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The Alberta Court of King’s Bench has long contended with extended wait times in civil matters—often a year or more between the conclusion of pre-trial steps and the trial itself. In a decisive move to address this backlog, the Court has issued a Notice to the Profession and Public1 and an Announcement2 aimed at accelerating litigation and compelling parties to set trial dates much earlier in the process.
New Expectations: A 36-Month Backstop
Effective immediately, the Court now expects all civil actions to be set down for trial within 36 months of the service of the first Statement of Defence. This new “backstop” is intended to push actions forward more efficiently, limiting the previous flexibility often granted due to party or counsel availability. Extensions beyond the 36-month period will only be considered in “exceptional circumstances.”
Litigation Plans Now Mandatory
As of September 1, 2025, all litigants are expected to agree on a litigation plan within four months of the service of the first Statement of Defence. These litigation plans must chart a course for resolving the matter within the 36-month timeframe. The requirement promotes early cooperation between parties and ensures that the timeline to trial is top of mind from the outset of litigation.
Court Deadlines: Compliance or Consequences
The Court has reiterated that parties are expected to meet deadlines under the Alberta Rules of Court or as otherwise agreed between counsel. The announcement signals a shift toward stricter enforcement, with potential consequences for delay, particularly where the delay results from failure to meet procedural obligations. The message is clear: litigants and their counsel must treat timelines as mandatory, not aspirational.
Conclusion
These new measures mark a significant cultural and procedural shift in Alberta civil litigation. With the Court taking a firmer stance on delay, counsel must proactively develop litigation plans and prepare for trial scheduling earlier than before. The reforms are aimed at delivering timelier access to justice and reducing the inertia that has historically plagued the civil system. The impact on client’s, and litigants in general, is that matters which would traditionally take several years now will be compelled to be resolved quicker and, at the latest, within 3 years.
1 The Alberta Court of King’s Bench, Notice to the Profession and Public NPP2025-02, July 10, 2025.
2 The Alberta Court of King’s Bench, Announcement – Reducing Civil Trial Delay, July 20, 2025.
For further details or specific inquiries as to how these changes will impact your current or future litigation please contact:
Court of Justice and the Recovery of Costs and Disbursements
As detailed in our prior article, Understanding Costs in Alberta’s Litigation Process (Part 1), litigation costs in the Court of King’s Bench are typically awarded on a partial indemnity basis, guided by Schedule C of the Alberta Rules of Court (“ARC”).
Effective January 1, 2019, the Alberta Court of Justice instituted its own Tariff of Recoverable Costs (the “Tariff“), which serves as a guideline for determining the costs that may be awarded in its proceedings.
On July 31, 2023, the Court of Justice updated its Tariff of Recoverable Costs, which is detailed in Practice Note 3 – Costs in the Alberta Court of Justice Civil Division. The Tariff remains “a guide to costs that may be awarded”.
In alignment with the Court of King’s Bench, the Alberta Court of Justice (formerly known as the Provincial Court) has four general types of costs:
Party and Party costs;
Lump Sum costs;
Solicitor Client costs; and
Enhanced costs.
Party and Party Costs
Party and Party costs are governed by the 2023 Tariff of Recoverable Costs, which assigns specific cost amounts for various stages of litigation based on the claim value.
Typically, these costs allow a litigant to recover between 20-25% of the actual legal expenses (see Legare v Acme (Village), 2023 ABKB 278).
The award of such costs is discretionary and is influenced by factors such as:
The outcome of the case;
The complexity of the litigation;
The conduct of the parties during the proceedings; and
Whether the litigation was unnecessarily prolonged.
Lump Sum Costs
Lump sum costs represent fixed amounts awarded in lieu of calculated costs under the Tariff. They provide a streamlined approach to awarding costs, without requiring extensive itemized calculations.
Such costs are typically awarded where:
The court deems the calculation of individual costs impractical;
There is a desire to encourage a cost-effective resolution of disputes; and
The lump sum award is at the court’s discretion (see Varshney v 864475 Alberta Ltd., 2025 ABCJ 26).
Solicitor-Client Costs
Solicitor-client costs are awarded on a full-indemnity basis, covering all reasonable legal fees and disbursements incurred by the prevailing party. However, these costs are rarely granted and are generally reserved for cases involving egregious misconduct (see Aman Carrier Ltd. v. 1746446 Alberta Inc., 2015 ABQB 344).
Solicitor-client costs may be awarded in exceptional circumstances, such as:
Litigation misconduct (e.g., delay tactics, false testimony, and failure to comply with court orders);
Fraudulent conduct (e.g., falsification of documents or deceitful claims);
Obstruction of justice (e.g., concealing evidence); or
Malicious or vexatious litigation, where a party abuses the legal process.
Enhanced Costs: A Special Category
Enhanced costs may be awarded in certain cases where a party’s conduct:
Causes significant delays in the proceedings;
Involves bad faith litigation; or
Unnecessarily increases costs for the opposing party.
Enhanced costs exceed the standard tariff rates, but do not provide the full indemnity granted by solicitor-client costs (see Cyr v Bryce-Burns, 2025 ABCJ 6).
Examples of Conduct Leading to Enhanced Costs:
Refusing to provide disclosure or evidence;
Making unsubstantiated claims of fraud or misconduct; or
Filing frivolous lawsuits or counterclaims to harass the other party.
Recoverable Litigation Expenses (Disbursements)
In addition to legal costs, certain disbursements (out-of-pocket litigation expenses) are recoverable under Section 39 of the Provincial Court Civil Procedure Regulation. These expenses include:
Mandatory Court Fees
Filing fees as per the Provincial Court Fees Regulation; and
Fees for issuing subpoenas, court transcripts, and trial-related documentation.
Service Fees
Fees paid to process servers for delivering court documents to the opposing party.
Government Registry Searches
Fees for conducting searches at the Land Titles Office, Corporate Registry, or Personal Property Registry.
Expert Witness Fees
Preparation of expert reports;
Time spent in court by expert witnesses; and
Reasonable expenses incurred by expert witnesses for attending trial.
Witness Attendance Allowance
Regular witnesses: $25 per day plus travel and accommodation costs; and
Expert witnesses: $50 per day plus travel and accommodation costs.
Additional Litigation Expenses
Photocopying and document preparation fees;
Court-ordered costs for translations or transcriptions; and
Reasonable costs of travel and accommodation if a witness or party had to travel for the hearing.
Judicial Discretion in Awarding Disbursements:
The court may reduce or disallow expert witness fees if:
The expert’s testimony was unnecessary or redundant;
The expert was not properly qualified; or
The expert failed to provide useful or relevant evidence.
Conclusion
The Alberta Court of Justice employs a structured approach to awarding costs, with the 2023 Tariff of Recoverable Costs providing guidance for party and party cost calculations. The court retains discretion to award enhanced or solicitor-client costs in cases of misconduct, while recoverable disbursements cover necessary litigation expenses.
If you have any questions or concerns after reading this article, or if you need guidance regarding costs and disbursements in the Alberta Court of Justice, please contact Walsh LLP and speak with a member of our litigation team. We are here to help you navigate the litigation process with clarity and confidence.
For further details or specific inquiries please contact:
A review assessment of costs is the process by which a review officer evaluates the reasonableness and propriety of costs incurred by a party in legal proceedings. This process ensures that parties are compensated fairly for their legal expenses while promoting efficiency and accountability in litigation. The Alberta Rules of Court (“ARC”) provide the framework for this critical procedure, offering detailed guidance for both litigants and legal professionals.
Role of the Review Officer
Previously referred to as the “Taxation Officer” under the old rules, the ARC now designates this role as the “review officer.” A review officer is a court-appointed individual tasked with evaluating the Bill of Costs submitted by the successful party in a case. The Bill of Costs must itemize all expenses, including legal fees, disbursements, and other charges. The review officer ensures these costs are reasonable, necessary, and compliant with the ARC, particularly the guidelines outlined in Schedule C.
Disputing the Bill of Costs
When a party disputes the Bill of Costs, an appointment for assessment is arranged using Form 45, ensuring all affected parties can participate in the review process. Guided by Rule 10.41, the review officer has the authority to adjust or disallow costs deemed excessive, unnecessary, or improperly claimed.
Factors Considered in Cost Assessments
A variety of factors influence the assessment process, including the complexity of the case, the conduct of the parties, and the necessity of incurred costs. Misconduct, procedural inefficiencies, or unnecessary actions can lead to disallowances or reductions in claimed amounts. Additionally, costs related to dispute resolution or expert fees are generally excluded unless exceptional circumstances apply.
Outcome of the Assessment
The final outcome of this process is a certified Bill of Costs, which serves as definitive proof of the amount owed under the costs award. This certification conclusively establishes the amount the responsible party is required to pay.
Conclusion
Whether you’re preparing a Bill of Costs or navigating a contested assessment, understanding the review process is essential to achieving fair and equitable outcomes in civil litigation. For professional advice and guidance on cost-related matters, consult Walsh LLP to ensure compliance and make informed decisions.
For further details or specific inquiries please contact:
The imposition of tariffs between the U.S. and Canada significantly impacts the construction industry and its regular supply chains. Contractors and subcontractors should anticipate how tariffs will impact their contract pricing and schedule.
Where tariffs are likely to impact a construction contract, contractors and subcontractors can mitigate risks and navigate the uncertainty of tariffs by considering and complying with common contractual provisions.
Contract Type and Risk Exposure
The contractual provisions engaged by tariff-related risks will vary substantially depending on the form of contract. Construction contract types likely to be significantly impacted by tariffs include:
Fixed-Price Contracts;
Design-Build Contracts; and
Unit-Price Contracts.
Regardless of contract type, understanding how the risk of cost escalation is allocated in your contract is crucial to avoiding or navigating any disputes which could arise as a result of tariffs.
Managing Tariff-Related Risks
Tariff-related risks are most likely to take the form of cost escalations and/or project schedule delays.
Whether tariffs are causally related to cost escalation, project schedule delays, or other issues, most construction contracts, including CCDC standard-form contracts, include provisions for dispute resolution, change orders, or schedule extensions.
If subcontractors or contractors anticipate that their contract may encounter price escalations or schedule delays, subcontractors and contractors should review their contracts’ dispute-resolution, change-order, and schedule-extension provisions.
Dispute-resolution, change-order, or schedule-extension provisions almost always have notice requirements, which require notice be given within a short period after price escalation or delay issues arise. These notice periods can be as short as two days from when an issue arises.
Courts interpret contractual notice provisions strictly.1 This means that if a contractor or subcontractor is not aware of the contractual notice requirements of a change order provision, and they do not provide notice of a claim for a change order after the notice provision is triggered due to a tariff related price escalation, a subcontractor’s or contractor’s entire claim may be barred, and any loss may need to be shouldered entirely by the subcontractor or contractor.
It is paramount that contractors or subcontractors that believe their contracts will be impacted by tariffs review their contracts and/or consult with a lawyer to review their contractual provisions to ensure contractual compliance and preservation of contractual rights.
More Severe Tariff Impacts
In addition to price escalations or delays, tariffs may also lead to more severe impacts on construction contracts which make a contract fundamentally different or impossible to perform.
Most construction contracts and CCDC contracts account for fundamental changes or impossibility using force majeure clauses.
Force majeure clauses require that performance of a contract be impossible and not just difficult or unprofitable.2 Further, force majeure clauses have strict notice requirements similar to those for change orders and are typically limited to certain occurrences, which may or may not include tariffs.
Proactive Legal and Contractual Strategies
Contractors and subcontractors ought to take proactive steps to protect their interests in light of U.S.-Canada tariffs. Understanding your contracts, ensuring compliance with notice provisions, and addressing delays will help mitigate financial and legal risks. Consulting Walsh LLP’s construction lawyers when facing potential tariff related price escalations, delays, or tariff-related disputes can mitigate the risk of bearing the full loss of tariff-related price escalations and delays.
For further details or specific inquiries please contact:
Termination clauses in employment contracts are a crucial component in defining the rights and obligations of both employers and employees. These clauses often outline the conditions under which an employer may terminate an employee and may offer clarity regarding the compensation an employee is entitled to receive upon such termination. These clauses can significantly limit an employer’s liability in cases of termination without cause, but their enforceability is subject to strict legal scrutiny, especially when it comes to ensuring compliance with both statutory and common law principles. Recent case law, including Dufault v The Corporation of the Township of Ignace, 2024 ONSC 1029, Baker v Van Dolder’s Home Team Inc., 2025 ONSC 952, and Singh v Clark Builders 2025 ABKB 3, provides important insights into the evolving legal landscape concerning the enforceability of termination clauses in Canada, including in Alberta.
The Legal Framework for Termination Clauses in Alberta
In Alberta, the enforceability of termination clauses in employment contracts is governed by both common law and statutory provisions under the Employment Standards Code (ESC). Under the ESC, employees are entitled to certain minimum standards regarding termination, such as notice or pay in lieu of notice, based on their length of service. Employment contracts that attempt to reduce an employee’s statutory entitlements below these minimums are typically unenforceable.
Common law principles further stipulate that an employee who is dismissed without cause is entitled to “reasonable notice,” which is determined by factors such as the length of employment, the employee’s age, the nature of their job, and other relevant factors. Employers often seek to limit their liability by including termination clauses that provide for severance or notice in accordance with the statutory minimums, which, if enforceable, would reduce the employer’s obligations under common law.
However, for a termination clause to be enforceable, it must be clear, precise, and unambiguous. Vague or imprecise clauses that do not clearly outline the scope of entitlements upon termination, or clauses that are inconsistent with the Code, will likely be found unenforceable.
The Dufault Decision (2024)
In Dufault v The Corporation of the Township of Ignace, 2024 ONSC 1029, which was affirmed by the Ontario Court of Appeal (Dufault v Ignace (Township) 2024, ONCA 915), the termination clause in the employment contract sought to limit the employee’s severance to the statutory minimums required under the Employment Standards Act, 2000, SO 2000, c 41. The plaintiff argued that the clause was unenforceable because it failed to clearly exclude his entitlement to common law notice, despite the contract’s attempt to limit his severance to statutory minimums.
In finding in favour of the plaintiff, the Court in Dufault held that since the with-cause provision of the termination clause violated the Employment Standards Act, the entire termination framework was invalid and unenforceable. The Cout found in favour of the plaintiff, even though the Defendants were not seeking to rely on the with-cause provision.
Specifically, the Court held that the wording in the with-cause termination clause, which allowed the employer to terminate the Employee’s employment “at any time” is prohibited by the Ontario Employment Standards Act, as there are certain circumstances and times, which the employer would be prohibited from terminating an employee’s employment.
Although Dufault has not yet been applied in Alberta, Dufault established that termination clauses may be looked at as an entire termination framework, and any ambiguity or inconsistencies may result in an entire termination framework being deemed invalid and unenforceable. While the Ontario Employment Standards Act differs from the Alberta Employment Standards Code, the Code and Alberta common law restricts when an employer can terminate an employee, such as when an employee is on a leave granted by the Code.
The Township of Ignace, disagreeing with the outcome of the appeal, has filed an application for leave to appeal to the Supreme Court of Canada. If accepted, a Supreme Court of Canada decision would become binding in Alberta, to the extent that it is applicable.
The Baker Decision (2025)
The Ontario case Baker v Van Dolder’s Home Team Inc., 2025 ONSC 952, dealt with the enforceability of a termination clause that sought to limit an employee’s entitlement to severance or notice in the event of dismissal without cause. In this case, the plaintiff, Mr. Baker, argued that the termination clause in his contract was unenforceable because it did not explicitly address his right to common law notice and failed to make it clear that he was waiving any entitlement to amounts beyond the statutory minimums.
The Court sided with Mr. Baker, stating that the termination clause was ambiguous and lacked sufficient clarity regarding the employee’s entitlement to severance. The ruling underscored that employers must ensure that their contracts clearly outline any limits to statutory entitlements.
Further, in relying on Dufault, the Court held that the without-cause provision was unenforceable since the Ontario Employment Standards Act does not permit an employer to terminate employment “at any time”, as the without-cause provision stated. General language stating that the employer will comply with the Employment Standards Act did not save the clause.
Baker reiterates that vague termination clauses that fail to specify a limitation of common law rights, or clauses that fail to comply with employment legislation will be deemed unenforceable. Employers must take care to ensure that their termination clauses are both compliant with the Employment Standards Code and clear enough to avoid disputes over common law entitlements.
The Singh Decision (2025)
The Alberta case Singh v Clark Builders, 2025 ABKB 3, directly addresses the enforceability of termination clauses in Alberta and is of particular importance given its jurisdictional relevance. In this case, the plaintiff, Mr. Singh, argued that the termination clause in his contract was unenforceable because it limited his entitlements to the statutory minimums under the Employment Standards Code, without sufficiently limiting his right to common law notice.
The Alberta Court of King’s Bench found that the termination clause was ambiguous and unenforceable because it did not make clear whether the employee’s entitlements were limited to statutory severance or whether the employee retained a right to claim common law severance. The Court emphasized that the employee’s right to reasonable notice under the common law could not be waived unless the contract explicitly and clearly stated that such a waiver was intended.
The Court reaffirmed the principle that termination clauses that do not clearly limit the scope of severance entitlements are unenforceable in Alberta, aligning with the principles set out in Baker.
Implications for Employers in Alberta
Clarity and Precision: The decisions in Dufault, Baker, and Singh underscore the importance of clarity and precision when drafting termination clauses. Alberta employers must ensure that their termination clauses specifically address both statutory and common law entitlements. Failure to do so may result in the clause being deemed unenforceable, leaving the employer exposed to the risk of higher severance costs under common law principles.
Common Law Rights: All three decisions make it clear that an employee’s entitlement to common law notice is not easily waived through vague language. A termination clause must explicitly state that the employee’s rights to reasonable notice under common law are being excluded. Employers who intend to limit their liability to the statutory minimums must do so with clear and unequivocal language that will withstand judicial scrutiny.
Compliance with the ESC: Employers in Alberta must also ensure that termination clauses comply with all requirements and minimum standards set out in the Employment Standards Code. A termination clause in which any aspect is inconsistent or contrary to the Employment Standards Code may render the entire termination framework unenforceable. This may include wording which, contrary to the Employment Standards Code, permits the employer to terminate an employee’s employment “at any time” or “for any reason”.
In light of these recent decisions, it is crucial for employers to review their employment agreements to ensure compliance with the most recent legal standards. These decisions may impact the enforceability of various clauses. Employers should take proactive steps to assess and update their contracts to mitigate the risk of potential legal challenges.
At Walsh LLP, Carmelle Hunka and Brody Sikstrom are available to assist businesses in reviewing and revising their employment agreements, ensuring they are both compliant with current laws and, if necessary, enforceable in court.
For further details or specific inquiries please contact:
There can be a significant tax impact when a taxpayer dies, resulting in a deemed disposition of property at fair market value.[1] This can create onerous tax consequences, particularly for Canadians owning private company shares.
Capital property will generally “roll-over” to a Canadian resident spouse on death.[2] However, if private company shares are owned on a last-to-die basis, this can create a potential for double tax (and possibly triple tax) in the estate of the deceased.
First Layer of Tax – Capital Gains
The first layer of tax that will apply is capital gains tax on the value of the shares at death. Let’s say a taxpayer passes with corporate shares worth $2,000,000 with a cost base and paid-up capital of nil. This results in a total capital gain of $2,000,000 ($1,000,000 taxable capital gain at current inclusion rate[3]). Applying the highest combined Alberta marginal rate to the total capital gain, this could result in tax up to as high as 24%.[4]
Second Layer of Tax – Dividends
Let’s say the deceased’s personal representative decides to wind-up the company. This results in a deemed dividend of the fair market value of the shares less paid-up capital. In this example, this would result in a deemed dividend of $2,000,000 with tax up to approx. 42%.
If the corporation has assets to sell prior to wind-up, this could create a third level of tax (including taxable capital gain or recapture). If only the above two levels of tax are considered, this can result in an effective tax rate just over 66% on the total value of the private company shares.
There are a couple of solutions which can be employed by the estate of the deceased taxpayer to mitigate this potentially negative tax result.
Loss Carryback
If the shares are held by a graduated rate estate (GRE), the wind-up of the corporation within the first taxation year of the estate creates a capital loss (and deemed dividend), which can be carried back to the deceased’s final tax return to be claimed against the capital gain noted above.[5] Planning must be conducted to ensure the wind-up occurs within the one (1) year timeframe.[6]
The loss carryback results in the capital gains layer of taxation being eliminated and the estate being subject only to the dividend taxation rate.
Pipeline Planning
Alternatively, the estate could consider incorporating a new company (“NewCo”) and transferring the shares of the private corporation to NewCo in exchange for a promissory note. The retained earnings of the corporation could then be distributed to the estate via the note on a tax-free basis.[7]
The pipeline plan results in the dividend layer of taxation being eliminated and the estate being subject only to the capital gains taxation rate[8].
Bottom Line
In both cases, post-mortem (after death) planning is complex, and accounting and legal advisors should be consulted to take advantage of these strategies. Significant potential tax liability can be mitigated resulting in greater distribution to your estate and your beneficiaries.
For more information, please contact Eric Dalke at edalke@walshlaw.ca / 403-267-8454 or any member of our Walsh Tax & Estates team and we would be happy to answer your questions.
Note: This article is of a general nature only. Tax laws may change over time and should be interpreted only in the context of particular circumstances. These materials are not intended to be relied upon or taken as legal advice or opinion.
[1] Subsection 70(5), Income Tax Act, RSC 1985, c 1 (5th Supp) (“ITA”).
[6] Amendments have been proposed to extend the 164(6) timeline to three (3) years.
[7] Certain requirements must be met including the corporation being in existence (and maintaining its assets) for a period of time after death.
[8] “Bump” planning could also be considered whereby non-depreciable capital assets in the private corporation could be bumped to reflect capital gains tax already triggered on death.
Article | Dan Fuller | February 3, 2025
Costs Series: Understanding Costs in Alberta Litigation Process (Part 1)
In Alberta, parties engaged in litigation are entitled to recover “costs.” Costs are awarded to partially compensate parties for expenses incurred during legal proceedings. The primary purpose of a cost award is to indemnify the successful party for litigation-related expenses. Secondary purposes include: encouraging settlements; discouraging frivolous, vexatious, or harassing lawsuits; and promoting efficient and economical litigation.
Key Terms and Framework
The Alberta Rules of Court (“ARC”) outline the rules governing who is entitled to costs, when they apply, and how much can be awarded. Key terms and concepts include:
Costs: Amount awarded by the Court to compensate the successful party for litigation expenses;
Fees: Charges for lawyers’ professional services;
Disbursements: Payments to third parties, such as court filing fees or courier services;
Bill of Costs: Itemized list of the costs, fees, and disbursements sought to be recovered in the litigation;
Schedule C: A tariff in the ARC setting out recoverable costs based on the litigation step and monetary amount at stake; and
Other Charges: Other expenses incurred in relation to non-legal services.
When Costs Apply
The Court retains broad discretion in awarding costs. Rule 10.29 of the ARC establishes the default rule that a successful party is entitled to costs unless a contrary ruling is made. Specific rules address unique scenarios, which may be the subject(s) of future articles.
Types of Costs
There are different types of compensation that may be awarded by a Court:
Party and Party Costs: Partial indemnity for legal expenses. Designed to cover part of the successful party’s legal expenses;
Solicitor-Client Costs: These provide partial indemnity to the successful party. These costs are higher than party and party costs and cover reasonable legal services;
Solicitor and Own Client Costs: These costs, also known as full indemnity costs, are awarded in exceptional circumstances and are meant to fully compensate a party for their legal expenses;
Enhanced Costs: These are higher than tariff costs but less than full indemnity costs. Enhanced costs are awarded in exceptional circumstances where the conduct of one litigant falls far short of what is expected from a responsible litigant;
Punitive Costs: Where the conduct of the party against whom they are sought is described as scandalous, outrageous, or reprehensible. They are intended to sanction/deter bad behaviour related to the litigation and are awarded in exceptional cases;
Costs Against Solicitor Personally: A lawyer may be ordered to pay costs, if they engage in serious misconduct that undermines the authority of the courts or interferes with the administration of justice. Awarded in exceptional circumstances; and
Costs Against the Crown: Although rare, costs may be awarded against the Crown in exceptional circumstances involving serious misconduct by its agents.
Court Considerations
When determining costs, Rule 10.33 of the ARC allows the court to assess factors like:
The result of the action and the degree of success of each party;
The amount claimed and the amount recovered;
The importance of the issues;
The complexity of the action;
The apportionment of liability;
The conduct of the parties that tended to shorten the action; and
Any other matter related to the question of reasonable and proper costs that the court considered appropriate.
In Practice
Cost awards in Alberta’s litigation system aim to mitigate financial burdens while promoting fair and efficient resolutions. Litigation costs are typically awarded on a partial indemnity basis, guided by Schedule C of the ARC. Adjustments may be made in specific circumstances, such as unaccepted settlement offers, including Formal Offers.
The Court retains ultimate discretion over costs, even when written agreements stipulate specific terms for cost recovery. This flexibility gives the Court to award costs that are fair, reasonable, and consistent with principles of fundamental justice.
For further details or specific inquiries please contact:
Despite being introduced in 2022, the Prompt Payment and Construction Lien Act (the “PPCLA”) has been the subject of little judicial consideration, especially in relation to the Adjudication process under Part 5. The lack of judicial consideration can be explained by both: the transitional provisions of the PPCLA, which allowed the former lien act to govern contracts entered into prior to August 29, 2022;[1] and the fact that the adjudication process has yet to become a mainstream forum for resolving construction disputes.[2]
While we expect that adjudications will become much more common in the years to come, further clarity from the Province and the Judiciary would be a welcome development. This article will summarize some issues with the current PPCLA, the Province’s proposed amendments in Bill 30, then address the little case law that has been released in relation to adjudications thus far.
The Prompt Payment and Construction Lien Act and Bill 30
On November 4, 2024, the Alberta Government tabled Bill 30, the Service Alberta Statutes Amendment Act, 2024 (“Bill 30”), which proposes amendments to the PPCLA.[3] Specifically, Bill 30 addresses when adjudications can be commenced, “clarifies” the definition of when a contract is “completed”, and allows an adjudicator’s determination to be binding even if it is under judicial review, arbitration, or litigation.[4] As of the date of this article, Bill 30 has now passed its third reading.
When Adjudication can be Commenced
Pursuant to section 33.4(3) of the PPCLA, where an adjudication was commenced on the same day that a statement of claim was filed, the adjudication would not proceed.[5] The practical result was that recipients of a notice of adjudication have attempted to “race to the courthouse” and file a statement of claim to avoid adjudication, attempting to frustrate the purpose of adjudication at its beginning.
Bill 30 amends section 33.4(3) so that where a statement of claim is filed the same day as the commencement of an adjudication,[6] both the adjudication and the court action may proceed unless or until a court directs a stay of either the court action or the adjudication.
When a Contract is “Completed”
Under section 33.4(2) of the PPCLA, “An adjudication may not be commenced if the notice of adjudication is given after the date the contract or subcontract is completed, unless the parties to the adjudication agree otherwise.”[7] The usage of the term “completed” resulted in parties experiencing significant confusion as to when exactly a contract is “completed”, as completion was not definitively defined. Was a contract completed upon issuance of a certificate of substantial completion? Was completion only attained when all contract work was completed? Did contract work include deficiencies and extras? Or, most generously, when both of the Parties obligations under the contract were completed, including all payment obligations? Parties to adjudication have become bogged down in this pre-adjudication issue, depriving certain parties of the benefit of a prompt resolution, and leading jurisdictional challenges.
Bill 30 amends section 33.4(2) to allow adjudication to begin 30 days after “Final Payment” under the contract;[8] and defines “Final Payment” as the earlier of either:
(a) the date on which complete payment of the amount set out in the contract or subcontract, as applicable, is made, and
(b) the date on which complete payment of the amount set out in the contract or subcontract, as applicable, is required to be made under section 32.2, 32.3 or 32.5, as the case may be.[9]
Judicial Review, Arbitration, and Litigation
Under the current PPCLA, section 33.6(5) provides that the determination of a matter by adjudication is binding, except where a party applies for judicial review of the determination, where the parties have entered a written agreement to appoint an arbitrator regarding the dispute, or where a court has made a court order regarding the determination.[10] As a result, any determination made by an adjudicator becomes non-binding by arbitration, judicial review, or court order.
Bill 30 amends 33.6(5) of the PPCLA to make a determination binding, except where a court directs otherwise, where an arbitrator has been appointment and makes an award, or where the parties have entered into a written agreement that resolves the matter.[11] The amendments of Bill 30 to section 33.6(5) significantly strengthen adjudicator’s determinations, as compared to the current PPCLA.
A note for Public Works
Bill 30 also amends the PPCLA to expand the application of adjudication to apply to public works, signaling a continuing shift in Alberta’s construction legislation to embrace adjudication.[12]
Welcome Homes Construction Inc. v. Atlas Granite Inc.
Bill 30 provides much-needed clarity in relation to the foregoing issues and significantly strengthens the determinations of adjudicators; however, with the passage of time, we can also expect additional clarity from the Courts. As of the date of this article, the Alberta Court of King’s Bench’s decision of Welcome Homes Construction Inc. v. Atlas Granite Inc., 2024 ABKB 301, stands alone in its consideration of the adjudication process in Alberta.[13] We summarize the decision below:
Background
A dispute was born out of a contract between Welcome Homes Construction Inc. (“Welcome Homes”) and Atlas Granite Inc. (“Atlas Granite”) for the supply and install of marble countertops for a residential project. Disputes arose over the quality of work, leading Welcome Homes to stop payments and eventually terminate the contract. Atlas Granite responded by filing a lien against the project. Both parties then turned to adjudication under the PPCLA, resulting in a decision favoring Atlas Granite. Following the adjudicator’s decision, a notice to prove lien was served on Atlas, prompting the parties to seek advice and direction from the Court.
Key Findings
The Court made two crucial findings that affect how the adjudication process operates under the PPCLA:
Scope of Adjudication – Contractual Rights/Relationships
The Court clarified that adjudication under the PPCLA focuses exclusively on settling disputes related to contracts, and not on issues related to lien rights. This means adjudication is only available between parties who have a direct contractual relationship. Adjudication does not apply to disputes solely based on lien rights between subcontractors and project owners.
Finality of Decisions – Differences in Interpretation
Unlike Ontario’s interpretation, where adjudication decisions are viewed as interim until further legal action, in Alberta, the Court held that adjudicator’s decisions are “final and binding,” unless challenged or varied through Court orders, judicial review, arbitration, or by mutual agreement of the parties.
Key Takeaways
From the Court’s decision in Welcome Homes v. Atlas Granite, three important lessons emerge:
Efficiency in Alberta: For those eligible in Alberta, adjudication offers a faster and more cost-effective path to resolve disputes compared to traditional court proceedings;
Limits of Adjudication: The ruling limits the use of adjudication to disputes between parties with direct contracts. This means, parties who hold liens but lack direct contractual claims, such as subcontractors relying solely on lien rights, may find adjudication less applicable, needing to seek resolution through the courts; and
Future Developments: Ongoing legal interpretations and legislative amendments will continue to shape how adjudication operates under PPCLA, impacting construction industry practices in Alberta
Conclusion
The Welcome Homes v. Atlas Granite decision provides foundational clarity on how construction disputes are managed under Alberta’s PPCLA. It underscores the importance of understanding the specific scope and limitations of adjudication for stakeholders in the construction sector.
For those navigating construction disputes in Alberta, staying informed about legal developments and decisions, like Bill 30 and Welcome Homes, is crucial to ensure you are appraised of the changing construction litigation landscape and how you, or other parties, can pursue claims.
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Greenfire Resources Ltd. (Greenfire) recently announced a key legal development involving its shareholder rights plan, or “poison pill,” and the resignation of two directors. The Alberta Securities Commission (ASC) has scheduled a hearing on November 5, 2024, after Waterous Energy Fund (WEF) and related selling shareholders applied to stop Greenfire’s rights plan. This case will illustrate how regulators balance fairness in contested takeovers and the use of poison pills in corporate governance.
Poison Pills: A Takeover Defense
Rights plans, used interchangeably with “poison pills,” are a mechanism used by companies to protect against hostile takeovers by making it more difficult or costly for an acquirer to gain control without board approval. Greenfire adopted its plan after WEF agreed to acquire 43.3% of the company’s shares.
The primary goal of a poison pill is to give the company’s board more time and leverage. It allows management to negotiate better terms, explore alternative bids, or even block a hostile takeover entirely.
Though poison pills are effective, they are often controversial. Critics argue that they can entrench management and block legitimate takeover attempts that might benefit shareholders. As a result, they are subject to legal scrutiny by securities regulators and courts, which assess whether they are being used appropriately or simply to protect the board from losing control.
The Role of the ASC and Fair Treatment of Shareholders
The ASC will scrutinize the purpose and impact of Greenfire’s rights plan to ensure it does not unfairly prejudice shareholders or unduly entrench the board of directors. While the board of Greenfire may argue that the rights plan is necessary to protect shareholder interests, WEF and the selling shareholders are challenging the plan’s validity, likely asserting that it hinders their ability to proceed with a legitimate acquisition.
The ASC’s task in this situation will be to balance two key interests: allowing shareholders to benefit from any value-enhancing transactions while ensuring that corporate governance tools like poison pills are not misused to entrench management or block otherwise beneficial acquisitions. The recent resignation of two directors introduces additional complexity, which may be taken into account by the ASC as part of its broader assessment of governance and fairness in the context of the rights plan.
Navigating Corporate Control and Fairness
The November hearing will be pivotal in determining whether Greenfire’s rights plan is a legitimate tool to protect shareholders or an undue obstacle to WEF’s acquisition. For corporate lawyers and business experts, the Greenfire ASC hearing serves as a reminder of the importance of ensuring that defensive measures align with both legal standards and shareholder fairness. Poison pills can level the playing field for companies facing aggressive bids, giving boards the breathing room needed to consider alternatives and secure better deals for shareholders. However, as with any strong medicine, poison pills must be carefully administered to avoid negative side effects, such as stifling legitimate opportunities for growth.
The Corporate Group at Walsh specializes in corporate governance and mergers and acquisitions. Whether you need support in protecting shareholder interests or negotiating favorable terms, here at Walsh we are equipped to ensure your company’s defensive measures align with legal standards while maintaining shareholder fairness.
Article | Usama Rashid | September 19, 2024
Condominium Bylaws vs. Condominium Rules and Regulations in Alberta
Condominiums in Alberta are subject to a variety of bylaws, rules and regulations. Although each contributes to the operation of a condominium, they have separate functions and distinct legal ramifications. It is essential for both condominium owners and board members to be aware of the distinctions between rules and regulations and also condominium bylaws.
Bylaws are created pursuant to the Condominium Property Act (Alberta) (the “CPA”) and its Regulation. Bylaws are formal, legally binding documents of a condominium corporation that provide a breakdown of its governance and operations. They address a wide range of topics, including unit owners’ responsibilities, common area maintenance, and the duties of the board of directors. Bylaws must also be registered with the Alberta Land Titles Office to be enforceable. Any changes made to the bylaws require a special resolution, meaning the change must be approved by a large majority of the unit owners, usually requiring at least 75 percent of the owners’ approval.
Bylaws typically address the following areas:
Board of Directors: election, duties, and powers of the board of directors;
Meetings: procedures for calling and conducting meetings;
Financial: reserve funds and financial reporting requirements;
Maintenance and Repairs: responsibilities for maintaining and repairing common property and individual condominium units;
Use of Units: permitted and non permitted use of units; and
Enforcement: methods for enforcing compliance.
On the other hand, condominium rules and regulations are more flexible guidelines established by the condominium board to manage the day-to-day living conditions and the use of the common property. Condominium rules and regulations complement the bylaws by addressing specific issues that arise in the daily management of the condominium.
Rules and regulations are created and amended by the condominium board, rather than pursuant to the CPA like bylaws. Unlike bylaws, condominium rules are not required to be registered with the Alberta Land Titles Office and can be amended by a simple majority vote of the condominium board members.
Rules and regulations often cover practical and specific matters, such as:
Common Areas: guidelines for using amenities like the gym, pool, etc.;
Noise: providing time frame for quiet hours;.
Pets: policies on pets (types and sizes of pets permitted); and
Security: methods to ensure the safety and security of residents, such as key access to common areas.
It is important to know that bylaws are formal and legally binding documents that require registration and a special resolution to amend, while rules and regulations are less formal and can be amended by the board at any time. Whether you are purchasing a condominium or joining your building’s board of directors, you should remember that bylaws cover governance issues, fundamental responsibilities, financials, etc., and that rules and regulations address day-to-day use and enjoyment of the property. Further, bylaws can be enforced through fines and legal action, while violations of rules and regulations are enforced through warnings and smaller fines, but do not carry the same weight as bylaws.
Usama Rashid is available to discuss the importance of understanding your condominium bylaws, rules or regulations. Whether you already are or are going to be a condominium owner or board member, please contact Usama Rashid at urashid@walshlaw.ca to have our office review your condominium documentation.
