Court File No. 148/04

20050223

ONTARIO SUPERIOR COURT OF JUSTICE (DIVISIONAL COURT)

BETWEEN:

JOEL WAITE

Respondent (Plaintiff)

• and -

LORNE GERSHUNY

Appellant (Defendant)

HEARD: February 11, 2005

BEFORE: Lane, Jarvis and Swinton, JJ.

COUNSEL: E. Eva Frank, for the Appellant; Yan David Payne, for the Respondent.

E N D O R S E M E N T

[1] This is an appeal with leave of O’Driscoll J. from the order of Herman, J. dated January 15, 2004, restoring the plaintiff’s action. The action had been struck from the trial list as a result of the plaintiff's failure to comply with the terms of the order of Bellamy J. dated November 2, 1998.

[2] On November 2, 1998, the plaintiff failed to appear at the trial of this action. After holding the action down until the afternoon, the trial judge, Bellamy J., ordered that the action be struck from the trial list. She recorded that the plaintiff had not appeared despite being informed in person by the trial co-ordinator of the date and despite further reminder messages left for him by the trial co-ordinator. She further ordered that the counsel for the defendant was to bring her order to the attention of the plaintiff, and if the plaintiff failed to move to restore the action to the list by December 28, 1998, that the action was dismissed.

[3] The plaintiff appeared in person before Dyson J. on December 24, 1998 without notice. Dyson J. recorded that the plaintiff stated that he had not received the pre-trial messages about the date of trial and that he had paid the costs thrown away as ordered. Based on the plaintiff's submissions, Dyson J. restored the action to the list, recording that he did so assuming the truth of those submissions.

[4] On February 23, 1999, on motion by the defendant, Dyson J. set aside his December 24th order without prejudice to the plaintiff bringing a motion on notice to restore the case to the list.

[5] The plaintiff did not do so for nearly five years. On January 15, 2004, the plaintiff brought his motion before Herman J. and was successful in having the dismissal set aside and the action restored. The learned motion judge held that the appropriate test to apply was that used where there had been a dismissal for delay: was the delay excusable and was there prejudice to the defendant? She rejected the submission of the defendant that she should examine the plaintiff’s failure to attend at the trial. She said that the evidence was inconclusive but Dyson J. had been in a better position than she to assess the situation and he chose to give the plaintiff the benefit of the doubt. She then determined the motion on the basis of delay and prejudice, finding that the delay was not so inordinate as to deprive the plaintiff of the opportunity to proceed, and that there was no evidence of prejudice to the defendant. She did not consider whether the plaintiff had demonstrated that there was any merit to his case.

[6] It is the defendant’s position that the motion judge erred in granting this order. This position is based on the following submissions as set out in the factum:

Herman J. applied the test for restoring actions dismissed for delay. The criteria under this test is whether the delay is excusable and whether there is any prejudice to the defendant in restoring the action. In the case at hand, this placed an unreasonably low burden upon the plaintiff. This is particularly so where the plaintiff failed to attend trial, had his action dismissed by a trial judge and delayed in bringing a proper motion to revive his action for five years.

The test employed by the court in similar cases seeking to set aside judgment granted by default requires the moving party to provide a satisfactory explanation of both his failure to attend trial and his delay in bringing the motion to set aside judgment; and further to establish that, if restored, the action is one which raises a meritorious issue. Herman J. erred in failing to apply this test. Had she done so, the plaintiff's motion would have failed.

[7] The plaintiff submits that the order below should be affirmed and offers Rules 48.11 and 24.01(1)(e) in support. Rule 48 is a general Rule dealing with setting matters down for trial, and includes provisions for dismissing an action for failure to meet the timetable for setting the action down. Specifically, Rule 48.11 provides that an action struck from the trial list shall not be restored without an order of a judge. It is silent on the requirements to obtain such an order, but the plaintiff submits that the test used in Rule 24 should be applied by analogy. That Rule deals with the dismissal of actions for delay. In such a case, the action should not be dismissed unless the delay was intentional and contumelious, or the plaintiff is responsible for an inexcusable delay giving rise to a substantial risk that there cannot be a fair trial.[^1]

[8] However, there are two other Rules requiring consideration. The first is Rule 52.01(3), which provides that a judge may set aside or vary, on such terms as are just, a judgment obtained against a party who failed to attend at the trial. The second is Rule 37.14(b), which enables the giving of relief to a party who has failed to attend a motion through accident or mistake. The first is directly applicable to the case at bar, and the second is analogous.

[9] In Re Roberts[^2], Killeen J. dealt with a case where a party had failed to appear on a motion in a bankruptcy. He said:

Here, the order granted by Jenkins J. in the absence of Mrs. Roberts is tantamount to a final order or judgment on the merits: Jenkins J. has effectively found as a fact that there was a fraudulent preference in favour of Mrs. Roberts under the B.I.A. and has granted judgment against her for the amount of the preference.

21. In a case such as this the test for a grant of relief should be that laid down in Nelligan v. Lindsay, [1945] O.W.N. 295 (H.C.) where Urquhart J. adopted what was said by Lamont J.A. in Klein v. Schile, (1921), 1921 107 (SK CA), 59 D.L.R. 102 at p. 103:

The circumstances under which a Court will exercise its discretion to set aside a judgment regularly signed are pretty well settled. The application should be made as soon as possible after the judgment comes to the knowledge of the defendant, but mere delay will not bar the application, unless an irreparable injury will be done to the plaintiff or the delay has been wilful. Tomlinson v. Kiddo (1914), 1914 139 (SC EnBanc), 20 D.L.R. 182, 7 S.L.R. 132; Mills v. Harris (1915), 1915 161 (SC EnBanc), 21 D.L.R. 230, 8 S.L.R. 113. The application should be supported by an affidavit setting out the circumstances under which the default arose and disclosing a defence on the merits. Chitty's Forms, 13th ed., p. 83.

It is not sufficient to merely state that the defendant has a good defence upon the merits. The affidavits must shew the nature of the defence and set forth facts which will enable the Court or Judge to decide whether or not there was matter which would afford a defence to the action. Stewart v. McMahon (1908), 1 S.L.R. 209.

[10] In Nelligan v. Lindsay[^3] itself, the defendant had failed to appear at the trial, rather than at a motion, but the test is the same. Similarly in General Leaseholds[^4] the court followed Nelligan where the defendant had failed to appear at trial. The cases show that a party failing to appear for trial has to explain that fact and show that there is some merit to the action, at least on a prima facie consideration, as well as explain any delay in seeking the relief.

[11] In our view, the learned motion judge erred in principle in failing to consider whether the action she was asked to restore to the trial list had some indication of merit, and in deferring to Dyson J. on the issue of whether the failure of the moving party to appear at the trial had been satisfactorily explained. Dyson J. was not in a better position than the motion judge to determine this important issue. It was she and not Dyson J. who had evidence on the point. He had only the unsworn ex parte statement of the plaintiff as to his failure to appear, and Dyson J.’s decision was expressly based on the assumption that the statement was correct, not on any finding that it was.

[12] The motion judge having acted on a wrong principle, her order cannot stand. We turn to consider what disposition ought now to be made in the light of the evidence before us.

[13] The evidence available to us raises doubts about the bona fides of the plaintiff’s absence from the trial. There is certainly a real possibility that it was deliberate. In September 1998, through his then solicitor, he had asked for consent to an adjournment of the trial and counsel for the defendant had refused to consent. He was again refused an adjournment of the trial by O’Brien J. at a pre-trial on October 14, 1998.

[14] At a hearing on the original trial date, October 26, 1998, he again asked for an adjournment and was again refused, this time by Wilkins J. The plaintiff was present in court for this proceeding and was prepared for this outcome. He then produced and served in court a notice that he would act in person and gave his address and phone number to the court officials. On cross-examination he confirmed having voicemail at home. Also on cross-examination, he could not remember being told on October 26 that the trial would be proceeding on November 2, but could not deny it. He stated that he did not receive the two reminder phone calls which the trial co-ordinator told Justice Bellamy had been made to his home during the week preceding the trial date. All of this evidence raises a serious doubt as to the bona fides of the plaintiff’s explanation. If the motion judge had considered it, she might well have reached a different conclusion.

[15] As to the delay of nearly five years, the plaintiff conceded on cross-examination that he understood after Justice Dyson rescinded his first order that a further motion had to be brought to restore the case to the trial list. It did not happen. He put the blame on his lawyer and it is true that there was evidence that the lawyer had personal troubles and went bankrupt in August, 2002. This could explain the delay in part, but it is not an explanation for five years of delay in bringing a straightforward motion. As the party whose interests were at stake, he cannot entirely escape from responsibility for the delay by simply saying it was in the hands of his lawyer. He also pleaded impecuniosity, but he admitted he was steadily employed during the period at a salary of between $48,000 and $53,000 annually, not a fortune but, without dependents at home, surely sufficient to provide a retainer for such a motion.

[16] As to the merits, there is no evidence in the affidavit filed by the plaintiff on the motion beyond bald assertions that the defendant, his lawyer in an action arising from a purchase and subsequent sale of a rental apartment building, had disobeyed his instructions and had mis-handled the action so that the plaintiff could not recover damages of $300,000. That action was begun in 1991 by the plaintiff’s former business partner, Mr. Steer, against the present plaintiff, who launched a counterclaim and cross-claims. Like this one, that action was characterized by delay. The Statement of Claim in the present case blames that delay on the defendant, again without apparent acknowledgement that a client has any responsibility in such matters. No particulars of the damages claimed are given. No satisfactory explanation is offered as to why, if he had such losses, the plaintiff signed a mediated agreement to accept $10,000, and a dismissal of the claims made against him.

[17] The plaintiff later resiled from the mediated agreement, but it was enforced by court order from which his appeal was dismissed. If there was something legally wrong with the mediated agreement, such as that the plaintiff had been improperly pressured into signing it against his real will, that proceeding was the place to raise it. The evidence does not disclose whether he raised the point. Issues of res judicata and issue estoppel may well arise on these facts even if the point was not put to the court which enforced the agreement. In any event, the plaintiff’s failure to raise such a point, if he did not, speaks volumes about the bona fides of the present assertions.

[18] In the result the appeal is allowed and the action is dismissed. The appellant will have the costs of the appeal and of the motion for leave. If the parties cannot agree on the amount, they may make brief written submissions within twenty days of the release of this endorsement.

Lane, J.

Jarvis, J.

DATE: February 22, 2005

Swinton, J.

[^1]: See: Haffar v. 581572 Ontario [2002] O.J. No. 4165, per Wein J.; Hudon v. Colliers Macaulay Nicolls Inc. [2001] O.J. No. 1588 (Div. Ct.) [^2]: Re Bankruptcy of Kenneth Gordon Roberts [1996] O.J. No. 3101 (O.C.G.D.) [^3]: [1945] O.W.N. 295 (H.C.J.) [^4]: General Leaseholds v. Moore, [1995] O.J. No. 2188 (O.C.G.D.)