Apr 24, 2017

Alberta Does Not Condone Litigation Delay

Humphreys v. Trebilcock, 2017 ABCA 116 (CanLII)

Procedural Background:

The underlying action was a commercial action involving allegations of fraudulent business practices between a number of corporate parties and natural individuals. The respondents commenced the action on December 14, 2006. A number of the defendants filed one statement of defence on February 6, 2007; it was amended on October 14, 2008. On September 15, 2009 a number of other defendants filed a statement of defence.

Most of the parties filed affidavits of records before May 10, 2007. Some parties filed supplementary affidavits of records on October 14, 2008 and in January 2010. Questioning began in October 2008 and continued on through August 2012. The litigation came under case management in 2011. Along the way, the plaintiffs changed counsel, both internally and externally.

A delay application was brought in December 2014 which was unsuccessful. A case management order was made on March 19, 2015 requiring the parties to complete certain steps, after which the case was to be set for trial. None of the parties complied with that order. The defendant applicants applied again under 4.31 to dismiss the plaintiffs’ claim for delay. The application was dismissed, with a written decision reported at 2016 ABQB 579.

The applicants appealed.

Analysis of the Court of Appeal:

After reviewing the history of the delay rule under the former Supreme Court Rules and the old Alberta Rules of Court, the Court provided the following under the heading of “Alberta Does Not Condone Litigation Delay”:

Litigation delay harms those who are directly and indirectly involved in an action tainted by inaction, the civil justice system as a whole and the greater community. Litigation is a form of stress that has the potential to make those directly and indirectly affected unhappy – litigation is expensive, introduces uncertainty and may undermine a person’s ability to earn a livelihood and to plan ahead – and may diminish the productivity of the persons affected by the unresolved disputeLitigation delay is a corrosive force in a free and democratic state committed to the rule of law.[1]

Acknowledging the organizing principle found in Rule 1.2, the Court went on:

Claimants who fail to proceed with appropriate expedition may be subject to harsh consequences. They may lose their right to prosecute their actions.[2]

Alberta has adopted an approach to delay that provides a court with discretion to dismiss an action after balancing an applicant’s interest in “expeditious resolution of an action” with a respondent’s interest in having a judicial determination of its dispute.[3]

Rule 4.31 authorizes a court to dismiss an action if the action has been prosecuted at such a slow pace that delay has occurred and the delay has resulted in significant prejudice.[4] 4.31 also introduces a rebuttable legal presumption: if there has been inordinate and inexcusable delay then there is proof of significant prejudice.[5] The Court noted the following are markers of “delay” and “significant prejudice”:

  • Delay is a relative concept. It is understood by reference to the point a reasonable litigant, acting in a “reasonably diligent manner”, and taking into account the nature of the action and the timelines set out in the Rules, would have reached in the same time frame.[6] Delay is inordinate if “the differential between the norm and the actual progress of an action is so large as to be unreasonable and unjustifiable.”[7]
  • Significant prejudice means injury or damage suffered by the applicant as a result of the respondent’s dilatory prosecution of her or his action. The injury or damage must be important, weighty, and/or notable.[8]

Significant prejudice is not limited to the ability of the defendant to make a full answer and defence. That is one recognized form of prejudice (noted as “litigation prejudice”), but prejudice can also result even when an applicant’s ability to defend the action is not seriously infringed. The Court noted that prejudice can exist where the delay has occurred and “the very existence of litigation may threaten an important and legitimate interest of the moving party.”[9] This is referred to as “nonlitigation prejudice”.

The Court set out the following test for judicial use in these applications:

  1. Has the respondent party failed to advance the action to the point on the litigation spectrum that a litigant acting reasonably would have attained within the time frame under review?
  2. Is the shortfall or differential of such a magnitude to qualify as inordinate?
  3. If the delay is inordinate, has the respondent provided an explanation for the delay? If so, does it justify the inordinate delay?
  4. If the delay is inordinate and inexcusable, has the delay impaired a sufficiently important interest of the applicant so as to justify overriding the respondent’s interest in having its action adjudged by the court?
  5. If the applicant relied on the presumption of significant prejudice created by Rule 4.31(2), has the respondent rebutted the presumption of significant prejudice?
  6. If the applicant has met the criteria for relief under 4.31, is there any compelling reason not to dismiss the respondent’s action?

The Court also examined Rule 4.31 in the context of Rule 1.2. It wrote:

A direction to interpret the rules to accomplish the expeditious resolution of differences is honored if the delay rule attaches onerous consequences to litigants who do not prosecute their actions with reasonable dispatch. Nor is it unfair to prefer the interests of those who are harmed by the conduct of litigants who do not invest the resources needed to advance their action with reasonable urgency over those who are dilatory. In addition, judicial resources are scarce and should not be made available to advance cases that have been largely ignored by those responsible for their prosecution.[10]

[1] At para 90, citing to a number of authorities and publications.

[2] At para 96.

[3] At para 104.

[4] At para 105.

[5] At para 105.

[6] At para 115.

[7] At para 120.

[8] At paras 125-128.

[9] At para 133.

[10] At para 143.