“Drop Dead” Excuse Me! – Don’t Let This Happen to Your Legal Action

In Alberta, the Rules of Court include a specific provision relating to the dismissal of a claim for long delay – the mandatory “drop dead” rule.  This Rule is a mechanism which effectively euthanizes a lawsuit where three or more years have passed without it meaningfully progressing towards resolution or trial.

When spouses separate, it is routine for one or both of them to commence court proceedings seeking divorce and division of matrimonial property. This is often so whether or not the spouses intend to resolve their matters amicably by themselves rather than through the adversarial court process, if only because a formal divorce can only be obtained in Alberta from a judge of the Court of Queen’s Bench.

Just about anybody who has participated in family or divorce court will tell you that it is almost always better for separated parents or spouses to negotiate a settlement than to let a judge decide their issues for them.  That being said, lengthy negotiations in family court proceedings carry with them a risk that is all too often overlooked by the litigants or their lawyers. Unsuccessful negotiations can often result in lengthy back-and-forth between parties that ultimately results in nothing being accomplished.  As a result, unsuccessful negotiations can come at the expense of moving a lawsuit towards trial, and can trigger the drop dead rule, resulting in automatic dismissal of the lawsuit.

While this Rule applies to most claims that can be brought against a party, whether it is in personal injury or corporate law, when this Rule is applied to Matrimonial Property it can bring about draconian and unintended consequences for one or both of the spouses, particularly where the bulk of the matrimonial property is in the name of one spouse and dismissal of the lawsuit effectively extinguishes the claim of the other spouse to that property, which may have been acquired over the course of a lengthy marriage.  In general, under the Matrimonial Property Act married partners have a legal right to the property that has been accumulated throughout the course of the marriage, regardless of whether they hold title or are a registered owner of the property.  However, if any claim under the Matrimonial Property Act is extinguished as a result of the “drop dead” Rule, that right disappears and a spouse may be left without a claim or a right to ownership over any property that was not registered in their name.

As such, divorce litigants must always keep “one eye on settlement and another on the requirements of the Rules of Court.” Although unsuccessful settlement discussions may sometimes qualify as a form of significant advance in a lawsuit, thus restarting the three-year clock, this will only be found if the settlement discussions or negotiations provide some sort of result that significantly advances the matter, such as creating partial settlement, or narrowing the focus of the issues by creating agreement on certain facts.  However, notwithstanding this possibility, the risk of a successful “drop dead” application is something best avoided entirely. If a judge decides that there has been three or more years of delay without significant advance in a suit, that judge must apply the “drop dead” rule “unblinkingly.”

However, the harsh consequences of the “drop dead” rule can be easily avoided, either through ensuring steps are taken to advance a lawsuit while negotiations are ongoing, or by obtaining a “standstill” agreement from the other party that any delay will be excused and not count towards the time considered under the “drop dead” Rule.

The lawyers at Mincher Koeman LLP have experience in drop dead applications, and are able to provide you with legal advice and strategy to make sure your lawsuit doesn’t “drop dead.” If you need further information contact Mincher Koeman LLP at (403) 910 3000

Posted by Daniel J. Wilson