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October 2013




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We are pleased to be serving full afternoon tea at the Four Seasons during our afternoon session- see p.2 for more details Featured Cases: P9

Expropriation; Rate of Interest; Evidentiary Burden; “Usual and Prudent� ~With Counsel Comments


Insurance; Equitable Defence; Trial by Jury ~With Counsel Comments


Sexual Assault; Disciplinary Hearing; Witness Statements; Procedural Fairness


Concurrent Criminal Proceedings; Property Disposal; Adjournment; Right of Appeal


Family Law; Child Support; Guideline Income; Corporate Pre-Tax Income

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Gimbel v Alberta (Public Works, Supply & Services), 2013 ABCA 290 Areas of Law: Expropriation; Rate of Interest; Evidentiary Burden; “Usual and Prudent” ~Evidentiary burden borne by claimants seeking interest under Expropriation Act~ CLICK HERE TO ACCESS THE JUDGEMENT



he parties had been involved in protracted litigation over the respondent’s expropriation of the appellants’ lands. The expropriated properties consisted of a parcel owned by Dr. Gimbel and Mrs. Gimbel as joint tenants and two adjacent parcels owned by Carl Management Ltd. (“Carl Management”) of which Dr. Gimbel was the sole shareholder. The proceedings to determine the compensation payable came before the Land Compensation Board (the “Board”) in 1995. The matter was decided in 1997 and the Board’s decision was appealed, returning before the Board for a re-hearing. A new decision was rendered by the Board ordering the respondent to pay an additional sum in compensation. The matter continued as the appellants sought interest on the compensation payments in accordance with s. 66(1) of the Expropriation Act, R.S.A. 2000, c. E-13 (the “Act”) for the period between the initiation of the expropriation proceedings in 1995 to the date they received final compensation in 2006. The Board awarded the appellants October 2013

interest, however, the interest award was calculated on an investor’s rate based on the 90-day T-bill rate rather than the “cost of borrowing” rate sought by the appellants. On appeal of the Board’s decision on interest, the Court of Appeal confirmed that the “default position” for the interest rate awarded under s. 66(1) of the Act is the investor’s rate and that the onus lies on the claimant to prove that it ought to be the borrower’s rate. However, the Court held that the Board’s decision to base the investor’s rate on the 90-day T-bill rate was not supported by the evidence and that the Board ought to have determined how a prudent investor would have invested the expropriation proceeds. The matter returned once again to the Board where the Board denied the appellants claim once again that the default position should be an award of interest based on the cost of borrowing. The Board made several findings based on its review of the investment practices of Dr. Gimbel, Mrs. Gimbel and Carl Management. The Board found that Carl Management had changed its investment strategy three times throughout the applicable period and determined an interest rate for each period. For the first period, the Board concluded that


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Gimbel v Alberta (Public Works, Supply & Services), (cont.) a savings account interest rate applied as there had been insufficient evidence of Carl Management’s investment practices and no evidence of an investor’s rate during that period. This was the only interest rate relating to Carl Management that was appealed. The Board treated Dr. Gimbel and Mrs. Gimbel separately on the basis that they had distinct investment accounts and strategies. The Board concluded that Dr. Gimbel’s usual and prudent investment strategy was to invest money in his own

companies, which exhibited no rate of return, and in his RBC Dominion Securities account, which yielded 9% annually. As a result of the “dual investment track”, the Board awarded interest at a rate of 3%. Mrs. Gimbel followed a similar “dual investment track”, but primarily invested in her RBC Dominion Securities Account, which also yielded 9%, and was awarded interest at a rate of 4.5%. The parties appealed the interest rates awarded.

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Gimbel v Alberta (Public Works, Supply & Services), (cont.) APPELLATE DECISION


he appeal was dismissed primarily on the basis that the appellants had failed to meet their evidentiary burden to prove that the Board ought to have awarded the Gimbels and Carl Management different interest rates. Use of the phrase “usual and prudent” investment practices to determine the just rate of interest under s. 66(1) of the Act is based on an objective standard and, in this case, includes Dr. Gimbel’s injections of capital despite a nil rate of return. The appellants argued that the Board had erred by treating the Gimbels

October 2013


separately rather than as joint tenants and by ignoring an agreed statement of facts when it had determined the interest rate awarded to Carl Management. However, the Board’s decision to treat the Gimbels separately and assign different rates was supported by the evidence as they had used different investment strategies. The Appellants also failed to provide evidence regarding the proportions of money invested in each track. This lack of evidence left the Board to reasonably rely on viva voce evidence and infer rates based on what evidence it had.

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COUNSEL COMMENTS Gimbel v Alberta (Public Works, Supply & Services) Comments provided by Tim Mavko, Counsel for the Respondent


n a perfect world, landowners would get paid the day their lands are expropriated. But where the landowners and the expropriating authority can’t agree, and the Land Compensation Board (or a court) is asked to determine the amount, there can be a lag between the date the land is expropriated and the date full compensation is paid. That’s what happened in this case: the land was expropriated in 1995, but because of appeals and re-hearings, the final compensation was not determined and paid until 2006. This meant the landowners had to wait 11 years for some of their money.

Tim Mavko

S.66 of the Expropriation Act addresses that delay. It says that “[a]n expropriating authority shall pay interest at a rate the Board considers just… with respect to … compensation for the land”. The question, then, and the subject matter of this appeal, is how is the Board to determine what is just? In 1984 the Alberta Court of Appeal gave some guidance. In Mannix v Alberta (1984), 56 AR 221, 31 LCR 299 the Court of Appeal said that “[...] an owner should be compensated for such income as he would have received had he followed the usual and prudent investment practices, or, if it is illustrated, for the cost of usual and prudent borrowings.” This introduced two concepts. First, the just rate of interest is tied to the circumstances of the landowner. Second, depending on the circumstances, that just rate might be an investor’s rate (i.e. the rate one might earn from usual and prudent investing) or a borrower’s rate (i.e. the rate one might earn from usual and prudent borrowing). In 2008, in the earlier appeal in the present case (Gimbel v Alberta (Public Works, Supply and Services), 2008 ABCA 262 - “Gimbel #1”), the Alberta Court of Appeal said that the just rate requires evidence. But how much evidence is needed? And what happens when the landowners, who control the evidence, pick and choose what they will adduce? That was the


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COUNSEL COMMENTS dilemma faced initially by the Board at the re-hearing of this case, and then by the Court of Appeal on this appeal. The Court of Appeal provides a couple of answers. First, the Court says that in the absence of evidence supporting a borrower’s rate, an investor’s rate is the default position. (This, though, is not really new but just confirms what was said earlier in Mannix and Gimbel #1.) More importantly, though, this decision says that while the circumstances of the landowners need to be taken into consideration, ultimately the determination of a just rate of interest must be based on an objective standard. A just rate is to be determined by “what the reasonable and prudent person, in the same circumstance as the claimant before it, would have done with the money.” So the take-away is that there needs to be some evidence about two different things: the circumstances of the landowner(s); and what a reasonable and prudent person would do in those circumstances. This evidence need not be perfect, or even complete, but there needs to be enough upon which the Board (or a Court) can make a decision.”

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A note about Counsel Comments: The opinions and views expressed in Counsel Comments are the opinions of the contributing authors and do not necessarily reflect the opinions or views of OnPoint.

October 2013


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Coulter v Co-operators Life Insurance Company, 2013 ABCA 295 Areas of Law: Insurance; Equitable Defence; Trial by Jury ~Equitable defence of rescission arising from misrepresentation bar to trial by jury~ CLICK HERE TO ACCESS THE JUDGEMENT



he deceased in this case had taken out a life insurance policy with the respondent, Co-operators Life Insurance Company, many years prior to his death. Less than two years before he died, the deceased decided to add extra coverage. The respondent paid out the full amount with interest under the main policy but denied paying the extra coverage on the basis that several details of the deceased’s written application for the additional coverage were false. As a result, the respondent argued it had elected to rescind the extra insurance and refund the applicable premium. The beneficiary sued under the policy and sought trial by jury under s. 17(1) of the Jury Act, R.S.A. 2000, c. J-3 (“Jury Act”). However, the respondent opposed, arguing that their defence, that the extra insurance had been obtained by misrepresentation, was equitable in nature and thus barred a jury. The Chambers judge agreed with the respondent and held that a jury was not permitted in this case.

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Coulter v Co-operators Life Insurance Company, (cont.) APPELLATE DECISION

The appeal was dismissed on numerous grounds. In Alberta, there is no common-law right to a jury and civil juries are rare. The requirement under the Jury Act for an “amount claimed” had not been met as a claim for rescission is not a claim seeking an amount of money. Further, it is well known that juries are not possible for claims for equitable relief and this principle extends to equitable defences, such as the one raised by the respondent for rescission of the insurance policy. Even if the respondent’s defence were in substance a cross-action, the whole issue was equitable going to whether there was misrepresentation or nondisclosure by the deceased. The Court of Appeal affirmed the long-standing principle that equitable claims or defences cannot be made before a jury was neither a mere technicality nor a rule of the past. The majority of equitable claims are discretionary. This means there is no set of facts which entitles either party to demand a verdict, leaving the judge no choice. Instead, there is a list of factors which are relevant and required to be weighed without any single factor or combination being decisive. Futher,

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judges do not just weigh such factors, but they read case law that provides guidance on how to fit the factors together and helps determine the relative weights to give to each. Judges also engage a coherent philosophy that underlies the principles and maxims of equity which carries over from one remedy or equitable rule to another. Thus a jury is suited for cases which do not involve discretion where a judge can charge the jury on the law and issues, and tell them what verdict they must give based on what is proven or not. The appellants also argued that the respondent’s claim was actually statutory in nature arising from the Insurance Act, R.S.A. 2000, c. I-3, ss. 567, 568 (“Insurance Act”) and had nothing to do with equity. However, the Court determined that it was not a statutory defence, and even if it was, it “talks and walks like an equitable right and remedy” and it would not be practical for a jury to try and administer a “statutory clone of it”. Nor does the word “voidable” found in s. 567(2) of the Insurance Act operate to exclude the possibility or the need to ask the court for the traditional judgment of rescission.


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COUNSEL COMMENTS Coulter v Co-operators Life Insurance Company Comments provided by Chad J. Brown, Counsel for the Appellants


he issue presented in Coulter v. Co-operators Life Insurance was whether the Appellants, who were Plaintiffs suing to enforce benefits payable under a life insurance contract, were entitled to a civil jury trial. The Jury Act’s mandatory language requires that any action founded on a contract, and exceeding $75,000, “shall” proceed by jury on application by either party to the proceeding. As an action to enforce a life insurance policy is simply an action to enforce a contract, the Appellants argued they were, prima facie, entitled to a trial by jury.

Chad J. Brown

Although the Jury Act enumerated certain complicating factors which could deprive a litigant of a jury trial, neither the chambers judge nor the Court of Appeal found those factors to be applicable in this case. Instead, both Courts accepted the Respondent insurer’s primary argument in opposition to Appellants’ motion, which was a novel one. The Respondent argued that by pleading the policy was voidable by the insurer due to an alleged misrepresentation by the insured, it was seeking relief in the nature of contractual rescission, an equitable remedy developed by the Judges of the English Court of Chancery sitting without juries. As equitable remedies are only applied through the exercise of judicial discretion, Alberta Courts have consistently found that actions seeking equitable relief are unsuitable for juries. The Jury Act is silent on the issue. The Appellants challenged the Respondent’s position on two fronts. Firstly, the Appellants noted that the Respondent’s Statement of Defence did not plead the words “equity” or “rescission” and that the Respondent had only pled the statutory right to “render the contract voidable” under sections 567 and 568 of the Insurance Act. The Appellants’ position was that the defence of equitable rescission had not been pled, and as such, it could not be relied upon to resist the Appellants’ motion.


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COUNSEL COMMENTS Secondly, the Appellants argued that the defence of equitable rescission is no longer available in the context of life insurance contracts in any event. Historically, the broad and flexible remedy of equitable rescission could be sought by an insurer to rescind a policy where the insured had made a misrepresentation during the formation of insurance contract. However, the Appellants argued that the equitable remedy was displaced when the provisions of section 567 and 568 of the Insurance Act were enacted. Under the Insurance Act, the circumstances at which point the contract is voidable at the option of the insurer are much more restrictive than a Court would face if contemplating the equitable rescission remedy. The Appellants argued that if the broad equitable remedy continued to co-exist, it would make the more restrictive statutory remedy redundant. It was suggested that the Legislature, in enacting the provisions, intended to restrict the circumstances where contractual rescission of a life insurance contract can be granted to those identified in the statute. As such, the Appellants argued there were no equitable issues to be addressed by the jury, because the remedy granted to the insurer was governed by statute alone. The appeal was ultimately dismissed by Côté, J. (Veldhuis, J. concurring) after conducting a lengthy analysis. In the opinion of the writer, the majority of the Court failed to address the practical question raised by O’Ferrall, J. in his dissent: What equitable function would a jury be required to perform in this case? The only question to be answered by the jury is whether or not the insured failed to disclose facts, or made a misrepresentation with respect to facts, material to the insurance. As noted by O’Ferrall, J., those are questions of fact which juries are particularly well‑suited to determine. There is no equitable discretion to be exercised by the jury after the finding of fact is made. The remedy flows automatically from the legislation, which states that the contract is voidable at the behest of the insurer. In conclusion, this case is an example of legal and historical technicalities being utilized by the insurer in order to avoid an unwanted jury trial. Defence counsel in Alberta may, hereafter, choose to plead equitable rescission in addition to the statutory remedy which has two possible benefits. Firstly, the insurer can circumnavigate the risk of a jury trial in sympathetic cases, and secondly, they might argue that the Court of Appeal in Coulter v. Co-operators Life Insurance has tacitly endorsed the concurrent existence of the broader equitable remedy of rescission.”

October 2013


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Dalla Lana v University of Alberta, 2013 ABCA 327 Areas of Law: Sexual Assault; Disciplinary Hearing; Witness Statements; Procedural Fairness ~Evidence of expert went to ultimate issue of matter and therefore not admitted at hearing~ CLICK HERE TO ACCESS THE JUDGEMENT



he complainant and appellant were students at the University of Alberta. After a university residence party, the complainant alleged that the appellant sexually assaulted her. A university disciplinary officer reviewed the investigation report prepared by Campus Security Services, interviewed the parties, concluded that the appellant had breached the University’s Code of Student Behaviour (the “Code”), and recommended that he be expelled. The appellant appealed to the University Appeal Board (the “Board”). The appellant’s counsel had hired a private investigator to interview witnesses who had observed the parties at various points throughout the evening of the alleged assault.


The appellant’s counsel was advised by the appeals co-ordinator that if he intended to use the witness statements at the hearing then he was required to disclose them and counsel for the appellant disclosed them on this basis. The statements were subsequently used by opposing counsel at the hearing to cross-examine some of the witnesses. After six days of hearing evidence and submissions, including testimony from several witnesses and the physician who treated the complainant after the alleged sexual assault, the Board confirmed the disciplinary officer’s decision but reduced the penalty to a three-year suspension followed by a three-year notation on the appellant’s transcript. The appellant’s application

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Dalla Lana v University of Alberta, (cont.) for judicial review to the Court of Queen’s Bench was dismissed. The appellant appealed that decision on the grounds of procedural fairness and a failure of the Board to admit the appellant’s expert evidence. Particularly, the appellant alleged that the Board denied him a fair hearing by: directing the appellant to disclose several witness

statements obtained by an investigator he had hired; receiving an ex parte communication from counsel for Campus Security Services; failing to provide reasons for its ruling; and refusing to admit the opinion of an expert retained by the appellant.



he appeal was dismissed. The reviewing judge properly found that the Code required disclosure of materials intended to be used at hearings and there was no evidence that appellant’s counsel objected to or requested an adjournment in response to any rulings on the statements. The appellant alleged that the chair of the Board varied a procedural ruling in response to an ex parte communication sent by counsel for Campus Security Services. Particularly, the appellant argued that the initial ruling that CDs of the witness statements would not be provided to the Board panel members at the time of the ruling was subsequently varied to include transcripts of the witness statements. However, the content of the CDs was the same as the content of the transcripts and counsel for the appellant was fully aware of this variation without taking issue at the time. Therefore, no procedural unfairness resulted from the communication. The Board had also provided an explanation for its ruling that the witness statements would not be admitted as evidence in the proceedings and the appellant’s counsel acknowledged that documents used to impeach a witness do not automatically become exhibits. Lastly, the appellant’s counsel argued that the expert evidence of a physician they had provided could have given the Board pertinent information to assist with its decision on whether the complainant had made a false allegation of sexual assault. Nonetheless, the Board found that the evidence of the physician was essentially October 2013


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Dalla Lana v University of Alberta, (cont.) expert opinion on the ultimate issue, which was to be decided by the Board, and concluded that it would not admit the evidence. The reviewing judge dismissed the application for judicial review and the majority of the Court of Appeal upheld this decision. However, Justice Martin provided a dissenting opinion with respect to this last issue only, opining that the expert physician’s opinion did not go to the ultimate issue and that the appellant had thus been denied a fair hearing.

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Alberta (Justice) v Paasch, 2013 ABCA 301 Areas of Law: Concurrent Criminal Proceedings; Property Disposal; Adjournment; Right of Appeal ~No appeal of an adjournment order permitted in property disposal hearing~ CLICK HERE TO ACCESS THE JUDGEMENT



he respondents, Paasche and Robert, were arrested and charged with drug trafficking and weapons offences as well as possession of stolen property. Under the Victims Restitution and Compensation Payment Act, S.A. 2001, c. V-3.5 (the “Act”), the Minister of Justice and Solicitor General for Alberta (the “Minister”) are permitted to apply for a restraint order to seize property acquired by illegal means or found to be “an instrument of illegal activity” and to subsequently dispose of it via a property disposal hearing (which is in essence a forfeiture hearing). The Minister, on an ex parte application, was granted the restraint order to seize the subject property and obtained a date for a property disposal hearing. At the date of the property disposal hearing, the charges laid against the respondents had not yet been disposed of. The Act allows parties, such as the respondents, the opportunity to make a claim respecting the seized property on October 2013

the basis that they file an affidavit stating the nature and extent of their interest in the property. Both Paasche and Robert were served with the restraint order, and thus had notice of the property disposal hearing, but neither filed an affidavit or appeared during the hearing to make a claim against the property. However, Crown counsel representing the Minister requested an adjournment of the application with respect to Robert on the basis that she had been contact by him and was told he was represented by counsel. The chambers judge granted Crown counsel’s request adjourning the application sine die as it related to Robert and went further, on his own motion, to also adjourn the application as it related to Mr. Paasche until his criminal charges were disposed of or Paasche made an application or filed an affidavit respecting the seized property. The chambers judge also noted an earlier decision of his where he refused to grant a restraint order on the basis that the respondent in that case should not be required to file evidence in a civil forfeiture proceeding that could prejudice his criminal defence. The Minister appealed.


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Alberta (Justice) v Paasch, (cont.) APPELLATE DECISION


he Minister raised three issues on appeal, namely that the chambers judge: incorrectly interpreted and applied the act; failed to apply the correct test for adjourning civil proceedings when concurrent criminal proceedings were ongoing; and failed to consider and apply the law of compelled protected evidence in the civil forfeiture context. In addition to these grounds raised by the Minister, the panel presented the preliminary issue of whether an appeal could be made of a decision to adjourn a property disposal hearing under s. 19 or s. 19.99 of the Act. On this preliminary issue, the Court of Appeal noted that the right of appeal set out in the Act is narrow, and found that identical sections 19(1) and 19.99(1) of the Act both deny appeals from an “application or order made or step or process taken under this Part” with only two exceptions, one being for a property disposal order and the other for an ancillary order made in respect of a property disposal order. For the purposes of these exceptions, the Act defines a property disposal order to be those made “at the conclusion of a property disposal hearing” upon determining whether the restrained property was or was not obtained by illegal means or an instrument of illegal activity. In this case, the order adjourning the application was not made at the conclusion of the hearing and thus did not fall under this exception. With respect to the second exception, the Act did not define “ancillary order” but based on the principles of statutory interpretation, the Court of Appeal was of the view that the Legislature intended the phrase “ancillary order” to mean an order “in addition to and providing the necessary support for a property disposal order”. As such, the Court of Appeal held that the adjournment order was not an ancillary order under the Act and thus did not fall under the exceptions and the appeal was prohibited. The appeal was dismissed accordingly.


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Chekowski v Howland, 2013 ABCA 299 Areas of Law: Family Law; Child Support; Guideline Income; Corporate Pre-Tax Income ~Corporate pre-tax income not included in calculation of child support guideline income as no evidence corporate structure used to shelter income and avoid child support obligations~ CLICK HERE TO ACCESS THE JUDGEMENT



he parties had an on-again/off-again relationship and went to trial to determine parenting arrangements and child support of their 7-year old daughter. The appellant was the owner of a survey company engaged in the oil industry, Gridline Technical Surveys Ltd. (“Gridline”) and the only issue in this matter focussed on how the appellant’s corporate pre-tax income for Gridline would be treated. Over the course of the trial, the judge made several findings of Gridline, most notably that it was currently carrying a significant amount of pre-tax income. While Gridline was a relatively new company, the appellant’s evidence was that Gridline maintained significant cash reserves in revenue to weather difficult times and, as a result, had sustained itself through the October 2013

economic downturn in 2008. Based on this finding and several other factors including: Gridline was a new company still in the growing stages; Gridline was making a profit after weathering the 2008 downturn; it was in the respondent’s and the child’s best interests to keep Gridline in good standing; and the court should not second-guess business decisions. The trial judge concluded that the appellant’s guideline income for 2011 should consist of his line 150 income plus 50% of Gridline’s corporate pre-tax income. The appellant appealed only on the issue of whether Gridline’s corporate pre-tax income should be added to his line 150 income for the purposes of calculating his guideline income for child support.


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Chekowski v Howland, (cont.) APPELLATE DECISION


he method for calculating the income of a payor who is a shareholder, director or officer of a corporation is provided in s. 18 of the Alberta Child Support Guidelines, AR 147/2005. This section gives the trial judge the discretion to determine whether all or a portion of the corporate pre-tax income ought to be attributed to the payor’s income for child support. The exercise of such discretion by the trial judge is only appealable if it was not exercised judicially, or if she “ignored conclusive or relevant evidence, had misunderstood the evidence, or had drawn erroneous conclusions from it”. The courts have considered s. 18 in recent cases where they interpreted that section to allow them to pierce the corporate veil in order to avoid any unfairness that could result if a parent were using their corporate structure to divert, manipulate or otherwise shelter income as a means to avoid payment of adequate child support. Thus the Court’s role under s. 18 is to ensure there is a fair distribution of corporate income between business and family purposes and its job is not to second-guess business decisions. Several cases set out factors for the Court to consider when determining whether a fair allocation has occurred, but it remains that each case must be decided on its own facts. The Court of Appeal noted that the appellant was neither the sole shareholder nor the only employee and thus he had responsibilities to these other parties regarding Gridlock. Further, the wages the appellant was paid from Gridline were less than that paid to his co-owner on the basis that he worked in Edmonton while his co-owner worked out of Fort McMurray, spent time living in work camps and worked considerably more hours. The trial judge had also erred in failing to consider the appellant’s prudent business practices of retaining pre-tax income in the corporation to enable Gridline to sustain itself through slow periods and particularly downturns in the economy. There was sufficient evidence that such funds were also needed to expand its operations in the future. The appellant’s liberal disclosure of financial statements and accounting information evidenced there was no attempt to conceal funds to reduce his child support obligations. Taking the rationale behind s. 18 and these factors into consideration, there was no evidence before the trial judge to suggest that the appellant had been attempting to circumvent his child support obligations and the appeal was allowed with the appellant’s guideline income to be calculated by reference to his line 150 income only.


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