Court File and Parties
COURT FILE NOS.: CV-13-472351; CV-13-476379 RELEASED: 2018/10/10 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Landmark Vehicle Leasing Corporation v. TAC Mechanical Inc. and Dennis Chedli AND: Landmark Vehicle Leasing Corporation v. Drain-Tac Inc. and Dennis Chedli
BEFORE: Master Graham
COUNSEL: Sean Lawler, agent for counsel for the plaintiff Stefanie Lima, counsel for the defendants (moving parties)
HEARD: September 24, 2018
Reasons for Decision
(Defendants’ motions to dismiss actions for delay)
[1] The plaintiff claims damages arising from the defendants’ alleged default under three motor vehicle leases. The claim in action CV-13-472351 is for $60,098.00 in respect of leases for a 2005 Ferrari, entered into on November 20, 2007 and a 2008 Mercedes, entered into on May 1, 2008. The claim in action CV-13-476379 is for $29,945.00 in respect of a lease for a 2007 Mercedes, entered into on March 14, 2007. Both actions were commenced under the simplified procedure in rule 76.
[2] The defendants now move to dismiss both actions for delay. Counsel agreed at the beginning of the hearing that the history of the two actions is sufficiently similar that the outcome of these motions should be the same for both actions, i.e. that they should either both be dismissed or they should both be permitted to proceed. For the reasons set out below, the motions to dismiss for delay are dismissed.
Chronology of the actions
[3] The statement of claim in action no. CV-13-472351 was issued on January 21, 2013, the statement of defence, including a counterclaim was delivered on February 15, 2013 and the plaintiff delivered a reply and defence to counterclaim on May 3, 2013.
[4] The statement of claim in action no. CV-13-476379 was issued on March 18, 2013 and the statement of defence was delivered on May 2, 2013.
[5] Pleadings have been closed in both actions since May, 2013.
[6] The first communication from plaintiff’s counsel following the close of pleadings was more than 4.5 years later, on January 18, 2018, when he wrote to the defendants’ counsel to propose dates for summary judgment motions. No affidavits of documents have been served and no examinations for discovery have been held.
[7] On March 22, 2018, plaintiff’s counsel served notices of motion returnable May 31, 2018 for motions to extend the time to set both actions down for trial.
[8] On April 17, 2018, counsel for the plaintiff and for the defendants attended at Civil Practice Court (“CPC”) at which time Firestone J. scheduled the summary judgment motions in both actions to proceed on September 20, 2018 and set a timetable for the delivery of materials.
[9] On approximately May 30, 2018, plaintiff’s counsel served the motion records for the summary judgment motions. In addition to summary judgment, the relief sought in the notices of motion included orders to extend the time to set the actions down for trial pending the hearing of the summary judgment motion and orders directing that the registrar not dismiss the actions for delay pending further orders of the court.
[10] The motion records for these motions to dismiss the actions for delay were served on July 16, 2018. It appears from the case histories that on August 9, 2018, the summary judgment motions scheduled to be argued on September 20, 2018 were adjourned, presumably pending the outcome of these motions to dismiss for delay.
Applicable rules and case law
[11] The defendants bring these motions pursuant to rule 24.01(1), read with rule 48.14(1) of the Rules of Civil Procedure:
24.01(1) A defendant who is not in default under these rules or an order of the court may move to have an action dismissed for delay where the plaintiff has failed, . . .
(c) to set the action down for trial within six months after the close of pleadings;
(2) The court shall, subject to subrule 24.02(2), dismiss an action for delay if either of the circumstances described in paragraphs 1 and 2 of subrule 48.14(1) applies to the action, unless the plaintiff demonstrates that dismissal of the action would be unjust.
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):
The action has not been set down for trial or terminated by any means by the fifth anniversary of the commencement of the action.
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.
[12] Subrule 24.02(2) applies to actions in which the Office of the Children’s Lawyer or the Public Guardian and Trustee have been served, which is not the case here. Item 2. of rule 48.14(1) is not applicable to this case because the action was never set down for trial and therefore never placed on a trial list. Subrules (4) to (8), referred to in the first part of rule 48.14(1), address circumstances in which the parties have agreed to an extension of the deadline for the dismissal of the action (subrule (4)), or where a party has brought a motion for a status hearing (subrules (5) to (8)), neither of which has occurred in this case.
[13] There is no issue that the action was not set down for trial within six months of the close of pleadings. Accordingly, the defendants are entitled to move for dismissal under rule 24.01(1)(c).
[14] The case law applicable to motions to dismiss for delay is as set out in Langenecker v. Sauvé, 2011 ONCA 803 at paragraphs 5-7:
5 The language used to describe the appropriate test varies slightly in the authorities. I prefer the language of Lord Diplock in Allen, [Allen v. Sir Alfred McAlpine & Sons, Ltd. [1968] 1 All E.R. 543] at p. 556, where he described the exercise of the power to dismiss for delay in these terms:
It should not in any event be exercised without giving the plaintiff an opportunity to remedy his default, unless the court is satisfied either that the default has been intentional and contumelious, or that the inexcusable delay for which the plaintiff or his lawyers have been responsible has been such as to give rise to a substantial risk that a fair trial of the issues in the litigation will not be possible at the earliest date at which, as a result of the delay, the action would come to trial if it were allowed to continue.
6 The first type of case described by Lord Diplock refers to those cases in which the delay is caused by the intentional conduct of the plaintiff or his counsel that demonstrates a disdain or disrespect for the court process. In dismissing cases which fall within this category, the court effectively declares that a continuation of the action in the face of the plaintiff's conduct would constitute an abuse of the court's process. These cases, thankfully rare, feature at least one, and usually serial violations of court orders. This case does not fall into that category.
7 The second type of case that will justify an order dismissing for delay has three characteristics. The delay must be inordinate, inexcusable and such that it gives rise to a substantial risk that a fair trial of the issues in the litigation will not be possible because of the delay: see De Marco, at paras. 22, 26; Armstrong, at paras. 11-12.
[15] The defendants also rely on rules 24.01(2) and 48.14(1)1., which, read together, mean that if the action has not been set down for trial (or terminated by any other means) by the fifth anniversary of the commencement of the action, the court shall dismiss the action for delay “unless the plaintiff demonstrates that dismissal of the action would be unjust”. The fifth anniversary of the commencement of the more recent of the two actions was March 18, 2018, and, the actions not having been set down for trial by that date, the onus is on the plaintiff to demonstrate that dismissal of the actions would be unjust.
[16] In this regard, the defendants rely on a passage in Marrello v. Naccarato, 2017 ONSC 757, at paragraph 35, in which MacLeod J. states:
35 . . . Rule 24 was amended [effective March 31, 2015] to provide that if a defendant moves to dismiss an action for delay and more than five years have passed since the action was commenced, there is a presumption of prejudice to the defendant.
[17] As indicated in the text of the rule itself, rule 24.01(2) does not specifically state that a passage of five years since the commencement of the action creates a “presumption of prejudice”. However, this rule does create a rebuttable presumption that in the event of a five year delay, the court shall dismiss the action, which implies the presumption of prejudice referred to by MacLeod J. in Marrello, which in turn is consistent with previous authority that a lengthy delay gives rise to a presumption of prejudice to the defendant (see Berg v. Robbins, [2009] O.J. 6169 (Div. Ct.) at paragraph 14). The term “prejudice” is equivalent to the “substantial risk that a fair trial of the issues in the litigation will not be possible” referred to in paragraph 7 of Langenecker, supra.
[18] Essentially, rule 24.01(2) codifies the existing case law that places the onus on the plaintiff to demonstrate why an action in which there has been a lengthy delay should be permitted to continue, and at the same time establishes a clear line of five years from the commencement of the action following which the plaintiff must rebut the presumption in favour of a dismissal.
Issue on the motion
[19] The defendants have not argued that the plaintiff’s delay is intentional and contumelious, such as to constitute an abuse of the court’s process. Distilling the applicable rules 24.01(2) and 48.14(1)1. and the second part of the test in paragraph 7 of Langenecker, the issue to be resolved on this motion is:
Has the plaintiff demonstrated that there is no inordinate and inexcusable delay giving rise to a substantial risk that a fair trial of the issues in the litigation would not be possible, such that dismissal of the action would be unjust?
Analysis and decision
[20] The delay between the close of pleadings in May, 2013 and the plaintiff’s first attempt to address the impending deadline in rule 48.14(1) by serving notices of motion to extend the deadline in March, 2018, is almost five years. These actions are relatively straightforward debt collection claims commenced under the simplified procedure in rule 76. Even allowing for the inevitable periods of delay owing to both counsels’ involvement in other matters, plaintiff’s counsel should have been able to complete the exchange of affidavits of documents and each party’s two hour examination for discovery in 18 months at the very most. The delay in excess of 4.5 years is clearly inordinate.
[21] Plaintiff’s counsel Mr. Winer (not counsel on these motions) has sworn a responding affidavit on the motion in which he provides no explanation whatsoever for the delay. The plaintiff has also delivered a responding affidavit from Jonathan Pekker, the plaintiff’s legal manager. Mr. Pekker’s evidence is that the legal manager who instructed counsel to commence the actions left Landmark in 2013, her replacement died in a car accident in November, 2014, that individual was replaced by a manager who took a maternity leave in early 2016, following which Mr. Pekker assumed the position in July, 2016. Mr. Pekker adds that the senior management of the plaintiff state that Landmark at all times intended to proceed with the action.
[22] However, Mr. Pekker does not explain how the various changes in personnel at Landmark should excuse the delay in the action. Although one could infer that there would be brief periods of delay when various new individuals became responsible for the company’s legal affairs, there is no explanation for how these changes would have resulted in a delay of over 4.5 years. Mr. Pekker himself was in the position for approximately 18 months before Mr. Winer first requested dates from defendants’ counsel for a CPC attendance, and yet says nothing about why he apparently failed to follow up with counsel regarding the progress of the action.
[23] On this evidence, in the absence of any reasonable excuse being offered for the delay, the delay is also inexcusable.
[24] The plaintiff also submitted that the defendants acquiesced to any delay up to the bringing of these motions by having agreed to schedule the summary judgment motions. The plaintiff relies on the statement in Stokker v. Storoschuk, 2018 ONCA 2 at para. 5 that “[W]here delay has been addressed in a prior court order, or consented to, it is any subsequent delay that requires explanation.”
[25] The prior orders considered by the Court of Appeal in Stokker included orders to set aside administrative dismissal orders, which arose from the delay of the action, so the defendants’ consent to setting aside those dismissal orders could be taken to constitute waiver of any possible prejudice arising from the earlier delay. In the case before me, plaintiff’s counsel, after seeking dates for a summary judgment motion in January, 2018, served notices of motion to extend the deadlines by which the actions would be dismissed for delay on March 22, 2018, thus acknowledging that the issue of delay needed to be addressed, and further, stated in his covering letter that he proposed to adjourn those motions to be heard at the same time as the summary judgment motions.
[26] After scheduling the September 20, 2018 date for the summary judgment motions at the Civil Practice Court of April 17, 2018, plaintiff’s counsel served notices of motion for the summary judgment motions in which the relief sought included an extension of time to set the actions down, which the defendants addressed in their responding affidavits on those motions. The issue of delay was therefore still a live issue in the summary judgment motions, so the fact that the defendants agreed to a date and timetable for those motions, which were incorporated into the CPC orders of Firestone J., did not amount to a waiver with respect to the delay leading up to the scheduling of those motions.
[27] I conclude that the defendants did not acquiesce to the delay or waive reliance on any prejudice by agreeing to schedule the summary judgment motions.
[28] The remaining issue is whether the plaintiff has demonstrated that the delay, which I have found to be inordinate and inexcusable, has not resulted in a substantial risk that a fair trial of the action is no longer possible.
[29] The defendants submit that they are prejudiced in their defence of the action because the individual defendant and principal of the corporate defendants Dennis Chedli died on September 12, 2015 so his evidence will not be available for trial. Mr. Chedli signed all of the leases personally and was also the sole signatory of the leases on behalf of the corporate defendants. The defendants further submit that in defending the action, the corporate defendants relied on Mr. Chedli’s recollection and personal knowledge of key documents as to the terms of the Leases, and the alleged default on the Leases.
[30] The defendants also submit that they rely on the evidence of Stephen Shessel, a licensed motor vehicle broker, who was the agent for the plaintiff Landmark who arranged for the leases with the defendants. They allege that Mr. Shessel “has become difficult to locate, and it is quite possible that [the corporate defendants] may be unable to contact him if this action proceeds”. There is no evidence from the defendants as to what efforts they may have made to contact Mr. Shessel.
[31] The plaintiff submits that plaintiff’s counsel Mr. Winer was not informed of Mr. Chedli’s death until a telephone call of January 19, 2018, the day after Mr. Winer proposed dates to attend at Civil Practice Court to schedule the summary judgment motions. On that occasion, counsel for the defendants did not allege any prejudice arising out of Mr. Chedli’s death. However, I have already ruled above that the defendants never waived their reliance on prejudice arising from the plaintiff’s delay.
[32] The plaintiff further submits that the defendants have preserved the evidence of Stephen Shessel in an affidavit sworn July 17, 2013, which has been delivered with the defendants’ responding materials on the summary judgment motion. Also, Mr. Pekker of Landmark has provided evidence that Mr. Shessel still resides in the GTA and still has an active cell phone number. Mr. Pekker also deposes in his affidavit that none of Landmark’s former legal managers, referred to in paragraph [21] above, had first hand knowledge of the matters in issue and therefore, their departures from Landmark would not prejudice the defendants.
[33] With respect to Mr. Chedli’s death, the plaintiff also submits that the defences raised by the defendants to its claims are not such as would require Mr. Chedli’s viva voce evidence. The defences are that Mr. Chedli paid a $25,000.00 deposit on the lease for the Ferrari, that the leases did not provide for any guaranteed re-sale price for the leased vehicles at the conclusion of the leases, and that “the plaintiff did not make reasonable efforts to sell [the vehicles] for an appropriate price”. The plaintiff submits that Mr. Shessel confirms in his affidavit the receipt by Landmark of a $25,000.00 cash deposit from Mr. Chedli for the Ferrari lease, and that the evidence with respect to whether Landmark made reasonable efforts to get reasonable prices on the sale of the vehicles would all come from Landmark, not the defendants. Further, the issue of whether the leases provided for a guaranteed re-sale price would be resolved by reviewing the leases themselves, and there is no evidence in the defendant’s affidavits of what viva voce evidence Mr. Chedli might have been able to give in that regard.
[34] As indicated above, the defendants’ evidence is that in defending the action, they relied on Mr. Chedli’s recollection and personal knowledge of key documents as to the terms of the Leases, and the alleged default on the Leases. However, this evidence is extremely vague and the defendants offer no more precise statement of which specific claims they are unable to respond to as a consequence of Mr. Chedli’s death. Further, the defendants have provided no evidence that they no longer have documents relevant to the issues in the action. The loss of any such documents would be important evidence on these motions and the defendants’ failure to include any such evidence gives rise to an inference that they have retained all relevant documents.
[35] As stated above, rules 24.01(2) and 48.14(1)1. place the onus on the plaintiff to demonstrate that, in the face of a delay of more than five years following the commencement of these actions, the dismissal of the action would be unjust. What would make the dismissal of the action unjust would be an absence of prejudice to the defendants arising from the delay. Although the death of the principal of the defendant corporations could plausibly result in such prejudice, in this case, I am not persuaded that Mr. Chedli’s death would compromise the defence of the actions, particularly given the availability of Mr. Shessel’s evidence.
[36] I therefore conclude that the plaintiff has demonstrated that, despite the inordinate and unexplained delay, there would be no prejudice to the defendants if the actions were permitted to proceed and that, accordingly, it has rebutted the presumption in rule 24.01(2). For these reasons, the motions to dismiss the actions for delay are hereby dismissed.
Costs
[37] Counsel have filed costs outlines. As I informed them at the conclusion of the hearing, if they cannot agree to the disposition of the costs of the motion, they may make written submissions, not to exceed three pages each, the plaintiff within 30 days and the defendants within 20 days thereafter. For the assistance of counsel in resolving the issue, my current inclination is to order that there be no costs of the motion, owing to the lengthy unexplained delay on the part of the plaintiff and the fact that it was reasonable for the defendants to require the plaintiff to meet its obligation to demonstrate that there would be no prejudice to the defendants if the action were to proceed.