This was an Appeal of a decision of an Applications Judge who directed that MCG Construction Ltd.’s Application for Summary Judgment and Shahni Holdings Ltd.’s Application for Dismissal for Delay be heard together. Justice Lema found that the Applications Judge erred, and the Delay Application should proceed first.

The Court held that hearing the Delay Application first was consistent with the purpose of Rule 1.2, which is to ensure that matters are resolved fairly, justly, and in a timely and cost-effective manner. A successful Dismissal Application would end the Action, thus avoiding wasted time and the expense of preparing for the Summary Judgment Application. The Court emphasized this approach aligned with Rule 1.2(2)(b), which promotes the quickest and least expensive means of resolving a claim.

Justice Lema noted that Shahni had arguable positions under both Rules 4.31 and 4.33. Rule 4.31 allows a defendant to seek dismissal where significant prejudice arose from the delay, and Rule 4.33 requires dismissal where no significant advance has occurred within three years unless exceptions apply. The Court accepted that Shahni’s arguments were not frivolous and that its claims of prejudice following the death of its principal warranted consideration.

The Court also clarified that the filing of an application to dismiss for delay did not automatically bar all further steps in the litigation under Rule 4.33. Rule 4.33(2)(b) expressly contemplates that subsequent steps or participation by the defendant may justify the continuation of an action. Accordingly, the Court rejected the interpretation that the mere filing of a delay application froze the proceeding.

The Appeal was allowed. The Court directed that Shahni’s Delay Application proceed first as a stand-alone application. It also stayed further steps in the Summary Judgment Application until the delay issue was resolved, and awarded Shahni Schedule C costs.