SLICING THE LITIGATION PIE: A REVIEW OF LAW ON SPLITTING A TRIAL

Litigation

by Nitin Srivastava (Nick)

At some point during our practice, we stumble upon with a proposition to sever “liability” from “damages” and that the trial for liability be held before any trial for quantum. The theory behind splitting is that it would save time and costs. The philosophical root of this theory lies in the process of deconstructing the problem with motivating principle being that large complex problems are disproportionately harder to solve than small problems.

Some potential benefits and considerations associated with this approach are:

  • Cost and Time Efficiency: By separating liability and damages trials, the court can focus on specific issues in each phase. This may lead to quicker resolution and reduced costs. Complex liability issues can be addressed first, followed by a streamlined damages assessment.
  • Unique Nature of the Case: Some cases have distinct liability issues that can be resolved independently. In such situations, a separate liability trial may be efficient. For example, if liability depends on a novel legal question or a specific set of facts which will make it at least probable that the issue will put an end to the action[1], addressing it separately could save time.
  • Early Resolution: Severing liability early in the proceedings allows parties to assess their positions and potentially settle the case without proceeding to a full trial. This is especially relevant when the case is in its early stages, before extensive discovery has taken place.
  • Economy of Litigation: If there is a significant disparity in financial resources between the plaintiff and defendant, severance may level the playing field. The parties can focus their resources on the liability phase first and then decide whether to proceed with damages litigation.
  • Prejudice and Fairness: Severance should not prejudice either party. If necessary, damages can still be litigated after resolving liability. The court ensure fairness and avoid any undue advantage to either side.
  • Injunction vs. Damages: An injunction trial (e.g., seeking an order to stop certain actions) may be shorter than a damages trial. If an injunction is successful, it could resolve the entire dispute without the need for further damages litigation.[2]
  • Access to Justice: Severance may promote access to justice by simplifying complex cases and making the legal process more manageable for litigants.

Splitting trial has been metaphorized as “cheap ticket on a big lottery”[3] or as sometimes “purchasing an economy ticket in the hope of being bumped into first class”[4] as it aptly captures the idea that addressing liability first can set the course for the entire litigation journey. Just as a well-chosen ticket can lead to a smoother ride, a well-considered approach to severance can streamline the legal process.

Despite its positive aspects, a seemingly simple application for spitting the trial, in most cases, gets dismissed by the Court. It appears like attempting to open a Gordian knot[5] when asking the court to split the trial for complex litigation matters such as in personal injury and medical malpractice claims. The court’s response to the theory is whether the split really would save time and money in that individual case or not.

This short snap attempts to bring out legal aspects and factors encircling splitting the trial and may be of some assistance for young lawyers in making their decision whether to proceed with such applications, if so, when.

General Rule and the Test of Severance

According to Section 8 of the Judicature Act,[6] the rules of civil procedure contemplate that every action will result in only one trial, where all issues will be decided. However, splitting a trial into its component parts is the exception to this general rule and some compelling reason has to be shown to justify severance.[7]

For sake of reference, I will consider 2010 changes to Alberta Rules and water divide to see how the courts see the test prior traditionally and what changed after 2010 amendment to the Rules.

Traditional Standpoint

Rule 221 of the old Alberta Rules of Court, Alta. Reg. 390/196, provided that a severance of trial can be done in an “exceptional case”.

The court in Lim Estate[8] summarized relevant factors as follows:

  • Will it end the suit, at least if decided one way?
  • Will there be a saving in time or money spent on litigation, again at least if decided one way?
  • Will it create an injustice?
  • Are the issues complex or difficult?
  • Will it result in a delay in the trial?

There is a huge body of traditional law which warns that splitting is dangerous often ending by wasting everyone’s time and money, not saving it.[9] The old law (pre-2010) provides high cautionary authorities of the dangers of hopeful theorizing.[10]

In Royal Bank v LRSCO Investments Ltd.[11], the court stated that “litigation by instalments is a grave evil to avoid carefully …”. Litigation by installments is an abuse of process.

The court in Paniccia Estate v Toal,[12] noted the splitting of trial as a – serious misconduct, and a basis for enhanced litigation cost awards.

Few examples of declining the applications to sever for personal injury and medical negligence matters under old Rules includes:

  • Oberik Mendoza[13]: The court dismissed the defendant’s application to sever liability from damages noting that there is no guarantee of a benefit and there is the potential of mischief. The court observed that “Where the damages issue is complicated, it makes initial sense to consider whether liability can be decided first. If the defendant is not liable, there is no point in the parties going through the considerable expense of pre-trial and trial process to prove damages. However, two potential problems arise. First, the judge who makes the liability decision could be wrong. Her decision could be appealed and overturned. Then a new liability/damages trial would be ordered. That involves a long delay and other disadvantages such as increased expense. That’s why, even if a judge finds a defendant not liable, she will usually go on to assess damages to save the parties as much future trouble as possible. Second, the liability judge might not be able to make a clean-cut liability decision. Here, for example, the trial judge could conceivably decide that each of the drivers, Ms. Tuchsen, and Ms. Mendoza, is 50% responsible for the accident.  In such a situation, the witnesses including the parties would have to be called again, and testify again, perhaps before a different judge.”
  • Tanguay v. Vincent[14]: This was a medical negligence matter where the plaintiff alleged that the doctor was negligent in his care and treatment of the plaintiff during her pregnancy. Honorable Justice Binder emphasised that the possibility of appeal on the issue of liability is higher when there is no undertaking for not going to appeal, as such splitting would rather increase the time and costs instead of reducing it.

On the other hand, the court severed the liability in some cases:

  • Vanderlee v. Doherty[15]: in this personal injury matter arising from a motor vehicle accident, the court granted the application to sever liability from quantum. The plaintiff offered an undertaking that it would not appeal the issue of liability until after determination of the damages. The court reviewed the earlier factors in Tanguay and also added that “ensuring access to justice” is also an aspect of the factors to making severance decisions. Although Veit J. acknowledged that Lord Denning’s “just and convenient” test had not been adopted in Alberta, she held that Alberta severance decisions did not exclude justice and convenience as considerations and held that despite the principle that courts should not encourage the piecemeal trial of actions, they must nevertheless remain open to consideration of newly important stresses in the litigation process such as the impact that the increased schedule of party and party costs have on access to justice.[16]

In sum, the common basis for a split proceeding is where a preliminary issue is decisive, and its resolution ends the matter.[17]

  • Post 2010 approach

The old test for severance – the “exceptional case” test was not “simply embodied” in Rule 7.1(1)(a) of the new Rules. As such multiple cases post 2010 changes attempted to interpret Rule 7.1 take aid of Rule 1.2. i.e. the purpose of these rules is to provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost-effective way.

In the application for severance in Envision[18] the Court first considered whether Rule 7.1 was a substantive change to its predecessor (Rule 221) or merely a formal change. Moen J. summarized the factors for considering severance from previous case laws including:

  1. Will the issues be easily severable?
  2. Will the severance end the matter or potentially end the matter if decided in on [sic] way?
  3. Will time or money be saved?
  4. Will it end the suit, at least if decided one way?
  5. Will there be a saving in time or money spent on litigation, again at least if decided one way?
  6. Will it create an injustice?
  7. Are the issues complex or difficult?
  8. Will it result in a delay in the trial?

 

Instead of using the exceptional case test or its possible alternative the “just and convenient test”, Moen, J. thought that what should be considered are the grounds and considerations actually laid out in Rule 7.1(1)(a) interpreted through the lens of Rule 1.2, stating the steps as follows:

  • First, Rule 7.1(1)(a).  There are three grounds for severance: it will dispose of all or part of a claim; it will substantially shorten a trial; or it will save expense.  A judge has discretion to grant severance based on any one or more of the grounds.
  • Next, Rule 7.1(1)(a) should be interpreted in light of the purposes of the Rules as set out in Rule 1.2 which include to provide a means by which the claim can be resolved fairly, justly and in a timely and cost-effective way; and to facilitate the quickest means of resolving the claim and encourage the parties to resolve the claims by themselves.  Courts must also keep in mind the requirement of proportionality in granting a remedy under Rule 1.2(4).  This requires the Court to balance all of the interests in each case.

Arguments were made that once at least one of the prerequisites of Rule 7(1)(a) is found, the next step analysis moves to consider Rule 1.2 to access, on all evidence available, whether the severance is warranted. This approach was rejected by the Alberta Court of Appeal.

The interplay of Rule 1.2 and Rule 7.1(1) was addressed by the court in Gallant v Farries[19], where the Court of Appeal held that the provisions of Rule 1.2 changed nothing from the prior regime, where speed and economy were already important objectives in civil litigation. The test remains a review of the criteria in Rule 7.1 and an assessment of whether a split trial is likely to achieve the aims of the section, and not to thwart them.[20] The court also noted that general Rule 1.2 cannot supersede clear criteria on splitting trials in Rule 7.1. It is correct that the 2010 revision to the Rules removed the “exceptional circumstances” language from severance applications.  However, it remains the case that splitting a trial into its component parts is the exception to the general rule that civil actions will proceed to a single trial.[21]

In sum, Alberta courts in applying the purposive interpretation of Rule 1.2 were not willing to simply let go pre-2010 case laws on splits and held that trial split must be one likely to achieve those aims which R 7.1 lists, not to thwart them.[22] The majority of the case law post 2010 changes to the Rules agrees with the objectives of speed and economy, however, the only disagreement is on whether a particular split would really advance or retard those objectives.

Gallant is clear authority for the proposition that the current rules do not affect the application of prior case law about splitting issues for separate trials, or the rationale for avoiding such splitting.

Rule 7.1 (1) (a) of the Alberta Rules of Court provides the current test as an exception to the general rule if either of the three factors are satisfied.[23]

7.1(1) On application the Court may,

(a) order a question or an issue to be heard or tried before, at or after a trial for the purpose of

 (i) disposing of all or part of a claim,            

(ii) substantially shortening a trial, or

(iii) saving expense.

Rule 7.1(1) says “Court” not “Judge” as such the appropriate forum for such applications is before the Application Judges.

Disjunctive Requirements:

The threshold for splitting the trial under Rule 7.1(1) (a) appears to be simple i.e. only one of the three requirements namely disposing of all or part, substantially shortening a trial, or saving expenses, needs to be satisfied for the severance application to be granted.

However, an applicant who proposes to sever issues must demonstrate that it is clearly desirable to do so, and whether there is a real likelihood that one of the prerequisites can be satisfied. [24]

  • Disposing all or part of the claim

The threshold under this subsection would require if the plaintiff were either seeking “partial remedy” or one or few of the total claims made or it is proposed that first trial will dispose of any claim. But if there is only one claim made or one injury complained of, then it would fail to meet the requirement under Rule 7(1)(a)(i).

Splitting application can be easily granted is there is a readily extricable preliminary issue, such as whether a clear limitation period has expired or there are issues relating to standing to sue. It will definitively save time and money. Another scenario where splitting may dispose all or part of the claim may be for estate claims, where severance of two issues of entitlement and quantification is permissible, and possible.[25]

In Votour v. Tucker[26], the plaintiff’s vehicle hit a bull which got out of the fenced pasture. The defendants brought an application to sever liability and quantum under Rule 7.1. The court dismissed the application noting the overlap between liability and quantum as the nature and extent of injuries is an issue and held that the aims of Rule 7.1(1) (a) are not likely to be met under the circumstances and there is likelihood that splitting the trial would cause more harm than good.

In cases where there are multiple unrelated defendants, severance could be granted in part as the split in liability among the named Defendants would lead to negotiations since each Defendant would have clarity about their individual level of legal responsibility. For example, in Nowicki v Price, [27] there were three actions, all arising out of the same automobile/bus collision. The court severed the liability portion of the actions in all three actions and directed that the liability portion be heard concurrently.

Recently in Schlichter v Pearce,[28] a claim arising or a motor vehicle accident where the defendant brought an application for severing liability from quantum, and the Master/ Application Judge granted the severance. On Appeal, the court directed that the claim should proceed as a single trial. The court held that the Master erred in anchoring his assessment that despite the concurrent expert opinions, it is not realistic to conclude that the Respondent will likely be absolved of liability by focusing entirely on the conduct of the Appellant. The court also noted that the Master also dismissed the real potential of overlapping evidence between the liability and quantum claims, and where the credibility of the Appellant and the Respondent will be key components of both liability and quantum. Where any determination of split in liability for the collision is an issue, it is unlikely that the same would yield to negotiations on the quantum portion.[29]

  • Saving time or costs

General argument by the applicants that a single lengthy trial would increase their costs. On the other hand, the respondents argues that the severance will add up their costs.

Arguments for saving time and money can be branches into two scenarios, namely:

  1. If the first trial the judge finds no liability, then the plaintiff might not make a further appeal, then the damages might become academic. As such the first saving scenario would be that trial judge in the first trial may find no liability, and the plaintiff would not start a new appeal to upset that decision. The plaintiff would abandon the claim, or
  2. The trial judge in the first trial might find liability and it would motivate the defendant to settle the claim out of client without proceeding with second trial.

As such, no appeal and prompt settlement would save time and money.

However, splitting would be a waste of time and money in the following scenarios, namely:

  1. If liability is not found and the plaintiff appealed. This would result of that appeal would be a second trial on liability. If the new trial found liability, and either party did not like the damages award, then there would probably be a second appeal. This would not save any time or costs. The courts have warned about that: see generally: Esso v Stearns, supra(paras 35-38). Many decided cases decrying splits are successful appeals from a partial trial’s decision on the merits of half the suit.
  2. In the scenario if the first trial judge finds liability, and the defendant does not agree with the plaintiff’s suggestion on the dollar amount for damages, then there will be a second trial on damages. As such no time or money, be saved.

 

As such, when considering an application for severing liability from quantum, once must first consider the following:

  • More than just probability:

Saving time or money requires more than just a good probability that the second trial will not be necessary. It also requires that the first trial be much shorter than the second.[30] Otherwise even the saving hoped for will be but a small percentage of the total. For these reasons, a short simple and less complex issue such as a limitation period, or standing to sue, can be easily severed and tried as a preliminary issue.

  • Nature of Severance Applications:

The courts might see an application to sever itself as an example of added delay to conclusion of the claim and also as increased litigation expense. For example, X made an application to sever trial before the Application Judge. The application was heard, adjourned, written arguments provided, and the Application Judge issues a decision. The important thing to note is that the application to sever trial is “procedural” in nature, not substantive. So, both parties incurred time and costs for the procedural application which did not advance the claim in “substance”.

  • Liability:

However, in complex litigation matters where parties vigorously contest liability, splitting the trial would not be a good idea as it wouldn’t be quick to try given both the plaintiff’s and the defendant’s evidence. For complex matters, liability itself might take few days or week to try.

  • Causation

Causation is often a very important issue to be addressed at the trial. Causation involves both causation in fact, and causation in law. – especially with personal injury and medical negligence matters where pre-existing medical conditions are relevant considerations. Splitting under such scenarios would be an obvious waste of time and money. There is also a risk of inconsistent decisions.

  • Overlapping Evidence

If there is an overlap of witnesses, it would be highly unlikely that the negotiations will be successful on quantum issues to avoid a lengthy quantum trial. The

  • Additional opportunities for Appeal

Appeal process is a fundamental part of the democratic operation of the court system. As such, Appeal will always be a concern when it comes to saving time and costs if the liability decision is appealed. However, if the plaintiff provides an undertaking not to appeal until the determination of damages, it might be a relevant factor for the court to consider when severance application is submitted. In any event, while considering an application to sever under Rule 7.1(1), the court will consider the possible exposure to multiple appellate routes if the litigation is split.

In short, while severing liability from damages may offer benefits in certain situations, it’s essential to carefully consider the specific case, potential consequences, and fairness to both parties. Severance applications require a balancing between the access and efficiency of the justice system. Based on the court decisions post 2010 it appears that severance under Rule 7.1(1) is meant to be used as a “scalpel” to carve out a small ingenious piece – a “key stone” from the litigation puzzle, particularly when the remainder of the claim gets solved or partly solved by determining the keystone issue. Severance can save time and costs if there is an extricable legal issue that would dispose all or most of the claim, with no overlap of evidence, and no appeal is ensured. The legislation did not intend to use Rule 7.1(1) as “Alexander’s sword” to cut the “Gordian Knot” in a complex litigation matter.  Following the general rule – one trial for one claim adjudicating all issues involving, would be the best way to save time and costs for a complex litigation matter.

I would invite my ACTLA colleagues to ventilate their views and share their experience on this issue.

© Nitin Srivastava (Nick)

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[1] Tanguay v. Vincent, 1999 ABQB 814

[2] Edmonton Flying Club v Edmonton Regional Airports Authority, 2013 ABCA 91 para 11.

[3] Gallant v. Farries, 2012 ABCA 98 para 48.

[4] Votour v. Tucker, 2013 ABQB 207 para 22.

[5] A knot tied by Gordius, king of Phrygia, held to be capable of being untied only by the future ruler of Asia, and cut by Alexander the Great with his sword.

[6] Judicature Act RSA 2000, c. J-2, s. 8.

[7] LKD v JB, 2012 ABCA 72 at para 6: Smigelski v Smigelski, 2015 ABCA 320 at para 7.

[8] Lim Estate v. Home Insurance Co. 1995 CanLII 9052 (AB KB) para 13.

[9] See Windsor Refrigeration Co v Branch Nominees [1961] Ch 375, 396, [1961] 1 All ER 277, 283 (CA);  Ratcliffe v Nakonechny, 2003 ABQB 667, 23 Alta LR (4th) 21, 44 CPC (5th) 325; Canadian Cancer Society v Bank of Montreal (1966) 1966 CanLII 586 (AB CA), 57 WWR 182, 186 (Alta CA); CMHC v Canative Housing Corp (1988) 1988 CanLII 3843 (AB KB), 90 AR 303, 304; Esso Resources v Stearns Catalytic (1991) 1991 ABCA 48 (CanLII), 114 AR 27, 29-30 (CA) (paras 9-11); Keg River Métis Settlement v R [1978] AUD 720 (CA).

[10] Supra (Gallant) at para 14.

[11] Royal Bank v LRSCO Investments Ltd., 1994 ABCA 116 at para 11, 149 AR 241.

[12] Paniccia Estate v Toal, 2012 ABCA 397 at paras 127, 136, 539 AR 349.

[13] Oberik v. Mendoza, 1998 ABQB 512 (para 9).

[14] Tanguay v. Vincent, 1999 ABQB 814

[15] Vanderlee v. Doherty, 2000 ABQB 66.

[16] Severing The Issues Of Liability And Damages, by Bill McNally, Pamela Fischer and Bottom Line Research, Available online at https://bottomlineresearch.ca/pdf/Severing%20Liability%20and%20Damages.pdf

[17] Esso Resources Canada Ltd. v Stearns Catalytic Ltd., 1991 ABCA 48, 77 DLR (4th) 557.

[18] Envision Edmonton Opportunities Society v. Edmonton (City), 2011 ABQB 131

[19] Supra (Gallant) at para 18 and 24.

[20] Supra (Gallant) at para 25.

[21] See LKD v JB, 2012 ABCA 72 at para 6: Smigelski v Smigelski, 2015 ABCA 320 at para 7.

[22] Supra (Gallant) at para 25. 

[23] Edmonton Flying Club v Edmonton Regional Airports Authority, 2013 ABCA 91, at para 30.

[24] Supra (Gallant) at paras 31, 48

[25] Ponich Estate (Re), 2011 ABQB 33.

[26] Votour v. Tucker, 2013 ABQB 207

[27] Nowicki v Price, 2011 ABQB 133

[28] Schlichter v Pearce, 2022 ABQB 434

[29] Schlichter v Pearce, 2022 ABQB 434

[30] Alberta (Infrastructure) v Haluszka, 2020 ABLCB 5 at para 27 (referring Gallant).