Court File and Parties

Citation: Oberding v. Sun Life Financial, 2010 ONSC 3303

Divisional Court File No.: DC-09-160

Date: 2010-07-20

Superior Court of Justice – Ontario

Divisional Court

Re: Darcy Oberding v. Sun Life Financial Assurance Company of Canada

Before: Jennings, Wilton-Siegel and Koke JJ.

Counsel: David F. Smye, Q.C. for the Plaintiff/Appellant Duncan McDuff, for the Defendant/Respondent

Heard at Hamilton: June 2, 2010

Endorsement

THE COURT

[1] The plaintiff appeals an order of Crane J. dated December 18, 2008 made at a status hearing in respect of costs of $2,500 awarded against him. The defendant has cross-appealed the determination of the status hearing judge that there is no substantial risk of the loss of a fair trial. For the reasons set out below, the cross-appeal is granted and the matter is remitted for re-consideration by another judge at the re-convening of the adjourned status hearing scheduled for July 6, 2010 on the terms set out below.

Background

[2] In the action, the plaintiff claims disability benefits from the defendant pursuant to an insurance policy issued by the defendant. The statement of claim was issued on September 19, 2006. On October 19, 2006 the defendant served its statement of defence. On or about December 14, 2006, the defendant served its affidavit of documents. The plaintiff did nothing whatsoever to advance this action until a status notice was issued by the Registrar of the Court on October 24, 2008. This prompted the plaintiff’s counsel to contact the defendant, which took the position that it had been prejudiced by the plaintiff’s delay and requested a status hearing by letter dated November 5, 2005.

[3] The status hearing proceeded before the status hearing judge on December 18, 2008. The plaintiff did not file any materials notwithstanding the onus upon him pursuant to Rule 48.14(8) of the Rules of Civil Procedure to show cause why the action should not be dismissed for delay. Instead, the plaintiff’s counsel attended, made oral submissions explaining his reason for not advancing the action, and requested an adjournment. The defendant, although not required to file evidence, filed an affidavit of a solicitor of the defendant confirming that it had received no information, documentary or otherwise, regarding the plaintiff’s condition, his functional or vocational abilities, his income or his activities, despite alleging having been totally disabled. It further alleged prejudice to the defendant, among other things, flowing from its inability to assess what treatment, rehabilitation and/or retraining might have brought his claim to an end.

[4] This appeal proceeds under section 19(1)(b) of the Courts of Justice Act, c. C43, as amended. The cross-appeal proceeds under Rule 61.07(1.1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended, leave to appeal having been granted to the plaintiff by Whitten J. dated October 2, 2009.

The Plaintiff’s Appeal

[5] On the appeal, the plaintiff argued that the failure to afford him an opportunity to make cost submissions before an award was made by way of a condition of the adjournment constituted a denial of nature justice.

[6] It is well established that, absent extraordinary circumstances, the parties to litigation are entitled to make submissions as to costs at every stage of the proceedings following a decision on the issue in question or assuming a particular result if a decision on the issue is reserved: see Visic v. University of Windsor, [2006] O.J. No. 4730 (Div. Ct.) per Ferrier J.

[7] In our view, the failure to afford the plaintiff an opportunity to address costs before the award was made did constitute a denial of material justice. However, given the determination that we make in these reasons regarding the defendant’s cross-appeal, the plaintiff’s appeal is moot except insofar as it is relevant to costs of this appeal.

The Defendant’s Cross-Appeal

Positions of the Parties

[8] On the cross-appeal, the defendant argued the status hearing judge erred in failing to dismiss the action on the basis that the plaintiff had failed to discharge the onus upon it of satisfying the two-fold test set out by the Divisional Court in Savundranayagam v. Sun Life Assurance Company of Canada, 2008 54788 (ON SCDC), [2008] O.J. No. 4215 (Div. Ct.) per Carnwath J. The defendant submits that the plaintiff failed to establish either element of this test.

[9] The plaintiff relied principally on the decision of Gibson J. in Clements v. Greenlaw, 2009 33028 (ON SCDC), [2009] O.J. No. 2688 as support for his position that a status hearing is principally a case management tool and is not intended to be used, at least at an initial status hearing, to dismiss an action. He argues that it was open to the status hearing judge to reject the plaintiff’s allegations of prejudice, which he characterizes as bald assertions, and to accept the plaintiff’s oral submissions that the defendant would not be prejudiced if the action continued.

Standard of Review

[10] The standard on this appeal is correctness given that it addresses a matter of law.

Preliminary Issue

[11] Before addressing the defendant’s cross-appeal, it is first necessary to address a preliminary issue. Prior to the commencement of plaintiff’s appeal, the defendant sought and was denied leave to appeal by Whitten J. The plaintiff argues that such denial disentitles the defendant to an appeal as of right under Rule 61.07(1.1)(b) of the Rules of Civil Procedure. He is, however, unable to find any case law directly on that point.

[12] We do not agree with this submission. The wording of Rule 61.07(1.1)(b) is absolutely clear. Nor is there any necessary connection between a denial of an independent appeal on the basis that it does not meet the requirements of either branch of Rule 62.02(4) and the plaintiff’s independent decision to appeal the cost award against it. Accordingly, we are satisfied that we have jurisdiction to hear the cross-appeal.

Analysis and Conclusions

[13] Turning to the cross-appeal, we will set out that legal framework within which the status hearing judge was required to address the defendant’s submission that the action should be addressed and will then address the decision of the status hearing judge.

Applicable Law

[14] Status hearings are regulated by Rule 48.14 of the Rules of Civil Procedure. Of significance for this proceeding, Rule 48.14(13) provides as follows:

At the status hearing, the plaintiff shall show cause why the action should not be dismissed for delay and,

(a) if the presiding judge or case management master is satisfied that the action should proceed, the judge or case management master may,

(i) set time periods for the completion of the remaining steps necessary to have the action placed on or restored to a trial list and order that it be placed on or restored to a trial list within a specified time,

(ii) adjourn the status hearing to a specified date on such terms as are just, or

(iii) if the action is an action to which Rule 77 may apply under rule 77.02, assign the action for case management under that Rule, subject to the direction of the regional senior judge,

(iv) make such other order as is just; or

(b) if the presiding judge or case management master is not satisfied that the action should proceed, the judge or case management master may dismiss the action for delay.

Accordingly, the Rule imposes an onus on the plaintiff to show cause why the hearing should not be dismissed for delay. While Rule 48.14(13) grants discretion to the status hearing judge, that discretion must be exercised in accordance with the applicable legal principle.

[15] The test to be applied in determining whether the plaintiff has met such onus was set out by Carnwath J. in Savundranayagam at para. 13. The status hearing judge must be satisfied both that there is an explanation for the delay that justified continuation of the action and that there is no prejudice to the defendant, which we understand to mean non-compensable prejudice.

[16] Although it is unclear what whether Wilson J. intended to articulate a different standard in Clements v. Greenlaw, the test in Savundranayagam was recently applied by Glithero J. in Riggitano v. Standard Life Assurance Co. [2009] O.J. No. 1997 (S. Ct.), which decision was affirmed on appeal by the Court of Appeal 2010 ONCA 70, [2010] O.J. No. 292 (C.A.) without specific reference to Savundranayagam. We would also note that the facts in Clements v. Greenlaw, including the approach adopted by the Master whose judgment was the subject of the appeal, were significantly different from the present proceeding and that it does not appear that the decision in Savundranayagam was brought to the attention of Wilson J.

[17] Accordingly, we are satisfied that the applicable test in the present cross-appeal is that set out in Savundranayagam.

Ruling of the Status Hearing Judge

[18] Turning to the endorsement of the status hearing judge, we are unable to conclude that the status hearing judge applied the test in Savundranayagam.

[19] With respect to the first prong of the test, it is unclear whether the judge was or was not satisfied that the plaintiff’s explanation warranted a continuation of the action. Ultimately, this requires, among other things, a determination regarding the plaintiff’s intention to prosecute the action throughout the period since commencement of the action. The status hearing judge failed to make a determination on this issue.

[20] With respect to the second prong of the test, there are two difficulties with the endorsement of the status hearing judge.

[21] First, it is unclear whether the status hearing judge turned his attention to the question of whether the defendant had suffered non-compensable prejudice as a result of the delay that warranted dismissal of the action. Indeed, the status hearing judge appears to have considered a different, if related, test of whether there was a substantial risk of the loss of a fair trial, concluding that there was no such risk but without giving reasons for this conclusion. Without reasons specifically addressing the defendant’s allegations of prejudice, we cannot conclude that the status hearing judge addressed his mind to the second prong of the test in Savundranayagam.

[22] In addition, on the record before the status hearing judge, there was a serious issue as to whether the defendant had suffered non-compensable prejudice. Savundranayagam evidences the fact that a party in the position of the defendant could establish non-compensable prejudice. In the present proceeding, the defendant alleged specific forms of prejudice, albeit generic, related to the plaintiff’s long-term disability claim. The plaintiff offered no evidence to counter these allegations. In similar circumstances in Savundranayagam, Carnwath J. was not only satisfied that the defendant suffered prejudice, but also characterized the defendant’s evidence as “powerful evidence” of prejudice caused by the plaintiff’s delay. On this issue, there is no significant difference between the circumstances in Savundranayagam and the circumstances before the status hearing judge in this proceeding.

[23] These two difficulties regarding the issue of prejudice to the defendant are sufficient to dispose of the issue on this cross-appeal. The status hearing judge failed to address the issue of whether the defendant had suffered non-compensable prejudice and, accordingly, failed to apply the test in Savrundranayagam.

[24] In these circumstances, we must conclude that the status hearing judge erred in law in exercising his discretion under Rule 48.14 (13) and that the order dated December 18, 2008 giving effect to his decision must be set aside.

Conclusion

[25] It is clear that the status hearing was conducted in a more informal manner than current practice would require, given the defendant’s submission that the action should be dismissed. We therefore consider it appropriate to re-convene the status hearing that has been adjourned to July 6, 2010 before another status hearing judge in order that a proper record can be established and the applicable legal principles applied, it being intended, however that the issue shall remain whether the plaintiff discharged the onus upon it as of the date of the original status hearing, being December 18, 2008. We leave it to the status hearing judge hearing the re-convened status hearing to determine whether further materials may be filed regarding this issue.

Costs

[26] As the order dated December 18, 2008 of the status hearing judge has been set aside, the determination of the costs of that hearing is remitted to the status hearing judge on the re-convened hearing.

[27] The defendant was substantially successful on the cross-appeal. The Court has ordered a re-convening of the adjourned status hearing as an accommodation to the plaintiff in recognition of the significance to it of the relief sought by the defendant rather than by way of any partial success on the cross-appeal. Accordingly, the defendant is entitled to its costs of the cross-appeal, which we fix at $7,500 on an all-inclusive basis, payable forthwith.

Jennings J.

Wilton-Siegel J.

Koke J.

Released: July 20, 2010