3.37: Application for judgment against defendant noted in default
3.40: Continuation of action following judgment
4.31: Application to deal with delay
4.34: Stay of proceedings on transfer or transmission of interest
5.13: Obtaining records from others

Case Summary

The Plaintiffs claimed against several Defendants. After the Plaintiffs settled with some of the Defendants and noted others in default, only one Defendant remained. The Plaintiffs assigned their litigation interests to a new corporation, and the Action was automatically stayed pursuant to Rule 4.34.

This Decision dealt with three Applications: (1) the Plaintiffs applied to continue the Action after it was stayed pursuant to Rule 4.34; (2) the remaining Defendant applied to dismiss the Action against it pursuant to Rule 4.31; and (3) the Plaintiffs also sought to proceed with an oral hearing to asses their damages claimed against the Defendants who had been noted in default.

Dilts J. first considered whether the Action should be permitted to continue under Rule 4.34 and explained that pursuant to the Rule, an Action is automatically stayed when the interest or liability of a party is transferred to another person, and may be re-started upon the Plaintiff’s Application. In assessing whether an Action may be continued, the Court should consider whether there were valid reasons for the assignment, and whether there are policy or other concerns to suggest that the Action should not be continued. No such concerns existed, and Dilts J. ordered that the Action be continued as a whole.

Her Ladyship also explained that under Rule 4.34(4), if an Application to lift the Rule 4.34 stay is not made within a reasonable period of time, the Defendant may apply to dismiss the Action for delay pursuant to Rule 4.31. It was through this mechanism that the remaining Defendant applied pursuant to Rule 4.31 to dismiss the Action. Dilts J. explained that under Rule 4.31, the Court must assess whether delay in prosecuting the Action as a whole resulted in significant prejudice to a party. If the Applicant demonstrated inordinate and inexcusable delay, then significant prejudice is presumed and the burden shifts to the Respondent to rebut the presumption. Dilts J. found that there had been delay in the Action, but no inordinate or inexcusable delay since the delay was not “much in excess” of what was reasonable in the circumstances.

Further, Dilts J. held that the delay did not result in significant prejudice to the remaining Defendant. The remaining Defendant argued that it had not been notified of the Plaintiffs’ settlement with some of the other Defendants, and as a result it was prejudiced because it had lost the opportunity to obtain a procedural Order to claim contribution or indemnity from the settling Defendants, and would be unable to question or obtain records from certain witnesses. Her Ladyship noted that the remaining Defendant still had the right to apply for an Order requiring production of third party records pursuant to Rule 5.13, and that even if the remaining Defendant had suffered prejudice, it was not as a result of litigation delay – rather, it was as a result of “the action or inaction of the Plaintiffs and their former counsel”. Her Ladyship concluded that the Action should not be dismissed for delay pursuant to Rule 4.31.

Finally, Dilts J. held that the Plaintiffs could proceed with an assessment of damages against the Defendants that had been noted in default. The remaining Defendant objected to the assessment on the basis that it could be prejudiced by “any determination of the Plaintiffs’ losses without its full participation”. Her Ladyship accepted the Plaintiffs’ arguments that Rules 3.37 and 3.40 expressly allow a Plaintiff to engage in a damages assessment against only some Defendants, while continuing the Action against others. Further, Dilts J. noted that allowing the Plaintiffs to proceed with a damages assessment against the defaulting Defendants would assist them in recovering their losses without undue delay, and would not cause unfairness to the remaining Defendant as any damages against it could be assessed independently on a more complete record after document production, Questioning, and Trial.

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