DIVISIONAL COURT FILE NO.: 153/13
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
MARGARET GRACE KERR
Plaintiff
– and –
CIBC WORLD MARKETS INC., MERRILL LYNCH CANADA INC., CIBC WOOD GUNDY FINANCIAL SERVICES INC., MERRILL LYNCH INSURANCE SERVICES INC., ROY RUPPERT, GORDON W. LERICHE and TRANSAMERICA LIFE INSURANCE COMPANY OF CANADA
Defendants
Andrew Faith & Jeffrey Haylock, for the Plaintiff
Patrick D. Flaherty, for CIBC World Markets Inc., CIBC Wood Gundy Financial Services Inc., Merrill Lynch Insurance Services Inc., Merrill Lynch Canada Inc., Roy Ruppert & Gordon W. LeRiche, Defendants
Andrew A. Evangelista, for Transamerica Life Insurance Company of Canada, Defendant
HEARD: April 15, 2013
Overview
1It seems that the plaintiff, Margaret Grace Kerr, has been poorly served by two lawyers she retained to represent her in this action. The first was fired because the plaintiff became concerned that not enough had been done to move the action forward quickly. It had been struck from the trial list. The second failed to promptly set down a motion to restore the action to the trial list and failed to advise the plaintiff when an order was made, by Master Graham, dismissing the action. This motion, brought by the plaintiff’s third counsel, seeks to extend the time to file a Notice of Appeal of the decision of the Master.
Background
2Margaret Grace Kerr commenced this action on March 12, 2004. It alleged breach of contract and negligence in respect of investment advice provided to her in 2000-2001. Discoveries were completed, albeit after orders of the court had been obtained dealing with the satisfaction of undertakings that had been made. In December 2006, the action was set down for trial. Counsel, who at the time had carriage of the matter on behalf of the plaintiff, did not return the trial scheduling forms to the trial office. As a result, on July 8, 2010, the trial coordinator struck the action from the trial list.
3The plaintiff fired her lawyer and, on November 15, 2010, retained John Ormston. A motion to restore the action to the trial list returnable January 14, 2011 was scheduled. It became evident that the defendants intended to vigorously oppose the motion. After the defendants, other than Transamerica Life Insurance Company of Canada (“Transamerica”) had filed their factum, John Ormston filed an affidavit of his predecessor and an affidavit of the plaintiff. An adjournment was sought and granted. On April 7, 2011, counsel for the defendants cross-examined the predecessor to John Ormston on the affidavit she had sworn. John Ormston has acknowledged that, following the cross-examinations, he took no steps to re-schedule the motion and “allowed the matter to languish” (see: Affidavit of John Ormston, sworn January 8, 2013).
4On June 22, 2012, the defendants, other than Transamerica, brought a motion to dismiss the motion to restore the action to the trial list. It was heard by Master Graham. His decision was released on July 5, 2012. It dismissed both the motion and the action. John Ormston did not immediately advise his client of this result. On September 28, 2012, he responded to inquiries that had been made by the plaintiff’s accountant and advised him that the motion had been unsuccessful. The accountant informed the plaintiff. It was not until November 5, 2012 that John Ormston e-mailed the plaintiff. The e-mail explained that the action was “at an end” and made no mention of the possibility of an appeal. The next day, November 6, 2012, for the first time, John Ormston sent the plaintiff a copy of the decision of the Master.
5Subsequently, John Ormston sent two letters to the plaintiff, one dated November 13, 2012, and the other dated November 14, 2012. He indicated that there was no reasonable explanation for the long periods during which nothing had been done on the file. In neither letter did he advise that the decision of the Master could be appealed.
6On November 23, 2012, the plaintiff retained her present counsel. It was at this time that Margaret Grace Kerr learned of her right to appeal the order of Master Graham. She instructed her new counsel to attempt to have the order dismissing the action set aside. On November 30, 2012, the plaintiff’s present counsel wrote to the lawyers acting for the defendants and explained that a motion to that effect would be brought. An e-mail, dated December 6, 2012, followed. It advised that counsel for the plaintiff was prepared “…to schedule this motion on an urgent basis in front of any Master that is available” and expressed the concern that, failing this, counsel for the defendants would argue that the motion had not been proceeded with “…as expeditiously as possible”. Counsel for the defendants other than Transamerica responded as follows:
Mark,
If you defer bringing your motion to attempt to set aside the July 2012 order of Master Graham until after the hearing of the costs motions of the defendants on January 16, 2013, we won’t rely on the delay from the date of your email on December 6, 2012 to January 17, 2013, or such later date as we may agree.
7This motion was heard on April 15, 2013. It was not suggested that this date was set on any basis other than by the agreement of counsel. Accordingly, for the purposes of this motion, the delay in the filing of a notice appealing the order of Master Graham ended on December 6, 2012. Having said that, there is disagreement as to when the delay began. A party wishing to appeal a final order made of a Master is required to file a Notice of Appeal within thirty days of the decision being released (see: Rule 61.04(1) of the Rules of Civil Procedure). Counsel for the defendants submitted that the delay began on August 5, 2012 (thirty-one days after the decision of the Master had been released). In making this submission, counsel for the defendants understood that this would have required the plaintiff to file a Notice of Appeal in circumstances where she was unaware of the decision that was to be appealed. In the alternative, counsel proposed that the delay began to run thirty days after September 28, 2012; the day that the plaintiff’s accountant had been told of the decision and communicated this information to the plaintiff. On this basis, the delay would have commenced running on October 29, 2012. In the circumstances, the delay to be accounted for is either four months (August 5, 2012 to December 6, 2012) or one month and one week (October 29, 2012 to December 6, 2012).
8As counsel for the plaintiff sees it, there was no delay. It was only when his firm was retained that Margaret Grace Kerr learned that an appeal was possible. On learning this, she instructed her counsel to bring the requisite motion. A week later, counsel for the plaintiff wrote to counsel for the defendants advising that such a motion would be brought. This response on the part of the plaintiff was consistent with the evidence of the plaintiff and the first two lawyers who acted on her behalf. The plaintiff and the two lawyers have indicated that Margaret Grace Kerr always intended that the action be moved forward with expedition (see: Affidavit of Margaret Grace Kerr, sworn February 8, 2013, at para. 2; Affidavit of Diane L. Evans, sworn January 11, 2012, at paras. 13 and 18; Affidavit of John Ormston, sworn January 8, 2013, at para. 3).
Issues
9The questions at the root of this motion are:
(i) who bears the consequences of the failings of the two lawyers; and,
(ii) should the court be asked to provide the answer to the first question in response to this motion or as part of hearing an appeal of the order of Master Graham?
Analysis
10There are three possible answers to the first question. It could be the two lawyers. It can be argued that they both failed to follow their instructions or act in the best interests of their client. Counsel advised that the plaintiff has commenced actions against both of them. It could be the defendants. The action has been ongoing since 2004 and should have been completed by now. Despite this, if the plaintiff is successful in setting aside the dismissal of the action, it could be that they will have to defend themselves at a trial. Finally, it could be the plaintiff. After all, the lawyers acted on her behalf and were her agents in the conduct of the action. In such circumstances, her remaining recourse would be the action she has brought against the lawyers. This may leave her in a disadvantaged position. There would have to be what was referred to by counsel as a “trial within a trial”. Quite apart from the question of the alleged negligence of the lawyers would be the issue of the chance of success of the action against the defendants in the original proceeding.
11Counsel for the plaintiff says the fault is not the plaintiffs and, in the circumstances, should not be left on the shoulders of her earlier counsel. In making this submission, counsel relied on the case Chiarelli v. Weins, 2000 3904 (ON CA), 46 OR (3d). Following a car accident, counsel for the plaintiff moved with “commendable” dispatch to issue a Statement of Claim and to arrange for it to be served. The address of the defendant was not complete. She lived in the countryside and there was no municipal street number that allowed for her home to be identified. On April 24, 1991, the time for service passed. The lawyer did not move to extend the time for service. During February 1994, the insurer of the defendant closed its file. Two-and- a-half years later, during the fall of 1996, the plaintiff retained new counsel. The file was transferred in February 1997. A motion to extend the time for service was launched in May 1997 and was served on the defendant (at her corrected address) in August 1997. The motions judge allowed the extension. This determination was set aside by the Divisional Court, but was re-installed by the Court of Appeal.
12The lawyer, a sole practitioner, explained the delay by saying that he “...succumbed to the pressure of work, that he became embarrassed and depressed by his negligence, and that instead of bringing a motion he ‘froze’”(see: Chiarelli v. Weins, supra, at para. 6). The Court of Appeal agreed that the motions judge was correct when he observed that “... on a motion to extend time for service, the court should be concerned mainly with the rights of litigants not with the conduct of counsel” (see: Chiarelli v. Weins, supra, at para. 9).
13In the case I am asked to decide, John Ormston explains his failure to re-schedule the motion to extend time for serving a notice of appeal in similar terms. He confronted difficult issues in his personal life and became “immobilized” with respect to this action. With this in mind, relying on Chiarelli v. Weins, supra, counsel for the plaintiff submitted time should be extended.
14Counsel for the defendants took a different position. They rely on the case of Marché D'Alimentation Denis Theriault Ltée v. Giant Tiger Stores Ltd., 2007 ONCA 695, 87 O.R. (3d) 660. In October 1996, Marché sued Giant Tiger for damages arising out of an agreement that the latter would lease, with an option to purchase, a building owned by the former. By early 1998, the action stalled. Marché did not answer undertakings on discovery and failed to deliver amended pleadings to comply with court orders. Marché changed solicitors. The new solicitor failed to file a Notice of Change of Solicitors. On March 4, 1999, the Registrar dismissed the action for failure to set the action down within the prescribed time (see: Rule 48.14 of the Rules of Civil Procedure). As a result of the failure to file a Notice of Change of Solicitors, neither Marché nor its new counsel were aware that the action had been dismissed. Nothing happened for over four years. During June of 2003, the solicitor for Marché discovered that the action had been dismissed, but did not inform his client until October. A motion to set aside the order dismissing the action was not brought until December 2003. It was not heard until February 2005. This was almost six years after the order had been made. The Master dismissed the motion. The action was re-instated by a decision of a single judge of the Divisional Court. The Court of Appeal restored the decision of the Master.
15The Court of Appeal found that “...the nature of the delay and the solicitors' conduct in this case... amount[ed] to more than the kind of lapse or inadvertent mistake that the legal system can countenance” and determined that “... excusing a delay of this magnitude and gravity risks undermining public confidence in the administration of justice. Lawyers who failed to serve their clients threaten public confidence in the administration of justice.” The Court concluded that delays of the kind present in the case were “... inimical to the important goal of timely justice” (see: Marché D'Alimentation Denis Theriault Ltée v. Giant Tiger Stores Ltd., supra, at paras. 31, 32 and 41). It is the principle of timely justice that counsel for the defendants say should govern this motion. On this basis, they say it should be dismissed.
16To my mind, a consideration of this issue should begin with Rule 1.04 of the Rules of Civil Procedure. It says:
These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
17The rule demonstrates a pre-disposition that matters should be determined on their merits and, it follows, not as a result of the missteps of counsel.
18Ultimately, the issue is one of measuring prejudice. This is the “key issue” (see: Chiarelli v. Weins, supra, at para. 10). “The basic consideration…is whether [the extension of time for service] will advance the just resolution of the dispute, without prejudice or unfairness to the parties” (see: Laurin v. Foldesi (1979), 23 O.R. (2d) 331, as quoted in Chiarelli v. Weins, supra, at para. 12). The plaintiff has the onus to prove that extending the time for service will not prejudice the defence (see: Chiarelli v. Weins, supra, at para. 12), but it has to be recognized that “…in the face of such a general allegation [i.e. that the defence will be prejudiced], the plaintiffs cannot be expected to speculate on what witnesses or records might be relevant to the defence and then attempt to show that these witnesses and records are still available or that their unavailability will not cause prejudice… [I]f the defence is seriously claiming that it will be prejudiced by an extension it has at least an evidentiary obligation to provide some details (see: Chiarelli v. Weins, supra, at para. 14).
19“Each case should be decided on its facts…” (see: Chiarelli v. Weins, supra, at para. 17). In this case, there is no suggestion that witnesses are unavailable or in circumstances where memories will have faded. It is not alleged that the record can no longer be found or has been destroyed. In this case, it is the passage of time and its impact on “timely justice” that is of concern. This situation can be distinguished from the circumstances in Marché D'Alimentation Denis Theriault Ltée v. Giant Tiger Stores Ltd., supra. There, the motion to re-instate the action was brought more than 4.5 years after it had been dismissed. It was heard six years after the dismissal. Here, the motion to extend the time to allow for the appeal of the order of Master Graham was heard less than a year after the order was made. It was less than three years since the action was struck from the trial list.
20Counsel for the defendants acknowledged that the delay that was pertinent to this motion was the delay attributed to John Ormston following the order of Master Graham. He failed to advise his client of the dismissal of the action or her right to appeal. It is he who carries the responsibility for not obtaining instructions and commencing an appeal as well as for any further delay associated with not serving and setting down a motion to extend the time for doing so after the passage of thirty days. Counsel went on to say that, while it did not bear directly on the delay at issue, the court, in considering this motion, should keep in mind the earlier hold-up associated with the failure of John Ormston to bring on a motion to restore the action to the trial list after it had been struck off, as well as any delay arising from the actions of the first counsel retained by Margaret Grace Kerr. It was said that all of this contributed to “untimely justice” that the court should not tolerate and which is the demonstration of the prejudice that should lead the court to refuse to grant the extension.
21It is this submission that brings up the second of the questions to which I have referred. This earlier delay was raised on the motion before Master Graham. It was at the heart of what he heard and the decision he made. The impact of that delay is not a de novo consideration to be dealt with as if it had received no prior consideration by the court. Nor would it be appropriate to accept the determinations of the Master that reflect on that delay when the issue at hand is whether an appeal of those holdings should be allowed to proceed. It would be better dealt with as part of an appeal of his order if the extension requested on this motion is granted.
22Finally, I should refer to the case of Lawrence v. Peel Regional Police Force 2011 CarswellOnt 13766 A.C.W.S. (3d) 296. I do so only because counsel for the defendants referred to it as on “all fours” with the case I am asked to decide. It isn’t. A man engaged in a matrimonial dispute was charged as a result of a report made by his wife to the police. He was acquitted of all the charges save for breach of a recognizance. He sued his wife, her lawyer and the Peel police. He alleged that the wife and the lawyer conspired to bring the charges in the hope of gaining an advantage in the marital dispute and the police because they had conducted no investigation before laying the charges. The action failed. An appeal to the Divisional Court was dismissed. The man believed the next appeal was to the Supreme Court of Canada. When he discovered his error, it was too late to bring the motion for leave to appeal that was required for an appeal to the Court of Appeal. He brought a motion for leave to extend the time. It was dismissed. What determined the issue was the understanding that the appeal, if permitted, would seek to re-visit and reverse findings of fact that had been made by the trial judge. Leave could not be granted on this basis. It cannot be said, with the same certainty, that an appeal of the order of Master Graham could not be granted.
23The question to be determined is whether the delay in commencing the appeal and the subsequent delay in bringing the motion to extend the time to appeal is such that it will be the cause of “untimely justice” that would prejudice the defendants and bring the administration of justice into disrepute. In this case, the delay, be it four months, one month or less (see: para. [7], above) will not prejudice the defendants in such a way that the appeal of the order of Master Graham should not be heard on its merits pursuant to the direction in Rule 1.04 of the Rules of Civil Procedure. It will be at the appeal that the question of who bears the weight of the delay in processing the action will be determined.
Disposition
24The motion is granted. The time to serve and file the Notice of Appeal is extended to thirty days from the date of the release of these reasons.
Costs
Costs
25If the parties are unable to agree as to costs, I will consider submissions in writing on the following terms:
Submissions, on behalf of the plaintiff, no later than fifteen days after the release of these reasons. Such submissions are to be no longer than four pages, double-spaced, not including any Costs Outline, Bill of Costs or case law that may be provided.
Submissions, on behalf of defendant, no later than ten days thereafter. Such submissions are to be no longer than four pages, double-spaced, not including any Costs Outline, Bill of Costs or case law that may be provided.
Submissions, in reply, on behalf of plaintiff, no later than five days thereafter. Such submissions are to be no longer than two pages, double-spaced.
LEDERER J.
Released: 20130430
CITATION: Kerr v. CIBC World Markets Inc., 2012 ONSC 2541
DIVISIONAL COURT FILE NO.: 153/13
COURT FILE NO.: 04-CV-265351-CM1
DATE: 20130430
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
MARGARET GRACE KERR
Plaintiff
– and –
CIBC WORLD MARKETS INC., MERRILL LYNCH CANADA INC., CIBC WOOD GUNDY FINANCIAL SERVICES INC., MERRILL LYNCH INSURANCE SERVICES INC., ROY RUPPERT, GORDON W. LERICHE and TRANSAMERICA LIFE INSURANCE COMPANY OF CANADA
JUDGMENT
LEDERER J.
Released: 20130430