Willard v Compton Petroleum Corporation, 2015 ABQB 766

Court of Queen ’ s Bench of Alberta Citation: Willard v Compton Petroleum Corporation, 2015 ABQB 766 Date: 20151203 Docket: 0506 01120 Registry: Lethbridge Between: Ward Marshall Willard and Whispering Winds Stables Incorporated Plaintiffs/Respondents - and - Compton Petroleum Corporation and "XYZ Ltd." Defendants/Appellants _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Bryan E. Mahoney _______________________________________________________

Appeal from the Decision by J.B. Hanebury, Q.C., Master in Chambers Dated the 6 th day of January, 2015 Introduction [ 1 ] This is an appeal of an order pronounced by a Master on January 6, 2015, rejecting the Appellant Compton's application for dismissal of this Action for long delay pursuant to rules 4.33 and 4.31 of the Alberta Rules of Court . The Master also lifted the stay under rule 4.34 so that this action was allowed to continue. The Respondent, Ms.

Willard, as litigation representative of the deceased Plaintiff Ward Marshall Willard, was ordered to post security for costs, directed to file a litigation plan, and directed to revive the corporate plaintiff "Whispering Winds Stables" which was struck from the corporate registry in 1991. [ 2 ] This appeal raises the question of whether a defendant can apply under rule 4.33, the "drop dead" rule, to dismiss an action when, as a result of the death of the plaintiff, the action is subject to a stay of proceedings under rule 4.34.

Facts [ 3 ] The facts found by the Master in her Memorandum of Decision found at 2015 ABQB 8 are not contested in this appeal. The factual findings are an accurate reflection of the record and I adopt them for the purpose of these reasons. Those facts, taken verbatim from the decision, are as follows:

a) Ward Willard was the sole director and shareholder of Whispering Winds Stables Incorporated. It was struck from the corporate registry in 1991 and has not been re-instated. He operated a thoroughbred ranch and racetrack on certain lands owned by a relative.

b) In 2003, Compton Petroleum Corporation entered into an Alberta surface lease agreement with Mr. Willard and Whispering Winds for 20 years. The agreement permitted Compton to explore, develop and produce hydrocarbons on the property.

c) Mr. Willard and Whispering Winds filed a statement of claim in 2005 alleging that Compton had breached the agreement as it had damaged fences, left gates open, and in numerous ways damaged Mr. Willard's and Whispering Winds' property. The claim was for loss of earnings, costs for repairing the damage and special damages.

d) A defence was filed and Mr. Willard was examined for discovery. He and Whispering Winds served their undertaking responses on Compton on October 18, 2007. That was the last formal step in the proceedings.

e) In 2010 and 2011 there were discussions in relation to settling the claim. Compton wished to examine the lands and Mr. Willard refused to proceed with a meeting and to permit the examination until he received certain documents. He wanted copies of the fronts and backs of cheques paid by Compton in relation to the lease. When Compton's lawyer questioned why he sought these documents, Mr. Willard's lawyer advised that he was concerned that funds had been paid to Miles Willard (the owner of the lands), or others, and not to him.

f) On February 9, 2011, he received the copies of the canceled cheques from Compton and they indicated that the payments were to him. He also received a copy of the surface abstract outlining the terms of the agreement, with notations outlining the payments made.

g) A meeting was held on February 17, 2011, between Mr. Willard and representatives of Compton to inspect the lands and discuss settlement. Compton says that at their meeting it was agreed that it was not a good time to view the land. Its representative swore an affidavit saying that he was in attendance and no site inspection took place. Mr. Willard's sister, Marsha Willard, swears in her affidavit that a site inspection took place. She does not suggest that she was in attendance at the meeting nor does she give any source for that information. As a result her evidence on this point is not accepted: rule 13.18.

h) On April 13, 2011, the solicitor for the plaintiffs withdrew. On August 22, 2012, Mr. Willard passed away. He left a simple holograph will which transferred his estate to his sister Marsha Willard. Compton sent a series of registered letters to Ms. Willard asking her to deal with the outstanding claim. It sought a discontinuance without costs. She finally responded refusing to do so and seeking a

settlement.

i) On October 23, 2013, Compton filed a motion to dismiss the claim, returnable November 12, 2013. That application relied on rule 4.33, the drop dead rule, and 4.31, the delay rule. The application was adjourned.

j) In January, 2014, Ms. Willard's lawyer sent a litigation plan to Compton's lawyer, seeking consent to its terms. Compton's counsel refused to sign it. On February 7, 2014, Ms. Willard filed her affidavit of self-appointed litigation representative. On the same day she filed an application to continue the action under rule 4.34. On March 13, 2014, an application for security for costs was filed by Compton. [ 4 ] All of these applications came before the Master to be considered jointly. Issues [ 5 ] There are essentially two issues before the court:

a) Did the Master err in holding that Mr. Willard's death displaced rule 4.33 (the "drop dead" rule) by virtue of rule 4.34?

b) In the alternative, did the appellant Compton meet the requirements of rule 4.31 such that this action should be dismissed due to inordinate delay? Standard of Review [ 6 ] All parties agree that the standard of review on an appeal from an order of a Master, on questions of law alone, is correctness: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 , 524 AR 382, para 30 . Correctness entitles the reviewing court to undertake its own reasoning process to arrive at the result that it judges is the correct one. Analysis

a) Did the Master err in holding that Mr. Willard's death displaced rule 4.33 (the "drop dead" rule) by virtue of rule 4.34? [ 7 ] The Master held that the court cannot dismiss an action under rule 4.33 when the action has been stayed under rule 4.34. For ease of reference, these rules read as follows: Dismissal for long delay 4.33(1) If 3 or more years has passed without a significant advance in an action, the Court, on application, must dismiss the action as against the applicant, unless (

a) the parties to the application expressly agreed to the delay, (

b) the action has been stayed or adjourned by order, an order has extended the time for advancing the action, or the delay is provided for in a litigation plan, […] Stay of proceedings on transfer or transmission of interest 4.34(1) If at any time in an action prior to judgment the interest or liability of a party is transferred or transmitted to another person by assignment, bankruptcy, death or other means, the action is stayed until an order to continue the action by or against the other person has been obtained. […]

(4) If an order to continue an action is not made within a reasonable time after the date on which the action is stayed, the defendant or respondent may apply to the Court to have the action dismissed for delay under rule 4.31. [ 8 ] The remedy under rule 4.34(4) is to bring an application under rule 4.31, which reads: Application to deal with delay 4.31(1) If delay occurs in an action, on application the Court may (

a) dismiss all or any part of a claim if the Court determines that the delay has resulted in significant prejudice to a party, or

(

b) make a procedural order or any other order provided for by these rules.

(2) Where, in determining an application under this rule, the Court finds that the delay in an action is inordinate and inexcusable, that delay is presumed to have resulted in significant prejudice to the party that brought the application. [ 9 ] Rule 4.33 came into force November 1, 2013. Rule 15.4 (now repealed) established a bridging provision until the coming into force date. It provided as follows: 15.4(1) Unless subrule (2) applies, the Court, on application, must dismiss the action as against the applicant if (

a) after the coming into force of this rule, 3 years has elapsed since the last thing done to significantly advance the action, or (b) 5 years has elapsed since the last thing done to significantly advance the action, whichever comes first. [ 10 ] In order to determine whether Compton is able to rely upon rule 4.33, the court must first determine what was last done to significantly advance the action. In arguing before the Master, the parties disagreed as to when the last advance in the action was made.

The Respondents took the position that the settlement discussions in late 2010 and early 2011 significantly advanced the action. Specifically, they argued that the February 9, 2011 record production advanced the litigation such that the clock would be "re-set" for the purposes of rule 4.33. [ 11 ] The Master addressed the issue of delay during her analysis of rule 4.31. However, her findings are equally relevant to the analysis under rule 4.33.

Without repeating her analysis, the Master found that the last thing done to significantly advance the action took place on October 18, 2007, with the service of undertaking responses on Compton. Recent authorities support the Master's analysis and result on this point: see, for example Nash v Snow , 2014 ABQB 355 , 590 AR 198; Ro-Dar Contracting Ltd v Verbeek Sand & Gravel Inc , 2015 ABQB 300 . [ 12 ] Indeed, the Master's decision on this point was not contested by the Respondents. In their written brief filed September 25, 2015, the Respondents do not mention the settlement discussions as "key" dates.

Rather, they assert that there are only three relevant dates to be considered, being:

a) October 18, 2007: the date of the last step that materially advanced the action (the Plaintiffs served their undertaking responses on Compton);

b) August 22, 2012: the date of Mr. Willard's death triggering the stay of proceedings under rule 4.34; and

c) October 23, 2013: the date on which Compton filed its Application to Dismiss. [ 13 ] Compton takes the similar position. It argues that the action has not been significantly advanced since October 18, 2007, when the Plaintiffs' undertaking responses were served. For the reasons given above, I agree.

As directed by our Court of Appeal, the relevant time period is to be determined by counting back from the date on which an applicant files its application to dismiss: Filipchuk v Ladouceur , 2001 ABCA 26 , 277 AR 192 para 6 ; Trout Lake Store Inc v Canadian Imperial Bank of Commerce , 2003 ABCA 259 , 330 AR 379 para 33 . From there, we look to see whether a sufficient period of inactivity exists to engage the drop dead rule. Here, that date is October 23, 2013. [ 14 ] Compton submits that as last thing done to materially advance the action occurred on October 18, 2007. Mr.

Willard's death occurred on August 22, 2012. His death was four years and 10 months since there was a significant advancement in the action. According to the bridging provisions found in rule 15.4, which were in force at the time, Compton filed its application. If Mr. Willard's death and the resulting stay have no effect on the calculation of "inactive time", Compton was well-placed to bring its application on October 23, 2013. Counting backwards from that date, six years and five days had passed since the last significant occurrence in the litigation.

This date would have constituted the "earlier of" either the five year period since the last thing to significantly advance the action was done, or the three year period which commenced with the coming into force of rule 15.4 (being November 1, 2010). [ 15 ] There is no question that upon the death of Mr. Willard, and the transference of his estate to his sister, the action was stayed pursuant to rule 4.34(1). According to that subrule, the action remains stayed until either party obtains an order for continuation.

Compton takes the position that a stay granted under rule 4.34(1) does not act to bar a successful application under rule 4.33, as it is not a stay ordered by the court. It argues that rule 4.33 applies regardless of the Plaintiff's intervening death. That is, death does not "stop the clock" when pursuing a dismissal under rule 4.33. Specifically, Compton asserts that pursuant to rule 4.33(b), only a court-ordered stay operates as an exception to the drop dead rule. [ 16 ] The Respondents take the position that Compton's

interpretation would lead to an inequitable and absurd result. While the Respondents agree that a period of four years and 10 months passed from the date of the last significant occurrence and Mr. Willard's death, they assert that his death triggered an automatic stay of proceedings, which remained in place at the time Compton brought its application. They submit that because a stay was in place, Compton was unable to pursue a remedy under rule 4.33. Again, Ms. Willard filed her application to continue pursuant to 4.34(1) on February 7, 2014. [ 17 ] The Master agreed with the Respondents.

In rejecting Compton's submission, she held as follows, at para 17: I do not find this argument persuasive. Rule 4.34 (4) provides that if an order to continue an action is not made within a reasonable time after the date on which the action is stayed, "the defendant…may apply to the court to have the action dismissed for delay under rule 4.31". In my view the specific reference to rule 4.31 makes it clear that this is the only application open to a defendant during the period of the stay. As a result, rule 4.33 is not even engaged.

Therefore, I have come to the conclusion that Compton has no ability to apply to dismiss the action under the drop dead rule and this part of its application must be dismissed.

[18] Compton argues that the Master erred in her finding that because a stay (as imposed by the Rules) was in place, the onlyremedy available for delay fell under rule 4.34(4). The issue therefore becomes whether a party may bring an application to dismissunder rule 4.33, notwithstanding the fact that a stay has been put in place pursuant to rule 4.34(1).

I find that it can, and that the Mastererred in holding otherwise. [19] I agree with Compton that the Master erred in interpreting rule 4.34(4) as providing that the only application open to adefendant during the period of a stay imposed under rule 4.34(1) falls under rule 4.34(4). Again, rule 4.34(4) provides that if an order tocontinue an action is not made within a reasonable amount of time after the stay has been imposed, a defendant "may" apply to have theaction dismissed for delay under rule 4.31. [20] This finding, of course, imposes an additional burden upon Compton.

Under rule 4.31, an applicant must demonstrate that thedelay resulted in "significant prejudice" to the party. If it does so, the court "may" either dismiss the claim or make some other order tomanage the litigation. Conversely, under rule 4.33, if an applicant can demonstrate that over three years passed without a significantadvance in the action, the court "must" dismiss the action. The applicant does not have to demonstrate any prejudice as dismissal ismandatory once the requisite period of inactivity has been proven. [21] Compton asserts that the Master's

interpretation of rule 4.34(4) removes the "right" of an applicant to have a stale claimdismissed for a long delay (under rule 4.33) and replaces it with the mere "opportunity" to do so (under rule 4.31). Compton argues thatthe Master's

interpretation is excessively narrow, and that there is no language in either rule 4.33 or 4.34(4) suggesting that the ability toseek mandatory dismissal for long delay is eliminated upon the death of the plaintiff. To this end, Compton points to the well-establishedrule of statutory

interpretation, namely that: Today there is only one principle or approach, namely, the words of

an Act are to be read in their entire context and in their grammaticaland ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. See EA Driedger, Construction of Statutes, 2nd ed (Toronto: Butterworths, 1983) at p 87, recently quoted with approval in Wilson vBritish Columbia (Superintendent of Motor Vehicles), 2015 SCC 47 at para 18.

I note that rule 1.7 expressly provides that theinterpretation of the Rules requires a purposive and contextual approach. [22] In reply, the Respondents submit that when interpreting the drop dead rule (and, by extension, rule 4.34) the courts in thisprovince have consistently held that if there is more than one possible

interpretation, that which is most favourable to a plaintiffs' right tolitigate should govern: Filipchuk, para 5; Heikkila v Apex Land Corp, 2011 ABCA 87, 502 AR 243 para 35. [23] Both parties are correct, although the findings in Filipchuk and Heikkila predate the new Rules. This means to me that anypronouncements stressing a litigants right to his or her day in court must be read alongside the foundational rules in

Part 1 of the newRules. Further, rules 4.33 and 4.34 must be read with a view to determining the legislative objectives of each, in light of the intent andpurpose of the Rules as a whole. Clearly, the Legislature does not intend consequences that are internally incompatible or irreconcilablewith the objectives of the legislative enactment: Rizzo & Rizzo Shoes Ltd (Re), (SCC), [1998] 1 SCR 27, para 27. [24] Rule 1.2 identifies the underlying purpose and intention of the Rules, and clarifies the legislative objectives driving themodification of the old Rules.

One of the key objectives is the fair and just resolution of litigation in a timely fashion. Rules 4.33 and4.34 are to be interpreted with these goals in mind: St Jean Estate at para 31, Huerto at para 19. The interplay between the foundationalrules and rule 4.33 was commented on in Le v 1055168 Alberta Ltd, 2013 ABQB 431, 567 AR 206, where this court observed as follows,at para 24: I frequently find myself coming back to the foundational rules in the new Rules of Court for guidance in

interpretation. The new Rulesare intended to be somewhat less formalistic than was the case previously, and encourage a focus on efficiency, proportionality andeconomy. It probably goes without saying that delay in litigation is the anathema of all of these objectives.

Hence a shorter "drop dead"provision and maintaining the focus on whether the action has been moved along, rather than whether something has occurred in theaction which fits into a defined category of activities. [25] Similarly in Nash, the court confirmed that the dismissal of languishing litigation is consistent with the shift towardsimplifying proceedings and resolving claims fairly and justly in both a timely and cost-effective way: para 19. The court in Nash furtherconfirmed that "the change in tenor of the new Rules supports the notion that litigation is no longer about reaching the ultimate goal oftrial.

Rather, the goal - as stated in Hryniak and Windsor - is to resolve the case by proportionate means when it is just and fair to do so":para 35. [26] More recently, in Ro-Dar Contracting, following a review of a number of authorities dealing with the interplay between thefoundational rules and the drop dead rule, the court opined as follows, at paras 80-81: …Rule 1.2(1) tells us that the purpose of the Rules is to provide a means by which claims can be fairly and justly resolved in or by acourt process in a timely and cost-effective way. A trial is not the only court process.

An application to dismiss under Rule 4.33 is a courtprocess. In these times of expensive, and often delayed, access to justice, litigants should be mindful that when the process begins, stress isplaced on the parties' resources and the Court's resources. At some point in the process, all of the stakeholders will want resolution. Thatresolution need not, and in many cases should not, take the form of a trial. [27] The above authorities demonstrate that rules 4.33 and 4.34 must be read together in a manner which achieves the resolution oflitigation in a timely fashion, in a manner which is both fair and just.

The Master's

interpretation of rule 4.34 is at odds with these goals.While rule 4.34(4) expressly preserves the right of a defendant to apply for dismissal under rule 4.31, I do not find that its failure tomention rule 4.33 translates into a legislative intent to remove the ability of a defendant to apply for relief under rule 4.33. To findotherwise removes one of the key ways in which a litigant can dispose of a stale claim in a timely and cost effective manner.

[ 28 ] Rule 4.34(4) provides that if an order to continue a stayed action is not made within a reasonable amount of time, a defendant may apply to have the action dismissed for delay under rule 4.31.

Compton argues that the Master interpreted the word "may" in this subrule to mean "shall", thus creating a situation whereby the sole recourse available to a defendant where an action has been stayed by the Rules , yet over three years of inactivity have passed, is a delay of action application under 4.31. [ 29 ] Given the wording of both rules 4.33 and 4.34, as read against the foundational principles, this cannot be what the Legislature envisaged. [ 30 ] Although similar in outcome, rules 4.33 and 4.31 remain distinct.

Rule 4.33 is simply unavailable to an applicant until three years have passed without any significant advancement in the action. After this period of time it becomes a very powerful tool. Rule 4.31 deals with situations where the delay faced is presumably short of the three year delay dealt with in 4.33: Le at para 43. Ostensibly, in exchange for having an action dismissed despite a shorter period of inactivity, the applicant must demonstrate prejudice.

It functions, amongst other things, as a case management tool. [ 31 ] The two rules are designed to work together and to complement other rules in order to achieve the timely and cost effective resolution of court actions. There is nothing in the language of subrule 4.34(4) - express or implied - which indicates a legislative intent to remove the ability of a defendant to benefit under the drop dead rule.

Subrule (4) simply states that if a stay imposed under subrule (1) is in place, and no order to continue the action is made within a reasonable time, a defendant may apply for relief under rule 4.31 notwithstanding the stay. There is nothing in this language suggesting that additional avenues open to a defendant in cases of delay become unavailable.

Rules 4.33 and 4.34 can operate together and the permissive language used in rule 4.34(4) does not displace the availability of alternate remedies under 4.33. [ 32 ] An ordinary and contextual reading of subrule (4), given the object of the Rules , does not suggest that a defendant's exclusive remedy lies under rule 4.31. The permissive language used in rule 4.34(4) strongly intimates that it should not be read in a fashion which takes away or displaces rights provided for under other rules. [ 33 ] Support for this

interpretation is found in the wording of rule 4.33(1)(b). It provides that if more than three years go by without a significant advance in an action, the court, on application, must dismiss the action unless it "has been stayed or adjourned by order, an order has extended the time for advancing the action, or the delay is provided for in a litigation plan". [ 34 ] Compton argues that the wording of 4.33(1)(

b) means that not every type of stay which might be imposed will amount to an exception to the otherwise mandatory obligation to dismiss a stale action. Rather, it asserts that only a court-ordered stay is caught by the wording in subrule (1)(b). It suggests that the phrase "stayed or adjourned by order" should be interpreted as meaning stayed by order or adjourned by order. So as to give effect to the words "by order", subrule (1)(

b) must be interpreted as meaning that rule 4.33 is put on hold by Court-ordered stays, but not by stays imposed pursuant to the Rules . [ 35 ] The Respondents disagree with Compton's

interpretation on this point. They submit that rule 4.33(1)(

b) should be read as providing for exclusions when the action has either been "stayed" or "adjourned by order". They argue that if the legislature intended that only stays imposed by court order were caught under subrule (1)(b), express language to this effect would have been used, and that the subrule would have read "stayed by order or adjourned by order". They submit the disjunctive language used means that stays imposed under rule 4.34(1) are also included in the type of stays contemplated under 4.33(1)(b). As such, they take the position that the stay put in place upon the death of Mr. Willard constitutes an exemption to the passage of time. [ 36 ] I find that the Respondents' suggested

interpretation of rule 4.33(1)(

b) is not supported by the language used by the Legislature. There is no indication that the phrase in question is meant to be read disjunctively (i.e.: "stayed, or adjourned by order").

In so finding, I note that the exceptions listed under rule 4.33(1) were discussed by the Rules of Court Committee ("the Committee") in the February 8, 2013 paper entitled Rules of Court Committee Results of Consultation "Drop Dead" Rule 4.33 In it, the Committee advises (at para 3.1) as follows (emphasis added): Some commentators suggested (in addition to, or as a substitute for lengthening the trigger period) that further exceptions be created for the drop dead rule. Rule 4.33 presently contains the following exceptions: (

a) the parties expressly agreed to the delay (

b) the delay is accounted for in an order, or in a litigation plan […] [ 37 ] It is clear that in summarizing the exceptions to the drop dead rule, the Committee interpreted rule 4.33(1)(

b) as providing for an exception in two circumstances. The first being an order and the second being the creation of a litigation plan. The Committee's

interpretation therefore supports the

interpretation that an exemption will arise where there is a stay by order, and adjournment by order or an order for extending the time for advancing an action. In all cases, it is an order which initiates the exemption. [ 38 ] As such, reading rules 4.33 and 4.34 together leads to the conclusion that a stay imposed under 4.34(1) does not qualify as the type of stay included in the exemptions listed in 4.33(1)(b).

When the two rules are read together, I conclude that the Master erred in finding rule 4.33 inapplicable and in reading rule 4.34(4) as restricting the remedies available to Compton to a rule 4.31 application. [ 39 ] In Carter v Sears Canada Inc , 2011 ABQB 732 , 529 AR 394, the defendant obtained an order from the court which stayed the action until the plaintiff provided a proper address for service. The plaintiff did not do so until over five years had passed. When he finally provided the required address, the defendant filed an application to have his action dismissed for long delay.

The plaintiff then argued that under transitional rule 15.4(2)(b), now 4.33(1)(b), the court could not dismiss the action as it had been stayed. The court found that the existence of the stay did not nullify the application of (then) rule 15.4, nor was the clock stopped during the currency of the stay. It agreed with the Master that the stay in question was "not the type of stay contemplated by the rule" as precluding a successful drop dead application by the defendant: para 37.

[ 40 ] Carter can easily be distinguished on the grounds that the action had been stayed until the plaintiff took an identifiable step, which was in its sole power to do in order to move the action forward. The court held that it would be contrary to the purpose of the Rules to allow the plaintiff, having failed to take this step, to then hide behind the stay and claim protection from a drop dead application. [ 41 ] In the case at bar, no preliminary action was required before the stay could be lifted. All that need occur was for either party to apply to the court for an order that the action continue.

That said, I refer to Carter as an example of where this court allowed a drop dead application notwithstanding the existence of a court ordered stay. It is at least authority for the proposition that the mere existence of a stay does not necessarily preclude an application under rule 4.33. [ 42 ] During oral argument, the Respondents submitted that given the existence of a stay, procedurally, Compton would have had to apply under rule 4.34 to lift the stay, before making any application under rule 4.33.

While Compton agrees that a defendant, as an "interested party", may request the court to order that the action continue pursuant to rule 4.34, such a request in and of itself might constitute a significant advancement and re-set the clock. It submits that procedurally such a ruling would place it in a "Catch 22" type of situation, whereby an application to continue under rule 4.34 would have the effect of re-setting the clock under rule 4.33, thus precluding a successful application under this latter rule.

I agree. [ 43 ] Finally, it must be remembered that Compton's original application was brought under both rules 4.33 and 4.31. It was not brought in circumstances where there was an allegation of failing to continue the action after a reasonable time following the imposition of the stay. That is, Compton was alleging a lengthy delay in the course of the litigation as a whole , not simply a delay subsequent to a party's death and the resulting stay . In the case at bar, there was a lengthy delay which pre-existed the death of Mr. Willard and the subsequent stay of the action.

Subject to the parties agreeing to the delay or another of the exceptions listed in subsection (1), rule 4.33 provides no discretion to save a dormant action. Having found that a stay put in place under rule 4.34(1) does not qualify as an exemption under rule 4.33(1), this court must dismiss the action. [ 44 ] In so finding, I acknowledge that the foundational rules stress simplifying proceedings and resolving claims both in a timely and cost-effective way, as well as in a manner which is fair and just .

The Respondents submit that permitting Compton to bring a drop dead application while a stay under 4.34(1) was in place would itself be unjust, and would lead to absurd results. [ 45 ] Again, I cannot accept the Respondents' submissions on this point. Rather, the

interpretation adopted by the Master creates a situation where the successor of a deceased plaintiff can delay indefinitely without the possibility of facing an application under rule 4.33. This would lead to an unfair and unjust result for a defendant who would otherwise be in a position to strike a stale action. The existence of rule 4.33 provides a strong incentive to keep litigation moving along.

If it is removed from a defendant's toolbox, there may be less motivation to advance the action, especially given the added burden on an applicant under rule 4.31 of establishing prejudice, or showing that the delay is inordinate and inexcusable. [ 46 ] If nearly three years have passed with no significant advancement in an action at the time of a plaintiff's death (or other enumerated event triggering a stay under rule 4.34), should the defendant be made to wait an indeterminate amount of time before finally applying to have the action struck? I think not. Litigation is a costly and often stressful process.

A defendant should not have to endure the presence of a dormant yet enduring prospect of litigation indefinably. The weeding out of such claims is precisely what rule 4.33 is designed to achieve. [ 47 ] That said, there is much sympathy for an assignee-plaintiff in such situations. Not only might such an individual be dealing with passing of a loved one, but they are also expected to step in and manage ongoing litigation. In many, if not the majority of cases, an assignee will likely have time to protect his or her position. For example, they may seek an order contemplated under rule 4.33(1)(

b) so as to prevent a dismissal for long delay, or they may seek express consent to the delay. There are a number of options available to an assignee who finds themselves facing a looming application for delay under rule 4.33. [ 48 ] However, I acknowledge that in certain situations, such actions may simply not be feasible. There may simply not be enough time before the three-year mark approaches, or an assignee may otherwise find themselves in a position where they are unable to take any steps before a defendant applies for dismissal.

The question then becomes, from a policy perspective, which party should be prejudiced in such circumstances. In my opinion, it must be the assignee-plaintiff. [ 49 ] Rule 4.34(1) provides that the interest or liability of a party to an action may be transferred or assigned to another in certain circumstances. It must be that the assignee plaintiff essentially "inherits" the action as it stands. If the original litigant allowed a claim to sit dormant for a prolonged period of time (either by choice or through circumstance) this actuality must be borne by the assignee.

A defendant who is in a position to have a stale claim struck under rule 4.33 should not be further prejudiced and further delayed by the death (or bankruptcy) of an already lethargic litigant. [ 50 ] I note that in her February 5, 2014 affidavit, Ms. Willard deposed that shortly after her brother's death, and before she could direct her attention to matters involving his estate, she travelled to Arizona to care for her ailing sister, who passed away in October of 2012. While I am very sympathetic towards Ms.

Willard's personal circumstances and acknowledge the hardship she must have gone through in dealing with the death of two siblings in close proximity, her unfortunate circumstances do not affect the calculation of "inactive time" under rule 4.33. Upon her brother's passing on August 22, 2012, the action had sat dormant for four years and 10 months.

Nothing was done to advance the litigation until after Compton brought its application to strike. [ 51 ] The authorities are clear that the justification for the delay is irrelevant to an application to dismiss for long delay: see Marasch v Alberta , 2000 ABCA 24 at para 5 ; Milne v Dziadyk , 2014 ABQB 407 , paras 12-13 (Master). As this court recently noted, in Michel First Nations v Canada (Attorney General) , 2015 ABQB 337 at para 36 : There is no doubt that the application of Rule 4.33 may on occasion appear unfair and may, in fact, cause hardship.

However, Rule 4.33 is mandatory. [ 52 ] Further, in Wilson (next friend of) v Aspen View Regional School District Division No 19 , 2014 ABQB 741 , the court adopted

the position that the ability to litigate is a privilege which may be easily lost. In dismissing the plaintiff's action for delay, it commented as follows, at para 23: The case law is clear to the effect that Rule 4.33(1) is mandatory. Subject to the parties agreeing to the delay or another of the exceptions listed, a court has no discretion to save a dormant action: Nash v Snow , 2014 ABQB 355 at para 12 , 58 CPC (7th) 126, citing Morasch and Trout Lake Store Inc v Canadian Imperial Bank of Commerce , 2003 ABCA 259 , 330 AR 379. The Rule promotes certainty and expeditious litigation.

The requirement to dismiss languishing litigation is also consistent with Rule 1.2(1) which declares that the purpose of the rules is to provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost- effective way: Nash , paras 19-20 . [ 53 ] Reading rules 4.33 and 4.34 together in light of the foundational objectives contained in

Part 1 of the Rules convinces me that the Master erred in finding that rule 4.33 was not engaged and that the Applicant had no ability to apply to dismiss the action under the drop dead rule. The stated purpose and intention of the Rules generally, and the drop dead rule in particular, is to discourage delay and impose a limit on how long a claim is permitted to remain dormant. With respect, the Master's

interpretation frustrates rather than furthers these purposes. [ 54 ] I find that the type of stay put in place under rule 4.34 is not encompassed in the exclusions set out under rule 4.33(1)(b), such that Compton is able to seek a remedy for dismissal for long delay. As of the date of Compton's application, there had been no significant advancement in the action for a period of well over five years. Given the mandatory nature of rule 4.33, Compton's application for dismissal is therefore granted.

b) In the alternative, did the appellant Compton meet the requirements of rule 4.31 such that this action should be dismissed due to inordinate delay? [ 55 ] In the event that I am incorrect in my above analysis, I shall address Compton's alternate argument. Rule 4.31 gives the court the discretion to either dismiss an action or to take other measures in cases of delay.

If the court finds that a party's delay in advancing an action is "inordinate and inexcusable", there is a presumption that such delay has "resulted in significant prejudice" to the applicant. [ 56 ] Again, the Master held that nothing occurred to advance the action between October 18, 2007 and February of 2014, when Ms. Willard applied to continue the action. The Master found, and I agree, that this time frame met the test of inordinate delay.

The onus of establishing that the delay is inordinate lies with the applicant: Kuziw v Kucheran Estate , 2000 ABCA 226 , 266 AR 284, para 31 . [ 57 ] After reviewing the reasons provided for the delay, both prior and subsequent to Mr. Willard's death, she further found that the delay was inexcusable. Again, her findings on this point are unassailable. As per rule 4.31(2), where the delay is inordinate and inexcusable, it is presumed to have resulted in significant prejudice to the applicant, here, Compton. In so finding, the Master went on to hold, at para 33 that: The obligation is on Ms.

Willard to first rebut the presumption, a presumption that may lead to the claim being dismissed "unless there is evidence that at least raises a legitimate doubt about the existence of serious prejudice": Huerto , para. 25, citing Volk v. 331323 Alberta Ltd . , 1998 ABCA 54 , para. 21 . [ 58 ] The Master ultimately found sufficient evidence to rebut the presumption of prejudice and found that the Appellant had failed to prove that it suffered the requisite amount of prejudice required to dismiss the Action.

Specifically, she found that many of the assertions of prejudice alleged by Compton were not supported by affidavit evidence. [ 59 ] Compton submits that the Master erred by rebutting the presumption of prejudice and erred by finding that Compton did not suffer the requisite prejudice to justify dismissal of the action. I deal first with Compton's allegation that the Master erred in finding sufficient evidence to rebut the presumption of prejudice assumed under rule 4.31(2). [ 60 ] In finding that the presumption of prejudice had been rebutted, the Master drew from the fact that Mr.

Willard had been examined for discovery prior to his death (including responding to undertakings) and that such evidence was admissible at trial: see rule 8.14. She further noted that Mr. Willard had provided photographs depicting the lands and cost estimates/assessments that could be used in establishing any alleged damage to the property in his Affidavit of Records. [ 61 ] She concluded that of the two parties, the Respondents (through Ms. Willard as litigation representative) would suffer the greater disadvantage as a result of Mr. Willard's death. This is due to the fact that as the plaintiff, Ms.

Willard bears the onus of proving the claim; a burden which must now be met on the existing evidence. I agree with the Master's assessment that this places the Respondents in a "potentially difficult" position. [ 62 ] Indeed, Compton seems to acknowledge this fact. In its written argument addressing prejudice, it asserts that "...the photographs and assessments were not provided to the Court or reviewed by [the Master]. Further, those documents do not prove liability or causation." If the documents provided in Mr.

Willard's Affidavit of Records do, in fact, fail to establish liability or causation, it is difficult to see how this prejudices the defence. [ 63 ] The Master correctly noted that the authorities relied upon by Compton were distinguishable. In McDonald v Schoeler , 2002 ABQB 472 , Master Funduk found that given the stage of the proceedings, the death of the defendant precluded all relevant evidence from being put before the court. I note that the delay in McDonald was attributable to the plaintiff, and that the defendant had not yet filed his affidavit of documents, although he had been examined for discovery.

Thus the plaintiff's delay, coupled with the intervening death, caused prejudice to the defendant. [ 64 ] Conversely, in the case at bar, Mr. Willard was the source of the delay. The Master was correct in opining that due to his passing, his litigation representative may be placed in a more difficult position given the available evidence and the burden of proof.

However, the inordinate and inexcusable delay causes greater prejudice to the Respondents than to the Appellant in this instance. [ 65 ] It is clear that the death of an important witness will often cause prejudice. However, making such a determination is a fact- specific exercise, and "the presumption of prejudice from the death of a witness is rebuttable": Empson v Wenzel Downhole Tools Ltd , 2013 ABCA 418 , 566 AR 134, para 3 .

In Empson , the majority held that even if there were certain issues that only the deceased witness could have testified to, this might not amount to sufficient prejudice to warrant dismissal under rule 4.31. Specifically, they noted that the deceased had been examined, had answered undertakings, and had been re-examined.

This, coupled with rule 8.14 which allows a party to make use of transcripts from the questioning (examination) of its own witness in certain situations (including death) was found to have reduced the prejudice suffered from the death of the witness during the period of delay. [ 66 ] I therefore agree with the Master's conclusion that Ms. Willard has established evidence that at least raises a legitimate doubt about the existence of serious prejudice. [ 67 ] I turn, then, to Compton's argument that the Master erred in finding that it did not establish actual prejudice.

Compton's submission during the original application, and the Master's conclusions to the contrary are reproduced below: 35 Compton responds that the passage of time means that memories have faded. However I note that there were no affidavits of potential witnesses to that effect. 36 Furthermore, Compton argues, the case involves significant issues of credibility as to the alleged damages and it will not be able to cross-examine Mr. Willard.

However, it provided no examples of these issues, nor any relevant points from the transcripts of the discoveries. 37 As well, Compton says, it has been prejudiced as the property has now been sold to a third party. However, I note that the property was never owned by Mr. Willard, but by a relative. [...] 41 The arguments of prejudice raised by Compton were not supported by any actual evidence. Without specific examples from Compton of how it has been significantly prejudiced by its inability to cross-examine Mr.

Willard, or by the transfer of the property from one third party to another, or by the fading of memories, I am unable to find that it has suffered the requisite prejudice. [ 68 ] The arguments raised before the Master in an attempt to demonstrate actual prejudice were largely repeated before me during oral argument. I acknowledge that judicial notice has been taken of the fact that the memory of witnesses may fade over time: see for example R v AD , 2006 SKQB 156 , para 31 ; R v Pavsic , [1998] OJ No 6716 (Ont Ct Jus), para 17 .

I also acknowledge that a party may be prejudiced by the inability to cross-examine the party opposite. However, I concur with the Master that Compton has failed to lay an evidential basis to establish the required prejudice. Again, those examples provided by Compton, namely the income tax returns which raise some question as to Mr. Willard's ability to afford the rent he claims to have paid on the property, are more prejudicial toward the plaintiff given the burden of proof. [ 69 ] I conclude that the Master's finding that Compton failed to establish actual prejudice is correct.

Its appeal on this alternate ground is denied. [ 70 ] Given the above findings, there is no need to address the issue of the progress - or lack thereof - made by the Respondents since the pronouncement of the Master's decision. Conclusion [ 71 ] The Master erred in finding that the drop dead rule was not engaged in instances where a stay had been imposed by operation of rule 4.34(1). Given the mandatory nature of rule 4.33, and the amount of time which has passed without any significant advance in the action, the Respondents' (Plaintiffs) claim is dismissed.

Costs [ 72 ] If the parties are unable to agree as to costs, they may be settled on application within 30 days of the date of these reasons. Heard on the 9 th day of October, 2015. Dated at the City of Calgary, Alberta this 3 rd day of December, 2015.

Bryan E. Mahoney J.C.Q.B.A. Appearances: Michael J. Whiting, Carscallen LLP for the Plaintiffs/Respondents Michael Bokhaut, Dentons Canada LLP for the Defendants/Appellants