Omega Developments Inc. v. Canada Safeway Limited, 2012 ABQB 564

Court of Queen ’ s Bench of Alberta Citation: Omega Developments Inc. v. Canada Safeway Limited, 2012 ABQB 564 Date: 20120914 Docket: 0101 04612 Registry: Calgary Between: Omega Developments Inc. Plaintiff - and - Canada Safeway Limited, Ledcor Industries Limited, Ledcor Design-Build (Alberta) Inc., Ledcor Construction Limited and Ledcor Limited Partnership Defendants _______________________________________________________ Memorandum of Decision of J.T.

Prowse, Master in Chambers _______________________________________________________ [ 1 ] The plaintiff Omega Developments Inc. owns a building in the Kensington area of Calgary. The adjoining land was acquired by Canada Safeway Limited, who hired Ledcor to construct a store on it. I refer to the various Ledcor defendants simply as “Ledcor”. [ 2 ] Omega commenced these proceedings for damages against Safeway and Ledcor, asserting that both defendants trespassed on

Omega’s lands during construction and damaged Omega’s building. Eventually Omega discontinued the action against Safeway, leaving Ledcor as the only defendant. [ 3 ] Ledcor seeks an order dismissing the action against it pursuant to Rule 15.4, on the basis that 5 years have elapsed since the last thing done by Omega to significantly advance the action. For the reasons which follow, I decline to dismiss the action.

The relevant dates In the chronology which follows, the steps taken during the relevant 5 year time period are underlined: February 2001 - Omega issued its statement of claim July 2001 - Ledcor filed a defence November 2001 - Safeway provided an affidavit of records February 2002 - Safeway filed a statement of defence and counterclaim February 2006 - Omega filed an affidavit of records February 2006 - Safeway served Omega with an affidavit of records and appointment for discoveries April 2006 - Omega filed a motion to compel Ledcor to produce an officer for discoveries July 2006 - Ledcor’s application to dismiss for want of prosecution failed and the parties were directed to hold discoveries (this never occurred) September 2006 - Discoveries were postponed awaiting Ledcor’s affidavit of records June 2007 - Omega filed a defence to Safeway’s counterclaim July 2010 - Omega discontinued its action against Safeway June 2011 - Omega obtained an order to amend, and did amend, its action against Ledcor, leaving out some previous claims and reducing damages from $10 million to $500,000 June 2011 - Omega provided some inspection reports to Ledcor (which, it turns out, had previously been provided to Ledcor) and began making almost monthly efforts to locate the author of those inspection reports to obtain an updated report.

April 2012 - Omega sought Ledcor’s affidavit of records, and repeated this request in early May 2012

May 14, 2012 - Ledcor applied to dismiss the application for delay May 30, 2012 - Omega applied to compel Ledcor to file an affidavit of records [ 4 ] The 5 year period during which Omega asserts nothing was done to significantly advance the action is May 14, 2007, to May 14, 2012. I will now consider whether any or all of the (underlined) steps taken during that 5 year time period significantly advanced the action.

June 2007 - Omega filed a defence to Safeway ’s counterclaim [ 5 ] Did Omega’s filing of a defence to Safeway’s counterclaim advance Omega’s action against Safeway and Ledcor? [ 6 ] Rule 3.58 states that a counterclaim is an independent action. However, in practice although not reflected expressly in the Rules of Court, they are tied together more closely than two separate actions.

Where there is a claim and counterclaim the parties hold concurrent questioning (formerly discoveries) and set the matter down for trial concurrently, without the necessity of an order which would be required for two entirely separate actions. [ 7 ] In Trout Lake Store Inc. v. CIBC , 2003 ABCA 259 , 31 Alta.L.R. (4 th ) 243, 330 A.R. 379, 39 C.P.C. (5 th ) 304, 2003 CarswellAlta 1321, Trout Lake sued CIBC and Jadot. Jadot defended and counterclaimed against Trout Lake and others. Jadot had done nothing in the counterclaim for over 5 years.

Trout Lake sought to have the counterclaim dismissed due to the 5 year delay. Jadot contended that Trout Lake’s discovery of CIBC (which had occurred during the 5 years) in the main action constituted a thing that materially advanced the counterclaim.

The Court of Appeal ruled that it did not as “these were different actions and there was no agreement in place that allowed for Jadot to use the discovery of CIBC in the counterclaim”. [ 8 ] In a different context, there is a line of cases indicating that, in a multiple defendant lawsuit, the plaintiff must establish that it materially advanced the action, within the prior 5 years, against the defendant seeking to dismiss it for delay.

This line of cases was overruled, and the court applied a functional approach by looking at how an action was advancing as a whole, not just how the action was advancing against the defendant seeking dismissal: see Heikila v. Alberta (WCB) , 2011 ABCA 87 , 2011 CarswellAlta 381, 42 Alta.L.R.(5th) 204, 502 A.R. 243. [ 9 ] That same functional approach was applied in the context of counterclaims in Brar v.

Pawa , 2010 ABQB 779 , 2010 CarswellAlta 2387, 506 A.R. 325, at para. 31 (Master), where the court concluded that it would be inappropriate to strike a counterclaim when the action as a whole was being moved towards trial. [ 10 ] In considering whether a claim has been significantly advanced, should a claim and counterclaim be treated as one, and a functional approach applied, so that a significant advancement of one would be considered a significant advancement of the other, or should this approach only be adopted in circumstances where the court would typically decline to allow one to proceed without the other (such as where either legal or equitable set-off applied)? [ 11 ] The prior rules of court specifically directed the court to take counterclaims into consideration when deciding whether to impose terms in an order striking an action for delay.

Specifically, former Rule 244.2 stated: Notwithstanding Rule 244 [dismissal for delay] or 244.1 [dismissal for 5 year delay], where in an action (

a) there are cross actions, or

(

b) there is a counterclaim or a plea of set-off, any order made under Rule 244 or 244.1 may be made subject to those terms or directions that the Court considers necessary to prevent any substantial injustice. [ 12 ] Under this prior Rule 244.2 the court could, presumably, impose a condition in an order striking a claim that the counterclaim likewise be concurrently struck. [ 13 ] It is not clear whether the omission of Rule 244.2 from the current rules results in a situation where the court would not be able to impose a condition that a claim only be struck for a 5 year delay if the counterclaim is also struck.

The current rule simply states that an action must be dismissed where there is a 5 year delay. This possible injustice would not occur if the claim and counterclaim were considered together under a functional approach, as you would not end up with one 5 year time period running under an action and a different 5 year time period running under a counterclaim. [ 14 ] In any event given my decision on the issues which follow, it is not necessary to decide whether Omega’s filing of a defence to Safeway’s counterclaim materially advanced Omega’s action against Safeway and Ledcor.

July 2010 - Omega discontinued its action against Safeway [ 15 ] Did Omega’s discontinuing the action against Safeway advance Omega’s action against Ledcor? [ 16 ] After the discontinuance, the remaining action against Ledcor was simplified and moved closer to trial. Accordingly, the discontinuance against Safeway significantly advanced the action against Ledcor.

June 2011 - Omega amending its claim against Ledcor by dropping some of its claim [ 17 ] Did Omega’s obtaining of an order allowing it to amend its claim against Ledcor by dropping some of the claims, and subsequently filing an amended statement of claim which dropped those claims, significantly advance the action? In my opinion, the answer is ‘yes’. [ 18 ] The remaining action against Ledcor was simplified and brought closer to trial as a result of the amendments. [ 19 ] Counsel for Ledcor pointed out that this logic, if taken too far, could be subject to abuse.

If a plaintiff delayed for 4 years and 11 months, could it apply to drop, for example, the portion of its claim seeking punitive damages, and thus earn the right to be dormant for another 4 years and 11 months? In my view, the court would be able to control this type of abuse. The plaintiff would be compelled to seek a court order allowing the amendment, and the defendant could oppose that application on the basis that it was simply a cover for further delay. I note in this case that Ledcor was served with Omega’s application for the amendment, and chose not to oppose the application.

June 2011 - Omega providing further inspection reports [ 20 ] In June of 2011 Omega provided to Ledcor some inspection reports on the state of damage to Omega’s building. The most recent of these reports was dated 2006, and all of them had previously been provided to Ledcor. In my view, this did not significantly advance the action.

[ 21 ] In addition, Omega or Omega’s representatives made at least nine enquiries, between June of 2011 and May 14, 2012, to locate Mr. Colin Campbell, who had produced the earlier reports, in order to obtain an updated report, but these efforts were unsuccessful. In my view, these efforts did not significantly advance the action. April 2012 - Omega seeking affidavit of records of Ledcor [ 22 ] In my opinion Omega’s seeking an affidavit of records from Ledcor, unsuccessfully, did not significantly advance the action.

Conclusion [ 23 ] I find that Omega significantly advanced the action when it discontinued the action against Safeway, and when it obtained an order allowing it to amend its claim against Ledcor and subsequently made that amendment. These things occurred during the relevant 5 year period. Accordingly I decline to dismiss the action pursuant to Rule 15.4. Costs [ 24 ] If counsel cannot reach an agreement as to costs then they may approach me to arrange for an appearance to make submissions as to costs. Heard on the 08 th day of August, 2012. Dated at the City of Calgary, Alberta this 13 th day of September, 2012.

J.T. Prowse M.C.C.Q.B.A. Appearances: Lauren Turnquist Miles Davison LLP

for the Plaintiff Don Dear, Q.C. McLennan Ross LLP for the Defendants