Jul 17, 2019

Reconciling Transamerica with Humphreys as the Leading Authority on r. 4.31 & 4.33 Applications

Transamerica Life Canada v Oakwood Associates Advisory Group Ltd, 2019 ABCA 276 (CanLII)

Summary and Findings

The Appellants brought an unsuccessful application before the master to dismiss a 10-year-old case for long delay under r. 4.31. At the time of the initial application, questioning for discovery had not been completed and the matter was not yet ready to be set down for trial.

The master concluded that in order to invoke the presumption of prejudice under the rule, delay had to be both inordinate and inexcusable. He held that where the defendants had contributed in part to the delay and had not expressed any concern about Transamerica’s leisurely pace, the presumption of significant prejudice in r. 4.31(2) had not been engaged.

Since the presumption was not engaged, the appellants had to prove prejudice. The master concluded that the prejudice that had been established was not significant prejudice and the application was dismissed.

On appeal the chambers judge concluded that while the overall delay was inordinate, it was found to be excusable because the defendants contributed to it. Even though the plaintiff had the ultimate responsibility for advancing the claim, the defendants had an obligation to respond in a timely manner.

Because the chambers judge concluded that significant prejudice was not presumed, prejudice had to be proven. Although both the master and chambers judge found that there had been delay, it had not risen to the level of inordinate and inexcusable delay. Neither the master nor the chambers judge concluded that the presumption of significant prejudice had been engaged. Both went on to examine the evidence of actual prejudice and concluded that it did not amount to significant prejudice.

The Court of Appeal concluded that dismissal for delay turns on whether substantial prejudice existed. Both the master and the chambers Judge found that no significant prejudice had been suffered and that it was within the lower court’s discretion to determine that, for which the Court of Appeal refused to interfere with the lower court’s exercise of discretion.

Humphreys As the Leading Authority

Up until the Transamerica decision, Humphreys was recognized as the leading authority with respect to r. 4.31 and 4.33. The appellants argued that the master and the chambers judge applied the wrong legal test in assessing the delay in Transamerica by departing from the decision in Humphreys, which they argued reflected the binding law of this province.

The Court of Appeal held that insofar as analyzing delay is concerned, Humphreys is merely a guide for that purpose and that there are many other judicial formulations that may be considered when analyzing delay.

Ratio

The Court of Appeal concluded that Humphreys is one of many decisions on delay and did not purport to displace all the other jurisprudence on the issue. They concluded that the basic test for dismissal for delay is found in the text of the rules, as interpreted in all the many decisions on that topic.

The Court of Appeal concluded that the six-step analysis in Humphreys is merely one way for a judge to analyze a delay application and that there is no universal mandatory formula.

Prospective Impact of Transamerica

In having come to that conclusion, the Court of Appeal appears to have ignored the affirmative language contained at paragraphs 150-156 of the Humphreys decision which is set out below. At paragraph 16 of Transamerica, the court appears to have adopted a watered-down version of the original six-part test in Humphreys.

More specifically, the affirmative language in Humphreys that was omitted by the Court of Appeal in Transamerica is as follows:

[150] In order to apply r. 4.31 an adjudicator must answer six distinct questions…

[156] Sixth, if the moving party has met the criteria for granting relief under r.4.31(1) is there a compelling reason not to dismiss the nonmoving party's action? This question must be posed because of the verb "may" in r. 4.31(1).

emphasis mine

And at paragraph 16 of Transamerica, the Court of Appeal held:

This approach might be helpful in many cases, but it is not the only way to analyze delay.

emphasis mine

That commentary was made in response to some of the challenges litigants face when attempting to answer the six questions posed by Humphreys in order for the court to carry out its analysis pursuant to r. 4.31. Transamerica appears to give both, the litigants and the lower court the flexibility to expand upon the six factors set out in Humphreys rather than limit it.

However, there exists a potential problem created by the Court of Appeal in concluding that Humphreys is merely one of many ways that the lower court may analyze a delay application. By having concluded that there is no universal mandatory formula, the Court of Appeal appears to have ignored the obligatory language in the Humphreys decision, which previously required litigants, masters and judges to answer the six questions posed by Humphreys.

Lack of further comment from the Court of Appeal on that point will make it difficult to reconcile what it previously appeared to be saying in Humphreys, ie., that it reflected the binding law of this province in determining dismissal applications for long delay, compared to what they seem to be saying now, ie., that it is not the leading authority, it is one of many.

The Court of Appeal then went on to conclude that the objective of the exercise that needs to be addressed in relation to r. 4.31 is whether delay is inordinate, inexcusable or otherwise has caused significant prejudice to a party with reference to r 4.31 and all the jurisprudence that has considered that rule.

As a result, despite nearly 100 cases of jurisprudence which implement the Humphreys six step analysis, the Court of Appeal appears to be modifying the obligatory language without further commenting on that point.

Conclusion

Perhaps, the Court of Appeal was simply stating that the test contained in Humphreys is the starting point of the analysis, but where a question cannot easily be answered through the utilization of Humphreys, litigants are free to resort to other jurisprudence in association with r. 4.31.

It does however beg the question whether the test in Humphreys is still valid where the six questions posed by it can be handily answered. One thing is certain, the six questions set out in Humphreys still appear to flesh out the pith and substance of what r. 4.31 and 4.33 were trying to achieve. It must be remembered that Humphreys was an attempt to bring some clarity to prior jurisprudence associated with the predecessor rules relating to dismissal for delay.

The Transamerica decision did not change anything in terms of the lower court’s exercise of discretion and the deference that will be afforded to a chambers judge when analyzing a delay application.

The test under r. 4.31 was the same as under former r. 244, in Steparyk v. Alberta, 2014 ABQB 367 Justice Crighton said at paragraph 8:

8 The test to be met under r. 4.31 is the same test under the former r.244. The appropriate test was established by our Court of Appeal in Ravvin Holdings LTD v. Ghitter, 2008 ABCA 208, 437 AR 66. In this instance the crown must demonstrate an important, inexcusable delay that is likely to cause serious prejudice. Where the court finds inordinate delay, the delay itself is prima facie evidence of serious prejudice to satisfy the crown's burden of proof, unless other evidence exists that raises legitimate doubt about the existence of that prejudice which flows from that delay.

In the result, the six questions posed by Humphreys reflects common themes that have been fleshed out of earlier cases which assist with the interpretation and application of r. 4.31. Humphreys merely summarized the common themes from older jurisprudence and built on them, to create a unified test.

While the focus of r.4.31 relates to prejudice arising from delay, prejudice does not end the matter where prejudice has been found. The rule itself is discretionary in nature based upon the language contained in the first sentence :

4.31(1) If delay occurs in an action, on Application the Court may

(2) Where…the Court finds that the delay in an action is inordinate and inexcusable, that delay is presumed to have resulted in significant prejudice…

Emphasis mine

The bolded words illustrate the discretionary nature of the rule when a court is asked to apply it for the purposes of dismissing an action. The court has the discretion to determine whether there has been prejudice under the first part of the rule. Under the second part of the rule, the court has the discretion to determine whether there has been both inordinate and inexcusable delay. If the court concludes that there is, the court still has the discretion to refuse to dismiss an action for delay because of the language contained in the first sentence of the rule. This was the basis upon which the sixth factor in Humphreys materialized, details of which are further set out.

Support for this proposition can also be found by reference to the language above, whether delay in an action is both inordinate and inexcusable. The term “inexcusable” presumes that even where significant prejudice has resulted from delay, excuses or compelling explanations are permitted as a basis to avoid dismissal. And if acceptable to the court, permit it to deny an application to dismiss an action for long delay.

While Tranamerica may cause some confusion in terms of the mandatory language requiring the parties to answer the six questions posed by Humphreys, it does not appear that the Court of Appeal overruled the test in Humphreys. Rather, Tranamerica merely expands the six part test in Humphreys in order to provide litigants and the court with the appropriate flexibility to ensure that injustices are avoided when determining applications of this nature.

What the Court of Appeal has clarified is that a decision from the Court of Queen’s Bench entails significant discretion and significant deference will be afforded to such decisions on appeal.