Court File and Parties

COURT FILE NO.: CV-16-00068742 DATE: 2024-04-24 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: McDonald Brothers Construction Inc., Patrick Brousseau, Chris Fournier, Paul McDonald and Patrick McDonald, Moving parties / Defendants AND: Divisions 9 +10 Inc., Responding party / Plaintiff

BEFORE: Muszynski J.

COUNSEL: Tegan Stairs, for the Moving parties Stéphane Bond, for the Responding party

HEARD: February 22, 2024

Endorsement (Motion to dismiss for delay)

[1] The defendants, McDonald Brothers Construction Inc., Patrick Brousseau, Chris Fournier, Paul McDonald and Patrick McDonald (collectively referred to as “McDonald Brothers”) bring this motion to dismiss the claim of the plaintiff, Divisions 9 + 10 Inc., for delay pursuant to Rule 24.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”).

Background

[2] The plaintiff alleges it is owed $133,554.90 in unpaid invoices arising from work completed under a subcontract with McDonald Brothers to perform various aspects of a larger construction project for the defendant, Public Works and Government Services Canada (“PWGSC”).

[3] The statement of claim was issued on May 30, 2016 and served on McDonald Brothers shortly thereafter. The statement of claim was never served on PWGSC. PWGSC has never participated in the litigation.

[4] McDonald Brothers served a notice of intent to defend on June 27, 2016 and its statement of defence and counterclaim on August 22, 2016. The gist of the defence and counterclaim is that the plaintiff failed to complete its work in accordance with the subcontract. As a result, McDonald Brothers alleges that nothing remains owing to the plaintiff and, further, the plaintiff owes it $11,922.05.

[5] A case conference was held on November 27, 2017 at which time a litigation timetable was established. The timetable required the parties to exchange affidavits of documents on or before January 31, 2018; to complete discoveries by March 30, 2018; and to use best efforts to attend mediation by August 31, 2018. The timetable could be varied on the consent of the parties.

[6] The parties exchanged affidavits of documents and completed examinations for discovery on April 11 and 12, 2018. Mediation did not take place as required by the litigation timetable.

[7] On September 13, 2019, Mann Lawyers LLP obtained an order removing them as solicitors of record for the plaintiff. The September 13, 2019 order provides:

a. that the plaintiff shall appoint a new lawyer of record within 30 days after being served with the order or obtain and serve an order under subrule 15.01(2) granting it leave to be represented by a person other than a lawyer; and

b. if the plaintiff fails to comply, the court may dismiss its proceeding or strike out its claim.

[8] The plaintiff did not comply with the September 13, 2019 order.

[9] Nothing happened on this file until McDonald Brothers served the subject motion to dismiss on the plaintiff on January 24, 2024.

[10] On February 21, 2024, the plaintiff finally retained new counsel. The plaintiff served its responding motion record on February 22, 2024 – the date of the hearing of the motion.

[11] At the hearing of the motion, the plaintiff requested an adjournment, which was opposed by McDonald Brothers and which was ultimately denied after hearing submissions on the issue. The parties then argued the merits of the motion to dismiss for delay. For the reasons that follow, McDonald Brothers’ motion is granted. The action is dismissed for delay.

Issues

[12] Should an adjournment of the motion be permitted?

[13] Should the action be dismissed for delay pursuant to Rule 24.01?

Analysis

I. Should an adjournment of the motion be permitted?

[14] Counsel for the plaintiff attended at the hearing of the motion advising the court that he had been retained the previous day. In the short time he was retained, counsel managed to prepare and file a responding affidavit. Counsel requested an adjournment to allow him to prepare more fulsome material.

[15] Despite being served and filed outside the timelines provided in the Rules, I allowed the plaintiff’s responding motion material to be filed and considered it on the merits of the motion to dismiss. Counsel for the plaintiff submits that additional time would allow him to provide documentary support for the explanations offered for the delay contained in the affidavit of Robert Cayouette, the president of the plaintiff.

[16] Putting aside the plaintiff’s breaches of court orders and the significant amount of time that has passed since discoveries concluded, there is no explanation offered in the affidavit of Mr. Cayouette as to why it took so long to retain a lawyer once the motion to dismiss was served on January 24, 2024. This is one factor that I have considered in denying the request for an adjournment.

[17] The crux of the plaintiff’s argument as to why the delay in this litigation was reasonable is contained in Mr. Cayouette’s affidavit. Frankly, even if I had supporting documents to prove the reasons proffered it would not change the outcome.

[18] Accordingly, the adjournment request was denied.

II. Should the action be dismissed for delay pursuant to Rule 24.01?

[19] Rule 48.14(1) provides that, unless a court orders otherwise, the registrar shall dismiss an action for delay if the action has not been set down by the fifth anniversary of the commencement of the claim. The fifth anniversary of the commencement of the claim in this case was May 30, 2021. Due to the COVID-19 pandemic, procedural timelines were suspended between March 16 – September 13, 2020. After September 13, 2020, court staff were directed to refrain from administratively dismissing cases. That directive currently continues.

[20] In the absence of automatic administrative dismissals by the registrar, this motion was brought pursuant to Rule 24.01 - a defendant who is not in default may move to have an action dismissed for delay where a plaintiff has failed:

(a) to serve the statement of claim on all the defendants within the prescribed time;

(b) to have noted in default any defendant who has failed to deliver a statement of defence, within thirty days after the default;

(c) to set the action down for trial within six months after the close of pleadings; or

(d) (repealed)

(e) to move for leave to restore to a trial list an action that has been struck off the trial list, within thirty days after the action was struck off.

[21] Rule 24.01(2) provides that a court shall dismiss an action for delay if the action has not been set down for trial or terminated by any means by the fifth anniversary of the commencement of the action unless the plaintiff demonstrates that dismissal of the action would be unjust.

[22] McDonald Brothers is not in default and therefore has standing to bring the subject motion.

[23] The plaintiff has not served the statement of claim on PWGSC, nor has the plaintiff set the action down for trial within six months of the close of pleadings.

[24] Further, the plaintiff has failed to comply with the September 13, 2019 order requiring it to appoint a new lawyer of record, or an order granting leave for the corporation to be represented by a person other than a lawyer, within 30 days. The September 13, 2019 order specifically provides that a potential consequence to non-compliance is dismissal of the plaintiff’s claim.

[25] Daley J. summarized the test on a Rule 24.01 motion in Ever Fresh Direct Foods Inc. v. Jamia Islamia Canada Ltd., 2021 ONSC 1278, aff’d 2022 ONCA 185, as follows:

[79] The test to be met on a motion seeking to have an action dismissed for delay under rule 24.01 is set out in North Toronto Chinese Alliance Church v. Gartner Lee Limited, 2012 ONCA 251, 12 C.L.R. (4th) 1, at para. 11, leave to appeal refused, [2012] S.C.C.A. No. 248 (S.C.C.), and was restated in Ticchiarelli v. Ticchiarelli, 2017 ONCA 1, at para. 12.

[80] The jurisprudence under rule 24.01 states that an order dismissing an action for delay under this rule is warranted where: (I) the default is intentional or contumelious; or (II) the delay is inordinate, inexcusable, and prejudicial to the defendant, in that it gives rise to a substantial risk that a fair trial of the issues will not be possible.

[81] Under the first situation the case law provides that the default is intentional or contumelious where there is (a) no reasonable explanation for the delay/default and (b) there is an element of disrespect to the court, usually involving a breach of one or more court orders: Langenecker v. Sauvé, 2011 ONCA 803, 286 O.A.C. 268, at para. 6.

[82] As to the alternate second circumstance warranting dismissal of an action for delay, this is engaged where the delay is inordinate, inexcusable, and prejudicial to the defendant, in that it gives rise to a substantial risk that a fair trial of the issues will not be possible. Inordinance is measured “by reference to the length of time from the commencement of the proceeding to the motion to dismiss”: Langenecker, at para. 8; Ticchiarelli, at para. 15. It is also a contextual inquiry that depends on the nature of the case: Langenecker, at para. 8.

[83] A delay is inexcusable where there is no "reasonable and cogent" explanation for it: Langenecker, at paras. 9-10; Ticchiarelli, at para. 16.

[84] There is a presumption of prejudice "inherent in long delays" that increases with the length of delay: Langenecker, at para. 11.

[85] The moving defendant bears the ultimate burden on a rule 24.01 motion; however, the plaintiff bears an evidentiary burden to (I) provide a reasonable explanation for the delay; and (II) rebut the presumption of prejudice arising from the delay: Langenecker, at paras. 10-12; Ticchiarelli at paras. 27-29.

Is the default intentional or contumelious?

[26] In Langenecker v. Sauvé it was noted that: “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.”

[27] There is no evidence that the delay in prosecuting this claim was due to any intentional conduct to the extent that it demonstrates disdain or disrespect for the court process identified in Langenecker.

[28] There is evidence of non-compliance with court orders.

[29] Firstly, there is non-compliance with the litigation timetable set out in the November 27, 2017 case conference order, specifically, the parties did not participate in mediation by August 31, 2018. I have no evidence as to any efforts made by either party to comply with this deadline, and, accordingly, I am not prepared to find that this breach alone constitutes an abuse of the court’s process.

[30] Secondly, the plaintiff did not comply with the September 13, 2019 order requiring it to appoint new counsel. The explanation for non-compliance seems to be that the plaintiff suffered business losses and retained the services of a trustee in bankruptcy to file a proposal in 2019. While I do not condone the plaintiff’s non-compliance with a court order, in my view, this violation – even in combination with the breach of the timetable order – does not rise to the level of conduct that is contemplated as grounds for dismissal based on “intentional or contumelious” actions as set out in Langenecker. Accordingly, I find that it is inappropriate to dismiss the plaintiff’s claim for delay on this basis.

Is the delay inordinate, inexcusable, and prejudicial to the defendant, in that it gives rise to a substantial risk that a fair trial of the issues will not be possible?

(i) Is the delay inordinate?

[31] The action was commenced on May 30, 2016. It has now been almost eight years since the commencement of the litigation and the action has not been set down for trial. More concerning is that there have been no steps taken to move the file forward since examinations for discovery took place in April of 2018. In the context of this litigation, I find that this constitutes inordinate delay.

(ii) Is the delay excusable?

[32] The onus is on the plaintiff to demonstrate on a balance of probabilities that there is a reasonable or cogent excuse for the delay.

[33] The affidavit evidence filed by the plaintiff provides the following explanation for the delay:

a. In May of 2017, the plaintiff’s president, Mr. Cayouette, was in an accident that resulted in him having to undergo multiple surgeries and have to take time off work.

b. There was a breakdown in the relationship between the plaintiff and its former lawyer.

c. Shortly after the breakdown of the solicitor-client relationship, the plaintiff suffered financial losses which led to retaining the services of a trustee in bankruptcy and the filing of a proposal, in late 2019.

d. Mr. Cayouette’s business partner was diagnosed with bone marrow cancer in early 2020.

e. Due to the financial situation of the business, and the pandemic, the plaintiff temporarily ceased its operations.

f. The proposal was completed in August 2022 at which time the trustee was discharged.

g. Mr. Cayouette’s business partner, who was responsible for the business licence died in January of 2023.

h. By November 2023 the plaintiff was able to resume full activities.

i. New counsel, Mr. Bond, was retained on February 21, 2024 after referrals from a Quebec lawyer.

[34] Mr. Cayouette’s May 2017 accident and subsequent recovery does not excuse the delay in prosecuting the claim. The parties moved the action forward despite Mr. Cayouette’s health issues by: attending at a case conference in November 2017; and examinations for discovery in April of 2018, at which time Mr. Cayouette was examined under oath.

[35] The breakdown in relationship between the plaintiff and its former lawyer is not an excuse for the delay in prosecuting this claim. The only evidence about efforts to retain new counsel is that the plaintiff sought a referral from lawyers in Quebec. There is no evidence as to when the referral was sought or what specific efforts were made to retain counsel between September 13, 2019, when the plaintiff’s former lawyer was removed from the record, and February 21, 2024, when Mr. Bond was ultimately retained – a day prior to this motion. I infer that no such efforts were made.

[36] I do not accept that the financial circumstances of the plaintiff provide a reasonable or cogent excuse for the delay in this litigation. The evidence on this motion is that the plaintiff filed a corporate proposal in late 2019 and that the trustee in bankruptcy was ultimately discharged in August 2022. There is no evidence that McDonald Brothers was ever informed of the corporate proposal. There is no evidence as to why litigation remained stalled after August 2022 – other than perhaps that the business was not fully operational for a period of time due to an issue with a business licence. Litigants cannot unilaterally pause litigation due to financial constraints, ignoring court orders and the timelines set out in the Rules, re-engaging only when it is convenient to do so with impunity.

[37] There is reference to the pandemic in the plaintiff’s materials. The COVID-19 pandemic, in and of itself, has been repeatedly held to not be an excuse for delay in prosecuting civil claims beyond the six-month period when procedural timelines were suspended: Gordon v. Gordon, 2021 ONSC 273, at paras. 32-33; Beshay v. Labib, 2023 ONSC 2874, at para. 37, aff’d 2024 ONCA 186.

[38] I do not accept that Mr. Cayouette’s business partner’s cancer diagnosis in 2020, or his death in 2023, are reasonable excuses for the delay in prosecuting this claim. This appears to be tied into the argument that the plaintiff was under financial strain or non-operational for a period of time. I have already stated why I do not accept this to be an excusable explanation for delaying the litigation.

[39] It is primarily a plaintiff’s responsibility to move litigation forward: Wellwood v. Ontario Provincial Police, 2010 ONCA 386, 102 O.R. (3d) 555, at para. 48. In this case, it is not alleged that McDonald Brothers did anything to thwart the plaintiff’s attempt to progress the action. Neither is there any evidence that McDonald Brothers took any positive steps to spur the plaintiff into action. I do not accept the submission of the plaintiff that McDonald Brothers’ conduct is akin to “lying in the weeds”. It is not reasonable to expect a defendant to incur the costs associated with prodding a plaintiff into pursuing a lawsuit against it: 1196158 Ontario Inc. v. 6274013 Canada Limited, 2012 ONCA 544, 112 O.R. (3d) 67, at para. 30.

[40] If there had been any communication from the plaintiff requesting an indulgence or, frankly, any evidence of effort on the part of the plaintiff whatsoever in the six-years post-discovery, I may have reached a different conclusion. In this case, the explanations for delay provided in the affidavit of Mr. Cayouette are simply too little, too late. I find that the delay is inexcusable.

(iii) Has the delay caused prejudice to the defendant that gives rise to a substantial risk that a fair trial of the issues will not be possible?

[41] Due to the inordinate delay, prejudice is presumed. The onus is on the plaintiff to rebut the presumption of prejudice.

[42] Although it is not required, I note that there is no evidence of fact specific prejudice associated with the delay in this litigation. Further, I accept that the prejudice to McDonald Brothers is somewhat ameliorated since affidavits of documents have been exchanged, and examinations for discoveries have taken place.

[43] However, the boilerplate statement in Mr. Cayouette’s affidavit that he is not aware of any real prejudice if the matter were to be heard on the merits, and that the plaintiff is willing to mediate on short notice, is insufficient to rebut the presumption of prejudice associated with the inordinate delay in this case.

[44] Affirmative evidence to establish that a fair trial of the issue is still possible despite an inordinate delay is required when responding to a motion of this nature. For instance, who are the anticipated witnesses at trial? Are they still available? Does the death of Mr. Cayouette’s business partner impact the litigation? Have the records been preserved?

[45] I find that the plaintiff has failed to rebut the presumption of prejudice arising from the inordinate, and inexcusable delay in this litigation.

Conclusion / Costs

[46] I appreciate that the dismissal of a plaintiff’s claim for delay deprives a litigant of an adjudication of their dispute on the merits and that it should not be done lightly. To allow the plaintiff’s claim to proceed given these facts, I find, would offend the integrity of the civil justice system. The motion to dismiss the plaintiff’s claim is granted.

[47] McDonald Brothers filed a costs outline claiming costs of the action on a partial indemnity scale totalling $11,589.16, inclusive of HST and disbursements and costs of the motion on a partial indemnity scale totalling $5,101.22, inclusive of HST and disbursements.

[48] As the successful party, McDonald Brothers is entitled to costs of the action and the motion. The action proceeded through the pleadings stage, a case conference, documentary, and oral discoveries. I find the costs claimed by McDonald Brothers, for both the action and the motion, to be fair and reasonable.

[49] The plaintiff shall pay to McDonald Brothers costs of the action and motion on a partial indemnity scale fixed in the amount of $16,690.38, inclusive of HST and disbursements.

Muszynski J. Released: April 24, 2024