Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20200603 DOCKET: C67100

Gillese, Brown and Jamal JJ.A.

BETWEEN

Home Town Financial (Timmins) Corporation and Lorne Feldman Plaintiffs (Appellants)

and

Sheryl Levesque, Beverley Kenny, Todd Schofield, Gwen Schofield, 2165527 Ontario Inc. o/a The Mortgage Centre-Schofield Financial Group, Ward Morris, Dominion Lending Centres Inc. and Neighbourhood Mortgage Centres Ltd. o/a Neighbourhood Dominion Lending Centres Defendants (Respondents)

Counsel: Jesse Harper and Nora Kharouba, for the appellants Derek Zulianello, for the respondent, Sheryl Levesque Jordan R.D. Lester, for the respondent, Beverley Kenny

Heard: May 28, 2020 by videoconference

On appeal from the order of Justice Robin Y. Tremblay of the Superior Court of Justice, dated May 13, 2019, with reasons reported at 2019 ONSC 2835.

Reasons for Decision

[1] The appellants seek to set aside the order of the motion judge dated May 13, 2019, made following a motion for a status hearing, dismissing the appellants’ action for delay as against the respondents Sheryl Levesque and Beverley Kenny under r. 48.14(7) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The defendants to the action, other than Levesque and Kenny, consented to the appellants’ motion and timetable and the action is continuing as against them.

[2] In the action, the appellants seek damages and other relief against several individual and corporate defendants, including the appellants’ former employees, Levesque and Kenny. The appellants allege that their mortgage brokerage business was injured when Levesque and Kenny were solicited to join competitors and then misused the appellants’ confidential information in their new employment.

[3] At the conclusion of the oral hearing of the appeal, we dismissed the appeal with reasons to follow. These are our reasons.

[4] The action was commenced by notice of action on November 26, 2013, and a statement of claim was filed on December 27, 2013. Kenny filed her statement of defence on June 5, 2014. The appellants did not serve Levesque with the statement of claim, as required under the r. 14.08(2), within six months after the notice of action was issued. When the appellants filed a motion in writing in 2014 for an order validating service on Levesque, the court ordered that Levesque be served with the notice of motion through her counsel. The appellants did not pursue this. When the appellants brought back the same motion in writing in 2015, the court directed that the motion should be argued orally and that a special time should be set for the matter to proceed. Again, the appellants did not pursue this. As a result, the motion was not heard. Service of the statement of claim upon Levesque had still not been validated by the time of the motion for a status hearing. Levesque nevertheless filed a statement of defence on February 13, 2019.

[5] The motion judge correctly set out the test for dismissing an action for delay under Rule 48.14(7). A plaintiff must show: (1) an acceptable explanation for the delay; and (2) the defendant would not suffer any non-compensable prejudice if the action is allowed to proceed: Faris v. Eftimovski, 2013 ONCA 360, 42 C.P.C. (7th) 258, at para. 32; Kara v. Arnold, 2014 ONCA 871, 328 O.A.C. 382, at para. 8.

[6] Before the motion judge, the appellants purported to explain the delay in the action on the basis that they were taking a “wait and see” approach to the action. They claimed that they did not take active steps to move the action forward because aspects of it are factually related to another action commenced in North Bay in October 2010 that has several parties in common. The appellants argued that because there were significant delays in the North Bay action, they decided to “let sleeping dogs lie” in the present action until the North Bay action proceeded.

[7] The motion judge stated that the following factors supported a finding that the appellants had not established an acceptable explanation for the delay:

• The action was totally dormant between July 24, 2014, and September 6, 2018, a period of more than four years.
• The appellants did nothing to advance the action after serving their statement of claim. At the time the appellants moved for a status hearing before the motion judge, they had neither served and filed a reply nor delivered an affidavit of documents. The examinations for discovery had also not occurred.
• The appellants’ failure to move their action forward was not inadvertent. It was a calculated and deliberate litigation strategy.

[8] Next, the motion judge rejected the appellants’ contention that they were justified in taking a “wait and see” approach in this case. He noted that the North Bay action was itself “marred by delays” and that Levesque and Kenny were neither parties to that action nor even aware of it. As the motion judge explained:

To wait for the outcome of another action that is proceeding with dispatch through the court system is one thing. To do so when the other action itself is marred by delays is another, particularly in a situation such as this one, where Ms. Levesque and Ms. Kenny were totally unaware of the existence of the related North Bay action.

[9] The motion judge held that the appellants had not established that there was an acceptable explanation for the delay. He stated that, “[i]n the circumstances of this case, the ‘wait and see’ approach adopted by the plaintiffs does not, in my view, justify their total inactivity over a four-year-period in pursuing their action as against Ms. Levesque and Ms. Kenny.”

[10] The motion judge added that it was unnecessary to decide whether the appellants had demonstrated that Levesque and Kenny would not suffer any non-compensable prejudice if the action were allowed to proceed, because the appellants had failed on the first element of the Faris test.

[11] The appellants submit that the motion judge erred by not addressing the issue of prejudice under the second element of the Faris test and by failing to find that the appellants had provided an acceptable explanation for the delay.

[12] We do not accept the appellants’ submissions in the context of this case.

[13] Even if we were to accept, as urged by the appellants, that Levesque and Kenny would not suffer any non-compensable prejudice if the action were allowed to proceed as against them, it was fully open to the motion judge on the record before him to determine that the appellants had failed to provide an acceptable explanation for the delay. He was therefore justified in dismissing the action for delay as against Levesque and Kenny.

[14] It is well established that “[t]he decision of a judge presiding at a status hearing under rule 48.14 is discretionary and is entitled to considerable deference”: Kara, at para. 8. We see no basis to intervene with the motion judge’s exercise of discretion in this case.

[15] The appeal is dismissed. Costs are payable to the respondents Levesque and Kenny in the amount of $12,000 each, inclusive of disbursements and taxes.

“E.E. Gillese J.A.” “David Brown J.A.” “M. Jamal J.A.”