Direct Horizontal Drilling Inc v North American Pipeline Inc, 2017 ABQB 653

Court of Queen’s Bench of Alberta Citation: Direct Horizontal Drilling Inc v North American Pipeline Inc, 2017 ABQB 653 Date: 20171027 Docket: 1103 15423 Registry: Edmonton Between: Direct Horizontal Drilling Inc Plaintiff/Defendant by Counterclaim - and - North American Pipeline Inc Defendant/Plaintiff by Counterclaim _______________________________________________________ Reasons for Decision of L.A.

Smart , Master, Court of Queen's Bench of Alberta _______________________________________________________ Introduction [ 1 ] North American Pipeline Inc. (North American) applies to dismiss the claim of Direct Horizontal Drilling Inc. (Direct) for long delay pursuant to Rule 4.33. The parties have proceeded on the basis of an Agreed Statement of Facts. Direct acknowledges that three or more years had passed without a significant advance when it served its Affidavit of Records on North American on September 12, 2016.

Unless an exception applies under the Rule, the action must be dismissed. [ 2 ] Direct commenced this action on September 29, 2011 claiming $1,675,000 in damages for alleged additional work on a project known as “Groundbirch”. North American filed a Statement of Defence and Counterclaim on May 1, 2012 denying responsibility for the amounts claimed.

Under the Counterclaim North American sought set-off for amounts alleged owing by Direct for breach of its contractual obligations relating to Groundbirch of $1,750,000 and for $5 million allegedly arising from Direct’s breach of the terms of a contract to perform work on another project known as the “Fraser Work”. [ 3 ] Direct commenced another action against North American on November 2, 2012 seeking damages of $62,000 on account of amounts it alleges it is owed on a project known as “Gordondale”. North American has defended by claiming a set-off for inter alia amounts alleged owing from the Fraser Work.

Direct brought an application for

summary judgment in the Gordondale action. Questioning took place on the affidavit filed in support of that application and North American filed an extensive affidavit detailing the set-off claim arising from the Fraser Work. The

summary judgment application did not proceed.

[ 4 ] Two exceptions are asserted by Direct: a. There was an express agreement to delay under Rule 4.33(1)(a); and b. There was a significant advance in another inextricably linked action specifically in the Gordondale action (the evidence arising from the application for

summary judgment having moved the action closer to resolution). Express Agreement [ 5 ] Based on the Agreed Statement of Facts on or about May 24, 2012 counsel for Direct contacted counsel for North American to request that no steps be taken adverse to Direct with respect to the Counterclaim without prior written reasonable notice.

By correspondence on May 24, 2012 counsel for North American by correspondence confirmed that it would not take any adverse steps without prior written reasonable notice. [ 6 ] Plainly, North American’s agreement to provide reasonable notice before noting Direct in default in relation to the Counterclaim constituted what is often described as the “usual courtesy”. There is simply no evidence to support the contention that the parties had expressly agreed to delay in the context of Rule 4.33.

Furthermore, in these particular circumstances the courtesy was extended in relation to the Counterclaim without any suggestion that Direct was relieved of its obligation to proceed with its claim. Notably in this case based on the exchange between the parties time continued to run against both Direct and North American. Neither party is in a position to advance successfully an argument that there was a standstill agreement and consequently both the Claim and Counterclaim are subject to dismissal for long delay.

Significant Advance in the Other Action (Gordondale) [ 7 ] The significant advance in a separate action found to be inextricably linked to the other may constitute a significant advance in that other action ( City of Calgary v Chisan , 2000 ABCA 313 at para 3 ). The first consideration is to determine whether the two actions are inextricably linked. In Angevine v Blue Range Resource Corporation , 2007 ABQB 443 at para 41 , the factors to consider are set out as follows: 41 To determine if a related action is “inextricably linked” to the primary action, the following factors are to be considered.

(1) Are the two actions inextricably linked in the sense that the result in the related action would be “legally or factually determinative” of the issues in the primary action?

(2) Will the issue determined in the related action be “relevant and binding” in the primary action?

(3) Does the related action materially advance the primary action?

(4) Could the decision in the related action be a “barrier in law” to the Court’s adjudicating the primary action? (citation omitted) [ 8 ] The actions commenced by Direct are distinct, that is, based on separate contractual claims. The connection must therefore arise from the respective counterclaim and set-off defences raised by North American in the actions. The allegations set out in both actions with respect to set-off claimed by North American arising from the Fraser Work and Groundbirch are identical. The Fraser Work Counterclaim is also identical with the omission of the paragraph seeking set-off.

To that extent there is a clearly identifiable link between the actions. A determination in the Gordondale action of an entitlement to set-off and its quantification would be legally binding and factually determinative in relation to the amount of the set-off claims in both actions but not determinative of the entitlement to a set-off in this action. It follows that the quantification of the Counterclaim would also be factually determined but not the liability of Direct for that amount.

Of more significance in my view is that none of these determinations would advance the claims of Direct for amounts alleged to be due to it under the contracts or any damages alleged in either action. [ 9 ] With the foregoing in mind, one must look to the decision in Danek v Levine , 2016 ABQB 422 at paras 25 to 27 .

Similar to Danek although a finding in the Gordondale action to the extent that it may inform on the quantum of set-off, it would not be binding or determinative of North American’s liability in the Groundbirch and Fraser Work actions nor would it be binding or determinative of North American’s entitlement under its Counterclaim.

These findings would certainly be relevant but not determinative of the Groundbirch action per se and as a consequence does not establish an inextricable linkage. [ 10 ] Having reached the foregoing conclusion it is not necessary for me to consider the sufficiency of the material filed in opposition to the

summary judgment application in Gordondale and, in particular, whether it significantly moved the Gordondale action closer to resolution or trial. Decision [ 11 ] Based on the foregoing and the whole of the Agreed Statement of Facts, the Claim of Direct and consequently the Counterclaim of North American are dismissed. North American has asked for costs on an indemnity basis however there is no evidence to support such an entitlement. Acccordingly, they will have their costs based on Column 5 of

Schedule C of the Rules of Court . Dated at the City of Edmonton, Alberta this 27 th day of October, 2017.

L.A. Smart M.C.Q.B.A. Appearances: Daniel P. Carroll, Q.C. Field LLP for the Plaintiff/Defendant by Counterclaim Debra Curcio Lister and Adrienne S. Funk Miller Thomson LLP for the Defendant/Plaintiff by Counterclaim