CITATION: Essa Carpentry Inc. v. Falconwin Holdings Limited, 2014 ONSC 6527
DIVISIONAL COURT FILE NO.: 139/14
DATE: 20141110
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
ESSA CARPENTRY INC.
Plaintiff
(Respondent)
– and –
FALCONWIN HOLDINGS LIMITED
Defendant
(Appellant)
Salvatore Mannella, for the Plaintiff (Respondent)
Allen C. Gerstl, for the Defendant (Appellant)
HEARD at Toronto: November 10, 2014
harvison young j. (Orally)
[1] The appellant/defendant appeals from an order by Master Albert dated March 10, 2014 in which she struck out its defence of set off and its counterclaim. In the same order, she ordered that the trial date previously set for May 6, 2014 should proceed and that the plaintiff would be required to prove its case.
[2] The order of the Master striking the defence of set off was a final discretionary order. Accordingly, the applicable standard of review is clearly set out by this Court in Starland Contracting v. 1581518 Ontario Ltd., a very similar case, 2009 30449 (Div. Ct.) at para. 7:
On appeal, the decision of a master is entitled to the same level of deference with respect to findings of fact and the exercise of discretion as would be accorded to the decision of a judge. The standard of review of an order, whether final or interlocutory, is correctness with respect to questions of law. Where the master exercises discretion, the Court on appeal must determine whether the correct principles were applied and whether the master misapprehended the evidence such that there is a palpable and overriding error (Zeitoun v. The Economical Insurance Group (2008), 20996 (ON SCDC), 2008 20996 (ON SCDC), 91 O.R. (3d) 131 (Div. Ct.), aff’d 2009 ONCA 415).
[3] Starland also refers to the decision of Vacca v. Banks [2005] O.J. No. 147 of this Court. There had been repeated breaches of court orders that required the plaintiffs to answer outstanding undertakings and to provide a damages brief. On appeal, Ferrier J. declined to set aside the order of the Master dismissing the action. He noted that the dismissal of the action was not for failure to answer undertakings, but as a result of the plaintiffs’ continued defiance of court orders. Ferrier J. stated (at paras. 27):
There comes a time when this court is obliged to meet its responsibility for the effective administration of justice through case management by dismissing an action. Such is the case when the plaintiff repeatedly fails to comply with orders of the court whether or not there has been prejudice to the defendants.
[4] The appellant’s central argument is that the circumstances in this case did not justify striking this counterclaim and defence of set off, and it relies principally on the recent decision of Signal Chemicals v. Singh [2014] O.J. 4258 (Ont. Div. Ct.). It also submits that, in effect, it did not have proper notice that the respondent and the Master would rely on “repeated breaches of court orders” rather than on the failure to produce undertakings as set out in the original notice of motion.
[5] In this case, the Master was the case management Master (unlike the Master in the Signal decision) and was very familiar with the case. At para. 26 of Starland, this court stated as follows:
The ability of the court to control the litigation process is particularly important in matters that are case managed, such as construction lien actions. The authority to dismiss proceedings for repeated failure to comply with court orders and flagrant disregard for the court process is an essential management tool. A case management judge or master who has a continuous connection with an action, the parties and their counsel is well-positioned to monitor the conduct of the participants throughout the proceedings, and to determine whether anyone is deliberately stalling, showing bad faith or abusing the process of the court when deadlines are missed and defaults occur under procedural orders. A decision to dismiss an action or strike a pleading because of such faults is entitled to deference, unless that decision is shown to have been exercised on wrong principles or based upon a misapprehension of the evidence such that there is a palpable and overriding error.
[6] I do not agree with the appellant that it did not have proper notice because the notice of motion referred only to the outstanding undertakings. As the respondent indicates, the appellants provided answers to undertakings on the original return date of the motion on February 4, 2014, requiring an adjournment for the respondents to consider the responses. At the return of the motion on March 10, the respondent took the following position:
(i) That many of the answers to undertakings contained numerous, that is about 50 new documents that had clearly been in the possession of the appellant and should have been disclosed in the appellant’s affidavit of documents sworn January 24, 2013 that had not been;
(ii) That the appellant was previously ordered to deliver its affidavit of documents and produce its schedule “A” documents by November 16, 2012;
(iii) That the respondent’s expert was unavailable to review the additional documentation produced by the appellant until mid to late April 2013;
(iv) Lien action was commenced on May 25, 2010 and a trial date was finally fixed to proceed May 6, 2014 based on a procedural schedule as ordered by the Master; and
(iv) The late delivery of new documents by the appellant posts a risk that the trial would be delayed.
[7] For these reasons, the respondent sought before the Master an order to strike the appellant’s counterclaim to permit the plaintiff to proceed with the trial so as to prove its case or alternatively, to adjourn the trial, direct the appellant’s representative to re-attend for a discovery to answer further questions arising from his undertakings and for leave to deliver a supplementary expert report.
[8] The appellant submits that there was no basis in the evidence for a finding that the respondent would suffer delay or prejudice or that the construction lien procedure would be compromised in the circumstances, especially because the lien has ceased to be perfected. They also argue that there was complete or substantial compliance with the fulfilment of the undertakings prior to the hearing of the motion on March 10, 2014.
[9] The Master’s reasons, though brief, indicate that she considered these factors, the evidence before her, as well as the appropriate legal principles. She also reviewed the lengthy background:
The defendant’s repeated breaches of court orders and failure to provide a reasonable explanation for failing to produce the documents required promptly or, in the case of proof of payment to the rectification contractor, at all, persuades me that any other order would require that the trial date be adjourned from May 6, 2014. Doing so would not only result in a waste of trial time booked almost a year ago, it would also prejudice this plaintiff who is entitled to know the case to meet and proceed on a fixed trial date. Rescheduling the trial would result in an adjournment of at least 10 months before the construction lien court could reschedule the trial and would prejudice other litigants in line for trial time.
[10] The Master continued as follows referring to Vacca v. Banks, [2005] O.J. No. 147 (Ont. Div. Ct.) stating that:
Repeated failures and delays affect not only the parties to the action. They significantly increase the cost of the administration of justice due to the impact on administrative and judicial resources. Repeated breaches of orders as in this case must attract significant sanctions.
[11] In addition, she went on to note that while it was not necessary, pursuant to Vacca v. Banks, supra, to find prejudice to the plaintiff, she found that Essa would be prejudiced if the Court were to allow Falconwin yet another chance to produce the documents required to establish its claim for set off and its counterclaim.
[12] In my view, the Master applied the principles that were articulated in Vacca v. Banks, Starland and the other cases dealing with the exercise of the discretion to strike pleadings. There was an ample evidentiary record to ground her conclusion and it is clear that the appellant made these submissions before her. Moreover, she applied the correct legal test.
[13] I disagree with the appellant that there was no evidence to ground this finding. In my view, this case is distinguishable from the circumstances in Signal. In this case, the Master was the Case Management Master, she referred to the repeated breaches of court orders and the proper considerations to be applied in exercising her discretion.
[14] While the appellant is correct in stating that the “interlocutory dismissal of an action is a last resort” from Dewpoint Insulation Systems Inc. v. JV Mechanical Ltd. (2010) 84 C.P.C. (6th) 297 (Div. Ct.), this is a case where the Master, having carefully considered the relevant legal principles, along with the factual background and history of this case, with which she was extremely familiar as the Case Management Judge, exercised her discretion and concluded that this was a case which warranted striking the defence of set off and the counterclaim. I find no error in principle or palpable or overriding error that would justify interfering with the Master’s decision in this case and the appeal is therefore dismissed.
[15] I have endorsed the back of the Appeal Book, “Appeal dismissed for reasons delivered orally. Costs payable by the appellant to the respondent in the amount of $4,000.”
HARVISON YOUNG J.
Date of Reasons for Judgment: November 10, 2014
Date of Release: November 13, 2014
CITATION: Essa Carpentry Inc. v. Falconwin Holdings Limited, 2014 ONSC 6527
DIVISIONAL COURT FILE NO.: 139/14
DATE: 20141110
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
HARVISON YOUNG J.
BETWEEN:
ESSA CARPENTRY INC.
Plaintiff
(Respondent)
– and –
FALCONWIN HOLDINGS LIMITED
Defendant
(Appellant)
ORAL REASONS FOR JUDGMENT
HARVISON YOUNG J.
Date of Reasons for Judgment: November 10, 2014
Date of Release: November 13, 2014