Kardynal v Shumlich, 2021 ABQB 357

Court of Queen’s Bench of Alberta Citation: Kardynal v Shumlich, 2021 ABQB 357 Date: 20210506 Docket: 1901 10966 Registry: Calgary Between: Twila Kardynal, as Litigation Representative of the Estate of Norma Joyce Thompson Plaintiff - and - Tom Shumlich Defendant _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice N.E. Devlin _______________________________________________________ I. Overview [ 1 ] When Norma Thompson passed away in 2014, the Defendant owed her almost $45,000. While the debt is undisputed, the Defendant resists this application for

summary judgment against him on the basis that the action is limitation-barred. His defence turns on the

interpretation of an ambiguous provision of the Limitations Act , RSA 2000, c L-12 (the “ Act ”), which provides that the two-year limitation period commences against an estate when a personal representative is “appointed” for it. [ 2 ] There are two available readings of the contentious provision. Both create potential anomalies and injustices. Nevertheless, for the reasons that follow, I find that the relevant limitation begins to run only upon the appointment of a personal representative through a grant of probate and that the estate is not out of time to seek recovery in this case. II.

Agreed Facts [ 3 ] Norma Joyce Thompson (“the Deceased”) made two loans of $20,000 each to the Defendant Tom Shumlich in December 2011. Each loan was evidenced by a promissory note establishing its terms. The first loan matured on December 3, 2012 and required re- payment of $22,400, based on simple interest at 12% per annum. The second loan, on identical terms, matured on December 9, 2012 and also required re-payment of $22,400. [ 4 ] Payment came due on the maturity dates, but Mr. Shumlich has never repaid any portion of either loan.

The details of his personal arrangements with the Deceased are not in evidence before me. [ 5 ] The Deceased passed away on September 30, 2014, slightly less than two years after the notes had come due but gone unpaid. Thus, the two-year limitation period contained in s 3(1)(

a) of the Act had commenced but not expired at the time of her passing. The Deceased left a will naming her daughter, Twila Kardynal, as co-executor. The will was never submitted for probate and Ms. Kardynal never obtained a Court appointment as the personal representative. In the vernacular of estates practice, however, she was “appointed” as the personal representative upon the Deceased’s death by operation of the will.

[ 6 ] On August 27, 2019, Ms. Kardynal was appointed as litigation representative for the Deceased’s estate in respect of Mr. Shumlich’s debts. On September 11, 2019, she filed a Statement of Claim seeking repayment thereof. Mr. Shumlich plead the Act in defence. III. The issue [ 7 ] The sole issue in this case is whether s 3(2)(

c) of the Act bars the claim. The relevant portion of the legislation reads as follows (emphasis added): 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. …

(2) The limitation period provided by subsection (1)(

a) or (1.1)(

a) begins… (

c) against a personal representative of a deceased person as a successor owner of a claim, at the earliest of the following times: (

i) when the deceased owner first acquired or ought to have acquired the knowledge prescribed in subsection (1)(

a) or (1.1)(a), if the deceased owner acquired the knowledge more than 2 years before the deceased owner’s death; (ii) when the representative was appointed , if the representative had the knowledge prescribed in subsection (1)(

a) or (1.1)(

a) at that time; (iii) when the representative first acquired or ought to have acquired the knowledge prescribed in subsection (1)(

a) or (1.1)(a), if the representative acquired the knowledge after being appointed. [ 8 ] Unfortunately, the Act defines neither “personal representative” nor “appointed”. This creates an interpretive problem as the Act may be read in two different ways, and is truly ambiguous. [ 9 ] The first option is to give “personal representative” the same meaning under the Act as it has in the Wills and Succession Act , SA 2010, c W-12.2 , s 1(1)(h), the Estate Administration Act , SA 2014, c E-12.5 , s 1(g), and the Surrogate Rules , s 1(l). Under this

interpretation, a named personal representative is “appointed” by operation of the will at the moment of the testator’s death. The limitation period then begins to run at that time, assuming the requisite knowledge. Mr. Shumlich endorses this approach as most consistent with the overall statutory regime of estate administration. [ 10 ] The second option is to interpret “appointed” as meaning the issuance of a grant of probate from this Court, with the limitation running from that time. This

interpretation is more consistent with the Rules , which do not permit a personal representative named in a will to launch legal actions on behalf of the estate, but reserves that right to those appointed by the Court, either through probate or as a litigation representative. The Plaintiff advocates this approach. [ 11 ] I note that Ms. Kardynal’s appointment as litigation representative cannot be the starting point for the limitation period in this case.

Section s 3(2)(

c) of the Act provides that the limitation operates against the personal representative “as a successor owner of a claim”. A litigation representative acquires no ownership interest in the claim by virtue of the appointment and therefore is not a “personal representative” within the meaning of the Act , notwithstanding that they would logically fall within a purposive reading of this term. IV. Analysis [ 12 ] The issue in this case has been the subject of previous, non-binding consideration by this Court, which the Plaintiff urges me to follow. That is the logical starting point for the analysis. A.

Prior Treatments of this Issue [ 13 ] In 1368276 Alberta Ltd v Grotski , 2015 ABQB 490 , Master Smart held that the limitation period at issues runs from the grant

of probate. He thoughtfully analyzed the question as follows at paras 36-39: I agree with the Applicant that a litigation representative is not a personal representative nor does the appointment of a litigationrepresentative constitute the appointment of a personal representative. What I must decide is whether the time runs from the passing ofan individual where there is a personal representative named in their will or at the time of probate. I find neither of the

interpretationsproffered as particularly satisfactory. It is common to describe a personal representative named in a will as being appointed. That, of course, cannot be the point in timeascribed to this section. To say that on the passing time begins to run if there is knowledge strikes me as fraught with uncertainties notthe least of which is the uncertainty as to authority to act.

There is also no duty to act and legal impediments to doing so regardless.Noting the concern that ALRI says the provision is to address, it would seem inconsistent to have time run when in addition to theforegoing the personal representative may not even know they are appointed in the will, may renounce that appointment or otherwise beunable to take on the responsibility. The converse though is to permit a personal representative with knowledge of the claim to simply avoid time from running by delayingprobate.

This is underscored in this case where the personal representative not only had knowledge of the claim but took active stepsthrough legal counsel to preserve the claim. Eventually, he became a self-appointed litigation representative and has begun prosecutingthe estates claim under the mortgage yet the standard two year limitation period has still not begun to run. Based on this factualcircumstance the first three conventional rationale of limitations legislation are effectively subordinated to the whims of a namedpersonal representative to apply for probate.

Conclusion Despite the clear mischief identified, that is, if the limitation period runs from the appointment of the personal representative by probate,I nonetheless conclude that that must be the meaning placed upon s 3(2)(

c) in order to give it the effect it was intended to achieve. Thealternative argued simply fails in that regard. In this situation the Applicants may well have had to wait for expiry of the ultimatelimitation period of ten years to be in a position to seek immunity from liability. Although I doubt that was an intended consequence ofproviding this element of fairness in favour of estates and their personal representatives that is a matter which the legislature would haveto address. [14] Master Smart’s decision was upheld by Yungwirth J in unreported oral reasons.

The case proceeded to the Court of Appeal,which reversed on other grounds: 2017 ABCA 148. The Court of Appeal concluded at para 45 that: [t]here was a palpable and overriding error in the determination of when the limitation period commenced. Given our conclusion that theinjury did not occur on October 15, 2009, it is unnecessary to consider the proper

interpretation of the word “appointment” in section3(2)(

c) of the Limitations Act. [15] This result renders Master Smart’s conclusions obiter. However, the Court of Appeal did not reject his approach to the presentissue and it may remain persuasive. [16] In Re Moody Estate, 2011 ABQB 222 at paras 8-12, this Court treated the grant of probate as the triggering date for thislimitation period. However, since the parties agreed that this was the commencement date, the Court was not required to analyse theissue. [17] Finally, the parties brought to my attention the Alberta Law Reform Institute’s treatment of the Act in its Report No. 55(Edmonton: December 1989).

At p 68, the ALRI said this about s 3(2)(c)(ii): Legally, one who may become a personal representative has no duty to do anything in that capacity until the appointment. Therefore, thepersonal representative should have a full discovery period beginning with the appointment even if he had the requisite knowledgebefore the appointment. [18] While this reference is not explicit, it treats the testator’s death and the appointment are separate events, favouring a Courtappointment as the triggering event. [19] Thus, prior consideration of this issue favours the Plaintiff’s approach to some degree.

Nevertheless, I turn to a considerationof the question from first principles. B. Purposive Approach to Statutory

Interpretation [20] The canonical starting point is what Sullivan refers to at §2.1 as Driedger’s modern principle that “the words of

an Act are tobe read in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act,and the intention of Parliament”; see also Bell ExpressVu Limited Partnership v Rex, 2002 SCC 42 at para 26.

This approach recentlywas affirmed in Paragon Capital Corp v Starke Dominion Ltd, 2020 ABCA 216 at paras 40-42, where our Court of Appeal emphasizedthat a statute must be read pragmatically in the manner that best achieves its purpose. [21] The purpose limitation periods are understood to serve has shifted over time from a focus on defendants’ interests in finality toa more balanced approach: Wong v Voong, 2004 ABCA 216 at para 10.

As the Supreme Court wrote in Novak v Bond, (SCC), [1999] 1 SCR 808 at paras 66-67: Contemporary limitations statutes thus seek to balance conventional rationales oriented towards the protection of the defendant -certainty, evidentiary, and diligence - with the need to treat plaintiffs fairly, having regard to their specific circumstances... The result of this legislative and interpretive evolution is that most limitations statutes may now be said to possess four characteristics.

They are intended to: (1) define a time at which potential defendants may be free of ancient obligations, (2) prevent the bringing of claims where the evidence may have been lost to the passage of time, (3) provide an incentive for plaintiffs to bring suits in a timely fashion, and (4) account for the plaintiff’s own circumstances, as assessed through a subjective/objective lens, when assessing whether a claim should be barred by the passage of time. To the extent they are reflected in the particular words and structure of the statute in question, the best

interpretation of a limitations statute seeks to give effect to each of these characteristics . [Emphasis added.] [ 22 ] The Supreme Court refined its articulation of the Act ’s purpose in Yugraneft Corp v Rexx Management Corp , 2010 SCC 19 at para 36 : As the Alberta Court of Appeal noted in Daniels v. Mitchell , 2005 ABCA 271 , 51 Alta.

L.R. (4th) 212, at para. 30 : A main purpose of the [ Act ] was the simplification of limitations law, by the imposition of one period (two years) for nearly all causes of action. ... [D]ebates in the Legislative Assembly repeatedly emphasized that the new legislation would simplify and clarify the system while eliminating inconsistencies and special treatment for certain defendants.

Thus, the purpose of the Act was to streamline the law of limitations by limiting the number of exceptions and providing a uniform limitation period for most actions. [Emphasis added.] [ 23 ] The characteristics of limitation periods outlined by the Supreme Court in Novak suggest that s 3 of the Act must be interpreted to require that actions be brought in a timely fashion by plaintiffs who have knowledge of claims and are able to pursue them. [ 24 ] Unfortunately, delineating this purpose sheds little light on a preferred

interpretation. The purpose of the Act is neither advanced by allowing estate representatives to malinger in pursuing known claims nor by barring claims by personal representatives who lack the legal authority to commence them. Therefore, the Court must look beyond the purposes of the Act in choosing an

interpretation of s 3(2)(c)(ii). C. Consistency with Estates Legislation [ 25 ] Mr. Shumlich argues that the term “personal representative” is defined consistently in estates legislation and logically should be given the same meaning in the Act .

Specifically, “personal representative” is defined in the Surrogate Rules as follows (emphasis added): (l) “personal representative” means an executor of a will or an administrator or trustee of an estate to which these Rules apply, and includes a person named as an executor or trustee in a will before a grant is issued . [ 26 ] A similar definition is found in the Estate Administration Act and the Wills and Succession Act , both of which define “personal representative” as “an executor or an administrator or judicial trustee of the estate of a deceased individual and includes a personal representative named in the will whether or not a grant is issued ”. [emphasis added] [ 27 ] Consistent with this definition, a personal representative has the obligation to identify and manage the estate’s assets, including any potential legal claims, irrespective of whether probate has been granted: Estate Administration Act , ss 7(1)(

a) and (b). This power extends to settling claims already brought or negotiated outside the auspices of a formal action: Sustrik Estate v Floyd , 2005 ABQB 880 at paras 33-34 . [ 28 ] Mr. Shumlich argues that, because the focus of the Act is now on knowledge, it makes no sense to allow the person who could seek probate to avoid doing so, with the effect of artificially and arbitrarily delaying the commencement of a limitation period on a known claim.

There is obvious logic to this position. [ 29 ] There is also authority for an interpretive approach that promotes intra-statute harmony, particularly when the statutes in question are in pari materia . Sullivan says this in §§13.25-26: Introduction . When interpreting legislation, common law courts generally consider any statutes in pari materia , that is, any statutes dealing with the same subject matter as the statute to be interpreted. Their concern is to ensure coherence and consistency between rules dealing with the same thing. Governing principle .

Statutes enacted by a legislature that deal with the same subject are presumed to be drafted with one another in mind, so as to offer a coherent and consistent treatment of the subject. The governing principle was stated by Lord Mansfield in R. v. Loxdale : Where there are different statutes in pari materia though made at different times, or even expired, and not referring to each other, they shall be taken and construed together, as one system, and as explanatory of each other. [ 30 ] Sullivan points out at §13.28 that the federal

Interpretation Act , RSC 1985, c I-21 codifies this principle in s 15(2): Where an enactment contains an

interpretation

section or provision, it shall be read and construed (

b) as being applicable to all other enactments relating to the same subject-matter unless a contrary intention appears. [ 31 ] At the time of her writing, however, this codification had not been reproduced in any of the provincial or territorial

Interpretation Acts . I neither see nor have been referred to any similar provision in the Alberta statute. Nevertheless, it is clear that this principle of

interpretation is applicable in Alberta. Our Court of Appeal recently stated in BP Canada Energy Group ULC v National Bank of Canada , 2021 ABCA 85 at para 64 :

Section 32 should also be read consistently with the applicable canons of

interpretation, including that the provision is part of a larger

scheme across several pieces of legislation, and accordingly it should be read in harmony with the scheme and not so as to render anyother parts of the scheme ineffective. This canon of

interpretation also dates back to Lord Mansfield in R v Loxdale (1758) 1 Burr 445 at447… [32] However, the case law establishes the need for caution in applying this principle of

interpretation too broadly. In RainbowPipe Line Co v Improvement District, No 17, [1975] AJ No 203, the Court made these helpful comments at paras 7-9: In Maxwell on

Interpretation of Statutes, 12th Edition at p. 66, it states: Statutes are said to be in pari materia when they deal with the same person or thing or class: it is not enough that they deal with a similarsubject matter. Although both of these Statutes appear to deal with the same thing, a more detailed examination of the

definitions of the word pipeline inboth makes it clear that, this is not so. … I would find that the two Acts in question are not in pari materia, because they do not deal withthe same thing. In one Act they are lines of pipe forming part of a system, in the other Act they need only be pipe designed to conveysubstances. Essentially, the

definitions in the two acts of pipelines do not refer to the same things. [33] In Gale (Trustee of) v Heintz, (AB KB), [1991] 126 AR 40, Master Waller considered the breadth of thisinterpretive tool: It is settled law that different enactments of the same legislature are deemed to be coherent as if each was the provision of a singleenactment. That presumption of coherence in enactments of the same legislature is even stronger when they relate to the same subjectmatter "in pari materia". The in pari materia principle has in part been enacted into law by the

Interpretation Act of Canada. … Pierre Cote in his text on the

Interpretation of Legislation (1983) at page 272 cautions that the presumption should be applied prudently: Once again, this presumption, a mere guide to the intention of Parliament, should be applied prudently, quite possibly the make-up of thenew legislation will be incompatible with a definition in another law.

Because a word's meaning is derived from its context, it ishazardous to shift from one law to another without making adjustments dictated by the new context: No doubt, for the purpose of ascertaining the meaning of any given word in a statute, the usage of that word in other statutes may belooked at, especially if the other statutes happen to be in pari materia, but it is altogether a fallacy to suppose that because two statutesare in pari materia, a definition clause in one can be bodily transferred to the other. (per Duff J., Miln-Bingham Printing Co. vs.

TheKing, (SCC), [1930] S.C.R. 282 & 283.) [34] It is not obvious to me that the Act is truly in pari materia with estates legislation. The former creates a hard delineation oflegal rights, the latter is intended to enable the practical and functional administration of estates. These subject matters differ in bothsubstance and approach. [35] Moreover, I share, and am guided by, Duff J’s concern about indiscriminately applying

definitions from one statute to anotherwithout a clear legislative directive. If the Legislature had intended “personal representative” for purposes of the Act to be precisely co-extensive with its defined meaning elsewhere in its legislative portfolio, it easily could have said so. [36] If anything, the absence of express confirmation suggests a deliberate choice not to import this meaning into the Act.

As statedby Laskin JA in University Health Network v Ontario (Minister of Finance) (2001), (ON CA), 208 DLR (4th) 459(ONCA) at para 31, "legislative exclusion can be implied when an express reference is expected but absent.” See also Alexis v Alberta(Director, Environment and Parks), 2020 ABCA 188 at para 154 (per Pentelechuk JA, dissenting on other grounds). [37] Rather than expressly treating the testator’s death as triggering event in ss 3(2)(c)(ii) and (iii), the Legislature insteadintroduced the additional concept of the personal representative being “appointed”.

If the Legislature had intended to make thisappointment coincident with the testator’s death for the purposes of the Act, it could have done so. The choice not to do so should begiven effect, rather than treated as an oversight. [38] Moreover, permitting limitation periods to run from the moment of the testator’s death risks creating injustices in casesinvolving disputed or competing wills, wills found some time after the testator’s death, or renunciations of executorship.

In each of thesesituations, far greater certainty flows from commencing the limitation period once the personal representative’s status has beenconfirmed by Court Order. [39] In a similar vein, relying on appointment in a will – an inherently private and disputable document – as the triggering eventfor the limitation leaves defendants without any public, accessible mode of ascertaining whether a limitation has commenced againstthem and the identity of the person with the obligation and authority to commence the action. These are material disadvantages to theinterpretation urged by Mr. Shumlich. D.

Consistency with the Rules [40] By contrast, a grant of probate is a public and definitive declaration of rights and responsibilities. An Order of this Courtprovides a clear and knowable point for the commencement of limitations. Most importantly, however, interpreting the disputedlimitation as commencing upon the grant of probate dovetails with the operation of the Rules of Court governing how actions by estatescan be commenced. [41] Specifically, Rule 2.11(

e) dictates that an estate may launch an action only through a personal representative appointed undera grant of probate or a court-appointed litigation representative.

Litigation representative required 2.11 Unless otherwise ordered by the Court, the following individuals or estates must have a litigation representative to bring or defendan action or to continue or to participate in an action, or for an action to be brought or to be continued against them: … (

e) an estate for which no personal representative has obtained a grant under the Surrogate Rules... [42] This, I find, is the most compelling basis for interpreting the Act. The Act governs when someone must bring an action or losethe right to do so. It is not consonant with this function to bind a party who legally cannot commence the claim. While a personalrepresentative named in a will is the “successor owner” of the claim, he or she cannot commence litigation without a further judicialappointment.

It is logical for the “appointment” referenced in the Act to be the act that vests the representative with authority tocommence the action to which the limitation applies. [43] This reading also levels the field as between testate and intestate estates. If an appointment for purposes of the Act were foundto flow from the naming of a representative in the will, intestate estates would be subject to very different limitations treatment, evenwhere the potential representatives have full knowledge of the claim.

Eliminating this arbitrary distinction is consistent with regularizingtreatment of similarly-situated plaintiffs, as discussed in Yugraneft. [44] Finally, Ms. Kardynal also points out that the general principle of remedial

interpretation, as articulated in the

InterpretationAct, RSA 2000, c I-8, s 10, does not narrow limitation periods. Rather, as the Supreme Court has held, limitations destroy a citizen’s legalrights and should be interpreted strictly against the party invoking them: Ordon Estate v Grail, (SCC), [1998] 3 SCR437, citing Berardinelli v Ontario Housing Corp, (SCC), [1979] 1 SCR 275 at 280; see also MacKinnon v Bate, 2003PESCAD 17 at para 9. The requirement of a Court Order, providing public certainty of the right to commence litigation on behalf of theestate, is more consistent with a restrained reading of the Act, respectful of all parties’ interests. V. Disposition [45] While neither

interpretation is wholly satisfactory, like Master Smart and Yungwirth J in Grotski, I conclude that interpreting“personal representative” in s 3 of the Act as a person appointed to that position through a grant of probate is most consistent with thepurposes and language of the Act. The two-year limitation period in s 3(2)(c)(ii) runs from that point in time. If this is not theLegislature’s intent, clarifying amendments to the Act are needed. [46] I appreciate that the net effect of my preferred

interpretation is to shift a burden to defendants, whose repose from liability isreduced when potential claimants die. Like Master Smart, I acknowledge that this

interpretation permits situations, such as that in thiscase, where the two-year limitation period may never commence.

This will be common in situations where an estate can be administeredwithout a grant of probate and the appointment of a litigation guardian is a more efficient way of advancing the estate’s legal rights.While this may be unfair to defendants in some instances, many quarters of the law retain tools for the Court to address or remedy lachesand intentional delay where a defendant is prejudiced. [47] I commend counsel for the concise, cooperative, and efficient manner in which they brought this novel and important issuebefore the Court.

They have served their clients and the administration of justice well. [48] The parties may exchange brief submissions on costs within 30 days if those cannot be agreed. Heard on the 10th day of February, 2021. Dated at the City of Calgary, Alberta this 5th day of May, 2021. N.E. Devlin J.C.Q.B.A. Appearances: Daniel D. Peterson, QC- DD West LLP for the Plaintiff Martin L. Hoornaert- Hoffman Dorchik LLP

for the Defendant