Leaving The Court In Peace: The Alberta Court Of Appeal Applies Narrow Limitations Exception For Declaratory Relief

• Published date: 27 June 2023
• Subject Matter: Litigation, Mediation & Arbitration, Court Procedure
• Law Firm: Bennett Jones LLP
• Author: Ms Ciara Mackey, David Wahl and Krishen Singh

The Alberta Limitations Act does not apply to requests for "a declaration of rights and duties, legal relations or personal status". The exception is narrow. But as recently confirmed by the Alberta Court of Appeal in Bacanora Minerals Ltd v Orr-Ewing (Estate), 2023 ABCA 139 (Bacanora), declaratory relief can serve useful and valid purposes in a contractual dispute, where the party is prepared to "leave the court in peace" with only a declaration in hand. Although parties must advance claims for damages and other remedial relief within the limitations period, the Court held that no time limit applied for seeking a declaration that the parties' contract was void.

Background

Bacanora concerned the validity of a gross overriding royalty on revenues from lithium produced from certain mineral claims in Mexico. As part of an acquisition in 2009, the Plaintiff, Bacanora Minerals Ltd. (BML), extended royalty rights to Mr. Orr-Ewing (Royalty Agreement). In 2014, BML began inquiring into the validity of the Royalty Agreement. Mr. Orr-Ewing passed away, and in 2017, BML informed his estate of its position that the Royalty Agreement was invalid and unenforceable for misrepresentations and want of consideration.

BML filed a Statement of Claim in Alberta in late 2017 seeking a declaration that the Royalty Agreement was void and unenforceable, or alternatively, an order rescinding the Royalty Agreement. It also sought but later abandoned a claim for damages (including punitive or exemplary damages).

Following summary trial, the trial judge dismissed the claim for being out of time. Although the remaining relief sought was declaratory in form, the trial judge held that the effect was remedial as BML would hypothetically still require a further order to have royalties repaid.

The main issue on appeal was whether the relief sought by BML was declaratory, not remedial, and thus not subject to the Limitations Act.

Appeal Allowed Identifying Proper Declaratory Relief

The Court of Appeal allowed the appeal, finding that the Limitations Act did not apply and the trial judge's dismissal of the claim was both incorrect and based on palpable and overriding error.

The Court explained the concept of declaratory relief as providing parties with "a formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs", confirming or denying the existence of rights between disputing parties, including pronouncing on the non-existence of a contract. The...