2016 MBCA 91, 2016 MBCA 91

Citation: Bjornsson et al v Smith et al, Date: 20160922 2016 MBCA 91 Docket: AI15-30-08438 IN THE COURT OF APPEAL OF MANITOBA Coram: Mr. Justice Alan D. MacInnes Mr. Justice Marc M. Monnin Madam Justice Janice L. leMaistre BETWEEN : MICHAEL KENNETH BJORNSSON, ) S. Green, Q.C. CLINTON BJORNSSON, THE WINNIPEG ) for the Appellant HUMANE SOCIETY and the ESTATE OF ) CAROL DEE BJORNSSON through its ) Administrator, MICHAEL KENNETH ) BJORNSSON ) ) (Plaintiffs) Respondents ) D. M. Skwark and ) A. R.

Foderaro - and - ) for the Respondents ) JAMES RICHARD SMITH ) ) (Defendant) Appellant ) ) - and - ) Appeal heard: ) April 29, 2016 PETER J. MOSS and KAREN BURWASH, ) carrying on the practice of law under the firm ) name of THE LAW OFFICES OF PETER J. ) MOSS, and the said firm of THE LAW ) OFFICES OF PETER J.

MOSS, JAMES ) Judgment delivered: RICHARD SMITH and MARILYN JEAN ) September 22, 2016 MACKENZIE ) ) (Defendants) ) MACINNES JA [ 1 ] The defendant Smith (Smith) moved before the motion judge (the judge), on appeal from the order of a Master, for an order that the plaintiffs’ statement of claim be struck out and dismissed. Various grounds were raised in support of the motion, but the motion was dismissed by the judge. Background [ 2 ] Smith was the lawyer for Carol Dee Bjornsson who died October 10, 2006. He prepared her will, was her executor and was the lawyer for her estate following her death.

The principal asset of the estate was her residence at 899 Goulding Street in Winnipeg (the property). Smith obtained an independent appraisal of the property which was valued at $90,000. [ 3 ] Ms Bjornsson’s principal beneficiary under her will predeceased her, leaving her two sons, Michael Kenneth Bjornsson and Clinton Bjornsson (Michael and Clinton), and the Winnipeg Humane Society (the WHS) as the residual beneficiaries.

Michael and Clinton were each to receive 41.66 per cent and the WHS 16.68 per cent of the estate. [ 4 ] During December 2006, Michael and Clinton made several requests of Smith to provide them with money out of the estate. Smith told them that the property would have to be sold, and other steps taken to complete the administration of the estate before they would receive proceeds from the estate, all of which he estimated would take about a year. [ 5 ] In light of continuing demands from Michael and Clinton, Smith told them of the appraised value of the property, and

that he could arrange for its quick sale to an investor for $50,000, from which Michael and Clinton each would be paid $10,000immediately with the balance of their share payable when title to the property issued to the purchaser. [6] Michael and Clinton agreed to this proposal, whereupon Smith arranged for and completed the sale. Smith acted forthe purchaser in the transaction. [7] The purchaser of the property was Smith’s wife, a fact never disclosed by Smith to Michael and Clinton.

In June2007, the sale was finalized, and Michael and Clinton each received the balance of their share due from the $50,000 sale. [8] The WHS was not advised of the sale of the property, or that it was sold for the reduced price of $50,000, or that thepurchaser was Smith’s wife, until well after the sale was completed.

It first heard from Smith by his letter dated October 17, 2007,wherein he advised the WHS, amongst other things, that its share was $8,810, being 16.68 per cent of the value of the estate with theproperty having been sold for $50,000. [9] The WHS, on April 14, 2008, and Michael and Clinton, on June 11, 2009, filed claims against the reimbursementfund (RF) of the Law Society of Manitoba (the LSM) seeking reimbursement for loss arising from the misappropriation or conversion oftrust property by Smith. [10] On January 6, 2010, the deceased’s estate, Michael, Clinton and the WHS, commenced the within action against Smithand others, including Smith’s wife. [11] On June 18, 2012, the LSM paid Michael, Clinton and the WHS a total of $47,000 from the RF.

The LSM obtained arelease and assignment from the estate, Michael, Clinton and the WHS, of their right title and interest in, and to any and all causes ofaction arising out of the actions of Smith by reason of his receipt, misappropriation, conversion, use or other dealings with the trustmoney in the amount of $47,000. Since that time, the LSM has assumed conduct of the within action. [12] As previously indicated, the judge dismissed Smith’s motion for an order striking out and dismissing the plaintiffs’action, and it is from that dismissal that this appeal is brought.

Issues on Appeal [13] Smith raises two issues on this appeal; namely, that the judge erred in failing: 1) to strike the statement of claim on the ground that this action is being funded by the LSM, and thus is the product of champerty ormaintenance; and 2) to find that the LSM had no legislative jurisdiction to fund and maintain this action, and is only permitted to participate in the actionas a plaintiff or as a co-plaintiff pursuant to section 47(3) of The Legal Profession Act, CCSM c L107 (the Act).

Standard of Review [14] Smith asserts that the standard of review in respect of both issues is that of correctness. [15] The plaintiffs submit that Issue No. 1 raises a question of mixed law and fact for which the standard of review ispalpable and overriding error, and that Issue No. 2 raises a question of law and, therefore, the standard of review is that of correctness. [16] In my opinion, Issue No. 1 does raise a question of mixed law and fact and, accordingly, the standard of review is thatof palpable and overriding error.

Issue No. 2 raises a question of law and thus, the standard of review is that of correctness.

Issue No. 1 [17] There is no dispute between Smith and the plaintiffs that the LSM has paid Michael, Clinton and the WHS a total of$47,000 out of the RF. [18] Nonetheless, Smith asserts the LSM has no financial interest in the litigation, and that its assuming conduct of theaction amounts to champerty or maintenance. [19] The plaintiffs and the LSM argue that the LSM has a legitimate interest in the action as its RF has paid Michael,Clinton and the WHS the sum of $47,000 as a result of Smith’s conversion of the estate property.

The LSM says that it has no interestin, or claim to, entitlement for more than repayment of that sum plus costs, and that there is no evidence to the contrary. The LSM alsoasserts that there is no evidence that it is acting with an improper motive. It says that it is not, and that, indeed, the opposite is true.

Analysis [20] In McIntyre Estate v Ontario (Attorney General) (2002), (ON CA), 164 OAC 37, O’Connor ACJOfor the Court wrote (at para 26): Maintenance is directed against those who, for an improper motive, often described as wanton or officious intermeddling, becomeinvolved with disputes (litigation) of others in which the maintainer has no interest whatsoever and where the assistance he or she rendersto one or the other parties is without justification or excuse. Champerty is an egregious form of maintenance in which there is the addedelement that the maintainer shares in the profits of the litigation.

Importantly, without maintenance there can be no champerty.

[ 21 ] He wrote further (at para 27): The courts have made clear that a person’s motive is a proper consideration and, indeed, determinative of the question whether conduct or an arrangement constitutes maintenance or champerty.

It is only when a person has an improper motive which motive may include, but is not limited to, “officious intermeddling” or “stirring up strife”, that a person will be found to be a maintainer. [ 22 ] Professor of Law John D McCamus, The Law of Contracts (Toronto: Irwin Law, 2005) wrote (at pp 441-42): In determining whether a particular arrangement amounts to maintenance or champerty, it is critical to find the presence of an improper motive. . . . The mere fact that one is providing financial support to a lawsuit is thus not sufficient.

It must be established that the party providing support does not have a legitimate interest in the outcome of the lawsuit. [ 23 ] Here, it is clear on the evidence that the LSM does have a legitimate interest in the lawsuit, namely, the attempt to recover $47,000 from Smith, which it paid to the plaintiffs out of the RF. Further, there is no evidence whatsoever of any improper motive on the part of the LSM. [ 24 ] The judge made no error in his decision respecting this issue and there is no basis for appellate intervention in respect of it. Issue No. 2 [ 25 ] The essence of Issue No. 2 pertains to the RF.

Given payment of $47,000 out of the RF by the LSM to the plaintiffs, does the LSM have the legislative jurisdiction to fund and maintain this action, and is it only permitted to participate in the action as a plaintiff or co-plaintiff pursuant to section 47(3) of the Act ? [ 26 ] It will be helpful to set forth certain provisions of the Act which, in my view, are relevant to the discussion of the issue. [ 27 ] Under the Act , the LSM is continued as a body corporate (section 2(1)). Its purpose is to uphold and protect the public interest with regard to the delivery of legal services (section 3(1)).

In pursuing its purpose and carrying out its duties, it has all the powers and capacity of a natural person (section 2(2)). [ 28 ] The relevant provisions of the Act pertaining to the RF for purposes of this appeal are: Purpose of reimbursement fund 46(2) The purpose of the reimbursement fund is to compensate claimants who have sustained pecuniary losses because of a member’s or law corporation’s misappropriation or wrongful conversion of the claimants’ money or property. . . .

When loss may be compensated 47(1) The benchers may pay compensation out of the reimbursement fund to a claimant only if they are satisfied that (

a) money or other property was entrusted to or received by (

i) a law corporation, or (ii) a member in his or her capacity as a lawyer; (

b) the corporation or member misappropriated or wrongfully converted the money or other property; and (

c) the claimant sustained a pecuniary loss as a result of that misappropriation or wrongful conversion.

Reimbursement is discretionary 47(2) When the benchers receive a claim for compensation out of the reimbursement fund, they may (

a) use the reimbursement fund to compensate the claimant for all or any part of his or her loss, on any terms they consider appropriate; or (

b) refuse to compensate the claimant. Recovery of compensation 47(3) When a claimant is compensated out of the reimbursement fund, the society has all the rights of recovery of the claimant. The society may bring an action in its own name, alone or in a joint action with the claimant, to enforce those rights. Application of money recovered 47(4) If the society or the claimant recovers money or other property for the claimant’s loss, the recovered money or property must be paid or applied as follows: (

a) first, to cover the legal costs and fees incurred in recovering it; and (

b) second, to compensate the reimbursement fund for the compensation paid to the claimant. The balance, if any, belongs to the claimant. Rules re reimbursement fund 47(5) The benchers may make rules respecting the reimbursement fund, including rules respecting contributions to and payments out of the fund. Position of the Parties [ 29 ] Relying upon sections 47(1) and 47(3) of the Act , Smith argues that if the LSM wishes to recover amounts paid out of the RF, it can either commence an action to do so or join an action to do so. Here, Smith asserts, the LSM did neither.

It is not a party to the action nor has it joined in the action. [ 30 ] Smith says that when cross-examined on his affidavit, the chief executive officer of the LSM testified that it was engaged in the lawsuit by virtue of an assignment.

Smith says the LSM has not sued on the assignment and that had it intended to do so, it would have had to commence a lawsuit so indicating. [ 31 ] Smith argues that had the LSM become a party to the action as a named plaintiff either pursuant to section 47(3) of the Act or pursuant to an assignment, Smith would have had defences against the LSM which it cannot advance because the LSM is not a party to the litigation. [ 32 ] Smith asserts that the LSM is a creature of statute, namely the Act , and thus has only such powers as are conferred by the Act .

He says that the Act contains no provisions that would entitle the LSM to pay money to claimants other than pursuant to the provisions pertaining to the RF. He argues that the LSM paid money that it was not authorized to pay by the legislation as there was no conversion or misappropriation of funds. He submits that section 47(3) does not provide an option for the LSM. He asserts that it is only by virtue of this

section that the LSM is entitled to pay money to the plaintiffs, and that in failing to follow the regime set out under

section 47 of the Act it is acting without jurisdiction. [ 33 ] The LSM argues that, consistent with its obligation to uphold and protect the public interest, the RF was created to

compensate claimants who have sustained pecuniary loss due to a member’s misappropriation or wrongful conversion of money or property. It says, however, that the fund is discretionary in the sense that the LSM may decide to pay or not pay a claimant(

s) out of the RF. As well, it argues that it is not mandatory that the LSM pursue recovery from a member or former member. [ 34 ] The LSM asserts that, in this case, having made payment to the plaintiffs, it has a right to recover the funds it paid to the plaintiffs from Smith.

It submits that it may do so in one of several ways: first, pursuant to section 47(3) of the Act ; second, pursuant to an assignment; third, by simply agreeing to pay the plaintiffs’ legal fees incurred in an effort to recover amounts owed to the plaintiffs and the LSM. [ 35 ] As previously stated, the CEO of the LSM testified that the LSM was engaged in this action by virtue of an assignment.

The LSM argues that pursuant to section 31(1) of the The Law of Property Act , CCSM c L90, it can do so pursuant to the common law, without becoming a named party in the litigation. [ 36 ] The LSM says it has chosen to pay the plaintiffs’ legal fees from the date of the assignment forward with an agreement that, from any funds recovered in the action, it will be reimbursed for the payments it made to the plaintiffs, as well as its costs to prosecute the action, with any additional funds recovered going to the deceased’s estate to be disbursed according to the will. [ 37 ] In this case, argues the LSM, the plaintiffs commenced this action before the RF made payment to them.

The LSM says that while it could have commenced a separate action for the payment it made, and thereafter moved to consolidate that action with the plaintiffs’ action, it made no practical sense to do so. Instead, the LSM chose to assume conduct of this action.

It argues that the course which it chose secures the most expeditious and least expensive determination of the matters in dispute. [ 38 ] The LSM submits that it is entitled to fund the litigation if it so chooses, given its interest in the outcome of the action, having made the payment that it did to the plaintiffs from the RF. [ 39 ] As well, as the LSM has all the powers and capacity of a natural person, it says that it may, if the situation warrants, fund the litigation of another.

Analysis [ 40 ] The RF was originally created in 1956 pursuant to section 30(1) of The Law Society Act , SM 1956, c 39, which provided: Levy for reimbursement fund. 30(1) The governing body may maintain and augment, by the levy of an annual assessment of such amount as may be fixed by it, from time to time, on the members of the society entitled to practise in the province, a special fund for the purpose of reimbursement in whole or in part of persons sustaining pecuniary loss by reason of the misappropriation or conversion, by any member of the society practising in the province . . . of money or other property entrusted to, or received by, him in his professional capacity; and may administer the special fund and for that purpose may make such rules and by-laws as the governing body deems necessary. [ 41 ] Section 46(1) of the Act provides for continuation of the RF. [ 42 ] The language of the provisions related to the RF, enacted by

An Act to Amend the Law Society Act , SM 1974, c 51 (the 1974 Act ) was much different than the language of the provisions related to the RF contained in the current Act (see para 28), and provided: Society subrogated. 30(5) The society shall, upon making, or assuming liability for, any reimbursement under the provisions of subsection (1), be conclusively deemed to be an assignee of and subrogated to all rights and remedies of recovery of the person reimbursed, to the extent of the reimbursement, against all persons liable for the loss in respect of which the reimbursement is made or the liability for reimbursement is assumed.

Action by society. 30(6) The society may bring a separate action in its own name to recover the amount of the reimbursement. Action by recipient. 30(7) If the society brings an action in its own name to recover the amount of the reimbursement, the person to whom, or for whose benefit, the reimbursement is made may bring an action in his own name for the amount by which the loss exceeds the amount of the reimbursement.

Action in name of recipient. 30(8) The society may bring an action in the name of and on behalf of the person to whom or for whose benefit the reimbursement is paid for recovery of the loss to the extent of the amount reimbursed. . . .

Joint action. 30(10) The society and a person to whom or for whose benefit reimbursement is paid may jointly bring one action in the name of the person for recovery of the loss, making such arrangements as to the apportionment of the costs of recovery as may be agreed upon. [ 43 ] For ease of reference, we can compare the language (relevant to this issue) in both the current and former legislation. The Legal Profession Act Recovery of compensation 47(3) When a claimant is compensated out of the reimbursement fund, the society has all the rights of recovery of the claimant.

The Law Society Act Society subrogated. 30(5) The society shall, upon making, or assuming liability for, any reimbursement under the provisions of subsection (1), be conclusively deemed to be an assignee of and subrogated to all rights and remedies of recovery of the person reimbursed, to the extent of the reimbursement. [ 44 ] Further, section 47(3) goes on to provide that the LSM may bring an action in its own name, alone or in a joint action with the claimant to enforce those rights. [ 45 ] The 1974 Act , however, provided:

(1) The society may bring a separate action in its own name to recover the amount of the reimbursement (section 30(6));

(2) If the society brings an action in its own name to recover the amount of the reimbursement, the person to whom, or for whose benefit, the reimbursement is made may bring an action in his own name for the amount by which the loss exceeds the amount of the reimbursement (section 30(7));

(3) The society may bring an action in the name of and on behalf of the person to whom or for whose benefit the reimbursement is paid for recovery of the loss to the extent of the amount reimbursed (section 30(8)); and

(4) The society and a person to whom or for whose benefit reimbursement is paid may jointly bring one action in the name of the person for recovery of the loss (section 30(10)). [ 46 ] Neither Hansard nor other legislative materials appear to provide any comment or explanation as to the language changes in the Act as compared with the 1974 Act . [ 47 ] As was the case relating to the 1974 Act , the Act ( section 47(5) ) empowers the benchers of the LSM to make rules respecting the RF, including rules relating to payments out of the RF. [ 48 ] The issue articulated by Smith on his appeal is whether the judge erred in failing to find that the LSM had no legislative jurisdiction to fund and maintain this action, and is only permitted to participate in the action as a plaintiff or co-plaintiff pursuant to section 47(3) of the Act . [ 49 ] Smith asserts that there was no conversion or misappropriation of funds and hence, the LSM paid money to the plaintiffs that it was not authorized to pay under the Act .

I note, however, that the Act speaks of misappropriation or conversion of money or other property. Moreover, Smith’s argument on this point is an issue for determination ultimately in this litigation, that is, whether there was a misappropriation or wrongful conversion by Smith of money or other property of the plaintiffs. [ 50 ] As has been seen, there is no longer specific provision which conclusively deems the LSM to be an assignee of, and subrogated to, all rights and remedies of recovery of the person reimbursed to the extent of the reimbursement.

As well, there is no specific provision for the LSM to sue in the name of, and on behalf of, the person to whom or for whose benefit the reimbursement is paid for recovery of the loss to the extent of the amount reimbursed. Rather, the language of section 47(3) of the Act is more succinct. It provides simply that the LSM has “all the rights of recovery of the claimant.”

[51] In Eckstein v Law Society of Manitoba (1981), (MB CA), 7 ManR (2d) 415 (CA), Huband JA inaddressing section 30(5) of the 1974 Act wrote (at para 30): [U]nder s. 30(5) The Law Society becomes subrogated to all rights and remedies of the person reimbursed “to the extent of thereimbursement”. [52] In dealing with the current section 47(3) of the Act, Beard JA in Law Society of Manitoba v Mackinnon, 2014 MBCA28, 303 ManR (2d) 223, wrote (at para 13): [T]he Law Society commenced proceedings against [the appellant] to recover the money that it paid to Westfair, which claim was basedon the Law Society’s right of subrogation under s. 47(3). [53] While doubtless it would have been clearer had section 47(3) of the Act continued to provide that the LSM is deemedconclusively to be an assignee of, and subrogated to, all the rights and remedies of recovery of the person reimbursed to the extent of thereimbursement, I am satisfied that the right of subrogation is clearly implicit in the language of section 47(3), which provides the LSMwith “all the rights of recovery of the claimant.” [54] Subrogation has its foundation in equity.

The essence of subrogation is to ensure the party who suffers loss is notentitled to be indemnified twice for its loss. I note the comments of Huband JA in Grace v Manitoba Public Insurance Corp (1988), (MB CA), 52 ManR (2d) 75 (CA) (at para 15): Subrogation has its foundation in the law of equity. It would be inequitable to allow an insured person to be indemnified for a loss, firstby his own insurer, and then a second time by a defendant tortfeasor. [55] While the doctrine of subrogation and much of the law concerning it is found in the field of insurance, it is a doctrine ofgeneral application.

See McRae v Canada (Attorney General) (1997), (BC CA), 99 BCAC 112 per Finch JA at para26. [56] The LSM is not an insurer, nor is the RF an insurance contract. Still, it would be inequitable if the plaintiffs, havingbeen paid $47,000 by the LSM, could again seek to recover that sum from Smith.

Subrogation gives the LSM the right to pursuerecovery of that sum from Smith, and is embraced in the language of section 47(3) of the Act where, upon compensating the claimant outof the RF, the LSM acquires all of the rights of recovery of the claimant. [57] In my opinion, the language of section 47(3) also implicitly provides the LSM a statutory right of assignment. [58] Stated in its simplest sense, an assignment is often described as a transfer of rights.

In Vladescu v CTVglobemedia Incet al, 2013 ONCA 448, 307 OAC 131, leave to appeal refused, [2013] SCCA No 369 (QL), Gillese JA concisely described assignment asfollows (at para 62): [Assignments] ordinary legal meaning is the act of transferring, to another, all or part of one’s property, interest, or rights: B. Garner,ed., Black’s Law Dictionary, 8th ed. (St.

Paul, MN: Thomson West, 2004), at p. 128. [59] Later, Gillese JA had occasion to note that: “the fundamental nature of an assignment . . . is the transfer of rights to theassignee” (at para 85). [60] As well, in Makar v Master of the Motor Vessel “Rivtow Lion” et al (1982), 43 NR 245 (FCA), Thurlow CJ wrote (atpara 34): An assignment is a transfer of a right from one person to another.

The Shorter Oxford Dictionary gives as a meaning of assignment: “Legal transference of a right, etc.” An assignment transfers to the assignee the right to the thing transferred and in the case of a chose inaction the right to sue for its recovery. [61] The foregoing authorities are but two of many which stand for the similar proposition that an assignment isfundamentally a transfer of rights from one person to another. In this case, the LSM obtained an assignment from the plaintiffs, which itsays it does as a matter of practice in any similar case.

While in my view that is unnecessary, in light of my conclusion that section 47(3)of the Act creates a statutory assignment, there is nothing to prevent the LSM from doing so if the claimant is prepared freely to sign sucha document.

[ 62 ] In the present case, Smith argues that the provisions of the Act , and in particular, sections 47(1) and 47(3) , in effect mandate a legislative regime which must be followed by the LSM in pursuit of any recovery of compensation paid out of the RF to a claimant, and in particular, that the LSM may only bring an action in its own name, alone or in a joint action with the claimant to enforce its rights of recovery.

The LSM, however, argues that upon payment out of the RF to a claimant, the LSM may proceed to recover the funds which it has paid either pursuant to section 47(3) , by assignment, or simply by agreeing to pay the legal fees of the plaintiff in pursuit of recovery. [ 63 ] In this case, the LSM says that it is proceeding by way of the assignment that was executed by the plaintiffs in its favour.

The evidence of the CEO on cross-examination was that the LSM chose to proceed in the fashion that it did because the plaintiffs had already commenced action against Smith (and others), that the facts and issues pertaining to the LSM’s claim, to the extent of the amount paid out of the RF, were identical to those raised by the plaintiffs and that, in the circumstances, the most expeditious and least expensive manner of proceeding was simply to take over conduct of the plaintiffs’ action pursuant to the terms of the assignment. But for that, he said that the LSM would have commenced a separate action.

In Mackinnon , that is precisely what the LSM did. [ 64 ] Paragraph 1(

b) of the statement of claim issued against Mackinnon stated : The Society is a body corporate continued under the provisions of The Legal Professions Act (“the Act ”) established to uphold and protect the public interest in the delivery of legal services in Manitoba.

The plaintiff brings this action pursuant to subsection 47(3) of the Act, and as assignee of the rights of the claimant referred to herein. [ 65 ] I note that the language of the assignment in Mackinnon was identical in all material respects to the language of the assignment in this case as it pertained to the transfer by the party paid out of the RF to the LSM of its “right, title, and interest . . . relating to or in any way arising out of the receipt, misappropriation, conversion, use or other dealing with the Trust Monies.” [ 66 ] What is the meaning or effect of “may” in section 47(3) of the Act which reads in part: The society may bring an action in its own name, alone or in a joint action with the claimant, to enforce those rights. [ 67 ]

Section 15 of The

Interpretation Act , CCSM c I80 provides: Imperative and permissive language 15 In the English version of an Act or regulation, “shall” and “must” are imperative and “may” is permissive and empowering. [ 68 ] Ruth Sullivan, Sullivan on the Construction of Statutes , 6th ed (Markham: LexisNexis, 2014) at 81, 88-89, comments on the importance of a contextual analysis in the meaning of the word “may”: 4.60 Uses of “may” . The legal effect of a provision that uses “may” varies depending on the purpose of the provision and its context. 4.73 In short, focusing on the word “may” is not enough.

In every case, it is essential to consider the meaning of the provision in which “may” is used, the purpose of the provision, its role in the legislative scheme and other relevant contextual features. [ 69 ] Division 3 of

Part 6 of the Act pertains to the RF.

Section 47 is contained therein and relates to compensation and reimbursement out of the RF, recovery of such compensation, the application of any money recovered and the making of rules respecting the RF. [ 70 ] “May” is found in sections 47(1) , 47(2), 47(3) and 47(5) . [ 71 ] In my view, the clear meaning and effect of “may” in those four sections is empowering and permissive, and creates a discretion in the LSM and its benchers respecting the payment of compensation out of the RF, whether to proceed to recover such compensation and the making of rules respecting the RF. [ 72 ] Section 47(4) pertains to the allocation of money recovered and, unlike the sections referred to in paras 70 and 71 above, is imperative or mandatory in stipulating how the LSM “must” pay or apply any money recovered. [ 73 ] I would conclude, therefore, that in matters of this kind, when the LSM decides to pursue recovery, it might be preferable to sue in its own name alone or jointly with the claimant(s), given the scheme of

section 47 . However, it is not mandated to

do so under

section 47, including section 47(3). [74] Where, as here, it has obtained an assignment from the claimants, it is not precluded from proceeding under thatassignment. In this case, the plaintiffs had sued Smith (and others) more than two years before they received payment from, and gavethe assignment to, the LSM. As well, their action claims additional relief beyond the compensatory sum of $47,000.

Thosecircumstances provide support for the LSM’s decision to proceed as it has, although I note that it could have moved to be joined as aplaintiff, rather than commence a separate action. [75] In proceeding under its assignment, the LSM relies upon section 31(1) of The Law of Property Act which, in essence,provides that, “Every debt and any chose in action is assignable at law by any form of writing that contains apt words in that behalf” andthat “the assignee . . . may bring an action thereon in his own name, as the party might to whom the debt was originally owing, or inwhom the right of action originally arose; or he may proceed in respect thereof as though this Act had not been passed.” [76] The LSM argues that the phrase “or he may proceed in respect thereof as though this Act had not been passed” meansthat the LSM can proceed pursuant to the common law as distinct from pursuant to section 31(1) of The Law of Property Act.

Atcommon law, an assignee could not sue in its own name, but rather was required to sue in the name of the assignor. [77] There are a number of cases to that effect. In the Manitoba case of Lang v Graves, (MB KB), [1923]2 WWR 907 (Man KB), the vendor of land assigned the monies due from the sale of the property to a bank as security. The vendor latersued the purchaser and one of the defences was that the vendor was precluded by the assignment from bringing the action in his ownname. That defence was rejected by Dysart J, who wrote (at p 909): By sec. 26(

e) of our King’s Bench Act [RSM 1913, c 46], the assignee . . . may bring an action . . . in his own name . . . or he may proceed in respect of the same as though this Act had not beenpassed. If the

section had not been passed, the assignee could not sue in his own name, but might sue in the name of the assignor, as at commonlaw. In this case the assignee has not brought the action but has approved, though informally, of the bringing of the action by theassignor in his own name.

It seems to me, therefore, that this objection of the defendant must fail. [78] While Lang and many other similar decisions are of considerable vintage, it is worth noting that section 31(1) of TheLaw of Property Act reads essentially the same as it did over 100 years ago. [79] In the result, the LSM says that it is entitled, pursuant to section 31(1) of The Law of Property Act, to proceed as thoughthat Act had not been passed, that is, pursuant to the common law, in which case it could not sue in its own name pursuant to theassignment, but was required to sue in the name of the assignor (the plaintiffs herein). [80] In the course of argument, Smith asserted that if the LSM was assuming conduct of the action pursuant to itsassignment, it was necessary for it to commence an action pursuant to the assignment.

The LSM argued that it had no such obligationand, indeed, pursuant to the common law, it could not sue in its own name. [81] Manitoba, Court of Queen’s Bench Rules, Man Reg 553/88, r 11.01 provides: Where at any stage of a proceeding the interest or liability of a party is transferred . . . to another person by assignment . . . no furthersteps in the proceeding shall be taken until an order to continue the proceeding by or against the other person has been obtained. [82] Form 11A of the Court of Queen’s Bench Rules provides for the form of the necessary order and reads, in part: IT IS ORDERED that this proceeding continue with (name) as plaintiff (or applicant) and (name) as defendant (or respondent) and thatthe title of the proceeding be amended by adding the parties described in this order immediately after the parties named in the previoustitle and the extended title of proceedings shall be used in all documents issued, served or filed after the date of this order. [83] The order in question may be obtained on requisition from the registrar of the court without notice to any other party,though the order, once obtained, shall be served forthwith on every other party.

Rule 11.03 provides that, if no order is obtained within areasonable time, a defendant may move to have the action dismissed for delay. [84] In 1467736 Ontario Ltd v Galli (2003), (ON SC), 48 CBR (4th) 147 (Ont), Master Kellycommented generally on r 11 as follows (at para 9):

The purpose of Rule 11 is simply to ensure that the proper or effective parties to the action are identified in the proceeding before the action proceeds further. It does not seek to interfere with the substantive rights of the parties. [ 85 ] I note that Ontario, Rules of Civil Procedure , RRO 1990, Reg 194, r 11.02(1) to which Master Kelly was referring, is identical to r 11.02(1) of the Court of Queen’s Bench Rules and applies in circumstances where a party is disabled, for example, by bankruptcy, or deceased and therefore unable to pursue the claim.

The rule, however, does specifically provide for transfer by assignment, and requires that a continuation order be obtained. Thus, in the normal course, it would appear that r 11 of the Court of Queen’s Bench Rules would require a continuation order where, as here, the LSM chooses to proceed by way of assignment. [ 86 ] While that is the normal course, I note that to require the LSM to proceed to obtain such an order now would result in further delay and litigation expense. The purpose of a continuation order is to allow parties to know that there has been a change in the status regarding the litigant.

The circumstances here are such that the involvement of the LSM in this litigation is well known to Smith. In my view, it is well past the time to move this action to conclusion, whether by trial or otherwise.

The substantive issues in this action remain to be resolved and should be done so as expeditiously as possible. [ 87 ] Rule 2.03 of the Court of Queen’s Bench Rules provides: COURT MAY DISPENSE WITH COMPLIANCE 2.03 The court may, only where and as necessary in the interest of justice, dispense with compliance with any rule at any time. [ 88 ] In the circumstances, I would dispense with the need for a continuation order pursuant to r 11 of the Court of Queen’s Bench Rules and order that the action shall continue as presently constituted. [ 89 ] In conclusion, I am not persuaded that the motion judge erred or that there is any basis for appellate intervention in respect of Issue No. 2 of this appeal. [ 90 ] I would therefore dismiss the appeal.

There will be no costs. JA I agree: JA I agree: JA