Court File and Parties

COURT FILE NO.: DC-07-00000126-0000 DATE: 20071029 SUPERIOR COURT OF JUSTICE - ONTARIO DIVISIONAL COURT

RE: LUCIA VIOLA, BRUNO CESCOLINI, SANDRA VIOLA, 863823 ONTARIO LIMITED and DOREEN KNOTT Plaintiffs/Respondents

• and -

ADRIANA HORNSTEIN, JACK HORNSTEIN and DANIEL HORNSTEIN Defendants/Appellants

BEFORE: HIMEL J.

COUNSEL: Howard Crosner and Michael Carlson for the plaintiffs/respondents Stephen R. Dyment for the defendants/appellants

E N D O R S E M E N T

[1] The plaintiffs move for an order to dismiss for delay the defendant’s appeal and for costs or, in the alternative, to stay the appeal pending the payment of costs and the posting of security for costs. The defendants bring a cross-motion for an order to extend time to perfect their appeal of the order of Master Hawkins dated February 20, 2007 striking their pleadings.

FACTUAL BACKGROUND:

[2] The plaintiffs issued a statement of claim on July 5, 2005 and an amended statement of claim on July 11, 2005 in an action involving a substantial commercial property in which the parties had an interest. The plaintiffs claimed general damages of $2,500,000 and aggravated and punitive damages of $2,500,000. They alleged fraudulent conduct, conspiracy, and breach of fiduciary duties by the defendants. The defendants delivered their statement of defence on September 20, 2005. On May 31, 2006, the plaintiffs delivered an affidavit of documents. The defendant Jack Hornstein suffered a heart attack and was hospitalized in June 2006. Master Hawkins, who had been case managing the case, fixed a timetable on July 5, 2006 and another timetable on October 24, 2006. He also made an order for costs fixed at $2,000 to be paid within thirty days. The plaintiffs moved before the Master for an order striking the pleadings for failure to pay costs, failure to deliver an affidavit of documents and productions by November 10, 2006 and for failing to attend examinations for discovery. On February 20, 2007, Master Hawkins ordered that the pleadings of the defendants be struck and fixed costs at $3,000 payable by the defendants.

[3] The defendants filed a Notice of Appeal of the Master’s decision on March 21, 2007. The deadline for perfecting the appeal was April 22, 2007. New counsel was retained by the defendants early in 2007. That counsel was in court on another action on May 9, 2007. On August 7, 2007, the plaintiffs brought a motion to dismiss for delay or for security for costs because the defendants had not perfected the appeal. Counsel for the defendants had heart surgery on August 1, 2007 and requested an adjournment which was granted. Counsel appeared before Chapnik J. on August 24, 2007 and paid the outstanding costs order and adjourned the motion on terms. The matter was returnable on September 26, 2007 at which time it was adjourned to enable the motion and cross-motion to be heard. The plaintiffs now seek to have the case dismissed and the defendants seek an extension of time for perfecting the appeal.

DECISION:

[4] On February 20, 2007, Master Hawkins struck the defendant’s pleadings and ordered that costs of $3,000 be paid within thirty days. The defendants had been in default of two orders of Master Hawkins which had set a timetable for various steps in the litigation. Rule 77.10(7) of the Rules of Civil Procedure authorizes a Master to strike out any document filed by a party who fails to comply with a time requirement set out in a timetable under the rule. Rule 60.12 also is authority for moving to strike for non-compliance with an interlocutory order of the court. In his decision, Master Hawkins made reference to the history of delay by the defendants. The Master had before him numerous letters in which Adriana Hornstein requested time to comply with the timetable set because either her husband and son were required to travel to Ottawa, her husband was admitted suddenly to the Toronto General Hospital, she had to go to appointments with her husband, the family had been evicted from their house or her son was away. Adriana Hornstein also made an assignment in bankruptcy on the day she was ordered to attend an examination for discovery. The defendants relied upon financial hardship, bankruptcy, eviction and medical emergencies to support requests for adjournments. The Master exercised his discretion and decided to strike the pleadings.

[5] The defendants indicated they were appealing the decision but did not meet the deadline for perfecting the appeal which was approximately six months ago. Under Rule 61.13, a party may bring a motion to the Registrar to have an appeal dismissed for delay where the appellant has not perfected within the time set out in Rule 61.09. To obtain an extension of time to perfect an appeal, the appellant must satisfy the court of the “justice of the case”. In Chuang v. Royal College of Dental Surgeons (Ontario) 2005 28853 (ON SCDC), 77 O.R. (3d) 280, the court outlined the following relevant considerations:

(a) the existence of a bona fide intention to appeal within the time period;

(b) the length of the appellant’s delay in pursuing the appeal; and,

(c) the merits of the appeal.

[6] On a motion to determine whether to extend the deadline to perfect an appeal, the relevant factors are the length of the delay, a settled intention to appeal within the prescribed time, the merits of the appeal and any prejudice to the respondent: see Roach v. Oniel [2005] O.J. No. 745 (2005) (Ont. Div. Ct.).

[7] The defendants submit that it is just to grant an extension of time to perfect their appeal, that their appeal is meritorious and is not frivolous and does not lack substance. Furthermore, they have assembled their affidavit of documents, have complied with the prior costs order and have prepared all the documents to perfect their appeal. The plaintiffs argue that the defendants’ counsel who had heart surgery appeared on other matters at the time when the perfecting of the appeal was due and had other counsel handle cases on his behalf in the succeeding months. There is no reason why this case could not have been perfected at the time or during the months following the date required and there is no plausible explanation for the delay. The plaintiffs argue that when balancing interests, the justice of the case favours the plaintiffs.

[8] Having reviewed the history of the orders of Master Hawkins and the timetable set by him and the materials filed in these motions, I am not satisfied that, as a result of financial hardship or illness, the appellants could not have perfected their appeal. I am not persuaded that the appellants have demonstrated that they had a bona fide intention to appeal within the time period, that the delay is excusable and that there are merits to the appeal. To succeed on an appeal of a Master’s decision would require the appellant to demonstrate to the court that the Master was clearly wrong in the exercise of discretion. There is no reason to draw that conclusion. The Master had all relevant material before him, was very familiar with the case because he was the Case Management Master and detailed the delay that had taken place. There is no basis for saying that the exercise of discretion of the Master was clearly wrong. In addition, I am advised that two of the plaintiffs are more than eighty years old and that delaying this case would cause hardship. Any prejudice to the defendants is outweighed by prejudice to the plaintiffs who have been unable to prosecute their case in a timely fashion. In my view, the justice of the case does not support an extension of time to perfect the appeal. Although it is a serious matter to grant an order which has the effect of preventing a party from being heard, where the circumstances warrant and there is no other effective means of securing compliance with the orders of the court, such relief is appropriate. In the case of Hudon v. Colliers Macaulay Nicolls Inc. (2001) 147 O.A.C. 163, 11 C.P.C. (5th) 258, [2001] O.J. No. 1588 (Ont.Div.Ct.), the court wrote at para. 24:

The court should exercise its powers to dismiss (or to permit a dismissal to stand) only where the default has been intentional and “contumelious”, or where there has been an inordinate and inexcusable prejudice to the defendant if the action were not dismissed: see, Birkett v. James (1977),[1978] A.C.297, [1977] 2 All E.R. 801 (U.K.H.L.).

[9] This case falls in that category of cases where dismissal for delay is justified. For these reasons, the request for an extension of time to perfect the appeal of Master Hawkins’ order is dismissed. The motion to strike the pleadings for delay is granted.

[10] Given my decision regarding the motion to strike for delay, I do not need to rule on the motion for an order for security for costs. However, I would say that if the action were allowed to proceed, I would not have made such an order as it was not demonstrated that the appellants (defendants) do not have sufficient assets in Ontario to pay the costs of the appeal. The evidence suggests they have a source of income and assets.

[11] Costs of this motion and cross-motion which took approximately three hours to argue are fixed in the amount of $10,000 for fees and $171.01 for disbursements and applicable GST payable by the defendants to the plaintiffs within thirty days. These costs do not include the $3,000 costs ordered by Master Hawkins in the order made on February 20, 2007.

HIMEL J.

DATE: 20071029