Relevant & Substantial Undertaking Responses Might Qualify As Litigation Steps

• Published date: 27 September 2021
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: CLC (Canadian Litigation Counsel)
• Author: Ms Ashley Cosgrove (Brownlee LLP)

Recently, the Court of Queen's Bench in Kahlon v Kahlon, 2021 ABQB 683 clarified whether undertaking responses can materially advance an action to restart the three-year clock under the 'Drop Dead' Rule (Rule 4.33) of the Alberta Rules of Court.

Takeaway'the Court will look at substance, not form

The Court will assess the functional effect of an undertaking response in advancing an action, taking a practical approach. If the response does not narrow the issues in the dispute, it will not qualify as a step that significantly advances the action.

Facts'the Plaintiff had answered three undertakings in the three years

This action arose over the Defendants' alleged failure to pay a deposit and remaining $650,000 balance, under a $1.675 million real-estate transaction. A Master dismissed this action, under Rule 4.33. The Plaintiff then appealed to a Justice.

The potential steps to significantly advance the action were responses to three undertakings the Plaintiff gave at questioning:

1. to produce records about buying the lands and constructing the home;
2. to request and produce bank copies of appraisals acquired for the property during construction; and
3. to produce any documents about the deposit of a $200,000 cheque, and its return, because of its Not-Sufficient-Funds status.

Analysis'the action, as pled, must hinge on the responses to undertakings

Relying on Alderson v Wawanesa Life Insurance Company, 2020 ABCA 243, the Plaintiff emphasized that a response to an undertaking usually materially advances an action, as an undertaking given at a questioning is an extension of the discovery process.

Even so, the Court in Khalon noted that when determining if any of the three undertakings functionally and significantly advanced the action, the Court had to assess if the responses were simply perfunctory, with nothing hinging on their response. In doing so, the Court needed to consider the undertakings' nature, quality, genuineness and timing. These principles had been enshrined in Ravvin Holdings Ltd v Ghitter, 2008 ABCA 208.

Appeal decision'the responses to undertakings did not qualify as significant steps

The Court held that the undertaking responses did not materially advance the action. Relying on Jacobs v. McElhanney Land Surveys Ltd., 2019 ABCA 220, the Court stressed:

1. the action's status at the start and end points of the applicable period; and
2. 'the degree to which the factual and legal issues dividing the parties have been identified and the progress...