Master Schlosser has discovered and explained what appears to be a serious gap in the Rules of Court. It is in the Rules dealing with adding parties. Once the pleadings have closed, it takes a court order to add a new party to a lawsuit. Rule 3.74 covers that, and allows an order in two circumstances. Subrule (2)(a) lets any “person” apply to add or substitute a plaintiff (including the party issuing a counterclaim or third party notice). So far so good.
But then paragraph (b) covers the other situations. One is removing, or correcting the name of, a party. The other more important one is adding or substituting any other party. Paragraph (b) does not allow “a person” to apply. It expressly requires that the application be made by an existing party. So in most cases, the existing parties could stonewall any such addition, substitution, removal, or even correction of a party. The existing parties can merely decline to make such an application.
There was no such restriction from the 1880’s to 2010. Why that extra restriction was put in the 2010 Rule is mysterious. The only report on the topic was by an advisory committee formed by the Institute, and the Master says that that report does not suggest any such condition.
Master Schlosser's decision is Stratum Projects Alta. v. Aman Bldg. Corp. (M) 2017 ABQB 351 (May 26)
Sometimes this gap in the Rule would not matter much, as ordinarily a non-party would legitimately not care if there was an unnecessary or misnamed defendant or third party in a lawsuit. And if absence of a necessary or desirable party bothered the plaintiff, he or she could apply to add the missing person. And if a defendant thinks that someone else should be added as a co-defendant, the existing defendant could so apply.
But a real problem arises where someone who is not a party to the lawsuit wants to have himself or herself added as a party. If that non-party has no financial or proprietary interest at stake and merely wants to raise legal questions and make submissions, again there may be little problem; a new Rule expressly covers such interventions: see Rule 2.10. But an intervener is not a party, and lacks most of the rights of a party. And having a big property interest in the suit is not enough to get permission to intervene, if one has no useful new legal insights to add.
Here is an example which shows how serious the problem can be. A purchaser or a mortgagee sues a man to get his land. He is the only defendant. Two other people want to defend themselves, as they claim to have big ownership interests in the land. One is the defendant's wife, who swears she has dower rights. The other is a company which gives evidence that it is also a purchaser from the defendant, with priority over the plaintiff. The defendant does not care about these two people, or he is insolvent or ill. He will not apply to add more parties. The plaintiff does not want to add people who will effectively oppose the plaintiff's suit, so it certainly will not apply to add them. Apparently the court has no power to add to the suit the persons who may be the only ones with a real interest in the land. They may well lose their land with no chance to be heard. In theory maybe a judgment for the plaintiff would not bind them, but by then the successful plaintiff would have sold to a bona fide purchaser, and the land would be gone. This breach of natural justice would be gross.
Master Schlosser's case gave another example: the person who wished to become an additional party there was a guarantor under the relevant arrangements. If the defendant lost the suit, the effects on the guarantor would be very bad.
Maybe ingenious counsel can find some other remedy, such as a cross-suit by the persons who want to be parties. But that is unfair, and greatly increases delay and expense for everyone.
Not naming enough affected persons as respondents is a common problem in judicial review. But mercifully, R. 3.75 allows an application by “a person” to correct that, so the Stratum gap does not exist in judicial review. It is all the more odd that the preceding Rule, 3.74, so plainly features the gap.
At common law and in equity, lacking a proper party to a lawsuit could have fatal results for various persons. Dickens’ novel Bleak House is about just such problems, and the interminable delays which they produced in the Court of Chancery. Under the Judicature Act of 1875 and their Rules of Court, the remedy was to allow easy addition or subtraction or substitution of parties. Now barring some such applications takes one back to pre-1875 days. Indeed, maybe even before the procedural reforms of the 1850’s.
– Hon. J.E. Côté
The Commentaries are intended to call the attention of lawyers to promising or threatening developments in the law, in civil procedure, in developing their skills, or simply to describe something curious, funny or intriguing.
Justice Côté recently retired from the Court of Appeal of Alberta and currently acts as an arbitrator, mediator, or referee under Rules 6.44 and 6.45 of the Alberta Rules of Court.
He may be contacted through Juriliber at email: info@juriliber.com or phone 780-424-5345.
