Arnston v Arnston, 2023 ABKB 328

Court of King’s Bench of Alberta Citation: Arnston v Arnston, 2023 ABKB 328 Date: 20230601 Docket: 4803 160737 Registry: Edmonton Between: Viva Lea Arnston Plaintiff - and - Donald James Arnston Defendant _______________________________________________________ Reasons for Decision of the Honourable Justice L.K. Harris _______________________________________________________ [ 1 ] On February 22, 2023, the Plaintiff filed a Discontinuance of Claim in the within action. The Defendant applies to set the Discontinuance of Claim aside and for leave to file a Counterclaim. I.

Background [ 2 ] The parties were married in 1980 and separated in 2011. They have four children, all of whom are now adults. [ 3 ] The Plaintiff issued a Statement of Claim for divorce and division of matrimonial property on March 9, 2011.

The Defendant filed a Statement of Defence on March 23, 2012, agreeing to a Divorce Judgment but contesting the parenting, child and spousal support, and the division of matrimonial property proposals put forward by the Plaintiff. [ 4 ] The procedure card demonstrates that the parties were extremely litigious, with numerous interlocutory applications filed over the years and various lawyers acting for each party at various times. [ 5 ] Clackson J was appointed Case Management Justice in 2013. On February 19, 2014, Clackson J granted an Order setting

the action for a five-day trial commencing November 3, 2014. On July 30, 2014, the parties filed a Form 39 confirming the trial date. [ 6 ] Shortly before the trial was to begin, the parties held settlement discussions. The trial did not proceed. There arose a dispute about whether a settlement agreement was reached.

The parties asked Clackson J to determine whether there was a settlement contract between the parties and on December 18, 2015, he issued an Order stating that there was not. [ 7 ] The following month (January 2016), each of the parties filed a Notice of Appeal of Clackson J’s December 18, 2015 Order. Shortly thereafter, the parties had more settlement discussions and reached a settlement agreement in relation to the within action, as well as other civil actions which had been commenced by the children against their father, the Defendant.

The Defendant attaches to his Affidavit a filed Discontinuance of Appeals executed by the parties, their son, Mikkel Arnston and their daughter, Keri Arnston. The filed Discontinuance of Appeals attaches a document titled “Arnston Offer of Settlement March 14, 2016” marked “with prejudice”.

That document provides that the divorce of the parties is “to proceed on an uncontested basis,” provides for the division of certain matrimonial property between the parties and the two children, a waiver of spousal support, for Mikkel Arnston to sign satisfaction pieces with respect to the judgments he held against his father and a Discontinuance of the action commenced by Kari Arnston. The Arnston Offer of Settlement is signed by the Defendant and Mikkel Arnston, but not the Plaintiff, nor Kari Arnston.

The document is however attached to the Discontinuance of Appeals which was executed by the Plaintiff. [ 8 ] The Defendant attests to subsequent steps being taken by the parties in furtherance of the Arnston Offer of Settlement such as effecting the transfer of certain lands and the assignment of surface leases, amongst other things. Money was paid into court pursuant to an Order issued by Sulyma J. in the context of the matrimonial action and the action between the Defendant and Kari Arnston.

Other funds were held in trust by the Defendant’s counsel. [ 9 ] It is evident, however, that the matter then languished for quite some time. The Defendant says that in 2021, he attempted to speak with opposing counsel about concluding the outstanding issues. He says that several issues remain outstanding, including the disbursement of funds held in court and in counsel’s trust account, the transfer of a property and office in Hay Lakes to his name, the return of some of his personal property, and the divorce itself. [ 10 ] Various discussions between 2021 and early 2023 were not productive.

The Defendant served a Notice to Attend Family Docket Court in January 2023. There was some dispute over whether Mikkel Arnston could accept service for the Plaintiff. Mikkel Arnston, who is a lawyer by profession, attended Family Docket Court on February 21, 2023, and the matter was adjourned for two days. [ 11 ] On February 22, 2023, Mikkel Arnston advised the Defendant that the within action had been discontinued. The Defendant then filed his Application to set the Discontinuance aside. II.

Positions of the Parties [ 12 ] The Defendant argues that the Discontinuance ought to be set aside on the basis that there are issues in the within action which remain outstanding. He says that in the interests of fairness, the Plaintiff ought not to be permitted to unilaterally discontinue the Claim when he has an ongoing interest in the resolution of outstanding issues.

The Defendant relies upon Richardson v Richardson , 2018 ABCA 327 , in support of his position. [ 13 ] The Defendant did argue that at some point an application would be required to determine the enforceability of the Arnston Offer of Settlement.

What he really appears to be saying however is that the Plaintiff has not complied with its terms, implying that he is relying upon that agreement. [ 14 ] Further, the Defendant argues that he ought to be permitted to issue a Counterclaim against the Plaintiff and as well, Mikkel Arnston and Kari Arnston, to ensure that his interests remain protected. [ 15 ] The Plaintiff, on the other hand, argues that in the within action, she is permitted under Rule 4.36 of the Alberta Rules of Court to file a Discontinuance of her action as of right. She strongly disputes the Defendant’s version of events.

She argues that if the Defendant feels that there are issues arising from the Arnston Offer of Settlement which remain outstanding, then the Defendant has the option to issue his own separate action in this Court for breach of agreement if he wishes to do so. [ 16 ] If the Court considers the fact that the parties still are not divorced as reason to set aside the Discontinuance of Claim, then the Plaintiff says that the Discontinuance of Claim can be set aside for the limited purpose of obtaining a Divorce Judgment.

She says that the reason why the parties did not apply for a Divorce Judgment was because the Defendant would not cooperate in doing so, but she remains willing to do so. Otherwise, she says that the Defendant has not complied with all his obligations under the Arnston Offer of Settlement, and in fact, he probably owes her money under that agreement, but she cannot afford to relitigate a matter that settled seven years ago. [ 17 ] The Plaintiff says that there is no basis to allow a Counterclaim, as it is clearly out of time and would be an abuse of process. III.

Analysis [ 18 ] Richardson was an appeal from a decision of a chambers judge in a matrimonial action, in which the appellant (the defendant in the action) had filed a demand of notice instead of a statement of defence.

The chambers judge concluded that, absence an abuse of process, a plaintiff has a right to discontinue an action, relying upon De Shazo v Nations Energy Company Ltd., 2006 ABCA 400 , and finding that a party that does not properly defend a matrimonial property claim, runs the risk of the claim being discontinued. [ 19 ] De Shazo held that in an ordinary situation, Rule 4.36(1) permits the filing of a discontinuance as of right before a trial date is

set: Discontinuance of claim 4.36

(1) Before a date is set for trial, a plaintiff may discontinue all or any part of an action against one or more defendants.

(2) After a trial date has been set but before a trial starts, a plaintiff may discontinue all or part of an action against one or more defendants only (

a) with the written agreement of every party, or (

b) with the Court’s permission.

(3) After the trial starts, a plaintiff may discontinue all or part of an action only with the Court’s permission.

(4) A discontinuance under this rule must be in Form 23 and must be filed and served on each of the other parties and, after the plaintiff serves notice of discontinuance, the defendant is entitled to a costs award against the plaintiff for having defended against the discontinued claim.

(5) The discontinuance of the action may not be raised as a defence to any subsequent action for the same or substantially the same claim. [ 20 ] Notwithstanding the wording of Rule 4.36, the Court has jurisdiction to preclude a discontinuance of action when the discontinuance would be obstructive, abusive, or unfair: De Shazo at para 13 . [ 21 ] In Richardson , the Court of Appeal clarified that the “ordinary situation” referred to in De Shazo , refers to circumstances in which the plaintiff only claims relief for himself or herself and is abandoning such a claim.

In a matrimonial action, however, a unilateral discontinuance of claim could undermine a defendant’s position regarding such things as the division of matrimonial property, even when only a demand of notice is filed. Further, the Court held that a discontinuance can also be set aside when there remains outstanding issues between the parties such as a determination of the proper disbursement of money paid into Court, a failure to comply with prior court orders or an outstanding application.

In such cases, special considerations apply and a Plaintiff may not be permitted to file a unilateral discontinuance of claim as of right. [ 22 ] The Defendant in this action has an even stronger position then that of the appellant in Richardson because he did more than file a Demand of Notice agreeing that the matrimonial property should be distributed equitably. He filed a Statement of Defence specifically taking issue with the proposals put forward by the Plaintiff in the Statement of Claim.

Without more, the Discontinuance filed in this case would undermine the Defendant’s interest in seeing these issues resolved and the Court’s jurisdiction to set aside the Discontinuance would be engaged on this basis. This is not the “ordinary situation” contemplated in De Shazo . [ 23 ] However, Richardson is distinguishable because there was no settlement agreement. In this case, the parties have put forward evidence that they took the extra step to resolve all issues between them, as well as between the Defendant and two of his children, by way of a settlement agreement.

This requires a determination of whether the Arnston Offer of Settlement changes the circumstances because the resolution of the issues in the matrimonial action mean that the Defendant’s interests in having them resolved are no longer undermined by the discontinuance filed by the Plaintiff. To answer this question I must determine if in fact the Arnston offer of settlement is binding upon the parties, and if it concludes all of the issues between them. (

a) Is the Arnston Offer of Settlement Binding? [ 24 ] The Arnston Offer of Settlement was never signed by the Plaintiff. Although it certainly refers to matrimonial property and purports to distribute it amongst the parties and their children, it is signed by the Defendant and Mikkel Arnston. Mikkel Arnston is a lawyer by profession but there is nothing within the agreement to show that he is representing his mother, the Plaintiff, or even that he is signing on her behalf. [ 25 ] However, the Plaintiff did sign the Discontinuance of Appeals, to which the Arnston Offer of Settlement was attached.

The Discontinuance of Appeals also makes reference to the parties having reached a settlement agreement, which renders the appeals moot. [ 26 ] Further, in her Affidavit filed in response to the within Application, the Plaintiff takes the position that the Arnston Offer of Settlement was a settlement agreement that she entered into, describing it as: “The Global Settlement resolved inter alia the: matrimonial property dispute; corollary relief in the divorce; and various actions and other matters between the Husband and the children…” I find that both parties are viewing the terms of the Arnston Offer of Settlement as a resolution to all of the issues between them, but they disagree as to whether they have each complied with its terms.

In the face of the Plaintiff’s admission that she sees the Arnston Offer of Settlement as binding upon her it is not appropriate for me to find that the Plaintiff cannot rely upon it since she signed only the discontinuance of appeals and not the Arnston Offer of Settlement itself. (

b) Does the Arnston Offer of Settlement conclude all issues between the parties? [ 27 ] Typically, settlement agreements provide for the discontinuance or cessation of any underlying legal proceedings between the parties. A discontinuance filed pursuant to a settlement agreement is permissible even after the matter has been set for trial, because all parties have consented ( Rule 4.36(2)(a)). The Arnston Offer of Settlement reflects this to a certain degree; para 15 requires Mikkel Arnston to sign satisfaction pieces with respect to the two judgments he held against the Defendant and requires Kari Arnston to discontinue her action against the Defendant.

[ 28 ] The Arnston Offer of Settlement is silent, however, with respect to the Divorce and Matrimonial Property Action between the parties. This must be because the parties had not yet obtained a Divorce Judgment, and the Action would need to be kept alive until the Divorce Judgment was obtained, and once the Divorce Judgment took effect the action would then have been concluded.

As such, the failure of the Arnston Offer of Settlement to require a discontinuance of the matrimonial action is only reflective of this ongoing interest in obtaining a Divorce Judgment and does not support the conclusion that there remain other issues between the parties in the context of the matrimonial action itself. [ 29 ] The only outstanding issue which formed the subject of the matrimonial action is the issue of divorce between the parties. Certainly, the Defendant has an interest in seeing that issue resolved.

The remainder of the issues, which the Defendant argues are outstanding (for example, the funds paid into court and funds held in his counsel’s trust account, any outstanding land transfers, or accounting of funds) are more accurately described as issues arising from the parties’ non-compliance with the Arnston Offer of Settlement, and not the matrimonial action proper. [ 30 ] There remains the issue of the money currently held in court.

I note however that the Order issued by Sulyma J on September 15, 2016 directs money paid into court in the context of not only the matrimonial action but also Action 1403 04614, which is the action commenced by Kari Arnston against the Defendant. That Order was entered after the Arnston Offer of Settlement was in place and arose because Kari Arnston’s solicitors withdrew from the record.

As such, to the extent any order is required to disburse those funds such an order may be obtained in the context of Action 1403 04614. [ 31 ] In these circumstances, where there is a binding settlement agreement that the parties intended to resolve all issues between them, should the Court exercise its jurisdiction to set aside the Discontinuance filed by the Plaintiff, on the basis that it undermines the Defendant’s interests in resolving any outstanding issues, as was done in Richardson ? [ 32 ] There is a broader interest to consider in this case, which is the fact that parties should be encouraged to independently reach domestic contracts, and parties to a settlement agreement should be able to rely upon their agreement to bring about a finality to their proceedings against each other.

These principles were recently discussed by the Supreme Court of Canada in Anderson v Anderson , 2023 SCC 13 , in which the Court expressed deference to a non-compliant separation agreement, balancing the values of contractual autonomy and certainty with concerns of fairness, given the potential for unfairness and exploitation that can arise in the domestic environment. [ 33 ] Given the length of time that the parties have been engaged in litigation with each other, the high-conflict nature of that litigation and the potential for the litigation to further spiral, the considerations of certainty and finality are significant here and should be given weight in the absence of any evidence of unfairness in the division of matrimonial property.

In this case, the more significant threat to fairness and potential for exploitation arises from the prospect of continued litigation in the face of a settlement agreement. [ 34 ] In this case, neither party is arguing that the Arnston Offer of Settlement should be set aside. Instead, both argue that the other party has not complied with its terms. That is an issue arising from the Arnston Offer of Settlement and not the underlying matrimonial action.

To the extent either party feels the need to compel compliance with the Arnston Offer of Settlement, they have had the option to issue a claim against the other for breach of that agreement.

Subject to submitting an uncontested Desk Divorce Application they do not therefore have an interest in relitigating anything in the context of the matrimonial action. [ 35 ] I have concluded that the parties’ intentions in executing the Discontinuance of Appeals and the Arnston Offer of Settlement was to resolve all outstanding issues between them, subject to the submission of an uncontested Desk Divorce Application to obtain a Divorce Judgment, which would then conclude the matrimonial action in its entirety.

The effect of that conclusion is that the only outstanding issue in the within matrimonial action which the Discontinuance might undermine is the issue of divorce.

The Defendant’s interest in obtaining a divorce can be satisfied without unconditionally setting aside the Discontinuance of Claim filed by the Plaintiff. [ 36 ] Setting aside the Plaintiff’s Discontinuance for the limited purpose of submitting a Desk Divorce Application avoids the potential for mischief through the relitigation of all of the other issues between the parties within the matrimonial action and is consistent with the parties’ intentions as expressed in the Arnston Offer of Settlement.

I also conclude that I have authority to make this order under the foundational rules of the Rules of Court , particularly Rule 1.4(

b) and (c). IV. Conclusions [ 37 ] To give effect to the “Arnston Offer of Settlement” and to address the parties’ interest in finalizing their divorce, I therefore direct as follows: (

a) The Discontinuance filed by the Plaintiff in the within Action on February 22, 2023, shall be set aside for the limited purpose of allowing the parties to submit a Desk Divorce Application; (

b) The Defendant shall have 30 days from this Decision to provide his consent to the Desk Divorce Application, failing which the Plaintiff has leave to submit the Application for divorce without the Defendant’s consent as an uncontested Application; (

c) If the parties require an order directing the payment of the funds currently held in court they are to obtain that order in the context of Action 1403 04614. [ 38 ] Given that the Discontinuance is only to be set aside for a limited purpose, I need not address the Defendant’s request for leave to file a Counterclaim. [ 39 ] As the Plaintiff has been substantially successful in defending the Defendant’s Application, I award her costs of this Application. If the parties cannot agree on costs, they can make submissions to me in writing, no more than three pages in length, within 30 days.

Heard on the 3rd day of May, 2023. Dated at the City of Edmonton, Alberta this 1 st day of June, 2023 . L.K. Harris J.C.K.B.A. Appearances: Christopher Dawson McCuaig Desrochers LLP for the Plaintiff Stephen Harfield Queck & Associates Law Office for the Defendant