Jelonek v Monterrosa-Renaud, 2022 ABKB 738

Court of King’s Bench of Alberta Citation: Jelonek v Monterrosa-Renaud, 2022 ABKB 738 Date: 20221107 Docket: 2001 11995 Registry: Calgary Between: Piotr Jelonek Appellant (Defendant) - and - Bella Alexandra Josephine Monterrosa-Renaud Respondent (Plaintiff) _______________________________________________________ Reasons for Decision of the Honourable Justice Colin C.J. Feasby _______________________________________________________ Introduction [ 1 ] The Rules of Court require both filing and service to commence an action.

Despite this clear requirement, the practice of plaintiffs’ counsel in Alberta is sometimes to file a Statement of Claim and then not serve the claim. Instead, plaintiffs’ counsel may provide the Statement of Claim to a defendant, defendant’s counsel, or a defendant’s insurer on an informal basis. Plaintiffs’ counsel’s expectation in such circumstances is that settlement discussions will ensue. Sometimes settlement discussions do not occur or fall apart. When more than a year has passed since filing, the Statement of Claim has not been served, and there is no explicit standstill agreement

between the parties, the defendant may seek to have the claim dismissed on the grounds that the Statement of Claim has expired.

The facts of the present appeal are consistent with this archetype with the added wrinkle that after receipt of a courtesy copy of the Statement of Claim and in anticipation of service of the Statement of Claim on the Defendant, the Defendant’s insurer asked to be relieved from the requirement to file a Statement of Defence and Plaintiff’s counsel acceded to the request. [ 2 ] After the expiry of the one-year period from filing of the Statement of Claim, the Defendant took the position that the Statement of Claim expired because it was not served within the one-year time limit provided for by Rule 3.26.

The Plaintiff applied pursuant to Rule 3.27 for an extension of the time to serve the Statement of Claim. Applications Judge Farrington granted a two-month extension of the time to serve the Statement of Claim on the grounds that the course of dealing between the parties gave rise to a reasonable belief that the time limits in the Rules of Court would not be strictly relied upon.

In the alternative, he found that there were special or extraordinary circumstances that justified extending the time for service. [ 3 ] This appeal raises the question of when it is appropriate to grant an extension of time to serve a Statement of Claim pursuant to Rule 3.27. I conclude that Applications Judge Farrington made the correct decision in granting an extension of the time to serve the Statement of Claim.

Where, as here, a party seeks and obtains an indulgence with respect to compliance with a time limit under the Rules of Court from an adversary, it is inequitable for that party to strictly enforce other time limits in the Rules of Court against the adversary without first giving notice of an intention to do so and an opportunity to take the required step. For the purposes of Rule 3.27, an agreement to suspend a time limit for one party gives rise to a reasonable belief that the time limit for service will not be strictly enforced against the other party in the absence of a clear indication to the contrary.

Background Facts [ 4 ] The Plaintiff was in two motor vehicle collisions. The first accident occurred on November 8, 2018 (“First Accident”). The second accident, which was the one that involved Mr. Jelonek, occurred on February 10, 2019 (“Second Accident”). [ 5 ] The Plaintiff’s original lawyer was Shawn Johanson. [ 6 ] The Statement of Claim was filed on September 16, 2020. [ 7 ] On February 1, 2021, Mr. Johanson engaged in an email exchange with an adjuster for Mr. Jelonek’s insurer, SGI Canada Insurance Services Ltd. (“SGI”). In the exchange, the following took place: (

a) Mr. Johanson provided the adjuster, Phillip McDougall, a copy of the filed Statement of Claim; (

b) Mr. McDougall, requested that Mr. Johanson refrain from requiring a Statement of Defence; (

c) Mr. Johanson agreed not to require a Statement of Defence; and (

d) Mr. Johanson twice asked for information to enable him to serve Mr. Jelonek with no response from Mr. McDougall. [ 8 ] Mr. Johanson took an in-house legal position in the Spring of 2021 and was required to wind-up his private legal practice. Michelle Andresen agreed to represent Ms. Monterrosa-Renaud. Ms. Andresen met with Mr. Johanson to transfer the file. Mr. Johanson provided Ms. Andersen with a hard copy of the file on April 15, 2021. No electronic copy of the file was provided and the hard copy file provided was incomplete. [ 9 ] A notice of change of counsel was filed on May 21, 2021. [ 10 ] Ms.

Andresen served a draft Affidavit of Records on all parties on December 9, 2021. This was followed by a settlement offer delivered to all parties on March 15, 2022. The settlement offer led to a settlement between Ms. Monterrosa-Renaud and the Defendants involved in the First Accident. [ 11 ] The settlement between Ms. Monterrosa-Renaud and the Defendants involved in the First Accident was effected by way of a Pierringer Agreement. Pierringer Agreements require the approval of the Court.

The Pierringer Agreement was approved by way of a consent order signed by all parties and granted by Justice Yamauchi dated May 1, 2022 (“Yamauchi Consent Order”). Mr. McDougall signed the order on April 21, 2022, in his capacity with SGI and as agent for the Defendant, Mr. Jelonek. [ 12 ] The Yamauchi Consent Order provides, among other things, that “[t]he Plaintiff shall file and serve an Amended Statement of Claim on the Non-Settling Defendants within 14 days of this Order being filed with the Court.” Mr.

McDougall did not object to this provision nor did he purport to reserve any rights in respect of the sufficiency of service. [ 13 ] On April 28, 2022, one week after signing the Yamauchi Consent Order and three days before the order was granted, Mr. McDougall wrote to Ms. Andresen to inquire whether Mr. Jelonek had been served within a year of filing the Statement of Claim. [ 14 ] After determining that the Defendant had not been served within a year of filing the Statement of Claim, SGI took the position that the Statement of Claim had expired.

Given the passage of time and the two-year time limit under the Limitations Act , RSA 2000, c L-12 s 3(1) for commencing claims, if sustained, SGI’s position would have the effect of extinguishing the Plaintiff’s rights to advance a claim against the Defendant. Rule 3.27 [ 15 ] Counsel for Ms. Monterrosa-Renaud brought an application pursuant to Rule 3.27 for an extension of time to serve the

Statement of Claim. Rule 3.27 provides as follows: 3.27(1) The Court may, at any time, grant an extension of time for service of a statement of claim in any of the following circumstances: (

a) if a defendant, anyone purporting to be a defendant, or a lawyer or other person purporting to negotiate on behalf of a defendant, has caused the plaintiff or the plaintiff’s lawyer to reasonably believe and to rely on the belief that (

i) the defendant has been served, (ii) liability is not or will not be contested, or (iii) a time limit or any time period relating to the action will not be relied on or will be waived; (

b) if an order for substitutional service, an order dispensing with service or an order validating service is set aside; (

c) special or extraordinary circumstances exist resulting solely from the defendant’s conduct or from the conduct of a person who is not a party to the action.

(2) If an extension of time is granted under subrule (1), no further extension of time may be granted under this rule and rule 13.5 does not apply unless different or new circumstances described in subrule (1) are established to the Court’s satisfaction. Decision of Applications Judge Farrington and Grounds of Appeal [ 16 ] This matter came before Applications Judge Farrington in morning chambers. After reviewing the facts, he concluded as follows: I think two potential sections [of Rule 3.27] apply. That is the time limit

section and the enforcement of a strict time limit and the special or extraordinary circumstances section. I think when you look at it here, there were settlement discussions both before and even after the expiry of the time for service of the statement of claim. And I think that is important to recognize that no one appears to have been dealing with this matter on a basis that required strict compliance with the rules.

So I think in all of the circumstances, I do agree that no prejudice has been shown by the defendants in terms of any hardship or prejudice such as a lack of an ability to investigate or anything of that sort. In fact, the defendants' adjuster was very able to negotiate and try and resolve the claim based upon the material available, so there really is not any prejudice. I think the plaintiff has brought their case within the rule.

And this one is very close to the line, but I think it is one where, on the balance of probability basis, the plaintiff has met the burden of proof, and I do grant the extension of time for service. [ 17 ] Applications Judge Farrington granted a two-month extension for service. [ 18 ] The Defendant submitted in its brief that Applications Judge Farrington erred in concluding: (

a) Mr. McDougall caused Mr. Johanson and/or Ms. Andresen to reasonably believe and to rely on the belief that a time limit or any time period relating to the Action will not be relied upon or waived. Specifically, that the defence time period would not be enforced such that service of the Statement of Claim was not required; and (

b) Mr. Johanson was a person not a party to the Action, and further, that his sole conduct resulted in special or extraordinary circumstances such that extension of service of the Statement of Claim should be extended.

Analysis Standard of Review [ 19 ] Rule 6.14 provides “[a]n appeal from a master’s judgment or order is an appeal on the record of proceedings before the master and may also be based on additional evidence that is, in the opinion of the judge hearing the appeal, relevant and material.” The present appeal is on the record before the Applications Judge; no additional evidence was provided. [ 20 ] The standard of review applicable to an appeal of an Applications Judge’s decision on the record is correctness: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 at paras 3 and 30 .

Justice Price explained in Western Energy v Savanna Energy , 2022 ABQB 259 at para 22 that “on an appeal from a Master where no new evidence has been adduced, a justice is not hearing the matter anew, but is considering whether the Master’s decision was correct based on the record that was before him.” Rule 3.27(1)(a)(iii) – Time Limit Will Not Be Relied On [ 21 ] The facts of the present case are similar to the facts in Cyre-Wills v Couture , 1992 ABCA 1 .

In that case, Major JA, as he then was, began by characterizing the problem before the Court as “a matter of long-standing procedure and practice within the Province of Alberta” (para 1). The Statement of Claim had not been served, but the defendant’s insurers and the plaintiff were in contact, medical reports had been provided to the insurer, and settlement discussions were initiated. The insurer wrote to the plaintiff’s counsel prior to

the expiry of the Statement of Claim “request[ing] that the plaintiff take no further steps with respect to the matter without giving thedefendant ample notice” (paras 3-4). [22] Justice Major held that “[r]eceipt of such a letter, when accepted by the other party, results in a standstill agreement onprocedural matters while discussions on settlement usually begin or continue as was the case in this instance” (para 5). JusticeHetherington concurring in the result considered the communication to give rise to a waiver rather than an agreement.

She wrote at para10 “[w]hen the insurers wrote to the appellant's lawyers asking that they take no further steps without ample notice to the insurers, theywaived their right to rely on the failure of the appellant’s lawyers to serve the renewed statement of claim during its currency.” Major JAconcluded at para 7 “[i]t is my opinion that, in light of the practice in this province, the effect of the insurers’ letter requesting that nosteps be taken is such that the defendant cannot now avail itself of remedies that may have been available in its absence.” [23] The concept articulated by Major and Hetherington JJA is sound but, in my view, it is neither an agreement nor a waiver.

Therequesting and granting of an indulgence which, in turn, by custom gives rise to an obligation not to enforce other time limits is hard tocharacterize as an offer and acceptance giving rise to a contract: see the comments of Lord Diplock in Gibson v Manchester CityCouncil, [1979] 1 All ER 972 (HL) at 974. [24] A waiver of a legal right requires “an unequivocal and conscious intention to abandon” rights: Saskatchewan RiverBungalows Ltd. v Maritime Life Assurance Co., (SCC), [1994] 2 S.C.R. 490 at 500. There is no proof of actualknowledge of legal rights in the present case on the part of Mr.

McDougall sufficient to permit me to conclude that he had anunequivocal and conscious intention to abandon legal rights on behalf of SGI and the Defendant. [25] I respectfully suggest that the correct characterization of the concept is promissory estoppel.[1] There is a distinction betweenestoppels based on representations of facts or law by words or conduct (estoppel by representation) and representations as to futureactions (promissory estoppel). The Supreme Court of Canada explained in Maracle v.

Travellers Indemnity Co. of Canada, (SCC), [1991] 2 SCR 50 at 57 that promissory estoppel demands: “[t]he party relying on the doctrine must establish that theother party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be actedon.

Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed hisposition.” [26] Moldaver and Brown JJ held in Trial Lawyers Association of British Columbia at para 24 that for a promissory estoppel toarise, the party making the promise must have knowledge of the facts giving rise to the legal rights that the promise affects.

Where thereis knowledge of the underlying facts, knowledge of the legal significance of those facts may be imputed to the promisor (para 26) and, inturn, an intention to alter legal rights may be imputed to the promisor (para 29). [27] The salient fact that Mr. McDougall must be shown to have known is that at the time of requesting the indulgence in respectof filing the Statement of Defence is that the Defendant had not been served. The fact that the Defendant had not been served at the timethat Mr.

McDougall requested the indulgence in respect of filing a Statement of Defence is evident from the correspondence between Mr.McDougall and Mr. Johanson. In the same email chain where the indulgence in respect of filing the Statement of Defence wasrequested, Mr. Johanson twice asked for the Defendant’s contact information so that service of the Statement of Claim could beeffected. Though Mr.

McDougall may have expected or assumed that service would be effected prior to the expiry of the time limit,there can be no question that at the time of making the request for the indulgence he knew that service had not been effected. [28] The promise in the present case was the request by Mr. McDougall on behalf of SGI and the Defendant that a Statement ofDefence not be required. Mr. McDougall did not say anything about not requiring service of the Statement of Claim, but words andactions take meaning from the context in which they are used or occur.

The reasons of Major and Hetherington JJA in Cyre-Willis vCouture show that there is a collective understanding or convention among lawyers and insurers in Alberta that when an indulgence withrespect to provision of a Statement of Defence is requested there is an implicit reciprocal commitment not to strictly enforce the Rules ofCourt requirement for service of the Statement of Claim. Given that Mr.

McDougall is an insurance adjuster, he may be presumed to befamiliar with litigation practice and it is fair and reasonable to impute to him knowledge of both the legal rights SGI and the Defendantwould have in the absence of proper service of the Statement of Claim and the practical and legal effect of making a request for anindulgence in respect of filing a Statement of Defence. Counsel for the Plaintiff reasonably relied on Mr. McDougall’s promise such thatit is inequitable to permit SGI and the Defendant to resile from the representation made on their behalf by Mr.

McDougall. [29] Applications Judges have reached similar conclusions in similar cases without delving into the details of the law of waiverand estoppel; instead, they simply note the inequity in allowing a party to obtain a relaxation of the Rules of Court time requirementsfrom another party and then turning around and attempting to strictly enforce other Rules of Court time requirements against the partywho granted the indulgence.

For example, in Reyes v Dyck, 2019 ABQB 667 at para 20 Master Shulz observed “[i]f the Insurer wants totake advantage of the professional courtesies offered by Counsel, then the Insurer must be equally circumspect in its behaviour. It is notappropriate to allow the Insurer to insist on all the formalities while also asking that the formalities not be enforced against it.” See also,Brousseau v Janz, 2014 ABQB 136 at para 27. [30] Rule 3.27(1)(a)(iii) can be viewed as a sort of codification and modification of promissory estoppel in the limited context ofextensions for the filing of a Statement of Claim.

Rule 3.27(1)(a)(iii) requires reasonable belief and reliance on the part of the plaintiff. The present case was dealt with by Applications Judge Farrington as a matter of the Rules of Court and not as a matter of estoppel.

While the question of estoppel was raised in oral argument of this appeal and counsel were given the opportunity to providesupplemental authorities on the point, the bulk of the argument concerned the Rules of Court. [31] Applications Judge Farrington concluded in his oral reasons that the Rule 3.27(1)(a)(iii) provision that a party’s reasonablebelief that “a time limit or any time period relating to the action will not be relied on or will be waived” does not have to be a beliefspecifically in respect of the time period for service.

He went on to conclude that the course of dealing between the parties gave rise to areasonable belief on the part of Ms. Monterrosa-Renaud or her counsel that time limits under the Rules of Court would not be strictlyenforced.

[ 32 ] I agree that the interactions between the parties in the present case gave rise to a reasonable belief that the time limits under the Rules of Court would not be strictly enforced and that absent this belief steps would have been taken by the Plaintiff’s counsel to perfect service. The reasonable belief is rooted in the common understanding or convention noted earlier in these reasons that exists among lawyers and insurers in Alberta.

An agreement between an adjuster and counsel that a Statement of Defence will not be required without notice gives rise to a reasonable belief that other time limits, including the time for service of a Statement of Claim, will not be strictly enforced until one party or the other advises that the rules of the game will revert to being strictly applied.

Indeed, as explained by Major and Hetherington JJA in Cyre-Wills v Couture and by Master Shulz in Reyes v Dyck , it is inequitable to permit an insurer to obtain an indulgence with respect to a time limit from counsel to a plaintiff and, at the same time, hold the plaintiff to the strict time limits provided by the Rules of Court . [ 33 ] Reliance on the reasonable belief that service of the Statement of Claim would not be required without notice may be inferred from Mr. Johanson’s failure to follow up on his initial inquiries of SGI as to contact information for the Defendant and his failure to brief Ms.

Andresen on the requirement for service. If Mr. Johanson had not had a reasonable belief that service of the Statement of Claim would not be required without prior notice, I conclude that he would have advised Ms. Andresen of this fact when the file was transferred and that she would have taken steps to serve the Statement of Claim. This conclusion is consistent with the positive steps that Ms.

Andresen took to move the case forward once she was engaged as counsel. [ 34 ] My conclusion is reinforced by SGI’s concession that the Defendant has not suffered any prejudice and by the fact that SGI raised the issue of lack of service more than eight months after the expiry of the one-year period and after engaging with the Plaintiff on various issues including potential settlement. SGI also executed the Yamauchi Consent Order which provided for service of an Amended Statement of Claim on the Defendant.

The execution of the Yamauchi Consent Order may also operate as an admission that service was in order or as an estoppel to that effect. Rule 3.27(c) – “Special or Extraordinary Circumstances” [ 35 ] Rule 3.27(

c) requires that there be “special or extraordinary circumstances exist resulting solely from the defendant’s conduct or from the conduct of a person who is not a party to the action.” The Plaintiff does not assert that special or extraordinary circumstances arose from the Defendant’s conduct. Instead, it is claimed that the special or extraordinary circumstances arose from the conduct of Plaintiff’s former counsel who is not a party to the action.

The Plaintiff claims that the change of counsel combined with poor communications surrounding the change of counsel attributed to health issues of former counsel amount to special or extraordinary circumstances. [ 36 ] Applications Judge Farrington concluded on the question of special or extraordinary circumstances as follows: The unusual fact on this one is that we had the transition of counsel. We had second counsel picking it up at the negotiations stage.

And hindsight, of course, is always 20/20, and one of the things that one may check is whether the statement of claim has been served or not, but it is hard to put too fine of an analysis on these things. I think we certainly have conduct from a person who is not a party to the action, and that is the first counsel on the file. There does not seem to be any question that the lack of service was not brought to new counsel’s attention. So potentially there is some latitude there in terms of bringing oneself within the rule. [ 37 ] Changes of counsel happen frequently in litigation.

A change of counsel without something more is not a special or extraordinary circumstance for the purpose of Rule 3.27(c). The question in the present case is whether a change of counsel where outgoing counsel provides an inadequate briefing and incomplete file for new counsel is a special or extraordinary circumstance. Again, though not good practice, inadequate briefings and incomplete files are common.

I accept that there may be a point at which the transition of a file to a new lawyer may be so compromised that it amounts to a special or extraordinary circumstance, but I cannot agree with Applications Judge Farrington that this was the case here. The present case involves a less than ideal file transition, but there was more than enough time for new counsel, acting diligently, to address the deficiencies in the transition. [ 38 ] The assertion that Mr.

Johanson had a health condition that affected the file transition is not supported by evidence before the Court nor is there an explanation as to any connection between the health condition and the quality of the file transition. Though a file transition compromised by an outgoing lawyer’s health may amount to a special or extraordinary circumstance, the evidence does not support such a finding in the present case. Conclusion [ 39 ] The appeal is dismissed. I award the Respondent costs calculated at double the appropriate column of Rules of Court ,

Schedule C. Heard on the 2 nd day of November, 2022. Dated at the City of Calgary, Alberta this 7 th day of November, 2022.

Colin C.J. Feasby J.C.K.B.A. Appearances: Shyne M. Victoria, SGI Canada Insurance Services Ltd. for the Appellant Morgan Deacon, McAllister LLP for the Respondent