Executive Summary: Key Legal and Evidentiary Issues

• The propriety of dismissing both the action and counterclaim for delay under Manitoba King’s Bench Rules 24.01 and 24.02.

• Whether an express agreement to delay existed between the parties, impacting the operation of Rule 24.02(1)(a).

• Assessment of what constitutes a “significant advance” in the action for the purpose of the delay rules.

• Application of the correct legal standard for inordinate and inexcusable delay under Rule 24.01.

• Evaluation of whether the defendants established significant litigation or non-litigation prejudice due to delay.

• Determination of responsibility for costs in light of both parties’ conduct contributing to the delay.

Facts of the case

Tony Blaze and Berkshire Agripower Ltd. (plaintiffs/appellants) commenced an action on July 24, 2020, against Daniel Rooke, Penny Rooke, George Rooke, and D & P Rooke Farms (defendants/respondents), alleging breach of a partnership or joint venture agreement to operate a custom forage harvesting business in or around Alexander, Manitoba. The plaintiffs also alleged unjust enrichment and conversion, and shipped large equipment from the United Kingdom to Manitoba for the business. On November 20, 2020, the defendants filed and served their statement of defence and counterclaim, alleging the plaintiffs owed monies under a separate agreement related to maintenance and shipping costs of the equipment.

On November 25, 2020, counsel for the plaintiffs requested an extension to file a reply and defence to counterclaim, and the defendants’ counsel agreed not to note default without reasonable notice. On December 2, 2020, the defendants filed a motion for security for costs. The motion was adjourned several times, and a memorandum of settlement was drafted in April 2021, but never signed. The motion was adjourned sine die on May 17, 2021.

Between November 7, 2022, and February 8, 2023, and again in June 2023, counsel exchanged emails about moving the matter forward, including finalizing the memorandum of settlement. On July 27, 2023, the defendants filed a motion to dismiss the action for delay and served it on July 31, 2023. Before this, the defendants had not requested the plaintiffs file a reply and defence to counterclaim, nor had the plaintiffs done so. On August 1, 2023, the plaintiffs filed their pre-trial conference brief. The delay motion was adjourned to August 28, 2023, then adjourned sine die. On November 27, 2023, the defendants requisitioned the delay motion back onto the civil motions list, and the plaintiffs filed their reply and defence to counterclaim, served their pre-trial conference brief, and requested a pre-trial conference date. On January 24, 2024, the plaintiffs served an unsworn affidavit of documents and copies of documents listed in Schedule A. A pre-trial conference was held on March 19, 2024, and trial dates were set for September 2025. The delay motion was heard on April 19, 2024. On August 6, 2024, the motion judge dismissed both the action and the counterclaim for delay and cancelled the trial dates.

Discussion of policy terms and clauses at issue

The case centered on Manitoba King’s Bench Rules 24.01 and 24.02. Rule 24.01 allows for dismissal where delay has resulted in significant prejudice to a party, with a presumption of prejudice if the delay is inordinate and inexcusable. Rule 24.02 requires dismissal if three or more years have passed without a significant advance in the action, unless all parties have expressly agreed to the delay (Rule 24.02(1)(a)). The motion judge found more than three years had passed since the last significant advance and determined there was no express agreement to delay, dismissing the action and counterclaim under both rules.

The Court of Appeal found that the motion judge erred in law by applying a higher standard than required under Rule 24.02(1)(a), requiring an “express, clear and explicit” promise not to invoke the delay rules. The Court held that the November 25, 2020, email exchange between counsel constituted an express agreement to delay, as it was reasonable for the plaintiffs to assume the proceedings were at a standstill until reasonable notice was given. The Court also found that the motion judge failed to apply the proper legal framework for inordinate and inexcusable delay under Rule 24.01, omitting consideration of relevant factors and the conduct of both parties.

Outcome and ruling

The Manitoba Court of Appeal allowed the appeal and set aside the order dismissing both the action and the counterclaim. The Court concluded that an express agreement to delay existed, so the exception in Rule 24.02(1)(a) applied. The Court also found that, although the delay was lengthy, it was not inexcusable under Rule 24.01, and significant litigation or non-litigation prejudice was not established by the defendants. Both parties were ordered to bear their own costs in the Court of Appeal and the court below. No specific monetary amount was ordered or awarded, as the decision was procedural and restored the case to the litigation track without resolving the underlying substantive claims.