Alberta – uncertainty over which claims covered by arbitration does not delay commencement of limitation period – #162

In Weir-Jones Technical Services Incorporated v. Purolator Courier Ltd, 2019 ABCA 49, Alberta’s Court of Appeal held that an arbitral party’s uncertainty about which claims were covered by arbitration did not delay commencement of the applicable limitation period. A party’s reliance on the potential success of other procedures amounts at most to an error of law is irrelevant to calculating the start of a limitation period. “Discovery relates to the facts, not the applicable law or any assurance of success.”  In a lengthy footnote to concurring reasons, Mr. Justice Thomas W. Wakeling also commented on how the cost of litigation drove litigants towards other procedural solutions such as summary judgment and arbitration.

Weir-Jones Technical Services Incorporated (“Weir-Jones”) provided services to Purolator Courier Ltd, Purolator Inc. and Purolator Freight (“Purolator”) pursuant to a January 23, 2008 agreement comprised of a Collective Agreement, an Owner/Operator Contract, and a Standards of Performance Contract (“Agreement”).

Disputes arose and collective agreement grievances were submitted by a union in November 2008 and January 2009. The grievances related to compensation for services rendered by Weir-Jones, unpaid invoices of Weir-Jones and termination of the Agreement.

Weir-Jones filed its statement of claim on July 22, 2011 claiming damages “in respect of various breaches of an alleged agreement or agreements, the terms of which were either supplemental to, or separate from, the Agreement.

Purolator applied under Rule 7.3 of the Alberta Rules of Court, Alta Reg 124/2010 for summary judgment against Weir-Jones. Purolator sought dismissal of the action on the basis that Weir-Jones had not commenced its action within the two (2) year limitation period stipulated by section 3(1)(a) of Alberta’s Limitations Act, RSA 2000, c L-12.  Madam Justice Donna L. Shelley granted Purolator’s motion, her reasons set out in Weir-Jones Technical Services Incorporated v. Purolator Courier Ltd, 2017 ABQB 491.

At para. 35 of her reasons, Shelley J. outlined the date by and the reasons on which Respondent knew that certain of its “claims fell outside the scope of the collective arbitration process”.

– at Questioning on January 18, 2016, the Respondent’s officer confirmed that: it had retained counsel in February 2009 for the purposes of discussing possible legal actions for the alleged breaches and claims falling outside of the grievance process, and had received advice that the facts supported a separate cause of action; the Respondent knew there were certain claims outside of the Collective Agreement and it was contemplating a lawsuit to keep its options open in case the Applicants did not settle or attempt to do so; the Respondent knew by June 2009 at the latest that there were claims that fell outside the scope of the arbitration process and that they would have to be dealt with separately; the Respondent understood there was a difference between labour matters and the claims which were eventually set out in the Statement of Claim; the Respondent understood that it had knowledge of the facts giving rise to its cause of action in early 2009, although it understood that the limitation period commenced from the last point of involvement with the Applicants, which was August of 2009 when it terminated the Agreement; and no standstill or tolling agreement had been entered into between the parties at any time.

Shelley J. determined that a party’s uncertainty as to the proper venue for its recourse did not interrupt the limitation period. A limitation period for breach of contract commences on the date of the breach. Discoverability is related to the facts, not whether the claim falls within one venue or another. She determined that Respondent knew of the breaches before July 22, 2009 but waited until July 22, 2011 to file litigation.

Shelley J. determined that Weir-Jones had mistakenly believed that termination of the Agreement started the limitation period but this was an error of law or an error concerning the legal consequences of the facts.

[39] Similarly, to the extent that the Respondent argues that it could not commence its action until it was able to establish what specific matters would be covered by the grievance procedure and which would not be so covered, it is clear that the Respondent knew that at least some of its claims would fall outside the scope of the procedures available under the Collective Agreement. I conclude that this argument is similar to the unsuccessful argument advanced by the plaintiff in [De Shazo v. Nations Energy Company Ltd., 2005 ABCA 241]. Here, the legal advice that at least some of the claims would not fall under the scope of the alternative proceedings did not justify delay in commencing this action pending conclusion of a grievance procedure that the Respondent knew might not result in a resolution of all matters in dispute between the parties. And in fact it did not do so, since the Respondent commenced this action long before the outcome of the arbitration was known.

Weir-Jones appealed.  The Alberta Court of Appeal

On appeal, the Court committed the bulk of its attention to the test for summary dismissal.

In commenting on the genesis for allowing summary judgment motions, Wakeling J.A. in his concurring reasons addressed the costs of litigation. Those comments appear in footnote 117 to the reasons. Footnote 117 provides not only the Court’s own thoughts on the relation of costs to procedural activity in a “traditional litigation file” but also notes the “declining trial” phenomenon and summary judgment’s likely contribution to it. Arbitration practitioners should also examine the comments in light of the oft-repeated promise of arbitration to provide a more cost-effective resolution to disputes.

Footnote 117 “For some time the high cost of litigation and the delays associated with it have caused disputants to seek other forms of redress outside the public court system. They may turn to private mediation or arbitration. Or they may pursue expedited litigation alternatives that are components of a modern public civil process. The factors that make the traditional litigation model unattractive may be directly attributable to the increased level of complexity of actions. There is a direct correlation between the complexity of an action and its costs. The more complex a matter is the more time lawyers must devote to identify the issues and develop the best arguments to resolve these issues in the client’s favor. Most lawyer’s fees are a product of time spent on a client’s file. Complex matters frequently require the retention of experts. Experts are usually expensive. In addition, complex actions make increased demands on a client’s time. Clients must spend more time in discoveries and in the affidavit-drafting process. All of these factors have a cumulative impact on the time frame an action is a live file. See generally, Report of the Canadian Bar Association Task Force on Systems of Civil Justice 15-16 (1996). These factors no doubt contribute to the declining percentage that conventional trials represent as the ultimate method by which disputes are resolved. Professor Galanter reports that the “portion of [American] federal civil cases resolved by trial fell from 11.5 percent in 1962 to 1.8 percent in 2002, continuing a long historic decline. More startling was the 60 percent decline in the absolute number of trials since the mid 1980s. … The phenomenon is not confined to the federal courts; there are comparable declines of trials, both civil and criminal, in the state courts, where the great majority of trials occur. … Although virtually every other indicator of legal activity is rising, trials are declining not only in relation to cases in the courts but to the size of the population and the size of the economy”. “The Vanishing Trial: An Examination of Trials and Related Matters in Federal and State Courts”, 1 J. Empirical Legal Stud. 459, 459-60 (2004). See also Twohig, Baar, Meyers & Predko, “Empirical Analyses of Civil Cases Commenced and Cases Tried in Toronto 1973-1994” in 1 Ontario Law Reform Commission, Rethinking Civil Justice: Research Studies for the Civil Justice Review 77, 127 (1996) (trials declined both in absolute and percentage terms as the method of resolution from 1973 to 1994). Justice Bouck provides some insights into why in British Columbia delay is a problem. Chu v. Chen, 2002 BCSC 906 (CanLII), 22 C.P.C. 5th 73 (B.C. Sup. Ct. 2002). Some have argued that the summary judgment device has directly contributed to the declining rate at which trial dispositions resolve disputes in American federal courts. Galanter, “The Vanishing Trial: An Examination of Trials and Related Matters in Federal and State Courts “, 1 J. Empirical Legal Stud. 459, 483 (2004) & Simmons, Jacobs, O’Malley & Tami, “The Celotex Trilogy Revisited: How Misapplication of the Federal Summary Judgment Standard Is Undermining the Seventh Amendment Right to a Jury Trial”, 1 Fla. A & M.U.L. Rev. 1, 3 (2006).

Regarding the limitation period, the Court held that Alberta’s current Limitations Act contained no separate rule for limitation periods for breach of contract and the same three (3) part test applies: “reasonable awareness of the injury, attribution of the injury to the defendant, and a claim warranting a proceeding”.

[53] Since the statute provides the test for the commencement of the limitation period, the alternative starting points proposed by the appellant do not apply. Unless the alternative proposed dates happen to coincide with the test in the Limitations Act, the limitation period does not commence on (a) the date of breach, (b) the date the last services are provided under a service contract, (c) the date that economic loss emerges, (d) the date of acceptance of repudiation, or (e) the termination of the contract.

While the arbitration in issue involved collective bargaining, the Court’s comments should be noted by arbitration practitioners considering whether or not to institute litigation to preserve a right of action.

[56] There was some dispute or uncertainty about whether the corporate appellant and its allegations of breach of contract were covered by the collective agreement, and therefore whether it was bound to pursue any claims through the arbitration process. Uncertainty about which claims were covered by the arbitration process does not delay commencement of the limitation period. Reliance on the possible efficacy of other procedures amounts at most to an error of law, which does not have the effect of delaying commencement of the limitation period. Discovery relates to the facts, not the applicable law or any assurance of success: Templanza v Wolfman, 2016 ABCA 1 (CanLII) at para. 19, 612 AR 67, leave to appeal refused [2016] 2 SCR xi; De Shazo v Nations Energy Co., 2005 ABCA 241 (CanLII) at para. 31, 48 Alta LR (4th) 25, 367 AR 267.

The Court dismissed the appeal.