ONTARIO
SUPERIOR COURT OF JUSTICE
(DIVISIONAL COURT)
B E T W E E N:
VITTORIO VACCA and ANNA VACCA
Plaintiffs (Appellants)
Michael Title for the appellants
Larry A. Banack and Nancy Shapiro for Leonard Banks and Banks & Starkman
- and -
LEONARD BANKS, BANKS & STARKMAN, MICHAEL SPEARS and PACEY, DEACON, SPEARS & FEDSON
Joel Richler and Teresa Howarth for Michael Spears and Pacey, Deacon, Spears & Fedson
Defendants (Respondents)
Heard: December 2, 2004
This is an appeal from the decision of Case Management Master Birnbaum dismissing the plaintiffs’ action for repeated non-compliance with court orders. The Master dismissed the action after the plaintiffs failed to comply with four orders to give adequate answers to undertakings and to produce documents. The fourth order explicitly noted it was the plaintiffs’ “last chance”.
The plaintiffs, Vittorio and Anna Vacca (“the Vaccas”) claim damages for breach of contract and negligence against two solicitors and their respective law firms who had acted for them in relation to an aborted real estate transaction.
The history of this matter goes back to 1989 when the plaintiffs entered into an agreement of purchase and sale to purchase a condominium unit from Kingsbridge Grand Ltd. (“Kingsbridge”). The Vaccas paid a deposit but took the position that since they never received a disclosure statement under s.52 of the Condominium Act they were entitled to rescind the agreement and recover their deposit. In 1991 they retained Leonard Banks and Banks & Starkman, defendants in this action, to recover the deposit. In 1993, Kingsbridge began legal proceedings against the plaintiffs for the balance of the purchase price. The Vaccas maintained their position and retained Michael Spears and Pacey, Deacon, Spears and Fedson to represent them in the action. These solicitors are also defendants in this action.
Kingsbridge obtained judgment against the Vaccas at trial in 1995. The Court of Appeal upheld the judgment in 1997. Subsequently, Kingsbridge commenced an action against the Vaccas to set aside fraudulent conveyances and obtained judgment in 1999. The Court of Appeal upheld the judgment in 2001. Following this, the Vaccas and Kingsbridge settled the amount to be paid to Kingsbridge.
In this action against the lawyers and law firms that represented them, the Vaccas claim damages for negligence and breach of contract in the sum of $4.6 million.
The Vaccas were initially represented in this action by counsel who prepared the statement of claim. However, in February 2002, an order was made removing his firm as solicitors of record for the plaintiffs. The plaintiffs were unrepresented for about a year, until March 2003, when their current solicitors were appointed.
Mr. Vacca was examined for discovery in June 2002, during the period when the Vaccas were unrepresented. This examination was not completed because Mr. Vacca did not bring with him all relevant documents. The scheduled examination of Mrs. Vacca was cancelled for the same reason.
During that examination, Mr. Vacca gave various undertakings. On October 17, 2002, Mr. Vacca provided handwritten responses to the undertakings together with a letter and some documents. The letter alleged consequential losses that were not pleaded in the statement of claim. The defendants took the position that these responses were inadequate and incomplete.
On January 31, 2003, the action was transferred to Case Management.
On March 13, 2003, the Case Management Master issued her first Timetable Order, which set the deadlines for the plaintiffs to retain new counsel (they having indicated their wish to do so) and answer undertakings by April 30, 2003. Discoveries were to be completed by June 30, 2003.
On May 12, 2003, after new counsel were on the record for the plaintiffs, further responses were given to the undertakings. The defendants took the position that these responses were inadequate and incomplete.
On June 5, 2003, the Master agreed with the defence position and issued a second Timetable Order, in which the plaintiffs were required to deliver their Affidavit of Documents by June 16, 2003, to answer outstanding undertakings by June 23, 2003, and to complete examinations for discovery by August 29, 2003.
On July 14, 2003, the Master, finding the plaintiffs still had not complied, made a third order, requiring that the plaintiffs answer the outstanding undertakings and provide a damages report by 1:00 p.m. on July 18, 2003.
The defendants took the position that the documents and responses delivered on July 18, 2003, were inadequate.
On July 22, 2003, the Master issued a fourth order:
The plaintiff shall answer all undertakings as listed in Schedule A attached. This is his last chance to do so. They shall be answered by September 30/03;
The plaintiff shall provide a damages brief inc. the evidence for the damages claim by September 30/03.
The plaintiffs failed to comply fully with this last order. On February 17, 2004, the Master dismissed the action giving the following reasons:
- This 1999 action is dismissed for delay and for non-compliance with court orders to answer undertakings and produce documents. This delay has created prejudice for the defendants because without the information ordered to be produced, the defendants do not know the case they must meet regarding the damages claim.
The Master issued a clarification of her order on March 30, 2004:
Defendants’ counsel have asked me to clarify my use of the word “delay” in my order of February 17, 2004 as they had not argued delay as found in the Rules. They relied on R. 30.08(2)(b), R. 34.15(1)(b), R. 60.12 and Rule 77.10, all relating to breaches of my orders to produce information, particularly my order of July 22, 2003 requiring the plaintiff to produce the evidence for his damages claim by September 20, 2003.
The breach of the orders, especially the breach of the July 22, 2003 order, in an action that was almost four years old at the time, created a delay, in the ordinary use of the word, contrary to the principles of case management. This delay in providing information ordered to be provided in an action against lawyers whose professional reputations are at stake is, to my mind, prejudicial as the timetable in the orders are then further delayed. In fact, I had to address timetable issues four times in this action.
The plaintiffs did not appeal any of the Master’s four orders, including the July 22, 2003 order that noted it was the plaintiffs’ “last chance” to comply. The orders remained in full force and effect throughout.
The Appropriate Standard of Review
The test to be applied on the review of a Master’s decision is as follows:
(a) if the matter is one of discretion, the court should not interfere unless the Master was clearly wrong;
(b) if the matter is one of law that is not vital to the disposition of the lawsuit, the court should not interfere unless the Master was clearly wrong; and
(c) if the matter is one of law that is deemed vital to the disposition of the lawsuit, the test should be one of correctness.
Bank of Nova Scotia v. Liberty Mutual Insurance Company et al. (2003), 67 O.R. (3d) 699 at 702 (Div. Ct.)
Analysis
The Master did not dismiss the action because of delay. This is evident from the clarification the Master issued on March 30, 2004, reproduced above. The plaintiffs’ case was dismissed for breach of court orders. It is unnecessary to examine the issue of delay.
Furthermore, the order dismissing the action was not made because the plaintiffs had failed to comply with undertakings but because the plaintiffs had repeatedly breached court orders to comply with undertakings and to produce documents, especially concerning damages calculations. When an order is made, and it is not appealed, it must be complied with.
Case Management Masters have significant powers under the Case Management Rules. These rules and the powers they afford are designed to reduce the expense and delay of civil actions. The purpose of case management is stated in rule 77.02:
77.02 The purpose of this Rule is to establish a case management system throughout Ontario that reduces unnecessary cost and delay in civil litigation, facilitates early and fair settlements and brings proceedings expeditiously to a just determination while allowing sufficient time for the conduct of the proceeding.
Repeated delays and failures to comply with procedural orders affect not only the parties to the action. They significantly increase the cost of the administration of justice due to the impact on administrative and judicial resources. Repeated breaches of orders must attract significant sanctions otherwise the Case Management Rules will become ineffectual and the ultimate goal of the rules will be unattainable.
The rules must not be rendered nugatory by failure to impose appropriate sanctions in cases of breach of orders.
Rules 30.08(2)(b), 60.12 and 77.10(7), specifically provide for the dismissal of a plaintiff’s action in such circumstances.
Furthermore, although the Master found prejudice to the defendants, in my view it was unnecessary to make such a finding as a factor supporting a dismissal of the action.
There comes a time when this court is obliged to meet its responsibility for the effective administration of justice through case management by dismissing an action. Such is the case when the plaintiff repeatedly fails to comply with orders of the court whether or not there has been prejudice to the defendants.
In the circumstances of four breached orders, including the “last chance” order, the Master realistically had only two options – one was to give the plaintiffs yet another chance – the other was to dismiss the action.
Not only am I unable to find error in the exercise of discretion by the Master, I am of the view that her decision was correct.
If the parties are unable to agree on costs, the defendants shall deliver brief written submissions within ten days and the plaintiffs shall do so within a further five days.
Ferrier J.
Released: January 18, 2005
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COURT FILE NO.: 146/04
DATE: 20050118
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
VITTORIO VACCA and ANNA VACCA
Plaintiffs (Appellants)
- and -
LEONARD BANKS, BANKS & STARKMAN, MICHAEL SPEARS and PACEY, DEACON, SPEARS & FEDSON
Defendants (Respondents)
REASONS FOR JUDGMENT
FERRIER J.
Released: January 18, 2005
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