There are numerous technical traps a lawsuit can fall into which will need to be corrected before the matter moves forward. Generally speaking, the current norms of practice are for the parties to sort out any technical deficiencies between themselves so court time can be devoted to arguing the substantive issues in dispute. The Rules of Civil Procedure support this approach (see, for example, Rule 2 of the Rules of Civil Procedure).
In the context of estates litigation, a common technical errors including naming an estate as a party as opposed to the estate trustee. Estates are not like corporations – estates are not a distinct entity capable of commencing or defending a lawsuit. Rather, estates are a type of trust whose interests are represented by the estate trustee (see Rule 9).
Another common trap is the failure to obtain an order to continue after a party dies while litigation is ongoing. In that case, the litigation is automatically stayed (i.e. paused) until the litigation is continued in the name of the deceased’s estate trustee (see Rule 11).
While failure to correct any of these technical deficiencies may result in the litigation being dismissed, the courts tend to be lenient. However, when the technical errors pile up and there is unexplained delay in advancing the litigation, the risk of dismissal should not be ignored.
At first glance, there did not appear to be anything wrong in the case of Edward Sobie, Executor v. Sobie. In that case, Edward, acting in his capacity as estate trustee of his father’s estate, brought a lawsuit against his cousin, Fredrick Sobie and a corporation, Titan. The technical deficiencies only came to light years into the litigation when the defendants began to do some digging.
By way of background, Fredrick owned a house at 14 Norris. The neighbouring house, 16 Norris, was owned by Edward’s father, Stanley. When Stanley passed away in 2009, he left 16 Norris to his son Edward, making Edward and Fredrick neighbours.
In 2012, Edward commenced an action against Fredrick and Titan claiming (i) an easement over a portion of the laneway at 14 Norris; (ii) adverse possession of a portion of the yard at 14 Norris over which Edward’s shed extended; and (iii) damages against Titan for causing flooding to his property, 14 Norris, when Titan performed work at 16 Norris.
A brief chronology of events illustrate the slow pace of the litigation:
- 2012 – Edward served his statement of claim.
- 2013 – Fredrick delivered his statement of defence.
- 2014 – Fredrick’s counsel asked for Edward’s affidavit of documents and dates for examinations for discovery.
- 2015 – Edward delivered his affidavit of documents.
- 2016 – Titan delivered its affidavit of documents.
- 2017 – Fredrick delivered his affidavit of documents.
In 2017, Fredrick’s lawyer asked about the ownership of 16 Norris and for copies of Stanley’s will and the certificate of appointment of estate trustee. When no response was received, Titan’s lawyers performed a title search of 16 Norris and discovered two things: (i) that Edward and his sister were named and acted as estate trustees of their father’s estate; and (ii) ownership of 16 Norris was transferred from Stanley to Edward and his sister (as estate trustees) in 2016, then immediately transferred to Edward as sole owner.
Fredrick’s counsel wrote to Edward’s counsel to point out that (i) the litigation had been improperly commenced, as it should have been brought by Edward and his sister as co-estate trustees; and (ii) once ownership of 16 Norris was transferred to Edward, Edward should have obtained an order to continue the litigation in his personal capacity.
While these technical errors may seem small, Fredrick’s counsel pointed out that his client did not wish to incur costs in an action where there may be costs against an estate that had already been wound up. As a result, Fredrick refused to move forward with any further step in the litigation until the matter was addressed.
The matter was set down for a status hearing four days shy of the five year anniversary of its commencement. At that time, Fredrick sought to have the action dismissed for (i) delay, (ii) failure to properly constitute the action within a reasonable time, and (iii) failure to obtain an order to continue within a reasonable time.
The court granted Fredrick’s request and dismissed Edward’s action on the following grounds:
- Delay: Dismissal for delay is allowed under rule 48.14. Edward bore the onus of showing why his action should not be dismissed: first, Edward must provide an acceptable explanation for the delay; and second, Edward must show that the defendants would not suffer non-compensable prejudice. Edward failed both branches of the test.
- Proper Constitution of the Claim: Edward and his sister were appointed as co-estate trustees in 2010, two years before the action was commenced. It was not until 2018 that steps were taken to add Edward’s sister as co-plaintiff, and only after the error was pointed out by opposing counsel. Edward did not move within “reasonable time” to correct this error as required by rule 9.03(6).
- Order to Continue: When 16 Norris was transferred out of the estate to Edward in 2016, Edward was required to obtain an order to continue. No steps to do so were taken until 2018, and only after the error was pointed out by opposing counsel. Edward did not move within “reasonable time” as required by rule 11.03.
The take-home lesson: delay doesn’t pay.