Wood v Royal, 2019 NSSC 189

SUPREME COURT OF Nova Scotia Citation: Wood v Royal , 2019 NSSC 189 Date: 20190617 Docket: 457304 Registry: Pictou Between: Christopher Aaron Wood Plaintiff v.

Captain Randall Robert Royal, Attorney General of Canada And Municipality of Pictou County Defendants The Estate of Dale Johnston Third Party Judge: The Honourable Justice Scott Norton Heard: June 5, 2019, in Pictou, Nova Scotia Counsel: John Rafferty, Q.C. for Christopher Aaron Wood Sandra O Arab Clarke, QC for the Municipality of Pictou County By the Court: [ 1 ] The Municipality of Pictou County (“the Municipality”) seeks an order to set aside a notice of discontinuance filed by the plaintiff on the basis that its filing was an abuse of process and, in consequence, an order for

summary judgement pursuant to Rule 13.04 because the discontinued proceeding was filed without delivering a notice of intended action as required by the Municipal Government Act (“MGA”), and the notice of action was filed after the one-year time limitation in that Act. [ 2 ] In response to the motion, the Plaintiff conceded that if the notice of discontinuance is set aside by the court, the Municipality’s

summary judgement motion should be granted. [ 3 ] Accordingly, at the hearing of the motion, it was agreed by the parties that the only issue before the court is whether the notice of discontinuance should be set aside. The parties further agreed that if the notice of discontinuance was not set aside, a separate motion could be brought by the Municipality to determine if the plaintiff’s action is barred by the limitation period set out in the MGA. [ 4 ] The Attorney General of Canada, Captain Royal and the Estate of Dale Johnson did not participate in the motion.

Background [ 5 ] The plaintiff was injured as a result of a motor vehicle accident which occurred on February 11, 2016. [ 6 ] A notice of action and statement of claim was filed by the plaintiff’s lawyer on November 2, 2016, naming as the single defendant the Attorney General of Canada as representative of both the Department of National Defence (owner of the motor vehicle) and Capt.

Randall Robert Royal (operator of the vehicle). [ 7 ] Considering the circumstances of the accident, plaintiff’s counsel became concerned that the municipal unit responsible for the sidewalk at the location of the accident could have some liability. After investigation, plaintiff’s counsel determined the responsible municipal unit was the Municipality. [ 8 ] On February 2, 2018 the plaintiff filed an amended notice of action and statement of claim adding Capt. Royal as a defendant personally and the Municipality.

The amended notice of action and statement of claim were served on the Municipality on February 7, 2018. [ 9 ] On February 12, 2018 the Municipality filed a notice of defence with cross-claim, statement of defence and statement of cross-

claim, pleading, inter alia , sections 512(1) and (3) of the Municipal Government Act (“MGA”) that provide: (1 )For the purpose of the Limitation of Actions Act, the limitation period for an action or proceeding against a municipality or village, the council, a council member, a village commissioner, an officer or employee of municipality or village or against any person acting under the authority of any of them, is twelve months. . . .

(3) No action shall be brought against any parties listed in subsection(1) or(2) unless notice is served on the intended defendant at least one month prior to the commencement of the action stating the cause of action, the name and address of the person intending to sue and the name and address of that person’s solicitor or agent, if any. [ 10 ] At the same time as it filed its defence, the Municipality filed a notice of third-party claim against the Estate of Dale Johnson alleging that, pursuant to a snow and ice control contract with the Municipality, the late Mr.

Johnson was liable to indemnify or contribute to the Municipality in the event that the Municipality was found liable to the plaintiff. [ 11 ] On June 14, 2018 defences were filed on behalf of the defendants Royal and the Attorney General of Canada to the amended statement of claim and the Municipality’s cross claim. [ 12 ] On October 31, 2018 counsel for the Municipality sent an email to counsel on record for all parties, advising that they were instructed to bring a motion for

summary judgement based on the limitation defences set out in their pleading and attached an unfiled notice of motion. [ 13 ] On September 16, 2018 counsel for the plaintiff wrote to counsel for the Municipality acknowledging the prerequisite of the notice of intended action before commencing action against the municipality and advising that they would be filing a notice of discontinuance and would subsequently serve a notice of intended action. [ 14 ] Counsel for the Municipality responded the same day advising that they would take instructions regarding the intended discontinuance, but their initial reaction would be to oppose any approach which attempted to avoid

summary judgement in this manner. Counsel for the Municipality offered to consider any authority which the plaintiff’s counsel relied upon to support the legitimacy of discontinuing an “invalid” action for that purpose. [ 15 ] On November 20, 2018 the plaintiff filed a notice of discontinuance of the action against the Municipality.

Although not set out in the affidavit evidence before the court, counsel agreed that a notice of intended action dated November 20, 2018 was served on the Municipality the same day. [ 16 ] On November 22, 2018 counsel for the Municipality wrote to all counsel on record stating that they expected to receive instructions to file a motion to set aside the notice of discontinuance and seek

summary judgement and would also file a notice of continuance to preserve the crossclaims and third-party claims. The notice of continuance was filed on November 27, 2018. [ 17 ] On December 19, 2018 the Municipality filed its motion to set aside the notice of discontinuance and obtain

summary judgment. [ 18 ] On January 21, 2019 a further amended notice of action was filed by the plaintiff adding the Municipality again as a defendant to the same proceeding and this notice was served on the Municipality on January 24, 2019. [ 19 ] I pause here to set out for easy reference the following relevant dates: Date of injury February 11, 2016 Notice of Action November 2, 2016 One-year limitation period under MGA February 11, 2017 Amended Notice of Action adding the Municipality February 2, 2018 Municipality filed Defence February 12, 2018 Notice of intention to file

summary judgment motion by the Municipality October 31, 2018 Notice of Discontinuance against the Municipality November 20, 2018 Notice of Intended Action served on the Municipality November 20, 2018

Summary Judgment Motion filed December 19, 2018 New Amended Notice of Action adding the Municipality January 21, 2019 The Civil Procedure Rules [ 20 ] Rule 9 governs the discontinuance of a proceeding: 9.01 A party who starts a proceeding may discontinue the proceeding, and a party advancing a claim or defence in a proceeding may withdraw the claim or defence, in accordance with this Rule.

9.02

(1) A party who starts an action may discontinue the proceeding before the day of the trial readiness conference and a party who starts an application, a proceeding for judicial review, or an appeal, may discontinue the proceeding before the day of the hearing.

(2) A party may discontinue a proceeding at any time with the permission of a judge.

(3) A party may discontinue a proceeding by filing a notice of discontinuance.

(4) The notice of discontinuance must contain the standard heading, be entitled “Notice of Discontinuance”, be dated and signed, and include a statement that the party discontinues the proceeding.

(5) A notice of discontinuance of an action, or an application, must also state that a counterclaim, crossclaim, or third party claim in a discontinued action, or a respondent's claim in a discontinued application, is also discontinued unless the party who made the claim files a notice continuing the proceeding for the purpose of the counterclaim, crossclaim, third party claim, or respondent's claim.

(6) The notice of discontinuance may be in Form 9.02. 9.03 A counterclaim, crossclaim, third party claim, or respondent's claim is discontinued ten days after the day the plaintiff delivers the notice of discontinuance to the party making the counterclaim, crossclaim, third party claim, or respondent's claim unless that party files a notice continuing the counterclaim, crossclaim, third party claim, or respondent's claim. 9.07

(1) Discontinuance of a proceeding or withdrawal of a cause of action does not give rise to a defence in subsequent proceedings for the same, or substantially the same, cause.

(2) A judge who allows a proceeding to be discontinued or a claim to be withdrawn may impose terms concerning a subsequent proceeding for the same cause against the same parties.

(3) A subsequent proceeding that amounts to an abuse of process may be controlled under Rule 88 - Abuse of Process. The Positions of the Parties The Municipality [ 21 ] The Municipality argues that “it is clear that a discontinuance is a procedural mechanism which should only be utilized where a party determines that it does not intend to proceed with a claim” (Brief, para. 30).

The argument proceeds that: • The notice of intended action requirement contained in Section 512(3) of the Municipal Government Act creates a substantive and complete defence for the municipality in the same manner as a limitation period; • Once the Plaintiff filed his notice of action without giving the required advance notice, the action against the Municipality was “void ab initio” or “invalid”; could not be remedied; and,

summary judgment must be ordered on that basis; • An order for

summary judgement would render any subsequent action void on the basis that it would be res judicata . • There is no discretion for the court hearing such a motion to consider the factors leading to the failure to give notice and no consideration of prejudice is permitted; • Having been notified of the Municipality’s intention to make a

summary judgment motion, it was an inappropriate use of a notice of discontinuance because the Plaintiff did not do so with the intent to abandon his claim, rather, with the intent to avoid the

summary judgment motion. This amounted to an abuse of the court’s process. Allowing the notice of discontinuance to stand as filed “would subvert the substantive right of the Municipality to

summary judgment on an uncontested ground”. • Although Rule 9 does not expressly provide the court with the power to set aside a discontinuance, the court has discretionary authority under Rule 2 and inherent power to control its own process.

The Plaintiff [ 22 ] The plaintiff accepts that the court has jurisdiction to set aside a notice of discontinuance in the proper circumstances pursuant to Rule 2 or alternatively under the inherent jurisdiction of the court. [ 23 ] The plaintiff submits that a review of Nova Scotia cases disclosed no case in which an action was allowed to proceed despite a failure to give the required notice of intended action. As a result the plaintiff decided to discontinue the “doomed” proceeding in order to start afresh and counsel for the Municipality was so notified.

The filing of a discontinuance in the circumstances was a permitted use of the Rules, not an abuse of the Rules.

The argument proceeds as follows: • Rule 9.01 contemplates that a party who starts a proceeding may discontinue the proceeding without having to seek permission of the court prior to the day of the trial readiness conference. • Rule 9.07(1) clearly states that the discontinuance of a proceeding does not give rise to a defence in any subsequent proceedings for the same, or substantially the same, cause. • The Rules clearly contemplate that it is permissible to discontinue a proceeding and later recommence a proceeding for the same cause of action. • Neither party could find authority for the argument that filing a discontinuance followed by giving a proper notice of intended

action and subsequently commencing a new proceeding for substantially the same cause of action as the first proceeding is an abuse ofprocess. • Under Rule 9.07(3), the only restriction on filing a notice of discontinuance is when the discontinuance is made after the trialreadiness conference (requiring leave); or, if the subsequent proceeding is determined by the court to be an abuse of process. • Simply discontinuing a proceeding in order to recommence a proceeding dealing with substantially the same cause of action is notinappropriate and on its own does not amount to an abuse of process.

There must be other facts and circumstances that transport the newcause of action into the realm of an abuse of process. • In determining whether there has been an abuse of process, courts look at whether the impugned conduct brings the administration of justice into disrepute. • Commencing a new action to remedy a procedural error in the discontinued action does not bring the administration of justice intodisrepute.

On the contrary, such disrepute could arise from the court preventing a litigant who was seriously injured in a motorvehicle/pedestrian collision from making a claim in negligence against a municipality because of a correctable procedural error. • If the discontinuance is allowed to stand, the plaintiff can have the case against the Municipality determined on its merits,including the Municipality’s right to raise the limitation of action defence as well as its other substantive defences and third-partyclaims on the facts and law. • The notice of discontinuance was not filed for an inappropriate purpose, but filed in recognition of the correctness of the Municipality’s position that the failure to give notice of intended action rendered the first proceeding a nullity.

That void was properlyfilled upon the provision of the required notice and the commencement of a new action against the Municipality. • The Municipality is wrong in its submission that if

summary dismissal was obtained on the basis that the plaintiff did not giveproper notice of intended action, any subsequent fresh action brought against the municipality would be res judicata. The Ontario Courtof Appeal decision in VK Mason Construction Ltd v Canadian General Insurance (ON CA), [1998] O.J. No. 5291,para. 19 states: the

summary judgement finally determines the issue or issues between the parties and gives rise to a plea of res judicata in subsequentproceedings on the same issue or issues. • The plaintiff submits that the key concept in that quote is that res judicata applies only to the same issue or issues decided ingranting the

summary judgement motion. • Res Judicata is a concept that consists of two separate forms of relief: issue estoppel; and, cause of action estoppel. The plaintiff refers to Donald Lange’s text: The Doctrine of Res Judicata in Canada (3rd. ed.) at page 1: “The doctrine of res judicata is a fundamental doctrine of this justice system in Canada. It has two distinct forms: issue estoppel andcause of action estoppel. … In their simplest

definitions, issue estoppel means that a litigant is estopped because the issue has clearly been decided in the previousproceeding, and cause of action estoppel means the litigant is estopped because the cause has passed into a matter adjudged in the previous proceeding.” • And at page 11: “In their most concise

definitions, the six essential estoppel doctrines are: issue estoppel bars an issue which has actually been decided in the first proceeding. … cause of action estoppel, the true res judicata, bars a cause which has actually been decided in the first proceeding.” • If the notice of discontinuance is disallowed, there is but one issue encompassed by the

summary judgement order, namely that theoriginal proceeding commenced against the Municipality was a nullity by virtue of the failure to give notice of intended action. Therewill have been no determination on any other issue between the plaintiff and the Municipality and in particular there will have been nodetermination of the merits of the entire cause of action of the plaintiff against the Municipality. • The Municipality appears to conflate res judicata that occurs by issue estoppel with res judicata by way of cause of actionestoppel.

By filing the notice of discontinuance, the plaintiff recognized that the original proceeding filed against the Municipalitywithout advance notice of intended action is a nullity but that does not prevent the plaintiff from giving a proper notice of intendedaction and issuing a new notice of action against the Municipality because the plaintiff’s cause of action has not been determined on the merits, nor has there been an adjudication upon any of the other issues in the proceeding.

Analysis and Decision [24] The purpose of requiring notices of intended action to be served on government agencies (as found in both federal andprovincial legislation governing proceedings against the Crown and under the MGA regarding claims against municipal entities) is to

recognize the vast extent of operations carried on by government and that no one person or department could be aware of all of the possible threats of pending litigation against the government. [ 25 ] As stated by Thomson Rogers on Municipal Liability (1996, Canada Law Book) at page 267: A number of reasons for notice requirements have been identified in various decisions: to provide an early opportunity to investigate by examining the scene, source and circumstances of the loss and to locate and interview witnesses; to consider whether to settle or contest the claim and if the former, to make prompt settlement of meritorious claims; to estimate future liabilities and make budgetary provision for them; and to repair any dangerous condition.

These matters are particularly apt with regard to claims involving disrepair of hide with highways or sidewalks, of which the municipality might have tens or hundreds of miles, and they are sufficiently important that satisfaction of a notice requirement generally is either expressly made by statute a condition precedent to a cause of action or is so interpreted, even when the action is commenced within the limitation period but the notice given does not meet the statutory requirement. [ 26 ] The notice period also provides government with additional time to investigate the circumstances behind intended litigation so as to allow government to be able to meet the time deadlines for filing a defence under the Civil Procedure Rules (which do not distinguish between large public entities, corporations or individuals with regard to the time in which a defence must be filed). [ 27 ] The Municipality filed no evidence of actual prejudice arising from the failure of the plaintiff to give the one-month notice of intended action required by section 512(3) of the MGA. [ 28 ] The case law cited by both parties is extremely contextualized and, depending on the circumstances being addressed by the court, the courts have used the phrases “cause of action” and “notice of action” and “proceeding” interchangeably. [ 29 ] As previously stated none of the authorities cited deal with the specific point of argument made by the Municipality on this motion. [ 30 ] For greater precision, I will use the following terms and meanings in my analysis: “Cause of action” is the ground on which an action can be maintained, e.g. breach of contract or negligence. “Claim” “includes a cause of action and the remedy sought” (Rule 94.10) “Proceeding” is “the entire process by which a claim is started in, and determined by, the court, such as an action, application, judicial review, or appeal” (Rule 94.10); “Action” is a specific type of proceeding (Rule 4). [ 31 ] Section 512(3) of the MGA states that “no action shall be brought…unless notice is served on the (municipal unit) at least one month prior to the commencement of the action stating the cause of action…” The word “action” is not defined.

I take the legislature’s use of the word “action” in this context to mean “proceeding” as defined in the Rule 94.10. [ 32 ] Section 512(3) does not state that no “cause of action” exists unless the one month notice of intention to file a proceeding is given; rather, the effect of the provision is that no proceeding shall be filed before notice of intention to do so is served one month before. [ 33 ] The Municipality relies upon the decision of the Alberta Court of Appeal in De Shazo v Nations Energy Co. 2006 ABCA 400 .

There, the court considered whether there are any limits on an Alberta plaintiff’s ability to file a discontinuance of action before the matter is set down for trial. The Albert Rules of Court do not contain a provision similar to our Rule 9.07(3) regarding abuse of process. The Alberta Court of Appeal held that notwithstanding the wording of the rule the court possessed an inherent jurisdiction to control its own process and that no rule should be read to countenance an abuse of process.

The court went on to find that the plaintiff’s use of a discontinuance was an abuse of process on the facts of that case because the plaintiff was facing an inevitable dismissal of the action on

summary judgment due to a prior decision in the same proceeding that determined that the limitation period had expired. In this context the court found: The Rules of Court are designed to enable the fair, economical and efficient adjudication of a civil claim. Where the rules are used in an obstructive, abusive or unfair manner, the court has the inherent jurisdiction to intervene , especially where the ability of the court to adjudicate on the merits is involved. (para. 13) (emphasis added) [ 34 ] This decision does no more than to address the same considerations set out in our Rule 9.

The question to be determined in each case is whether the factual circumstances in which the notice of discontinuance is filed amount to an abuse of the court’s process. [ 35 ] In the case before me, there has been no determination that the proceeding is barred by the passage of time before it was commenced. There is no attempt, by the plaintiff filing the notice of discontinuance, to prevent the court from adjudicating the claim on its merits (including the defence of limitation).

Indeed, it is the Municipality that is seeking to have the matter concluded without the court having the opportunity to adjudicate on the merits. [ 36 ] I note that the Municipality could have refused service on the basis that the requisite advance notice had not been provided (as was the approach taken by the Crown in Neary v Nova Scotia (Attorney General) [1994] NSJ No. 537 ); or, it could have alerted plaintiff counsel to this oversight so that it could be corrected. Instead, the Municipality filed a defence and gave notice of their intention to seek

summary judgment. [ 37 ] I reject the Municipality’s submission that once a municipal unit has been alerted to the failure of a plaintiff to give the notice

required by section 512(3) of the MGA before filing a proceeding, the municipal unit can, simply by giving notice of intention to obtain

summary judgment, effectively dismiss the otherwise valid cause of action of a plaintiff. [ 38 ] While there may be circumstances in which the filing of a notice of discontinuance is intended by the party filing the notice to end the claim then and forever, such as when the matter is settled prior to a defence being filed; it does not follow that a discontinuance should only be utilized where the party has that intent. [ 39 ] There are various circumstances where a plaintiff may choose to discontinue a proceeding when they do not intend to forever forego advancing a cause of action .

For example: the wrong municipal or corporate entity may have been named; the action may be required to be brought by naming a representative under Rule 36; the claim may have been filed prematurely because all of the required elements for the cause of action were not in existence at the time the notice was filed; or, as here, where counsel has mistakenly filed the notice of action before giving a required notice of intent to do so. While it is possible that the issue of concern may be resolved by amendment in some cases, in other cases counsel may consider that it is preferable to start afresh.

The Rules do not prevent that approach except if doing so would amount to an abuse of process. [ 40 ] Rule 9.07 specifically contemplates that a subsequent proceeding can be filed advancing the same cause of action . There is nothing in the Rules that prevents such a curative approach by a party filing a notice of discontinuance before the finish date except if the circumstances are such that a judge considers that they amount to an abuse of process. [ 41 ] I do not consider that the conduct of the plaintiff in the circumstances on the record before the court amount to an abuse of process.

Counsel mistakenly filed the notice of action without giving the Municipality the requisite one-month notice in advance. I do not consider that permitting a plaintiff to correct such a slip by their counsel would bring the administration of justice into disrepute in the eyes of the public. [ 42 ] The Municipality’s argument of abuse of process is predicated on its position that

summary judgment obtained based on the failure by the plaintiff to file a notice of intended action makes any new proceeding based on the same cause of action against them res judicata . [ 43 ] I reject this argument. [ 44 ] I agree with counsel for the plaintiff that this argument misinterprets and conflates the concept of issue estoppel and cause of action estoppel. I refer to the quoted passages from Lange’s test on the subject quoted above. [ 45 ] Cromwell, JA, as he then was, considered the issue of res judicata in Hoque v. Montreal Trust Co. of Canada , 1997 NSCA 153 .

At the outset of his analysis he made the following relevant observation: This appeal involves the interplay between two fundamental legal principles: first, that the courts should be reluctant to deprive a litigant of the opportunity to have his or her case adjudicated on the merits; and, second, that a party should not, to use the language of some of the older authorities, be twice vexed for the same cause (para. 19) [ 46 ] Justice Cromwell conducted a thorough analysis of the case law in Canada dealing with the issue of cause of action estoppel. He concluded the analysis with the following

summary: My review of these authorities shows that while there are some very broad statements that all matters which could have been raised are barred under the principle of cause of action estoppel, none of the cases actually demonstrates this broad principle. In each case, the issue was whether the party should have raised the point now asserted in the second action.

That turns on a number of considerations, including whether the new allegations are inconsistent with matters actually decided in the earlier case , whether it relates to the same or a distinct cause of action, whether there is an attempt to rely on new facts which could have been discovered with reasonable diligence in the earlier case, whether the second action is simply an attempt to impose a new legal conception on the same facts or whether the present action constitutes an abuse of process. (emphasis added) [ 47 ] In determining that the original proceeding was filed by the plaintiff before providing the requisite advance notice to the Municipality, a court would only be determining that the proceeding was deficient and should be set aside solely on that basis.

This was the result in the cases referred to by the plaintiff in his brief that led him to the decision to file a notice of discontinuance. See, for example, Johnson v City of Halifax and Dominix [1975] NSJ No. 386 . [ 48 ]

Summary judgment on this basis would not decide the merits of the plaintiff’s cause of action against the Municipality and would not prevent the plaintiff from filing a new proceeding against the Municipality as the court would not have considered and determined whether the plaintiff made out the requisite elements to prove his cause of action (in negligence) against the Municipality. [ 49 ] For these reasons I dismiss the motion of the Municipality to set aside the notice of discontinuance and dismiss the motion for

summary judgment. The notice of intended action and subsequent proceeding that were respectively served on the Municipality on November 20, 2018 and January 21, 2019, are valid. As indicated by counsel in their agreement made known to the court at the outset of the argument before me, the Municipality remains entitled to bring a separate motion to determine if the proceeding was brought within the limitation period. [ 50 ] I have heard the parties’ respective submissions on costs. The Municipality shall pay costs to the plaintiff forthwith in the amount of $1,500 plus disbursements. Norton J.