Court File and Parties

CITATION: Farmers Oil & Gas Inc. v. Ministry of Natural Resources, 2013 ONSC 1608

COURT FILE NO.: 589/12

DATE: 20130315

SUPERIOR COURT OF JUSTICE – ONTARIO – DIVISIONAL COURT

RE: FARMERS OIL & GAS INC., Responding Party (Plaintiff)

AND:

HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO represented by the MINISTRY OF NATURAL RESOURCES et al, Moving Party (Defendant)

BEFORE: MOLLOY J.

COUNSEL: William McLarkey and Joseph D’Angelo, for the Moving Party

Andrew Winton, for the Responding Party

HEARD: March 4, 2013 at Toronto

Endorsement

Background

[1] This is a motion for leave to appeal from the decision of Mr. Justice Todd Ducharme, (dated November 23, 2012), upholding the decision of Master Graham (dated May 29, 2012).

[2] The action was commenced in October 2001, more than 11 years ago. The central allegation is that, based on an oral representation allegedly made by the Ministry of Natural Resources (“the Ministry”) between 1991 and 1993, the Ministry acted wrongly in giving petroleum drilling rights on Lot 10 in Kent, Ontario to a competitor of the plaintiff, rather than to the plaintiff. There was a mutually accepted explanation for the earlier part of the delay. However, the Master found that the delay between February 2006 and January 2011 should basically be laid at the feet of the plaintiff’s solicitors at the time. Notwithstanding that finding, at a contested status hearing, the Master refused to dismiss the plaintiff’s action, but rather allowed it to proceed with a strict timetable.

[3] The defendant Ministry appealed. Ducharme J. dismissed the appeal, holding that the Master’s decision was an exercise of discretion entitled to deference, was consistent with applicable legal principles, and contained no errors of fact or law justifying appellate intervention.

The Test for Granting Leave to Appeal

[4] The test for granting leave to appeal under Rule 62.02(4) is well-settled. It is recognized that leave should not be easily granted and that the test to be met is a very strict one. There are two possible branches upon which leave may be granted. Both branches involve a two-part test and in each case, both aspects of the two-part test must be met before leave may be granted.

[5] Under Rule 62.02(4)(a), the moving party must establish that there is a conflicting decision of another judge or court in Ontario or elsewhere (but not a lower level court) and that it is in the opinion of the judge hearing the motion “desirable that leave to appeal be granted”. A “conflicting decision” must be with respect to a matter of principle, not merely a situation in which a different result was reached in respect of particular facts: Comtrade Petroleum Inc. v. 490300 Ontario Ltd.¸(1992), 7 O.R. (3d) 542 (Div.Ct.).

[6] Under Rule 62.02(4)(b), the moving party must establish that there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted. It is not necessary that the judge granting leave be satisfied that the decision in question was actually wrong; that aspect of the test is satisfied if the judge granting leave is satisfied that the correctness of the order is open to “very serious debate”: Nazari v. OTIP/RAEO Insurance Co., [2003] O.J. No. 3442 (S.C.J. per Then J.); Ash v. Lloyd’s Corp. (1992), 8 O.R. (3d) 282 (Gen Div., per Farley J.). In addition, the moving party must demonstrate matters of importance that go beyond the interest of the immediate parties and involve questions of general or public importance relevant to the development of the law and the administration of justice: Rankin v. McLeod Young Weir Ltd. (1986), 57 O.R. (2d) 569 (H.C.J. per Catzman J.); Greslik v. Ontario Legal Aid Plan (1988), 65 O.R. (2d) 110 (Div.Ct.).

Central Issue

[7] The moving party accepts that Ducharme J. applied the correct standard of review. Since the decision of the Master was a discretionary one, it is entitled to deference, and should only be set aside on appeal if made on an erroneous legal principle or if infected by a palpable and overriding error of fact.

[8] The moving party is not relying on any factual errors, whether by the Master or the reviewing judge. For purposes of the appeal, it is accepted that Farmers intended to pursue the lawsuit and instructed its former counsel accordingly. However, between 2006 and 2011, the plaintiff’s counsel failed to do so, contrary to his retainer. Farmers acted reasonably by relying on its counsel to protect its interest in this regard. The Ministry did not provide any evidence of actual prejudice as a result of the delay.

[9] The central issue on the appeal from the Master, and on this motion for leave to appeal, is whether the Master erred in not dismissing the action once he determined that the delay was caused solely by counsel.

[10] The moving party accepts that the appropriate test at a status hearing under Rule 48.14(8) was identified by both the Master and the reviewing judge, based on Khan v. Sun life Assurance, 2011 ONCA 650. Specifically, the onus is on the plaintiff to demonstrate: (1) an acceptable explanation for the delay; and (2) that if the action proceeds the defendant would suffer no non-compensable prejudice.

[11] The moving party contends that there is binding authority in Ontario that where the delay is attributable solely to counsel for the plaintiff that is not inadvertent, in the sense that he deliberately failed to follow the instructions of his client, then the delay cannot be excused and the action must be struck. The plaintiff who is not responsible for the delay has his remedy against his solicitor, rather than against the wholly blameless defendant. The moving party relies in this regard on the Court of Appeal decisions in Marché D’Alimentation Denis Theirault Ltee v. Giant Tiger Stores Ltd., 2007 ONCA 695 and 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544.

Analysis

[12] The first problem with the moving party’s position is that it presupposes a clear finding of fact that the plaintiff’s solicitor “deliberately” failed to move the action forward, notwithstanding the instructions of his client. As noted by the reviewing judge, that goes somewhat further than the Master’s ruling, although I do accept that there was no specific finding that the solicitor’s failure was because of mere inadvertence.

[13] The second, and more significant problem, is that the moving party has erroneously interpreted the Court of Appeal’s decisions in Marché and 1196158 as imposing a rigid rule to be applied whenever the delay is fully attributable to plaintiff’s counsel. In my view, the cases do not stand for that proposition; they merely assert that this can be a proper basis upon which to dismiss an action. However, whether to dismiss an action (or set aside a default dismissal) remains an exercise of discretion involving the weighing of various factors, one of which is the explanation for the delay, with another being the impact of delay on the justice system as a whole. The reviewing judge was clearly alive to these issues. The balancing of these competing interests forms the subject matter of the opening paragraph of his reasons, and infuses his whole analysis of the case.

[14] There is no universally applicable definition as to what constitutes “acceptable” delay. Much will depend on the circumstances of the given case. I do not see the reviewing judge’s decision as being in conflict with any of the cases cited by the moving party. These cases all involve the exercise of discretion and the weighing of relevant factors. The reviewing judge did not stray from the established principles in all of these cases. He merely declined to interfere with the discretion of the Master, who considered the relevant factors, weighed them in the balance and exercised his discretion in favour of the plaintiff. The outcome of the decision may be different from the cases cited by the moving party, but the general principles underlying them are not. Therefore, these do not constitute “conflicting decisions” within the meaning of Rule 62.02(4)(a).

[15] Further, I find no reason to doubt the correctness of the decision of the reviewing judge. He did not fail to apply the cases cited by the moving party, although he did distinguish some aspects of them on appropriate grounds. I may not agree with every aspect of the distinctions drawn, but that does not affect my overall conclusion that there is no reason to doubt the correctness of the reviewing judge’s consideration and application of the legal principles involved. The reviewing judge applied the correct test on review of the Master’s decision and I have no basis for thinking he may have done so incorrectly. There is therefore no basis for granting leave to appeal under Rule 62.02(4)(b).

[16] Finally, even if I had reached a different conclusion with respect to reason to doubt correctness or conflicting decisions, I would still refuse leave to appeal in this case. There is nothing in this decision that alters or confuses the law. The decision reached by the Master, as confirmed by the reviewing judge, is based on specific facts and the exercise of discretion. There are no overarching principles requiring appellate clarification, nor is there any broader interest beyond the interests of the parties directly involved. This is not an appropriate case in which to grant leave to appeal.

Conclusion and Order

[17] In the result, this motion for leave to appeal is dismissed. If the parties are unable to agree on costs, brief written submissions (three pages) supported by costs outlines, shall be forwarded to the court within 30 days.

MOLLOY J.

Date: March 15, 2013.