COURT OF APPEAL FOR ONTARIO

CITATION: Wallace v. Crate's Marine Sales Ltd., 2014 ONCA 671

DATE: 20140930

DOCKET: C58159

Juriansz, LaForme and Lauwers JJ.A.

BETWEEN

Kim Robert Wallace and Karen Lynn Wallace

Plaintiffs (Appellants)

and

Crate’s Marine Sales Ltd. and Carver Boat Corporation

Defendants (Respondents)

William E. Pepall and Jasmine T. Akbarali, for the appellants

Morris Manning, Q.C., for the respondents

Heard: September 18, 2014

On appeal from the order of Justice Drew S. Gunsolus of the Superior Court of Justice, dated December 10, 2013, with reasons reported at 2013 ONSC 7384.

Lauwers J.A.:

[1] This is a relatively simple case. The appellants claim that the yacht they purchased in 2000 for more than $1 million from the respondent, Crate’s Marine Sales Ltd., was so defective that there was a fundamental breach of the purchase contract. They returned the yacht to Crate’s in 2003 where it has languished ever since. They seek rescission of the purchase contract and return of the purchase money, or damages in the alternative.

[2] The action was started in 2003. The motion judge estimated that if the action was now permitted to proceed, it would not be ready for trial until 2015 at the earliest.

[3] The motion judge dismissed the action for want of prosecution based on both his discretion under Rule 24 of the Rules of Civil Procedure R.R.O. 1990, Reg. 194, and as an exercise of the court’s inherent jurisdiction.

[4] For the reasons set out below, we dismiss the appeal.

(1) The Test for Dismissing an Action for Delay

[5] The appellants concede that the motion judge properly instructed himself at paras. 17-27 of his reasons on the test for dismissing an action under Rule 24. The motion judge cited Woodheath Developments Ltd. v. Goldman (2001), 2001 CanLII 28019 (ON SC), 56 O.R. (3d) 658 (S.C.); Scaini v. Prochnicki, 2007 ONCA 63, 85 O.R. (3d) 179 and Marché D'Alimentation Denis Thériault Ltée v. Giant Tiger Stores Ltd., 2007 ONCA 695, 87 O.R. (3d) 660. However, the appellants challenge the motion judge’s application of the law to the facts.

[6] The motion judge did not find that the delay was intentional or contumelious. He instructed himself that, under Rule 24, he had to be satisfied that the delay gave rise to “a substantial risk that a fair trial of the issues would not be possible at the earliest date a trial could be held in this matter” (para. 81). The motion judge also noted the expiry of the applicable limitation period and the presumption of prejudice that arises in circumstances of inordinate delay.

(2) Background and Decision in the Court Below

[7] Until the close of pleadings in 2004, the action proceeded at an ordinary pace. It then took about one and one-half years to arrange for discoveries. The motion judge noted that he had not received a satisfactory explanation for this delay (para. 75).

[8] The discoveries began in December 2005, but were shortly adjourned to permit the appellants to amend their statement of claim. The appellants were to narrow their allegations to a claim that either the portside Volvo engine or the electronics related to the engine were defective. Counsel never took steps to amend the statement of claim. No other steps were taken by either side to advance the litigation for a number of years, apart from a desultory exchange of correspondence. In August 2011 counsel for the appellants served a notice of examination for discovery; the respondents did not attend, advising that they would be bringing a motion for summary judgment, which led to the motion that is the subject of this appeal.

[9] The motion judge stated:

In fact, the court received no satisfactory explanation from the plaintiffs as to the cause for a delay of in excess of ten years. The plaintiff's explanation is basically that he and his counsel were tied up in other, unrelated litigation for over two years of that time. Counsel for the plaintiff explained that they were busy with other cases and the realities of their litigation practice. The defendant sent ongoing correspondence trying to "needle" the matter forward on their own terms, but neither side availed themselves of motions, which is surprising, as neither counsel could be considered "wilting flowers" on the civil litigation stage. (Para. 76)

[10] At para. 80, the motion judge found:

I find that the delay in this matter of in excess of ten years is inordinate and inexcusable as it has never really moved beyond the pleadings stage. This delay includes an unexplained ten year litigation delay after the issuance of the Statement of Claim, and an eight year delay following the expiry of a critical limitation period. It was over thirteen years ago when the original contract was entered into.

[11] The motion judge concluded:

The inordinate delay described above, has created a presumption that the defendant has been prejudiced by this delay. The onus was on the plaintiff to displace the prejudice and persuade the court with convincing evidence that no prejudice will be suffered as a result of its delay, and that there is not a substantial risk that a fair trial will not be possible. The plaintiff has failed to discharge that onus. Beyond that, the defendant has demonstrated actual prejudice in any event. (Para. 89)

(3) Analysis

[12] The confluence between discretion and dismissal for delay is traced out in this court’s decision in Langenecker v. Sauvé, 2011 ONCA 803, [2011] O.J. No. 5777. Doherty J.A. observed:

An order dismissing an action for delay is obviously a severe remedy. The plaintiff is denied an adjudication on the merits of his or her claim. Equally obviously, however, an order dismissing an action for delay is sometimes the only order that can adequately protect the integrity of the civil justice process and prevent an adjudication on the merits that is unfair to a defendant. (Para. 3)

[13] In this case, the motion judge’s finding that the delay was inordinate and inexcusable is unassailable.

[14] The appellants argue that they have successfully rebutted the presumption of prejudice. They argue that the evidence is in decent enough form to permit a fair trial, and that any memory lapses can be repaired by recourse to the documentary record.

[15] Counsel for the appellants takes direct aim at three factors cited, at para. 90, by the trial judge as examples of prejudice: mitigation of damages relating to re-sale and depreciation of the yacht; passage of the limitation period in relation to the manufacturer’s warranty on the portside engine; and the bankruptcy of the co-defendant Carver Boat Corporation. The appellants submit that these factors are not examples of prejudice, but are instead litigation risks that they, not the respondents, must absorb. There is some merit in this argument.

[16] However, the motion judge did not rely on the listed examples of prejudice alone. He also noted that, while documentary evidence may well be available, “this is not litigation driven solely by documentation” (para. 86). He added: “Both parties have their own views as to what occurred and what should have occurred, in relation to the use and repair of the vessel and they are now relying upon memories of events that occurred over a decade ago.”

[17] Based on these findings, the motion judge concluded that the appellants’ attempted rebuttal of the presumption of prejudice failed in the face of the respondent’s evidence as to the potential significance of testimony dependent upon the witnesses’ ability to recall statements and observations. These findings cannot be characterized as unreasonable.

[18] The appellants argue that at least some of the delay falls at the feet of the respondents. It is fair to say that neither side is free of fault in the conduct of this action, but, as LaForme J. observed in DeMarco v. Mascitelli, [2001] O.J. No. 3582, 14 C.P.C. (5th) 384 (S.C.), at para. 22, the plaintiff is responsible for moving the action along. In this case the appellants manifestly failed to fulfill this responsibility.

[19] The appellants also challenge the motion judge’s statement that his decision dismissing the action for delay was an exercise of the court’s inherent jurisdiction. They argue that Rule 24 effectively exhausts the court’s jurisdiction to deal with dismissal for delay.

[20] Regarding this exercise of inherent jurisdiction, the motion judge stated:

A lengthy, unexplained delay in a case of this nature could well be defined as an abuse of the court's process. There is, indeed, a strong public interest in promoting the timely resolution of disputes in our civil justice system, which is already overburdened. Litigants and the public regularly complain about inordinate delays in obtaining civil motions and trial dates. The delay in this matter, of over a decade, strains the empathy of the court to excuse a delay of this "magnitude and gravity" and further undermines public confidence in the administration of our civil justice system. (Para. 95)

I agree. This is a simple case in which there was no reason to delay the trial to permit the situation to unfold, as there often is in personal injury cases, for example.

[21] The motion judge’s invocation of inherent jurisdiction is consistent with this court’s decision in Marché D'Alimentation Denis Thériault. Sharpe J.A. noted at para. 24:

Dismissal for delay is not, of course, an invention of case management. Rule 24.01 allows a party to move to dismiss an action for delay where the plaintiff has failed to prosecute the action in a timely fashion in accordance with the rules. Moreover, courts may dismiss actions for delay even when the relevant rules do not mandate it. A court has inherent jurisdiction to control its own process, which "includes the discretionary power to dismiss an action for delay." Housser v. Savin Canada Inc. (2005), 2005 CanLII 35779 (ON SC), 77 O.R. (3d) 251 at para. 9 (S.C.J.). As the Manitoba Court of Appeal wrote, "The power of a superior court to strike a matter for want of prosecution does not hinge on the niceties of the wording of the rules, but rather flows from the inherent power of the court to prevent an abuse of its own process." Kuhr v. Pearlman (1991), 1991 CanLII 11776 (MB CA), 76 Man. R. (2d) 67 at para. 16. In at least two cases, this court has characterized lengthy, unexplained delays as "an abuse of the court's process." In Susin v. Baker & Baker, [2004] O.J. No. 723 at para. 7 (C.A), the court wrote that "even if the action could not be dismissed under r. 24.01(1), given all of the circumstances, it could properly be dismissed as an abuse of the court's process." See also Convay v. Marsulex Inc., [2002] O.J. No. 4655 (C.A.).

[22] There comes a time, in short, when enough is enough, and the civil justice system will no longer tolerate inordinate and inexplicable delay. A court may then eject the action as an exercise of its inherent jurisdiction, whether or not the relevant rules expressly mandate it. This is such an action. The motion judge properly exercised his jurisdiction to dismiss the claim and the counterclaim.

[23] The appeal is dismissed with costs fixed in the amount of $9,000, all inclusive.

Released: September 30, 2014 “PL” “P. Lauwers J.A.”

“I agree R.G. Juriansz J.A.”

“I agree H.S. LaForme J.A.”