Court File and Parties
CITATION: Kupets v. Bonavista Pools Limited, 2015 ONSC 7348
DIVISIONAL COURT FILE NO.: 39/15
DATE: 20151126
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
RACHEL KUPETS and DORON SCHAFFER Plaintiffs (Appellants)
– and –
BONAVISTA POOLS LIMITED Defendant (Respondent)
COUNSEL: David Silver, for the Plaintiffs (Appellants) Daniel A. Fiorita and James B. Tausendfreund, Defendant (Respondent)
HEARD at Toronto: October 30, 2015
BEFORE: Swinton J.
Reasons for Judgment
Overview
[1] The appellants, plaintiffs in a simplified rules proceeding, appeal from the final order of Master Abrams dated January 21, 2015 that dismissed their action for delay following a status hearing.
[2] The appellants argue that the Master made a number of errors, including her failure to apply a contextual approach, in deciding whether to dismiss the action. For the reasons that follow, I would allow the appeal.
The Governing Principles
[3] The Court of Appeal has set out the principles governing dismissal for delay and setting aside a dismissal for delay in a number of recent cases. Most useful for the purposes of this appeal is the case of Carioca’s Import & Export Inc. v. Canadian Pacific Railway Limited, 2015 ONCA 592. While that case dealt with an appeal from the refusal of a judge to restore an action to the trial list under rule 48.11, the Court held that the appropriate test in the case was that applicable in a dismissal for delay, because the effect of the refusal to restore the action to the trial list was an administrative dismissal.
[4] The appropriate test requires the plaintiff to show, on a balance of probabilities, that there was a reasonable explanation for the delay and that the defendant would suffer no non-compensable prejudice if the action proceeded (at para. 3). The Court of Appeal explained in detail how the test should be applied, emphasizing the need for a contextual approach. In assessing whether there has been a reasonable or acceptable explanation for delay, the court must consider the overall conduct of the litigation, including the conduct of the defendant (at paras. 46, 53-54). In assessing prejudice, the court must not mechanically apply a presumption of prejudice based on the passage of time (at paras. 5, 18). While the plaintiff has the onus to show the defendant would suffer no non-compensable prejudice, the court must also consider the defendant’s conduct in determining the issue of prejudice (at paras. 49-50).
The Factual Background
[5] The present action arises out of a dispute between the appellant homeowners and the respondent Bonavista Pool Limited about alleged damage to the appellants’ property in May 2007 during an acid wash cleaning of their swimming pool. The parties engaged in negotiations in an effort to resolve the matter through 2007 and 2008. The Statement of Claim was not issued until May 8, 2009, at a time when the appellants were represented by Kelly Smith of Rogers Partners LLP.
[6] Settlement efforts continued between Mr. Smith and the respondent’s insurance adjuster. Sometime in July 2010, the respondent’s adjuster and contractor went to the appellants’ home and inspected the property.
[7] In March 2011, Mr. Smith discovered that the action had been administratively dismissed on November 16, 2009 because the action was not defended. A motion was brought to reinstate the action. The respondent did not oppose, and Master Haberman set aside the Registrar’s order on June 17, 2011.
[8] Mr. Smith served a Notice of Change of Lawyer on September 29, 2011, as he had joined Zarek Taylor Grossman Hanrahan LLP (“Zarek”). In February 2012, he requested that a Statement of Defence be served forthwith.
[9] On March 6, 2012, the action was administratively dismissed because the respondent had not filed a Statement of Defence. Again, the respondent did not oppose a motion to set aside the dismissal. Master Hawkins ordered the dismissal order set aside on April 26, 2012, and the Statement of Defence was delivered on April 30, 2012.
[10] The parties scheduled examinations for discovery, which occurred June 11, 2012. An unsworn Affidavit of Documents had been served on the respondent on June 8, 2012 without objection by the respondent.
[11] A mediation scheduled for September 20, 2012 was postponed on the eve of the mediation, apparently because one of the appellants had not been advised of the date.
[12] Mr. Smith left the Zarek firm at some time in September or October 2012, and he took no steps to advance the litigation from October 2012 to October 2013. In 2014 his licence was suspended by the Law Society of Upper Canada for reasons not apparent from the motion materials. Meanwhile, the appellants retained Nathalie V. Rosenthall on November 15, 2013. She immediately made contact with the respondent’s counsel about the status of the file. After various efforts by her to schedule a conference call with the respondent’s counsel in February and March, 2014, there was a discussion of settlement on April 1, 2014.
[13] A Status Notice was issued by the Court on May 5, 2014. On July 14, 2014, Ms. Rosenthall served a Status Hearing Request Form. The next day, she wrote to respondent’s counsel to state that she was obtaining a further expert opinion to respond to the respondent’s repair quotation, and she confirmed that the appellants were prepared to proceed to mediation.
[14] On October 1, 2014, Ms. Rosenthall requested the appointment of a specific mediator and suggested a timetable to set the action down for trial by April 2015. On October 9, 2014, respondent’s counsel first told her that there were two outstanding undertakings from Dr. Kupets’ examination for discovery in 2012. Shortly thereafter, the respondent served an undertakings chart and also requested five photo exhibits from Mr. Schaffer’s examination for discovery.
[15] The Status Hearing was convened on October 30, 2014 pursuant to the former rule 48.14, which provided that unless the court orders otherwise, a status notice is to be issued by the court in any action that has not been set down for trial or otherwise disposed of within two years of filing a Notice of Intent to Defend or the first Statement of Defence. Under the rule, the onus is on the plaintiff to show cause why the action should not be dismissed for delay.
The Reasons of the Master
[16] The Master dismissed the action for delay. In the final paragraph of her endorsement, she stated:
Given the paucity and (poor) quality of the evidence adduced on behalf of the plaintiffs, the failure on the part of the plaintiffs themselves to directly address their role and/or intentions, the fact that the plaintiffs have failed to fulfill all of their obligations, even as at the date of the status hearing, the lack of specific evidence as to the whereabouts of witnesses and availability of documents, the fact that this action arises from acts/omissions from some 8 years ago, and the fact that this action was already dismissed twice before with no apparent or stated desire on the part of the plaintiffs to see it move forward with alacrity now, this action is dismissed for delay - with costs to be agreed or assessed.
The Standard of Review
[17] The decision whether to dismiss an action for delay is discretionary in nature. Deference is accorded to the decision of the judge or master on appeal, and the decision will not be set aside unless there has been an error in legal principle or there has been a palpable and overriding error of fact (Carioca’s, above, at para. 4). The decision can also be overturned if the judge or master has given no or insufficient weight to relevant considerations (H.B. Fuller Company v. Rogers (Rogers Law Office), 2015 ONCA 173 at para. 19).
Analysis
[18] The Master set out the test to be applied at para. 5 of her endorsement. There is language in the paragraph that suggests she imposed a higher standard of proof on the appellant than she should have. She stated that the plaintiffs had an onus to provide “an acceptable or cogent explanation for the delay” (emphasis added). The Court of Appeal has used the language of reasonable, acceptable or satisfactory explanation (Carioca’s at para. 45), not a “cogent” explanation.
[19] The Master set out the two part test I have described earlier in these reasons, and correctly stated that it is conjunctive, and that the court must look at the whole of the action in context to determine a just result. However, she stated that the court could dismiss “if the plaintiffs’ evidence regarding either aspect of the test is not compelling and convincing”, citing 1196158 Ontario Inc. v. 6274013 Canada Limited, 2012 ONCA 544 at para. 34. In fact that paragraph does not state that the evidence must be “compelling and convincing”, and the Court of Appeal has made it clear in Carioca’s that the standard of proof is a balance of probabilities.
[20] While I have concerns about the Master’s statements regarding the standard of proof, it is in the application of the test that the Master made a number of errors. The first is in her consideration of whether there was a reasonable explanation for delay. In considering this aspect of the test, the court must determine the length of the delay, the reason(s) for it, and whether the plaintiff’s explanation is reasonable or acceptable.
[21] The Master focused on the poor quality of the affidavit evidence from the appellants, which consisted of an affidavit from an associate in the law firm representing them. In my view, she erred in failing to consider all the evidence before her - first, in determining what was the period of delay that needed to be explained, what explanation was provided, and the role of the defendant as well as that of the plaintiffs in moving the action forward.
[22] The Master erroneously stated that the action was commenced in April 2007, which she says is almost two years after the alleged damage to the pool. In fact, the action was commenced in May 2009 and the first damage to the pool was in 2007. While the respondent suggests that the 2007 date might be a typographical error, the Master repeated in para. 8 that the delay to be explained was from 2007 until new counsel was appointed in November 2013, and she stated again in para. 18 that the delay was 8 years.
[23] In Kara v. Arnold, 2014 ONCA 871, the Court of Appeal stated that the delivery of the statement of defence marks the starting point for the period of delay that must be explained (at para. 15). In the present case, the parties had engaged in discussions aimed at settling the dispute for a lengthy period of time before the action was commenced. It was not until February 2012 that the appellants’ lawyer asked the respondent to provide a Statement of Defence. Because of the administrative dismissal of the action, a motion was necessary to set aside the dismissal, and the Statement of Defence was not provided until April 30, 2012. Accordingly, the Master erred in requiring the appellants to explain a delay from 2007.
[24] The Master also erred in failing to consider what occurred in the litigation after the Statement of Defence was filed. Steps were immediately taken to move the action along. The appellants provided a draft Affidavit of Documents in June 2012, and examinations for discovery were held. A mediation was scheduled, although cancelled because one of the appellants had not been informed of the date.
[25] It is true there was no further action after that cancellation in September 2012 until new counsel was retained in November 2013, apparently tied to the fact that Mr. Smith was not responsive. It is not clear why, but the affidavit evidence states that there were efforts to obtain the appellants’ file from him from January 2013 and he was subsequently suspended by the Law Society.
[26] In November 2013, Ms. Rosenthall immediately made efforts to try to get the action back on track, including engaging in settlement discussions, retaining a new expert and seeking to re-schedule the mediation. The Master did not consider these efforts, or the fact that the discoveries had occurred and the appellants were suggesting a timetable to get the action listed for trial at the time of the status hearing.
[27] Nor did the Master consider the fact that the respondent did not express any concern about the pace of the litigation until just prior to the status hearing. Even if one considers the length of the delay from the time the action was started in 2009, the parties were satisfied at first to engage in negotiations in an effort to settle. The respondent did not oppose either motion to set aside the administrative dismissals. The respondent did not request the response to outstanding undertakings until October 2014. Furthermore, it was not until the status hearing that the respondent asked the action be dismissed for delay, at a time when examinations for discovery had been completed, only two undertakings remained to be answered and some photos tracked down, and when the appellants were seeking a mediation date and consent to a timetable.
[28] In my view, the Master’s analysis of the first part of the test was flawed, as she did not identify the period of delay, nor did she consider the explanation of that period of delay in the context of the overall litigation.
[29] With respect to the second factor, prejudice to the defendant, the Master stated that “it is trite law that prejudice arises presumptively from the passage of time”. This statement is inconsistent with the instruction from the Court of Appeal in Carioca’s that prejudice is a question of fact, and a presumption is not to be mechanically applied.
[30] The Master stated that two witnesses, employees of the respondent, have not been examined under oath, and “it seems” they have provided no witness statements, nor is it known if they can be found. There is nothing in the affidavit evidence to support this conclusion that the witnesses were unavailable. The affidavit of Brian Yung filed on behalf of the appellants stated, “I verily believe that the Defendant would suffer no compensable prejudice if this action is allowed to proceed, especially given that Affidavit of Documents [sic] have been exchanged and evidence has been preserved as Examinations for Discovery.” The affidavit from James B. Tausendfreund filed by the respondent does not raise concerns about these employees’ availability. At para. 14, he states that to his knowledge, they have not made transcribed or recorded statements. With respect to prejudice, he stated at para. 32,
I verily believe that the Defendant would suffer prejudice if this action were permitted to continue, owing to the inevitable deterioration in the memories of the witnesses since the cause of action first arose seven years ago.
[31] As the Court of Appeal stated in Carioca’s, above, the prejudice to be assessed is “the respondent’s ability to defend the action as a result of the appellant’s delay, not as a result of the sheer passage of time” (at para. 57). In considering this factor, the court is required to apportion responsibility for delay.
[32] On the evidence, as stated by Mr. Yung, the respondent would suffer no prejudice, given the completion of discoveries and the exchange of affidavits of documents. The evidence from Mr. Tausendfreund does not provide any evidence to contradict this, except to opine that memories would deteriorate over time. In accordance with what the Court of Appeal stated in H.B. Fuller, above, at para. 43, the Master was not entitled to ignore Mr. Yung’s evidence.
[33] Moreover, the Master failed to consider the total context of the litigation. The respondent had timely notice of the dispute and the action. It had access to the appellants’ property to assess and try to repair the damage before the action commenced. Its insurer investigated the loss, obtained an independent repair quote and conducted a site visit with its contractor in July 2010. Accordingly, the respondent had adequate opportunity to preserve evidence necessary to defend the action, including the obtaining of witness statements from its own employees. Indeed, it is noteworthy that the respondent did not raise any issues of prejudice in 2011 or 2012, at the time of the motions to set aside the administrative dismissals for delay.
[34] The Master was concerned that the appellants’ Affidavit of Documents was not sworn. However, the respondent did not object, and there is no evidence of prejudice as a result.
[35] Finally, the Master failed to consider that the action was mature, with discoveries complete. While there were two undertakings outstanding, it would not appear difficult for the appellants to respond to them. (Indeed, they have done so since the Master’s order.) Even if new counsel for the appellants was obtaining a new expert’s report, there was time to do so and still set the action down for trial within a few months of the status hearing. In sum, the Master erred in finding prejudice in the circumstances of this case.
[36] In my view, given the errors made by the Master in her application of both parts of the test, her decision to dismiss the action for delay must be set side.
[37] This is a case where the appropriate order is to permit the action to proceed. The parties completed their discoveries in 2012, having failed in their efforts to settle the action. While there was a lengthy period of inaction from September 2012 to November 2013, it appears that former counsel is responsible for it. However, Ms. Rosenthall has made efforts to move the matter forward since she took over as counsel. I am satisfied that there is an acceptable reason for the delay. Moreover, there is no evidence of actual prejudice to the respondent from the delay, and the action is mature.
[38] Therefore, I allow the appeal and set aside the dismissal order. I order that the parties agree on a date for mediation, and that the action be set down for trial within 90 days. If the parties cannot agree on a timetable or a mediation date, they are to attend before a Master to resolve their dispute.
[39] Having compared the two bills of costs filed by the parties, I award costs of the appeal to the appellants fixed at $9,000.00 all inclusive, on a partial indemnity basis.
Swinton J.
Released: November 26, 2015
CITATION: Kupets v. Bonavista Pools Limited, 2015 ONSC 7348
DIVISIONAL COURT FILE NO.: 39/15
DATE: 20151126
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
RACHEL KUPETS and DORON SCHAFFER Plaintiffs (Appellants)
– and –
BONAVISTA POOLS LIMITED Defendant (Respondent)
REASONS FOR JUDGMENT
Swinton J.
Released: November 26, 2015