New Alberta Rules of Court - Arbitration & Dispute Resolution

Originally published in Blakes Bulletin on Litigation & Dispute Resolution, November 2010

On November 1, 2010, the new Alberta Rules of Court (the New Rules) came into force in Alberta, repealing the prior Rules of Court (the Old Rules) and ushering in a dramatic change to the procedural conduct of litigation in Alberta. The New Rules represent the most substantial change to the rules of procedure in Alberta in over 40 years. Although a number of the Old Rules still exist in the New Rules, the New Rules have been completely rewritten and renumbered. There is little in the litigator's procedural toolbox that will go unchanged – everything from critical deadlines to the format of pleadings has undergone material change.

This bulletin is an update of our May 2010 Blakes Bulletin: New Alberta Rules of Court and incorporates both finalized and additional procedural rules that will be of interest to corporations involved in corporate/ commercial litigation.

Dismissal for Long Delay – Rule 4.33(1)

Perhaps one of the most significant changes in the New Rules is the compressed time period for what has become known as the "Drop Dead" rule. Under the Old Rules, the court was required to dismiss an action where five or more years had expired from the time that the last thing was done to materially advance the action. Under the New Rules, if two or more years have passed after the last thing was done that significantly advanced that action, the court, on application, must dismiss the action. This will have significant implications on plaintiff's counsel to advance the action in such a way as to prevent delay from being fatal to the action. Parties should note that there is a two-year "bridging provision" before this New Rule takes effect. (For more information on the Drop Dead Rule, see our October 2010 Blakes Bulletin on Litigation & Dispute Resolution.)

Mandatory Dispute Resolution Process – Rule 4.16(1)

Another significant development in the New Rules is the requirement for parties to engage in a mandatory dispute resolution process. The New Rules specifically provide that a trial date cannot be set by the court unless the parties have engaged in a dispute resolution process, unless the court waives the requirement. A dispute resolution process includes a dispute resolution process in the private or governmental sectors with an impartial third party, for example, arbitration or mediation, or a judicial dispute resolution process that allows a Justice to facilitate a resolution for the parties.

Standard and Complex Cases – Rule 4.3(1)

The New Rules also require that ALL actions be categorized as either "standard cases" or "complex cases". Factors that must be considered by the parties, or by the court, in making the categorization include, among others, the amount of the claim, the nature of the claim, the number of parties and the number of documents. If the parties cannot agree on the appropriate classification, or, if the court does not order otherwise, within four months of the filing of the Statement of Defence, the action is deemed to be a standard case.

The classification of the case as either standard or complex has important implications for the management of the litigation. For example, with "standard cases", the parties must, within a reasonable period of time, complete various steps in the action such as completing pleadings, participating in at least one of the dispute resolution processes in Rule 4.16(1) and applying for a trial date. For "complex actions", the parties must, within four months of categorizing the action as complex, agree to a "complex case litigation plan" that requires the parties to establish specific guidelines for completion of steps in the action.

Appeals from Master's Judgment or Order – Rule 6.14(3)

Under the Old Rule 500, an appeal from a Master's decision to a Justice was heard on a de novo basis and, accordingly, the Justice was not bound by the evidentiary record before the Master but could instead permit new evidence to be filed in the hearing. Under Rule 6.14(3), an appeal from a Master's judgment or order is an appeal on the record of proceedings before the Master, however, the Justice may permit new evidence if it is significant enough that it could have affected the Master's decision. As such, the presumption is that an appeal from a Master is now "on the record" of the court below except where and if a Justice permits new evidence. It remains to be seen what the applicable standard of review will be regarding appeals from a Master to a Justice.

Evidence of Corporation's Employees – Rule 5.29(1)

Evidence provided by a corporation's employee during examination for discovery is not binding upon the corporation unless it is adopted by the corporate representative as some of the information of the corporation. The New Rules specifically address the mischief that occurred under the Old Rules where a corporate representative would not accept the information of the employee because he or she disagreed with it. The New Rules specifically prevent a corporate representative from refusing to acknowledge the information of the corporation's employee on the basis that he or she simply disagrees with the employee or has a different version of events.

Informed Corporate Representative

The New Rules impose obligations which will influence the way in which corporate litigants select their corporate representatives for the litigation. Rule 5.4(1) explicitly requires that corporate representatives must take steps to inform themselves of relevant and material records and relevant and material information. In addition, the corporate representative must give appropriate evidence of the relevant and material records and swear the affidavit of records on behalf of the corporate party. On application, the court may order the corporate representative to inform themselves of relevant and material records or information. Moreover, on application, the court may appoint an additional or suitable corporate representative for a party if the appointed corporate representative is unsuitable or has failed to inform themselves of relevant and material records and information.

Security for Costs – Rule 4.22

The Old Rules provided nine separate categories for when security for costs could be ordered, together with a general discretion of the court to order security for costs when it was just and reasonable to do so. In addition, the Old Rules provided for very specific criteria required in an affidavit in support of such an application. The New Rules, while still maintaining the discretion of the court to order security for costs, eliminate many of the previously stipulated categories for when security for costs will be ordered and replaces those with four factors which the court can take into account, plus a catch-all of any other matters the court "considers appropriate to consider". The factors the court may take into account include whether an Order to give security would unduly prejudice the plaintiff's ability to continue the action and its ability to pay the costs award. While the New Rule requires that the court consider the merits of the action in which the application is filed, there is no express provision in the New Rules specifying what an affidavit in support of such an application must contain, as was the case under Old Rule 594.

Third-Party Claims

Under Rule 3.44, the scope of third-party claims is significantly broader under the New Rules as opposed to the Old Rules. Under the New Rules, third-party claims are no longer limited to claims based on contribution or indemnity. A third-party claim can now be based on an independent claim against another party arising out of a transaction or series of transactions between the plaintiff and the defendant.

Number of Experts at Trial

The New Rules place a limit on the number of experts that can be called during trial. According to Rule 8.16, no more than one expert is permitted to give opinion evidence on any one subject on behalf of a party, unless the court otherwise permits. Under the Old Rules and the Alberta Evidence Act, there was no limit on the number of expert witnesses that could be called at trial, however, the Very Long Trial rules limited the number of experts to one per issue, except with the leave of the court. According to the Very Long Trial rules under the Old Rules, if the leave of the court was granted to call more than one expert and the trial judge was of the view that the additional evidence was unnecessary, the party calling that additional expert was required to pay the costs of the other parties. It does not appear that the New Rules contain similar cost consequences.

New Timelines

The New Rules contain a plethora of new timelines that all litigants and their counsel should be familiar with. Some of the most significant new timelines include:

Rule 3.31(3) – filing and service of a Statement of Defence must occur within 20 days after service of the Statement of Claim in Alberta, or one month if the Statement of Claim is served outside Alberta but within Canada and two months if service is effected outside of Canada – under the Old Rules, the time period was 15 days;
Rule 5.5(1) – a plaintiff must serve an Affidavit of Records within three months after the plaintiff is served with a Statement of Defence. The defendant must serve an Affidavit of Records within one month after the defendant is served with the plaintiff's Affidavit of Records –under the Old Rules, the timing was sequential as each party had 90 days from the service of the Statement of Defence;
Rule 4.24 (3) – a formal offer of settlement remains open for acceptance for two months – as opposed to 45 days;
Rule 9.5(2) – judgments and orders must be entered within three months of pronouncement; and
Rule 6.3(1) – an interlocutory application must be filed and served five days or more before the application is heard – under the Old Rules it was two clear days. Affidavit evidence in support of the application must be served within a "reasonable time" prior to the application – under the Old Rules, Affidavits had to be served no later than 24 hours prior to the hearing.

It should be noted that under Rule 13.5(1), the parties are still free to agree to the extension of the foregoing timelines. In addition, the court may stay, extend or shorten any time period that is specified in the New Rules.

Undertakings/Continuous Duty to Disclose

Under the New Rules, undertakings arising from questioning are no longer simply confined to corporate officers. Rule 5.30(1) provides that if any person who is questioned does not know the answer to a question but would have had they reasonably prepared for questioning, that person is required to undertake to inform themselves and provide an answer or produce a document within a reasonable time. In addition, Rule 5.27 provides a continuing duty to disclose information arising from questioning. Thus, a person questioned must, by Affidavit, correct any answer if the answer was incorrect or misleading or the answer becomes incorrect or misleading as a result of new information. The correction must be made as soon as practicable after the person realizes the answer was incorrect or misleading.

Costs of Examining Additional Persons

Rule 5.17(2) of the New Rules imposes a cost sanction on the number of individuals that a litigant can question. If a questioning party is to question more than one person of the party adverse in interest and the person questioned is an officer or former officer of a corporation, an employee or former employee, an auditor or former auditor, or a member or former member of a partnership, the costs of questioning the second and subsequent persons are to be paid by the questioning party, unless the parties otherwise agree or the court otherwise orders.

Preparation of Judgments/Orders

The New Rules now specifically require that the successful party at the application or trial is required to draft the order or judgment within 10 days of pronouncement. The unsuccessful party must object within 10 days of service of the draft order or judgment, failing which, the order of judgment may be signed and entered.

Service Outside Alberta – Rule 11.25(1)

The New Rules also change the Old Rules relating to service of a Statement of Claim outside Alberta. Under the New Rules, an Order for service of a Commencement Document, i.e., Statement of Claim, Originating Application or Notice of Appeal, is no longer required. The basic requirement for service outside Alberta is that the facts of the claim demonstrate a real and substantial connection to Alberta. A real and substantial connection can exist even if it does not fall within the defined categories provided in the New Rules.

Service by Electronic Method – Rule 11.21(2)

The New Rules now specifically permit that all documents, other than commencement documents, may now be served via electronic means. This includes, for example, service of documents by email, provided that there is confirmation that the transmission is successfully completed. The New Rules reference the terms of the Electronic Transactions Act including "electronic agent", which means a computer program or any other electronic means used to initiate an act or to respond to electronic information.

Terminology Changes

The lexicon of the procedural rules has also changed with the New Rules. Overall, the New Rules have attempted to introduce more user-friendly and "plain language" terminology. Terms such as "examination for discovery" and "cross-examination on Affidavit" are now replaced by "questioning". "Motions" are now "applications" and "originating notices" are now referred to as "originating applications". Service ex juris is now obsolete and is simply referred to as service outside Alberta. Finally, "conduct money" is now "allowance money".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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