Gayle Legault - v. -, 2012 SKPC 23

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2012 SKPC 023 Date: January 31, 2012 File: SC 5-11 Location: Swift Current , Saskatchewan _____________________________________________________________________________ Between: Gayle Legault - and - Karson Legault -and- Gayle Legault -and Debra Legault In Person For the Plaintiff In Person For the Defendants _____________________________________________________________________________

DECISION FOLLOWING CASE MANAGEMENT CONFERENCES D.J. KOVATCH , J _____________________________________________________________________________ Background [ 1 ] The Plaintiff, Gayle Legault, issued a claim against his son Karson Legault. This first claim was set for Case Management Conference (CMC) to be held in Swift Current on June 17, 2011. Both parties appeared at that time. Later in this judgment I will more fully deal with matters that occurred on June 17.

The CMC was eventually adjourned by myself and Gayle Legault was given leave to amend his claim to name Debra Legault as a Defendant and have a small claims summons issued to Debra Legault. On the 9 th of September, we resumed the CMC with respect to the claim against Karson Legault and conducted the CMC with respect to the claim against Debra Legault. No settlements were reached. I now must determine if these claims should be set for trial. The Jurisdiction of the Provincial Court [ 2 ]

Section 7.1 of The Small Claims Act, 1997, R.S.S.

Chapter S-50.11 deals with the conduct of the Case Management Conference.

Section 7.1 (6)(7) and (8) read as follows:

(6) A judge in a case management conference may attempt to settle any issues in dispute.

(7) If settlement attempts pursuant to subsection (6) have not resolved the dispute, a judge in a case management conference may do any of the following: (

a) decide any issues that do not require evidence; (

b) make any other appropriate order according to terms agreed to by the parties; (

c) set a trial date and location, if a trial is necessary; (

d) discuss any evidence that will be required and the procedure that will be followed if a trial is necessary; (

e) order the defendant to prepare a statement of defence; (

f) order a party to: (

i) give another party copies of documents by a set date; or (ii) allow another party to inspect and copy documents by a set date; (

g) order a party to permit a person chosen by another party to examine any item or property; (

h) adjourn the case management conference from time to time; (

i) make any order for the just, timely and inexpensive resolution of the action.

(8) If a party does not comply with an order mentioned in subsection (7), a judge may at any time do one or more of the following: (

a) adjourn a case management conference and order that party to pay all reasonable expenses incurred by any other parties as a result of the adjournment, other than lawyer-related costs; (

b) order a trial to proceed without permitting that party to produce as evidence any information, document or records withheld as a result of the non-compliance; (

c) dismiss the claim, counterclaim, reply or third party notice, as the case may be. (emphasis added)

[ 3 ] Under these subsections, the case management judge may decide any issues that do not require evidence, set a trial date if a trial is necessary, or make orders for the timely and inexpensive resolution of the action, including dismissal of the action in an appropriate case. His Honour Judge Loewen dealt with similar issues in the case of Fox v. Government of Saskatchewan and Muskoday First Nation , 2011 SKPC 143 .

He pointed out that the Queen’s Bench Registrar issues all claims presented to the Court and that the Queen’s Bench Rules have a procedure whereby a judge can review whether there is a cause of action or the claim is frivolous or an abuse of process. Judge Loewen concluded that in Provincial Court, the Provincial Court Judge issues the claims and must act as “gate keeper”. [ 4 ] In the Provincial Court ,we have no process for interim applications that a claim has no cause of action or is an abuse of process. In some locations, at issuance of the claim, the matter is set for a Case Management Conference.

In other locations, upon a simple denial of the claim by the Defendant, the matter is set for a Case Management Conference. This causes me to conclude that very occasionally the judge conducting the Case Management Conference will be required to “act as the gate keeper” and conclude there is no cause of action that can be set for trial. [ 5 ] I draw further support for this conclusion from

section 7.1(7) of The Small Claims Act . Subsections (c), (

d) and (

e) allow the Case Management Conference Judge to set a trial, if necessary, and make an Order “for the just, timely and inexpensive resolution of the action”. Under

section 7.1(10) if the matter is to proceed to trial, the judge conducting the Case Management Conference shall prepare a report. It seems to me that in order to comply with these requirements, the case management judge must make some determination that there is an arguable case or issue to proceed to trial before the Provincial Court Judge. If there is no arguable case or issue for trial, then the trial is not necessary and should not be set. The judge is not then in a position to prepare a report.

In this situation, the judge should be dismissing the claim as that is the just, timely and inexpensive resolution of the action. [ 6 ] Against this legal backdrop, I will analyse the claim against each of the Defendants. The Claim Against Karson Legault [ 7 ] The Plaintiff in both claims, Gayle Legault, and the Defendant in the second or amended claim, Debra Legault, are formerly husband and wife, respectively. The Defendant in the first or initial claim, Karson Legault, is their son.

An interspousal contract filed by the parties indicates that Debra Legault and Gayle Legault separated in 1999, and in 2009 executed an interspousal contract, in which they agreed to divide all of their property. It would appear that Swift Current solicitor, Douglas Heinricks, acted as a mediator to assist the parties in reaching an agreement on the terms of the interspousal contract, and also drafted the formal interspousal contract.

Schedule C of that interspousal contract reads in part as follows: The Husband and Wife shall each receive one-half of the funds received by Legault Cattle Company Limited from CAIS, and the Wife agrees that as a director of Legault Cattle Company Limited she will ensure that the Husband receives his one-half share within 20 days of its receipt or January 2, 2010, whichever is the latter. [ 8 ] I could see nothing in the interspousal contract itself which set out the amount of funds to be paid by CAIS to the cattle company.

However, the Plaintiff, Gayle Legault, does have another document entitled “Buy-out calculation”. He indicated he received this document from the mediator, Douglas Heinricks. This document contains the following notation: “Possible receivable - CAIS $95,000.00”. [ 9 ] It is important to note that the Plaintiff’s initial statement of claim names only the Defendant, Karson Legault, and made no mention of Debra Legault. The initial claim alleged that the account receivable, paid and received from CAIS, was $96,830.31, and that the Plaintiff’s one-half share was $48,415.16.

The Plaintiff alleged that he received only $31,919.70, and he claimed against the Defendant, Karson Legault, the balance of $16,495.46. In his dispute note, the Defendant Karson Legault, said only: “Gayle Legault has no claim on Karson Legault’s personal CAIS money”. [ 10 ] In preparation for the first CMC on June 17, 2011, the Defendant filed two cheque stubs from CAIS, both dated 03/06/10. One cheque stub indicated a payment in the amount of $63,839.39 to the Legault Cattle Company Ltd., and the other indicated a payment to Karson Legault of $32,990.92.

[ 11 ] Based upon the above, I assumed, going into the Case Management Conference, that the Plaintiff was alleging that the entire sum paid by CAIS was properly owed to and should have been paid to Legault Cattle Company Ltd. Further, that the entire sum of $96,830.31, should then have been caught by the terms of the interspousal contract and equally divided. I believed that he was alleging that Debra Legault and Karson Legault used a fictional debt and assignment, or some other arrangement, to divert the funds to Karson Legault.

As a result, Karson Legault would be improperly in receipt of these funds and liable in this action. Clearly, if this were the nature of the claim, the Plaintiff would have an arguable cause of action against the Defendant, Karson Legault. [ 12 ] At the CMC, I briefly set forth the above theory of the case and asked Karson Legault if he could produce documents to prove that he personally made application for a CAIS payment and was personally entitled to receive that payment. He agreed to gather those documents together for a later date.

The Plaintiff, Gayle Legault, then said he had no dispute that Karson Legault personally made application for the CAIS funds or was personally entitled to receive them. He said his argument was that Debra Legault indicated the account receivable was approximately $95,000.00, and Karson Legault did nothing to dispute this. (Gayle Legault has a letter from Douglas Heinricks that appears to confirm this.) Gayle Legault said that based upon this information he believed he was receiving $16,000.00 more from Debra Legault than he actually received.

Further, that had he been advised and been aware of the true situation, that he would receive $16,000.00 less, he would never have executed the interspousal contract or settled on the basis of the interspousal contract. It is important to note that at no time did Gayle Legault allege or state that the Defendant Karson Legault knowingly misrepresented anything.

The only allegation is that Karson Legault did not speak up to correct Debra Legault’s estimate as to the amount of the CAIS receivable during the course of mediation sessions between his parents regarding the division of their matrimonial property. [ 13 ] In my view, and I so determine in this action, this leaves the Plaintiff, Gayle Legault, without any cause of action against the Defendant, Karson Legault. The Defendant, Karson Legault, was not and has never been a party to the family property action between his parents in the Court of Queen’s Bench.

Just as importantly, the family property action is an action between two spouses. Clearly, during the course of such proceedings, the two parties or spouses are obligated to fully disclose the nature and extent of all family property, and the nature of any indebtedness attached to such property. However, in my view there is no obligation upon a child to engage in any participation in their parent’s property dispute, or to make any disclosure to either party or the Court during the course of that matrimonial property dispute.

In my view, the Defendant Karson Legault cannot be subjected to any civil action for failure to make a disclosure that he was under no obligation to make. For this reason, there is no cause of action against Karson Legault. [ 14 ] Near the conclusion of matters on June 17, I advised Gayle Legault and Karson Legault that in my view the existing claim against Karson Legault could not be maintained on the basis set out above. I also suggested that the Plaintiff might have an action against Debra Legault based upon a misrepresentation in the negotiation of the interspousal contract, or a significant non-disclosure.

I suggested that we adjourn the CMC, and that Gayle Legault amend his claim to name Debra Legault as a Defendant, and to set forth a proper cause of action against Debra Legault. I also strongly suggested to the Plaintiff that he seek some legal advice prior to amending that claim. He strongly resisted this, but eventually did obtain some advice and assistance drafting a new claim naming Debra Legault as Defendant. All three parties then came before me for a CMC on September 9, 2011.

The Claim Against Debra Legault [ 15 ] The claim against Debra Legault alleges that the Plaintiff and Debra Legault entered into an interspousal contract and that pursuant to

Schedule C of the contract, the Plaintiff and Defendant, Debra Legault, were each to receive one-half of the funds received by the Legault Cattle Company Ltd. from CAIS. The claim further states: 4. The Defendant, along with the parties’ son Karson Legault, represented to the Plaintiff that the Company’s accounts receivable were equal to $96,830.31 and that the Plaintiff was entitled to receive half of that sum in an amount equal to $48,415.16. 5. The Plaintiff only received $31,919.70.

The Defendant owes the Plaintiff the remaining balance of $16,495.46. [ 16 ] As mentioned above, all of the parties came before me on September 9. At that time, Debra Legault stated that during the mediation she was unaware as to the amount of the CAIS receivable. Further, that she provided the mediator with a written authorization, enabling the mediator to obtain this information from the company’s accountants. Further, the mediator had acquired inaccurate information, and she had not knowingly misrepresented anything.

These statements by Debra Legault cannot, in and of themselves, dispose of the action brought by Gayle Legault. The statements quoted above from Gayle Legault’s statement of claim properly assert a cause of action, and the Plaintiff would normally be entitled to attempt to prove that action before a judge of this Court. Other statements made during the CMC, which were not in anyway contested by Gayle Legault, are much more problematic in respect to whether this matter should be set for trial.

[ 17 ] During the CMC, Debra Legault advised that this action was part of the long ongoing family property dispute, that was still before the Court of Queen’s Bench. She advised that the division of family property, pursuant to the terms of the interspousal contract, had not yet been concluded, and in fact there had been and were remaining several applications before the Court of Queen’s Bench with respect to the family property. I did later ascertain from the Clerk of the Court that the Queen’s Bench file was still ongoing. [ 18 ] None of this was disputed by Gayle Legault.

He repeatedly stated that had he known he would receive $16,000.00 less than anticipated from CAIS, he would never have executed the interspousal contract and never have settled the family property action. [ 19 ] I deal firstly with Mr. Legault’s statement that had he known the true state of affairs, he would not have executed the interspousal contract. What are the damages that Mr. Legault claims and hopes to receive in this action in the Provincial Court? The Plaintiff, Gayle Legault, is entitled to have us assume there is a material misrepresentation made by Debra Legault, and that he can prove this fact.

What damages does he sustain by reason of that misrepresentation? If the misrepresentation results in Mr. Legault receiving less than one-half of the family property, then he should be entitled to reopen the family property action, because he was deprived of a portion of his share of the family property. Alternatively, however, if the misrepresentation overstated the overall value of the family estate, and Mr. Legault received 50% or more of the overall family property, then he has received all family property to which he is entitled, and has really suffered no damages by reason of the misrepresentation.

Viewed in this light, and considering Mr. Legault’s repeated statement that he would never have executed the interspousal contract or settled, it is clear that Mr. Legault not only seeks, but must reopen the entire division of family property in this action to assert and establish his damages. [ 20 ] As mentioned above, the family property action in the Court of Queen’s Bench is still alive, and applications are being made within that action.

Because I have determined that this action is in reality an attempt to review and amend the interspousal contract and the division of matrimonial property made in the Court of Queen’s Bench, the Provincial Court should not, and indeed cannot deal with this application for the division of family property.

Common sense and the most rudimentary knowledge of the respective jurisdictions of the Provincial Court and the Saskatchewan Court of Queen’s Bench dictate that this Court cannot become enmeshed in a matter that is already before the Queen’s Bench, or take any steps that would be seen as amending or setting aside a division of property made by the Queen’s Bench.

Furthermore, section 44(2) of The Family Property Act reads as follows: Where an application is made to a court pursuant to this Act , no person who is party to the proceeding shall make an application pursuant to this Act to any other court. [ 21 ] The Plaintiff, Gayle Legault, is a party to a family property proceeding before the Court of Queen’s Bench, and this

section therefore expressly prohibits him from bringing this action in the Provincial Court. [ 22 ] I note further that The Family Property Act contains provisions dealing with the amendment or setting aside of an interspousal contract or for orders specifically implementing terms of an interspousal contract. [ 23 ] On the basis of all of these legislative provisions and my characterization of Gayle Legault’s action as being an application to divide family property, I am of the view that this Court does not have jurisdiction to entertain or decide upon the Plaintiff’s action against Debra Legault.

Section 7.1 of The Small Claims Act, 1997 [ 24 ] Several subsections of

section 7.1 of The Small Claims Act are quoted above. In my determination, these sections imply that I can only set this matter for trial and prepare a case management report if there is an issue to be tried and the matter is within the jurisdiction of the Provincial Court. I have already determined that there is no cause of action against Karson Legault, and accordingly no issue to be tried. With respect to Debra Legault, there is an issue to be determined.

However, I have determined that the application with respect to Debra Legault must be made to the Saskatchewan Court of Queen’s Bench and cannot be made to this Court. Accordingly, there is no issue with respect to Debra Legault that can be tried in this Court. Conclusion

[ 25 ] For all of the above mentioned reasons, there is no issue that Gayle Legault has raised that is capable of being tried by this Court. I decline to set the matter for trial, and his actions are hereby dismissed. This decision is without prejudice to either party. The Plaintiff may bring an appropriate application in the Court of Queen’s Bench. Dated at Moose Jaw, Saskatchewan, this ______ day of January, 2012. _____________________________________________ D.J. Kovatch, J