A fire broke out in March 2015 at a commercial building owned by Center Street Partnership. The construction was managed by Neura Platinum, with Over & Above Reno handling roofing.

Center Street sued the construction companies for negligence (the “Trades Action”) and filed a claim against its insurer after coverage was denied (the “Coverage Action”). In April 2017, Center Street and the construction companies had agreed that the Coverage Action would proceed first, and if insurance covered the losses, the Trades Action would be dropped. In July 2021, Neura sought dismissal of the Trades Action for long delay under Rule 4.33(2), citing over three years of inactivity. An Applications Judge found that Rule 4.33(2) did not apply due to the linkage between the two Actions, but this decision was appealed.

The first thing the Court analyzed was whether a letter agreement between the parties constituted a standstill agreement. The Court held that it did not, as there was nothing in the text of the letter agreement that clearly indicated an intention by the parties to hold the Coverage Action in abeyance to avoid dismissal for delay. The Court stated that if parties wish to pause their litigation under Rule 4.33(5), the agreement must be clear and precise and not left to inference.

The Court then turned to the next question, to determine whether any advance in the Coverage Action significantly advanced the Trades Action. The Court emphasized that when dealing with an application to strike for long delay, the crucial question is not whether there is an inextricable link but simply whether the advance in an action moves the lawsuit forward in an essential way considering its nature, value, importance and quality.

The Appellants did not dispute the Chambers Judge’s finding that there was an “inextricable link” between the Trades Action and the Coverage Action but argued she misapplied the functional analysis. They claimed the Actions involved different parties, issues, and documents, and that steps taken in the Coverage Action—specifically limited questioning in 2018—did not significantly advance the Trades Action, particularly as they were not parties to the Coverage Action, the implied undertaking rule was not waived, and a letter agreement barred using that evidence in the Trades Action.

The Respondents argued that the Coverage Action was potentially dispositive of the Trades Action and that resolving it first was consistent with both parties’ expectations, as the Appellants had previously urged that the Coverage Action be heard first to avoid unnecessary litigation. The Respondents maintained that the two Actions should be viewed functionally, and any progress in the Coverage Action—regardless of whether the evidence could be used directly—significantly advanced the Trades Action by moving it closer to resolution or abandonment. The Court agreed with the Respondents, finding that while the Coverage Action was not formally a precondition to the Trades Action, its outcome could determine whether the Trades Action would proceed at all, making procedural steps in the Coverage Action significant for both. The Court emphasized the parties’ shared understanding that the Coverage Action should proceed first and concluded that, in these unique circumstances, Rule 4.33(2) did not apply.

However, it cautioned that this reasoning applied only in limited cases where related actions are meant to proceed sequentially, not as a general workaround to mandatory dismissal rules.