Copyright 2010, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on Litigation & Dispute Resolution, October 2010
INTRODUCTION
The rule relating to dismissal of actions for long delay – what has become known as the "Drop Dead Rule" – is an important tool for commercial litigants. It prevents actions from "hanging over" parties by creating a mandatory requirement that actions be dismissed, upon application, after the passage of time where no "thing" has been done to significantly advance the action against a defendant. On November 1, 2010, the new Alberta Rules of Court (New Rules) will come into effect. The New Rules contain many important changes which will affect the litigation process in Alberta. One of the most noteworthy of those changes has occurred with respect to the mandatory dismissal of actions for delay.
This bulletin will focus on the key differences and similarities between the existing and the New Drop Dead Rules.
EXISTING RULE 244.1
The current rule relating to the dismissal of actions for delay is Rule 244.1 of the existing Alberta Rules of Court (Old Rules). It provides that:
...where 5 or more years have expired from the time that the last thing was done in an action that materially advances the action, the Court shall, on the motion of a party to the action, dismiss that portion or part of the action that relates to the party bringing the motion.
The principles relating to Rule 244.1 have generally been well developed by the Alberta courts. These principles include:
- Mandatory Dismissal: The court must dismiss the action upon application where more than five years has passed since the last thing was done to materially advance the action.
- Thing: The "thing" referred to in Rule 244.1 has been interpreted quite broadly. It is certainly a procedural step as required by the rules but it may also be another thing which materially advances the action.
- Materially Advance: Generally, a "material advance" must not be trivial but instead must be a movement of the action towards trial. A material advance has been interpreted quite broadly. For example, providing a response to an undertaking has been found to materially advance the action, although simply setting a date for examinations does not.
NEW RULE – 4.33(1)
Significant Changes
New Rule 4.33(1) represents a significant change from the Old Rule in many respects. Specifically, it makes two major changes worth noting.
First, it shortens the time period in which the action must lay dormant before the action "Drops Dead" from five years to two years.
Second, the wording has been changed from a thing which "materially" advances the action to a thing which "significantly" advances the action. This change in wording suggests a deliberate change in meaning although the exact effect of this change is uncertain. Based upon the plain language, it seems likely that the court will interpret a "significant" event to require something more than a "material" advance. "Significant" is defined in the Oxford English Dictionary, 2nd ed. (Oxford: Clarendon Press, 1989) as "full of meaning or import" or "important, notable" while "material" is defined as "pertinent, germane, or essential to". Further, an interpretation that "significant" is something more than "material" is in accordance with the overall purpose of the New Rules to resolve claims in a timely manner as stated in New Rule 1.2(1). Ultimately, however, it remains to be determined how the courts will interpret this change in wording.
New Rule 4.33(1) also provides a list of specific exceptions to the mandatory dismissal of an action which were not included in the Old Rule 244.1. The New Rule will not apply when:
- there is an express agreement between the parties allowing the delay;
- there is a court order staying the action or granting extended time;
- "the applicant did not respond to a written proposal by the respondent that the next thing in the action not occur until more than 2 years after the last thing done that significantly advanced the action"; or
- "an application has been filed or proceedings have been taken since the delay and the applicant has participated in them for a purpose and to the extent that, in the opinion of the Court, warrants the action continuing".
The last exception represents a slight but potentially significant change from the old Drop Dead Rule 244.1 as interpreted by the Alberta Court of Appeal in 2003 in Trout Lake Store Inc. v. Canadian Imperial Bank of Commerce. In that case, Conrad J. held that if an applicant participated in proceedings post-delay, then the court must dismiss the application and allow the action to continue. The New Rule 4.33(1) does not make dismissal mandatory in such circumstances. Instead, it grants the court discretion to either allow the dismissal application or to reject it if, "in the opinion of the Court [the participation] warrants the action continuing".
Effect on Existing Actions
It is also important to note the effect of the New Rule 4.33(1) on existing actions. Rule 15.4 of the New Rules provides a transitional provision for actions which are currently in existence but where no "things" have been done to advance them for some time. It provides for mandatory dismissal of actions in two circumstances:
- Where two years have elapsed since a "thing" was done to significantly advance the action after the New Rules come into force.
- Alternatively, if five years have elapsed since any"thing" was done to significantly advance the action, it will be dismissed.
It is interesting to note that the transitional provision uses the "significantly advance" test. If this means that a higher threshold is applied to steps that save an action, existing actions are likely more readily dismissed.
Conclusion
The changes that are set to take effect to the Drop Dead Rule are quite significant. The continued mandatory nature of the relief under this rule means that it will continue to be a powerful tool for the defendant, while the new two-year period will provide further motivation for plaintiff's counsel to advance the action so as to avoid mandatory dismissal. The new wording and specific exceptions, however, provide a certain degree of flexibility in the New Rule's application.
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.