1.2: Purpose and intention of these rules
4.1: Responsibilities of parties to manage litigation
4.16: Dispute resolution processes
4.2: What the responsibility includes

Case Summary

The Plaintiff sought an Order to have the mandatory Dispute Resolution Process waived pursuant to Rule 4.16(2). Pursuant to Rule 4.16, barring certain circumstances, parties must engage in a form of alternative Dispute Resolution prior to proceeding to Trial.

In this case, the Plaintiff argued that the Dispute Resolution requirement should be waived since the Plaintiff had a very strong case against the Defendants. The Plaintiff was confident it would obtain a Judgment granting full recovery following the Trial of the Action. Further, the Plaintiff advised that its corporate policy required that it could not accept anything less than full or near-full indemnity in fraud cases such as this one. The Plaintiff also argued that it was unlikely that the Defendants were in a financial position to agree to a settlement of a full or near-full indemnity resolution. The Plaintiff argued that there was “no realistic chance of the matter settling at JDR”. Further, the Plaintiff submitted that proceeding to a JDR would be a waste of resources and time – both for the parties and for the Court. The Defendants argued that the matter was appropriate for a JDR and that the reasons provided by the Plaintiff in support of waiving the Dispute Resolution Process were insufficient.

The Court noted that Rule 4.16 is a new Rule and did not have a predecessor in the former Rules. Accordingly, there is no Alberta case law which is instructive. In determining whether to waive the mandatory alternative Dispute Resolution Process the Court considered Rule 4.16, Rule 1.2, and Rules 4.1 and 4.2 in respect of the Parties’ responsibility to manage the litigation.

With regard to Rule 1.2, the Court noted that this foundational Rule “highlights the importance of identifying those issues in dispute and of effective communication between parties…”. The Court added that the “rule stresses resolution of the claim in issue as early in the litigation process as possible and at the least expense”. The Court held that the same principles apply to the mandatory alternative Dispute Resolution Process and that Rule 4.16 must be read in a manner which gives effect to the purpose statement contained in the Foundational Rule.

In addition to examining the new Rules, the Court looked at judicial consideration of similar Rules in other jurisdictions. In considering relevant and applicable jurisprudence, the Court noted that, before the new Rules of Court, the:

…traditional view was that although dispute resolution was a useful process, the court would not ordinarily order it over the objections of a party. The thinking was that a mandatory dispute resolution process is an oxymoron, because a party who believes that this it is a waste of time and money will not engage in good faith negotiations.

The Court added that such thinking is “not the new millennium view nor the view of the legislature when enacting the New Rules”. Instead, the Court held that experience has shown that participation in alternative Dispute Resolution has resulted in many settlements that would otherwise not have occurred. Moreover, the alternative Dispute Resolution Process is valuable in identifying the real issues in dispute, reducing the costs of final resolution and, in some instances, improving the relationship between the Parties.

In its analysis, the Court also noted that, in addition to benefits, there are some disadvantages to mandatory Dispute Resolution, including expenditures of time, money and resources; nevertheless, absent the presence of compelling reasons “the court should not use its discretion to bypass the legislated objectives of the Rule”. The Court then turned its attention to the specific instances where an exemption may be appropriate. The Court reviewed Rules 4.16(2) (a) – (e) and case law from other jurisdictions to examine situations where a waiver of the Dispute Resolution requirement is appropriate, noting that each case must be assessed on an individual basis and that the threshold for obtaining such exemptions is high.

Based on its interpretation of the Rules, its review of the purpose of the Rules, and its review of case law in other jurisdictions, the Court denied the Plaintiff’s Application to waive the alternative Dispute Resolution requirement.

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