounds for service might be considered trivial or more critical. [ 14 ] My point in examining the reasoning in Greenbuilt , which the Appellant relies on to say the requirement to specifically refer to the grounds for service outside Alberta is non-trivial, is that when Wakeling J speaks of “[a]n omission of this critical assertion” in Greenbuilt , he is referring to the “real and substantial connection”.

He was speaking of the lawfulness of the Court exercising jurisdiction extraterritorially (in his words: “a feature necessary to a finding that extraterritorial service is lawful”). He was not speaking of effecting service extraterritorially. [ 15 ] This focus is also evident at para 94 of his decision: By deleting the merit based component for service outside of Alberta but within Canada, the new rules shine a bright light on one important issue - does the court have jurisdiction to hear the plaintiff’s claim? That issue of the Court’s jurisdiction to hear a matter, I agree, is critical. It is not trivial.

But a flaw in specifically referring to the grounds for service may or may not be trivial. Failure to serve at all a party from whom relief is claimed is not trivial; the right to be notified is a foundational principle of natural justice. It must be satisfied before a party can access every other procedural right entailed by audi alteram partem . [ 16 ] Referring to the grounds for service, however, is most often trivial. It does not go to the Court’s jurisdiction but to the process for notifying a person about a matter within its jurisdiction.

Other Rules accord the Court discretion to relieve or remedy flaws in modes of service. See, for example: Rules 11.27 and 1.2 through 1.5. Service is frequently deemed sufficient after the fact, in a broad range of circumstances. [ 17 ] In the circumstances of this case, including there being no doubt that the Appellant was personally served sufficiently in advance of being noted in default, the alleged flaw in process is not critical to the validity of the default judgment.

It does not automatically entitle the Appellant to have the default judgment set aside. [ 18 ] In the circumstances of this case, in any event, there is no flaw. The commencing document satisfies both parts of the test in Rule 11.25(1)(b). First, it discloses facts showing a real and substantial connection, by triggering the presumption in Rule 11.25(3)(b). It is a claim that “relates to a contract allegedly made, performed or breached in Alberta”.

Second, it also makes specific reference “to the grounds for service… outside Alberta and in Canada.” [ 19 ] What does “specific reference to the grounds of service” require? The meaning of this phrase is informed by the predecessor Rule 31. Rule 31 set out the requirements for evidence supporting an application for service ex juris , including: (

b) showing in what place or country the person to be served is, or probably may be found [ 20 ] I understand the “grounds for service” to be the carry over from Rule 31(b), and to require in the commencing document specific reference to the place where the person to be served may be found. In this case the statement of claim specifically refers to the Appellant Defendant, “as far as is known to” the Plaintiff, as residing in Windsor, Ontario (at para 2), satisfying this second requirement.

[ 21 ] If I am incorrect in that conclusion, that the requirement for specific reference to the grounds for service means the probable location of the defendant (though I am not sure then just what else it might mean), I would consider any such deficiency, or “flaw”, to be trivial in the circumstances of this case. In this case the evidence is clear that personal service was effected and that the Appellant’s actions thereafter show that she understood what she received. The Appellant was served personally on January 24, 2019.

Soon thereafter, in early February, she sought out legal counsel. [ 22 ] As the Master correctly noted, she was aware of not just the commencing document in Alberta, but of its resulting in default judgment and of the Respondent commencing a new process in Ontario to register it there for enforcement purposes. Those two further notices were personally served upon her on April 16, 2019.

Once again, soon thereafter, she took steps to consult a lawyer, accompanied by a family member. [ 23 ] Therefore, I disagree with the Appellant that she is entitled to have the default judgment set aside by reason of any flaw in the Respondent’s process. If I am incorrect and there was a flaw, I consider it to be trivial and not entitling her as of right to have the default set aside. [ 24 ] Second, if not entitled to have the default set aside, should I nevertheless set it aside in the circumstances?

The Appellant says she has met the three-part test and that, in any event, the circumstances warrant her having opportunity to have her interests heard and determined in court. [ 25 ] I agree with the Master that the Appellant has satisfied the first branch of the test, of showing an arguable defence. [ 26 ] Regarding the second and third branches of the test, the Appellant is now 82 years old, has been blind “since before these proceedings were commenced”, and now appears by a litigation representative.

She was found to be without capacity, leading to the appointment in April 2020 of the litigation representative as guardian and trustee for the Appellant. [ 27 ] The litigation representative learned of the default judgment September 2020 and promptly commenced efforts to have it set aside – first by seeking consent of the Respondent and thereafter by this application. [ 28 ] The Appellant presents lay opinion evidence, that is, not from a qualified expert, that as early as August 2019 she suffered dementia.

The Respondent presents lay opinion evidence, that is, not from a qualified expert, that the Appellant appeared to be of sound mind and not suffer dementia in January 2019. These opinions are not admissible for the truth of their respective propositions and I am unable to assess what if any weight to ascribe them.

Neither of them informs me on whether the Appellant’s age and/or medical condition may have impaired her condition, judgment and actions between January 24, 2019 and April 30, 2019 for purposes of the set- aside test. [ 29 ] The parties also adduced hearsay evidence in their affidavits which cannot be relied on absent independent confirming evidence. The Respondent adduced evidence that information the Appellant told one of his affiants (Ms West) in January 2019, about locations of events in Chicago years prior, were proven to be accurate in May 2019 when Ms. West checked those Chicago location in person.

But in the Appellant’s state, the statements of locations attributed to her in the out of court statements cannot be put to her now for verification or context or response. Fairness dictates I place no weight on this ‘Chicago locations’ evidence attributed to the Appellant’s out of court statement to Ms West, in assessing her condition, judgment and actions between January 24, 2019 and April 30, 2019 for purposes of the set-aside test. [ 30 ] The Appellant knew of the claim on or soon after January 24. She sought out and spoke to a lawyer about it.

She did not retain and instruct a lawyer to defend the claim or otherwise actively resist it. She was noted in default February 26, 2019. Default judgment was obtained March 14, 2019. [ 31 ] The Appellant knew of the noting in default and subsequent default judgment no later than on or soon after April 16, 2019, when she was personally served with the Ontario reciprocal enforcement application. She again sought out and spoke to counsel about it, in timely fashion. On April 29, 2019 that lawyer asked the Respondent’s lawyer to adjourn the Ontario application scheduled for the next day as he waited to be retained.

The Respondent declined, since he felt the delay would be prejudicial (he learned the Appellant had commenced the process of selling her Ontario property) and his past experience gave him reason to believe the Appellant would not, in fact, retain counsel. [ 32 ] The Appellant did not retain and instruct a lawyer to defend the Ontario application or otherwise resist it.

More critically, she did not then take any steps to have the default in Alberta set aside. [ 33 ] In these circumstances, I agree with the conclusion of the Master, who said: Based upon the evidence, I cannot conclude on a balance of probabilities that the second branch of the test has been made out. In other words, the evidence is that the defendant knew about the action, lawyers were contacted, and for whatever reason in each instance, no defence was filed or advanced.

I also cannot speculate or guess as to the defendant’s reasons for not filing a defence. [ 34 ] The Appellant has not demonstrated, on balance, that at the relevant times her later dementia or any other condition affecting her judgment and actions played a role in her failing to defend the claim or in her failing to act promptly to have it set aside. [ 35 ] The Appellant argues (Brief, para 41): “It is not clear on the evidentiary record, and cannot be clarified given [the Appellant’s present] lack of capacity, whether she was ever told that the Default Judgment had not been set aside and remains in place” between April 30, 2019, and April 2020.

That is correct, but the Appellant’s implication is that therefore her appeal should succeed. That is not correct; it does not follow. It falls to the Appellant to establish by the evidentiary record that a lack of capacity operated during that time. She has not done so. The record discloses an approach to the litigation by the Appellant that is equally consistent with an attitude of avoidance, or intimidation, or belief she was liable as alleged, or merely being as difficult as possible, as it is consistent with a lack of capacity.

For this reason, I also disagree with the Appellant’s assertion that the record “establishes that [she] had no intention of allowing the claim to go by default” (Brief, para 56).

[ 36 ] Absent evidence of some impairment of her condition at the relevant times, or some other reasonable explanation for her not defending originally and for her protracted delay, the Appellant’s inaction in the face of knowledge of the claim suggests that she did not intend to retain counsel to defend and she took no steps on her own behalf to do so. [ 37 ] For these reasons, I find the Appellant has not satisfied the second and third branches of the test. She has not shown on balance that she did not intend the claim to go by default and some reasonable excuse for that happening anyway.

She has not shown on balance that when the noting in default came to her attention April 16, 2019, that she promptly applied to set it aside. [ 38 ] The Appellant says even if so, fairness dictates she now be allowed to defend the action and therefore I should set aside the default. She refers in particular to not being deprived of the right to respond to the claims, of having the claim decided on its merits. She characterizes that as “the most fundamental principle at the core of our judicial system” and says she has not been dilatory.

The problem with this plea is that, on this record, she did have that opportunity and she was dilatory about it (or very likely here, she consciously chose to not defend the claim). Her burden of proving that she was not simply dilatory has not been met.

Any such fundamental principle as urged by the Appellant does not operate in a vacuum; it does not relieve a litigant of acting in a timely fashion, of complying with the rules of fair process, and it does not override the rights of parties opposite to finality of judgments, ceteris paribus . [ 39 ] I am not persuaded in all the circumstances that I should exercise my discretion and set aside the default judgment. [ 40 ] Accordingly, I dismiss the appeal. Heard by written submissions as a desk application Dated at the City of Calgary, Alberta this 14 th day of April, 2021. P.R.

Jeffrey, JCQBA Appearances: Chadwick Newcombe for the Appellant/Defendant Curtis Wolff for the Respondent/Plaintiff _______________________________________________________ Corrigendum of the Reasons for Decision of The Honourable Mr. Justice P.R. Jeffrey _______________________________________________________ The following changes were made to the Reasons for Decision: 1. The second line of Paragraph 14 was amended as follows: “...the requirement to specifically refer to the grounds for service outside Alberta is non-trivial , is that...”

2. Paragraph 18 was amended as follows: “ Second, i I t also makes specific reference “to the grounds for service… outside Alberta and in Canada.” Second, it also makes specific reference to the grounds for service .” 3. The quote in Paragraph 33 was corrected as follows: “I also cannot speculate of or guess as to...”