The Rules of Court1 set out the procedure by which civil litigation is administered in Alberta and it has been over 40 years since the Rules have undergone a complete overhaul. During that time there have been considerable changes to concepts, terminology and technology used in the practice of litigation. After a multi-year consultation and review process the new Rules came into force on November 1, 2010. While some rules remain unchanged, almost every stage of the litigation process – from filing a claim, to managing a litigation, to entering a judgment – has a revised procedure.
In this Osler Update we will identify some of the most significant changes to the Rules and discuss their potential impact on complex business disputes presently, or potentially, before the courts in the province of Alberta.
1. The Purpose of the New Rules
The purpose of the new Rules is to provide a means by which claims can be resolved in a timely and cost-effective way. In particular, they have been designed to assist parties in identifying issues in dispute; facilitate quick resolution of claims; encourage parties to resolve claims on their own; oblige parties to communicate honestly and openly; and provide an effective, efficient and credible system of remedies.2 We anticipate that the new purpose and intent provision, Rule 1.2, will be used as a guiding principle in applying and interpreting all of the Rules. Moreover, the five objectives set out in this rule will likely inform the court's exercise of discretion when interpreting or resolving ambiguity in the new Rules.
The general purpose provision of the new Rules will also guide litigants by imposing positive obligations on parties to take responsibility for the management and resolution of their disputes. These new and express requirements may therefore facilitate the resolution of proceedings and act as a deterrent from taking unnecessary and expensive steps in the course of a litigation.
2. Pleadings and Service
Commencing an Action
There are two ways by which to commence a claim under the new Rules: statement of claim or originating application.3 The petition is no more. An originating application (previously an originating notice) is used when there are no facts in dispute, when there are no persons to serve as defendants, when seeking judicial review, or when prescribed by statute. A statement of claim should be used in all other instances.4
The technical rules set out in Part 13 of the Rules are detailed and prescriptive, and should be consulted to ensure compliance. For example, Part 13, Division 3 contains detailed requirements for the style and content of pleadings, which should be carefully consulted prior to drafting pleadings, or when considering a response to pleadings delivered by opposing counsel.
Time for Filing
The time period for filing a statement of defence has changed. A statement of defence must be filed and served on the plaintiff within 20 days if served within Alberta, 1 month if served outside of Alberta but within Canada, and 2 months if served outside of Canada.5
A significant change to service of commencement documents is that litigants are permitted to serve persons living outside of Alberta without a court order so long as a real and substantial connection exists. Under the new Rules, when serving a party outside of Canada the claim must be accompanied by a document that sets out the grounds for service.6 Otherwise, the claimant must obtain a court order permitting service.7
Service of non-commencement documents is now permitted by email. However, service by email is only effected where: a party has provided an email address for service; the document is received in a form usable for subsequent reference; and confirmation of transmission to the correct address is received.8
3. Categorizing Litigation
The new Rules create two categories for litigation proceedings commenced by way of statement of claim: standard and complex.9 Categorizing litigation is important because the category determines how an action will be managed by the litigants. Parties may agree on a categorization or seek guidance from the Court to resolve any disputes arising out of a categorization.10
The factors that parties must consider when determining how a litigation will be categorized include: the amount of the claim; the number of parties and documents; the number and complexity of issues; the length of time questioning (formerly called examinations for discoveries) will take; whether expert reports are required; and whether a third party claim will likely be made.11 Based on these criteria, we expect the majority of commercial proceedings will fall into the complex category, including oppression claims, dissent shareholder litigations, class actions, and contractual disputes between mid to large-sized corporations.
If a litigation falls into the complex category, the parties must draft a litigation plan and file that plan with the court.12 The purpose of the litigation plan is to get the parties thinking early about planning and preparing for each stage of the litigation, and to provide an incentive to stick to that plan. The plan must set completion dates for: identifying the real issues in dispute; disclosure of records; questioning; exchanging expert reports; and applying for a trial date.13 Parties are obliged to monitor the progress in their action and adjust the dates if circumstances require, either by agreement or by court order if necessary.14
Just because a case is categorized as complex does not necessarily mean that it will be case managed. Parties must still apply to the Chief Justice for the appointment of a case management judge and this procedure may still be necessary for more complex or acrimonious disputes.15
Proceedings commenced by way of originating application need not be categorized. However, where such proceedings are complex, parties would be wise to, and may be required to, manage the process in a manner similar to that employed for a complex proceeding commenced by statement of claim.
4. Records Disclosure and Questioning
The new Rules replace the old terminology of "discovery" of records, with "disclosure" of records.
They key change to the records disclosure process is that the time periods for exchanging affidavits of records have changed. Pursuant to the new Rules, a plaintiff must serve an affidavit of records within 3 months of being served with a statement of defence. The defendant must serve an affidavit of record within 1 month of being served with the plaintiff's affidavit of records. Third parties must serve affidavits of records within 3 months of filing a statement of defence.16 Accordingly, defendants now have the opportunity to review a plaintiff's relevant and material records, allowing them to see the scope of a plaintiff's documentary disclosure and how the issues in dispute have been framed by a plaintiff prior to producing their own records. This also means that it will take slightly more time for a plaintiff to receive a defendant's records.
The new Rules replace the old terminology of "examination for discovery" and "cross-examination on an affidavit" with the single term "questioning".
As was the case under the old Rules, every corporation that is a party to a proceeding must appoint a corporate representative. The corporate representative is obliged to inform him or herself of relevant and material information before being questioned, and his or her evidence is binding on the corporation. Therefore, it is important to choose the correct person to fulfil this role and ensure that they are thoroughly prepared before attending questioning.
Under the new Rules, Alberta litigants continue to have the right to ask wide-ranging questions of parties (and related persons) adverse in interest. However, a significant change is that, if a party chooses to question more than one person from or related to each party adverse in interest, the costs of questioning any subsequent persons are to be paid by the party that is conducting the questioning.17 In other words, unless otherwise agreed by the parties or directed by the court, costs for the questioning party will increase with the number of individuals questioned. This costs provision is in keeping with the purpose of the new Rules to make litigation proceedings more cost-effective and timely. Moreover, it may cause parties to stop and consider the cost of questioning multiple witnesses. This will likely mean that corporate officers may also be expected to have greater knowledge of information pertaining to issues in a proceeding; if there is only one "free" questioning then it had better be good.
5. Mandatory Dispute Resolution
One of the most significant changes to the new Rules is the requirement that parties participate in a good faith dispute resolution process prior to proceeding to trial.18 The dispute resolution process could include judicial dispute resolution or private mediation before an impartial third person.
This requirement may be waived on application to the court if: (i) the parties engaged in a dispute resolution process before filing the claim, (ii) the nature of the claim is not one to likely result in agreement, (iii) there is compelling reason why a process should not be attempted, or (iv) the court is satisfied that the process would be futile.19
The parameters of such a waiver will be set in the coming months as jurisprudence emerges on this new Rule. Note that a trial date cannot be scheduled unless parties certify that they have participated in a dispute resolution process (or if the requirement was waived).20
6. Dismissal for Long Delay
Under the old Rules, a court was required to dismiss an action on application if 5 years had passed since the last step was taken that materially advanced the action. The new Rules bring the time limit for "drop dead" applications down from 5 years to 2 years21 This again reinforces one of the main objectives behind the new Rules by facilitating the resolution of claims by the quickest means possible. Careful attention must be paid to transition rule 15.4 to determine the appropriate time to seek a dismissal after the entry into force of the new Rules.
This new Rule may provide corporate litigants an opportunity to seek to dismiss actions that have been inactive due to conduct of the opposing party. This also means that inaction could, over time, result in the loss of rights; corporate litigants would be advised to take stock of all ongoing proceedings, and take action where it is incumbent on them to do so in order to preserve their rights.
Entry of Judgments and Orders
The new Rules specifically provide that, unless the Court directs otherwise, a successful party is responsible for preparing a draft judgment or order. A successful party has 10 days after a judgment or an order is pronounced to prepare a draft of the judgment or order and serve it on every other party in attendance at the hearing.22 Each party served with the draft judgment or order has 10 days to approve or object.23 If the party does not do so within this time frame but all other requirements are met and service of the draft is proved, the judgment or order may be signed and entered.24
Perhaps the most significant change is that judgments and orders come into effect on the date of pronouncement, not the date of entry. This will have implications for, among other things, the amount of time available to a party to file an appeal.25
The transition to the new Rules will compel parties to proceedings in Alberta and their counsel to concentrate on practice and procedure. It will also provide counsel in Alberta with an opportunity to consider litigation strategies in existing and potential proceedings. The new Rules provide parties with additional tools to take control of the litigation process, and their emphasis on cost-effective and timely litigation should translate into more efficient proceedings and possibly earlier settlement of disputes. While there is likely to be a degree of initial uncertainty with respect to the interpretation of the new Rules, jurisprudence over the coming months and years should shape their meaning and application.
If you have any questions on the implementation of the new Rules of Court, please contact the authors directly.
1 Alberta Rules of Court, Alta. Reg. 124/2010. The Alberta Rules of Court (AR 124/2010) have already been amended by the Alberta Rules of Court Amendment Regulation, Alta Reg. 163/2010 issued on October 15, 2010.A copy of this amending Regulation can be found at: http://www.qp.alberta.ca/documents/orders/orders_in_council/2010/1010/2010_353.html. Clients reading the new Rules are advised to ensure that their version of the Rules is complete, and includes the October 2010 amendments.
2 R. 1.2.
3 R. 3.2.
4 R. 3.2.
5 R. 3.31.
6 R. 11.25(2)(a).
7 R. 11.25(2)(b).
8 R. 11.21.
9 R. 4.3(1).
10 R. 4.8.
11 R. 4.3(2).
12 R. 4.5(1)(a).
13 R. 4.5(1)(b).
14 R. 4.7.
15 R. 4.12.
16 R. 5.5.
17 R. 5.17(2).
18 R. 4.16(1).
19 R. 4.16(2).
20 R. 8.4.
21 R. 4.33.
22 R. 9.2(2)(a).
23 R. 9.2(2)(b).
24 R. 9.2(2)(c).
25 R. 9.6.
Maureen is an experienced trial and appeal lawyer whose practice is devoted to complex commercial litigation. Kelly carries on a commercial litigation practice focused on complex business disputes in a variety of industry sectors including energy, financial services and consumer products. Tommy's practice encompasses a broad range of corporate and commercial litigation, including complex contractual disputes in the energy and petrochemicals industry, insolvency proceedings and export control matters.
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.