Executive Summary: Key Legal and Evidentiary Issues

• New Star Energy Ltd. challenged a consent judgment as a nullity, arguing it lacked foundation because no action was properly commenced before it was filed.

• Appellant contended that the consent judgment violated the Legal Profession Act since John Zhao, a non-lawyer, signed the settlement dealing with tort claims.

• Court examined whether procedural irregularities in filing the consent judgment rendered it void or merely voidable.

• Modern jurisprudence rejects the concept that procedural errors create nullities, particularly for orders from superior courts of record.

• Central issue was whether the consent judgment remained valid despite alleged procedural defects and potential statutory violations.

• Appeal turned on the principle that superior court orders remain enforceable until formally set aside, regardless of underlying irregularities.

Background and procedural history

New Star Energy Ltd., which has changed its name to Highvale Energy Limited, appealed the dismissal of its application to have a consent judgment declared a nullity. On December 9, 2021, a consent judgment signed by John Zhao, in his capacity as New Star's Interim Chief Executive Officer, and by Kenneth Reh, as counsel for the respondents, was filed in the Court of King's Bench through an email filing request. Appended to the signed consent judgment was an affidavit sworn by Mr. Zhao verifying his corporate signing authority. The filing request form provided a style of cause naming the respondents as plaintiffs and New Star as the defendant. It noted that no action number existed and that the signed consent judgment was an originating document. On December 13, 2021, the consent judgment was signed by an applications judge, then known as a master. It was returned to counsel for the respondents on December 21, 2021, under Court File No. 2101-15856. It was the only record listed on the court procedure card in that action.

Enforcement attempts and challenge

On or about November 6, 2023, New Star's banks received a garnishee summons pursuant to the consent judgment. New Star subsequently filed an originating application under Court File No. 2301-14989 seeking a permanent stay of the consent judgment as having been issued contrary to law and an interim stay pending the outcome of the originating application and, in the alternative, a stay of enforcement pending the outcome of a separate action under Court File No. 2301-11837 that New Star commenced alleging the consent judgment is the product of fraud and a breach of fiduciary duty. An interim order was granted on November 14, 2023, that stayed the consent judgment until further order of the court. The interim order directed, among other things, that New Star pay the judgment amount into court and that a copy of the order be filed in the contested action, being Court File No. 2101-15856.

New Star's legal arguments

Before the chambers judge, New Star asserted that the consent judgment had no foundation in law and was thus a nullity because no action was properly commenced and because section 106(1)(d) of the Legal Profession Act, RSA 2000, c L-8, prohibits a person who is not an active member of the Law Society of Alberta from settling, or negotiating in any way for the settlement of, any claim for loss or damage founded in tort. Mr. Zhao is not a lawyer. The chambers judge dismissed New Star's application, prompting the appeal to the Court of Appeal of Alberta.

Court of Appeal's analysis

The Court of Appeal noted that the circumstances surrounding the negotiations that form the basis for the consent judgment will be determined in New Star's separate action. In the meantime, the amount owing under the consent judgment has been paid into court where it will remain pending further court order. For the purposes of this appeal, the consent judgment must be viewed as reflecting an agreed upon resolution of a dispute between New Star and the respondents. The court characterized the question as a narrow one: is the consent judgment a nullity? The answer is no. New Star relied upon the 1963 decision in Hunter v Coombs (1963), 45 WWR 53 (Alta SC), 1963 CarswellAlta 79. However, the court observed that the law and rules of court have evolved since then. The court cited Chandos Construction Ltd v Deloitte Restructuring Inc, 2024 ABCA 403 at para 21, which quoted Bridgeland Riverside Community Association v Calgary (City), 1982 ABCA 138, stating that the idea that procedural errors create nullities has been rejected for many years. The court also referenced Mazepa v Embree, 2014 ABCA 438 at para 9. Irregularities in the commencement of proceedings may be cured where no irremediable prejudice arises from the defect, citing Chandos at paras 21 and 23 and Alberta Rules of Court, Alta Reg 124/2010, rules 1.5(4) and 3.2(6). The court found there was no evidence of such prejudice.

Superior court orders and validity

The court acknowledged that Mr. Zhao signing the consent judgment on behalf of New Star may be some evidence of a contravention of section 106(1) of the Legal Profession Act to the extent the consent judgment deals with damages founded in tort. However, the court stated it was not deciding that issue, as it is the subject of the separate action. The court held that assuming this gives rise to an issue with what the applications judge ordered, it does not make a valid judgment of a court of superior jurisdiction a nullity. The court articulated the overriding principle that the orders of a superior court of record are never nullities. They perhaps should not have been granted, they may be based on procedural irregularities, and they may be undermined by reviewable error, but they are nevertheless valid orders of the court until they are set aside, citing Mazepa at para 10 and Tempo Alberta Electrical Contractors Co Ltd v Man-Shield (Alta) Construction Inc, 2025 ABCA 282 at para 26.

Disposition and outcome

The appeal was dismissed. The monies in court shall remain there until further order of the Court of King's Bench. The appeal was heard on October 16, 2025, and the memorandum was filed at Calgary, Alberta on October 20, 2025. The respondents, Shing Tak (Michael) Lam and Weija Wang, were the successful parties. The specific amount ordered or awarded was not specified in the decision.