2008 BCSC 829 Battrum v. MacKenzie

Before: The Honourable Mr. Justice Macaulay

Reasons for Judgment

(In Chambers)

Agent for Counsel for the Plaintiff:	V. Critchley
Counsel for the Defendants:	M.H. Grant
Date and Place of Hearing:	20080604
	Vancouver, B.C.

[1] The plaintiff seeks, over the objection of the defendants, to further amend his statement of claim. At issue are the following questions:

(1) Do the proposed amendments raise any new cause of action;

(2) If not, are the proposed amendments otherwise necessary to determine the real questions and would granting them cause undue prejudice or delay; or

(3) If the proposed amendments raise a new cause of action, has the applicable limitation period expired and, if so, should the Court permit the amendments?

For the reasons that follow, I conclude that the application to amend succeeds.

[2] In July 1999, the plaintiff sued Roderick Hector MacKenzie (“MacKenzie”), a barrister and solicitor. The plaintiff alleged in his statement of claim that, in July 1997, he forwarded a cheque to MacKenzie for $103,500 “in trust” (paragraph 3). Of significance, the plaintiff then alleged:

…

(5) The said money was for the immediate purchase of three hundred thousand shares of a company called Anglo-Canadian Gas Corp. which the said [MacKenzie] was an officer and director of.

(6) The Trust conditions were, inter alia, that the funds were not to be released from trust until the shares were issued.

…

(9) The Defendant released the said $103,500 from his solicitor’s Trust Account without ensuring the shares in Anglo-Canadian Gas Corporation were issued under the Terms of Trust, thereby breaching the trust terms to the Plaintiff.

(10) The Defendant knew or ought to have known that at all material times to this transaction, Anglo-Canadian Gas Corporation had no shares for sale under the conditions of Anglo-Canadian Gas Corp.’s registration with the Vancouver Stock Exchange and the Rules of the British Columbia Securities Commission.

(11) The Defendant was in a fiduciary position in respect to the Plaintiff and the Defendant was in a Trust position, as a solicitor, in respect to the Plaintiff at all material times.

(12) The Defendant was in a conflict of interest as a solicitor and as an officer/director of Anglo-Canadian Gas Corp. and as such, the said conflict of interest resulted in damages to the plaintiff because the shares were not issued to the plaintiff or his designate …

(13) The Breach of Trust and conflict of interest of the Defendant towards the Plaintiff has resulted in the Plaintiff losing the sum of $103,500 ...

...

(15) The Plaintiff has demanded return of his money in the amount of $103,500 by [sic] the Defendant, Roderick Hector MacKenzie has refused to pay or is unable to pay the said sum.

(16) The Defendant’s treatment of the Plaintiff and the Plaintiff’s funds in the amount of $103,500 constitutes the Defendant being and acting in a conflict of interest, Breach of Trust and professional negligence as a Barrister and Solicitor practicing in the Province of British Columbia resulting in damages to the Plaintiff for which the Defendant is liable at law.

In his Prayer for Relief, the plaintiff claimed damages, including punitive damages, court ordered interest and costs. Anglo-Canadian Gas Corp. is sometimes referred to as “AOI”.

[3] In October 1999, the plaintiff amended the statement of claim without leave, as permitted by the Rules of Court, to change an address set out in the pleading.

[4] MacKenzie died in March 2000. In December 2001, counsel for the executor of the MacKenzie estate delivered a Notice to then counsel for the plaintiff, pursuant to s. 66 of the Estate Administration Act, R.S.B.C. 1996, c. 122 (“EAA”). The Notice read:

Take notice that Neil MacKenzie, personal representative of the estate of Roderick Hector MacKenzie, late of c/o #2020 – West Georgia Street, Vancouver, B.C., rejects or disputes your claim for $103,500 damages against the estate of Roderick Hector MacKenzie in whole or in part.

If you do not commence legal proceedings in respect of your claim within six months after the date of service of this notice on you, Neil MacKenzie will rely on section 66 of the Estate Administration Act and your cause of action against the estate and Neil MacKenzie will be forever barred.

Section 66 of the EAA requires the party receiving notice under the section to commence action within six months of receipt. There is a question, to be addressed later, whether the section applies to any of the claims in the present case.

[5] In February 2002, the plaintiff retained new counsel. Counsel for the executor re-delivered the s. 66 Notice to him in March 2002. Shortly after that, in April 2002, and by consent, the plaintiff further amended his statement of claim to add the executor of the MacKenzie estate and the estate as defendants in place of MacKenzie personally.

[6] There were no substantive amendments respecting the claims at the time of the April 2002 amendments and, thereafter, the parties proceeded to oral and document discovery. The latter included obtaining documents from non-parties.

[7] During the discovery process, counsel for the plaintiff became aware of documents that he believed supported an allegation of fraud arising out of MacKenzie’s conduct respecting the issuance of the subject shares. During examinations for discovery of the executor in July 2003, counsel for the plaintiff asked questions, which were not objected to, about the alleged fraudulent conduct. It appears that counsel for the plaintiff, and possibly counsel for the defendants, believed that the existing pleadings were sufficiently broad to include these allegations.

[8] In October 2003, counsel for the plaintiff wrote to his counterpart advising that he intended to amend the statement of claim and set out, in the letter, his theory of liability:

…

It is quite clear that Dr. Battrum advanced monies by cheque payable directly to Mr. MacKenzie. Dr. Battrum also spoke with Mr. MacKenzie, who confirmed that he had shares in AOI. Mr. MacKenzie knew his representation to be false and fraudulent. His representation was made to induce Dr. Battrum to give money to Mr. MacKenzie and no adequate accounting of the money has been provided. Mr. MacKenzie knew that the terms of the private placement had not been met, that the company did not have sufficient funds to meet the terms of his placement, and that there was serious wrongdoing in the financial affairs of the company. Mr. MacKenzie made a false declaration to the Vancouver Stock Exchange which he knew to be false, and all of this was done for the purpose of obtaining money from innocent investors such as Dr. Battrum. There is little doubt that Mr. MacKenize perpetrated a fraud or was party to a fraud. Dr. Battrum gave very clear evidence that he relied upon Mr. MacKenize's representations, particularly so, because Mr. MacKenzie was a lawyer.

The trading and the shares of AOI was stopped because of the wrongdoing of the officers and promoters of the company, including Mr. MacKenzie. This was the main cause of the loss.

If the matter is to proceed, then I will include a claim for punitive damages and special costs. I cannot see that it is in the interests of the Estate to defend actions which clearly were fraudulent and which caused the loss suffered by Dr. Battrum in this matter. ...

In December 2003, counsel for the plaintiff delivered an un-filed copy of a further amended statement of claim to counsel for the defendants but the defendants never consented to the proposed amendments. I observe that these allegations were not dependent on the plaintiff establishing a solicitor-client relationship. In that respect, they differed from the allegation that, as a solicitor, MacKenzie owed a fiduciary duty to the plaintiff and was in a position of trust.

[9] For a variety of reasons, including general inattentiveness, counsel for the plaintiff did not deliver a notice of motion seeking to further amend the statement of claim, in the form provided to opposing counsel, until May 2004. The defendants never contributed in any way to this delay.

[10] In June 2004, counsel for the defendants contended that the proposed amendments were barred by s. 66 of the EAA. Shortly after that, counsel for the plaintiff suffered a heart attack and was away from work for an extended period. In the result, the chambers application did not proceed. In fact, no steps were taken in the proceedings until May 2005 when counsel for the plaintiff filed a Notice of Intention to Proceed with the action.

[11] After the requisite waiting period under the Rules of Court, counsel for the plaintiff advised opposing counsel again of his intention to proceed with the application to amend the statement of claim. A number of delays ensued each resulting in a failure to proceed with the application.

[12] The delay was largely and perhaps solely due to the procrastination of plaintiff’s counsel. The plaintiff did not, at any time, authorize or instruct delay. The defendants did not contribute to the delay.

[13] Eventually, the chambers application was set for hearing in May 2007. At that point, plaintiff’s counsel realized that he should not speak to the application and retained independent counsel who appeared as agent at the eventual hearing of the application before me. Counsel for the defendants agreed that I need not consider the additional delay between June 2007 and the hearing of the application before me in calculating the extent of the delay and determining whether the defendants have been prejudiced.

[14] The proposed amendments were delivered to counsel for the defendants in July 2007 and are very similar to the form earlier delivered in late 2003. The proposed substantive amendments, shown as underlined, are, as follows:

6. At all material times, MacKenzie was a director and the president of Anglo Canadian Gas Corp. (“AOl”).

7. At all material times, AOl was a public company incorporated pursuant to the British Columbia Act having its registered office at 6020 Steveston Highway, Richmond, British Columbia. At all material times until on or about March 16, 1998, shares in AOl traded publicly on the Vancouver Stock Exchange, now known as the TSX Venture Exchange.

8. On or about April 30, 1997, MacKenzie consented to and adopted the following resolutions in his capacity as a director of AOl (the “Resolutions”)

a. Whereas AOl had prepared private placement subscription agreements (the “Subscription Agreements”) pursuant to a private placement (the “Private Placement”) agreed to between AOl and certain Placees dated April 11, 1997;

b. And whereas according to the Private Placement, the Placees agreed to purchase an aggregate of 1,250,000 units (the “Units”) of AOl at a price of 34.5 cents per unit, with each Unit consisting of one common share of AOl and one non-transferrable share purchase warrant exercisable for a period of 2 years from the placement date;

c. It was resolved that MacKenzie or any other Director of AOl was authorized to execute such Subscription Agreements and AOl accept the aforesaid Subscription Agreement from the persons named as Placees, namely:

i. Joanne Fletcher

1712 Augusta

Coguitlam, BC, V3E 3C9

ii. Ricardo Munoz

1319 Mahon Avenue

North Vancouver. BC, V7M 2S2

iii. Tim Coupland

1210-2012 Fullerton Avenue

North Vancouver, BC, V7P 3E3

iv. Richard C. Harris

Seven Mile Beach

Grand Cayman

Cayman Islands, BVI

v. Roderick H. MacKenzie

#1001 —466 Moberley

Vancouver, BC

vi. Piptown Investments Ltd.

P.O. Box 116

Road Town, Tortolla, BVI

d. Upon receipt of final acceptance from regulatory authorities of the Private Placement, AOl was authorized to execute a Treasury Order for the issuance of 1,250,000 shares of AOl to the Placees as fully paid and non-assessable shares, for the price of $0.34 per share;

e. AOl should reserve a total 1,250,000 shares for purchase by the Placees on exercise of the Share Purchase Warrants required.

9. The aforesaid Resolutions were made fraudulently in that MacKenzie made them knowing they were false or made them without belief in their truth or made them recklessly, not caring whether they were true or false.

10. The Resolutions were false and fraudulent in that

a. The names Placees were not the actual Placees or investors in AOl;

b. The Placees did not pay for their Private Placement shares;

c. AOl had not received Subscription Agreements from the persons named as Placees; and

d. MacKenzie knew that Placees did not intend to advance the sums of money required to be advanced to AOl under the Private Placement.

11. On May 2, 1997, MacKenzie executed a Declaration (the “Declaration”) to the Vancouver Stock Exchange in which he certified that, inter alia,

a. the filing of the aforesaid Private Placement was in all respects in accordance with policy 16 in Section 3 of the Exchange’s Listing Policy and Procedures Manual;

b. there were no material changes in the affairs of AOl which had not been publicly disclosed;

c. any changes to the terms of the Private Placement since preliminary acceptance had been disclosed.

12. The Declaration of May 2, 1997 was false and was made fraudulently by MacKenzie in that he made it knowing it to be false or made without belief in its truth or made it recklessly, not caring whether it was true or false.

Particulars

a. The individuals named as Placees in the Private Placement were not the actual subscribers to the Units to be issued pursuant to the Private Placement;

b. AOl had not received the consideration payable by the Placees pursuant to the Private Placement;

c. AOl did not have sufficient or any ownership of the funds received to comply with the requirements of the Private Placement.

13. On May 23, 1997, MacKenzie executed a Treasury Order (the “Treasury Order”), authorizing and directing the Montreal Trust Company of Canada, as transfer agents for AOl, to issue certificates for fully paid commons shares in the capital of AOl to the Placees pursuant to the aforesaid Resolutions dated April 30, 1997.

14. In the Treasury Order, MacKenzie certified that the shares to be issued by Montreal Trust Company as transfer agents for AOl, were allotted to the persons names as Placees in the Private Placement and that AOl had received full consideration for the shares.

15. MacKenzie’s certification in the Treasury Order was false and was made fraudulently in that MacKenzie made it knowing it was false or made it without belief in its truth or made it recklessly, not caring whether it was true or false. The certificate was false in that AOl had not received full consideration or any consideration for the shares from the Placees, or at all.

16. On or about July 10, 1997, MacKenzie represented to the Plaintiff that:

a. He was a barrister and solicitor in good standing with the Law Society of British Columbia;

b. $103,500 would purchase 300,000 units in the capital of AOl, each such unit consisting of one share in AOl and one warrant to purchase one additional share in AOl;

c. MacKenzie would deposit the $103,500 paid by the Plaintiff to his trust account and use those monies to purchase 300,000 units of AOI;

d. MacKenzie would hold the 300,000 shares and 300,000 Warrants in AOI in trust;

e. MacKenzie had such units available;

(the "Representations")

17. MacKenzie intended the Plaintiff to rely on his representations, and to be induced by them to advance the sum of $103,500 to MacKenzie for 300,000 such units in AOI, and the Plaintiff was induced by MacKenzie’s representations and did rely on them and did enter into an agreement with MacKenzie to advance $ 103.500. to be held in trust by MacKenzie for 300,000 units of AOI which units MacKenzie was to hold in trust.

18. MacKenzie made the representations to the Plaintiff fraudulently in that MacKenzie made them knowing them to be false or made them without belief in their truth or made them recklessly, not caring whether they were true or false. The representations were false in that:

a. MacKenzie did not have such shares and warrants available;

b. Any shares MacKenzie had were derived from the Private Placement of April, 1997 referred to in this Statement of Claim;

c. The aforesaid Resolutions, Certification and Declaration were false and fraudulent and MacKenzie knew that consequently, any issued shares in AOI including the 1,200,000 Private Placement shares and including 300,000 units he told the Plaintiff he had available, were subject to retraction or cancellation;

d. The aforesaid Resolutions, Certification and Declaration made by MacKenzie were false and fraudulent and MacKenzie knew that the Plaintiff would not advance $103,500. or any sum for shares in AOI or at all, if he knew of MacKenzie’s fraud;

e. The aforesaid Resolutions, Certification and Declaration were false and fraudulent and MacKenzie knew that consequently, trading in shares in AOL was subject to lengthy or permanent prohibition or cessation from trading and suspension by the Vancouver Stock Exchange or the British Columbia Securities Commission and consequently, the value of such shares would be eradicated.

...

29. The Plaintiff says that at all material times, MacKenzie stood in a fiduciary relationship to the Plaintiff and owed the Plaintiff fiduciary duties of honesty, loyalty, fidelity and avoidance of conflict of interest.

30. The Plaintiff says that MacKenzie’s fraudulent misrepresentations and fraudulent conduct as particularized aforesaid amount to a fraudulent breach of trust.

31. Further, the Plaintiff says that the $103,500 paid to MacKenzie was impressed with a trust in favour of the Plaintiff.

...

41. Further, the Plaintiff claims the sum of $103,500 as money received by MacKenzie for and to the use of the Plaintiff.

[15] The plaintiff also seeks to amend the Prayer for Relief, as follows:

a. Rescission;

b. Repayment of the principal sum of $103,500;

c. Interest pursuant to the Court Order Interest Act calculated from July 11, 1997 to December 12, 2003 in the sum of $129,007.88;

d. Interest pursuant to the Court Order Interest Act calculated from December 12, 2003 to date of Judgment;

e. An accounting of the sum of $103,500. paid to MacKenzie;

f. A Declaration that the monies the Plaintiff paid to MacKenzie in the sum of $103,500 are impressed with a trust in favour of the Plaintiff for an Order that the Defendants pay the sum of $103,500 to the Plaintiff;

g. An Order that any necessary inquiries and accounts be made or taken;

h. An Order that the Defendant disgorge any profit, income, or revenue earned with the sum of $103,500. paid to MacKenzie;

i. Damages, including punitive, aggravated and exemplary damages;

j. Costs, including Special Costs;

k. Such further and other relief as this Honourable Court deems just.

[16] No trial date has been set for the action.

[17] Ordinarily, amendments of pleadings are permitted as are necessary to determine the real questions in issue between the parties so long as it is just and convenient to do so: Teal Cedar Products (1977) Ltd. v. Dale Intermediaries Ltd., (1996), 19 B.C.L.R. (3d) 282 (C.A.), at para. 38; and also, G.A.D. v. British Columbia Children’s Hospital, 2003 BCSC 443, at para. 17. In deciding whether it is just and convenient, the court should consider the extent of and the reasons, or explanation, for any delay, as well as the degree of prejudice caused by the delay: Teal at paras. 45 and 74.

[18] The defendants contend, as I will return to later, that s. 66 of the EAA grafts on to the existing limitation periods for new causes of action raised in the proposed amendments so as to fix their expiry in June 2002, six months after delivery of the Notice. According to the defendants, the application to amend should be denied on this basis.

[19] The defendants rely on Ryan v. Moore, 2005 SCC 38, but that decision does not address the issue before me, namely whether to permit an amendment that raises a new cause of action where the limitation period has or may have expired. Instead, the decision focuses on the grafting effect referred to above. I accept the grafting effect. For example, a claim for non-payment of a contractual debt is subject to a six year limitation period as it falls within s. 3(5) of the Limitation Act, R.S.B.C. 1996, c. 266. I have no doubt that delivery of Notice under s. 66 of the EAA grafts on to that limitation period so as to effectively shorten it to six months from the date of delivery. Further, based on Ryan, the principle of discoverability would not apply as to do so would defeat the legislative intent underlying s. 66.

[20] Assuming for the moment that s. 66 applies to any new cause of action arising from the proposed amendments here, Ryan does not address whether to permit the amendment in such circumstance. Other binding jurisprudence does.

[21] When proposed amendments set out a new cause of action and the applicable limitation period has expired, the court will presume prejudice but that does not automatically preclude the amendment. While presumed prejudice is an important factor, all the relevant factors must be considered to determine what is just and convenient. See G.A.D. at paras. 20 and 21.

[22] In the passages referred to immediately above, Ross J. reviewed and applied appellate authority, including Teal, and concluded, correctly in my respectful view, that the presumption of prejudice arising as a result of an expired limitation period is not conclusive on an application to amend. Instead, as set out in Teal, “all relevant factors must be considered in light of what is just and convenient” (G.A.D. at para. 21).

[23] The decisions that the court analyzed in G.A.D. interpret s. 4(4) of the Limitation Act. The section expressly permits me to allow the amendment of a pleading:

… even if between the issue of the writ and the application for amendment a fresh cause of action disclosed by the amendment would have become barred by the lapse of time.

Section 4(1) opens with the words “[i]f an action to which this or any other Act applies has been commenced”; s. 4(4) opens with “[i]n any action the court may allow”. I am satisfied that the s. 4(4) interpretation set out in the decisions discussed in G.A.D. apply here. Section 4(4) is not ousted, as the defendants suggest, by the legislative intent underlying s. 66 of the EAA.

[24] In support of their contention that the discretion to permit an amendment under s. 4(4) of the Limitation Act has no application, the defendants rely on the following decisions of the Court of Appeal: M. (L. N.) v. Green, (1995) 11 B.C.L.R. (3d) 374 (C.A.); Dos Remedios v. Morey (1966), 56 W.W.R. 21 (B.C.C.A.); and Cairney v. Queen Charlotte Airlines Ltd. (No. 1) (1954), 14 W.W.R. 301 (B.C.C.A). None of those decisions address the question whether the court has the discretion under s. 4(4) and the Rules of Court to amend pleadings to permit the raising of a new cause of action after the expiration of a limitation period under the EAA.

[25] Green addressed the requirement under then s. 66(4) of the Estate Administration Act, R.S.B.C. 1979, c. 114, that an action commenced against an alleged tortfeasor who later dies must be continued against the executor or administrator of the estate. Section 66(4) of the 1979 statute is found in s. 59 of the current EAA and I will refer to the section again later to contrast the causes of action that fall within what are now ss. 66 and 59 respectively.

[26] The applicability of s. 4(4) of the Limitation Act and the power to amend was simply not an issue in Green or the other decisions referred to. The decisions are helpful, however, in interpreting the differing application of ss. 66 and 59 of the current EAA and I will discuss them for that purpose later.

[27] It is, in any event, necessary to first determine whether the proposed amendments set out any new cause of action and only, if so, whether such cause of action falls within the ambit of s. 66 of the EAA. If it does, the limitation period expired in June 2002, six months after the original delivery of the Notice, and the presumed prejudice flowing from that will be a factor to take into account along with all others in deciding whether the amendments are just and convenient. If, on the other hand, the amendments do not set out a new cause of action but are simply material particulars of the existing claims which were filed within time, there is no presumed prejudice arising from an expired limitation period.

[28] There is, as I will also discuss, a third possibility, namely that the proposed amendments raise a new cause of action, but not one to which s. 66 applies. In that case, the Notice under s. 66 has no legal effect but I must address whether the applicable limitation period has expired.

[29] Turning to the question whether the proposed amendments raise any new cause of action, our Rules of Court relating to pleadings do not require a plaintiff to specifically identify causes of action. Instead, the pleadings must set out, in “summary form” the “material facts on which the party relies”: Rule 19(1). While the pleader must satisfy those requirements, he or she is not required to identify the cause of action: Alford v. Canada (Attorney General) (1997), 31 B.C.L.R. (3d) 228 (S.C.), at para. 13, affirmed [1998] B.C.J. No. 2965 (C.A.), at para. 5. Once facts are pled, the party asserting them “may raise any argument to be made from those facts”: Canned Heat Marketing Inc. v. CFM International Inc., [1998] B.C.J. No. 2409 (S.C.), at para. 9. This is because any cause of action, in law, is inextricably linked to the underlying facts.

[30] A cause of action is defined as “the fact or combination of facts which give rise to a right to sue”: Romanchuk v. Revelstoke (City), [1999] B.C.J. No. 1181 (S.C.), at para. 14. Accordingly, the focus here should be on the facts set out in the proposed amendments with a view to determining whether they give rise to some additional right to sue that did not already arise from the facts originally pled. The parties disagree on the result of this exercise.

[31] Counsel for the plaintiff contends that the combination of facts originally pled support, albeit imperfectly, claims in fraudulent misrepresentation and fraudulent breach of trust. In such regard, he emphasizes the allegations found in paragraph 10 of the original statement of claim alleging that MacKenzie “knew or ought to have known that at all material times to this transaction [AOI] had no shares for sale under the conditions of [AOI’s] registration with the Vancouver Stock Exchange and the Rules of the British Columbia Securities Commission” and paragraph 11 to the effect that MacKenzie, as a solicitor, was in a fiduciary or trust position relative to the plaintiff. Counsel for the defendants contends that there is no allegation of deceit or fraudulent misrepresentation in the current pleadings but I disagree.

[32] The essence of an allegation of deceit is dishonesty. There is an allegation of dishonesty in paragraph 10 of the existing statement of claim to the effect that MacKenzie, acting as a solicitor, and also a director, knew or ought to have known that AOI could not lawfully offer to sell shares to the plaintiff. Elsewhere, in paragraph 5, the plaintiff alleges that he paid the money for the "immediate purchase" of the shares.

[33] Having said that, it requires a generous reading to extract an allegation of fraudulent misrepresentation from the paragraph even when coupled with the balance of the pleading. Ordinarily, the plaintiff should allege that the representor made material misstatements, knowing them to be false, or at least was reckless whether they were true, that induced the plaintiff to enter into a contractual relationship.

[34] The facts originally alleged, if proven, support a finding that MacKenzie acted dishonestly in relation to the offering for sale and the sale of the shares to the plaintiff. It is alleged that he was acting as a solicitor and then wrongly retained the plaintiff’s money.

[35] The amendments set out in proposed paragraphs 8 to 15 also allege fraud but in a different context. The contention in these paragraphs is that MacKenzie engaged in dishonest conduct including making fraudulent declarations to the regulatory authorities. They may be material particulars but do not give rise to any separate cause of action. Instead, they describe how MacKenzie allegedly created the appearance of a legitimate offering to prospective investors like the plaintiff.

[36] The amendments set out in proposed paragraphs 16, 17 and 18 further particularize the facts respecting the original claims in fraud and breach of trust but also, for the first time, expressly allege fraudulent misrepresentation. I accept that paragraphs 16, 17 and 18 are better particulars of a poor initial pleading rather than a new cause of action.

[37] Counsel for the defendants also contends that proposed paragraphs 29 and 30 allege new duties owed to the plaintiff that have been breached and thereby constitute new causes of action. Again, for the most part, I disagree. Both paragraphs address the legal result of facts previously pleaded, the existence of a fiduciary relationship on the one hand (paragraph 29) and, on the other, the fraudulent misrepresentation and conduct also constituting a fraudulent breach of trust by MacKenzie while acting as a solicitor.

[38] Finally, counsel for the defendants contends that proposed paragraph 41 does not allege facts but sets out a new cause of action. That paragraph reads:

Further, the Plaintiff claims the sum of $103,500 as money received by MacKenzie for and to the use of the plaintiff.

I view this allegation as a potential alternative to the alleged breach of trust by MacKenzie in his capacity as a solicitor but it does not raise any new cause of action.

[39] In case I err in my conclusion that the claim of fraudulent misrepresentation set out in proposed paragraphs 16 to 18 is not a new cause of action, I considered whether s. 66 of the EAA grafts on and abbreviates the limitation period for such a claim. In my view, it does not.

[40] The right to claim in tort for pure economic loss attributable to fraudulent misrepresentation generally expires six years after the date on which the right to bring the action arises: Limitation Act, s. 3(5). See Armstrong v. West Vancouver (District), 2003 BCCA 73, at para. 10.

[41] What then is the reach of s. 66 of the EAA? Section 66 of the EAA does not, in my opinion, extend beyond debt claims against an estate to claims in tort, breach of contract or breach of trust. The section, in its entirety, reads:

Limitation period for disputed claims against estate

66 (1) This section applies if an executor or administrator gives notice in accordance with subsection (2) to

(a) a creditor or person of whose claim against the estate the executor or administrator has notice, or

(b) the attorney or agent of the creditor or person.

(2) The notice must

(a) be in writing,

(b) give notice that the executor or administrator rejects or disputes the claim, and

(3) If notice is given in accordance with this section, the claimant must commence the claimant's action in respect of the claim whichever of the following is applicable:

(a) within 6 months after the notice is given, if the debt or a part of it is due at the time of the notice;

(b) within 6 months of the time the debt or a part of it falls due, if no part of it is due at the time of the notice.

(4) If the claimant's action is not commenced within the applicable time under subsection (3), the claim is forever barred.

(5) Subsection (4) does not bar a claim by a beneficiary of the estate with respect to a claim by the beneficiary against the estate in the person's capacity as a beneficiary.

[42] Having regard to the references to “creditor” in subsection (1) and to “debt” in subsection (3), the legislature intended to provide a means by which the executor or administrator of an estate can force creditors to commence their action within six months rather than having to delay winding up the estate until the expiry of the six year limitation period that would normally apply.

[43] In Meldrum Estate v. Klassen Estate (Public Trustee of), [1998] B.C.J. No. 2532 (S.C.), Josephson J. concluded that the public policy consideration underlying s. 66 “was to enable a timely winding-up of an estate without awaiting the expiration of statutory time limits” (para. 7). Restricting s. 66 to debt claims is also consonant with the interpretation of similar legislation in Ontario: see Re: Graham (1911), 25 O.L.R. 5, at 7 (H.C.), followed in Huffmon v. Breese (1974), 3 O.R. (2d) 416 at 421 (H.C.J.).

[44] I find further support for my conclusion in s. 59 of the current Act and its predecessors. Section 59(6) permits a person who has suffered loss or damage by the fault of a person since deceased, subject to some exceptions not material here, to bring an action against the estate “within the time otherwise limited for the action” but makes no reference to that time being limited in any way by s. 66. Section 59(6) reads:

59 (6) If a person alleges that the person has suffered loss or damage by the fault of another and the person alleged to be at fault dies, the person wronged may

(a) continue against the executor or administrator of the deceased any action on that account pending against the deceased at the time of the deceased's death, or

(b) within the time otherwise limited for the action, bring an action for the loss or damage, naming as defendant in it

(i) the executor or administrator of the estate of the deceased, or

(ii) the deceased.

[45] Earlier, I referred to the Court of Appeal decisions in Green, Dos Remedios and Cairney. All involved tort claims rather than debt claims. A historical review of the legislative history demonstrates that the EAA and its predecessors always differentiated between debt claims and other claims, including those in tort or contract. The following table illustrates:

Limitation periods for various claims against an estate	R.S.B.C. 1948	R.S.B.C. 1960	R.S.B.C. 1979	R.S.B.C. 1996
Bringing new tort action against deceased	s. 71(3)(b): ten months from death if no probate or letters of administration, otherwise six months from death	s. 71(4)(b): ten months from death if no probate or letters of administration, otherwise six months from death	s. 66(4)(b): twelve months from death	s. 59: no additional limitation period
Limitation periods for various claims against an estate	R.S.B.C. 1948	R.S.B.C. 1960	R.S.B.C. 1979	R.S.B.C. 1996
Disputed debt claims	s. 78: six months from either notice or when debt due	s. 78: six months from either notice or when debt due	s. 72(1): six months from either notice or when debt due	s. 66(3) and (4): six months from either notice or when debt due

[46] Of significance is the following. Section 66 of the current Act and its predecessors have always dealt with debt claims and provided for a form of six month notice to commence action similar to current s. 66(4). Current s. 59 has no similar limitation; instead, it effectively incorporates the limitation period from the Limitation Act, or other applicable legislation. Previously, the EAA did provide a shorter limitation period for tort claims although never six months upon notice being given.

[47] The immediate predecessor to s. 59 was s. 66(4) of the 1979 statute. It provided a reduced limitation period of 12 months for most tort claims against the deceased. Then s. 66(4) read:

66 (4) Where a person alleges that he has suffered loss or damage by the fault of another and the person alleged to be at fault dies, the person wronged

(a) may continue against the executor or administrator of the deceased any action on that account pending against the deceased at the time of his death; or

(b) may, if the period of limitation appropriate to the action had not expired at the time of the death and the action is brought not later than 12 months after the date of the death, bring an action for the loss or damage, naming as defendant in it the

(i) executor or administrator of the estate of the deceased; or

(ii) deceased, in which event the action is valid notwithstanding that the defendant is dead at the time the action is brought,

and damages or costs, or both, recovered in the action are payable out of the estate of the deceased person at fault.

This analysis confirms my view that the legislature never intended current s. 66 to apply to tort claims against a deceased person or the estate.

[48] In summary, I am not persuaded that the Notice under s. 66 had any impact on the applicable limitation period in the case at bar. Accordingly, principles such as discoverability, or postponement, might apply to extend the limitation period, if necessary. I turn next to whether I should permit the proposed amendments.

[49] In addition to the objections that some of the proposed amendments raise new causes of action, counsel for the defendants also contends that proposed paragraphs 6 to 15 are otherwise irrelevant and that paragraph 31 is unnecessary. Questions of relevance should be left to the trial judge and I would not deny the amendments on that basis. I also conclude that paragraph 31 may be necessary if the plaintiff fails to establish that MacKenzie acted in his capacity as a solicitor.

[50] Insofar as the proposed amendments provide further particulars of the claims advanced, and raise a new cause of action in fraudulent misrepresentation, there is an obvious interconnection that militates in favour of permitting them. The new cause of action is intertwined with the present claims, largely arises out of the same facts and should be tried in the same proceeding as the other claims.

[51] As to prejudice associated with delay, I keep in mind that where a limitation period expires, the effective time frame for considering prejudice is that occurring after the expiry of the limitation period plus the year available for service of the writ of summons permitted by our Rules of Court. All defendants are at risk in the same way during that cumulative period. See McIntosh v. Nilsson Bros. Inc., 2005 BCCA 297, at para. 8. There is, as a result, a grace period here of seven years, that is, until July 2004 before I should consider the prejudicial effect associated with the further delay to July 2007.

[52] While I do not doubt that the delay is mostly, and perhaps entirely, attributable to counsel for the plaintiff, the defendants are not additionally hampered in their ability to defend as a result of any of the delay that has occurred since July 2004. The proposed amendments stem largely from a review of additional documents, particularly records of the Vancouver Stock Exchange and AOI, which are available to all the parties. I appreciate that an executor is always hampered by the inability to review the issues raised in litigation with the deceased but that is not itself a prejudice attributable to the delay in this case including delay pre- and post-expiry of the limitation period and time for service. MacKenzie died in March 2000 so the executor was hampered long before the expiry of the limitation period. Finally, I observe that there is no evidence here to suggest that any relevant documents were destroyed or lost during the period of delay.

[53] There is presumed prejudice arising from the expiration of the limitation period in relation to the new cause of action but that is just one factor to consider in light of the others that I have identified. I also note that the defendants were put on effective notice of the claim in fraudulent misrepresentation in the fall of 2003, well before July 2004.

[54] I am left with two further general prejudicial effects of delay in this case, first, the inevitable erosion of witnesses’ memories associated with the passage of time and, second, that the litigation delay likely precludes the timely distribution of the MacKenzie estate. The issues raised by the proposed amendments are sufficiently interconnected that I doubt that any significant additional prejudice arises if I permit them. As to the second effect, the proposed amendments do not render the litigation more complex than it already was. Distribution of the estate necessarily awaits resolution of the original claims as well as the additional cause of action.

[55] Taking into account all the factors discussed, I find it just and convenient to grant the application to further amend the statement of claim. Costs will be in the cause.

"M.D. Macaulay, J."

The Honourable Mr. Justice Macaulay

Citation:	*Battrum v. MacKenzie,*
	2008 BCSC 829