Executive Summary: Key Legal and Evidentiary Issues

• Central issue was whether service of the Statement of Claim on Del Fisher Insurance Inc. was validly effected within the time permitted by the Alberta Rules of Court.

• The court considered if subsequent communications and litigation steps provided sufficient notice to Fisher that its legal rights were being engaged.

• The impact of the COVID-19 pandemic and Ministerial Order 27/2020, which extended limitation periods, was addressed.

• The court analyzed whether Urban Square Holdings Ltd. was genuinely advancing litigation or merely engaging in technical non-compliance.

• Consideration was given to whether, if service was not validated, an extension of time should be granted under Rule 3.27.

• Costs were awarded to Urban Square Holdings Ltd., with the amount to be determined if not agreed upon by the parties.

Background and facts of the case

Urban Square Holdings Ltd. (“Urban”) owned a shopping centre that was damaged by fire on March 25, 2017. The property was insured by Dominion of Canada General Insurance Company of Canada operating as Travelers Canada (“Travelers”), with Del Fisher Insurance Inc. (“Fisher”) acting as the broker. Urban alleged that Travelers failed to pay the full amount owing under the policy and that Fisher failed to advise and obtain sufficient insurance coverage, resulting in Urban being underinsured and suffering losses and damages in excess of $2 million.

After the fire, Urban retained legal counsel, Fric, Lowenstein & Co. LLP (“FLC”), in August 2017. FLC contacted Fisher regarding the fire on August 22, 2017, and Fisher subsequently retained legal counsel, Borden Ladner Gervais LLP (“BLG”). FLC and BLG engaged in communications regarding the matter, including attempts at settlement. On March 22, 2019, Urban filed its Statement of Claim (“Claim”), and on March 26, 2019, FLC sent a copy of the Claim to counsel for each defendant. The covering letter stated that the Claim was not being formally served at that time and that a Statement of Defence was not required, as Urban was waiting for word from Travelers Canada regarding dispute resolution under the Insurance Act.

Subsequent communications between FLC and BLG included letters and emails referencing the ongoing dispute, attempts to schedule meetings, and steps toward litigation such as serving an Affidavit of Records. On January 13, 2020, FLC wrote to BLG indicating that Urban believed it had no alternative but to proceed with questioning and the filing of affidavits of records. On January 28, 2020, FLC sent BLG Urban’s sworn Affidavit of Records. On May 15, 2020, BLG requested copies of the documents listed in Urban’s Affidavit of Records, and FLC sent the records the same day. The COVID-19 pandemic led to postponements and remote work arrangements.

On January 21, 2021, BLG requested a copy of the affidavit of service of the Claim on Fisher. FLC responded that it could not locate the affidavit of service but referenced Rule 11.27. On March 3, 2021, BLG advised that the Claim was a nullity because it was not served on Fisher. Urban applied to the court for an order validating service of the Claim or, alternatively, for an extension of time to serve the Claim.

Policy terms and clauses at issue

The dispute involved the adequacy of insurance coverage arranged by Fisher and the alleged failure of Travelers to pay the full amount under the policy. The procedural focus was on whether Urban had properly served its Statement of Claim on Fisher within the required time frame, as governed by Rule 3.26 (service within one year of filing) and Rule 11.27 (validation of service by the court) of the Alberta Rules of Court. Ministerial Order 27/2020, which suspended limitation periods from March 17, 2020, to June 1, 2020, was also relevant, making June 8, 2020, the deadline for service.

Court’s analysis and outcome

Fisher appealed the order of Application Judge Mason, who had validated service of the Claim as effective from March 26, 2019. Fisher argued that service was not properly effected, as the initial delivery of the Claim was explicitly not formal service and subsequent steps were irregular or solely for settlement purposes.

Justice J.C. Price, hearing the appeal, found that service was not effected on March 26, 2019, as the Claim was sent only as a courtesy copy. However, the court determined that subsequent communications, particularly the January 13, 2020, letter indicating that Urban was proceeding with litigation and the January 28, 2020, service of Urban’s Affidavit of Records, put Fisher on notice that its rights were being engaged. By May 15, 2020, when Fisher’s counsel requested documents listed in the Affidavit of Records, Fisher was engaging in the litigation process.

The court held that the purpose of service is to provide notice and an opportunity to defend, not to enforce technicalities where a party has actual notice. Justice Price validated service as of May 15, 2020, within the extended limitation period, and dismissed Fisher’s appeal. The court also stated that, had service not been validated, it would have granted an extension of time due to the circumstances, including the pandemic and the conduct of the parties.

Conclusion and costs

The court concluded that Urban was actively dealing with its Claim from very early on, and that Fisher was fully aware that its rights were being engaged. Application Judge Mason did not err in fact or law. The Service Order was revised to indicate that service of the Claim is validated and deemed effected as of May 15, 2020, within the time for service permitted by the Rules and as extended by Ministerial Order 27/2020. Costs were awarded to Urban, with the amount to be determined if not agreed upon by the parties. The successful party was Urban Square Holdings Ltd., and no exact amount was specified in the decision.