When Delay Isn’t Dismissal
Alberta Court Clarifies Standstill Agreements and Litigation Progress
In Center Street Limited Partnership v. Nuera Platinum Construction Ltd, 2025 ABCA 290, the Alberta Court of Appeal delivered a nuanced decision that reshapes how litigants should approach standstill agreements and interpret litigation delay under Rule 4.33(2) of the Alberta Rules of Court.
The case arose from a fire at a commercial property owned by Center Street Limited Partnership during construction. In response, Center Street launched two separate legal actions: one against the construction companies involved (the trades action), and another against its insurer (the coverage action). The parties informally agreed that the coverage action would proceed first, and if insurance coverage was confirmed, the trades action would be discontinued. This arrangement was intended to streamline litigation and avoid unnecessary proceedings.
However, when the trades action faced a dismissal application under Rule 4.33(2)—which allows courts to dismiss claims not significantly advanced within three years—the Court was asked to determine whether the informal agreement constituted a valid standstill and whether progress in the coverage action could count as advancement in the trades action.
The Court ruled that the agreement did not qualify as a valid standstill. It emphasized that for a standstill agreement to suspend the operation of Rule 4.33(2), it must be clear, unambiguous, and explicitly state that litigation is paused. Vague or informal arrangements, even if mutually understood, are insufficient to prevent dismissal for delay.
Yet the Court also found that progress in the coverage action did, in fact, constitute progress in the trades action. Drawing on the “functional approach” established in Round Hill Consulting Ltd v. Parkview Consulting, the Court reasoned that the two actions were closely linked and that the parties had expressly tied their outcomes together. Significant steps taken in the coverage action—such as document production and examinations—were deemed to have materially advanced the trades action.
This decision offers two key takeaways for litigants. First, parties relying on standstill agreements must ensure the language is precise and explicitly addresses Rule 4.33(2). Second, courts may recognize progress in one legal action as advancement in another, provided the actions are interdependent and the connection is clearly documented.
Ultimately, the Alberta Court of Appeal’s ruling reinforces the importance of formalizing litigation strategy and clarifying the relationship between parallel proceedings. For lawyers and litigants alike, it’s a reminder that clarity in agreements and strategic foresight can make all the difference when the clock is ticking.
*The law may have changed since this article was first published. You should consult with your lawyer to confirm the current state of the law*