DIVISIONAL COURT FILE NO.: 587/20
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
AMERICAN ENVIRONMENTAL CONTAINER CORP., SAN JUAN PRODUCTS INC., AND KIJO LEASING ULC, Plaintiffs (Appellants)
– and –
PAUL KENNEDY also known as PAUL RONALD KENNEDY, LEANNE KENNEDY also known as LEANNE DOVELL KENNEDY, DARRRAN GREEN, DARRAN THOMAS GREEN, RONALD KENNEDY, COLBY LYONS also known as COLBY JAMES LYONS, and also known as COLBY JAMES CHRISTOPHER LYONS, SAN JUAN PRODUCTS (CANADA) LTD., c/o Paul Kennedy, SJP ENTERPRISES (CANADA) LTD., SJP ENTERPRISES INC., AECC/SAN JUAN, OASIS FIBERGLASS POOLS INC., BACKYARD OASIS, 2001530 ONTARIO INC. O/A SOUTHERN COMFORT, O/A SOUTHERN COMFORT, SAN JUAN ENTERPRISES (CANADA) INC., 1324653 ONTARIO LTD., LEISURE POOLS ONTARIO LTD., LEISURE POOLS LOGISTICS LTD., LEISURE POOLS GTA LTD., LEISURE POOLS CANADA INC., LEISURE POOLS CANADA LTD., 1766846 ONTARIO LTD., LEISURE PRODUCTS, BACKYARD OASIS POOLS LANDSCAPING LTD. and LEISURE FIBERGLASS POOLS CANADA INC.
Defendants (Respondents)
David Silver, for the Appellants
James L. McDonald, for the Respondent, Darran Green
Rohit R. Kumar and Tina Kaye for the Respondents, Paul Kennedy, Leanne Kennedy, Colby Lyons, Leisure Pools GTA Ltd. and 1766846 Ontario Ltd.
HEARD at Toronto by videoconference: March 11, 2022
Justice J. Copeland
REASONS FOR DECISION
Introduction
1The appellants appeal from the order of the associate judge dated April 27, 2020, reported at 2020 ONSC 1662, dismissing the action for delay at a status hearing, pursuant to rule 48.14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“the Rules”).
2The appeal is brought to the Divisional Court pursuant to s.19(1)(c) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“the CJA”), as an appeal from a final order of an associate judge. It is heard by a single judge of the court pursuant to s. 21(2)(a) of the CJA.
3For the reasons that follow, the appeal is allowed.
Background
4The appellants are related corporations that manufacture and sell prefabricated fibreglass swimming pools and spas. In 2002, they entered into dealership agreements with the respondents Paul and Leanne Kennedy and Mr. Green which allowed those respondents to act as the appellants’ dealers in Canada.
5The parties’ business relationship deteriorated. In 2008, the appellants issued a claim naming Paul and Leanne Kennedy, Mr. Green, and others as defendants (“the 2008 action”). The 2008 action alleged that the defendants had, among other things, unlawfully misappropriated and converted the appellants’ assets for their own use. Although the defendants defended the 2008 action for a time, on October 28, 2013, the appellants obtained default judgment against the defendants in the 2008 action, including Paul and Leanne Kennedy and Mr. Green. The default judgment included an order that the defendants pay the appellants nearly $12,000,000 in damages, plus costs and interest (“the default judgment”). The default judgment remains outstanding.
6The appellants started the current action in July 2014. They named the defendants in the 2008 action, along with others, as defendants in this action (the respondents in the appeal, who I will refer to from here on as “the respondents”). The statement of claim alleges fraud and conspiracy on the part of the respondents, along with various other acts intended to defeat the claims of their creditors, including the appellants. This action seeks various declaratory relief regarding ownership of several corporations allegedly controlled by the defendants in the 2008 action, a tracing order, and various other interlocutory and permanent relief.
7I will return to the progress of the action in my summary of the associate judge’s analysis and factual findings below. The genesis of the motion that led to the order under appeal was as follows. On June 28, 2019, the appellants served a trial record. This was a few weeks prior to the five-year set-down deadline pursuant to rule 48.14. The appellants sought to file the trial record with the court and set the matter down for trial; however, the trial record was rejected for filing by the court because no mediation had taken place, a requirement for Toronto actions under rule 24.1. The associate judge accepted that trial counsel for the appellants missed by mediation requirement by inadvertent oversight (not counsel on appeal).
8Trial counsel for the appellants then wrote to counsel for the defendants in early July 2019 requesting mediation, proposing a mediator, and proposing a revised timetable for the action. The appellants also served their affidavit of documents on July 12, 2019.
9The respondents were not agreeable to scheduling a mediation or fixing a timetable. The appellants served a notice of motion on July 12, 2019 seeking an extension of time to set the action down for trial. That motion was heard by the associate judge on March 12, 2020, as a status hearing, leading to the order under appeal.
The Decision under appeal
10After an overview of the history of the litigation, the associate judge summarized the legal principles applicable on a status hearing motion (paras. 19-25).
11He then considered the issue of whether there was delay over the five years since the action was commenced, and the appellants’ explanation for the delay (paras. 26-46). The associate judge found that there was no unexplained delay over the first two years of the action (July 2014 to July 2016). During that time, the appellants took immediate steps to obtain interim injunctive and other relief. Of significance, the associate judge found that “a great deal of evidence was preserved, collected and served on the defendants.” He also found that extensive cross-examinations took place. In essence, the associate judge found that the steps taken by the appellants in relation to interim proceedings to protect their rights during the first two years were sufficient that there was no unexplained delay in that time period. He faulted the appellants’ counsel for failing to communicate with counsel for the respondent Mr. Green (who was not the subject of the interim steps), but that did not impact the assessment of delay (at paras. 26-32; see also paras. 8-15).
12The associate judge found that there was also a sufficient explanation for delay from July 2016 to December 2016. A related matter was scheduled for trial in November 2016, and the associate judge accepted that trial preparation was a priority for the appellants and their counsel during those months. That related action was settled in November 2016 (at para. 33).
13During this time, the Kennedy respondents had advised that they intended to seek an order setting aside the 2013 default judgement in the 2008 action, and that issue was still pending. The associate judge accepted that as of July 2016, it made sense that the motion to set aside the default judgment needed to be determined in some fashion as a logical next step in the litigation, given that the current action is about enforcing the default judgment in the 2008 action. He accepted that it would have made little sense to move ahead with full production and discovery in this action while the motion to set aside the default judgment was pending (at para. 34).
14The associate judge stated that a plaintiff bears the primary responsibility for the progress of an action, but recognized that the conduct of a defendant may also be a relevant consideration at a status hearing. In light of that, he found that as of July 2016, the next logical step, moving to set aside the default judgment, was in the hands of the Kennedy respondents. They had the obligation to move ahead the motion to set aside the default judgment (at paras. 35-36).
15However, the associate judge held that the appellants could not sit back and wait indefinitely; at some point, when the lack of interest of the Kennedy defendants in pursuing the default judgment motion became clear, the onus returned to the appellants as plaintiffs to move the proceeding forward. He found that by the end of 2016, when the Kennedy defendants had not proceeded with the motion to set aside the default judgment, the appellants had the onus to move the litigation ahead again, and failed to do so (at para. 37-38).
16The associate judge found that the appellants failed to provide a sufficient explanation for the delay proceeding from January 2017 to July 2019, a period of 30 months. The associate judge accepted the evidence of counsel for the appellants that he at some point formed the opinion that he had collected sufficient evidence from the interlocutory motions (in particular the Mareva injunction proceedings) to be in a position to set the action down for trial (at paras. 39, 40). However, as all of this evidence was available by July 2016, the associate judge faulted the appellants for not setting the matter down for trial earlier. He acknowledged that the appellants and their counsel were involved in a second piece of related litigation from before 2016 and which settled in September 2019, but he found that that ongoing related litigation did not prevent the appellants from taking straightforward steps to arrange for the required mediation and set the matter down for trial (at paras. 39-41).
17The associate judge also found that the injunctive and other interim relief obtained by the appellants placed an enhanced obligation on them to move the litigation forward “with a reasonable degree of alacrity” (at para. 42).
18The associate judge recognized that the respondents also failed to take any steps between January 2017 and July 2019 to advance the litigation or proceed with their motion to set aside the default judgment in the 2008 action. However, he found that the respondents did not actively obstruct the appellants from moving the litigation forward (at para. 43).
19The associate judge accepted the evidence of the appellants’ trial counsel that he overlooked the requirement for mediation prior to setting the matter down for trial by inadvertence. The associate judge found that the circumstances of this case did not involve visiting the errors of a lawyer on their clients (in relation to trial counsel’s oversight about the mandatory mediation). His reasons for so-finding were twofold. First, he found an absence of evidence from the appellants about what steps they were taking to supervise their trial counsel during the period between January 2017 and July 2019. Second, he stated that although he accepted that trial counsel for the appellants’ overlooked the mediation requirement, that error was not the basis for the court’s conclusion on delay. He found that even if the action had been set down for trial in July 2019, the unexplained 30-month delay would still have made the claim vulnerable to dismissal at a status hearing or on a motion to dismiss for delay (at paras. 44-45). I return to the latter point below in my analysis.
20The associate judge then considered whether the respondents would be prejudiced by allowing the action to proceed. He found that the appellants had met their onus to show that the respondents would not suffer significant prejudice in terms of their ability to defence themselves at trial if the action were allowed to proceed (at paras. 47-52).
21The associate judge explained his ultimate conclusions at paragraphs 53-57 of his reasons. Although he was satisfied that the respondents had not been prejudiced by the delay, he found that the appellants had failed to provide an adequate explanation for the 30-months delay from January 2017 to July 2019. He found that the appellants were in a position to set the matter down for trial in July 2016 or soon thereafter (based on his acceptance of trial counsel’s evidence that he felt the appellants could proceed to trial based on the evidence obtained in the interim motions in 2014-2016), but then failed to take any steps for 30 months until the eve of the five-year set down deadline. The associate judge held that, in the circumstances, the need for efficient and timely justice outweighed having the litigation decided on the merits. He dismissed the appellants’ action for delay.
Standard of Review
22The standard of review on appeals from a decision of an associate judge is the same as the standard applicable to appeals from a decision of a judge of this court. On questions of law, the standard of review is correctness. On questions of fact and mixed fact and law, the standard of review is palpable and overriding error, unless there is an extricable question of law: Zeitoun v. Economical Insurance Group, affirmed 2009 ONCA 415 at para. 1; Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 8-18; 26-37.
23A decision to dismiss an action for delay is discretionary. As such, it attracts deference on appeal. However, it may be set aside if it discloses palpable and overriding error of fact or is made on the basis of an erroneous legal principle: Faris v. Eftimovski, 2013 ONCA 360 at para. 22; 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544 at para. 16; H.B. Fuller Company v. Rogers (Rogers Law Office), 2015 ONCA 173 at para. 19.
Analysis
24The appellants raise a number of grounds of appeal, some of which overlap. The central grounds raised are the following:
(i) the associate judge committed palpable and overriding error in failing to appreciate the significance of the inadvertent error by the appellants’ trial counsel in overlooking the requirement of mandatory mediation in the Toronto region, which precluded the appellants from filing a trial record before the five-year anniversary of the action;
(ii) the associate judge failed to step back and assess the justice of the case;
(iii) the associate judge made inconsistent findings of unexplained delay;
(iv) the associate judge erred in law in imposing a higher standard of proof in assessing litigation delay by conflating the more stringent test for assessment of litigation delay applicable to a motion to dissolve injunctive relief rather than the contextual analysis required at a status hearing.
25I am persuaded that the associate judge made the first two errors asserted by the appellants, and that they are significant enough to warrant setting aside the order. I explain my reasons for coming to this conclusion below. In light of my conclusion with respect to the first two grounds of appeal, it is not necessary to consider the third and fourth grounds of appeal.
26It is not in dispute that the associate judge stated the correct legal test to apply at a status hearing. The appellant submits that the associate judge erred in his application of the legal test and made palpable and overriding error in his findings of fact or mixed fact and law.
27I will not recreate the wheel in explaining the applicable test. It was comprehensively stated by the Ontario Court of Appeal in Kara v. Arnold, 2014 ONCA 871 at paras. 8-13:
[8] The decision of a judge presiding at a status hearing under rule 48.14 is discretionary and is entitled to considerable deference. The test is two-fold and conjunctive: the plaintiff has the onus of demonstrating both that there was an acceptable explanation for the delay and that, if the action were allowed to proceed, the defendant would suffer no non-compensable prejudice: [citations omitted]. . . .
[9] Dismissals for delay involve a careful balance between two competing values. On the one hand, the Rules of Civil Procedure need to be enforced in a way that ensures timely and efficient justice, in the interests of plaintiffs, defendants, and society in general. On the other hand, society in general, and the parties, have an interest in the resolution of disputes on their merits and in the availability of flexibility to avoid potentially draconian results, by providing the opportunity for parties to offer a reasonable explanation for delay when it takes them beyond established timelines.
[10] The courts do not take a rigid or “purely formalistic and mechanical” approach to the application of timelines in the Rules “that would penalize the parties for technical non-compliance and frustrate the fundamental goal of resolving disputes on their merits”: 1196158 Ontario Inc. v. 6274013 Canada Ltd., at para. 19. That said, rule 48.14 was designed to have some teeth, in my view. As Sharpe J.A. noted, in Marché d’Alimentation Denis Thériault Ltée v. Giant Tiger Stores Ltd., 2007 ONCA 695, 87 O.R. (3d) 660, at para. 23:
Rule 48.14 is one of many rules of civil procedure designed to promote the timely resolution of disputes, to discourage delay in civil litigation and to give the courts a significant role in reducing delays. Before the promulgation of rule 48.14, parties had total control over when cases were placed on the trial list. Rule 48.14 “establishes a procedure which gives the court a degree of control over the speed at which litigation proceeds to a conclusion. . . . In essence the rule provides for a very limited form of case management.” Garry D. Watson & Craig Perkins, Holmested and Watson: Ontario Civil Procedure, vol. 4 supplement (Toronto: Carswell, 1984) [at] 48§15. The case management regime, for which rule 48.14 was a precursor, was introduced in part to reduce “unnecessary cost and delay in civil litigation”: rule 77.02.
[11] Later, in 1196158 Ontario Inc. v. 6274013 Canada Ltd., at paras. 39, 41 and 42, Sharpe J.A. reinforced the importance of the rule for purpose of promoting timely justice. He said:
[The] cases quite properly reflect and reinforce the strong public interest in promoting the timely resolution of disputes. “The notion that justice delayed is justice denied reaches back to the mists of time . . . . For centuries, those working with our legal system have recognized that unnecessary delay strikes against its core values and have done everything within their power to combat it”: [citations omitted]. Excusing significant delay “risks undermining public confidence in the administration of justice”: Marché, at para. 32. The timelines the rules impose are relatively generous and there is a heavy price to be paid when they are not respected.
The civil justice regime should deliver timely justice to both plaintiffs and defendants. … Unless the basic ground rules of litigation – including time requirements – are enforced in a principled way, counsel cannot provide reliable advice and clients cannot plan their affairs in an orderly manner.
If flexibility is permitted to descend into toleration of laxness, fairness itself will be frustrated. … [E]ven if there is no actual prejudice, allowing stale claims to proceed will often be unfair to the litigants. Disputes are more likely to be resolved fairly if they are resolved in a timely fashion and, accordingly, the enforcement of timelines helps achieve the ultimate goal of fair resolution of disputes.
[13] In my view, little is to be gained by debating whether there is a bright line between the “contextual approach” and the approach enunciated in later authorities such as Faris and 1196158 Ontario Inc. v. 6274013 Canada Ltd. It seems to be evident that, in considering the reasonableness of any explanation for the delay in question, a status hearing judge will almost invariably engage in a weighing of all relevant factors in order to reach a just result.
See also: Faris at para. 42; 1196158 Ontario Inc. at para. 32; H.B. Fuller at paras. 20-28.
28Having reviewed the reasons of the associate judge and the record before the court, I conclude that the associate judge made two interrelated errors in his analysis. First, he committed palpable and overriding error in his analysis of the impact of the missed mandatory mediation. Second, he erred in principle in failing to step back and assess the overall justice of dismissing the action for delay in circumstances where the appellants were ready to proceed to trial and could have set the action down for trial without a status hearing but for their counsel’s error of missing the step of the mandatory mediation; the action was just at the five-year mark; and the associate judge found as a fact that there would be no prejudice to the respondents to allowing the action to proceed. In the circumstances, the fundamental goal of the civil justice system of allowing for disputes to be resolved on their merits ought to have carried the day.
29I will address each of these errors in turn.
30The appellants’ submission on the first error, the palpable and overriding error of fact or mixed fact and law in relation to the impact of the missed mediation, focusses on paragraphs 45 and 46 of the reasons of the associate judge, which I reproduce below:
I accept that the plaintiffs’ lawyer overlooked the requirement for mandatory mediation. However, that technical misstep is not the basis for the court’s conclusion on the issue of delay. Even if this action had been set down in July 2019, the fact of the unexplained 30-month delay would still be present. The plaintiffs’ action would remain vulnerable to dismissal whether at a status hearing or on a motion to dismiss for delay.
For these reasons, I have concluded that the plaintiffs have failed to provide an adequate explanation for the lengthy period of delay from January 2017 to June 2019.
31Two aspects of the associate judge’s factual findings are important in considering this error. First, the associate judge accepted that the missed mediation was due to oversight by counsel for the appellants. Second, later in his reasons, the associate judge found as a fact that the respondents would not be prejudiced if the action was allowed to proceed (at paras. 47-52).
32In this context, the conclusion of the associate judge that “the plaintiffs’ action would remain vulnerable to dismissal whether at a status hearing or on a motion to dismiss for delay” is tainted by palpable and overriding error. But for the appellants’ trial counsel’s error of overlooking the mediation requirement, no status hearing would have been required. The appellants would have been entitled to set the matter down for trial pursuant to rules 48.02 to 48.03, prior to the five-year deadline in rule 48.14(1)1 expiring. Thus, the appellants’ claim would not have been vulnerable to dismissal at a status hearing had their trial counsel not overlooked the mandatory mediation requirement for Toronto actions.
33The associate judge erred in viewing counsel’s error about the mediation as merely “a technical misstep”; rather, counsel’s error had a meaningful impact on the appellants’ ability to set the action down for trial. Although it is true that setting the matter down for trial would have prevented the appellants for engaging in any further discovery, absent leave of the court (rule 48.04(1)), the record before the associate judge and before this court is clear that the appellants had engaged in significant cross-examinations of the main representatives of the respondents during the interim relief proceedings and were content to rely on those cross-examinations to proceed to trial. There can be no doubt about the good faith of the appellants’ assertion in their affidavits that they intended to proceed to trial based on the examinations from the interim proceedings in light of the fact that their counsel served a trial record on June 28, 2019.
34In submissions, the respondents’ pointed to the statement by the associate judge at paragraph 47 of his reasons that: “This action was not ready for trial. Examinations for discovery and mediation have not taken place. Additional time is required before the action can be set down for trial.” However, this finding is fundamentally at odds with two other related findings by the associate judge. First, elsewhere in his reasons, the associate judge accepted the evidence of trial counsel for the appellants that he was of the opinion that he had collected sufficient evidence from the interlocutory motions to set the action down for trial (at paras. 39-40, 55). Indeed, this finding by the associate judge was consistent with the finding at various points in his reasons that significant evidence had been obtained during the interim proceedings (at paras. 13, 14, 26, 49). Which brings me to the second finding of the associate judge that is inconsistent with his findings at paragraph 47 that the action was not ready for trial – he expressly found that the appellants could have set the matter down for trial in July 2016 or soon thereafter (at paras. 40 and 55). As I have noted above, there is no reason to doubt the evidence of the appellants’ trial counsel that the appellants intended to proceed to trial based on his opinion that the evidence obtained during interim proceedings – they had served and attempted to file a trial record, which would have prevented the appellants from conducting further discoveries, absent leave of the court, pursuant to rule 48.04(1).
35Further, in light of the associate judge’s finding of fact that there would not be prejudice to the respondents from allowing the action to proceed, his conclusion at paragraph 45 that the action would be vulnerable to dismissal on a motion to dismiss for delay also constitutes palpable and overriding error. Absent the error by trial counsel for the appellants in relation to the mandatory mediation, the matter could have been set down for trial prior to five years from commencement of the action. In the context of the associate judge’s finding that there would be no prejudice to the respondents from allowing the action to proceed, and that the action was just at the five-year mark, the associate judge’s conclusion that the action would be vulnerable to dismissal on a motion to dismiss for delay is unreasonable.
36The second error committed by the associate judge is that although he stated the correct legal analysis applicable at a status hearing, he did not fully apply it. In particular, he failed to step back and consider the full context and overall justice of the case. Rather, in reaching the final decision to dismiss the action for delay, he fixated unduly on the 30 months that he found was insufficiently explained delay on the part of the appellants (January 2017 to June 2019).
37The leading cases on dismissal for delay recognize that the issues at play on a status hearing (or other delay related motions) involve a court assessing a balance between two competing policy considerations: on one hand, that civil actions should be decided on their merits, and on the other, that civil actions should be resolved in a timely and efficient manner. The case law is also clear that in assessing this tension, a court should not merely engage in a formalistic analysis of the branches of the test for dismissal for delay, but must step back and consider the overall justice of the case. In my view, the associate judge erred in principle in failing to do so in this case.
38The decision of the Court of Appeal in HB Fuller is instructive on this issue (at para. 22-27):
Neither the four-factor approach nor the two-part test provides an exhaustive list of considerations. Regardless of which is followed, all of the circumstances of the case must be considered in order to arrive at a just result: [citations omitted]. Furthermore, it is not only the plaintiff’s conduct that must be considered. While the plaintiff bears primary responsibility for the conduct of the action, the defendant’s conduct in the litigation is a relevant circumstance: [citations omitted].
[25] The factors that guide the court’s choice between ending the plaintiff’s action before trial and forcing the opposite party to defend the case despite the delay require a judge to resolve the tension between two underlying policies. The first is that civil actions should be decided on their merits. The second is that civil actions should be resolved in a timely and efficient manner in order to maintain public confidence in the administration of justice: [citations omitted].
[26] When reviewing a registrar’s dismissal for delay under the former rule 48.14, the weight of authority from this court has leaned towards the first policy consideration. As Laskin J.A. stated in Hamilton (City), at para. 20, quoting with approval the motion judge’s comment, “[T]he court’s bias is in favour of deciding matters on their merits rather than terminating rights on procedural grounds.” While failure to enforce the rules may undermine public confidence in the capacity of the justice system to process disputes fairly and efficiently, as Sharpe J.A. observed in 119, at para. 19, nonetheless:
[P]rocedural rules are the servants of justice not its master … We should strive to avoid a purely formalistic and mechanical application of time lines that would penalize parties for technical non-compliance and frustrate the fundamental goal of resolving disputes on their merits. [T]he Rules and procedural orders are construed in a way that advances the interests of justice, and ordinarily permits the parties to get to the real merits of their dispute. [119, at para. 19. Citations omitted.]
[27] The court’s preference for deciding matters on their merits is all the more pronounced where delay results from an error committed by counsel. As the court stated in Habib, at para. 7, “[O]n a motion to set aside a dismissal order, the court should be concerned primarily with the rights of the litigants, not with the conduct of their counsel.” In Marché, Sharpe J.A. stated, at para. 28, “The law will not ordinarily allow an innocent client to suffer the irrevocable loss of the right to proceed by reason of the inadvertence of his or her solicitor” (citations omitted).
See also Micaleff v. Dodig at paras. 29-25.
39With due respect to the associate judge, a contextual review of the full picture of this litigation can only lead to the conclusion that the appellants had shown cause why the action should not be dismissed for delay, and that the justice of the case required that a timetable be set for completion of the remaining steps necessary to set the action down for trial.
40The action was just at the five-year mark. Absent the oversight by counsel regarding the requirement for a mandatory mediation, the action could have been set down for trial prior to the five years expiring. The associate judge found that there would be no prejudice to the respondents if the action were allowed to proceed. Further, although the associate judge adverted to the fact that during the 30-month time period that he faulted the appellants for not moving the litigation forward (January 2017 to July 2019), the Kennedy respondents also failed to move forward with the motion to set aside the default judgment in the 2008 action, he failed to weigh this apparent acquiescence by the respondents in the slow progress of the litigation in that time period in an overall contextual analysis of the justice of the case. In addition, the associate judge failed to weigh in the overall justice of the case that this was in the context of an action to enforce a $12,000,000 default judgment, which the respondents never sought to set aside, and which was based on misconduct, conspiracy, and fraud on the part of the defendants. Finally, the first error I have outlined above, of holding that the appellants’ claim was still vulnerable to dismissal for delay even had the lawyer’s oversight in missing the mandatory mediation not occurred, tainted the associate judge’s assessment. I conclude that considering all of the circumstances the only just result in this case was and is to allow the action to proceed and set a timetable for steps to set the action down for trial.
41I have considered that the decision at a status hearing of whether to dismiss an action for delay or set a timetable for completion of the remaining steps necessary to have the action set down for trial involves the exercise of discretion, but in light of my conclusion that there is palpable and overriding error of fact or mixed fact and law and error in principle in the decision of the associate judge, appellate intervention is warranted: Faris at para. 22; 1196158 Ontario Inc. at para. 16.
Conclusion
42The appeal is allowed. The associate judge’s order is set aside and the motion to extend time to set the action down for trial and set a timetable is granted. In accordance with rule 48.14(7), and in accordance with the submissions of the parties in the event that appeal was allowed, the court will set a timetable for the completion of the remaining steps necessary to have the action set down for trial, which will form part of the court’s order allowing the appeal. Counsel indicated at the hearing that in the event the appeal was allowed, they anticipated that they would be able to reach agreement on a timetable. I direct the parties to confer regarding a timetable for the completion of the remaining steps necessary to have the action set down for trial.
43Costs of the motion in the court below were not fixed due to the death of the associate judge. The parties are in agreement that I should fix the costs of the motion in the court below. In the circumstances, I agree that this approach is sensible. I accept that I have jurisdiction to fix the costs at first instance, pursuant to s. 134(1)(a) of the CJA. I did not hear submissions on the costs of the motion below at the time of the appeal because the parties agreed that the outcome of the motion would have an impact on that issue. I direct the parties to confer to attempt to reach an agreement regarding costs of the motion in the court below.
44If the parties are able to reach agreement on a timetable and costs of the motion in the court below, they may submit the agreement to me through the Divisional Court office as part of the draft order. If the parties are unable to reach agreement regarding the timetable and/or costs of the motion below by September 30, 2022, they may file written submissions addressing the unresolved issue or issues by October 30, 2022, and the court will set the timetable and/or fix the costs of the motion in the court below. The costs submissions, if any, shall include a costs outline and may also include brief written submission (maximum 3 pages). The timetable submission, if any, shall include a proposed timetable and may include a brief written submission (maximum 2 pages).
45In accordance with the agreement of the parties, the respondents shall pay costs of the appeal to the appellant in the amount of $20,000, inclusive of disbursements and HST.
Copeland J.
Date: July 29, 2022