Considerations on Service of a Statement of Claim

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 Martinezalso 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 King'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 King'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 King'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.