A Decade of Litigation in the Rockies
Market Insight 03 January 2024 03 January 2024
Projects & Construction
The Court of King’s Bench recently dismissed the entirety of a claim brought on behalf of a Condominium Corporation against all of the Defendants over a dozen years ago due to long delay.
This action arose from alleged deficiencies in the construction of a residential condominium complex called “The Portal”, located in Canmore, Alberta. The Portal was constructed between 2004 and early 2007 and the Statement of Claim was filed in September 2010. Throughout this litigation, the Condominium Corporation was represented by four law firms and over the course of 13 years only minimal steps were completed.
Eleven Defendants applied to dismiss the entirety of the Condominium Corporation’s Action due to long delay, pursuant to the Alberta Rules of Court r. 4.31, on the basis that there was inordinate and inexcusable delay resulting in significant prejudice to the Defendants. Over the course of 13 years, the Condominium Corporation only conducted Questioning of two former employees of one of the Defendants which resulted in a total of 63 pages of transcript and produced three preliminary expert reports.
The Defendants collectively argued that there was a substantive concern in this litigation that the memories of design professionals were fading, many potential witnesses had died and others were no longer fit to testify due to illness, the Portal itself was now 15 to 17 years old and had been subject to deterioration and the changing weather in the Canadian Rockies, the engineer Defendant was bankrupt and another Defendant corporation had been dissolved.
The Court stated that the lack of progress in Questioning was concerning, and it was troubling the fact that the first stage in the discovery process took so long. The first key witnesses that played a central role during the early design development phases passed away on May 31, 2015, which was 5 years after the Statement of Claim was filed. As Questioning had not occurred in a timely manner, these witnesses could no longer provide their evidence. The Court found that there was no reason his evidence was not acquired through Questioning before his passing.
When considering whether there has been inordinate delay, the lack of progress is an important factor in the Court’s decision. The Court agreed that without some of these key witnesses, it would be extremely difficult to provide an appropriate factual foundation for a standard of care opinion as this matter progressed.
The Condominium Corporation argued lay witness evidence was not expected to play a significant role in the determination of the Condominium Corporation’s claim or the defence of the Defendants and as such, any defence that fading memories was at issue was irrelevant. Further, the Plaintiff argued that the vast majority of the related issues in question could be determined by reference to records produced and expert reports. The Condominium Corporation had produced few expert reports that ultimately indicated that further investigative work was necessary before a final report could be issued. The Court found that none of the expert reports were acceptable.
The Court noted that there was no reasons why expert reports were not pursued within a couple of years after the initial Statement of Claim was filed and subsequently produced by the end of 2014. There was now a two-decade gap between the time of the disputed work and the potential time this Action would be set down for trial leading to the further deterioration of physical evidence and fading memories. The Court stated, the Condominium Corporation has a fundamental problem because much of the necessary evidence is now over fifteen years. Undoubtedly, memories are fading, and important witnesses are in poor health… many potential witnesses have died. This inherent problem has arisen because the Plaintiff did not advance this litigation promptly.
In cases such as this, the Court requires lay witness evidence before making a finding on certain critical points, “to determine who made what decisions, why they made those decisions, and when they made those decisions,” and the timelines associated with those decisions.
Throughout this litigation, the Defendants inquired on the status of the Action on multiple occasions, entered into a litigation plan and expressed concern about the potential for prejudice. The Court found that there was no suggestion that the Defendants acquiesced in any delay and found no sufficient reasons to excuse the delays that occurred. The Condominium Corporation further did not submit any evidence any of the Defendants contributed to the delay. Ultimately, Justice Nixon found that the Plaintiff’s evidence neither established an adequate excuse for the delay in this Action, nor does it effectively rebut the Defendants’ prejudice.
Ultimately, the Court determined there was significant nexus amongst the parties such that prejudice to one is prejudice to all given the intertwining of the business relationships amongst the various Defendants. As there had been a number of deaths and illness to many key witnesses, it would not be possible for the Court to make a fair and reasonable determination on critical facts without these key witnesses. Further, the building envelope components ranged between 15 to 17 years old and any replacement work done now or in the future would have, at minimum, been “subject to a heavy discount for betterment”. The Court stated that “Fading memories is a real concern, the absence of key memories because of multiple deaths and certain illnesses is a game changer” and it was time to allow the Defendants to move on with their lives.