Mid-West Design & Construction Ltd v Jayco Builders Inc, 2019 ABQB 945

Court of Queen’s Bench of Alberta Citation: Mid-West Design & Construction Ltd v Jayco Builders Inc, 2019 ABQB 945 Date: 20191212 Docket: 1208 00251 Registry: Medicine Hat Between: Mid-West Design & Construction Ltd. Respondent/ Plaintiff/Defendant by Counterclaim - and - Jayco Builders Inc. Appellant/ Defendant/Plaintiff by Counterclaim - and - South-West Steel Products Ltd. Defendant by Counterclaim _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice D. V. Hartigan _______________________________________________________

Appeal from the Order by Master J.R. Farrington, Master in Chambers Dated the 06 th day of February, 2019 I. Introduction [ 1 ] This matter is an appeal of Master Farrington’s decision of February 6, 2019, wherein the Master dismissed the application of Jayco Builders Inc. (hereinafter referred to as the “Appellant” or “Jayco”) to have the Action dismissed for delay, pursuant to Rule 4.31 of the Alberta Rules of Court , Alta Reg 124/2010 (the “ Rules ”).

Master Farrington determined that, whether or not there was inordinate and inexcusable delay, any presumption of significant prejudice was rebutted by Mid-West Design & Construction Ltd. (hereinafter referred to as the “Respondent” or “Mid-West”). II. Issue [ 2 ] The Appellant argues that the Master erred in his decision, and asks that the Action be dismissed for delay under Rule 4.31 . [ 3 ] The appeal hearing is de novo , and the standard of review is correctness: Bahcheli v Yorkton Securities Inc, 2012 ABCA 166 . III.

New Evidence on Appeal [ 4 ] In support of this appeal, the Appellant filed an affidavit of the corporate representative, Christopher Friesen, affirmed on June 7, 2019. [ 5 ] As well, new information regarding the Action arose shortly before this appeal was argued. That information was the response to an undertaking provided by the Respondent to the Appellant immediately before the appeal was heard by me on October 17, 2019. I will discuss that response later in my decision.

Insofar as that information and Christopher Friesen’s affidavit constitute new evidence which speaks to the issue of prejudice, that evidence is admissible pursuant to Rule 6.14 (3). IV. History of Litigation [ 6 ] The originating Action was commenced by way of Statement of Claim, filed July 19, 2012. The Action itself involves a claim by the Respondent for breach of contract by the Appellant in a construction agreement between the parties. The relevant litigation history after the filing of the Statement of Claim is as follows: • On August 8, 2012, Jayco filed its Statement of Defence and Counterclaim.

Jayco additionally named South-West Steel Products Ltd. as a party to the Action by way of a Third-Party Claim. • On September 2, 2012, Mid-West filed its Statement of Defence to the Jayco Counterclaim. • On November 9, 2012, Mid-West served Jayco with its Affidavit of Records. • On December 14, 2012, Jayco served Mid-West with its Affidavit of Records. • Examination of the corporate witnesses for Jayco and Mid-West occurred on October 28 and 29, 2013.

Undertakings were given by both parties. • On June 24, 2014, Mid-West provided its responses to undertakings. • On July 10, 2014, Jayco provided its responses to undertakings. • On May 24, 2016, the corporate witnesses for Jayco and Mid-West were examined on their responses to undertakings. • On August 31, 2016, counsel for Mid-West wrote counsel for Jayco inquiring about Jayco’s interest in scheduling a Judicial Dispute Resolution in the matter.

Jayco never responded to this correspondence. • On March 27, 2018, counsel for Mid-West wrote counsel for Jayco enclosing a draft Form 37 – Request for Trial. • On April 25, 2018, counsel for Jayco served an application on Mid-West to have the originating Action dismissed pursuant to

Rule 4.33. That application to dismiss was heard on June 6, 2018, and was dismissed by Master Robertson. Additionally, Master Robertson also permitted Jayco to make application to the Court pursuant to Rule 4.31 , which, it became clear during the hearing, was the Rule under which a remedy should have been sought. • On June 14, 2018, the proper application under Rule 4.31 was served by Jayco. This is the application which is the subject matter of this appeal. • On July 6, 2018, Mid-West examined Jayco on the affidavit made in support of the Rule 4.31 Application.

On October 30, 2018, Jayco examined Mid-West on the affidavit made in opposition to the Rule 4.31 Application. • On February 6, 2019, the Rule 4.31 Application was heard by Master Farrington. Master Farrington dismissed the application. It is this ruling which is currently before me in this appeal. [ 7 ] On October 17, 2019, the appeal of Master Farrington’s ruling was heard by me in Medicine Hat. A letter was provided to counsel for Jayco by counsel for Mid-West in response to an undertaking made October 30, 2018 in the course of examination on the affidavit regarding the Rule 4.31 Application.

That letter stated the following: Mid-West provides the following undertaking response following the cross-examination of Blayne Janssens: UNDERTAKING 1: To review Mid-West’s records to determine if there’s a bid file, construction file, and any other related documents that have not yet been produced in this litigation. ANSWER: Mid-West has reviewed their records and is unable to locate any records relevant to this undertaking that have not already been produced in the course of this litigation. V. Applicable Law [ 8 ] Rule 4.31 provides:

(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 the 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 ] The factors to be considered in an application under Rule 4.31 were outlined in Humphreys v Trebilcock , 2017 ABCA 116 at paras 150 – 156 ( Humphreys ): In order to apply r. 4.31 an adjudicator must answer six distinct questions.

First, has the nonmoving party failed to advance the action to the point on the litigation spectrum that a litigant acting reasonably would have attained within the time frame under review? Second, is the shortfall or differential of such a magnitude to qualify as inordinate? Third, if the delay is inordinate has the non-moving party provided an explanation for the delay? If so, does it justify inordinate delay?

Fourth, if the delay is inordinate and inexcusable, has this delay impaired a sufficiently important interest of the moving party so as to justify overriding the non-moving party’s interest in having its action adjudged by the court? Has the moving party demonstrated significant prejudice? Fifth, if the moving party relies on the presumption of significant prejudice created by r. 4.31(2), has the non-moving party rebutted the presumption of significant prejudice?

Sixth, if the moving party has met the criteria for granting relief under r. 4.31(1), is there a compelling reason not to dismiss the nonmoving party’s action? This question must be posed because of the verb “may” in r. 4.31(1). VI. Master Farrington’s Decision [ 10 ] Master Farrington dismissed the Rule 4.31 Application on the basis that any potential presumption of prejudice under Rule 4.31 (2) was rebutted by the Respondent. At page 19 of his decision transcript, he states: “There’s been no particular demonstration of actual prejudice here.

The rule says that if the first elements of the test are made out that there’s a presumption of prejudice, but that presumption is rebuttable, and in this particular case I think that presumption has been rebutted. There’s been no suggestion of any particular prejudice. This isn’t the type of case where we’re talking about going to trial fifteen years after the fact. It’s a construction dispute.

Largely it will be dealt with on the basis of documents, but there’s no question that oral evidence will be important as well. “So I think the presumption of prejudice has been rebutted, and I don’t think the moving party has demonstrated significant prejudice.”

[ 11 ] The Appellant states that the Master effectively ruled that there had been an inordinate and inexcusable delay in this matter. However, that is not the case. The Master found that there was delay, but did not go so far as to find that delay inordinate. He stated at page 18, lines 25 to 28: The second part of the analysis is whether the shortfall or differential is of such a magnitude to qualify as inordinate. This case certainly doesn’t go into the ten-to-fifteen-year range of the other cases, but not a lot was done in six years here.

So for the sake of argument, let’s assume that the inordinate test has been made out… [emphasis added] [ 12 ] In essence, the Master found that even if there had been inordinate and inexcusable delay, he would not have dismissed the Action because of his determination of a lack of prejudice to the Appellant, even if there were a rebuttable presumption of that prejudice at play. [ 13 ] As a consequence, the Master dismissed the application. VII. Analysis [ 14 ] It is not clear whether the Appellant relies upon Rule 4.31 (1) or 4.31 (2) in seeking the dismissal of the matter.

In any event, I will consider both parts of that Rule. [ 15 ] As stated above, Master Farrington understandably did not undertake a full Humphreys analysis, given his determination that the presumption of significant prejudice in Rule 4.31 (2) had been rebutted by the respondent. Given the new evidence presented on this appeal, I believe it is appropriate for me to apply the Humphreys analysis to this case.

Further, the Court of Appeal in Arbeau v Schulz , 2019 ABCA 204 at para 31 ( Arbeau ), states that a prejudice-first analysis is not the appropriate way to undertake a delay analysis: [I]t was an error for the chambers judge to not address the issues of delay, and of inordinate and inexcusable delay, before turning to the question of prejudice. The test in the rule is whether “the delay has resulted in significant prejudice”. As a result, the determination of significant prejudice cannot be made in the abstract as the concepts of delay and significant prejudice are causally linked.

The court must first determine whether there was delay (or inordinate delay) and, if so, whether that delay led to significant prejudice. [ 16 ] I apply the law as stated in paras 150-156 of Humphreys in the following discussion. VIII. Failure to Advance the Action [ 17 ] From the filing of the Statement of Claim in July of 2012 to the examinations of corporate witnesses on responses to undertakings in May of 2016, this Action proceeded at a steady, if not necessarily hurried, pace.

Affidavits of records were provided by both parties; corporate witnesses were examined; undertakings were responded to; and witnesses were examined on those responses. For all intents and purposes, the Action was proceeding in an orderly fashion for those 46 months. [ 18 ] However, after the examinations of May 24, 2016, the Action more or less came to a halt. On August 31, 2016, the Respondent approached the Appellant with a view to a possible Judicial Dispute Resolution to facilitate a settlement of the matter.

The Appellant never responded to this correspondence, and no further step was taken by the Respondent until the end of March 2018, when the Respondent provided counsel for the Appellant with a draft Request for Trial.

Effectively, there was a 22-month period of inactivity of the Action. [ 19 ] The first question, then, is whether there has been delay in this litigation on the part of the Respondent. “In other words, has [the Respondent] failed to advance the action to the point on the litigation spectrum that a litigant acting reasonably would have attained within the time frame under review?” ( Arbeau at para 33 ). [ 20 ] I am of the view that the Action was proceeding without significant delay during the period from July of 2012 to May of 2016.

Again, while the Respondent had not pursued the matter with urgency to that point, the Action had proceeded reasonably to that point. [ 21 ] I do find that there was unnecessary delay between May 2016 and March 2018. Delay cannot be looked at in terms of parts or periods of litigation. Rather, delay must be done in the context of the entire action, not segments. In the context of the total period under review from July 2012 to March 2018, some 68 months, the Action had not progressed to the point that could have been reasonably expected.

As stated by Master Farrington in the original hearing, this is not a particularly complex matter, and should have been further along. IX. Inordinance of the Delay [ 22 ] The next issue for me to consider is whether the delay described above is inordinate. As the Court of Appeal stated in Arbeau at para 36 : Whether delay is “inordinate” is “to be determined in light of all of the circumstances of a particular case”: Kuziw v Kucheran Estate , 2000 ABCA 226 at para. 30 .

Inordinate delay is that which is “ much in excess of what was reasonable having regard to the nature of the issues in the action and the circumstances of the case”: Kuziw at para 31 (emphasis added). “As a rule, until a credible excuse is made out, the natural inference would be that (inordinate delay) is inexcusable”: Lethbridge Motors Co v American Motors (Canada) Ltd , 1987

ABCA 150 at para 12 , quoting Allen v Sir Alfred McAlpine & Sons Ltd , [1968]1 All ER 543 at para 561 (CA) . [ 23 ] An interesting aspect to this time period between May 2016 and March 2018 is the action, or perhaps more appropriately, inaction on the part of the Appellant with respect to the Respondent’s proposal regarding Judicial Dispute Resolution. Clearly, the responsibility for moving an action along lies with the plaintiff.

As the Court of Appeal stated in Lethbridge Motors Co v American Motors (Canada) Ltd , 1987 ABCA 150 at para 19 : In my view it is for the Plaintiff to keep his action moving; he cannot pass the blame to the defendant for delay of this kind. I adopt the statement of Salmon L.J. in Fitzpatrick v. Batger & Co. [1967] 2 All E.R. 657 at 659 : “[The defendants] no doubt, however, were relying on the maxim that it is wise to let sleeping dogs lie.

They had good reason to suppose that a dog which had remained unconscious for such long periods as this one, if left alone, might well die a natural death at no expense to themselves; whereas if they were to take out a summons to dismiss the action, they would merely be waking the dog up for the purpose of killing it at great expense which they would have no chance of recovering.

I am not surprised that they did not apply earlier, and I do not think that the plaintiff’s advisers should be allowed to derive any advantage from that fact. [ 24 ] This principle is restated by Justice Moen in Riviera Developments Inc v Midd Financial Corp , 2002 ABQB 954 at para 23 : …[t]he principle still stands that the plaintiff is responsible for moving the action along.

A defendant is not responsible for taking any steps or pushing the plaintiff to move the action. [ 25 ] However, the Court went on in the same paragraph to state: “However, when making an application under Rule 243 and 244 [the previous rule 244 dealing with delay and mirroring the current rule 4.31] a defendant may not rely on its delay in responding to the plaintiff.” [ 26 ] In this case, three months after the corporate witnesses were examined on their responses to undertakings, the Respondent wrote to the Appellant to see if the Appellant was interested in scheduling a Judicial Dispute Resolution.

The Appellant never responded to this correspondence. In argument, counsel for the Appellant was very frank about this failure to respond, and could not offer an explanation, other than to attribute it to an oversight or an office error rather than intentionally ignoring the letter. I fully accept counsel’s representations in that regard. [ 27 ] The Respondent was certainly entitled to expect a reply to this proposal. What is less certain is exactly how long the Respondent should have waited before sending another enquiry or taking a further step.

There is therefore no way to accurately determine or even estimate what portion of the delay between the Judicial Dispute Resolution correspondence of August 31 and the presentation of the draft Form 37 in March of 2018 is attributable, or at least partly attributable, to the Appellant’s failure to respond to the Respondent. [ 28 ] Given the above, while I do find that there has been delay, in the context of the entire length of the Action and, to a lesser extent, the issue of non-response to the Respondent, I am not satisfied on a balance of probabilities that the delay has been inordinate. X.

Compelling Reason to Not Dismiss the Action [ 29 ] Given my determination that the delay in this case was not inordinate, steps three through five of the Humphreys analysis do not apply. Perhaps most significantly, the presumption of significant prejudice, triggered by a finding of inordinate delay, does not come into play. [ 30 ] However, I must still consider the sixth aspect of the Humphreys analysis: whether the Appellant has met the criteria for relief under Rule 4.31 (1). That Rule, again, is:

(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. [ 31 ] At para 43, Arbeau states that: “Where the presumption of significant prejudice under rule 4.31 (2) does not apply, the court must consider whether the applicant has established actual significant prejudice caused by the delay.” It is therefore the Appellant’s burden to demonstrate significant prejudice consequent on the delay. [ 32 ] The affidavit evidence that the corporate officer, Christopher Friesen, submitted as new evidence on this appeal essentially alleges non-litigation prejudice.

Non-litigation prejudice can be described as the prejudice that arises simply from the existence of the litigation. Where such prejudice threatens an important and legitimate interest of a party, a plaintiff’s delay in advancing the action with reasonable diligence may significantly prejudice the other party. Humphrey s at paras 132 – 138 . [ 33 ] In support of its claim of significant non-litigation prejudice, the Appellant relies upon the affidavit evidence of the corporate officer, Christopher Friesen, submitted in evidence in this appeal.

While that affidavit describes what might be described as the general or expected prejudice visited upon a defendant involved in lengthy litigation, it does not specifically set out any particular or unique prejudice caused to the Appellant by this litigation. In other words, there is nothing in the evidence that would indicate any non-litigation prejudice to this Appellant that rises above that which would reasonably be expected for any defendant.

Any non-litigation prejudice in this matter does not rise to the level of significant prejudice. [ 34 ] As to the Appellant’s claim of litigation prejudice, this claim is based upon the alleged non-production or loss of certain

documents. The Appellant asserts, essentially, that certain documents which have not been produced must exist or have existed, and that the Appellant is therefore significantly prejudiced by the absence of production of those documents. [ 35 ] The Respondent, on the other hand, insists that it has fully complied with its production obligations under

Part 5 of the Rules . Its position is that it has produced all documents relevant and material to the Action. It further represents that it is ready for trial. [ 36 ] Essentially, on the point of actual prejudice to the Appellant, I have conflicting evidence from the parties. The evidentiary record is insufficient for me to determine, on a balance of probabilities, that there has been actual litigation prejudice to the Appellant. As the Appellant is not in a position to rely upon the presumption of significant prejudice under Rule 4.31 (2), the Appellant has failed to meet its burden of proof. XI.

Conclusion [ 37 ] While there has been delay in this matter, that delay has not be inordinate. The Appellant has failed to demonstrate significant prejudice as a result of that delay on a balance of probabilities. As a result, the appeal is dismissed. [ 38 ] Given the litigation history in this matter, the parties shall bear their own costs on this application. Heard on the 17 th day of October, 2019. Dated at the City of Lethbridge, Alberta this 12 th day of December, 2019. D. V. Hartigan J.C.Q.B.A. Appearances: R. Barry Miskuski - Niblock & Company LLP for Jayco Builders Inc.

Michael Gaber - Borden Ladner Gervais LLP for the Mid-West Design & Construction Ltd.