CITATION: Duffin v. NBY Enterprises Inc., 2010 ONCA 765
DATE: 20101115
DOCKET: C52188
COURT OF APPEAL FOR ONTARIO
Laskin, Armstrong and Juriansz JJ.A.
BETWEEN
William Duffin, Kimberley Duffin and Hectares Properties Inc.
Plaintiffs (Appellants)
and
NBY Enterprises Inc., Northguard Capital Corp., 1692783 Ontario Inc., 1712042 Ontario Ltd., NA Financial Inc., Andrew Ferri, Paul D. Leon, Kimberly Ferri, Roger Kucy, Salima Merani, Gordon Tellier, Gord Clare, also known as Gordon Clare, Luciano Butera, Luigi De Lisio, Harry Korosis, and Chown Cairns LLP
Defendants (Respondents)
Erik Savas, for the appellants
Paul R. Sweeny and Scott W. Beattie, for the respondent Harry Korosis
James H. Bennett, for the respondent Luigi De Lisio
Rob Burns, for the respondents Luciano Butera, Gord Clare, 169278 Ontario Inc, and 1712042 Ontario Ltd.
Gavin Tighe, for the respondent Paul D. Leon
Heard: October 26, 2010
On appeal from the order of Justice Caroline E. Brown of the Superior Court of Justice dated April 26, 2010.
Laskin J.A.:
[1] The issue on this appeal is whether the motion judge exercised her discretion unreasonably when she dismissed the plaintiffs’ action because they were two days late in paying the costs component of an earlier court order.
A. FACTS
(a) Background
[2] The plaintiffs owned four commercial properties in the Niagara region. Each was mortgaged. The mortgages went into default, and the mortgagee issued notices of sale. Eventually the properties were sold. The plaintiffs allege that the notices of sale were defective and that the sale itself was improvident.
[3] The plaintiffs delivered a statement of claim in June 2007. Numerous interlocutory proceedings then ensued. The plaintiffs sought to maintain a certificate of pending litigation that they had registered against the properties, and to obtain interim possession. They were unsuccessful, though two motion judges who heard the interim possession motion each concluded that the plaintiffs had raised a serious issue to be tried.
[4] In November 2009 the defendants moved to dismiss the action for delay on the ground that the plaintiffs had failed to note pleadings closed. The motion was returnable December 3, 2009. The plaintiffs asked for and were granted an adjournment of the defendants’ motion to February 16, 2010. They were required to file their responding material by January 5, 2010. By February 16, however, they had filed no responding material.
(b) The February 16, 2010 Order
[5] The motion on February 16, 2010 was heard by Lococo J. At the outset, he granted an order removing the plaintiffs’ lawyer as solicitor of record. The plaintiffs then asked for a further adjournment to retain new counsel and deliver responding material. Lococo J. granted the adjournment, but on terms.
[6] He adjourned the defendants’ motion to April 26, 2010, and imposed on the plaintiffs filing deadlines and a costs sanction. The costs sanction has led to this appeal. Lococo J.’s order is as follows:
Application adjourned to April 26, 2010 at 10 am, on the following terms:
The adjourned date and time is peremptory to the Plaintiffs, Ms. Duffin and Hectares Properties Inc.
Ms Duffin and Hectares shall serve on the other defendants appearing today and file with this court notice of retainer of new counsel by Tuesday, February 23, 2010.
Any responding material for this motion and any other motions to be heard on the return date shall be filed by Thursday February 25, 2010, failing which no responding material may be filed or will be considered by this court.
Ms. Duffin and Hectares Properties Inc. shall pay costs thrown away to date for each of the four counsel appearing today for the four represented defendants, such costs fixed at $2,000.00 per counsel. Such costs are payable by Monday, March 22, 2010.
If any of the conditions above 1, 2 and 4[^1] is not met by the indicated deadline, the main action by all three plaintiffs (Mr. Duffin not being represented or appearing today) shall be dismissed without further order of this court, with costs payable on a partial indemnity basis, to be fixed by me based on written submissions to be served and filed on a schedule to be determined by me if required.
[7] The plaintiffs satisfied the second condition. They filed a notice of change of solicitors by February 23, 2010. They also satisfied the third condition. They delivered responding material by February 25, 2010. And the plaintiffs satisfied the fourth condition, albeit two days late. They paid $2,000 to each of the four sets of defendants ($8,000 in total) on March 24, 2010, over a month before the return date of the motion, but two days after the date stipulated in Lococo J.’s order.
[8] The defendants accepted payment of the costs and then wrote to Lococo J. asking that the plaintiffs’ action be dismissed for failure to comply with his order. He did not respond to the letter. Before the return date of the motion, the defendants took no other formal step to obtain a dismissal of the action.
(c) The April 26, 2010 order of the motion judge
[9] At the beginning of the motion on April 26, 2010, the defendants asked for an order that the action be dismissed because the plaintiffs had not complied with the fourth condition of Lococo J.’s order – in other words, they had not paid $8,000 in costs on time. The motion judge granted the order. She gave these brief reasons:
[4] The Plaintiffs agree that the costs ordered by Justice Lococo to have been paid by March 22, 2010 were in fact not paid until March 24, 2010. There was no explanation provided as to why the costs were not paid in time. The Plaintiffs ask me however to extend the time for payment of costs such that the action may proceed. They submit that the costs were just two days late and that there has been no prejudice to the Defendants as a result of the delay in payment.
[5] The Plaintiffs did not appeal Justice Lococo’s Order nor did they bring a Motion requesting that the Order be set aside, varied or amended. Justice Lococo’s Order is clear that non-compliance with the condition regarding payment of costs would result in the main action being dismissed. There has been non-compliance. The fact that the costs were paid late is sufficient for a finding of non-compliance, regardless of how late the payment was. Furthermore, the existence or non-existence of any prejudice of the Defendants does not change the finding of non-compliance.
[6] Justice Lococo’s Order speaks for itself. I am not prepared to vary that Order. As such, the main action by all three Plaintiffs is dismissed.
[10] It is from the motion judge’s order that the plaintiffs now appeal.
B. ANALYSIS
[11] The motion judge’s order dismissing the action is a discretionary order, and thus is entitled to deference from an appellate court. However, where that discretion is exercised unreasonably, an appellate court may intervene. That is the case here.
[12] The motion judge undoubtedly had the authority to vary Lococo J.’s order to extend the time for compliance with the costs condition of that order. Rule 3.02(1) of the Rules of Civil Procedure gave her that authority.[^2] In deciding whether to vary Lococo J.’s order, the motion judge ought to have put the plaintiffs’ non-compliance in context, and considered the justice of the case. Respectfully, in my view, she did not do so.
[13] In considering the justice of the case, it is fair, as the defendants point out, to take into account that the plaintiffs breached a peremptory court order. But weighed against that breach are several other considerations, each of which favours granting the plaintiffs relief.
[14] First, a court should always be reluctant to dismiss a claim on grounds unrelated to its merits. To do so is contrary to the general principle – found in rule 1.04(1) – that animates all of our Rules of Civil Procedure: “These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.”
[15] Second, on these kinds of motions, a court must consider the key issue of the prejudice to the parties that will result from its order. Here, the defendants suffer no prejudice whatsoever if Lococo J.’s order is varied to relieve against the plaintiffs’ non-compliance. On the other hand, the plaintiffs will suffer great prejudice if the order is not varied: their action will be dismissed without a hearing on the merits.
[16] Third, the court should consider the underlying purpose of the order that was breached. Lococo J.’s order was essentially a scheduling order, intended to ensure that there would be no further adjournments and to compensate the defendants for their costs thrown away because of the previous adjournments. All of the conditions of Lococo J.’s order were met over a month before the return date of the motion. Therefore, the motion could have proceeded without further delay.
[17] Finally, the court should consider the seriousness of the breach. Here, the breach was minor – a payment of costs made two days late but, as I have said, made a month before the motion was to be argued.
[18] Taking all of these considerations into account, the justice of the case warrants relieving the plaintiffs from their untimely compliance with the costs condition of Lococo J.’s order.
C. CONCLUSION
[19] I would set aside the order of the motion judge. In its place I would extend the time for compliance with the fourth condition of Lococo J.’s order from March 22 to March 24, 2010, and I would dismiss the defendants’ motions. The plaintiffs are entitled to their costs of the appeal in the agreed upon amount of $5,000, inclusive of disbursements and applicable taxes.
RELEASED: Nov 15, 2010 “John Laskin J.A.”
“JL” “I agree Robert P. Armstrong J.A.”
“I agree R.G. Juriansz J.A.”
[^1]: Presumably Lococo J. meant the conditions 2, 3 and 4 not 1, 2 and 4.
[^2]: Rule 3.02(1) provides: Subject to subrule (3), the court may by order extend or abridge any time prescribed by these rules or an order, on such terms as are just.