In This Case: The ‘Drop Dead’ Rule, Pt. 2 – Solution

By Ian Carruthers and Noel Harper 

DISCLAIMER: This blog is intended to inform the reader about how the law was applied in a particular case. It should not be taken as advice regarding the outcome of any other case, even one that may have similar facts. The Court’s decision will depend on the facts of each case. Please call 1-844-210-9511 or visit carrutherslaw.ca if you would like to learn more about your specific case. 

This week on In This Case, we asked whether various undertaking responses constituted a significant advance of an action pursuant to the ‘drop dead’ rule, and if the appeal to a dismissed action invoking Rule 4.33 would be granted or not. Be sure to take a look at our post introducing the timeline of this case here if you haven’t already. 

The issue surrounding Kahlon v. Khalon, 2021 ABQB 583 (we assure you this is not a typo) was if any of the three undertakings advanced the action in a meaningful manner, or if they were simply perfunctory measures that did not produce any consequential material. In the end, the plaintiff’s appeal was denied, and the action remained dismissed, meaning that once again, no steps were taken that materially advanced the action, and the correct answer to this week’s question is d) 

As a reminder, Rule 4.33 reads: 

(2) If 3 or more years have passed without a significant advance in an action, the Court, on application, must dismiss the action as against the applicant, unless 

(a) the action has been stayed or adjourned by order, an order has been made under subrule (9) or the delay is provided for in a litigation plan under this Part, or 

(b) an application has been filed or proceedings have been taken since the delay and the applicant has participated in them for a purpose and to the extent that, in the opinion of the Court, warrants the action continuing. 

The decision states “a functional, as opposed to a formalistic, approach is appropriate to determine if a step constitutes a significant advance” of the action at hand, meaning that a step must move the action forward in an essential way. 

The plaintiff gave three undertakings in December of 2016 in an effort to produce documents relating to the purchase of real estate, for which a sizable portion of the funds remained unpaid, and the deposit of a cheque that was returned NSF. After ten months, the answers to all three were provided: 

  1. The real estate purchase contract “had nothing to do with the action in question.” 
  2. The bank provided no appraisal records, only the confirmation that documents once in the bank’s possession no longer exist, which was also not relevant to the action.
  3. The document confirming the existence of the initial deposit cheque was a relevant response, but it did not provide any information that the parties did not already know. 

All of the above constituted a “necessary step” towards the action, argued the plaintiffs. However, requesting records from third parties because the defendant’s counsel agreed to answer the undertakings ultimately did not advance the action in a significant enough way, and thus, the claim was dismissed. 

PRACTICE TIP 

Do not rely on undertaking responses to constitute a significant advance of an action. Even if a response is procedurally necessary or relevant to the pleadings, it may not satisfy Rule 4.33 if it does not move the action forward in an essential way, “having regard for [its] nature, quality, genuineness and timing.”  

Your lawyer made a mistake. Is it malpractice? 

As seen in this case, although the plaintiff was following through with necessary steps in the civil litigation process, he failed to significantly advance the claim within a period of three years. A failure to advance an action is often the result of the client’s conduct, but if a client proceeded without being made aware by their lawyer of the three-year ‘drop dead’ period, the lawyer may be at fault. 

Are you facing a dismissal for delay application? Carruthers Law can assist in opposing it, or determining whether you have a professional negligence claim against the lawyer handling your file. Contact us for a complimentary consultation to discuss your situation. 

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