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Dismissal for Long Delay and Prejudice

The Alberta Lawyers Insurance Association (ALIA) has observed a significant increase in the number of claims resulting from Applications to Dismiss based upon long delay, and to a lesser extent, delay causing prejudice. This may be related to the recent economic down-turn which could be causing a “tight-money” situation amongst litigants which then results in stymied actions and delayed decision-making.  Lawyers are cautioned to be very careful to guard against this potential problem as the rate of occurrence appears to be growing.

Rule 4.33: Dismissal for Long Delay – What You Need to Know

Rule 4.33 of the Alberta Rules of Court, often referred to as the “Drop Dead” Rule, requires applicants to significantly advance an action within three years, or risk the action being dismissed upon application. The Court will dismiss the action unless it can be shown that one or more of the exceptions to the Rule exist.

While valid reasons may exist to not advance an action (examples might include such things as waiting for expert reports, personal injury litigants needing time to reach maximum medical recovery, damages to be crystalized etc.), to ensure you are not running afoul of this Rule, it is critical to place your action squarely within the exceptions to the Rule as soon as you recognize a long delay may be required. There are several exceptions to the Rule that, as of May 12, 2017, include but are not limited to:

  • Parties to the action can expressly agree to the delay
    • secure a standstill agreement and reduce it to writing
  • An Order can be sought which provides for a stay, adjournment, or extension of time for advancing the action, or, the litigation plan can provide for the delay
    • apply early and / or have a litigation plan in place early
  • After a three year delay, an application has been filed or proceedings taken in which the applicant has participated for a purpose and which in the courts opinion warrants the action continuing
    • This is perhaps the riskiest of the exceptions, as it relies upon the other party’s participation and the Courts interpretation and opinion as to whether such participation warrants the action continuing

Another option would be to set the action down for trial at the conclusion of questioning.

In some cases, settlement discussions may be seen to constitute a significant advance where they have resulted in a narrowing of the facts or issues in dispute. It would be prudent to memorialize any such settlement discussions in writing and specify what facts or issues have been narrowed or resolved. ALIA cautions, however, that seeking to rely on settlement discussions as a significant advance is risky given the Court’s use of the functional approach to determine whether that step significantly advances the action. The Court may not agree with your assessment on whether it was a significant advance.

A prior version of this ALIA Advisory referred to a decision by the Alberta Court of Appeal which was decided under an earlier version of Rule 4.33 (6).  That Rule allows a respondent to serve an applicant with a “written proposal setting out a suspension period” to stop time from running.

Please note that Rule 4.33 (6) is now modified by Rule 4.33 (7).  This Rule requires the applicant to respond to the proposal within two months.  Rule 4.33 (7) (a) states that: “if the applicant agrees with the proposal, then the period of time under subrule (2) does not include the suspension period agreed to…”  However, if the applicant disagrees with the proposal or does not respond to the proposal, Rule 4.33 (7) (b) says that: “the respondent may apply for an order under subrule (9).”  While this wording is permissive (“may”) and not mandatory (“must”), it would be prudent to make the application to the Court.  This will result in a clear written record of the suspension period, or in further direction from the Court. This is particularly important in light of the foundational rules and the recent clear messages from the Court of Appeal.

The following are several decisions which provide some direction on what does and does not constitute a significant advance:

Ro-Dar Contacting Ltd. V Verbeek Sand & Gravel Inc., 2016 ABCA 123 (CanLII) clarified what is considered a “significant advance” which determines when the limitation period expires:

A significant advance does not have to be so definitive that it would support an application for summary judgment. It is quite true that the casual and dilatory pace of this litigation continued even after the disclosure of this information. The drop dead Rule does not, however, require continuous and unbroken advancement of the action, only that there be a substantial advance at one point during the 3 year period. The dilatory pace of this litigation is not to be commended, but an application to strike for persistent delay is more properly brought under R. 4.31, which requires proof of prejudice, than under the drop dead R. 4.33 [at para. 28].

This suggests you should not focus on the status of the action or claim three years after it began, but what progress was made throughout the three-year limitation period itself. This is not intended to encourage unnecessary delays, but is something to consider if your limitation period is hastily approaching.

Flock v Flock Estate, 2017 ABCA 67 (CanLII) [at para. 17] clarifies and expands on Ro-Dar Contracting. Some takeaways from this decision include but are not limited to:

  • even a step mandated by the Rules requires the court to analyze that step using the functional approach to determine whether that step significantly advances the action
  • whether an action has been “significantly advanced” involves an assessment and measurement of what happened in the action during the period of alleged delay
  • while the plaintiff is responsible for prosecuting its claim in a timely manner, the defendant cannot purposively obstruct or delay the action

Donnelly v. Brick Warehouse Corp., 2013 ABQB 621 (CanLII) [at paras 17-26] provides an instructive yet incomplete list of “steps” and “things” that both do and do not significantly advance an action.

Rule 4.31: Dismissal for delay that causes prejudice – What You Need to Know

Rule 4.31 permits the Court to dismiss all or part of a claim if at any time there has been a delay in the prosecution of the action that caused significant prejudice to the opposing party.

The test for significant prejudice in the context of this Rule has been clarified to mean:

First, the moving party must establish the existence of inordinate and inexcusable delay and attendant significant prejudice attributable to the delay…. Has the moving party’s ability to defend itself at trial been compromised by the passage of time? A key witness may have died or be unavailable for other reasons. Important documents may have been misplaced or destroyed.

Second, there is no minimum time frame that protects a dawdling plaintiff. An application may be brought at any time the moving party wishes.

Third, the rule bestows discretion on the court (Travis v. D & J Overhead Door Ltd., 2016 ABCA 319 (CanLII) at para. 151).

Unlike Rule 4.33, under this Rule, the Court retains discretion not to dismiss an application even where significant prejudice and inordinate and inexcusable delay have been found to exist.  Once it is found that a delay is inordinate and inexcusable, there is a presumption of significant prejudice (Huerto v. Canniff, 2014 ABQB 534 (CanLII) at para. 12).

The recent April 19, 2017 decision by the Alberta Court of Appeal in Humphreys v. Trebicock, 2017 ABCA 116 (CanLII) clarifies the meaning of significant prejudice to include both litigation prejudice and non-litigation prejudice.

Litigation prejudice may include such things as a person’s ability to recall events, declining mental health, lost documents, and witnesses passing away or disappearing, all due to the passage of time. Non-litigation prejudice may include such things as inordinate and inexcusable delay that causes harm to business interests, reputation, and excessive stress, especially in cases where fraud is alleged. Where fraud is alleged the case ought to be prosecuted with reasonable expedition. “Any delay that was not trivial or minor is inordinate” [at paras 167-168].

If you have any questions about the Drop Dead Rule or limitation periods for actions or claims contact ALIA.

ALIA does not provide legal advice. ALIAdvisory notices, ALIAlerts and the content on ALIA’s website, notices, blogs, correspondence and any other communications is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind.  This information is not a replacement for specific legal advice and does not create a solicitor-client relationship.

ALIA may provide links to third-party websites. Links are provided for convenience only; ALIA does not vet or endorse the information contained in linked websites or guarantee its accuracy, timeliness or fitness for a particular purpose.

Printed from https://www.lawsociety.ab.ca on September 26, 2023 at 8:29:27 AM
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