Considerations on Service of a Statement of Claim

 by Michaela Kocon

In today’s increasingly litigious world, it is imperative for both those in the legal field and non-legal field who may be involved in litigation to have a solid understanding of the service requirements for a Statement of Claim. This includes both serving a claim on an opposing party and being served as a Defendant. In some cases, consideration must be given where service may be deemed sufficient, even in situations where a document is not formally served according to the Alberta Rules of Court, Alta Reg 124/2010 (the “Rules”).

What the Rules say

Rules 3.26-3.28 specifically outline the formal service requirements of a commencement document, setting out very strict requirements for proper service. While service of all types of documents is governed by the Rules (see Part 11, Division 2: Service of Commencement Documents in Alberta for further information), a commencement document has specific and unique requirements. Failure to ensure a Statement of Claim is served within the required time period can be fatal to a claim, no matter how strong it may be. Generally, a claim must be served within one year as stated in the Rule below:

3.26(1) A statement of claim must be served on the defendant within one year after the date that the statement of claim is filed unless the Court, on application filed before the one-year time limit expires, grants an extension of time for service.

How can an extension be granted?

There are certain circumstances in which the Court will permit an extension of time for service to be granted up to a maximum of three months. This time limit is designed to prevent unnecessary litigation delays, balancing “a Plaintiff’s needs with the prevention of undue delay” (Oberg v Foothills Provincial General Hospital, (1999), 232 AR 263). Rule 3.27(1) outlines the circumstances governing an extension:

(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.

What happens if the claim is not served in time?

Rule 3.28 states that if a Statement of Claim is not served within the time period outlined in 3.26 (one year with a potential additional 3 months), the Plaintiff is unable to take any further proceedings against the Defendant. This means the claim will no longer be active.

There are a number of decided cases that uphold the “strict and mandatory limit on service of a Statement of Claim” (Foster v Robb, 2011 ABQB 776). In Foster, the Court dismissed the Plaintiff’s case for failing to serve in accordance with the Rules. The Court referenced several other cases that upheld the principles developed in the old Rule 11, which have been incorporated into Rules 3.26-3.28. These are the principles referred to in Foster:

·         Failure to serve a Statement of Claim on time leaves the Court with little or no options (Martinez v Hogeweide, 1998 ABCA 34);

·         After a Statement of Claim expires, service is impossible (Hansraj v Ao, 2004 ABCA 223, para 63); and

·         Exceptions to the service requirements in the Rules are rare. In these exceptional circumstances, the onus is on the Plaintiff to show that service should be considered valid (Hiep v Cain, 2004 ABQB 876, paras 25 and 66).

The Court of Appeal in Martinez also rejected the idea that Rule 11 was optional or discretionary, and suggested the Court cannot cure a Plaintiff’s failure to serve through an Order.

If you are a Plaintiff:

If you have filed a Statement of Claim against someone, you will want to confirm it is served properly according to the Rules (Rules Part 11, Division 2). This will ensure the claim remains valid and active, at least as far as service is concerned; if the Defendant contests service and the claim has not been served in accordance with the Rules, Courts can deem service to be invalid. In a recent Alberta Court of Appeal case, Al-Ghamdi v College and Association of Registered Nurses of Alberta, 2020 ABCA 81, the Court ruled that no further proceedings could be taken against Defendants “who were not served in time pursuant to [Rule] 3.28”, which highlights the importance of ensuring service is performed properly. A Plaintiff can prove service through an Affidavit of Service or an Order validating service to safeguard their claim.

Despite the strict requirements of the Rules, the Court has discretion to grant an order deeming service sufficient. There are circumstances in which Courts have considered service to be valid even where a document has not been served in accordance with the Rules. In Clarke v Treadwell, 1997 ABCA 206, the Court of Appeal held that even knowledge of a claim was enough to consider service to be sufficient where the Defendants “had actual and substantial, though perhaps imperfect knowledge of the contents of the Statement of Claim” issued within the limitation period (para 3). In Cloutier Estate v Caterpillar of Canada Ltd., [1997] A.J. No. 1009, the Court of Queen’s Bench referred to Clarke, noting:

The Defendants were aware of the lawsuit during the currency of the Statement of Claim. The Plaintiff was dealing with the Defendants Insurer and the Defendants expected the Insurer to defend the lawsuit, as it was obliged to do.

This shows that in some cases, with sufficient awareness of the existence of a claim and its contents, formal service is not necessarily required for a Court to find that service is valid, and cannot be used as grounds to have a claim dismissed.

If you are a Defendant

The Rules outline strict service requirements as a method of ensuring a Defendant has sufficient notice of a claim against them to properly defend the lawsuit. If a Defendant is unable to defend themselves, a Plaintiff could obtain default judgment after noting the Defendant in default, obtaining an Order which may be unfair. The Court of Queen’s Bench discussed this issue in Ritter v Donell, 2005 ABQB 197, recognizing that defects in service are cured if the Defendant has notice, can respond, and is not prejudiced. If these factors are met, the Defendant cannot obtain an order determining service to be insufficient.

While it may appear that this test is seemingly simple, the Courts have differentiated between no service and defective service. They have recognized that there is a distinction between the two, and cautioned that a Defendant’s mere knowledge about the possible existence of a lawsuit is not enough to consider service to be sufficient (Ranger v Ferreira, 1999 ABQB 625, para 20). In Ranger, the Court of Queen’s Bench also cited Bolingbroke v Bolingbroke, 2001 ABQB 40 at para 12, noting “a Court can deem defective service of a document to be good and sufficient”. This should not be confused with complete lack of service.

Pursuant to Rule 11.31(1), a Defendant may apply to set aside service of a commencement document, but only before filing a Statement of Defence. This is imperative to keep in mind if making an application to set aside service.

Conclusion

It is important to consider all the above factors involving service of a commencement document within the required time period. Today’s litigation world is increasingly complicated and service is one of the most vital factors in safeguarding that a claim will be able to proceed. Retaining effective legal representation to ensure a claim is properly served and defended as required by the Rules and shaped by significant caselaw is always recommended.

With a strong reputation in commercial litigation, McLennan Ross LLP is well-positioned to provide you with exceptional advice and representation. If you have any questions or concerns with respect to a Statement of Claim or any other litigation matter, please do not hesitate to contact Michaela Kocon, Peter Major, Q.C., or any member of our Commercial Litigation Team.

Gaining Access to Experts’ Foundational Materials

By Lydia Roseman

Background

The disclosure of expert reports and their supporting data is a widely litigated area.

The jurisprudence in all Canadian jurisdictions is fairly consistent that a party is entitled to the foundational or underlying material of an opposing party’s expert report at some point. As stated by the Supreme Court, “the opposing party must be given access to the foundation of [expert] opinions to test them adequately”.[1] This disclosure requirement applies even to factual underpinnings that the expert had in its possession but did not actually use in creating its ultimate report.[2]

The dividing issue when it comes to the factual underpinnings of expert reports is when they must be produced. Some courts and jurisdictions consider production required when an expert report is served, for others it is only when the report is entered at trial or the expert is called to testify.

The Rule

Recent Alberta jurisprudence generally only requires production of underlying materials to expert reports once the report has been entered at trial or the expert has been called to testify.

This is a departure from previous case law and from the jurisprudence in most other jurisdictions.[3] Older Alberta jurisprudence under the previous Alberta Rules of Court generally held that once an expert report is served, privilege is waived and the opposing parties are entitled to the underlying materials.

Under the previous rule, Rule 218.1, the party was required to serve a copy of the expert report including “the substance of his opinion”. In a 1985 decision, the Alberta Court of Queen’s Bench concluded that the substance of the opinion includes not only the opinion but the factual information upon which that opinion is based.[4]

The Alberta Court of Queen’s Bench eventually diverged from this opinion in 2005 in Chernetz v Eagle Copters Ltd,[5] preferring upholding privilege over trial efficiency. The Court held that privilege is not waived over the underlying materials until the expert report is entered, or the expert is called, at trial. This also means that if the expert report is not ultimately used at trial, privilege over the foundational materials is never waived.

Despite a 2008 Alberta Court of Appeal[6] decision emphasizing the importance of early production of the information underlying expert reports, new Alberta cases since the introduction of the 2010 Alberta Rules of Court have generally followed the Chernetz line of reasoning, holding that privilege is not waived over the underlying materials until the report is entered or the expert is called at trial.

For example, in Grammer v Langpap,[7] Master Smart dealt with an application for the production of underlying documents to an expert report that was voluntarily disclosed to them by the plaintiff.

In conclusion, Master Smart said:

“Despite the laudable objectives of the foundational rules when noting the limited ability to question experts before trial under the rules and absent clear language in the rules altering litigation privilege historically afforded to litigants, I'm not prepared to order the production of the experts underlying documents in these circumstances”.[8]

Master Smart applied Chernetz and found that litigation privilege continued to exist for those documents not compelled to be disclosed until trial. Privilege therefore continues to win the day over trial efficiency in Alberta jurisprudence.

The Way Around

There is however a “go-around” in the form of Rule 5.37 for the questioning of experts before trial.

Rule 5.37 allows a party to question an opposing party’s witness prior to trial by agreement or in “exceptional circumstances”. Where a successful application is brought, the party can question the opposing expert on their report and all underlying materials, which are required to be disclosed at that time.

This “exceptional circumstances” test has been applied in applications seeking the production of the foundational materials to an expert report, independent of an application to question the expert.[9] This potentially allows a party to gain access to the foundational materials well in advance of trial. The difficulty is that the court will only grant such an application in “exceptional circumstances”; however, one case shows that efficiency considerations can be enough to satisfy this requirement.

In M (BJ) v M (SL),[10] the Court dealt with an application under Rule 5.37 for questioning an expert before trial. The Court found that exceptional circumstances existed because this was a particularly complicated family matter and the pre-trial questioning “may well result in a reduction in the time and complexity of the forthcoming trial”.[11] The judge also thought that the questioning might reduce the number of experts or even lead to settlement.

The Court found that granting the application “with a view to achieving some or all of these results is consonant with the foundational rules set forth in the Rules”.[12] The Court therefore allowed the questioning of the expert approximately three months before trial, including requiring that the opposing party produce the documents reviewed in preparing the report.

Of note, Rule 8.4(3) of the Alberta Rules requires that parties requesting a trial date certify that expert reports have been exchanged and that the questioning of experts is complete. There is, therefore, a general expectation that a Rule 5.37 application will be brought early in the litigation process, before the matter is set for trial.

Takeaway

If you are involved in litigation involving experts, you will be entitled to the foundational material of any opposing party’s expert report so that you and your expert(s) can adequately test the validity of that report. Under recent Alberta jurisprudence, this entitlement does not arise until the expert report is entered at trial or the expert is called to testify. This leaves little time for testing.

One potential route to earlier production of these factual underpinnings is through Rule 5.37. Where “exceptional circumstances” exist, the Court may order the production of the underlying materials earlier in the litigation process. While “exceptional” on its face is a difficult bar to meet, the Court has previously granted such an order based entirely on efficiency considerations as codified in the Alberta Rules of Court. Gaining early access to these materials may be very helpful to your case, whether for settlement discussions or informing your own expert’s report

Our Commercial Litigation group would be happy to help you with questions regarding expert reports or any other aspect of the litigation process.

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[1] R v Stone, [1999] 2 SCR 290 at para 99.

[2] Lamont Health Care Centre v Delnor Construction Ltd, 2002 ABQB 1125.

[3] For example, in Ontario the foundational materials must be produced when an expert report is served in accordance with Rule 53.03, in other words at a minimum of 90 days before a pre-trial conference: Moore v Getahun, 2015 ONCA 55; Galea v Best Water Limited, 2019 ONSC 7213.

[4] Commonwealth Construction Co v Syncrude Canada Ltd (1985), 64 AR 132 at para 22 (QB).

[5] 2005 ABQB 712 [Chernetz].

[6] Deloitte & Touche LLP v Institute of Chartered Accountants of Alberta, 2008 ABCA 162.

[7] 2014 ABQB 74 [Grammer].

[8] Ibid at para 10.

[9] See e.g., Grammer, ibid.

[10] 2012 ABQB 731.

[11] Ibid at para 29.

[12] Ibid.