Delay and prejudice are two concepts frequently discussed in the context of lengthy litigation. Recently, the Alberta Court of Appeal dealt with these issues in two actions commenced over eight years regarding faulty construction of gabion walls. The Court ultimately dismissed both actions due to lengthy delay by the plaintiffs that had caused prejudice to the defendants.
Wall construction failures result in two lawsuits
The issues in Cochrane (Town) v. Austech Holdings Inc. arose from the construction of gabion walls, which was started in 1999 and completed in 2000. The Town of Cochrane (the “Town”) originally learned of the structural failures in 2003 and attempted to remediate the issue in 2004. However, the Town learned of additional failures between 2007 and 2009.
A consulting firm retained by the Town prepared a report stating that the entire wall would need to be repaired for between $5.8 million and $8.5 million. The Town received the report in 2010 and filed an action one year later against 58 different parties, seeking $6 million in damages. Shortly thereafter, 69 homeowners filed their action alleging breach of contract and negligence against 89 defendants, including the Town, and sought damages of no less than $20 million.
Town and homeowner actions proceed together, settlement reached with one group of defendants
The actions were not consolidated as the Town was named a defendant in the homeowners’ lawsuit. However, the parties agreed that the actions would be heard concurrently, particularly as evidence adduced in each claim was admissible in the other.
In 2016, the Town and the homeowners reached a settlement agreement with one group of defendants involved in the wall’s design and construction. The Town and homeowners appeared to have “delayed questioning pending the attempted mediation in 2014” and questioned only the settling defendants.
Remaining defendants apply to have the action dismissed for delay
Despite the 2010 report stating that a full reconstruction of the wall would be required, a second report recommended only partial reconstruction at the cost of between $655,000 and $2.1 million. The author of this report was later discovered to have a conflict of interest. The Town and homeowners procured additional expert reports and provided a fifth report to the defendants in April 2019, alongside a litigation plan.
Approximately one month later, five groups of defendants applied to the Court to have the action dismissed for delay under rule 4.31 of the Rules of Court.
Case management judge dismisses actions based on “inexcusable and inordinate delay”
In August 2021, the case management judge acknowledged that this was not the type of case where plaintiffs seemed uninterested in prosecution or had not taken steps for several years. However, she held that an “inexcusable and inordinate delay” in the action resulted in “presumed and actual prejudice” to the defendants and dismissed both actions.
The case management judge noted the following, among other things, for her reasoning in dismissing the actions:
- Neither the Town nor the homeowners had advanced the actions to where a reasonably acting litigant would have in eight years;
- The actions would require a further two years to prepare for trial;
- There was an inordinate delay in completing questioning and obtaining reports;
- Witness memories were needed, but there was a lack of documents to refresh their memory over time; and
- The defendants did not contribute to the delay.
Additionally, the judge noted that while expert reports are critical in allegations of professional negligence, none of the five reports the plaintiffs obtained were usable at trial. The reports also failed to address issues of who should bear responsibility for the failures.
Plaintiffs appeal case management judge’s findings
On appeal, the Town claimed that the case management judge erred in law and fact when assessing the delay and applied the wrong legal test for determining prejudice. Further, the Town submitted that the judge erred in finding that failing to obtain a trial-ready expert report before May 2019 resulted in prejudice to the defendants.
The homeowners also argued that the case management judge “applied the wrong test” in determining that the delay was inexcusable and that the judge relied on speculative evidence concerning finding prejudice.
The Court of Appeal explained that the standard of review for assessing the case management judge’s decision must follow the test set out in Royal Bank of Canada v. Levy. That case states that a decision made under Rule 4.31 engages “a certain element of discretion” and that deference is warranted on appeal unless that discretion was unreasonable or the judge erred in principle.
Given prejudice to defendants, dismissal of actions was the only appropriate remedy
The Court of Appeal noted that the appellants’ only step towards dispute resolution after the 2014 case management meeting was securing a fifth expert report. The Court also agreed with the case management judge’s rejection of the argument that the respondents (the defendants) consented to the delay in the litigation through silence or conduct.
Concerning a finding of prejudice, the case management judge was aware that prejudice must arise from delay. The judge found that the appellants had not rebutted the presumption of the prejudice caused to the defendants. Further, dismissing the actions was the only remedy because the respondents had established actual prejudice caused by the delay.
The Court of Appeal confirmed that the case management judge completed a comprehensive and thorough analysis of the matter before deciding to dismiss the actions. As the appellate court found no basis to intervene with the case management judge’s findings, the appeal was dismissed.
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