Executive Summary: Key Legal and Evidentiary Issues

• The Alberta Court of Appeal considered whether a chambers judge erred in reinstating a claim struck for delay under Rule 4.31.
   
• Determining whether delay is inexcusable required weighing the conduct of both the plaintiff and the defendant in advancing the litigation.
   
• Rule 4.31(3) obligated the reviewing court to assess whether the party seeking to strike the claim had itself contributed to the delay.
   
• Evidentiary questions arose over whether the appellant demonstrated significant prejudice from the litigation delay.
   
• Fresh evidence concerning the death of a proposed expert witness was assessed against the Palmer test for admission on appeal.
   
• Findings on excusable delay and absence of prejudice were reviewed on a deferential standard absent legal error.
   

Facts of the case

The underlying action was commenced in 2009 and arises from investments made by the respondents, EMM Energy Inc. and Ener T Corporation, in the Sparky K Formation, an oil and gas producing zone in east central Alberta, dating back to 2004. The respondents allege that the appellant, Canadian Natural Resources Limited, damaged the formation by injecting water into it without authorization from the applicable regulator, now known as the Alberta Energy Regulator. The appellant denies liability, asserting it had been authorized to inject water into the formation since 1993, that the injection caused no damage, and that the formation was mostly depleted by 2004. On February 17, 2022, the respondents applied to amend their pleadings and to compel the appellant to attend alternative dispute resolution. The appellant cross-applied on March 31, 2022 to strike the action for long delay under Rule 4.31 of the Rules of Court. An applications judge struck the claim on January 3, 2023 and indicated he would also have dismissed the amendment application. On appeal from that decision, a chambers judge (Justice C.D. Simard) found the delay inordinate but excusable and allowed the amendments, in a decision dated October 28, 2025 and filed November 19, 2025 (2025 ABKB 620). The appellant then appealed that decision to the Court of Appeal, and separately applied to adduce new evidence concerning the death of one of its intended expert witnesses.

Policy and legislative provisions at issue

The appeal turned on the interpretation and application of Rule 4.31 of the Rules of Court. Under Rule 4.31(1), the court may dismiss all or part of a claim where delay has resulted in significant prejudice to a party. Rule 4.31(2) provides that where the court finds delay to be inordinate and inexcusable, that delay is presumed to have resulted in significant prejudice to the applicant. Rule 4.31(3) requires the court, in determining whether to dismiss a claim or whether delay is inordinate or inexcusable, to consider whether the party bringing the application itself participated in or contributed to the delay. The appellant's separate application to introduce new evidence on appeal was assessed against the four-part test from R v Palmer, [1980] 1 SCR 759, requiring that the evidence could not have been obtained earlier through due diligence, is relevant to a decisive issue, is credible, and could reasonably be expected to affect the result.

Reasoning and analysis

The Court of Appeal reviewed the chambers judge's interpretation of Rule 4.31 for correctness and his findings on excusability for deference, consistent with Transamerica Life Canada v Oakwood Associated Advisory Group Ltd, 2019 ABCA 276. It rejected the appellant's submission that the chambers judge had reversed the onus by focusing on the appellant's own conduct, noting that Rule 4.31(3) expressly required consideration of the applicant's contribution to delay. The chambers judge had undertaken a detailed review of the litigation timeline, finding the appellant responsible for delay from January 2009 to January 2013 and from March 2016 to March 2018, including its failure to commence questioning of the respondents until March 2018, a delayed response to undertakings given in December 2012 that was not answered until January 2016, a delay in seeking third-party reports that were known to exist by March 2018 but not pursued by application until January 2021, and a delay between April and October 2017 in responding to a proposed new litigation plan. The chambers judge also found the respondents responsible for delay between December 2009 and August 2011, before questioning began, and between January 2013 and October 2015, when they failed to produce requested records. Neither party was found responsible for the period from October 2015 to March 2016. On that basis, the chambers judge concluded the delay, while inordinate, was excusable because both parties had contributed to it. On the question of prejudice, the Court of Appeal found no reviewable error in the chambers judge's conclusion that the appellant had not met its onus, since the alleged prejudice was operational rather than related to moral turpitude or dishonesty, and the action remained largely a documents case despite some witnesses no longer being employed by the appellant or working on the relevant assets. Turning to the new evidence application, the Court found the appellant's evidence about the February 2025 death of its intended expert, Ken Schuldhaus, insufficient to satisfy the Palmer test, as there was inadequate information about the nature of the evidence he would have provided to determine whether it was relevant to a decisive issue or could have affected the result.

Ruling and overall outcome

The Court of Appeal dismissed both the application to adduce new evidence and the appeal itself, upholding the chambers judge's decision. The respondents, EMM Energy Inc. and Ener T Corporation, were the successful parties, preserving the reinstatement of their claim and the amendments permitted below. The decision did not order or specify any monetary award, costs, or damages.