Streamlining Resolution

1. Streamlining Resolution Leveraging Procedural Rules for Preliminary Determination of Issues & Bifurcation of Actions By: Nicholas A. Peters

2. Preliminary Determination Certain issues are ripe for it. The Rules of Court permit it (7.1), previously Rule 221 Certain cases are instructive as precedent Litigants benefit from the opportunity to streamline the process.

3. Rule 7.1 • Application to resolve particular questions or issues • 7.1(1) On application, the Court may • (a) order a question or an issue to be heard or tried before, at or after a trial for the purpose of • (i) disposing of all or part of a claim, • (ii) substantially shortening a trial, or • (iii) saving expense, • (b) in the order or in a subsequent order • (i) define the question or issue, or • (ii) in the case of a question of law, approve or modify the issue agreed by the parties, • stay any other application or proceeding until the question or issue has been decided, or • (d) direct that different questions of fact in an action be tried by different modes.

4. Rule 7.1 • Application to resolve particular questions or issues • 7.1(2) If the question is a question of law, the parties may agree • on the question of law for the Court to decide, • (b) on the remedy resulting from the Court’s opinion on the question of law, or • (c) on the facts or that the facts are not in issue.

5. Rule 7.1 • Application to resolve particular questions or issues • 7.1(3) If the Court is satisfied that its determination of a question or issue substantially disposes of a claim or makes the trial of the issue unnecessary, it may • strike out a claim or order a commencement document or pleading to be amended, • (b) give judgment on all or part of a claim and make any order it considers • necessary, • (c) make a determination on a question of law, or • make a finding of fact. • (4) Part 5, Division 2 applies to an application under this rule unless the parties otherwise agree or the Court otherwise orders.

6. Envision Edmonton Opportunities Society v. Edmonton (City), 2011 ABQB 29, 2011 Moen, J. • City passed by-law relating to closure of Edmonton City Centre Airport • The Society petitioned, attempting to keep airport open • administration rejected petition on grounds that petition filed outside of time Municipal Government Act specified limitations and without the necessary number of signatures • Application for judicial review of decision • City initiated the application to determine the time limitations issues on a preliminary basis, due to the complicated factors involved in the second question, likelihood that determination of same would hinge on the first • Application granted: severance allowed first question to be heard expeditiously, and an affirmative answer to same would put end to judicial review, saving parties and court time and money.

7. Envision Edmonton Opportunities Society v. Edmonton (City), 2011 ABQB 29, 2011 Moen, J. (67) I believe that the terminology of the test — be it "just and convenient" or "exceptional case" — may be irrelevant under the new Rule 7.1(1)(a). What should be considered are the grounds and considerations actually laid out in Rule 7.1(1)(a), interpreted through the lens of Rule 1.2. While some factors are consistently relevant to the issue of severance, there is no defined list of which factors must be considered, and factors may be given less or more weight depending on the context of the case. 68 Rule 7.1(1)(a) lays out three grounds for severance. These are: 1) disposing of all or part of a claim; 2) substantially shortening a trial; and 3) saving expense. A judge has discretion to grant severance based on any one or more of the grounds.

8. Envision Edmonton Opportunities Society v. Edmonton (City), 2011 ABQB 29, 2011 (69) Rule 7.1(1)(a) should also be interpreted in light of the purposes of the New Rules set out in Rule 1.2. Those purposes include: 1) under Rule 1.2(1), to provide a means by which the claim can be resolved fairly, justly and in a timely and cost-effective way; and 2) under Rule 1.2(2)(b) and (c), to facilitate the quickest means of resolving the claim and encourage the parties to resolve the claims by themselves. 70 The Court must also keep in mind the requirement of proportionality in granting a remedy under Rule 1.2(4). This requires the Court to balance all of the interests in each case. 71 I find that the "exceptional case" test is no longer the test in Alberta. Rather, the Court must view each application for severance by first analyzing the three parts to the test in Rule 7.1(1)(a). If one of those tests is answered affirmatively, then the Court must determine if a severance will meet the objectives of Rule 1.2. In carrying out the analysis, the Court must balance the ultimate goals as expressed in the Foundational Rules and determine if the remedy of severance is proportional.

9. Envision Edmonton Opportunities Society v. Edmonton (City), 2011 ABQB 29, 2011 (74 The correct analysis for answering this question is firstly to review the factors set out in Rule 7.1(1)(a) to determine if any of the tests set out therein are applicable to this case. Second, if we find that this case meets one or more of the tests, then we must consider the effect of the Foundational Rules, Rule 1.2, on this case before we can make a final determination as to whether to sever. If the answers to the Rule 7.1(1)(a) factors are negative, then we need not proceed to a Rule 1.2 analysis. (100) "[t]he language in Rule 7.1(1)(a) is disjunctive, requiring the Court to find in favour of only one of the three grounds in order to exercise its discretion to order severance."

10. Envision Edmonton Opportunities Society v. Edmonton (City), 2011 ABQB 29, 2011 (105) Further, the Foundational Rules require the Court to do a proportionality analysis. That is, the Court must consider whether the remedy of severance is proportional to the impacts of such an order. Rule 1.2(4) states: 1.2(4) . . . when exercising a discretion to grant a remedy or impose a sanction, will grant or impose a remedy or sanction proportional to the reason for granting or imposing it. (106) In other words, the Court must weigh and balance all of the relevant factors in order to achieve a fair and just result and the result must be proportional to the reason for granting it. As set out above in R. v T.(V), where there are a number of factors to consider, the court must consider and balance only those that apply to a particular case.

11. Manson Insulation Products Ltd. v. Crossroads C & I Distributors, 2011 ABQB 51, 2011 Poelman, J. • Corporate predecessors of plaintiff and defendant were parties to exclusive distribution agreement in respect of plaintiff's insulation products • Agreement specified that successors were obligated to assume and be bound by agreement • Successors (Plaintiff/Defendant) failed to properly assign agreement or give notice and Defendant commenced dealings with alternate supplier • Plaintiff (Manson) sued for breach of contract and brought Rule 7.1 application for declaration that agreement continued and • R. 7.1(3) contemplated a Two-stage procedure to properly screen issues suitable for preliminary determination • Notwithstanding this, preliminary determination on this point would not have resolved all or part of claim, substantially shortened trial, or saved expense • Determinations required re: issue of breach and related relief, process still required calling witnesses

12. Manson Insulation Products Ltd. v. Crossroads C & I Distributors, 2011 ABQB 51, 2011 Poelman, J. Old Rule 221 ‘Two Stage” procedure still applies but stages cannot be independently applied: (20) Rule 7.1(1) authorizes the court to order a question or issue to be heard, to define the question or issue and to give procedural directions. Rule 7.1(3) is premised upon there having been an order under rule 7.1(1) and a determination made, and speaks only to the remedies available when "the Court is satisfied that its determination . . . substantially disposes of a claim or makes the trial of the issue unnecessary.“ Importantly, the conditions needed for the remedies in rule 7.1(3) are not necessarily required for the court to order determination of a question or issue under rule 7.1 generally. Preliminary determination of an issue might substantially shorten a trial or save expense, within the meaning of rule 7.1(1)(a), and thus merit an order that it be "heard or tried before it, at or after a trial," while not substantially disposing of a claim or making trial unnecessary within the meaning of rule 7.1(3). Thus, rule 7.1(3) is part of the overall system that rule 7.1 provides for determination of particular questions and issues; it does not operate independently as its own procedure

13. Manson Insulation Products Ltd. v. Crossroads C & I Distributors, 2011 ABQB 51, 2011 Poelman, J. First Problem: error in the two-step process (22) New Manson has not applied for an order under rule 7.1(1). Rather it has applied directly under rule 7.1(3), which assumes that the court has found that there should be a preliminary determination of the matters on which a declaration is sought. For this reason alone, New Manson's application must fail Second Problem: piecemeal! (23) If New Manson's application were to be treated as though it were under rule 7.1(1), it would be necessary to consider whether the proposed determination of the requested declaration would dispose of all or part of a claim, substantially shorten a trial or save expense. While there are changes from the former rule 221 to the new rule 7.1, some of the authorities considering the former rule remain instructive. In particular, I note the Court of Appeal's warnings about "piecemeal" determination of preliminary issues in Esso Resources Canada Limited v. Stearns Catalytic Ltd.

14. Manson Insulation Products Ltd. v. Crossroads C & I Distributors, 2011 ABQB 51, 2011 Poelman, J. • Piecemeal… • (24) It would, however, remain to be determined: • (a) whether the Distribution Agreement was breached or repudiated by either New Crossroads or New Manson; • (b) whether New Manson breached implied warranties in the sale of products; • (c) whether there was tortious misconduct by any of the defendants (such as inducement or conspiracy to breach the supply arrangements); and • (d) If there was actionable misconduct by any party, what relief should be given. • 25 …neither liability nor damages would have been determined. It has not been established that the declarations would avoid the need to call any witnesses. In fact, New Manson has put forward no evidence or arguments that an order to determine the issues it raises would dispose of all or part of a claim, substantially shorten a trial or save expense.

15. Nowicki v. Price, 2011 ABQB 133, 2011 Moen, J. • Three actions stemming from rear-end collision involving a transit vehicle (Edmonton) • AN, plaintiff in one action and co-defendant in other two actions, brought application to preliminarily determine liability only in all three actions simultaneously • Agreement between parties as to benefit to determining liability concurrently, but disagreement re: preliminary determination/severance • Application granted, Rule 7.1 would apply to dispose part of the claim, and/or substantially shorten trial due to trickle-down settlement potential in other two actions • Potential for expense savings in first action, and other two actions if trickle-down effect occurred • Consideration given to new ‘foundational rule’, 1.2, given that preliminary determination was bound to expedite resolution and encourage settlement with minimal expense

16. Nowicki v. Price, 2011 ABQB 133, 2011 Moen, J. (44) …the norm is to have all issues heard at the same time. To date this has been true. However, the New Rules invite all of us, the Court and counsel, to find ways of reducing time and expense to get to resolution of disputes. Therefore, we must look seriously at whether a severance of issues is likely to dispose of a dispute entirely, thereby saving time and expense, or shorten a dispute or lead to resolution of some or all of the other issues. (46) One thing front and centre in the amendments to the Rules was consideration of the cost of litigation and the fact that ordinary people simply cannot afford to go to court to have their disputes decided. The Foundational Rules require the court and all lawyers to find means of settling those disputes quickly and cost effectively. We must, therefore, consider carefully why we should follow the old "exceptional case" rule in resolving modern disputes

17. L. (P.) v. Alberta, 2011 ABQB 771, 2011 Graesser, J. • Differences from Summary Judgment? • Issues “ hived off the remaining claims and determined before other claims proceed” • still subject to record production and questioning, expert witness report exchanges and “likely an alternative dispute resolution process (or waiver)” • (57) In my view, these rules must be read together, as offering the parties choices of a course of action. If a party believes that resolution of one issue amongst many might "dispose of all or part of a claim, substantially shorten the trial, or save expense", but the party still requires record production, questioning, expert report production and a trial, severance may be the appropriate route to follow…If the party believes that an issue can be determined in a summary way (i.e. without trial), because there have been admissions of fact or the only evidence necessary is in the form of authentic records, summary judgment may be the appropriate route to follow

18. Separation of Actions Rule 3.71 (formerly Rule 95) Ideal for multiple defendants with discrete claims/defences or Defendants with counter-claims suitable as stand-alone Actions Similar approach re: cost/benefit Expanding trend under the new rules

19. Rule 3.71 3.71(1) When 2 or more claims are made in an action or when 2 or more parties join or are joined in an action, the Court may make an order under this rule if the Court is satisfied that the joined claims or parties, or both, may (a) unduly complicate or delay the action, or (b) cause undue prejudice to a party. 3.71(2) The Court may, by order, do one or more of the following: (a) order separate trials, hearings, applications or other proceedings; (b) order one or more of the claims to be asserted in another action; (c) order a party to be compensated by a costs award for having to attend part of a trial, hearing, application or proceeding in which the party has no interest; (d) excuse a party from having to attend all or part of a trial, hearing, application or proceeding in which the party has no interest.

20. Fitzmaurice v. CEDA Reactor Ltd. [2011] A.J. No. 1570 G.A. Verville J. • Plaintiff commenced action for constructive dismissal, breach of employment contract, $1.6M in damages • Defendant employer advanced a counter-claim/set-off on the basis of a non-compete, and allegations of breach of fiduciary duty • Defendant’s counter claim was filed two years after Plaintiff’s statement of claim, but only two weeks after Plaintiff’s Amended Amended Statement of Claim • Plaintiff brought application for separation of action, arguing prejudice/undue delay would occur unless counter-claim was tried separately\ • Defendant argued that if the counterclaim is severed, it will prejudice its ability to advance its legal rights, including its claim of set-off

21. Fitzmaurice v. CEDA Reactor Ltd. [2011] A.J. No. 1570 G.A. Verville J. • Court agreed with Defendants and held that all actions with counterclaims would inevitably take longer than if there were no counterclaim, and that a delay in pursing the original claim is not a proper ground for severance. • Justice Vereville noted that the words, “unduly complicate”, in Rule 3.71(1)(a) and, “cause undue prejudice”, in (1)(b), connote a sense of seriousness, and are synonymous with “improper, inordinate, excessive or oppressive” • While the matter would inevitably take longer, it would not unduly complicate or delay the action or cause undue prejudice to the plaintiff and therefore the application for severance was denied • (13) “It is clear from the jurisprudence that one of the purposes of counterclaims is to avoid a multiplicity of proceedings.”

22. Murphy Oil Ltd. v. Predator Corporation, 2002 ABQB 629 McMahon, J. • Application by the plaintiffs (defendants by counterclaim) to try a certain issue (the “Proposed Issue”) separately from the remainder of the claim and counterclaim; staying the remainder of the claim and counterclaim until the Proposed Issue has been finally determined • Alternative application staying certain paragraphs of the counterclaim); postponing discovery and production of documents relevant to all stayed proceedings until the Proposed Issue has been finally determined • Further alternative, application for order directing the Proposed Issue be tried separately, with all other issues in the claim and counterclaim governed by a separate case management timetable and a separate case management order • Plaintiffs’ application ultimately denied, as severance and separate trials would be inappropriate in the circumstances.

23. Murphy Oil Ltd. v. Predator Corporation, 2002 ABQB 629 McMahon, J. • (15,): • As all actions with counterclaims will inevitably take longer than if there were no counterclaim, a delay in pursing the original claim is not a proper ground for severance. If that were so, there would be no need for counterclaims • (50): • While I acknowledge that trying the entire claim and counterclaim together will take longer than merely trying the claim and a portion of the counterclaim, that is a risk that a plaintiff takes when launching litigation.

24. Murphy Oil Ltd. v. Predator Corporation, 2002 ABQB 629 McMahon, J. • (28):Where consideration is given to splitting a trial, the factors are those set out in Tanguay v. Vincent (1999), 75 Alta. L.R. (3d) 90 (Q.B.), (18) the relevant principles with respect to applications under R.221: • - The Courts do not encourage the piecemeal trial of actions, but where the issue is readily severable and where the Court is satisfied that the cost of a long trial may thereby be saved, the order will be granted:... • - The test is whether there is some evidence which will make it at least probable that the issue will put an end to the action:... • There is a danger in granting such orders, and they should be granted only in exceptional circumstances where it is clear that the questions to be de-termined are completely severable, and where their determination will sub-stantially expedite the litigation or materially curtail the cost of the same:...

25. Murphy Oil Ltd. v. Predator Corporation, 2002 ABQB 629 McMahon, J. • The Courts should not attempt to determine substantial or difficult questions as preliminary issues:... • Where it appears clear that the trial of the preliminary issues would not save time or money unless the Applicant wins them completely, it is worth asking whether such a complete win is highly likely:... • The amount of documentation to be produced should be considered, and the Court must be satisfied that the cost of a long trial would be saved by granting the order:... • -The following appear to be the relevant factors: 1. Will it end the suit, at least if decided one way; 2. Will there be a saving in time or money spent on litigation, again at least if decided one way; 3. Will it create an injustice; 4. Are the issues complex or difficult; 5. Will it result in a delay in the trial?:...