Prescott et al. v. Barbon et al.; Economical Insurance Company, Intervenor

[Indexed as: Prescott v. Barbon]

Ontario Reports

Court of Appeal for Ontario

Watt, Pepall and B.W. Miller JJ.A.

June 1, 2018

141 O.R. (3d) 616 | 2018 ONCA 504

Case Summary

Civil procedure — Administrative dismissal — Setting aside

Plaintiffs' action dismissed as abandoned in August 2011 pursuant to rule 48.15 of Rules of Civil Procedure. Plaintiffs moving in February 2014 to set aside dismissal. Master erring in taking into account fact that rule 48.15 had been repealed by the time motion was heard and in finding that delay in moving to set aside was not inordinate owing to subsequent amendments to rule 48.14. Master also erring in finding that defendants were at fault for not filing defence. Master's finding that plaintiffs had always intended to prosecute their claim unreasonable in absence of any evidence to that effect. Master failing to consider finality principle in his analysis of prejudice to defendants. Plaintiffs' appeal from order of Superior Court judge setting aside dismissal dismissed.

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 48.14, 48.15.

Facts

The plaintiffs' action was commenced in December 2010 and was dismissed as abandoned pursuant to rule 48.15(1) of the Rules of Civil Procedure in August 2011. In February 2014, the plaintiffs brought a motion to set aside the dismissal. The master granted the motion. The Superior Court judge allowed the defendants' appeal from that order and reinstated the administrative dismissal. The plaintiffs appealed.

Held

The appeal should be dismissed.

Rule 48.15 was repealed by the time the motion was heard, and rule 48.14 was amended. Under the amended rule, the plaintiffs would have had five years from the commencement of their action to set the action down for trial or otherwise conclude it. The master erred by taking into account the fact that rule 48.15 was repealed as "part of the context" in which the motion was argued. He also erred in finding that the delay in moving to set aside the dismissal was not inordinate in light of the amendments to rule 48.14. Moreover, he erred in law by concluding that the defendants were at fault for not filing a defence. The rule governing administrative dismissals places no obligation on defendants to file a defence to prevent a registrar's dismissal. The master erred in finding that it had always been the plaintiffs' intention to prosecute their claim in the absence of any evidence to that effect other than a bald statement from a lawyer. Finally, the master erred by failing to consider the finality principle in his analysis of whether the defendants were prejudiced by the delay.

Reasons for Judgment

PEPALL J.A.:

Background

[1] On December 28, 2008, the appellants Andrea Prescott and Barbara Ramsey were passengers in a motor vehicle owned and operated by the appellant Amanda Burt. A motor vehicle owned and operated by the respondent Ramon Barbon stopped behind Burt's vehicle. A third motor vehicle operated by the respondent Eduardo Ramon-Sagastume struck Barbon's vehicle from behind, causing it to drive into the rear of Burt's vehicle. Wawanesa Mutual Insurance Company ("Wawanesa") insured both of the respondent vehicles. The appellants sued for injuries sustained in the accident. The action was commenced on December 29, 2010.

[2] Ramon-Sagastume pleaded guilty to impaired driving. He had been consuming alcohol and had been driving his father's vehicle. Wawanesa denied coverage to Ramon-Sagastume because he was operating the vehicle without the consent of his father, the owner.

[3] On July 11, 2011, the registrar sent a notice to the appellants' lawyer advising that the action would be dismissed as abandoned and giving the appellants 45 days to act. The registrar dismissed the action as abandoned on August 25, 2011, pursuant to rule 48.15(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which was then in force. Unaware of the dismissal order but prior to the expiry of the 45 days, the appellants' lawyer tried to note the respondents in default but was precluded from doing so due to the dismissal. The lawyer failed to inform his clients of the dismissal and only reported the matter to LawPRO over two years later in December 2013. In that time period, he unsuccessfully made some efforts to negotiate a setting aside of the dismissal order.

[4] Ultimately, the appellants served a notice of motion to set aside the dismissal in February 2014. As such, the total time between the date of the dismissal order (August 25, 2011) and the bringing of the motion to set aside the dismissal order (February 20, 2014) was two years and six months.

[5] Economical Insurance Company ("Economical") insures the vehicle the appellants were in at the time of the accident. If the dismissal is set aside, the appellants intend to bring a motion to add Economical to the action in order to access the uninsured motorist provisions of its policy. Economical was granted intervenor status because it was the uninsured motorist carrier for the appellants and an ultimate target for recovery.

[6] Master Hawkins heard the motion in June and September 2015 and overturned the registrar's administrative dismissal on December 11, 2015 (Prescott v. Barbon, 2015 ONSC 7689 (S.C.J.)).

[7] The respondents appealed the master's decision. The Superior Court judge (the "SCJ") allowed the appeal and overturned the master's decision, thus reinstating the administrative dismissal. She ordered the appellants to pay costs of $8,370 to each of the respondents and did not disturb the master's costs order of $3,000 to be paid by the appellants to each of them.

[8] The appellants appeal from that decision and the respondents seek leave to appeal the SCJ's costs award. For the following reasons, I would dismiss both the appeal and the request for leave to appeal costs.

[9] The SCJ anchored her decision overturning the master's order on three components of the master's reasons:

• he erred in failing to consider the entire statutory scheme relating to administrative dismissals in his contextual analysis;
• he erred in finding the respondents partially responsible for the administrative dismissal; and
• he erred in his approach to the factors set out in Reid v. Dow Corning Corp., [2001] O.J. No. 2365, 11 C.P.C. (5th) 80 (S.C.J.), with emphasis on his failure to consider the principle of finality in his prejudice analysis.

The Role of Masters

[10] The masters play a very important role in civil litigation proceedings and regularly address a wide variety of procedural matters. As a result, they have developed deep expertise in the law and practice relating to procedure. While traditionally masters presided in Toronto and Ottawa, the use of masters has now been expanded to other regions in Ontario as well. This expansion recognizes their valuable role in the litigation firmament. As far back as Evans v. Bartlam, [1937] A.C. 473 (H.L.), Lord Wright of the House of Lords stated, at p. 484:

The Masters admirably exercise their discretion in routine matters of pleading, discovery, interrogatories, venue, mode of trial, and other interlocutory directions.

[11] The decision of a master granting or refusing to set aside an administrative dismissal is discretionary. It is entitled to deference and may be set aside only if made on an erroneous legal principle or infected by palpable and overriding error of fact: 1196158 Ontario Inc. v. 6274013 Canada Ltd. (2012), 112 O.R. (3d) 67, 2012 ONCA 544 and Chrisjohn v. Riley Estate, [2015] O.J. No. 5555, 2015 ONCA 713, 341 O.A.C. 70. It is not for an appellate court judge to reweigh the evidence and substitute another discretionary decision for that of the master. Applying Zeitoun v. Economical Insurance Group (2009), 2009 ONCA 415, 96 O.R. (3d) 639, [2009] O.J. No. 2003 (C.A.), Cronk J.A. stated in Wellwood v. Ontario (Provincial Police) (2010), 102 O.R. (3d) 555, [2010] O.J. No. 2225, 2010 ONCA 386, at para. 28, that it is settled law that an appeal from a master's decision is not a rehearing.

Rather, on questions of fact and mixed fact and law, deference applies and the role of the reviewing court is limited. An appellate court cannot substitute its interpretation of the facts or reweigh the evidence simply because it takes a different view of the evidence from that of the master. On questions of law, the correctness standard applies.

[12] Unfortunately in this case, for the following reasons, I have concluded that interference with the master's decision was justified.

Applicable Legal Test

[13] Under rule 37.14(2), the court has discretion to set aside or vary a dismissal order on such terms as are just. Specifically, rule 37.14(1) and (2) provide:

37.14(1) A party or other person who,

(a) is affected by an order obtained on motion without notice;

(b) fails to appear on a motion through accident, mistake or insufficient notice; or

(c) is affected by an order of a registrar,

may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person's attention and names the first available hearing date that is at least three days after service of the notice of motion.

(2) On a motion under subrule (1), the court may set aside or vary the order on such terms as are just.

[14] The legal test for setting aside a registrar's order dismissing an action for delay was originally described by Master Dash in Reid and adopted by this court in Scaini v. Prochnicki (2007), 85 O.R. (3d) 179, [2007] O.J. No. 299, 2007 ONCA 63:

(i) have the plaintiffs provided a satisfactory explanation for the litigation delay;

(ii) have the plaintiffs led satisfactory evidence to explain that they always intended to prosecute this action within the time limit set out in the rules or a court order but failed to do so through inadvertence;

(iii) have the plaintiffs demonstrated that they moved forthwith to set aside the dismissal order as soon as the order came to their attention; and

(iv) have the plaintiffs convinced the court that the defendants have not demonstrated any significant prejudice in presenting their case at trial as a result of the plaintiffs' delay or as a result of steps taken following the dismissal of the action?

[15] This is not a rigid, one-size-fits-all test. Rather, a contextual approach is required: Scaini, at paras. 23-25. Prior to Scaini, a plaintiff had to satisfy each of the four elements. Thereafter, courts were to consider and weigh all relevant factors to determine the order that is just. See, also, Marché d'Alimentation Denis Thériault Ltée v. Giant Tiger Stores Ltd. (2007), 87 O.R. (3d) 660, [2007] O.J. No. 3872, 2007 ONCA 695. In Hamilton (City) v. Svedas Koyanagi Architects Inc. (2010), 104 O.R. (3d) 689, [2010] O.J. No. 5572, 2010 ONCA 887, at para. 23, Laskin J.A. observed that the overriding objective is to achieve a result that balances the interests of the parties and takes account of the public's interest in the timely resolution of disputes. The four Reid factors provide a structured approach to achieving this result.

[16] This appeal involves an order dismissing an action as abandoned but the same principles apply.

I. Master's Consideration of the Statutory Scheme

[17] Turning to the three bases identified by the SCJ for reversing the master, first, she determined that the master erred in his contextual analysis by failing to consider the entire statutory scheme relating to administrative dismissals.

[18] Prior to 2015, rule 48.14(0.1) and (1) provided:

48.14(0.1) In this rule,

"defence" means,

(a) a statement of defence,

(b) a notice of intent to defend, and

(c) a notice of motion in response to an action, other than a motion challenging the court's jurisdiction.

(1) Unless the court orders otherwise, if an action in which a defence has been filed has not been placed on a trial list or terminated by any means within two years after the first defence is filed, the registrar shall serve on the parties a status notice in Form 48C.1 that the action will be dismissed for delay unless, within 90 days after service of the notice, the action is set down for trial or terminated, or documents are filed in accordance with subrule 10.

[19] Also, prior to 2015, rule 48.15(1) provided:

48.15(1) The registrar shall make an order dismissing an action as abandoned if the following conditions are satisfied, unless the court orders otherwise:

1. More than 180 days have passed since the date the originating process was issued.

2. None of the following has been filed:

i. A statement of defence.

ii. A notice of intent to defend.

iii. A notice of motion in response to an action, other than a motion challenging the court's jurisdiction.

3. The action has not been disposed of by final order or judgment.

4. The action has not been set down for trial.

5. The registrar has given 45 days notice in Form 48E that the action will be dismissed as abandoned.

[20] As such, prior to January 1, 2015, unless a court ordered otherwise, a defended action could be dismissed for a delay of approximately two years and 90 days after the first defence was filed, and an undefended action could be dismissed 180 days after the originating process was issued combined with 45 days' notice from the registrar.

[21] As of January 1, 2015, rule 48.15 was repealed, and a registrar no longer had jurisdiction to dismiss an action as abandoned. In addition, as of January 1, 2015, rule 48.14(1) was amended in part to provide:

48.14(1) Unless the court orders otherwise, the registrar shall dismiss an action for delay in either of the following circumstances, subject to subrules (4) to (8):

1. The action has not been set down for trial or terminated by any means by the later of the fifth anniversary of the commencement of the action and January 1, 2017.

[22] Accordingly, under the amended rule, the appellants would have had five years from the commencement of their action on December 29, 2010 to set their action down for trial or otherwise conclude the action.

[23] As mentioned, rule 37.14 provides that a party affected by an order of the registrar may move to set aside the order by a notice of motion that is served forthwith and names the first available hearing date that is at least three days after service. It states that the court may set aside the order on such terms as are just.

[24] The SCJ reasoned that the master, in his contextual analysis, failed to consider the entire statutory scheme including transitional provisions and treated the repeal of rule 48.15 as a "get out of jail free" card.

[25] I would not characterize the master's reasons in this manner. The master was fully aware that rule 48.15 was in force when the action was dismissed and that the new rule 48.14 was not. He also was aware that the appellants should have moved forthwith after the order came to their attention to set it aside. Indeed, he recited that provision found in rule 37.14 in full in his reasons. It was also conceded by the appellants that the motion was not brought promptly.

[26] In his reasons, the master described the history of the proceedings. He then moved to the legal test, noting Goudge J.A.'s observations in Scaini, at paras. 23-24, that rule 37.14(2) invites the court to make the order that is just and that the court should consider and weigh all relevant factors to determine the order that is just in the circumstances of the particular case. The master noted that a contextual approach was mandated by this court in Scaini and, quoting from this court in H.B. Fuller Co. v. Rogers (c.o.b. Rogers Law Office), [2015] O.J. No. 1260, 2015 ONCA 173, 330 O.A.C. 378, identified the tension between deciding actions on their merits and resolving actions in a timely and efficient manner to maintain public confidence in the administration of justice.

[27] The master then described the changes to rules 48.14 and 48.15 and the statutory scheme. At para. 19, he noted that "what now constitutes an acceptable level of diligence in the prosecution of an action is a much easier test to meet than was the case in the past." He stated at para. 21 that the repeal of rule 48.15 "may . . . be considered as part of the context in which this motion to set aside a registrar's order dismissing an action as abandoned was argued".

[28] This was in error. Rule 48.15 was in force when the registrar dismissed the action as abandoned, but by the time the motion was argued, it had been repealed. As such, it could not form part of the applicable context, and it was an error for the master to make this statement. He went on to say at para. 35: "[O]wing to the amendments to rule 48.14, I do not find this delay to be inordinate." For the same reason, this too was in error.

II. Primary Responsibility for Action's Progress Lies with Plaintiffs

[29] The master then considered the four criteria contained in Reid. Dealing with the first criterion, he did not find the lawyer's explanation for the delays to be satisfactory. However, he also observed that the respondents had to accept part of the blame for the dismissal. The SCJ took issue with this finding. She stated that the party who commences the proceeding bears the primary responsibility for its progress, and the master erred in law in concluding that the respondents were at fault for not filing a defence. She said that the rule governing administrative dismissals places no obligation on defendants to file a defence to prevent a registrar's dismissal, and as such, the master's approach in treating the respondents as blameworthy created a categorization that does not exist under the Rules of Civil Procedure.

[30] I agree with the SCJ's conclusion. There is no burden on the defendant to explain the delay or to move the action to trial: Wellwood, at paras. 37-41, 84; Jadid v. Toronto Transit Commission, [2016] O.J. No. 6474, 2016 ONCA 936, at para. 23. The primary responsibility for the progress of an action lies with the plaintiff: MDM Plastics Ltd. v. Vincor International Inc. (2015), 124 O.R. (3d) 420, [2015] O.J. No. 265, 2015 ONCA 28, at para. 33. As Cronk J.A. stated in Wellwood, at para. 48, "the initiating litigant generally suffers the consequences of a dilatory regard for the pace of the litigation". Although there may be occasions where the defendant's conduct may be relevant (see, for example, Labelle v. Canada Border Services Agency, [2016] O.J. No. 1166, 2016 ONCA 187; Aguas v. Rivard Estate (2011), 107 O.R. (3d) 142, [2011] O.J. No. 3108, 2011 ONCA 494; and Armstrong v. McCall, [2006] O.J. No. 2055, 213 O.A.C. 229 (C.A.), at para. 26), assigning fault that arises from a failure to file a notice of intent to defend or a statement of defence within the context of Rule 48 was misplaced.

[31] There was also a more fundamental problem embedded in the master's consideration of the first and second criteria of the Reid test. There was no evidence filed from either of the appellants: no sworn affidavit, no correspondence, no testimony under oath. There was simply a bald statement from the lawyer that it had always been the intention of the appellants to proceed with the action. This was inadequate particularly given that, as noted by the SCJ, there was no reference to any conversations with the respondents, no evidence of any contact with any of the respondents between January 3, 2012 and February 2014, and only minimal contact before that time. There was no evidence that any of the respondents had asked about the status of their action in over two years. The master's finding that the respondents intended to prosecute their claim was unreasonable in light of the full factual context.

III. Prejudice

[32] The SCJ focused particularly on the master's failure to consider the finality principle in his analysis of prejudice. In that regard, she relied on H.B. Fuller Co. and Marché.

[33] Prejudice is a key consideration on a motion to set aside a dismissal order: Finlay v. Van Paassen (2010), 101 O.R. (3d) 390, [2010] O.J. No. 1097, 2010 ONCA 204, at para. 28.

[34] In addressing this issue, it is important to consider the different aspects of prejudice. In Reid, the focus is on whether a defendant would suffer "any significant prejudice in presenting their case at trial" (para. 41). The emphasis described in that decision is on the impact of delay on a defendant's ability to mount a defence to the plaintiff's claim.

[35] However, in Marché, Sharpe J.A. identified an additional dimension to the fourth Reid factor: security of legal position and finality at paras. 36, 38 and 40:

[A]s the Master correctly observed, the jurisprudence from this court identifies as relevant to the fourth Reid factor the security of legal position gained by a litigant through a court order granted because of delay or default: see Halton Community Credit Union Ltd. v. ICL Computers Canada Ltd., supra.

Even when the order dismissing the action was made for delay or default and not on the merits, and even when the party relying on the order could still defend itself despite the delay, it seems to me that at some point the interest in finality must trump the opposite party's plea for an indulgence.

I agree with the Master that, when viewed in the light of a delay of this magnitude, the security of the legal position obtained by the appellant becomes an important factor to consider. Five years after the action against it had been dismissed, the appellant was entitled to rest on the assurance that the judicial system had disposed of the respondents' claim once and for all.

[36] As such, in considering the fourth Reid factor, the master was required to address:

(i) did the appellants satisfy their onus to establish no significant actual prejudice to the respondents' ability to defend the action as a result of the appellants' delay; and

(ii) whether in light of the delay, the principle of finality and the respondents' reliance on the security of its position should nevertheless prevail. See H.B. Fuller, at para. 28.

[37] There is no need to resort to presumptions or inferences of prejudice. The question as described by Sharpe J.A. in Marché is simply whether the interest in finality must trump the opposite party's pleas for an indulgence.

[38] The SCJ acknowledged in her reasons that the master addressed the issue of prejudice but maintained that the master erred in failing to consider the finality principle. I agree with this assessment.

[39] The master did address whether either of the respondents had suffered any significant prejudice in presenting his case at trial as a result of the appellants' delay or as a result of steps taken following the dismissal of the action and properly placed the onus on the appellants to establish that the respondents had not suffered prejudice. However, he did not consider the finality principle.

[40] Coupling this failure with the master's consideration of the incorrect context, the blame allocated to the respondents, and the absence of any evidence from the appellants, the SCJ was correct in setting aside his decision and considering the merits of the motion anew. Her conclusion is effectively captured in para. 51 of her reasons:

More than eight years ago, the plaintiffs were involved in a minor car accident; all three vehicles drove away from the accident. The lawyer issued a Statement of Claim, then took virtually no steps to prosecute the action. He did not request a defence. He ignored correspondence from defence counsel and adjusters. Counsel became aware the case would be dismissed in August, 2011 and initially sought to note the defendants in default, although he was aware by September, 2011 that the case had been dismissed and he could not note the defendants in default. After the case was administratively dismissed in August, 2011, he did not inform his clients for more than 2.5 years, until February, 2014. There is no evidence the plaintiffs contacted their lawyer in this two year period to inquire about the status of the case. The notice of motion to set aside the dismissal was served in February, 2014; the motion record was served in June, 2014. The motion was argued in June and December, 2015.

[41] She found no satisfactory explanation for the delay and noted the complete lack of action by the lawyer and the absence of evidence from the appellants at paras. 52 and 53:

The evidence does not establish inadvertence. The motion was not brought promptly. The lawyer's tickler system was completely inadequate, and was a missed deadline waiting to happen.

There is evidence of reliance by Barbon and Ramon on the finality of the order and the intervenor stands to be added for the first time seven years after the accident. In addition, this is not a case which would depend on documents, but one which would depend on witnesses. Seven years after the accident, the case is at the pleadings stage.

[42] After considering the relevant factors, the SCJ was entitled to conclude as she did.

Disposition

[43] For these reasons, I would dismiss the appeal. The appellants are to pay each of the respondents $7,500 in costs of the appeal, inclusive of taxes and disbursements. I see no reason to interfere with the costs order made by the SCJ and would decline leave.

Appeal dismissed.

Notes

1 Rule 48.14(1) has since been slightly amended again. It currently provides:

1. The action has not been set down for trial or terminated by any means by the fifth anniversary of the commencement of the action.

2. The action was struck off a trial list and has not been restored to a trial list or otherwise terminated by any means by the second anniversary of being struck off.