Court of Appeal for Ontario

CITATION: Canadian National Railway Company v. Kitchener (City), 2015 ONCA 131

DATE: 20150226

DOCKET: C59372

Rouleau, Watt and Pardu JJ.A.

BETWEEN

Canadian National Railway Company

Plaintiff (Appellant)

and

The Corporation of the City of Kitchener, Public Utilities Commission of Kitchener and Hogg Fuel & Supply Limited

Defendants (Respondents)

Jeremy Devereux and Andrea Campbell, for the appellant

Karen Perron, for the respondent City of Kitchener

Michael Binetti and David N. Vaillancourt, for the respondent Hogg Fuel & Supply Limited

Heard: February 5, 2015

On appeal from the order of Justice Frederick L. Myers of the Superior Court of Justice, dated August 25, 2014, with reasons reported at 2014 ONSC 4929.

ENDORSEMENT

[1] Canadian National Railway Company (“CNR”) appeals from a decision dismissing this action for delay, pursuant to rule 24.01. It argues that although the motion judge applied the correct legal test, he erred in reaching the following conclusions:

1. The delay after 2003 was inexcusable;

2. There was a strong presumption of prejudice;

3. CNR had not rebutted the presumption of prejudice.

[2] CNR started this action in 1989. It alleges that from 1924 to 1958 the Public Utilities Commission of the City of Kitchener dumped coal tar on land now owned by the respondent Hogg Fuel & Supply Limited, and that some of this coal tar migrated onto CNR’s land nearby. The respondents deny that coal tar was disposed of as alleged.

[3] The lawsuit was prompted by Ministry of the Environment reports disclosing the presence of coal tar waste on CNR’s property. The parties initially engaged in a process to explore remediation of the properties and jointly retained experts. In November 1994 CNR demanded statements of defence. The City and Hogg Fuel delivered their statements of defence in 1996 and 1997, respectively.

[4] The City proposed and the other parties accepted that the evidence of five witnesses be taken and preserved by examination under oath under Rule 36, as the witnesses were elderly or infirm. The evidence was taken in 1997. CNR did not respond to a request by the City to examine a retired Public Utilities Commission foreman who had worked there from 1935 to 1968. He passed away in 1999.

[5] The parties initially showed some willingness to address the issues underlying the claims collaboratively. By letter of January 1997, one of the jointly retained experts advised the Ministry of the Environment that “[i]t is the desire of the … parties to co-operatively demonstrate an initiative to remediate this area and defer the MOEE Control Order”.

[6] By 2001 the legal landscape had changed with the introduction of case management under the Rules of Civil Procedure. Counsel attended before Wilkins J. on November 21, 2003. By then the action was 14 years old. Justice Wilkins rejected counsel’s joint request to set a schedule for completion of examinations for discovery by June 2004, and assigned the case to case management. The case management master made multiple efforts to require the parties to adhere to a schedule for the completion of discoveries and proceeding to trial. Ultimately, Master Dash approved a schedule which required the parties to conduct examinations for discovery, to mediate the dispute on October 14, 2004, and to appear in trial scheduling court on December 1, 2004.

[7] The day before the trial scheduling court date, counsel for CNR wrote Master Dash to ask that the appearance be delayed so that numerous steps could be undertaken, including obtaining expert reports and transcripts of discoveries, answering outstanding discovery undertakings by February 15, 2005 and dealing with discovery motions. None of the steps advanced as a basis to adjourn the trial scheduling court were ultimately completed. CNR’s final responses to undertakings on discovery were delivered on August 15, 2014, just before the motion to dismiss for delay was heard.

[8] Very little happened after the adjournment of the trial scheduling court date. CNR and Hogg Fuel both changed lawyers. Hogg Fuel’s counsel advised CNR on February 12, 2010 to either “get on” with the action or abandon it.

[9] To avoid dismissal of the action under Rule 48, which mandates automatic dismissal of actions that have not been set down for trial after an extended period of time, CNR set the matter down for trial on December 16, 2011. In the certification form requesting trial dates, CNR advised the court that its pleadings required amendment, that discoveries had not been completed, that all requests to admit had not been delivered and that documentary production was not complete.

Motion Judge’s Decision

[10] Applying the test set out in Langenecker v. Sauvé, 2011 ONCA 803, the motion judge concluded that CNR’s delay was “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.”

[11] The motion judge explained that while it was initially reasonable for the parties to pursue a collaborative approach, the delay after 2003 was not justified:

Thus, while I see the first 14 years of delay as excusable (although the first five of those weakly so) I can see no “reasonable and cogent” or “sensible and persuasive” reasons for the ongoing delays after 2003. CN and its counsel understood that the litigation had to move forward and yet they kept it on the backburner for another eight years.

[12] The motion judge concluded that there was a strong presumption of prejudice, given that 25 years had elapsed since the action was started. He applied the test set out in Armstrong v. McCall, 2006 CanLII 17248 (ON CA), [2006] O.J. No. 2055 (C.A.), at para. 11:

Where there is a presumption of prejudice, the defendant need not lead actual evidence of prejudice and the action will be dismissed for delay unless the plaintiff rebuts the presumption. The presumption of prejudice may be rebutted by evidence that all documentary evidence has been preserved and the issues in the lawsuit do not depend on the recollection of witnesses or that all necessary witnesses are available with detailed recollection of the events. If the presumption is rebutted then the action may still be dismissed if the defendant leads convincing evidence of actual prejudice.

[13] The motion judge held that CNR had not met its onus to rebut the presumption of prejudice. He identified a number of witnesses who would have had relevant evidence but were no longer available. There was no longer any documentary evidence available on the key issue of who dumped coal tar and where. He concluded that a trial in these circumstances would not be a fair and just resolution of the dispute.

Standard of Review and Analysis

[14] The motion judge’s decision should not be overturned unless he made a palpable and overriding error – that is to say, that he made unreasonable findings that were not supported by the evidence.

[15] This action is 25 years old. It lay essentially dormant for lengthy periods, despite case management efforts directed at bringing the matter to trial. Notwithstanding the intermittent collaborative approach and the joint retainer of experts, it was open to the motion judge to conclude that the overall delay from 2003 was both inordinate and inexcusable. He clearly took into account the nature and complexity of the action.

[16] A presumption of prejudice flows from lengthy delay. Memories fade, witnesses become unavailable and documents may be lost. As observed in Clairmonte v. Canadian Imperial Bank of Commerce, 1970 CanLII 470 (ON CA), [1970] 3 O.R. 97 (C.A.), at p. 116, “[w]hile the presumption will speak as a barely audible caution immediately after a limitation period has expired, it may command with increasing imperativeness on the passage of a substantial time, depending on the cause of action.” Use of the presumption is particularly appropriate when dealing with a 25 year old action relating to events in the period from 1924 to 1958. There is an inherent difficulty in proving that there is relevant evidence from long ago which no longer exists. Given the lengthy delay in this case, the motion judge did not err in finding that there was a presumption of prejudice. Further, he did not err in concluding that CNR had failed to rebut this presumption. He did not require CNR to meet the impossible standard of establishing that the evidence of every conceivable person who might have had any relevant observation had been preserved. Instead, he identified key individuals, such as the retired foreman for the Public Utilities Commission and a former employee of Hogg Fuel, who likely had some relevant information but whose evidence was no longer available. It was open to the motion judge to conclude on the record before him that CNR had not rebutted the presumption of prejudice flowing from the very long delay. Although, as noted by the appellant, some of the witnesses became unavailable during the period of excused delay, that is, before 2003, the record also shows that a number became unavailable during the period of unexcused delay, that is, after 2003.

[17] Finally, the motion judge did not err by failing to distinguish between the claims against the two respondents. The source and location of the coal tar dumping was a common issue in the claims against both the City and Hogg Fuel.

[18] As no palpable and overriding error has been shown, the appeal on the merits must be dismissed.

[19] CNR also appeals from the disposition of costs by the motion judge. It argues that it should have been awarded costs thrown away from 2008 because the respondents did not bring their motion to dismiss for delay until 2014. Cost awards are entitled to deference. Given that the responsibility for advancing the action rested with CNR, we see no error in the motion judge’s award of costs.

[20] Finally, CNR submits that the costs of the one-day motion awarded to the successful respondents, in the sums of $83,000 and $29,000, were excessive. Again, we see no basis to interfere with the motion judge’s cost awards.

[21] For these reasons, the appeal is dismissed, with costs to the City fixed at $23,911.81 and to Hogg Fuel in the sum of $5,000, both all inclusive.

“Paul Rouleau J.A.”

“David Watt J.A.”

“G. Pardu J.A.”