Following the Alberta Court of Appeal’s decision in Joarcam, LLC v Plains Midstream Canada ULC, 2013 ABCA 118 (“Joarcam”), plaintiffs should think twice before characterizing their claim as declaratory as a mechanism to avoid the two year limitation period set out in section 3(1) of the Limitations Act, RSA 200 c L-12 (the “Act”). The Court of Appeal in Joarcam unequivocally confirmed that section 1(i)(i) of the Act was to be “construed narrowly so as to discourage litigants from claiming declaratory relief merely to avoid the limitation period”.

Although the Court of Appeal’s conclusion in Joarcam recognizes claims for declaratory relief are an exception to the two year limitation period, Joarcam strongly suggests that an element of coercion or enforcement will be sufficient to preclude the characterization of a claim as declaratory.

The plaintiff, and appellant, Joarcam, claimed it was the rightful owner of a pipeline system and other assets used to carry crude oil from Camrose to Edmonton. Joarcam’s against Plains Midstream was summarily dismissed on the basis that Joarcam’s claim was remedial and not declaratory in substance, and therefore was subject to the two year limitation period.

The Court of Appeal applied the following test established in Yellowbird v Samson Cree Nation No 444, 2008 ABCA 270 (“Yellowbird”):

If the Court granted the declaration, and the defendant resisted the implementation of the declaration, could the plaintiff ‘leave the court in peace’ and enjoy the benefits of the declaration ‘without further resort to the judicial process’? (at para 47).

The Court of Appeal in Yellowbird also considered that the question of whether “the relief is executory or coercive, it is not declaratory” (at para 5) was part of the test.

If the declaration had been granted, Joarcam would have been able to enforce the declaration and ultimately regain possession of the pipeline and other assets it had claimed in the first action. The key consideration of the summary trial judge was the wording used in the amended statement of claim which stated the remedy sought was a declaration it was “entitled to recover immediate possession of the pipeline assets” (at para 7). In other words, what the appellant really wanted was an order to coerce Plains Midstream as the defendant to return the pipeline and assets to Joarcam. This was an enforceable remedy, not a declaration of the appellants’ rights, and as a result the Court of Appeal held Joarcam’s claim was barred by statute under the Act.

While the Court of Appeal’s decision is not surprising, it draws the attention to the ultimate effect of the declaration and whether such effect is to coerce the defendant or to give the claimant a right it would not otherwise have. Joarcam narrows the test set out in Yellowbird by interpreting the “without further resort to the judicial process” aspect of the test as necessarily precluding any element of coercion or enforcement.