Executive Summary: Key Legal and Evidentiary Issues

• The dispute originated from a property fire during a construction project owned by Center Street Limited Partnership, resulting in claims against Nuera Platinum Construction Ltd. and Over & Above Reno and Contracting Ltd. for breach of contract and negligence.

• The Nuera parties sought dismissal of the trades action for long delay under rule 4.33(2) of the Alberta Rules of Court, arguing that no significant step had been taken in the trades action for over three years.

• A written agreement between the parties regarding the sequence and linkage of the trades and coverage actions was examined to determine if it constituted a standstill agreement suspending the operation of rule 4.33.

• The Court found that the agreement was not a standstill agreement, as it did not clearly indicate an intention to suspend time for the purposes of rule 4.33.

• The Court applied a functional approach, holding that significant advances in the coverage action, in the circumstances of this case, constituted significant advances in the trades action.

• The appeal was dismissed, confirming that the trades action was not subject to mandatory dismissal for long delay, as the coverage action’s progress moved the trades action forward.

Background and facts

The genesis of this dispute is a fire that occurred on March 7, 2015, during construction of a commercial project in Calgary owned by Center Street Limited Partnership. Nuera Platinum Construction Ltd. was the construction manager, and Over & Above Reno and Contracting Ltd. was the roofing and waterproofing contractor retained by Nuera to conduct “hot works.” On February 12, 2016, Center Street brought an action against Nuera and Over & Above, alleging breach of contract and negligence in relation to the fire (the trades action). On June 13, 2016, Center Street also commenced an action against its insurer, Lloyd’s of London, under a course of construction policy, seeking a declaration that the policy covered losses related to the fire. Lloyd’s denied coverage based on an exclusion in the policy regarding the hot works operation underway when the fire occurred (the coverage action).

Lloyd’s applied to consolidate the two actions. On April 20, 2017, Center Street and the Nuera parties agreed in writing to oppose the consolidation application. The agreement contemplated that if the actions proceeded separately, Center Street would pursue the coverage action to trial before the trades action and would not use certain evidence from the trial of the coverage action involving the hot works operation in the trades action, or raise issue estoppel against Over & Above. Center Street agreed to sign and file a consent dismissal order of the trades action as against the Nuera parties if it obtained “a final, non-appealable, judicial determination requiring Lloyd’s Underwriters to provide coverage or indemnify Center Street, in whole or in part, under the policy.” Lloyd’s application to consolidate the actions was heard on April 20, 2017, and dismissed on April 28, 2017. An appeal of this decision to a chambers judge was also dismissed.

Center Street served supplemental affidavits of records in the coverage action on December 20, 2017, and May 28, 2018. Questioning proceeded on October 4 and 5, 2018. In December 2019, Center Street went into receivership and a receivership order was granted February 19, 2020, giving the receiver authority to continue the prosecution of both actions.

On July 14, 2021, Nuera put Center Street on notice that it intended to seek dismissal of the trades action for long delay as no step had been taken to advance that action for over three years. Effective August 31, 2021, Center Street and Nuera made an agreement to temporarily toll all unexpired time periods under the Alberta Rules of Court and the Limitations Act. The next step taken in the coverage action was on September 30, 2021, when Center Street served its answers to undertakings. The insurer served its answers to undertakings on December 29, 2021, and questioning of the insurer’s representative on the undertakings occurred on January 17, 2022. The parties’ tolling agreement was subsequently terminated, and in April 2023 the Nuera parties applied to dismiss the trades action for long delay pursuant to rule 4.33(2). Center Street opposed the application.

An applications judge heard and dismissed the Nuera parties’ application on August 10, 2023. He found that while the letter agreement of April 20, 2017 did not constitute a “standstill agreement,” it inextricably linked the two actions such that rule 4.33(2) did not apply. The Nuera parties appealed. On appeal, it was agreed that over three years had passed since Center Street took its last significant step in the trades action. The issues before the chambers judge were whether the agreement signed April 20, 2017 was an agreement to suspend time (a standstill agreement) and whether the trades action and the coverage action were inextricably linked. The chambers judge held that although the April 20, 2017 letter agreement was not as clearly drafted as a standstill agreement should be, it contained the essential terms required to signify the parties agreed to suspend the application of rule 4.33(2) in the trades action pending the outcome of the coverage action. She found the parties to the agreement were clearly identified, the date was April 20, 2017, and the agreement was to continue until a resolution to the coverage action occurred, provided it went to trial first. She also found that the coverage action and the trades action were inextricably linked and concluded that rule 4.33(2) did not apply as three or more years had not passed since significant advance in the coverage action.

At the hearing of the appeal in this Court, counsel advised that the coverage action has been discontinued. Following the hearing, the Court released its decision in Round Hill Consulting Ltd v Parkview Consulting, 2025 ABCA 195, clarifying that there is no inextricable link test, and that a functional analysis is required.

Legal issues and analysis

The appellants argued that the chambers judge erred in finding the letter agreement was an agreement to suspend the application of rule 4.33, and in relying on the inextricable link test rather than a functional analysis. The Court found that the agreement was not a standstill agreement as it did not clearly indicate an intention to suspend time for the purposes of rule 4.33. The Court emphasized that if parties wish to rely on an agreement that litigation be put on hold under rule 4.33(5), the agreement must state this with clarity and precision, and not be left to inference.

The Court then considered whether advances in the coverage action significantly advanced the trades action. The Court adopted a functional approach, as set out in Round Hill, focusing on whether the advance in an action moves the lawsuit forward in an essential way considering its nature, value, importance, and quality. The Court agreed with the respondent’s approach that, in the unique circumstances of this case, particularly the expectations and understanding of the parties reflected in the letter agreement as to how the two actions would proceed, the advancement of the coverage action constituted a significant advance in the trades action.

Outcome

The appeal was dismissed. The Court found no basis to interfere with the chambers judge’s conclusion that the advance in the coverage action significantly advanced the trades action. Center Street Limited Partnership was the successful party. No exact amount ordered or awarded in favor of the successful party is specified in the judgment.