Introduction

An application in court under Nova Scotia Civil Procedure Rule 5.07 is a lot like one of those fancy hybrid cars: It has many of the same features as a regular vehicle—aka a traditional action—but it’s meant to get you to your destination more quickly and efficiently.

Not an action, but not a Chambers application, the “application in court” was introduced into the Rules in 2009 as a middle ground. Or as Rule 5.01(4) puts it: “The application in court is for longer hearings, and it is available, in appropriate circumstances, as a flexible and speedy alternative to an action.”

The last five-plus years have seen Nova Scotia litigants, lawyers, and judges grapple with just how “alternative” the application in court is: Is it really an action compressed into tighter timelines, or is it a fundamentally different procedural beast?  Until recently, there remained a key difference between applications in court and actions: The respondent in an application in court could not bring a counterclaim against the applicant or a crossclaim against another respondent; the applicant remained ’in the driver’s seat.’ But recent amendments to the Nova Scotia Civil Procedure Rules (in force as of July 9, 2014) have filled this void — and made the application in court look a bit more like an action.

Before the amendments

When the application in court was first introduced, there was no provision for a respondent to bring its own claim within the proceedings. Instead, there were two options for wrestling some control of the litigation steering wheel away from the applicant: The respondent could seek conversion to an action under Rule 6, or bring a separate application and then request consolidation with the first application under (what is now) Rule 5.20. Both of these options would typically involve a separate motion, and would require the motion judge to exercise her discretion in the respondent’s favour.

Success was often hard to come by. A motion to convert to an action was especially difficult, because Rule 6 for the most part ’stacks the deck’ in favour of applications. Three cases will demonstrate this uphill battle.

In Citibank Canada v Begg, 2010 NSSC 56, a debt / guarantee proceeding, one reason for the respondent’s request for conversion of the application in court to an action was because it wanted to bring both a crossclaim and a third party claim, and saw no other way to do that within the current proceeding. Justice Bryson (as he then was) acknowledged the respondent’s concern, but ultimately refused the motion, finding that the respondent’s claims could be “adequately addressed in other ways” including through consolidation if the respondent brought a separate application (para 32).

Jeffrie v Hendriksen, 2011 NSSC 292 involved allegations of breach of contract and a claim for oppression, and another unsuccessful motion to convert. The respondents hoped to bring a counterclaim for breach of fiduciary duty, among other claims, but that was not enough to require conversion. Justice Pickup agreed that they were not prejudiced by the lack of an applicable provision in Rule 5, and that ”the application process provides ample flexibility” to accommodate the respondents’ allegations, i.e., through possible consolidation.

As a final example, Justice Rosinski in Schöningh v Homburg Canada Inc, 2012 NSSC 185, essentially an employment law case, refused the respondent’s motion for conversion despite its desire to bring a counterclaim containing allegations of conspiracy. Justice Rosinski suggested that a type of “counterclaim” could be “procedurally created” if the respondent brought its own application and then moved for consolidation, but thought it “highly unlikely” that consolidation would be ordered in that case (at para 43, point (c)).

After the amendments

The highlights of the Rule 5 amendments are as follows:

  • Rule 5.10 now permits a respondent to make a claim against the applicant (equivalent to a counterclaim) and / or against another respondent (equivalent to a crossclaim). The respondent has 15 days after receiving notice of the application to file its “Notice of Respondent’s Claim” in Form 5.09 which must include (inter alia) the grounds for its claim; material facts; references to relevant statutes and points of law; a list of proposed witnesses and the subjects of their affidavit evidence; and confirmation of whether or not the respondent will also file a notice of contest (equivalent to a defence). The motion for directions will cover both the applicant’s and the respondent’s claims.
  • Rule 5.11 provides for a “Notice of Contest of Respondent’s Claim,” which must be filed at least two days before the motion for directions. This Notice must set out (inter alia) which material facts are admitted or denied; any further grounds of contest; and a list of potential further witnesses.
  • Rule 5.12 says that a respondent who wants to bring a “third party claim“ has two choices: Starting an independent proceeding (and perhaps seeking consolidation, if the new proceeding is also an application in court?), or making a Rule 35 motion to have a new party joined.

What it means in practice

The former version of Rule 5 will apply to applications in court that pre-dated the amendments, “unless the parties agree or a judge orders otherwise.” (See section 4 of the Amendment.) This makes sense, given the tight timelines that the parties have inevitably been following. Throwing new claims into the mix could drastically throw them off schedule, and defeat one of the purposes of using the application in court procedure in the first place.

As of July 9, 2014, new applications in court will be governed by the current version of Rule 5, including the amendments.

Conclusion

In Nova Scotia v Roué, 2013 NSCA 94, the Court of Appeal’s first consideration of applications in court, Chief Justice MacDonald gave the procedure a ringing endorsement (at para 51):

In short, Rule 5.07, in appropriate circumstances, can go a long way to enhance access to justice. It embraces both flexibility and proportionality by allowing the Court to custom design a process that fairly reflects the dynamics of each particular dispute, with the added ability to recalibrate as circumstances demand [see what is now Rule 5.13(3)].

Finding the most appropriate and proportional procedure for a dispute is an ongoing goal, especially after the Supreme Court of Canada’s decision in Hryniak v Mauldin, 2014 SCC 7. As counterintuitive as it may seem for a procedural vehicle that’s supposed to be streamlined, the amendments permitting new claims might actually encourage proportionality.

Chief Justice MacDonald noted in Roué that the application in court process “commands aggressive case management where all pre-hearing procedures are tailored to meet predetermined pre-hearing dates” (para 18). This will be especially true where a respondent brings its own claim(s), and should help assuage concerns that the amendments will add unwelcome complication to applications in court. And now that respondents know they have a way to bring their own claims under the application in court umbrella, there may be fewer motions for conversion and consolidation, and more focus on actual dispute resolution.

In the end, the amendments create a new similarity between applications and actions — but you should still get better mileage with an application in court.