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Monday Morning Case Bites for September 24, 2018

Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.

Edited by Amanda Kostek & Christie Dewar

MGN Constructors Inc v AXA Pacific Insurance Company, 2018 ABQB 631
Dismissal for Long Delay l Standstill Agreement

Nova Pole International Inc v Permasteel Construction Ltd, 2018 ABQB 672
Dismissal for Long Delay l Consent Order to try Actions together

Alfaiate v 1014784 Alberta Inc, 2018 ABQB 666
Terms of Settlement l Release Indemnity Agreement

Judgment Highlights

MGN Constructors Inc v AXA Pacific Insurance Company, 2018 ABQB 631

This was a successful application for dismissal due to long delay under Rule 4.33. The key litigation milestones were as follows:

  • In October, 2010 the Statement of Claim was issued;
  • The defence was issued June 14, 2011;
  • July 12, 2013 a summary judgement application was dismissed;
  • May 3, 2013 the appeal of that application was dismissed.

No further activity occurred until July 26, 2016 when the application for delay was set down. Affidavits of Records had not been exchanged and Questioning had not taken place.

The issue was whether there was a valid standstill agreement in place. A letter from Plaintiff counsel dated June 18, 2015 indicated that he wished to bring the standstill agreement to an end. The defendant denied that a standstill ever existed, and denied receiving the June, 2015 letter. The Court was not satisfied that a standstill agreement had been reached. As a result, the Court dismissed the claim under Rule 4.33 for failing to significantly advance the action within 3 years.

Nova Pole International Inc v Permasteel Construction Ltd, 2018 ABQB 672

This matter involved the appeal of an unsuccessful application for delay. The Court confirmed that a Consent Order directed that two related matters be tried together was a significant advance in the action, and therefore the claim could not be dismissed under Rule 4.33, the 3 year “drop dead”. However, the claims were more than 11 years’ old by the time the delay application was brought. Questioning was not complete, and an expert report was only provided in 2016. On this basis the delay on the claim was inordinate and inexcusable. The Court dismissed the claim under Rule 4.31.

Alfaiate v 1014784 Alberta Inc, 2018 ABQB 666

This case concerned whether counsel could require an indemnity agreement in a release after settlement had been reached under a Formal Offer. The Formal offer required the Plaintiff to provide “an executed release (in mutually agreeable form) in favour of the Defendants, which is also to be signed by the Plaintiff’s spouse” and required the Plaintiff to “irrevocably agree to … settle the specific terms of the written release in favour of the Defendants”.

The Court noted the following:

[14] It is not necessary to specify in an agreement to settle existing litigation the terms of the formal release that must be delivered under it (Fieguth v Acklands Ltd, 1989 CanLII 2744 (BC CA), 1989 CanLII 2744, 59 DLR (4th) 114, 37 BCLR (2d) 61 (CA) at paras 29, 35; Bogue v Bogue, 1999 CanLII 3284 (ON CA), 1999 CanLII 3284, 46 OR (3d) 1, [1999] OJ No 4310 (CA) at paras 13-15; Imperial Oil Ltd v 416169 Alberta Inc, 2002 ABQB 386 (CanLII) at para 10; Buterman v St Albert Roman Catholic Separate School District No 734, 2017 ABCA 196 (CanLII) at para 31; Coco Homes Inc v Caleron Properties Ltd, 2017 ABQB 15 (CanLII) at para 37). The precise terms of the release are not essential terms of the settlement agreement and the Court can fix them if the parties are unable to agree (Imperial Oil at para 14; Apotex Inc v Allergan, Inc, 2016 FCA 155 (CanLII) at para 33).

[15] In fixing the terms of the release, the Court must consider the wording of the agreement, the context of the dispute and its resolution, and commercial reasonableness (Imperial Oil at para 14; Coco Homes at para 38; Beier v Proper Cat Construction Ltd, 2013 ABQB 351 (CanLII) at para 93). I adopt the following summary from Norwich Union Life Insurance Company (Canada) v MGM Insurance Group Inc, 2003 MBQB 282 (CanLII):

[22] The law is clear that where all the terms have not been specifically agreed upon, the court can consider any terms reasonably implied based on the settlement discussions, and the documentation and correspondence, taking into account normal business practice and common sense. Anything that is unusual and goes beyond the norm must be specifically agreed upon.

The Court accepted that releases commonly include indemnity agreements, but they are not implied in every case:

[16] Formal releases commonly include indemnities in the event of claims over against released parties in actions brought by the releasers against others. I cannot say, however, that these are customary or implied in every case (Imperial Oil at para 22; Norwich at para 29; Fieguth at para 21). Rather, the terms are dependent on the context. An indemnity might sometimes be implied. For example, where a claimant asserted, in his pleadings, conspiracies and involvement by other unnamed persons in the harm he suffered, and the wording of the settlement agreement contemplated a wide settlement of claims, an indemnity in the event of further litigation against unnamed parties was implied (Gregory v KPMG LLP, 2012 BCSC 1387 (CanLII) at paras 16-19, 26-27).

The Court directed the Plaintiff to sign the release tendered after the indemnity clause had been deleted.