Condo Corp 052 0580 (o/a The Tradition at Southbrook) v Carrington Holdings Ltd, 2022 ABKB 623: Alberta Court of King’s Bench Reaffirms Need to Combat Delayed Proceedings
Access to efficient dispute resolution is an increasing issue to businesses and other commercial parties. Conversely, inefficient dispute resolution by commercial parties is an increasing issue for Canadian courts. A recent decision from the Alberta Court of King’s Bench (the “Court”) illustrates these tensions. In Condominium Corporation 052 0580 (o/a The Tradition at Southbrook) v Carrington Holdings Ltd, 2022 ABKB 623, the Court dealt with applications by several defendants for dismissal for delay in a residential construction dispute. In the result, the Court reiterated that as Alberta courts commit to combat litigation delay, parties to a dispute that fail to meet their common law and statutory obligations to “proceed with proper expedition” must be prepared to face potential legal consequences, including dismissal of all or any part of a claim.
In 2011, the plaintiff, Condominium Corporation 052 0580 (“Condo Corp”), brought an action against the defendant, a development company, Carrington Holdings Ltd. (“Carrington”). The dispute arose over alleged deficiencies in the design and construction of a residential condominium project in Edmonton, Alberta.
Over the proceeding decade, the suit progressed slowly and inconsistently. Additionally, the suit grew to include several claims against third parties. Despite repeated requests by Carrington over the course of the dispute, Condo Corp failed to provide further information and records, and failed to meet related steps in the litigation process.
In November 2019, Carrington filed an application to dismiss Condo Corp’s claim on account of delay pursuant to Rules 4.31 and 4.33 of the Alberta Rules of Court (the “Rules”). In February and March of 2020, several third parties filed additional applications under Rules 4.31 and 4.33 to dismiss the specific claims against them.
Ultimately, the Court sided with Carrington and third party claimants, granting their respective applications to dismiss Condo Corp’s claims due to delay.
In coming to its decision, the Court relied upon the Alberta Court of Appeal’s established jurisprudence regarding applications under Rules 4.31 and Rule 4.33, including as outlined in Humphreys v Trebilcock, 2017 ABCA 116. Specifically, the Court examined whether:
- The non-moving party failed to advance the action at a reasonable pace?
- The subsequent delay was significant enough to qualify as inordinate?
- If inordinate, was there any explanation that justified the delay?
- If the delay was inordinate and inexcusable, had it been significantly prejudicial to the moving party to justify dismissal?
- If the moving party relied on the presumption of significant prejudice, had the non-moving party rebutted the presumption?
- If the moving party had satisfied all the conditions under Rule 4.31, was there any compelling reason not to dismiss the action?
The Court found that Condo Corp failed in its duty to move the action towards resolution at a reasonable pace. Even in the context of a large and complex construction dispute, the Court characterized the subsequent delay as ” considerably in excess of what is reasonable.” The Court clarified that litigation must progress through “genuine steps of advancement” in order to comply with the Rules. As just one example, the Court held that unofficial communication and meetings by the parties, such as “informal discoveries” as argued by Condo Corp, are insufficient to combat delay.
Condo Corp failed to produce any evidence justifying the inordinate delay. Finding the delay to be both inordinate and inexcusable, the Court reiterated the subsequent presumption of significant prejudice. The Court again cited Humphreys, finding that if Condo Corp were unable to rebut the presumption of significant prejudice, the law supported the dismissal of the action. While the Court noted that it was not satisfied on a balance of probabilities that Carrington had suffered actual significant prejudice on account of the litigation delay, Condo Corp still failed to provide sufficient evidence to rebut the automatic presumption of prejudice.
Lastly, the Court turned to the question of whether there were any compelling reasons not to dismiss the action. While Rule 4.31 grants a court the discretion to dismiss claims for delay, it does not compel a court to do so. For example, if a defendant is found to have acquiesced or participated in the delay, a court may reject an application for dismissal. The Court cited Carrington’s significant efforts to obtain document production as evidence demonstrating their lack of acquiescence or complicity in the Condo Corp’s delay.
Throughout its decision, the Court reaffirmed Humphreys’ characterization of litigation delay as a “longstanding and corrosive problem” in any society committed to the rule of law. The Court emphasized that while the threat of litigation can be an effective bargaining tool between private parties, businesses must be cognizant that once litigation is commenced, the broader public interest is engaged. Parties to litigation must focus “on either settling their matter or going to trial” as “those are the only outcomes once the litigation route has been chosen”. While helpful, business meetings, inspections and other informal actions by parties to a dispute are not a substitute for proper steps in the advancement of litigation.
With this reasoning in mind, the Court granted Carrington and the third parties’ applications for dismissal with costs.
Condominium Corporation 052 0580 (o/a The Tradition at Southbrook) v Carrington Holdings Ltd is representative of Alberta courts’ continued commitment to expedient access to justice, including in the commercial context. Prudent commercial parties that opt to pursue litigation will be aware of this trend and of their common law and statutory obligations to actively contribute to the efficient resolution of legal disputes.
Condominium Corporation 052 0580 (o/a The Tradition at Southbrook) V Carrington Holdings Ltd, 2022 ABKB 623 (“Tradition at Southbrook”).
Tradition at Southbrook at para. 64.
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Tradition at Southbrook at para. 188.