Edmonton (City) v Alberco Construction Ltd, 2021 ABQB 1006

Court of Queen’s Bench of Alberta Citation: Edmonton (City) v Alberco Construction Ltd, 2021 ABQB 1006 Date: 20211215 Docket: 1303 07965 Registry: Edmonton Between: The City of Edmonton Plaintiff - and - Alberco Construction Ltd, Dialog Alberta Architecture Engineering Interior Design Planning Inc, Clara Industrial Services Limited, Termarust Technologies Inc, Coveright Surfaces Canada Inc, Akzo Nobel Coatings International B.V., Tisi Inspection Services West Inc, ABC Corporation, Corporation Bridgecote operating as Termarust Technologies and Dolores Lindal Defendants _______________________________________________________ Reasons for Decision of L.R.

Birkett , Master in Chambers _______________________________________________________ Table of Contents Introduction . 2 Issues . 4 Should the City’s claim be summarily dismissed pursuant to rule 7.3 because the City’s claims against Clara are statute-barred? . 4 Rule 7.3

Summary Dismissal 4 The Limitations Act 6

Additional facts and positions of the parties . 7 Law and analysis . 9 Warranty claims . 9 Non-performance of an obligation . 10 Warrants bringing a proceeding . 13 Conclusion . 16 Should the City’s claim be dismissed pursuant to rule 4.31(1)(

a) because the City’s delay has resulted in significant prejudice to Clara? . 17 Rule 4.31 dismissal for delay . 17 Additional facts and positions of the parties . 19 Law and analysis . 21 Delay . 21 Inordinate and inexcusable delay . 23 Significant prejudice . 25 Conclusion . 27 Costs and next steps . 28 Introduction [ 1 ] In 2006, the City of Edmonton contracted with Alberco Construction Ltd (“Alberco”) for rehabilitation of the Low Level Bridge (Northbound), which included the application of an industrial paint to prevent rust. [ 2 ] The paint chosen by the City, Termarust 2100, had been used successfully on the High Level Bridge and there was an expectation the paint coating would last 20 to 25 years.

Unfortunately, the paint did not perform as expected. Repairs were needed within the first year.

Annual inspections and an inspection at each of the two-year and five-year marks revealed worsening deterioration of the paint coating. [ 3 ] On June 5, 2013, the City commenced this action against all involved in negligence, breach of contract and for breach of the 5 Year Coating System Warranty provided jointly by Termarust Technologies Inc (“Termarust”), the supplier of the paint, and Clara Industrial Services Limited (“Clara”), the company which applied the paint. [ 4 ] On July 25, 2018, this application was filed by Clara to dismiss the action against it pursuant to rule 4.31 for inordinate delay and, in the alternative, for

summary dismissal pursuant to rule 7.3 as there is no merit to the claim against Clara, because the claim is statute barred. [ 5 ] Clara’s grounds for making the application include the inordinate delay since the City entered into the contract with Alberco; since the City became aware of the defects and deficiencies relating to the paint used on the bridge; and since the commencement of the action. Clara submits that the last thing done to significantly advance the action was service of the City’s expert report of Dr. D. L. Li on August 7, 2015.

Two key witnesses have died since the action was commenced. [ 6 ] Clara states there is no reason or excuse for the inordinate delay and Clara has been significantly prejudiced in its defence of the claim. [ 7 ] Clara further states the City knew or ought to have known of their claim, the parties involved, and that the damages warranted bringing a proceeding more than two years before the filing of the statement of claim.

Therefore, the City’s claim against Clara is statute barred and the action should be dismissed for no merit. [ 8 ] The City denies there has been inordinate delay and states that any delay is excusable and has not been the cause of prejudice to Clara. The City submits that this case is not simply a documents case or a memories case but is a case which will turn on the evidence of experts . The City obtained and served two expert reports, the first within about two years of filing its statement of claim and the second within the month proceeding Clara’s application to dismiss.

The City submits that Clara has acquiesced to the delay in not filing its Statement of Defence until July 30, 2018 and in asking the City for quantification of the cost of repair. [ 9 ] The City states its claim was brought within the two-year limitation period. The City relies on the refusal of Clara and Termarust to honour the 5 Year Coating System Warranty which ran out in November, 2011 in justifying why its action was not commenced until June 5, 2013.

[ 10 ] Clara and Termarust each made it clear in May, 2012 that until it was determined whether the coating materials or the application of those materials, or a combination of the materials and the application, resulted in the paint failure, neither would assume responsibility for the repair of the defects and deficiencies relating to the paint used on the bridge. Clara claimed the paint itself was defective. Termarust claimed the application of the paint was deficient. The City sued within two years of this refusal to repair the paint failure under the warranty. [ 11 ] The application by Clara for

summary dismissal is supported by the affidavit of David Clara, President of Clara Industrial Limited, sworn July 24, 2018. In response, The City provided the affidavit of Nathan Stelmach, General Supervisor, Project Management filed June 7, 2019. These are lengthy and detailed affidavits with extensive exhibits. The transcripts of questioning on affidavits, exhibits and responses to undertakings were also provided, along with written briefs. Issues [ 12 ] The parties have set out the issues as follows: Should the City’s claim be dismissed pursuant to Rule 4.31(1)(

a) because the City’s delay has resulted in significant prejudice to Clara? Alternatively, should the City’s claim be summarily dismissed pursuant to Rule 7.3 because the City’s claims against Clara are statute- barred? [ 13 ] I will consider the limitation issue first. If the City did not sue within the two-year limitation period, the action against Clara has no merit and may be summarily dismissed. If the City did sue within time under the warranty, that provides context to the determination of the issue of inordinate and inexcusable delay and prejudice. [ 14 ] I will briefly set out the considerations for

summary dismissal under rule 7.3. I will then set out the law and further facts needed to analyse the limitation issue and reach a conclusion. [ 15 ] Thereafter, if the action is not summarily dismissed, I will set out the considerations and relevant facts under rule 4.31 to analyse the issue of dismissal for delay and reach a conclusion. Should the City’s claim be summarily dismissed pursuant to rule 7.3 because the City’s claims against Clara are statute- barred? Rule 7.3

Summary Dismissal [ 16 ] Clara relies on rule 7.3 of the Alberta Rules of Court , AR 124/2010 [“the Rules ”] and on s 3 of the Limitations Act , RSA 2000, c L-12 [“the Limitations Act ”]. The parties agree on the principles to be considered in making a rule 7.3 application for

summary judgment to dismiss a claim not sued in time for no merit. The parties essentially agree on the facts to be considered for the

summary dismissal application. The parties do not agree on how the law surrounding the Limitations Act is applied to the facts to conclude the City’s claims are statute barred. [ 17 ] Rule 7.3 provides that a party may apply to the Court for

summary judgment in respect of all or part of a claim on the ground there is no merit to the claim or part of it. If the application is successful the Court may, with respect to all or part of a claim, dismiss one or more claims in the action. The application must be supported by an affidavit swearing positively that one or more of the grounds have been met or by other evidence to the effect that the grounds have been met. [ 18 ] An application for

summary judgment or

summary dismissal is in keeping with the culture shift described by the Supreme Court of Canada in Hryniak v Mauldin , 2014 SCC 7 [ Hryniak ]. At paragraph 2, Justice Karakatsanis noted: Increasingly, there is recognition that a culture shift is required in order to create an environment promoting timely and affordable access to the civil justice system. This shift entails simplifying pre-trial procedures and moving the emphasis away from the conventional trial in favour of proportional procedures tailored to the needs of the particular case.

The balance between procedure and access struck by our justice system must come to reflect modern reality and recognize that new models of adjudication can be fair and just. [ 19 ] An application for

summary judgment may be granted whenever there is no genuine issue requiring a trial. In Weir-Jones Technical Services Incorporated v Purolator Courier Ltd , 2019 ABCA 49 [“ Weir-Jones ”], the Alberta Court of Appeal applied the principles of Hryniak in determining an appeal from the

summary dismissal of a claim because it was not brought within the limitation period. [ 20 ] At paragraph 21 of Weir-Jones , Justice Slatter elaborated on the test for

summary judgment set out in Hryniak and set the procedural framework for determining whether there is “no merit” or “no defence” to the claim under rule 7.3 .:

Hryniak v Mauldin at para 49 sets out a three part test for when

summary judgment is an appropriate procedure: 49 There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for

summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result. [ 21 ] Paragraph 47 of Weir-Jones is a

summary of the application of the principles as follows: The proper approach to

summary dispositions, based on the Hryniak v Mauldin test, should follow the core principles relating to

summary dispositions, the standard of proof, the record, and fairness. The test must be predictable, consistent, and fair to both parties. The procedure and the outcome must be just, appropriate, and reasonable. The key considerations are:

a) Having regard to the state of the record and the issues, is it possible to fairly resolve the dispute on a

summary basis, or do uncertainties in the facts, the record or the law reveal a genuine issue requiring a trial?

b) Has the moving party met the burden on it to show that there is either "no merit" or "no defence" and that there is no genuine issue requiring a trial? At a threshold level the facts of the case must be proven on a balance of probabilities or the application will fail, but mere establishment of the facts to that standard is not a proxy for

summary adjudication.

c) If the moving party has met its burden, the resisting party must put its best foot forward and demonstrate from the record that there is a genuine issue requiring a trial. This can occur by challenging the moving party's case, by identifying a positive defence, by showing that a fair and just

summary disposition is not realistic, or by otherwise demonstrating that there is a genuine issue requiring a trial. If there is a genuine issue requiring a trial,

summary disposition is not available.

d) In any event, the presiding judge must be left with sufficient confidence in the state of the record such that he or she is prepared to exercise the judicial discretion to summarily resolve the dispute. To repeat, the analysis does not have to proceed sequentially, or in any particular order. The presiding judge may determine, during any stage of the analysis, that

summary adjudication is inappropriate or potentially unfair because the record is unsuitable, the issues are not amenable to

summary disposition, a

summary disposition may not lead to a "just result", or there is a genuine issue requiring a trial. [ 22 ] In considering whether

summary dismissal is available under rule 7.3(1)(

b) where there is “no merit” to a statute-barred claim: “Th e word “no” cannot be severed from the phrases “no merit” … and should be viewed not in absolute terms but in the context of there being “no real issue”.” See paragraph 31 of Weir-Jones . [ 23 ] And at paragraph 32, “If the defendant is the moving party, it must prove “no merit”. The resisting party need not prove the opposite in order to send the matter to trial. The party resisting

summary judgment need only demonstrate that the record, the facts, or the law preclude a fair disposition, or, in other words, that the moving party has failed to establish there is no genuine issue requiring a trial…”. [ 24 ] As the moving party, Clara must prove the facts on a balance of probabilities to show that the City’s claims were brought outside the two-year limitation. Clara must meet its burden to show that there is no merit to the City’s claims, not in absolute terms but in the context of there being no real issue requiring a full trial. [ 25 ] As the resisting party, the City must show that a fair and just

summary disposition is unrealistic or inappropriate or that there is a genuine issue requiring a trial. The City must demonstrate that uncertainties in the record, the facts, or the law preclude a fair disposition as there is a real issue as to whether the claims are statute-barred. [ 26 ] I will apply the law surrounding limitations to the facts to determine if I have sufficient confidence in the state of the law and the record to exercise my judicial discretion to summarily dismiss the City’s claims.

The Limitations Act [ 27 ] “The purpose of limitations law is to encourage the timely resolution of legal controversies, and in so doing to strike a proper balance between the interests of potential claimants, potential defendants and society at large.” The

Summary of Alberta Law Reform Institute “Limitations” Report No. 55, December 1989, ISSN 0317-1604. Report No. 55 led to the enactment of the Limitations Act , SA 1996, c L-15.1 , now RSA 2000, c L-12 [“ Limitations Act ”]. [ 28 ] The provisions of the Limitations Act relevant to this application are the definition of injury and the determination of the limitation period within which a lawsuit must be commenced to avoid a claim being statute-barred. [ 29 ]

Section 1(

e) states in the Limitations Act , “injury” means personal injury, property damage, economic loss, non-performance of an obligation, or if none of those, a breach of duty. [ 30 ] Section 3(1)(

a) provides that if a claimant does not seek a remedial order within 2 years after the date on which the claimant first knew, or in the circumstances ought to have known, (

i) that the injury for which the claimant seeks a remedial order had occurred, (ii) that the injury was attributable to conduct of the defendant, and (iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim.

[ 31 ] “There is therefore a three part test, based on a reasonable awareness of the injury, attribution of the injury to the defendant, and a claim warranting a proceeding for a remedial order.” Paragraph 50 of Weir-Jones . [ 32 ] The Limitations Act provides the test for the commencement of the limitation period. Unless the proposed starting point happens to coincide with the test, “ the limitation period does not commence on (

a) the date of breach, (

b) the date the last services are provided under a service contract, (

c) the date that economic loss emerges, (

d) the date of acceptance of repudiation, or (

e) the termination of the contract.” Paragraph 53 of Weir-Jones . [ 33 ] In order for Clara to obtain

summary dismissal of the City’s claims based on the expiration of the limitation period, Clara must show from the record that the injury alleged by the City, whether arising from the alleged breaches of contract or otherwise, was reasonably known, attributable to Clara, and sufficiently serious to warrant a proceeding no later than June 5, 2011, being two years prior to the filing of the statement of claim. Paragraph 54 of Weir-Jones .

Additional facts and positions of the parties [ 34 ] In the statement of claim, the City sets out that Termarust and Clara jointly executed a Joint Five Year Coating System Warranty (the Paint Warranty) for the benefit of the City. On November 16, 2011, the City notified Clara and Termarust of defects and deficiencies identified in the paint in need of repair under the Paint Warranty (the Paint Failure) and required the repair work to be completed. On May 2, 2012, Termarust and Clara refused to repair the paint, in breach of the Paint Warranty.

On June 5, 2013, the City sued Termarust and Clara and the other defendants. [ 35 ] The City claims, in the alternative, Clara owed a duty of care to the City and breached the relevant standard of care by failing to ensure a quality paint product was applied properly. [ 36 ] The City claims that as a result of the Paint Failure caused by the negligence of Clara and/or breach of the Paint Warranty by Clara, and the claims against the other defendants, the City suffered loss or damage estimated at $10 million and special damages related to its investigation of the Paint Failure of $250,000. [ 37 ] Counsel for the City argues that the statement of claim makes it clear that the “injury for which the claimant seeks a remedial order” includes Clara’s breach of the Paint Warranty and, more specifically, non-performance of an obligation.

Clara refused to perform its obligation to repair the Paint Failure on May 2, 2012. The statement of claim was issued on June 5, 2013, within the applicable two- year period. [ 38 ] Counsel for Clara argues that the City was aware by at least the City’s 2008 annual inspection of the bridge and the 2008 two- year consultant’s inspection of all the facts relevant to the applicable three-part limitations test.

The City admits it was aware of problems with premature failure of the paint coating in 2007, through 2008 and 2009 there was a lowering of the rating of the coating system by the City’s bridge inspectors, and that this would be considered a failing of the coating system as contemplated by the Paint Warranty. The discovery of the paint failure started the limitation period running under the warranty and two-year limitation period had expired before Clara was sued. [ 39 ] The City was aware Clara was the paint applicator and Termarust was the paint manufacturer.

The City acknowledges it knew as of 2008 that the Paint Failure was either due to a problem with the paint, the paint application, or some combination of those things. [ 40 ] Clara submits that in these circumstances, the City’s claim against Clara in negligence, which is not tied to the five-year warranty period, had expired by the latest in June 2010, long before the action was commenced on June 5, 2013.

The warranty provision makes no mention of any extension of time and there is no evidence of any other agreement to extend or suspend the running of the limitation period. [ 41 ] In response, the City submits that it is Clara’s failure to perform its obligation to repair the Paint Failures within the warranty period that is the fundamental basis of the City’s action.

Clara’s breach of that obligation necessarily did not arise until it failed to make those repairs by the deadline given of May 30, 2012 or, alternatively, on May 2, 2012 when Clara advised the City it was not prepared to repair the defects and deficiencies. [ 42 ] The City argues that Clara’s

interpretation of the warranty and the application of the limitation period would result in claims being made within the five-year warranty period and potentially a multiplicity of unnecessary lawsuits. Such an

interpretation is commercially unreasonable. [ 43 ] While the warranty permitted the City to make claims in each year of the five-year period, it did not obligate the City to do so. The Paint Warranty provides: “intermediate reviews may be made requiring repairs and claimed against the Warranty and completed by the painting Subcontractor each year of the five-year Warranty period.” [ 44 ] The City points out that the conduct of the parties also supports a clear understanding of an obligation to repair defects at the conclusion of the five-year warranty period.

The parties were aware the five-year warranty period was coming due in the fall of 2011. The warranty inspection was held in July 2011, which satisfied the requirement to review the bridge coating system a minimum of 60 days before the warranty expired.

Almost immediately thereafter, each of Clara and Termarust submitted inspection reports claiming that the observed deficiencies were the responsibility of the other. [ 45 ] Clara mobilized labour, equipment and materials to the site in September 2011 to follow through on procedures which it had presented in order to make the repair, however, the City advised Clara not to proceed. [ 46 ] A Warranty Notice Letter was provided by the City in November 2011 advising the repairs were to be completed by May 30, 2012. The parties held a meeting on May 2, 2012.

The minutes of the meeting, entitled Paint Warranty Meeting #1, indicate that both

Clara and Termarust stated they were “not prepared to incur costs to repair the defects and deficiencies in the field applied coating systemat this time.” [47] The City submits that the injury for which a remedial order is sought against Clara is Clara’s non-performance of itscontractual obligation to repair defects.

However, if the “injury” is not the non-performance of Clara’s obligations to repair pursuant tothe five-year Paint Warranty, but instead “the injury” is the negligent damage to the bridge or breach of contract generally, then the Citysubmits it is necessary to consider when such injury warranted bringing a proceeding. [48] Counsel for the City argues that even if the “injury” is not the breach of the covenant to repair contained in the warranty, theexistence of the warranty is nevertheless relevant to whether the injury warranted bringing a proceeding.

Given the City was inpossession of a five-year warranty, which created obligations on Clara to repair any defects which arose during the warranty period, itwas entirely reasonable for the City not to have commenced litigation. [49] Although the City acknowledged generally that warrantable defects were observed in the course of the City’s annual reviews,that alone does not support the triggering of the limitation period. The extent of damage must be considered as against the cost ofbringing a proceeding. [50] The evidence clearly supports a deterioration of the paint on the bridge over time.

As summarized in the report of the City’sexpert, Dr.

Ellis: “signs of coating failure were observed as early as 2008 and continued to become worse in 2009, 2010, and by2011/2012 the failure had become extensive.” The limited commentary and information contained in the annual inspection reports suchas “some staining appearing” and “some previous pack-rust locations showing signs of superficial corrosion” does not address whether awarranty claim ought to have been made or, whether the observations were sufficiently serious to warrant the City bringing a proceeding. [51] In August 2011, Clara’s warranty inspection representative reported “I see no evidence of failures related to application…”The City points out that despite Clara’s own findings and opinion following the warranty inspection in 2011, Clara suggests that the Citywas aware of sufficient defects to warrant bringing a proceeding against them years earlier. [52] The City submits that even if the “injury” sued for is not the breach of warranty to repair, it was not until at least the warrantyinspections in July 2011 that the City knew or ought to have known that the defects warranted bringing a proceeding against Clara.

Thelawsuit was filed June 5, 2013, within the following two years. Law and analysis Warranty claims [53] Counsel for Clara relies on two Ontario cases: TSCC 2130 v York Bremner Developments Limited, 2016 ONSC 5393 [TSCC2130], which was followed in Bryenton v 7017103 Canada Inc, a 2016 decision reported at (ON SCSM)[Bryenton]. The Court found the two-year limitation set out in the Limitations Act, 2002 S.O. 2002,

Chapter 24 applied to thediscoverability of claims brought under the Ontario New Home Warranties Plan legislation regardless of the warranty period. [54] The Ontario Superior Court of Justice found that the residential condominium TSCC 2130 sued out of time to enforce theNew Home Warranties: “If it wished to sue on the contractual warranties, then it must have launched its lawsuit within the timeprescribed by the Limitations Act, 2002.” See paragraph 187, explaining at paragraph 188:

Section 14 of the agreements of purchase and sale subjected the contractual warranties to the time periods available under the New HomeWarranties Plan. In my view, a contract that sets out a defined period for warranty coverage does not affect the limitation period. Mindyou, the parties can agree not to sue each other after set time periods if they wish to do so. However, here, I read the contractual warrantyincorporation of the statutory time periods as nothing more than setting an end date for warranty coverage. My car may have a five yearwarranty.

That says nothing about how I sue or how long I have to sue once I discover a breach of the warranty. Similarly, here, thecontract incorporated the statutory warranty periods so that contractual warranties lasted for one year or two years depending on thenature of the deficiency alleged.

A lawsuit to enforce the warranty still needs to be commenced in court within two years of discovery ordiscoverability of the breach of the warranty (i.e. within two years of the discovery of a warranted deficiency that arose within one ortwo years of the registration of the condominium corporation as the case may be). [55] At paragraphs 48 and 49 in its decision in Bryenton, the Ontario Small Claims Court stated: The defendant pleaded that the plaintiff’s cause of action is stature barred.

I already found that to the extent his claim is based on thenegligence of the defendant corporation the claim is barred by the Limitations Act, 2002 S.O. 2002,

Chapter 24. I reach the sameconclusion in respect of the plaintiff’s claim based on the defendant’s breach of his warranty. The point was considered in TSCC 2130 vYork Bremner Developments Limited, 2016 ONSC 5393… As I understand the decision of Myers J. the period of the warranty is one, two or seven years as the case may be, and time commences torun when the plaintiff discovered the deficiencies that were covered by the warranty. In other words the defendant’s refusal to remedythe defects does not itself give rise to a cause of action.

It is the breach of the warranty by delivering a defective building that constitutesthe basis of the cause of action. [56] Counsel for Clara asks this Court to similarly find that the five-year length of the Paint Warranty has no effect on the runningof the limitation period. Any alleged injury occurred when the City discovered the bridge coating was failing and identified warrantabledefects or deficiencies, which was at least as early as the October 2008 annual inspection and two-year inspection and consultant’sreport.

The City’s action against Clara was filed outside the applicable two-year limitation period and should be dismissed. Non-performance of an obligation

[ 57 ] Counsel for the City argues that those cases are distinguishable because they involve reference to statutory warranties provided under the Ontario New Home Warranties Plan. The basis of the cause of action is the breach of warranty by “delivering a defective building”. The warranties do not contain an express covenant to repair as found in the Paint Warranty. It is Clara’s failure to perform its obligation to repair within the five-year warranty period that is the fundamental basis of the City’s action. [ 58 ] The City provides the decision of Judge B. K.

O’Ferrall, as he then was, in Kary v 1147237 Alberta Ltd , 2011 ABPC 178 [ Kary ] . The purchasers of a new condominium unit sued the developer, among other claims, for breach of contract for failure to remedy certain deficiencies. The parties met to identify deficiencies on November 27, 2007; the purchasers took possession November 30, 2007; and when the deficiencies were not remedied, sued on November 30, 2009. The defendants sought

summary dismissal because they were entitled to immunity from liability by the Limitations Act . [ 59 ] The Court found that in the unique circumstances of the case, the purchaser’s action may proceed. [ 60 ] The defendant had provided a Builder Warranty, in addition to the Alberta New Home Warranty Program. A Condominium Warranty Certificate was issued and contained the substance of the builder’s warranty and its covenants with respect to repairing or replacing defects: “… The Builder agrees to repair or replace Defects or Structural Defects in the Home where written notice has been given to the Builder in accordance with paragraphs 4(

a) and 4(

b) below.” [ 61 ] The defendants’ application for

summary dismissal of the plaintiff’s claim, pursuant to the Limitations Act , was dismissed for the reasons set out in paragraphs 55 through 59 of Kary : Since the Defendant’s limitations argument would be dispositive of the Claim, it is discussed first. As set out above, subsection 3(1) requires claimants to seek a remedial order within two years of the date when they knew or ought to have known that the injury occurred, was attributable to the conduct of the defendant; and warranted bringing a proceeding.

The Defendants assert that the Plaintiffs’ injuries were known when they discovered the shortfalls during the Inspection on November 24, 2007 and their Claim is statute-barred because it was not filed until November 30, 2009. However, the deficiencies or uncompleted work could not constitute non-performance of an obligation until the Defendants had been given an opportunity to remedy the identified deficiencies or to finish incomplete work. Injury or non-performance occurs when it becomes apparent that the obligation will not be performed.

Given the evidence of the Defendant’s procrastination until the end of the first year to remedy many of the more difficult deficiencies, I am satisfied that any limitation period which might have begun with the occurrence of the injury or the non-performance of the obligation commenced after November 30, 2007. And this does not even address the issue of when such injury or non-performance warranted “bringing a proceeding” which may not have occurred until it became apparent, in September 2009, almost two years after possession, that the Defendants were not going to be responsible for any outstanding issues.

The evidence simply does not support an entitlement to immunity on the basis of an expired limitation period. [ 62 ] Kary was considered in Infiniti Homes Ltd v Gagnon , 2020 ABQB 691 , which was coincidentally heard on the same day as this application as a Master’s Appeal from my earlier oral decision in that matter.

In the written decision, Justice Graesser found the ordinary limitation periods for the builder to sue the purchasers on the contract price expired before the statement of claim was issued. [ 63 ] Infiniti argued that the limitation period within which it had to sue for the balance of the contract price did not begin to run until the warranty work was completed.

Graesser J did not accept that argument as having any impact on the time limit for Infiniti to commence action against the Gagnons for outstanding contract price it claimed as owing. [ 64 ] In his comments on the warranty work, at paragraphs 57 and 58, Graesser J agreed with the result in Kary , where Judge O’Ferrall found that the limitation period for a purchaser to sue a builder did not begin to run until after the warranty provider carried out the remedial work it was required to do under the warranty: In this regard, with respect, I differ from the Master’s conclusion that the performance of warranty work by the warranty provider was relevant to Infiniti’s claims.

The warranty work relates to the Gagnons’ claims against Infiniti, and there is nothing in the evidence to suggest that disputes between the builder and the purchaser are to be put on hold pending involvement by the warranty provider. That is between the purchaser and the warranty provider, and is relevant to the purchaser’s claims against the builder, not the builder’s claims against the purchaser. Infiniti refers to Kary v 114237 Alberta Ltd , 2011 ABPC 178 . There, O’Ferrall PJC (as he then was) considered whether the completion of warranty work extended the limitation period.

There, the claim being considered was that of the purchasers, not the contractor. The purchasers had sued the contractor for damages arising out of defects and deficiencies. The contractor took the position that the plaintiffs knew of the defects and deficiencies at the time of the pre-occupancy inspection when defects and deficiencies were noted. The purchasers argued that the limitation period did not begin to run until after the warranty provider carried out the remedial work it was required to do under the new home warranty. O’Ferrall PCJ agreed with the purchasers.

I agree with the result there, but that does not help Infiniti as it was fully aware of the extent of its claim by the time the Gagnons took possession. They may not have known the extent of the Gagnons’ counterclaim or set off, but that did not hinder them from making their claim. [ 65 ] I note there are differences between the Alberta Limitations Act and the Ontario Limitations Act, 2002 . The Alberta Act specifically states in s 1(e)(iv) “injury” means non-performance of an obligation, whereas in the Ontario Act “claim” means a claim to remedy and injury, loss or damage that occurred as a result of

an act or omission; “injury” is not defined. [ 66 ] Section 3(1)(a)(iii) of the Limitations Act requires a claimant to seek a remedial order within two years of the date on which the claimant first knew, or in the circumstances ought to have known, “that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding.” That phrase was not used in the Ontario Limitations Act, 2002 which requires a proceeding to be

commenced in respect of a claim after the second anniversary of the date on which the claim was discovered.

Section 5(1) (a)(iv) provides that a claim is discovered on the earlier of, the day on which the person with the claim first knew [or ought to have known] … “that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.” [ 67 ] I may not be bound by the decision of our Provincial Court in Kary or the arguably obiter comments of Justice Graesser, but neither am I bound by decisions of the Ontario Superior Court of Justice or its Small Claims Court.

I am persuaded by the differences in the Alberta and the Ontario Limitations Acts and the analysis of Judge O’Farrell that it is Clara’s failure to perform its obligation to repair within the five-year warranty period that is the fundamental basis of the City’s action. [ 68 ] I find that the City first knew of the “injury” of non-performance of Clara’s obligation to repair the paint failure under the Paint Warranty when Clara advised at the paint warranty meeting held May 2, 2012 that it was “not prepared to incur costs to repair the defects and deficiencies in the field applied coating system at this time” and indeed, did not effect the repairs by the May 30, 2012 timeline set by the City. [ 69 ] The City sought a remedial order for Clara’s non-performance of its obligation to repair the paint defects and deficiencies by way of the statement of claim filed June 5, 2013, within the applicable two-year limitation period.

Warrants bringing a proceeding [ 70 ] The City further argues that suing Clara for an “injury” other than for the non-performance of Clara’s obligation to repair as set out in the five-year Paint Warranty, such as in negligence or contract for property damage, economic loss or breach of duty, was not warranted until at least the warranty inspections in July 2011. At that time, the City knew or ought to have known that the paint failure had become so extensive as to warrant bringing a proceeding against Clara.

The lawsuit was filed June 5, 2013, within the following two years. [ 71 ] Clara takes issue with the facts by arguing the City knew or ought to have known by at least its 2008 annual inspection of the bridge and the 2008 two-year consultant’s inspection report that there were problems with premature failure of the paint coating as contemplated by the Paint Warranty. It was this early discovery of the paint failure which started the limitation period running under the warranty and in negligence.

The three-part test under the Limitations Act was met in 2008 as the premature paint failure warranted bringing a proceeding against Clara. The two-year limitation expired before the lawsuit was filed. [ 72 ] To determine whether or not the injury warranted bringing a proceeding, in the context of a

summary dismissal application, the three-part test in Hryniak must be met, as well as the three-part test under the Limitations Act . Specifically, I must be left with sufficient confidence in the state of the record to make the necessary findings of fact, apply the law to those facts and exercise my judicial discretion to summarily resolve the dispute and achieve a just result. [ 73 ] Clara relies on the discussion of when an injury warrants bringing a proceeding in N. (J.) v Kozens , 2004 ABCA 394 at paragraphs 14 and 15 , highlighted as follows: In Novak v.

Bond , supra , Major, J. noted that the critical time is one “at which a reasonable person would consider that someone in the plaintiff’s position, acting reasonably in light of his or her own circumstances and interests, could - not necessarily should - bring an action.

This approach is neither purely subjective nor purely objective.… Time begins to run, [McLachlin J] explained, when, “in light of the plaintiff’s particular situation, the bringing of a suit is reasonably possible, not when it would be ideal from the plaintiff’s perspective to do so.” (at para. 84) McLachlin, J. in Novak provided the following as examples of when a plaintiff may not reasonably be able to bring an action when viewed objectively but with regard to the plaintiff’s own situation: (

a) the costs and strains of litigation would be overwhelming to him or her, (

b) the possible damages recoverable would be minimal or speculative at best, or (

c) other personal circumstances combined to make it unfeasible to initiate an action. [ 74 ] The Alberta Court of Appeal was determining when the injury to a student for a sexual assault “warranted bringing a proceeding” against a teacher; the Supreme Court of Canada discussion in Novak v Bond was in the context of a patient suing a doctor for misdiagnosis. [ 75 ] Counsel for the City relies on the more recent and perhaps more factually relevant decision of Justice Renke in Clark Builders and Stantec Consulting Ltd v GO Community Centre , 2019 ABQB 706 [ Clark Builders ] , also an appeal of one of my decisions.

Renke J discusses the “warranted” principle for interpreting and applying s 3(1) of the Limitations Act , referring to Novak v Bond and Kozens and other cases and states at paragraphs 264-266: Factors relevant to s. 3(1)(a)(iii) concern not whether the claimant knew or should have known about the injury but whether there were circumstances that did not warrant (or urged or militated against) bringing an action. The “warranted” factors relate to a claimant’s knowledge, economic factors, and any practical impediments faced by the claimant.

As for “knowledge,” Justice Hunt-McDonald cautioned in Currie v Craig at para 42 that It is clear that s. 3(1)(a)(iii) allows for situations where knowledge of the injury is not sufficient to immediately warrant bringing a proceeding. The courts may decide in such cases to delay the start of the limitation period accordingly: Yugraneft Corp v Rexx Management Corp … at para 58. Justice Clackson canvassed economic factors in Main Street Developments at para 63(QB):

It is not every nick, bump, bruise, failing or deficiency that warrants action. Thankfully, we Canadians are still reasonably tolerant and non litigious. The question of whether an injury warrants proceedings is not strictly an issue of fault, or even potential economic gain. What warrants proceedings embraces a consideration of the extent of the injury in comparison to the economics of a prospective action.

This assessment involves a blended objective/subjective analysis. [ 76 ] In Clark Builders , Renke J found the plaintiff GCC knew about its “injury”, that is the failure of the cooling system to operate to its satisfaction, by September 2012. When the plaintiff received a report on June 5, 2013, that dealt with the cause of the problems and the need for infrastructure improvements, it ought to have known that the injury was attributable to Clark Builders and Stantec and that an action against them was warranted.

The plaintiff also received a proposal from Stantec on July 29, 2013 involving design issues and upgrades.

The action was commenced on September 30, 2015, which was more than two years after the statutory limitation period expired. [ 77 ] In analysing when the plaintiff GCC knew or ought to have known that the injury, assuming liability on the part of the defendants, warranted bringing a proceeding, Renke J makes these observations at paragraphs 390-393: The “warranted” inquiry turns on an objective assessment of the claimant’s personal or subjective knowledge and circumstances.… The evidence did not support a finding that there was any factor relating to the GCC itself that deterred commencing an action.

There was no evidence of impecuniosity bearing on commencing litigation. GCC, I found above, did not have the funds to complete repairs, but that did not entail that it did not have funds to have a statement of claim filed within two years from July 29, 2013. There was no evidence that the “costs and strains” of litigation would have been overwhelming to GCC. There was no evidence that other personal circumstances of GCC (or even of its board members) precluded initiating an action within two years from July 29, 2013.

The record did not suggest that any time or investigation was needed after July 29 or indeed after June 5, 2013 to determine that GCC was exposed to a significant economic impact to redress the HVAC issues. Mr. Lembke referred to the need for further cooling units and air handling units.

While he did not mention a number, he did say that the facility would require “additional funding for infrastructure improvements.” Given that GCC had been a party to the construction process, it would have realized that whatever the total bill would be, it would be significant. [ 78 ] In Justice Renke’s opinion, there was no genuine issue to be tried respecting whether the plaintiff GCC brought its action within the applicable limitation; on the record, GCC’s claim in negligence against Stantec and Clark Builders had no merit. [ 79 ] Applying the analysis in Clark Builders , Counsel for the City argues that even if the “injury” is not the breach of the covenant to repair contained in the warranty, but perhaps the failure of the paint and coating system, the existence of the warranty is nevertheless relevant to whether the injury warranted bringing a proceeding.

The City was in possession of a five-year warranty which obliged Clara to repair any defects which arose during the warranty period. It was entirely reasonable for the City not to have commenced litigation earlier. [ 80 ] I find the existence of the Joint Five Year Coating System Warranty (the Paint Warranty) executed by Clara for the benefit of the City militated against bringing an action before the five-year warranty period had expired and Clara had an opportunity to make good on its obligation to repair.

On an objective assessment of the City’s subjective knowledge and circumstances, and from the City’s perspective, bringing an earlier proceeding against Clara was not reasonable, practical or warranted. [ 81 ] This is consistent with the very recent decision of Master Summers in Points West Living Red Deer Inc v Rockliff Pierzchajlo Kroman Architects Ltd , 2021 ABQB 589 that it would be premature to commence an action where significant efforts were being made to correct a heating problem by those responsible for the system.

Master Summers quotes extensively from the decision of Master Robertson in Condominium Corporation 0812755 v IBI Group Inc , 2019 ABQB 75 , including paragraphs 51 to 58 which I have excerpted as follows: [51] In Alberta, the test is whether the injury warranted bringing a proceeding. … As explained by the Law Reform Commission, that may involve a cost-benefit analysis. If the harm does not justify bringing the proceedings, based on what the plaintiff knows, the limitation has not yet run. [52] One known factor here was that the Developer and the warranty provider were dealing with the claim.

Until it became apparent that their efforts were not working and that they were apparently not going to do more, there was no point in suing anyone.… [56] The comments by the Law Reform Commission and previous cases have suggested that one factor might be cost.

If the plaintiff knows of the injury and knows that the defendant caused it, and concludes that the cost of dealing with it is small and suing is not worth it, but later finds out that the remedy is far more expensive than it reasonably believed at the outset, that is a factor that might delay the running of the limitation period.… [58] In my view, when there is no reason for a party to sue anyone, because the party reasonably believes that someone who has apparent liability has actually assumed responsibility for addressing it, and is doing so, the injury does not warrant bringing a proceeding.

Requiring a party to sue in this circumstance would encourage needless litigation. [ 82 ] Until it became apparent to the City that the warranty provider, Clara was not going to repair the paint defects, “there was no point in suing anyone”. [ 83 ] The City also submits that the extent of the paint failure must be considered as against the cost of bringing a proceeding. The case law supports those considerations.

See Novak . [ 84 ] The evidence on the record before me supports a deterioration of the paint on the bridge over time. “It is not every nick, bump, bruise, failing or deficiency that warrants action.… What warrants proceedings embraces a consideration of the extent of the injury in comparison to the economics of a prospective action.” See Clackson J as quoted above in Clark Builders .

[ 85 ] Clara says, based on the City’s inspections, the extent of the paint failure was such that proceedings were warranted within two years of 2008.

The City says, based on the Warranty Inspection Report, the extent of the paint failure was such that proceedings were not warranted until July 2011 and it brought those proceedings within the two-year limitation period. [ 86 ] Although there are numerous reports on the status and cause of the paint failure, including from the City’s annual inspections and from many other inspection and consultant reports, I do not have sufficient confidence in my ability to decide at what point in time the extent of the paint failure warranted bringing a proceeding from an objective cost benefit analysis.

That determination will involve the weighing of the existing evidence and further expert evidence, making a fair and just

summary disposition unrealistic. This is a genuine issue requiring a trial. Conclusion [ 87 ] Should the City’s claim be summarily dismissed pursuant to rule 7.3 because the City’s claims against Clara are statute- barred? The answer to this issue is no. [ 88 ] The City sought a remedial order for Clara’s non-performance of its obligation to repair the paint defects and deficiencies under the Paint Warranty within the applicable two-year limitation period.

Whether the other claims against Clara warranted bringing a proceeding earlier than June 5, 2013 is a genuine issue for trial. [ 89 ] The application to summarily dismiss the City’s claims against Clara for no merit is dismissed. [ 90 ] Having found the City did sue within time under Clara’s non-performance of its obligation to repair and

summary dismissal is not otherwise available to Clara, I further examine the facts to provide context to the determination of the issue of inordinate and inexcusable delay and prejudice. [ 91 ] I will set out the Rules , caselaw and other considerations under rule 4.31 to analyse the issue of dismissal for delay and reach a conclusion. Should the City’s claim be dismissed pursuant to rule 4.31(1)(

a) because the City’s delay has resulted in significant prejudice to Clara? Rule 4.31 dismissal for delay [ 92 ] The following relevant Rules set out the context for determining whether the City’s claim should be dismissed for delay resulting in significant prejudice to Clara. [ 93 ] Rule 4.31 allows for an application to deal with delay: Rule 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. Rule 4.31(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. [ 94 ] Dealing with delay in an action falls under the Rules

Part 4 Managing Litigation, as does the responsibilities of the parties: Rule 4.1 The parties are responsible for managing their dispute and for planning its resolution in a timely and cost-effective way. Rule 4.2 The responsibility of the parties to manage their dispute and to plan for its resolution requires the parties to (

a) act in a manner that furthers the purpose and intention of these rules described in rule 1.2. [ 95 ] The purpose and intention of the Rules are set out in the foundational rule: Rule 1.2(1) states that the purpose of these 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. Rule 1.2(2) states: in particular, these rules are intended to be used (

a) to identify the real issues in dispute, (

b) to facilitate the quickest means of resolving a claim at the least expense, and (

c) to encourage the parties to resolve the claim themselves, by agreement, with or without assistance, as early in the process as practicable and (

d) to oblige the parties to communicate honestly, openly and in a timely way. Rule 1.2(3) states that: to achieve the purpose and intention of these rules parties must, jointly and individually during an action, (

a) identify or make an application to identify the real issues in dispute and facilitate the quickest means of resolving the claim at the least expense. [ 96 ] The interplay of these rules in the context of an application to dismiss for delay is discussed in the leading Alberta Court of Appeal decision of Transamerica Life Canada v Oakwood Associates Advisory Group Ltd , 2019 ABCA 276 [ Transamerica ] . The Court sets out the respective and joint obligations of the parties in paragraphs 24 to 32, from which I have selected the following quotes:

[27] It is correct to say that the plaintiff has the primary obligation in moving the litigation forward. The Rules of Court give the plaintiff many tools to ensure that happens. It does not follow, however, that a defendant has no obligation with respect to the pace of litigation. This was confirmed, for example, in Sir Alfred McAlpine at p. 260: Since the power to dismiss an action for want of prosecution is only exercisable upon the application of the defendant, his previous conduct in the action is always relevant.

So far as he himself has been responsible for any unnecessary delay, he obviously cannot rely upon it.… There is a significant difference between a defendant “doing nothing” in the face of inactivity by the plaintiff, and the defendant failing to discharge its procedural obligations… [29] The Rules of Court expressly impose obligations on all parties to advance the action.… [30] The Rules of Court also impose a number of specific duties on a defendant in support of these general obligations. Some examples are: (

a) The defendant must file a statement of defence, presumptively within 20 days of service: R. 3.31(3)(a); (

b) Each party must file an affidavit of records within fixed time periods: R. 5.5(1); … (

f) A defendant must respond in a timely way to correspondence from the plaintiff inquiring about or suggesting the procedure to be followed in resolving the claim: R. 1.2(2)(d), 4.2(b), 4.4(2); … These are just examples. The rules contain many steps that call for a response by the defendant within a fixed or a reasonable time. Some, such as R. 6.37(3), contain their own remedy.

Sometimes the parties will acquiesce in a leisurely pace of the litigation, but when that happens in the face of positive procedural obligations on the defendant, the defendant cannot subsequently rely on the resulting delay in an application to dismiss. [31] It follows that, within limits, a defendant may be entitled to be recumbent in the face of plaintiff delay or inactivity.

It does not follow that a defendant has no responsibility for the timely resolution of the dispute, or that the plaintiff cannot rely on the actions of the defendant as “excusing” delay.… [ 97 ] In Transamerica , at paragraphs 13 through 23, the Court of Appeal outlines the general approach to delay in litigation, emphasizing that the Rules are designed to resolve claims “in a timely and cost-effective way”.

The Court quotes the passage at paragraph 90 in Humphreys v Trebilcock , 2017 ABCA 116 which speaks to the harms of litigation delay and the policy reasons why we have limitation periods for commencing claims and delay rules for prosecuting those claims once they are commenced. [ 98 ] The approach to rule 4.31 is summarized in paragraph 15 of Transamerica : There are numerous decisions of this Court on the

interpretation and application of the delay rules. The core source of the legal principles, however, remains in the Rules of Court themselves. While general principles have been established governing delay, each action is slightly different. The application of the rules to the particular facts will always engage an element of judicial discretion, reflected in the word “may” found in R. 4.31(1). There are many different ways that a Master or chambers judge can analyze a delay application; there is no universal mandatory formula.

Additional facts and positions of the parties [ 99 ] Clara submits that the City’s delay in this action has been inordinate and inexcusable and has resulted in significant prejudice to Clara. [ 100 ] Clara provides a

summary of the delay in the litigation. At the filing of the dismissal application on July 25, 2018, more than 5 years had passed since the filing of the statement of claim, more than 4 years had passed since service of the claim on Clara, nearly 3 years had passed since the City served report of Dr. Li on Clara, affidavits of records had not been exchanged and no questionings had taken place or even been suggested or scheduled.

Nearly 12 years had passed since Clara completed work on the bridge project, specifically the application of a Termarust coating system, which was the product selected by the City, in or about the fall of 2006. [ 101 ] The City submits that there was no inordinate delay and, alternatively, any delay was excusable. As there is no inordinate and inexcusable delay, the delay is not presumed to have caused significant prejudice to Clara.

Any prejudice incurred by Clara was not caused by the City’s delay, and alternatively, is not significant enough to justify overriding the City’s interest in having the action determined on the merits. [ 102 ] The City points out that Clara emphasizes the lack of formal litigation steps, while downplaying the importance of the two expert reports produced by the City. The next procedural step to be taken in the action was for Clara to file its statement of defence. [ 103 ] The City further submits that the steps taken by the City to retain and provide the expert reports of Dr. Li and Dr.

Ellis, prior to requiring formal litigation steps is consistent with the parties’ obligation to facilitate the quickest means of resolving the claim at the least expense. The primary issue in dispute in this litigation is the cause of the Paint Failure. [ 104 ] Following the warranty inspection in July 2011, each of Clara and Termarust submitted inspection reports claiming the observed deficiencies were the responsibility of the other.

Both Clara and Termarust stated at the May 2, 2012 warranty meeting that they were “not prepared to incur costs to repair the defects and deficiencies in the field applied coating system at this time.” [ 105 ] Pursuant to Item No. 25 of the Paint Warranty, responsibility to repair the deficiencies depends on whether the paint failure arose from surface preparation and application, coating materials or a combination of both. The City submits that determination requires

expert analysis as evidenced by this disparity of the parties’ opinions. It was reasonable to proceed to obtain and provide those reports early in the litigation process. [ 106 ] Clara acknowledges receipt of the two expert reports produced by the City but the inordinate delays in retaining and instructing the experts are not excused. The City first contacted and retained Dr. Li on September 30, 2013 and was advised it would take Dr. Li five months to complete his experiments, yet his report was not provided until August 7, 2015. [ 107 ] Although the City’s evidence is that the report of Dr.

Ellis provided June 29, 2018 is the first assessment it obtained to quantify its claim, the City provides no reasonable excuse as to why it took so many years to take steps to quantify its claim, particularly where such issues were raised early on by Clara’s counsel and by the latest in the fall of 2015. The majority of Dr. Ellis’ report addresses functionally the same questions on causation asked of Dr. Li. [ 108 ] Clara argues that the quantification of the claim by Dr. Ellis did not require engineering expertise as he took the original quotations and adjusted them for inflation.

This opinion of quantification completely ignores the warranty wording, which speaks to the repairs required within the warranty period, ending in the fall of 2011, not work which might be required nearly 7 years after the expiry of the warranty. [ 109 ] Clara acknowledges the professional courtesy extended by the City in not requiring a statement of defence at the time of service of the statement of claim. Thereafter, the City took no steps to demand a defence from Clara or to note Clara in default until after the dismissal application was filed.

The City then demanded Clara’s defence be filed by July 31, 2018 just shy of the three years since circulating Dr. Li’s report. [ 110 ] The City did not approach Clara about a standstill arrangement and did not disclose to Clara that the City had entered into standstill agreements with two of the other defendants. The City told those defendants it wanted to negotiate a resolution with Clara and Termarust but did not consult with or advise Clara of that intention. [ 111 ] Clara submits that this is not a case where Clara failed or refused to cooperate with the City and any proper requests.

It is not a case where Clara could be found to have misled or lulled the City by acquiescence into thinking the City was not obliged to move the action forward. [ 112 ] The City submits that Clara was aware of the its intention to resolve the claim. The August 7, 2015 correspondence enclosing Dr. Li’s report explicitly stated the City was of the position that Clara and Termarust were responsible under the paint warranty and suggested each of them consider the report over the following 60 days. Termarust responded in writing that it did not accept Dr.

Li’s report. [ 113 ] Clara’s counsel responded by requesting a meeting. Counsel for the City met with Clara’s counsel on October 15, 2015 at which time quantification of the cost to remediate the paint failure, the cost to fix the paint on the bridge and the specific locations which needed fixing were discussed. The City then retained Dr. Ellis to address quantification. [ 114 ] The City submits that it undertook significant efforts to obtain the reports of Dr. Li and Dr. Ellis.

Clara was apprised of the City’s efforts. [ 115 ] While that process may not have proceeded as quickly as Clara suggests it should have, any delays were not inordinate in the context of the opinions requested in the circumstances of the case. The City points out that any such delays are related to securing paint samples for the experts, arranging for site attendances, communications concerning a potential electron spectroscopy analysis, and awaiting the experts testing and reports.

The details of the communications with, and progress of, the experts are in the affidavit evidence. [ 116 ] Clara’s delay application was brought four years after being served with the statement of claim. The City submits that all parties were aware of the City’s intention to proceed with obtaining expert opinions to progress the matter towards resolution in an efficient manner.

Law and analysis Delay [ 117 ] The first question in an analysis of rule 4.31 is simply: “has there been delay?” See Transamerica paragraph 20 , Humphreys , paragraph 20 and Arbeau v Schulz , 2019 ABCA 204 [ Arbeau ] at paragraph 24 . [ 118 ] “Whether there has been delay in any particular case is to be determined based on an examination of the record, the submissions of counsel, and the experience of the judiciary.” Transamerica paragraph 22 [ 119 ] The progress of an action from the time the action was commenced until the application to dismiss is brought is examined to determine if there has been delay, and if that delay is inordinate.

See Arbeau , at paragraph 27 : Moreover, rule 4.31 and this aspect of the Humphreys analysis requires a review of the entire action, and not segments.

Humphreys contemplates a comparison being made between the overall progress of an action from the time the action was commenced until the application to dismiss is brought, to determine whether “the non-moving 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.” [ 120 ] Focusing on the litigation spectrum may be difficult to apply as: “There is such a wide variety in the detail of particular claims, and in the procedural journeys that particular litigation may follow , so as to make this test untenably theoretical.” See paragraph 19 in Transamerica .

[ 121 ] In a rule 4.31 analysis: “The basic test for dismissal for delay is found in the text of the Rules of Court , as interpreted in all of the many decisions on the topic.” See paragraph 23 in Transamerica . [ 122 ] The Court of Appeal in Arbeau summarized the approach in paragraph 35: Rule 4.31 distinguishes between “delay” (rule 4.31(1)) and delay that is “inordinate and inexcusable” (rule 4.31(2)). In both cases, an action may be dismissed if significant prejudice is established. However, in the case of “delay”, the onus is on the moving party to establish that they suffered significant prejudice.

In the case of delay that is “inordinate and inexcusable”, there is a rebuttable presumption that significant prejudice was suffered “unless the nonmoving party has proven on a balance of probabilities that the moving party has not suffered significant prejudice” ( Humphreys at para 149 ).

It is, therefore, necessary to consider what sort of delay is at issue in this action. [ 123 ] Has there been delay in the overall progress of the City’s action from the time the statement of claim was filed on June 5, 2013 until Clara’s application to dismiss was filed on July 25, 2018? [ 124 ] Clara was served with the statement of claim on May 2, 2014. The City provided a waiver of defence. At the time Clara brought the application to dismiss on July 25, 2018, statements of defence had not been filed, affidavits of records had not been exchanged, and questioning had not taken place.

More than four years had passed without a formal step in the litigation. [ 125 ] There has been delay. As in Transamerica : “There is no need to draw theoretical comparisons to a prototypical action of the same type to reach this conclusion.” Paragraph 24. [ 126 ] However, the City points out that within 3 months of filing its statement of claim, the City had discussed the matter with a potential expert, Dr. Li and on November 26, 2013, provided a binder of materials for him to review.

In the spring of 2014, the City corresponded with its construction consultant and Termarust about obtaining paint samples to be used by Dr. Li. As of January 6, 2015, Dr. Li had attended at the Bridge and it was understood his experiments would take 4-5 months. Dr.

Li’s expert report was finalized and circulated on August 7, 2015 with a request that Clara and Termarust consider the report and the application of the paint warranty over the following 60 days to begin steps toward resolution. [ 127 ] On September 2, 2015, Termarust advised the City it did not agree with the analysis and conclusions contained in the report of Dr. Li. At the request of Clara’s counsel, legal counsel for the City and counsel for Clara met on October 15, 2015.

The issue of quantification was discussed. [ 128 ] On November 26, 2015, the City advised counsel for Clara and the other defendants that the City was taking steps to provide a specific quantification of the Paint Failure. While those steps were being taken, the City requested Clara and Termarust identify specific concerns regarding the report of Dr. Li which would allow the City the opportunity to address those concerns while steps to quantify the Paint Failure costs proceeded. [ 129 ] Between December 2015 and March 2016, the City communicated and met with Dr.

Reed Ellis of Stantec with respect to quantifying the Paint Failure. In May and June 2016, the City and Dr. Ellis corresponded with respect to a proposed cost breakdown of the expert opinion. On February 15, 2017, the City confirmed to Dr. Ellis that it wished to proceed with retaining him as an expert. By December 7, 2017, Dr. Ellis had discussed his findings with The City and was to proceed with preparing a report. [ 130 ] The City received the expert report of Dr. Ellis on May 25, 2018 and provided it to the defendants, including counsel for Clara on June 29, 2018.

Clara filed the application for dismissal for delay on July 25, 2018. [ 131 ] Clara had identified problems with the paint coating material from the outset.

Clara negotiated the terms of the Paint Warranty to apportion the responsibility as between Clara (for failures arising from surface preparation and application) and Termarust (for the failures arising from the coating materials). [ 132 ] Clara and Termarust each made it clear in May, 2012 that until it was determined whether the coating materials or the application of those materials, or a combination of the materials and the application, resulted in the paint failure, neither would assume responsibility for the repair of the defects and deficiencies relating to the paint used on the bridge.

Clara claimed that the paint itself was defective. Termarust claimed that the application of the paint was deficient. [ 133 ] Rather than demand statements of defence, the exchange of affidavits of records and proceed to questioning, the City recognized that further expert evidence would be needed to persuade either Clara or Termarust or both of them to assume responsibility for the repair of the paint failure. [ 134 ] By the time the application to dismiss for delay was brought by Clara, the City had obtained and provided the expert reports of Dr. Li and Dr. Ellis. [ 135 ] There has been delay from the time Dr.

Li was engaged a few months after the statement of claim was issued on June 5, 2013 to the time the report of Dr. Ellis was provided in the month before Clara’s application to dismiss was filed on July 25, 2018. [ 136 ] Was the delay inordinate and inexcusable or did the delay otherwise result in significant prejudice to Clara?

Inordinate and inexcusable delay [ 137 ] Pursuant to rule 4.31(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 which brought the application. [ 138 ] In the context of this action, I find the “procedural journey” this particular litigation followed to be reasonable. The City took responsibility for managing the dispute over whether Clara or Termarust or both would remedy the paint failure and for planning a

resolution of that dispute in a timely and cost-effective way by obtaining expert opinion evidence. [ 139 ] I agree with the City that the delay between the time Dr. Li was engaged a few months after the statement of claim was issued to the time the report of Dr. Ellis was provided in the month before the dismissal application was filed was not inordinate. [ 140 ] Expert opinion was required by the City to move the litigation towards settlement or trial. [ 141 ] Master Schlosser makes this observation about expert reports in a decision on long delay, 1406998 Alberta Ltd v Dorbandt , 2017 ABQB 321 at paragraphs 19 to 21 : Expert reports fall under

Part 5 of the Rules relating to disclosure of evidence. Though the purpose of expert reports is not specifically described by the Rules , their evidentiary function is plain. Their purpose is to persuade the Court that a certain state of affairs is more likely than not. They can also perform an essential function in the assessment of damages. Expert reports are available for use either at trial or at an application (Rule 6.11). The Rules mandate the order of production of expert reports as a matter is readied for trial. It alerts the other side to the case that it will have to meet.

Expert reports may be mandatory from an evidentiary perspective in some cases, but they are optional procedurally. The primary function of an expert report is to assist the Court in determining one or more issues in the pleadings. Otherwise it is irrelevant. [ 142 ] The delays in obtaining an expert report of Dr. Li on liability and a further report of Dr.

Ellis to address quantum are not out of the ordinary and are reasonably related to securing paint samples for the experts, arranging for site attendances, communications concerning a potential electron spectroscopy analysis, and awaiting the experts testing and reports.

The delay in providing the necessary expert opinions is therefore not inordinate or inexcusable. [ 143 ] With respect to the formal steps in the litigation, the court must be mindful of defence delay. “Defence delay may be considered in deciding if the delay is “inordinate”, in examining whether the delay is “excusable”, and when the court is exercising its ultimate discretion to dismiss the action.” See paragraph 44 of Justice Eamon’s comments in Alston v Haywood Securities Inc , 2020 ABQB 107 and at paragraphs 45 and 46 : Any type of defence delay in breach of procedural obligations must be considered, and relevant delay is not limited to purposeful obstruction of the plaintiff’s action or similar formulations.

In Transamerica , the Court observed that there is a difference between a defendant “doing nothing” in the face of inactivity by the plaintiff, and a defendant failing to discharge its procedural obligations, which include failing to cooperate in an effective way with plaintiffs’ efforts to move the matter along ( Transamerica at para 27 ; see also Fish v Boyd , 2018 ABQB 190 (MC) at para 26 , cited by Ms Alston).

The Court emphasized that parties have many specific duties under the new Rules , including providing reasonable and realistic dates for questioning without delay, and without the opposing party having to repeat the request; answering undertakings in a reasonable time; and responding in a timely way to correspondence inquiring about or suggesting the procedure to be followed in resolving the claim ( Transamerica at para 30 ).

The Court must also be mindful of acquiescence in and waiver of delay ( Fish at para 36 , citing the decision of Master Robertson QC in Goldring v Blue Cross Life Insurance Company of Canada , 2017 ABQB 618 (MC) at para 34 ). In Goldring , Master Robertson observed at para 34: There is an exception in rule 4.33(2)(

b) that allows a case to continue even though there have been three years of inactivity, which is that “the applicant has participated in [continued proceedings after delay] for a purpose and to the extent that, in the opinion of the Court, warrants the action continuing”. That provision does not directly apply to an application under rule 4.31, but in my view the concept expressed by it (which is waiver) does apply for the purposes of the exercise of discretion.

I do not say that a slow accumulation of delay cannot ever be found to be sufficient delay for a dismissal under rule 4.31, but rather that in the circumstances of this case the continued movement of the case forward when the defendant was aware, or should have been aware, of the alleged prejudice, is a factor to be taken into account. [ 144 ] Clara was aware from the outset there would be an issue between it and Termarust as to whether the paint failure was a result of the application or the coating material.

If Clara wished to have that dispute resolved through formal litigation, Clara need only file the statement of defence to invoke the requirement for the City to provide its affidavit of records. Thereafter questioning could have proceeded. [ 145 ] Clara had the procedural obligation to file its statement of defence as the next step in the lawsuit. Clara did not initiate

Part 5 questioning of the City’s representatives or offer to

schedule questioning of Clara’s representatives. Clara chose to “doing nothing” in the face of the inactivity it perceived on the part of the City. [ 146 ] The Court of Appeal in Transamerica held that a defendant also has responsibility for the timely resolution of the dispute and the plaintiff can rely on the actions of the defendant as excusing delay (paragraph 31).

As an example of defence delay, the Court noted that the defendants waited for more than six years before they initiated questioning of the plaintiff’s representatives, stating at paragraph 32: … Questioning of the opposing party is virtually universal in civil litigation. The appellants did nothing to initiate this step, which was entirely for their benefit and under their control, but then complained that when they finally got around to it some of the witnesses could not be located.… [ 147 ] There was no “purposeful obstruction” of the City’s action by Clara. Although Clara did not provide the commentary on Dr.

Li’s report requested by the City, Clara was not “ failing to cooperate in an effective way with plaintiffs’ efforts to move the matter along”.

[ 148 ] Considering Master Robertson’s comments above, I find there was acquiescence in, or waiver of, the City’s delay by Clara. Rather than exercise its responsibility to jointly manage the litigation, pursuant to rules 4.1 and 4.2, Clara “participated” in the manner in which the City chose to advance the action by obtaining expert reports. Those expert opinions would reasonably be expected to assist Clara in deciding the extent to which it might be responsible for repair of the paint failure. [ 149 ] I am of the same view as expressed by Master Robertson in the quote above. The provision in rule 4.33(2)(

b) may not directly apply to an application under rule 4.31 but the concept expressed, which is waiver, does apply for the purpose of the exercise of discretion. Clara participated in the City’s approach to this litigation through acquiescence in the effort to obtain expert reports and by not filing its statement of defence, as the next step in the litigation.

The participation was for a purpose and to the extent that, in my opinion, warrants the action continuing. [ 150 ] Considering the purpose and intent of the rules in the context of this litigation and the many decisions of this Court, I do not find the delay in the action inordinate or inexcusable. [ 151 ] Transamerica reminds us: “The object of the exercise must be remembered. It is to determine whether the delay is inordinate, inexcusable, or otherwise, has caused significant prejudice to the defendant.… “Significant prejudice” remains the ultimate consideration. Paragraph 22.

Significant prejudice [ 152 ] Although rule 4.31 distinguishes between delay and delay that is inordinate and inexcusable, an action may be dismissed if there is significant prejudice. The onus is on the defendant to establish it has suffered significant prejudice, whether through the rebuttable presumption or leading evidence of actual prejudice. Arbeau paragraph 35 . It is open to the plaintiff to show there is insufficient prejudice to warrant striking the action . Transamerica paragraph 43 . [ 153 ] Rule 4.31 requires “significant prejudice” arising from the delay before an action will be struck.

Transamerica paragraph 44 . [ 154 ] In Alston , at paragraphs 47 and 48 , Eamon J identifies the factors the Court should consider: In deciding whether to exercise its discretion to dismiss an action for significant prejudice, the Court should consider the nature of the prejudice and its impact on the parties and the action. The Transamerica court stated that “[w]hether or not to dismiss for delay turns on prejudice, indeed substantial prejudice” (at para 50).

Humphries reasoned that “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?” (at para 156). Rule 1.2(4) provides that the intention of the Rules is that the Court, when exercising a discretion to grant a remedy, “will grant or impose a remedy proportional to the reason fo

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