Sassine Construction Corp. v Proserve Cleaning & Restoration Services Inc., 2022 ABKB 832

Court of King’s Bench of Alberta Citation: Sassine Construction Corp. v Proserve Cleaning & Restoration Services Inc., 2022 ABKB 832 Date: 20221209 Docket: 2213 00116 Registry: Edmonton Between: Sassine Construction Corp. Plaintiff - and - Proserve Cleaning & Restoration Services Inc. Defendant _______________________________________________________ Written Decision of the Honourable Justice L.M.

Angotti _______________________________________________________ Introduction [ 1 ] Sassine Construction Corp. contracted Proserve Cleaning & Restoration Services Inc. to perform drywall construction for one of its customers. A dispute arose over the quality and completion of the work. Ultimately, Proserve commenced a civil claim in Provincial Court against Sassine for damages.

Sassine appeals the decision of the Provincial Court, issued on February 10 2022, to allow the civil claim of Proserve to continue with leave to Sassine to defend, despite non-compliance by Proserve with the service provisions of the Provincial Court Civil Procedure Regulation , Reg 176/2018. The Provincial Court Act , RSA 2000, c P-31 is the governing

legislation for the Regulation . [ 2 ] The issue to be determined is whether fairness permitted the chambers judge to exercise discretion to apply R. 3.27 of the Alberta Rules of Court , AR 124/2010 or a similar test to relieve Proserve from the consequences of failure to serve Sassine in accordance with the Act and Regulation, or whether the Act and Regulation set out a complete and mandatory procedure for service that does not permit the application of any discretion. Service and Procedural History [ 3 ] The facts with respect to the procedural history and service are not disputed.

Proserve filed its civil claim on June 29, 2020. Proserve attempted to serve the claim by registered mail to Sassine’s registered office on July 21, 2020, which mail was delivered to the mailing address on July 23, 2020. However, Proserve relied upon a corporate search done in December 2019 for the registered office. Sassine had changed its registered office address with Alberta’s Corporate Registry in May 2020. Therefore, Proserve sent the civil claim for service to the incorrect address, as that was no longer the registered office of Sassine.

No one on behalf of Sassine signed for the delivery of the civil claim. Therefore, service was not effected by Proserve upon Sassine. [ 4 ] As Sassine was not aware of the claim, it did not file a dispute note. Under the mistaken belief that service had been effected, Proserve obtained default judgment on November 12, 2020 and took steps to enforce the judgment.

Sassine finally became aware of the civil proceeding, when proceeds of an equipment auction sale were seized through Proserve’s writ of enforcement on September 8, 2021. [ 5 ] Sassine brought an application to set aside the default judgment, dismiss the claim for lack of proper service under the Regulation , specifically s 4, and dismiss the claim on the basis of a limitation period. Upon being served with the application, Proserve realized that it had not properly effected service.

At the application, Proserve admitted that service had not been effected in accordance with the Regulation and, therefore, did not oppose the setting aside of default judgment. However, Proserve argued that a strict application of the Regulation would be unfair to the Plaintiff. [ 6 ] The chambers judge set aside the default judgment and gave leave for Sassine to file a dispute note. However, he declined to dismiss the civil claim for non-compliance with the service provisions of the Regulation . In his oral decision, he noted that there was merit to both parties’ positions on the substance of the claim.

He determined that procedural fairness did not include reliance upon technicalities or inadvertent mistakes by a party, where that prevented the merits of a claim from being argued and determined. He also concluded that there would be no prejudice to Sassine, as a defendant, other than having to engage in further steps in the legal process. Therefore, he permitted the civil claim to proceed and left Sassine to raise the issues of dismissal for improper service or limitation periods in their dispute note.

Position of Sassine [ 7 ] Sassine submits that the standard of review is one of correctness, as the chambers judge made an error of principle in interpreting and applying the Regulation . [ 8 ] Sassine argues that, as a statutory court, the Provincial Court is bound by its applicable legislation. The Regulation provides a complete and mandatory procedure for the service of a civil claim. Proserve did not comply with the requirements of that procedure, as it failed to serve the civil claim on the corporate defendant by the means set out in

Part 12, Division 1 of the Regulation . Section 3(3) of the Regulation makes it mandatory to serve a civil claim in accordance with

Part 12, Division 1. It is also mandatory that such service occur within one year of filing the civil claim, unless there is an order extending service, as required by s 4 of the Regulation . At no time did Proserve apply to extend the time for service. As a result, Proserve’s civil claim expired on June 29, 2021 due to lack of service and must be dismissed, as no further steps are permitted to be taken where service has not been effected within the mandatory timelines. [ 9 ] Reasonable excuse for failure to serve or prejudice to the defendant are not the test to be applied.

Section 4 of the Regulation is relatively strict and does not permit the exercise of discretion to relieve a party from non-compliance, even if such a result appears harsh in the circumstances. Given this clear consequence, the chamber judge’s attempt to engage in judicial economy by refusing to dismiss the civil claim with no prejudice to Sassine to raise the argument at trial was also in error, as there was no point to litigating the merits when this preliminary question would be determinative.

Position of Proserve [ 10 ] Proserve submits that the standard of review should be palpable and overriding error, as the decision involved an issue of mixed fact and law. The chambers judge’s decision was one of discretion, which is entitled to deference. [ 11 ] While it does not dispute that proper service upon Sassine did not occur, Proserve submits that it was not aware of the improper service as it was relying upon the incorrect representations of its former counsel that service had been properly completed.

As a result of this situation, Proserve should be accorded procedural fairness to pursue the merits of its claim, when it was not at fault for the lack of service. [ 12 ] This situation required a balancing of fairness with the need for efficient and timely litigation. As a result of the need for fairness, the Rules of Court should apply to this situation. The chambers judge was considering a case of

summary dismissal, which involves an exercise of his discretion as set out in the Rules of Court and a determination whether a

summary dismissal would be “just” in the circumstances. The authorities show that there will be times when the Court must consider whether a litigant's right to be heard and present its case, supersedes the strict enforcement of rigid rules. As Proserve has a valid and demonstrable cause of action against Sassine, allowing the appeal would result in the Plaintiff losing its right to have its civil claim properly adjudicated and shift liability onto

a party, being former counsel, other than the intended defendant, Sassine. Proserve did not attempt to delay proceedings or procrastinate pursuing its claim. It reasonably, but to its detriment, relied upon the inaccurate representations of its former counsel. There is no prejudice or irreparable harm to Sassine. Fairness requires that Proserve be allowed to pursue its claim despite the failure to meet the service requirements.

Standard of Review on Civil Appeal [ 13 ] The standard of review on an appeal from a decision of the Provincial Court, Civil Division to Court of King’s Bench is correctness on questions of law and palpable and overriding error on findings of fact or issues of mixed fact and law.

While the application of a principle of law or test to the facts is an issue of mixed fact and law, where the chambers judge made an extricable error by setting out the wrong principle or test to be applied, this is an error of law subject to correctness: Morin v Edmonton (City) , 2018 ABQB 104 at para 6 . [ 14 ] This appeal does not involve an issue of mixed fact and law.

The issue is the proper test to apply for failure to meet the requirements for service in the Regulation – does the chambers judge have the jurisdiction to exercise discretion to provide relief from improper service based upon fairness or must he apply the strict procedure and consequences set out in the Act and Regulation . Therefore, the standard of review is one of correctness. Did the Provincial Court Judge Have the Ability to Grant Relief from Failure to Comply with the Regulation [ 15 ] The Provincial Court is a statutory court, and thus its jurisdiction and procedure is governed by its governing statute.

The Provincial Court Act , RSA 2000, c P-31 , provides: 8(1) The practice and procedure of the Court shall be as provided in this Act and the regulations. [ 16 ]

Section 24.1 of the Act also provides that the practice and procedure in making or defending a claim are set out in the Act and the regulations.

While it permits the Court to determine and provide direction to parties regarding practice and procedure, such direction is specifically “subject to the regulations.” [ 17 ] The applicable practice and procedure for service is set out in the Regulation . [ 18 ] While the chambers judge was aware of the Regulation and the time limit for serving, he determined that he could provide relief for failure to comply with the Regulation under the auspices of procedural fairness, on the basis of merit to the claim, inadvertent mistake by the Plaintiff, and lack of prejudice to the Defendant.

This was an error of law. [ 19 ] It is important to distinguish the basis for the

summary dismissal application. Proserve relies upon Weir-Jones Technical Services Incorporated v Purolator Courier Ltd , 2019 ABCA 49 at para 41-46 , where the court discusses the “…need to ensure an appropriate level of fairness in the procedures used to resolve disputes…”, in the context of

summary dismissal under R. 7.3 of the Rules of Court . However, this is not a

summary dismissal application on the basis of a lack of merit in the plaintiff’s case, thus the

summary dismissal test of lack of merit and its common law principles do not apply. [ 20 ] This was for dismissal of the claim on the basis of missing a limitation period, similar to claims under the Limitations Act , RSA 2000, c. L-12 : Nixon v Timms , 2013 ABCA 84 at para 10 ; Marcil v Ellefson , 2014 ABCA 169 at para 31 ; Performance Industries Ltd. v Forgues , 2006 ABCA 401 at para 8 .

In such claims, neither fairness to the party who missed the limitation period nor the merits of the claim of the same party are relevant to the determination, unless the legislation setting out the limitation period provides for such consideration, such as R. 3.27 of the Rules of Court . Even then, in considering under R. 3.27 whether extraordinary circumstances exist or whether to exercise discretion, a court must have regard to the policy considerations in the Limitations Act and any prejudice arising as a result of the expiration of a particular limitation period.

Thus, the authorities relied upon by Proserve regarding

summary dismissal are not of assistance to the Court. [ 21 ]

Section 4 of the Regulation is similar to the old R. 11 of the Rules of Court . Under R. 11, a statement of claim could only be served while valid, its validity lasted originally only 12 months, it could be renewed but once for three months only, and it could only be renewed while still valid. There was one exception to R. 11 that does not exist in s 4 and is not applicable here, which was a scenario where a defendant or someone acting on behalf of the defendant led the plaintiff to believe that service had occurred or that timelines for service would not be relied upon.

The Alberta Court of Appeal considered very similar arguments to those made by Proserve, in circumstances where service had not been completed in accordance with R. 11: Hansraj v Ao , 2004 ABCA 223 at para 62-66 , Nixon v Timms , 2013 ABCA 84 at para 6-8 . In Hansraj , the Court noted that R. 11 is mandatory and service was impossible after the 12 month period or renewal period had expired, subject to the narrow exception.

The argument was raised that the Court of Queen’s Bench (as it then was) could grant an equitable remedy for relief under s 10 of the Judicature Act , RSA 2000, c J-2 from the failure to comply with proper service. However, such relief could not be applied to questions of civil procedure.

In particular, the Court of Appeal stated that “Courts have no “inherent power” to do what statutes forbid”: Hansraj , supra at para 66 . [ 22 ] In this case, the chambers judge was required to apply the provisions of s 4 of the Regulation , unless the Act or the Regulation provided an exception where he could exercise his discretion. The only applicable exception would be under s 8(2) of the Act .

It provides that the Rules of Court can be applied, with necessary modification, but only where the Act or the Regulation “…do not provide for a specific practice or procedure of the Court that is necessary to ensure an expeditious and inexpensive resolution of a matter…”. Simply because the legislation does not provide for an exception to allow service after the limitation period, such as R. 3.27 , does not mean that there is a gap in the procedure. Proserve did not argue that there was a gap, but rather submitted that fairness demanded the application of

the Rules of Court. But that is not the test, nor is that a full consideration of fairness. [23] Although Weir-Jones, supra was decided in a different context (as noted above), its comments about fairness at para 43 areimportant to consider in addressing Proserve’s fairness argument: In any event, any “right of the plaintiff to have a trial” is equally offset by the “right of the defendant not to have a trial on anunmeritorious claim”. Fairness is a two-way street. Litigation is expensive and distracting, and the costs awarded to the successfulparty seldom amount to full indemnity.

Cost, delay and inequality of arms may mean that the right to adjudicative fairness,justice, and reliability can actually be hindered by a full trial. A defendant who can show that a claim has “no merit” on a

summarydisposition application should not have to suffer a trial. As noted, supra para. 32, the resisting party does not have to prove its own caseat this stage, but only demonstrate that the moving party has failed to show there is no genuine issue requiring a trial. (emphasis added) [24] Dismissal of claims for missing limitation periods may arise due to inadvertent mistake of plaintiffs, but that is not an answersufficient to found relief. The chambers judge concluded that the defendant could raise s 4 as a defence to the claim in the dispute noteand have the defence determined at trial.

This ignores that the defendant was making that exact application before the chambers judge; itwould be improper to deny that application on the basis the application could be brought at a later time as a defence in the dispute note.Such an outcome would not provide for an “an expeditious and inexpensive resolution of a matter” when the facts establish that servicehas not occurred in accordance with the Regulation. Permitting relief from a failure to properly serve a defendant on the basis of ameritorious claim would result in a significant number of improperly served claims being allowed to continue.

This would render theconsequences and remedy set out in s 4 illusory to defendants. Defendants would then be put to the expense and time of defending theclaim. To permit such an exception would require specific language in the Regulation; none exists. [25] The Regulation provides a complete procedure for service of a civil claim and any test or discretion for dismissal of a claimpursuant to s 4 must be found in the Act or the Regulation.

The Regulation does not include any language similar to R. 3.27, whichprovides the ability of the Court to grant relief after the expiry of the time limit for service in certain specific circumstances. Thelegislature chose not to include that language in the Regulation, which must be respected by the Courts. Therefore, the

interpretation andapplication of R. 3.27 does not assist Proserve in anyway. [26] The application of s 4 of the Regulation was considered in A&M Auto Sales Inc. v Feldman, 2019 ABPC 133. The plaintiffhad made multiple service attempts, obtained an extension of time to serve, and the defendant appeared to be evading service. Just priorto the expiry of time to serve, the plaintiff applied for a substitutional service order, which was granted after the time to serve hadexpired. While the civil claim was served in accordance with that order, it was served approximately two weeks after the expiry of timeto serve.

Judge Haymour concluded that the civil claim had not been filed in accordance with s 4 and dismissed the civil claim. [27] I agree with Proserve that this decision was not binding authority upon the chambers judge. However, I also agree with JudgeHaymour’s determination that a civil claim not served in accordance with the clear and governing procedure under the Regulation is nolonger valid: A&M Auto Sales Inc., supra, at para 12. [28] As a statutory court, the Provincial Court is bound to follow the statutory procedure from its governing legislation.

In theabsence of express statutory language similar to R. 3.27, the chambers judge did not have the discretion to provide relief from themandatory consequence for failure to effect proper service, provided for in the Regulation. The procedures set out in the Regulation forservice of a civil claim are mandatory and complete, and do not provide for the exercise of discretion. If the service requirements of theRegulation are not complied with, extension of time for service is not available after the 12 month period and the civil claim isconsidered expired. Further steps in the civil claim are not permitted. [29]

Part 12, Division 1 of the Regulation sets out the specific manner in which service can be effected. While Proserve attemptedto comply by sending the document to the registered office of the corporation, it sent it to the wrong office. This was not the fault ofSassine, who had updated their corporate registration in accordance with its legal obligations. Rather, it was the error of Proserve, forrelying upon an outdated corporate registration: Aero Aviation Centre

(1981) Ltd. v 210698 Investments Ltd., (ABKB), 45 Alta. L.R. (2d) 17 at para 20. That was not an inadvertent error, but rather carelessness or perhaps even negligence. Whetherservice did not occur due to an inadvertent error or negligence, whether it arose from the conduct of counsel upon whom the Plaintiffreasonably relied, whether there was a meritorious claim for the Plaintiff, whether the error was simply a technical matter, the result isthe same. None of these are exceptions to the application of s 4(4).

To permit such relief as was granted in the court below in this casewould be to imbue the Provincial Court with jurisdiction it does not have and would be contrary to the provisions of the Act and theRegulation. Conclusion [30] As Proserve failed to serve the civil claim in accordance with the Regulation, no further steps are permitted to be taken in theaction. The appeal is allowed and Proserve’s civil claim is dismissed. Heard on the 1st day of December, 2022. Dated at the City of Edmonton, Alberta this 9th day of December, 2022.

L.M. Angotti J.C.K.B.A. Appearances: Patrick Hopf for the Appellant Ijaz Jiwani for the Respondent