Matthews v Lawrence, 2021 ABQB 776

Court of Queen’s Bench of Alberta Citation: Matthews v Lawrence, 2021 ABQB 776 Date: 20210924 Docket: 1501 10098 Registry: Calgary Between: Lionel Matthews, Casey Sorensen, Larry Clark, William Chistensen, Barry Lee, Tricia Darby, Ronald Barry, Patrick D’Hondy, Ron Noel, Laurie George Frank Darby, Jim Dewald, Trevor Kolody, Barry Hagar, Sherry Lait, Doug Fooks, Paul Johnson, Bernadette Jackson, Bob Seidlitz, Rick Holt, Lynn Beeton, Tim Fayant, and Maria Leoczko Plaintiffs/Appellants - and - Alan John Lawrence, Charles Clements, Kenneth Powell, Carolyn Joan Wallace, Ralph Woloschuk, Derick Sinclair, Dwight Randolph Hayward, Hebert Rainford Towning, Dan Hewitt, Angelo Gentili, Debbit Ulansky, Colin Lee, L.O.M.

Laboratories Inc., and L.O.M. Medical International Inc. Defendants/Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice N.E. Devlin _______________________________________________________ [ 1 ] This is an appeal from Master Mason’s decision dismissing this action for long delay pursuant to Rule 4.33 of the Alberta Rules of Court , AR 124/2010 (the “ Rules ”).

The question on this appeal is whether the Plaintiff’s service of a Notice of Appointment for questioning advanced the action sufficiently to prevent automatic dismissal under Rule 4.33(2). [ 2 ] For the reasons that follow, I agree with the Learned Master that the Plaintiffs’ failure to follow through on their proposed examination, or otherwise respond to the Defendants’ reason for refusing to attend, resulted in no significant advance being made and the action being properly dismissed. Facts [ 3 ] This multi-party lawsuit was commenced in 2015.

The last significant step was taken in June 2016, when the Defendants served their Affidavit of Records.

[ 4 ] Nothing happened between service of that Affidavit and May 26, 2020. On that day, new solicitors came on record for the Plaintiffs and wrote a letter to the Defendants’ lawyers, stating that they were mindful of the lack of progress and enclosing a Notice of Appointment for Questioning (“the Notice”). Tellingly, the Notice specified that the questioning should take place on June 15, 2020, the day prior to the three-year anniversary of the last significant step. [ 5 ] The Defendants’ solicitors responded on June 10, 2020.

They stated that their client would not attend for questioning because, in their view, the action was stayed by operation of Rule 4.34 since two of the parties, one Defendant and one Plaintiff, had died.

The letter stated in part: It is our understanding that the Plaintiff, Doug Fooks and the Defendant Dwight Randall Hayward have both passed away and consequently, pursuant to rule 4.34 of the Alberta Rules of Court , the proceedings are stayed until such time as the litigation is continued by Order.… As a consequence of the Stay of Action, the Notice of Appointment for questioning served on our firm in respect Mr. Lawrence is void.

Please advise as soon as possible if your client intends to bring an application to lift the stay of action . [emphasis added] [ 6 ] The Plaintiffs neither sought to enforce the Notice of Appointment, nor clarify or resolve the stay issue put forth by the Defendants as their justification for non-attendance.

Instead, on July 6, 2020, the Plaintiffs served a new Statement of Claim. [ 7 ] It is common ground that the three-year deadline pursuant to Rule 4.33 would have run to June 16, 2020 in the ordinary course, but was extended by Ministerial Order to August 31, 2020, in light of the impact of the COVID-19 pandemic on legal practice. [ 8 ] The only step which is said to have re-vivified the litigation and forestalled engagement of Rule 4.33(2) is the Plaintiffs’ service of the Notice. [ 9 ] On February 3, 2021, the Defendants served an application to dismiss the action for long delay.

Master Mason granted the motion on March 18, 2021. [ 10 ] The individual Plaintiff Lionel Matthews filed a notice of appeal against Master Mason’s decision. His appeal is now before me. [ 11 ] Mr. Matthews also applied to have the Defendants’ counterclaim against him dismissed for long delay, under Rule 4.33 . This application was heard and decided by Master Farrington on July 21, 2021.

Master Farrington concluded that he had no choice but to dismiss the counterclaim; Rule 4.33 is non-discretionary and the defendants had not advanced the counterclaim for over three years (plus the 75-day extension granted in light of the COVID-19 pandemic). As such, Mr. Matthews was successful in getting the defendants’ counterclaim dismissed. He now takes issue with Master Mason’s similar logic being applied to have his claim dismissed.

The Master’s decision [ 12 ] In her decision, the Learned Master appears to have accepted that Rule 4.34 does operate to stay the entirety of a multiparty action on the death of any individual Plaintiff or Defendant. She noted that the Plaintiffs had time to address this issue, either by way of agreement with the Defendants to a procedural order lifting the stay, or through an application to the Court.

The Plaintiff did neither of these things. [ 13 ] The Learned Master emphasized the Plaintiffs’ ongoing obligation to pursue and advance the litigation in a timely fashion: XS Technologies Inc v Veritas DGC Land Ltd , 2016 ABCA 165 at para 7 (“ XS ”). She found that no significant advancement of the action had taken place by virtue of the Plaintiff’s bare service of the Notice. Consequently, she concluded that the mandatory operation of Rule 4.33 compelled dismissal of the action. Grounds of appeal [ 14 ] Mr. Matthews advances two principal arguments on this appeal.

First, he submits that the death of a single party does not stay the entirety of a multi-party action under Rule 4.34 . This, he asserts, undercuts the Defendants’ pretense for refusing to attend for questioning. Second, he submits that this wrongful frustration of the plaintiffs’ bona fide attempt to advance the litigation should not operate to the Plaintiffs’ detriment and the action should not have been stayed. Analysis [ 15 ] Appeals from the decision of a Master are de novo hearings decided on a standard of correctness: Bahcheli v Yorkton Securities , 2012 ABCA 166 at paras 19 , 30.

In this case, the legal determinations which I must review are: (

i) whether the action should have been dismissed for delay pursuant to Rule 4.33 , or whether the Plaintiff’s fruitless Service of the Notice to Attend had done something to “significantly advance” the action; and (ii) whether operation of Rule 4.34 impacts this determination. [ 16 ] While I disagree with the Learned Master as to whether the action was stayed, I share her conclusion that the steps taken by the Plaintiffs, in the context of this case, did not satisfy the demands of Rule 4.33 in any event. Did the Plaintiffs advance the litigation within the meaning of

Rule 4.33? [ 17 ] The essence of Rule 4.33 is that plaintiffs must keep litigation moving at a meaningful pace or face having their actions dismissed.

The Court of Appeal has been crystal-clear that the Rules exist to promote expediency, that litigation delay is both a pressing concern and a source of injustice, that stalled litigation must be cleared from the path of those actually seeking timely justice, and that the rules must be applied with these principles as their North Star: Jacobs v McElhanney Land Surveys Ltd. , 2019 ABCA 220 at paras 64-72 . [ 18 ] Our modern Rules are not concerned with whether parties have done things on checklists. Rather, they ask whether truly substantial steps have taken place.

This is often referred to as the “functional approach” to assessing “the nature, quality, genuineness, timing and outcome of the steps taken”: XS at paras 8-9; Ro-Dar Contracting Ltd v Verbeek Sand & Gravel Inc , 2016 ABCA 123 at para 21 . [ 19 ] As Master Hanebury noted in Ziegler Estate v Green Acres (Pine Lake) Limited , 2018 ABQB 921 at para 12 : The rule requires the Court to undertake a functional approach to determining whether a step alleged to be a “significant advance in an action” actually moved the lawsuit forward in a meaningful way.

The Court is to consider the nature, value, importance and quality of the step taken. Its genuineness and the timing of the step are also relevant. All of these factors are to be considered in the context of the particular action. The focus is on the substance of the step taken and its effect on the litigation rather than on its form. The goal is not necessarily whether the action is moved closer to trial, but rather whether it is moved closer to resolution, as the Court recognizes that a resolution, not necessarily a trial, is the ultimate goal: Weaver v. Cherniawsky , 2016 ABCA 152 , para. 18 ; Huerto v.

Canniff , 2014 ABQB 534 , para. 14 , (aff’d 2015 ABCA 316 ); Phillips v. Sowan , 2007 ABCA 101 , para. 5 ; Flock v, Flock Estate , 2017 ABCA 67 , para.17; Ursa Ventures Ltd. v. Edmonton (City) , 2016 ABCA 135 , para’s 19, 23, 37; Top Grade Solutions Inc. v.

Flying Pizza 73 Inc. , 2009 ABQB 492 , para. 20 . [ 20 ] It also is important to remember that the Plaintiff has the ultimate responsibility for prosecuting its claim: XS at para 7. [ 21 ] The real question in this case is whether service of the Notice, coupled with the Defendant’s refusal to comply with it, amounts to a sufficiently significant advancement of the litigation to satisfy the substantive purpose of Rule 4.33 .

I conclude that it does not. [ 22 ] There is no doubt that questioning is a substantial step in litigation that would normally advance it significantly: Volk et al v 33123 Alberta Ltd et al , 1998 ABCA 54 . However, the same cannot always be said of an attempt to commence questioning.

Courts in Alberta have uniformly held that the simple act of serving a Notice of Appointment does not, in and of itself, materially advance an action: Bourne v Alberta , 2008 ABCA 165 at para 5 (“ Bourne ”); Madore v Madore , 2016 ABQB 146 at para 54 ; Nash v Snow , 2014 ABQB 355 at para 51 (“ Nash ”). [ 23 ] The law in this respect was summarized by Lee J in Nelson v Emsland , 2007 ABQB 571 at paras 28 to 31 : [28] The Defendants by Counterclaim acknowledge its Counsel was served with the Appointment.

However, serving an appointment for examination for discovery and conduct money does not automatically or materially advance an action: Co-operators Life Insurance Co. v. Rollheiser , 1998 ABQB 874 (Alta. Q.B.) at paras. 5-6 ; Morasch v. Alberta , [2004] A.J. No. 41 ; Tire City & Auto Inc. v. Harrison , 2002 ABQB 592 (Alta. Q.B.) At paras. 63-64 . [29] In Rollheiser my colleague Kent, J. comments as follows at paragraphs 5 - 6: The question then is whether or not filing and serving an Appointment for Examination for Discovery is a thing which materially advances the action. . . .

The thing which is done must be shown as something which moves the law suit closer to trial and does so in a meaningful way. An Examination for Discovery which occurs clearly advances the action. Setting a date for Examinations for Discovery does not materially advance the action. It barely advances the action. [30] The Rollheiser decision was followed by the Alberta Court of Appeal in Morasch v. Alberta , where Justice Fruman states the following at paragraph 13: The thing must “move the law suit closer to trial. . . in a meaningful way”...

Advancing the action is not sufficient; the action must be materially advanced. . . Setting a date for an examination for discovery, by itself, probably would not. [31] Consequently the Appointment itself was not a thing that materially advances an action. As nothing has been done to materially advance the counterclaim in over five years, the counterclaim should be dismissed pursuant to Rule 244.1. [ 24 ] It is noteworthy that in Nelson , the Defendant justified his failure to appear on the basis that the Plaintiff was obligated to pay him certain outstanding costs prior to any discoveries.

The Plaintiff in Nelson took no further steps to compel the questioning in the face of his opponent’s intransigence. The Court of Appeal upheld Lee J’s conclusion that the mere attempt to question did not constitute a meaningful step: Nelson v Emsland , 2008 ABCA 387 at para 14 : Seeking an order compelling the respondents’ attendance at discoveries would have properly advanced the action.

However, the mere filing of the appointment, in these circumstances, did nothing to advance it . [emphasis added] [ 25 ] This conclusion is both persuasive and, given the factual similarity between Nelson and the present case, binding. In both instances, the Defendants advised in advance of their intention not to comply with the Notices and offered legally plausible justifications for their refusal. In both cases, the Defendants’ articulation of their positions defined the further steps that were required to move the case forward. In both cases the Plaintiffs responded by doing nothing.

Conclusion on delay [ 26 ] The Learned Master correctly found that the Plaintiffs did not significantly advance the litigation for more than three years. The Defendants did not simply ignore the Notice but rather raised a legitimate procedural concern as to whether it was valid. While I am inclined to find that their objection was based on a misapprehension of Rule 4.34, their

interpretation of that Rule was reasonably open to them on the state of the law at the time, and required resolution for the matter to move forward. [ 27 ] Rather than seeking to enforce its right to question the Defendant by obtaining a Court Order compelling attendance, or otherwise resolving the issue of the purported stay, the Plaintiffs simply took their ball and went home when the Defendants said that they weren’t going to play. More is required of Plaintiffs by Rule 4.33 – attempts to conduct a questioning are not enough.

An attempt will only significantly advance litigation where the Plaintiffs follow through. In this case, their next steps were self-evident. They took none of them. [ 28 ] The Plaintiffs seem content to have done something that they could argue reset the three-year clock, in this case by sending a simple piece of paper, rather than having to meaningfully engage in the litigation process by preparing for a potentially complex questioning.

In this vein, the timing of the Notice in this case, setting the questioning on the very eve of the original drop-dead date, is also a consideration as to the real nature of the Plaintiff’s actions: Bourne and Nash . [ 29 ] For these reasons, I agree with the conclusion reached by the Learned Master that Rule 4.33 compelled dismissal for a long delay in this case. [ 30 ] That said, I do not wish to be taken as critical of the Plaintiff’s counsel who acted during this time period (not Mr. Chui, who argued the appeal most ably).

He was retained very near the original three-year deadline in a matter that has an obviously complex history. Neither the exact nature of his retainer and instructions, nor the reasons for the approach taken, are before the Court. Stepping into the breach in situations such as this can be fraught, and I do not wish to dissuade counsel from assisting clients who arrive on their doorstep on the eleventh hour of the litigation clock.

The operation of Rule 4.34 [ 31 ] Given my conclusion that the Plaintiffs did too little to substantively advance their case, irrespective of the whether the Defendants were right about it being stayed, it is not strictly necessary to determine how Rule 4.34 operated in this case. However, this question attracted significant argument before me by both sides and, somewhat unusually, appears unsettled.

Therefore, for the sake of future clarity, I will address it. [ 32 ] Rule 4.34 provides as follows: Stay of proceedings on transfer or transmission of interest 4.34(1) If at any time in an action prior to judgment the interest or liability of a party is transferred or transmitted to another person by assignment, bankruptcy, death or other means, the action is stayed until an order to continue the action by or against the other person has been obtained.

(2) If a transfer or transmission of the interest or liability of a party takes place while an application or proceeding in an action is pending, an interested person may, on filing an affidavit verifying the transfer or transmission of the interest or liability and without notice to any other party, request the Court to order that the action continue.

(3) An order to continue the action must be served on each of the other parties as soon as it is received by the party requesting the order.

(4) If an order to continue an action is not made within a reasonable time after the date on which the action is stayed, the defendant or respondent may apply to the Court to have the action dismissed for delay under rule 4.31. [ 33 ] The question arising in this case is whether the rule stays the entirety of the action or only as against the party whose interests were transferred, in this case by death.

In my respectful view, the rule only stays the action against those parties whose interests have transferred by operation of one of the mechanisms enumerated in the rule. [ 34 ] It makes little intuitive sense that the death of one of 22 Plaintiffs, and one of 15 Defendants, would stall an entire proceeding.

Indeed, the individual Defendant died well before the remaining Defendants served their Affidavit of Records, and yet their solicitors appear never to have turned their minds to this. [ 35 ] While this facet of Rule 4.34 has not directly been considered by a Court in Alberta, the effect of virtually identical wording in Ontario’s R 11.01 has been. In Green Bay Packaging Inc v Meco Group Inc , [1999] OJ No 3120 (Sup Ct

J) at para 22 , Nordheimer J (as he then was) reached the following conclusion: I do not accept that a fair or reasonable reading of rule 11 leads to the conclusion that the whole proceeding is stayed. I believe that rule 11 fairly read is referring to the proceeding as regards the party whose interest or liability is concerned. The reference in the rule to obtaining an order to continue the proceeding against the person reinforces my view that this is the proper

interpretation to give to the rule. It makes no sense to me that where there are multiple parties and one of those parties becomes bankrupt the entire proceeding would be stayed. Rather, in such a situation, I would view the reasonable result to be that the proceeding estate against banker party but can proceeding as the others. The opposing party would then, presumably, either obtain an order to permit the action to proceed against banker party with simple except that the action is stated and just deal with the parties remaining.

[ 36 ] I find this reasoning compelling. In multiparty actions of this nature, there is no good or practical reason why the litigation cannot proceed apace despite the death of one individual, whose involvement may well be peripheral.

For instance, if such a party passed away on the eve of a major motion being argued, or other step being taken, it would be both unnecessary and slightly absurd to hold that the entire process must automatically be put on hold, potentially resulting in significant costs and time being wasted. [ 37 ] Contrary to what the Defendants argue, the fact that Justice Nordheimer’s analysis took place in the context of bankruptcy does not alter the analysis. Reading Rule 4.34 in the same manner is more consistent with common sense and the foundational rules. [ 38 ] Moreover,

section 10 of the

Interpretation Act requires me to construe legislation “as being remedial” and by giving it a “fair, large and liberal construction and

interpretation that best ensures the attainment of its objectives”. The cardinal rules of statutory

interpretation, which apply to the Rules , also compel me to “read the words of

an Act in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of Parliament”: Rizzo & Rizzo Shoes Ltd (Re) , [1988] 2 SCR 27 at para 21 . In this case, that underlying objective of Rule 4.34 the timely and efficient advancement of litigation.

That objective is better served by holding that litigation is only stayed against parties whose interests have been transferred, irrespective of the mechanism underlying that transfer. [ 39 ] The Defendants also argue that the Ontario rule is worded slightly differently, which should lead to different interpretive results. Respectfully, I disagree. While the Ontario rule is worded more clearly, intention and effect of both is identical.

The Ontario rule is as follows: 11.01 Effect of Transfer or Transmission Where at any stage of a proceeding the interest or liability of a party is transferred or transmitted to another person by assignment, bankruptcy, death or other means, the proceeding shall be stayed with respect to the party whose interest or liability has been transferred or transmitted until an order to continue the proceeding by or against the other person has been obtained. [ 40 ] I acknowledge the distinction between Ontario’s rule and Alberta’s: the former is clear in stating that the stay of proceedings only applies to the party to whom the interest was transferred or transmitted.

However, the previous iteration of the Ontario rule was identical to Alberta’s: 11.01 Effect of Transfer or Transmission Where at any stage of a proceeding the interest or liability of a party is transferred or transmitted to another person by assignment, bankruptcy, death or other means, the proceeding shall be stayed until an order to continue the proceeding by or against the other person has been obtained. [ 41 ] This previous iteration was in effect until its amendment in 2004. As such, Justice Nordheimer in Green Bay was interpreting this previous version.

Indeed, the amendment may very well have been influenced by Justice Nordheimer’s reasoning. Therefore, his conclusion that the provision could only logically apply to the party whose interest or liability was impacted is on-point and persuasive. [ 42 ] The Defendants rely on the decision of Dilts J in Omniarch Capital Corporation will Bishop , 2020 ABQB 102 at paras 23- 24 , for the proposition that the stay applies to “the action as a whole”. With respect, that decision does not address or determine the question before me.

Rather, the question before the court in Omniarch was whether an action could be partially recommenced where there was no dispute that it had been stayed in its entirety, given the Plaintiff’s bankruptcy.

Moreover, Justice Dilts, in noting that Rule 4.31 serves as a “pathway” to Rule 4.34 (para 21), was explaining that Rule 4.34 only authorized whether she could say “yes” or “no” to a plaintiff continuing an action; she could not apply Rule 4.34 to selectively decide against which defendants the plaintiff could continue the action and which defendants were absolved. [ 43 ] The Defendants also referenced Heikkila v Alberta (Workers’ Compensation Board Appeals Commission) , 2011 ABCA 87 (“ Heikkila ”), where the Court of Appeal interpreted the phrase “the action” to mean “the action as a whole”: paras 32, 34.

That reasoning, however, was in reference to Rule 244.1 (Delay in Prosecution) of the former Rules of Court before their amendment in 2010. Moreover importantly, the Court of Appeal read these provisions in the course of explaining that a plaintiff’s obligation to materially advance an action does not require that it do something with respect to its claims against each individual defendant; simply taking an action was sufficient, regardless of which defendant had brought the motion to dismiss.

This is a fundamentally different context and does not determine the issue before me. [ 44 ] On the other hand, the Court of Appeal made clear that its

interpretation of Rule 244.1 was supported by the principle that if a rule has multiple possible

interpretations, the

interpretation “most favourable to the preservation of the right to litigate” should be applied: para 35. That principle weighs against the Defendants’ position here. [ 45 ] For these reasons, I am not persuaded that the action was stayed in the manner the Defendants asserted. Their position on this issue was, however, arguable and not a bad faith attempt to run out the clock. [ 46 ] In any event, the salient point on this appeal is that the Plaintiffs had a clear path forward to advance the litigation, either by compelling the Defendants’ attendance or moving to resolve the stay issue.

By doing nothing, they functionally abandoned the litigation and three years lapsed without any significant advancement of the action. Conclusion [ 47 ] For all of these reasons the appeal is dismissed.

Heard on the 9 th day of September, 2021. Dated at the City of Calgary, Alberta this 24 th day of September, 2021. N.E. Devlin J.C.Q.B.A. Appearances: Elmer Chiu for the Appellant/Plaintiff Lionel Matthews Adrienne Wong for the Respondent/Defendants