Direct Horizontal Drilling Inc v North American Pipeline Inc, 2018 ABQB 1006

Court of Queen’s Bench of Alberta Citation: Direct Horizontal Drilling Inc v North American Pipeline Inc, 2018 ABQB 1006 Date: 20181211 Docket: 1103 15423 Registry: Edmonton Between: Direct Horizontal Drilling Inc Plaintiff/Defendant by Counterclaim/Applicant - and - North American Pipeline Inc Defendant/Plaintiff by Counterclaim/Respondent _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice D.A. Yungwirth _______________________________________________________

Appeal of the Decision of L.A. Smart, Master in Chambers Dated the 27 th day of October, 2017 Introduction [ 1 ] This is an appeal from the decision of Master L.A. Smart, dated October 27, 2017, whereby the Master dismissed the Plaintiff’s Claim for long delay pursuant to Rule 4.33. The parties agreed before the Master and agree on this appeal, that there was a delay of 3 or more years without a significant advance in this action.

The issue before the Master was whether an exception applies to prevent the application of Rule 4.33. [ 2 ] Specifically, the Appellant argues that this is a case where a significant advance in a separate, inextricably linked action constitutes a significant advance in this action. Background Facts [ 3 ] On various occasions, the Respondent, North American Pipeline Inc. (“North American”) subcontracted work to the Appellant, Direct Horizontal Drilling Inc. (“Direct”) in relation to industrial drilling projects. A number of these contracts resulted in litigation.

The Groundbirch Action [ 4 ] On September 29, 2011, the Groundbirch action (1103 15423) was commenced by the Appellant for unpaid subcontract work on the TransCanada Groundbirch Project (“Groundbirch subcontract”). The Appellant claimed judgment for $1,674,706 plus interest and costs. [ 5 ] The Respondent filed a Statement of Defence claiming set-off as a result of the Appellant’s breaches of the subcontract.

The Respondent also claimed set-off as a result of breaches by the Appellant on another subcontract - the Fraser River South Arm Crossing Upgrade Project (“Fraser subcontract”). [ 6 ] The Respondent also filed a Counterclaim in which it incorporated the allegations contained in the Statement of Defence and alleged breaches by the Appellant of its obligations under the Groundbirch subcontract. In relation to those breaches, the Respondent claimed damages of $1,750,000. [ 7 ] The Respondent’s Counterclaim also included a claim for damages for alleged breaches of the Fraser subcontract, in the amount of $5,000,000.

The Gordondale Action [ 8 ] Later, on November 2, 2012, the same Appellant commenced an action (1203 16346) against the same Respondent, for unpaid subcontract work on the Gordondale Project (“Gordondale subcontract”). In that action, the Appellant claimed judgment for $61,596.72. [ 9 ] The Respondent filed a Statement of Defence in which it claimed set-off as a result of breaches by the Appellant on the same two subcontracts referenced in the Groundbirch Statement of Defence and Counterclaim (Fraser subcontract and Groundbirch subcontract).

The damages claimed were also the same as those claimed in the Groundbirch action. There was no Counterclaim filed by the Respondent in the Gordondale action. Steps Taken in Each Action In the Groundbirch Action:

a) the Appellant filed a Demand for Particulars on January 13, 2014, but did not serve it on the Respondent;

b) the Appellant filed a Statement of Defence to Counterclaim on March 4, 2016 but did not serve it on the Respondent;

c) on September 12, 2016, the Appellant filed an Affidavit of Records and served it on the Respondent. By this time, more than 3 years had passed without a significant advance in the action;

d) on September 13, 2016, Counsel for the Respondent advised the Appellant by letter that it intended to make an application for dismissal of the action under Rule 4.33;

e) on October 6, 2016, the Respondent filed the application that is the subject of this appeal. In the Gordondale action:

a) the Appellant filed and served an application for

summary judgment in April of 2013. An employee of the Appellant, David Fisher, swore an Affidavit on April 17, 2013 in support of that application.

b) on October 20, 2013, Counsel for the Respondent questioned Mr. Fisher on his Affidavit. During questioning, Counsel for the Appellant took the position that any questions regarding the Fraser or Groundbirch subcontracts would not be answered because they were irrelevant.

c) at some point, the Respondent filed an application to compel Fisher to answer questions relating to the Fraser and Groundbirch projects – that application did not proceed;

d) in opposition to the

summary judgement application, in-house Legal Counsel for the Respondent, David Thomlinson, swore an affidavit on November 25, 2014 (filed November 26, 2014).

e) the

summary judgment application has not proceeded to date. Decision of Master [ 10 ] The Master first looked at the issue of whether the two actions are inextricably linked. He relied on the factors set out in the case of Angevine v Blue Range Resource Corporation , 2007 ABQB 443 . [ 11 ] The Master concluded that the actions commenced by the Plaintiff are distinct in that they are based on separate contractual claims. Therefore, any connection must relate to the counterclaim and set-off defences raised by the Defendant.

He noted that the allegations set out in both actions with respect to the set off claims are identical and that the Fraser Work Counterclaim is also identical with the omission of the paragraph seeking set-off. [ 12 ] The Master concluded that “there is a clearly identifiable link between the actions”. [ 13 ] The Master went on in paragraph 8 to conclude: “….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.” [ 14 ] After considering the case of Danek v Levine , 2016 ABQB 422 , the Master concluded that no extricable link had been established. Standard of Review [ 15 ] The standard of review on appeal from a Master to a Judge on all issues, is correctness.

Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 . Both parties agree on this. Issues for Determination [ 16 ] Both parties agree that the issues for determination on this appeal are: 1. Are the Groundbirch and Gordondale actions “inextricably linked” such that a significant advance in the Gordondale action also advances the Groundbirch action; and 2. If the two actions are inextricably linked, was a step taken in the Gordondale action during the period of delay, one that significantly advanced the Groundbirch action? Position of the Appellant [ 17 ] On the first issue, the Appellant argues the following:

a) That in order to apply the Angevine factors, one must examine the pleadings;

b) The relevant paragraphs from the Respondent’s statement of Defence in the Gordondale Action are identical to the paragraphs from the Statement of Defence and Counterclaim in the Groundbirch action.

c) The four identical issues or causes of action that appear in the Respondent’s pleadings are: i. Liability of the Appellant for alleged breaches of the contract for the Fraser project; ii. Quantification of the damages resulting from these breaches, if any, by the Appellant, of the contract for the Fraser Project; iii. Liability of the Appellant for alleged breaches of the contract for the Gordondale project; and iv. Quantification of the damages resulting from these breaches, if any, by the Appellant of the contract for the Gordondale Project.

d) The Master erred when he did not identify BOTH the common liability and common quantum issues and did not then apply Angevine and consider these identities in light of the four factors set out therein.

e) The Master also erred by applying Danek , and in doing so, ruling that the finding in the Gordondale action would merely “inform” on the quantum of the set-off. The Appellant argues that Danek is distinguishable from this case.

f) The Master failed to see the importance of resolving the Respondent’s $7,000,000 of damages claims in the related Gordondale action and its impact on the advance of the primary Groundbirch action by focusing not on the advance that it would effect, but rather on other advances that it would not.

g) The Master erred in his finding that resolution of the issues of the quantum of set-off need be determinative of the Groundbirch action per se. [ 18 ] On the second issue, the Appellant argues that the exchange of affidavits giving evidence on the merits supporting and elaborating on the pleadings, and cross examination on one of those affidavits, significantly advanced the Gordondale action and hence the main action. [ 19 ] On second issue, the Appellant is not relying on the filing of a

summary judgment application or the filing of the affidavit of Fisher and the questioning on that affidavit to support his “significant advance” argument. The Respondent relies completely on the affidavit of David Thomlinson, and specifically paragraphs 10 through 31 thereof. The Appellant argues that this is the first time that there is evidence of actual damages and it materially changes what is in the pleadings. [ 20 ] In response to the Respondent’s oral arguments, the Appellant clarified that the affidavit of David Thomlinson was significant only if you focused on the amount of damages being claimed. Position of the Respondent [ 21 ] On the first issue, the Respondent argues that:

a) It is a high standard to find an inextricable link. The mere fact two actions are related or may have a practical effect on one another is not sufficient. The Respondent argues that the substance of the actions must be impossible to separate.

b) The related action must be logically or factually relevant or binding on the primary action, not just binding on the parties to the primary action.

c) It is the interconnectedness of the issues in the two actions that should be the focus, not on the issues as between the parties.

d) In this action (Groundbirch), the Appellant is claiming compensation for extras that it provided and the other action (Gordondale) concerns the Appellant’s claim for unpaid invoices issued under a different subcontract.

e) The liability of the Respondent to the Appellant in relation to Groundbirch has no relevance and is not binding on its liability to the Appellant on Gordondale. The determination of liability in one action is not a barrier to the determination of liability in the other action. [ 22 ] The Respondent admits that there is a “connective link” between the two actions in that the Respondent’s set-off defence in one action is the same as the set-off defence and counterclaim in the other action. [ 23 ] The Respondent maintains that Danek is factually analogous to this case. [ 24 ] On the second issue, the Respondent argues that:

a) Even if an inextricable link is found, the things done in the Gordondale action during the “drop dead period” did not significantly advance the this action so as to protect it from the application of Rule 4.33.

b) The step taken must meaningfully move the related action toward resolution. It must be a significant advancement of this action.

c) The only thing that can be considered on the “significant thing” analysis is the Affidavit of Thomlinson. One must look at what this did in fact in terms of advancing the action. Paragraph 2-4 is not new information. For paragraphs 5-16, there is no evidence before the court that this is new information. There is also no evidence that anything happened in the action after this affidavit was filed.

d) Most of the Affidavit of Thomlinson deals with issues raised only in the Gordondale action and makes no mention of the Fraser project or its set-off claim in relation to that project.

[ 25 ] The Respondent admits that there is new information in paragraphs 28-32 of the Thomlinson Affidavit regarding quantum of cost overruns and

schedule delay costs, but argues that this is not enough to permit an evaluation of the merits of the Defendant’s claim and defence. Analysis Issue 1: Are the Groundbirch and Gordondale actions “inextricably linked” such that a significant advance in the Gordondale action also advances the Groundbirch action? [ 26 ] The following factors must be considered to determine if one action is inextricably linked to another action: 1. Are the two actions inextricably linked in the sense that the result in the one action would be “legally or factually determinative” of the issues in the other action? 2. Will the issue(

s) determined in the one action be “relevant and binding” in the other action? 3. Does the one action significantly advance the other action? 4. Could the decision in one action be a “barrier in law” to the Court’s adjudicating the other action? Angevine v Blue Range Resource Corporation , 2007 ABQB 443 at para 41 [ 27 ] The application of Angevine raises several questions: Must the related action dispose of the main action in order for the actions to be inextricably linked? Is something less that a “condition precedent” situation sufficient for two actions to be inextricably linked?

Do all four of the Angevine factors need to apply, or is it sufficient if only some apply? [ 28 ] In the case of Danek v Levine , 2016 ABQB 422 at para 21 , Jones J concluded that establishing any one of the above factors is not necessarily sufficient to establish an inextricable link; but that it is not necessary for all 4 factors to be present in order to establish such a link. Jones J goes on to state at para 22-24: [22] Angevine tells us to consider the four factors set out. It does not state that any one is more important than any other.

It does not tell us, for example, if the result in the related action must be legally and factually determinative of all of the issues in the primary action, or just some of them or just the more important issues. [23] It does not tell us precisely how a determination of issues in the related action must be relevant and binding in the primary action and to what particular questions. It does not tell us how we are to measure the materiality of any advance it brings to the primary action. [24] These comments are not a criticism of the discussion in Angevine .

Rather, they are a recognition of the importance of viewing the four Angevine factors together to see if they collectively and cumulatively point to a consistent conclusion that the two actions are not only linked, but inextricably so. [ 29 ] The cases since Angevine provide a guide as to how Angevine has been applied and allows us to see how far the courts have been prepared to go in applying the four factors set out in Angevine . [ 30 ] In the following cases, an inextricable link was found: Calgary (City of) v Chisan , 2000 ABCA 313 [Chisan] [ 31 ] The plaintiff was convicted of bylaw infractions and ordered to comply with the bylaw.

The City applied for contempt based on plaintiff’s refusal to comply, which action was subsequently adjourned sine die . [ 32 ] Following this, the plaintiff appealed the conviction on the bylaw infraction, contesting the validity of information on which the conviction was based.

All avenues of appeal were exhausted on June 28, 1994. [ 33 ] The City later proceeded with its contempt application, and on June 3, 1999, the plaintiff argued the contempt application should be dismissed for want of prosecution based on Rule 244.1, the “drop dead” rule, which provided for a five year limitation period at the time. [ 34 ] The Court found that the contempt action could not proceed until the plaintiff’s right of action in the bylaw appeal had run its course. Therefore, the dismissal of the plaintiff’s ultimate appeal rights materially advanced the contempt action.

The two actions were inextricably linked, as one was a condition precedent to the advancement of the other. Field, Field & Field Architecture-Engineering Ltd v Temp Construction

(2000) Ltd , 2015 ABQB 471 [Field] [ 35 ] The plaintiff applied to the court to strike the defendant’s counterclaim for long delay under Rule 4.33(1). The first action brought by the plaintiff was for a debt owing under a contract. The defendant claimed deficiencies and set-off. It also counterclaimed damages for negligence and breach of contract, loss of revenue, increased construction and management costs, and other loss and

damage. This counterclaim was referred to by the Court as “the second action”. Separate law firms represented the plaintiff in each action. Counsel for the defendant served an Affidavit of Records on plaintiff’s counsel in first action, indicating service on the plaintiff in both capacities. However, plaintiff’s counsel in the second action was not served. [ 36 ] The plaintiff subsequently filed to dismiss the counterclaim for long delay.

The issue before the Court was whether the defendant significantly advanced the second action by serving its Affidavit of Records upon the plaintiff through its counsel in the first action. [ 37 ] The Court considered that both actions related to the same parties and contract. The existence of the contract, its terms, and the plaintiff’s performance of it were live issues in both actions. The second action expressly incorporated the claim for set-off from the statement of defence in the first action. The Court determined the two actions were inextricably linked. TRG Developments Corp v Allan Beach Resort

(2013) Ltd , 2018 ABQB 304 [TRG] [ 38 ] The plaintiff alleged that the defendant company failed to pay purchase price, lease payments, mortgage, and other amounts to the plaintiff, under an agreement for the sale of lands (“Sale Action”). Defendant individual was the sole director of a beach resort on the property.

He continued to use the lands during the relevant period, collecting camping fees and commencing construction, ultimately resulting in the registration of a number of builders’ liens against the land (“Lien Action”). [ 39 ] In the Lien Action, the plaintiff initially sought a discharge of the builders’ liens on the basis that it owned the lands, and the liens were invalid. The company that had filed the liens subsequently filed a Statement of Claim against the plaintiff.

The plaintiff made a third party claim against the defendant company and individual, bringing them in as defendants to the Lien Action. [ 40 ] Following a delay, the defendants sought an order from Master Smart dismissing the plaintiff’s claim in the Sale Action in accordance with Rule 4.33. The plaintiff argued that advances had been made in the related Lien Action such that the Sale Action should not be dismissed. The question before Master Smart was whether the two actions were inextricably linked. [ 41 ] Master Smart found that the two actions were inextricably linked.

The defendants in the Sale Action were added as third parties to the Lien Action. With the exception of the lien holder, the parties in the two actions were identical. The same piece of land was in issue, and there was clear duplication between the two claims. The purpose of the Lien Action was to determine whether the liens were valid. Through the filing of counterclaims and third party claims, the action grew to also encompass the claims for breach of contract and unjust enrichment.

The Court’s determination in the Lien Action would have a factual and legal impact on the Sale Action. [ 42 ] Several actions taken by the plaintiff in the Lien Action significantly advanced the Sale Action. Accordingly, the application to dismiss the plaintiff’s claim on the basis of long delay was denied. Dejanovic v Axa Pacific Insurance Company , 2015 ABQB 200 [Dejanovic] [ 43 ] The defendants brought an application to strike for long delay before Master Schlosser in Chambers.

The central issue was whether four actions were so closely linked that an advance in one represented an advance in another. [ 44 ] The plaintiff suffered factually similar motor vehicle accidents in 2007 and 2008, each resulting in identical soft tissue injuries. The amounts of damages claimed differed between the pleadings, but the alleged injuries were identical. Both actions were initiated within days of the second anniversary of the accidents. [ 45 ] The plaintiff also started two lawsuits against his

Section B insurer, both referring to the underlying claim and seeking unpaid benefits. Though the suit initially proceeded without delay, there came a point when three years passed after the plaintiff filed its Affidavit of Records. The

Section B insurer applied for dismissal. [ 46 ] In the meantime, the tort actions proceeded through questioning, undertakings were answered, and the matters neared trial or resolution. [ 47 ] The plaintiff argued that advances in the tort actions against other drivers qualified as “things” that advanced the

Section B actions. In order to apply the principles from Angevine , Master Schlosser first examined the pleadings. The

Section B defendant argued that the plaintiff was fabricating or exaggerating alleged injuries, and did not acknowledge that the accident happened, much less happened as alleged.

The tort defendant denied involvement in the action, denying fault in the alternative, and alleging pre-existing injury in the further alternative. [ 48 ] In concluding that the actions were inextricably linked, Master Schlosser determined that the central issues in all four actions were apparently identical and that determination of the extent of injuries and causation in one action, while not binding, would play a large role in the global resolution of the four lawsuits.

Master Schlosser noted that where multiple actions depend on the determination of several central issues, moving one action forward advances the others. He also noted that courts should be cautious to strike for delay. If there is doubt about whether an action has advanced, it should be resolved in favour of the Respondent. [ 49 ] In the following cases, an inextricable link was not found: Danek v Levine , 2016 ABQB 422 [ 50 ] In the first action, the plaintiff sought damages against the City after suffering injuries during a bus accident.

The plaintiff brought the second action against its own lawyer, alleging negligence and breach of retainer agreement after another action related to the same bus accident was dismissed for long delay. Although a determination in the bus action could provide assistance with the determination of damages in the action against her lawyer, it would not be determinative or necessary. Even if the plaintiff suffered no

damage resulting from the bus accident, she could still pursue costs and expenses from the defendant as a result of his negligence. Jones J determined that two actions were not inextricably linked. He concluded that what is necessary is that the related action would be legally or factually determinative, or relevant and binding on the primary action. Here, the extent to which the first action is determinative of the second depends on the outcome of the first. Such a conditional link is not an inextricable link. The two actions in this case involved a common plaintiff, but different defendants.

Chak v Sun Media Corporation, 2017 ABQB 614 [ 51 ] In this case, it was alleged that two lawsuits were linked by the common individual’s discriminatory, anti-Islamic prejudices. The first action identified the individual; however, he was only named as a defendant in the second action.

The fact that the individual may have expressed similarly discriminatory views in other circumstances was not legally or factually determinative of the central issue in the first action, and the two were determined to not be inextricably linked. [ 52 ] Turning to this case, the Groundbirch and Gordondale actions are undoubtedly related. The parties in each are identical. Both actions rely on the same contracts as between the Appellant and Respondent. In both actions, the Respondent claims set-off against amounts allegedly owed to it by the Appellant under those contracts.

The amount of set-off claimed under each of these contracts is identical. The question is whether the two actions are inextricably linked such that a significant advance in the Gordondale action also advances the Groundbirch action. Bearing in mind the foregoing case examples, the Angevine factors are applied as follows: Angevine Factor I [ 53 ] The first inquiry asks whether the two actions are 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. [ 54 ] The actions at hand both involve the same parties.

They concern liability arising from alleged breaches of overlapping contracts, and identical set-off claimed by the Respondent under each. Therefore, a determination in the Gordondale action as to both liability for and quantification of damages owed by the Appellant to the Respondent under the Fraser and Groundbirch projects would be legally and factually determinative of the same issues and causes of action as between the same parties in the Groundbirch action.

While this would not determine all of the issues in the Groundbirch action, or even the central issue, being the Appellant’s claim against the Respondent, the case law suggests that this is not a requirement. What is important is that the result in the Gordondale action would be determinative of some of the issues in the Groundbirch action.

Angevine Factor II [ 55 ] The second inquiry asks whether the issues determined in the related action will be relevant and binding in the primary action. [ 56 ] A determination of liability and quantum of the alleged breaches claimed by the Respondent in the Gordondale action would be relevant and binding in the Groundbirch action. It is relevant because it would affect the net quantum of damages as between the parties in both actions. Such a determination would also foreclose the parties from revisiting the same issues in the Groundbirch action.

Angevine Factor III [ 57 ] The third inquiry asks whether the related action materially advances the primary action. [ 58 ] Given the amount of damages claimed by the Respondent, the determination of liability for an alleged $6.1M will play a large role in the global resolution of both the Groundbirch and Gordondale actions. A determination of these issues in one would materially advance the other.

Angevine Factor IV [ 59 ] The fourth inquiry asks whether the decision in the related action could be a “barrier in law” to adjudicating the primary action. [ 60 ] As noted by the Appellants, if a final decision were made in the Gordondale action, the doctrines of issue estoppel, cause of action estoppel, and merger would operate to bind the parties on the same causes of action and issues in the Groundbirch action. This would effectively pose a barrier in law to re-adjudicating the same issues.

However, there would be no barrier in law to adjudicating the other issues and causes of action raised by the Respondent in the primary action. Conclusion on Issue 1 [ 61 ] I am satisfied that a global consideration of the four factors from Angevine collectively and cumulatively points to the consistent conclusion that the two actions are inextricably linked. [ 62 ] The two actions in our case are not so interdependent as in Chisan , where one was a condition precedent to the other.

However, similar to Field , the actions in our case involve the same parties, contracts, and incorporation of identical set-off claims. As in Dejanovic , the determination of liability for and quantification of an alleged $6.1M worth of damages in the Gordondale action case would play a large role in the global resolution of the Groundbirch action. The determination of these central issues has the effect of moving both actions forward.

One might also argue that as was the case in TRG , the Gordondale action has grown to encompass the Groundbirch action to the point that a determination in one action would have a factual and legal impact on the other.

[63] This case is distinguishable from Danek. In that case, while a determination in the first action could provide assistance withthe determination of damages in the second action, such a decision was neither determinative nor necessary. Even if the plaintiff werefound to have suffered no damages in the bus accident, this would not prevent recovery against her lawyer for breach of retainer andnegligence. In the present case, the set-off issues and cause of actions as pleaded are identical, and would be determinative and bindingin both actions.

Issue 2: If the two actions are inextricably linked, was a step taken in theGordondale action during the period of delay, which significantly advanced theGroundbirch action? [64] The parties agree that the focus here is on the affidavit of David Thomlinson, sworn November 25, 2014 and filed the nextday. [65] The parties also agree that the filing of a

summary judgment application and supporting affidavit and the questioning on thataffidavit are not sufficient to significantly advance the Gordondale action (and thereby the Groundbirch action). [66] In the context of “drop dead” applications, the Alberta Court of Appeal endorsed a functional approach in Ro-DarContracting Ltd v Verbeek Sand & Gravel Inc, 2016 ABCA 123 [Ro-Dar]. The Court later elaborated in Ursa Ventures Ltd vEdmonton (City), 2016 ABCA 135: [67] The new Rules use a functional approach.

Their purpose and intent, as emphasized in the foundational rule 1.2, is to providefair and just resolution of claims in a timely and cost effective manner. The foundational rules parallel a cultural shift in litigation thatdeemphasises trial as the dominant mechanism of resolving civil disputes in favor of procedures such as

summary dismissal andalternative dispute resolution: Windsor at para 15; Ro-Dar Contracting Ltd. v. Verbeek Sand & Gravel Inc., 2016 ABCA 123(Alta.C.A.) (available on Huerto v. Canniff, 2014 ABQB 534(Alta. Q.B.) at paras 13-15, aff'd 2015 ABCA 316(Alta. C.A.). [68] Under the delay Rules the functional approach inquires whether the advance in an action moves the lawsuit forward in anessential way considering its nature, value, importance and quality. The genuineness and the timing of the advance in the action are alsorelevant. This analysis is undertaken in the context of the particular lawsuit.

The focus is on substance and effect, not form: St. JeanEstate v. Edmonton (City), 2014 ABQB 47(Alta. Q.B.) at para 19, (2014), 585 A.R. 81 (Alta. Q.B.). [69] In Flock v Flock Estate, 2017 ABCA 67 at para 17, the Court outlined additional principles relating to the

interpretation ofrule 4.33. Generally, given its effect on the right to litigate, this new line of authorities suggests the drop dead rule should be interpretedin a large and liberal fashion so as to favour continuation of litigation. [70] The parties agree that the only step taken in the Gordondale action during the delay period with the potential to advance theGroundbirch action was the swearing and filing of David Thomlinson’s affidavit (“Thomlinson Affidavit”). The issue is whether thisstep taken in the Gordondale action did have the effect of significantly advancing the Groundbirch action.

Position of the Appellant [71] The Appellant argues the Thomlinson Affidavit disclosed evidence that had not previously been made available concerningthe Fraser and Groundbirch projects. Additionally, it indicated an intention to amend the Respondent’s pleadings in the Groundbirchaction, increasing the damages claimed from $1,750,000 to $4,369,805.77. The information was not previously available, was importantto the claims, and was provided under oath.

The Appellant contends that this information assisted in defining the issues and evidence insupport of those issues. [72] The Appellant relies on Franchuk v Schick, 2013 ABQB 532, in which a witness’ affidavit providing new evidence was heldto significantly advance an action. The affidavit was instructive to the plaintiff as it provided specific details of the defendant’s defences,which allowed the plaintiff to gain a better idea of the defendant’s case and test the strength or weakness of his own case. It is alsonotable that the witness died shortly after swearing the affidavit.

Master Schulz determined that the filing of the affidavit was asignificant advance which moved the litigation closer to trial. Position of the Respondent [73] The Respondent argues that the Thomlinson Affidavit did not significantly advance the Groundbirch action. It argues thatmost of the affidavit deals with issues raised only in the Gordondale action. It argues that the paragraphs touching on the Groundbirchaction contain no new information or helpful evidence aside from the quantum of costs attributable to overruns and delay.

TheRespondent contends this is merely a bare assertion of the values and does not assist the Appellant to evaluate the merits of the set-offclaims. The Respondent distinguishes this case from Ro-Dar Contracting Ltd. v Verbeek Sand & Gravel Inc., 2016 ABCA 123, whichinvolved voluminous disclosure of directly relevant evidence.

The Respondent also argues that merely stating an intention to dosomething, such as amend pleadings, is of no significant value without actually filing amended pleadings. [74] The Respondent argues that the Thomlinson Affidavit makes no mention whatsoever of the Fraser Project or its set-off claimin relation to that project. (In this regard, I note that paragraphs 5 – 16 discuss the Fraser contract, the Appellant’s alleged breaches of thesame, and resulting damages suffered by the Respondent.

Despite the fact that the Thomlinson Affidavit uses the term “Terasen Project”rather than “Fraser Project”, these appear to be one and the same.) [75] The Respondent draws analogy to Brar v Pawa, 2010 ABQB 779, in which the court held that the mere filing of an affidavit

in support of a motion in the related action that dealt primarily with issues in that related action, and only repeated information found in the pleadings in the within action, did not advance the within action in any meaningful way. [ 76 ] In Huynh v Rosman , 2013 ABQB 218 , Justice Gates applied the functional approach in the context of gathered but undisclosed medical evidence; considering the importance, extent, and quality of information gathered. Justice Gates found that the undisclosed medical information gathered by the plaintiff, even if disclosed, was not sufficient to significantly advance the action.

The information gathered was “minimal”, and only provided an incomplete “picture of any alleged damages”. [ 77 ] In Morrison v Galvanic Applied Sciences Inc , 2017 ABQB 514 , the plaintiff swore a voluminous affidavit. Despite its length and the provision of much information, in substance it did not provide pertinent details. Applying the functional analysis, the court held that the affidavit was not an important piece of evidence and therefore did not significantly advance the action.

Did the Thomlinson affidavit significantly advance the Groundbirch action? [ 78 ] Applying the functional approach, the question is whether the Thomlinson Affidavit actually moved the action forward in a meaningful way considering its nature, value, importance, quality, genuineness, and timing. Steps which narrow issues, complete discoveries, or clarify positions of the parties may significantly advance an action under the right circumstances.

In my view, this is not such a situation. [ 79 ] The affidavit of David Thomlinson outlined each of the Gordondale, Fraser (referred to as “Terasen”), and Groundbirch projects, and provided the following evidence:

a) With respect to the Gordondale project, the terms and conditions included in the purchase order which governed the work allowed, inter alia , payment to be adjusted, and the Respondent to set-off against amounts due to the Respondent under any other agreement between the parties.

b) With respect to the Fraser project, the Appellant failed to successfully perform its obligations under the contract, causing the Respondent to complete the work and remedy the associated complications. In doing so, the Respondent incurred a net loss of $1,231,915.

c) With respect to the Groundbirch project, the Respondent subcontracted work to Appellant. The Appellant agreed to be bound by the prime contract between the Respondent and TransCanada Pipelines Limited. Terms included strict timelines and completion dates, as well as a lump sum payment for work totaling $3,935,000. The Appellant completed the work roughly 5 months later than scheduled. Costs and expenses incurred by Respondent associated with the delay totaled $4,369,805.77. [ 80 ] With respect to the Appellant’s

summary judgment application on the Gordondale project, the Respondent’s statement of defence claimed, inter alia , set off for amounts owed to it in relation to the Fraser and Groundbirch projects. [ 81 ] The Thomlinson Affidavit indicated an intention to amend the Respondent’s pleadings in the Groundbirch action, increasing the damages claimed from $1,750,000 to $4,369,805.77. It also provided details regarding alleged breaches committed by the Appellant. This information was not previously available, and was provided under oath.

However, it did not assist in defining the issues and evidence in support of those issues in any meaningful way. [ 82 ] An examination of the Thomlinson Affidavit reveals that any additional information provided on top of that which was already available in the pleadings is minimal. It does not help the Appellant assess its own position in the Groundbirch or Gordondale action. While it does express an intention to amend the Respondent’s counterclaim, this is not in and of itself a significant advance.

Only once the pleadings are actually amended are the issues narrowed and the position of the Respondent clarified. The affidavit does not significantly advance the Groundbirch action to any sort of resolution. Accordingly, it is of limited value. [ 83 ] Application of the functional approach also involves an assessment of genuineness. The set-off claims which inextricably link the actions are not mentioned in the affidavit of Mr. Fisher in support of the Appellant’s

summary judgment application. In fact, during the cross-examination of Mr. Fisher on the same, the Appellant refused to entertain questions regarding the Fraser or Groundbirch projects, taking the position that these were irrelevant to the Gordondale action. The Appellant now seeks to rely on the Respondent’s discussion of the same issues in their affidavit in opposition to the

summary judgment application. Although the obligations of the foundational rule 1.2(3) apply to both parties, the plaintiff bears the ultimate responsibility of prosecuting its claim: XS Technologies Inc v Veritas DGC Land Ltd , 2016 ABCA 165 at para 7 . The Appellant’s conduct does not indicate a genuine willingness and effort to advance the action towards resolution. [ 84 ] The timing of the Appellant’s reliance on the Thomlinson Affidavit also supports a conclusion that there was no significant advance in the Groundbirch action from a functional standpoint.

The Thomlinson Affidavit was filed on November 26, 2014. The Appellants did not utilize the information contained therein to advance their claim, and only now, after the Groundbirch action faces dismissal for long delay, do they identify this as a significant step. Conclusion on Issue 2 [ 85 ] The Thomlinson Affidavit in opposition to the Appellant’s

summary judgment application in the Gordondale action did not have the effect of significantly advancing the Groundbirch action. [ 86 ] Accordingly, the appeal is dismissed. [ 87 ] Failing agreement between the parties on the issue of costs, costs may be spoken to within 45 days.

Heard on the 12 th day of October, 2018. Dated at Edmonton, Alberta this 11 th day of December, 2018. D.A. Yungwirth J.C.Q.B.A. Appearances: Daniel P. Carroll, QC for the Plaintiff Debra Curcio Lister for the Defendant