COURT OF APPEAL FOR ONTARIO

CITATION: Samuels v. Mai, 2020 ONCA 408

DATE: 20200624

DOCKET: C67621

Strathy C.J.O., Lauwers and van Rensburg JJ.A.

BETWEEN

Donovan Samuels

Plaintiff/Appellant

and

Jen Ling Mai, Hao Cheung Mark, Mark Holdings Inc. and CPM Realty Corporation

Defendants/Respondents

David Silver, for the appellant

Pulat Yunusov, for the respondents

Heard: in writing

On appeal from the order of Justice Shaun O’Brien of the Superior Court of Justice, dated September 23, 2019.

REASONS FOR DECISION

[1] The appellant appeals an order dismissing his action. The order was made on the appellant’s motion to vary a litigation timetable and for summary judgment against the respondents. On that motion, the respondents sought an order dismissing the motion to vary the timeline and dismissing the appellant’s action for delay.

[2] For the reasons that follow, we allow the appeal and remit the matter to the Superior Court.

Procedural History

[3] The action is based on an Agreement of Purchase and Sale dated September 6, 2011, for a 12-unit apartment building in Toronto for the sum of $1.28 million. The agreement called for a $50,000 deposit and was conditional on the buyer, the appellant, obtaining financing. The appellant was allegedly unable to do so and purported to terminate the agreement.

[4] On December 6, 2011, the appellant commenced this action for recovery of his $50,000 deposit under the Simplified Procedure: see r. 76 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. He claimed an additional $50,000 for loss of opportunity to invest the deposit.

[5] On January 11, 2012, the respondents delivered a statement of defence and counterclaim, claiming damages of $100,000 for breach of contract. Nine months later, on October 26, 2012, the appellant delivered a reply and defence to counterclaim.

[6] At that point, the action stalled. There is little evidence of why that happened, although there is a suggestion that the appellant’s then counsel had a serious illness.

[7] Whatever the reason, there is no evidence of any step having been taken by any party to move the action forward for over four years. There were some inconclusive communications between the lawyers concerning settlement and other issues, but nothing of significance occurred.

[8] In March 2016, the appellant retained new counsel, but there was no progress in the action for almost a year. In January 2017, the respondents retained new counsel.

[9] The appellant’s counsel requested a status hearing to prevent an administrative dismissal. At that hearing, on February 27, 2017, the Master directed the Registrar not to dismiss the action for delay and set a litigation timetable, which called for discoveries and motions to be completed and the action to be set down for trial by June 1, 2018. That order was not opposed by the respondents.

[10] In spite of being handed a lifeline by the Master, the appellant took no steps to move the action forward.

[11] On January 26, 2018, the respondents served a motion to dismiss the action for delay or, in the alternative, for summary judgment dismissing the appellant’s claim and granting the respondents judgment on their counterclaim.

[12] Between January and August 2018, the parties delivered affidavits of documents and exchanged communications concerning settlement, but once again, the appellant did little to move the action forward.

[13] On March 19, 2018, counsel for the appellant stated an intention to bring a cross-motion for summary judgment on the same timeline as the respondents’ motion for dismissal for delay or summary judgment.

[14] On March 20, 2018, a motion schedule was set in Civil Practice Court, leading to a return date for the respondents’ motion on September 11, 2018.

[15] On August 10, 2018, having filed no materials on their scheduled motion to dismiss the action for delay or for summary judgment, the respondents’ counsel proposed to withdraw their motion to focus on “the next stage of this action.”

[16] On September 6, 2018, counsel for the respondents advised the court in an email that the motion would be proceeding on September 11, 2018, but “only on costs” and the respondents would be “seeking a deadline to set this action down for trial”.

[17] On September 10, 2018, counsel for the respondents advised the appellant’s counsel, “[m]y offer on costs [of the withdrawn motion] will remain open until the hearing tomorrow but regardless of your acceptance I will seek a new deadline to set this matter down for trial.”

[18] On September 11, 2018, the motion did not go ahead because the matter had not been listed. On this day, counsel agreed that the appellant’s motion for summary judgment would be scheduled and a timetable would be set at Civil Practice Court. The costs of the respondents’ withdrawn motion would be reserved to the motion judge.

[19] In the five months thereafter, there were inconclusive settlement discussions, but nothing substantive occurred.

[20] On February 27, 2019, the appellant’s counsel appeared in Civil Practice Court to schedule a motion to vary the timetable set by the Master and for summary judgment. The motion, which resulted in the order at issue, was scheduled for July 24, 2019.

[21] Both parties delivered materials on the July 24, 2019 motion. The respondents’ materials addressed both the merits of the claim and counterclaim and responded to the appellant’s request for variance of the timetable. The appellant and one of his affiants were cross-examined.

[22] On September 23, 2019, the motion judge dismissed the appellant’s action for delay and provided written reasons for decision. She did not address the respondents’ counterclaim.

[23] On October 21, 2019, after the dismissal of the action, the respondents served a notice of election to proceed with their counterclaim.

The Motion Judge’s Reasons

[24] The motion judge noted the appellant’s failure to take any steps to move the action forward for several years after the exchange of pleadings. Even after the retainer of new counsel in March 2016, the appellant took no action until bringing a motion to avoid dismissal for delay in January 2017. As a result of that motion, the Master set a timetable order. Yet again, the appellant took no steps to advance the action, which prompted the respondents’ motion, served in January 2018, to dismiss the action for delay or alternatively for summary judgment.

[25] While the respondents ultimately did not proceed with their motion, which was scheduled for September 11, 2018, the appellant took no steps to schedule his own motion until February 2019. In the meantime, “the parties had one phone call and the [appellant] sent one letter in an attempt to settle the matter.”

[26] The motion judge found that the eight years’ delay since the commencement of the action was “inordinate.” The appellant had failed to provide a satisfactory explanation for the delay, either before or after the Master’s timetable order. While courts are prepared to make some allowance for delay due to settlement discussions, this was not a satisfactory explanation in the circumstances.

[27] In considering the motion to vary the timetable, the motion judge made reference to the test in Reid v. Dow Corning Corp. (2001), 11 C.P.C. (5th) 80 (Ont. S.C.), rev’d on other grounds (2002), 48 C.P.C. (5th) 93. (Ont. Div. Ct.), which was referred to by this court in Prescott v. Barbon, 2018 ONCA 504, 141 O.R. (3d) 616. The motion judge laid out the four Reid factors, namely: (1) the explanation for the litigation delay; (2) inadvertence in missing the deadline; (3) efforts to move promptly to set aside the dismissal; and (4) absence of prejudice to the defendant.

[28] The motion judge also cited to Jadid v. Toronto Transit Commission, 2016 ONSC 1176, aff’d 2016 ONCA 936, dealing with the application of the Reid factors in a situation where a party comes to the court seeking a “second lifeline”.

[29] Finally, the motion judge properly noted two points. First, it is not necessary to satisfy each part of the Reid test. A contextual approach requires the weighing of all relevant factors to determine what is just in the circumstances: Marché D’Alimentation Denis Thériault Ltée v. Giant Tiger Stores Limited, 2007 ONCA 695, 87 O.R. (3d) 660, at para. 20. Second, she was required to balance two principles, namely: (a) that actions should be determined on their merits if possible; and (b) that the timely and efficient resolution of disputes requires that rules be respected and enforced: 1196158 Ontario Inc. v. 6274013 Canada Limited, 2012 ONCA 544, 112 O.R. (3d) 67, at para. 18.

[30] Considering the Reid factors, and applying them with heightened scrutiny due to the appellant’s complete disregard of the timelines established by the Master, the motion judge found that the plaintiff:

1. had not provided a satisfactory explanation for the delay;

2. did not demonstrate that he failed to prosecute the action due to inadvertence;

3. did not move promptly to bring a motion to vary the timetable; and

4. had not proven that the defendants would not suffer prejudice.

[31] The motion judge added that if she were wrong in dismissing the action for delay, she would not have decided the summary judgment motion because the parties had disclosed the terms of settlement offers in their motion materials. She would have referred the matter to another judge.

Submissions on Appeal

(1) Appellant

[32] The appellant submits that the motion judge erred in dismissing the action because she failed to consider whether the order was just under the circumstances. She ought to have considered the overall context and history of the litigation and should not have dismissed an action that was ripe for summary determination on the merits. The order was “punitive rather than efficient”, citing to Carioca’s Import & Export Inc. v. Canadian Pacific Railway Limited, 2015 ONCA 592, 128 O.R. (3d) 143, at para. 54.

(2) Respondents

[33] The respondents submit that the appellant was responsible for unreasonable delay and failed to proceed with his motion in a timely way, particularly after the respondents withdrew their motion on September 11, 2018, in the expectation that the plaintiff would move promptly with his. The respondents also submit that the nature of their counterclaim is different from the claim advanced by the plaintiff. Specifically, the plaintiff sought return of the deposit and damages for loss of investment opportunity; whereas, the respondents sought damages for failure to close the real estate transaction. The respondents submit that this court should not consider the notice of election to proceed with the counterclaim, as it amounts to fresh evidence and would require a re-weighing of the Reid factors.

Discussion

[34] The motion judge’s decision is entitled to deference in the absence of an error in legal principle or a palpable and overriding error of fact.

[35] While the motion judge identified the need for a contextual analysis, she failed to consider a critical contextual factor: the dismissal of the appellant’s claim left the respondents’ counterclaim alive. In fact, the respondents have evidenced an intention to proceed with their counterclaim.

[36] We do not accept the respondents’ submission that the counterclaim is somehow different from the claim. It is a mirror image of the claim. If the appellant’s claim had been successful, he would have established that he was entitled to refuse to complete the transaction and the respondents’ counterclaim would have failed. Success on the counterclaim, on the other hand, would necessarily mean the failure of the claim.

[37] In Cardon Developments Ltd. et al. v. Butterfield, 1999 BCCA 642, 131 B.C.A.C. 197, at para. 5, Southin J.A. set aside an order dismissing a claim for delay because a counterclaim that arose out of the same events remained. Since the claim and counterclaim were “inextricably wound up one with the other” and the defendants were planning on proceeding on the counterclaim, the interests of justice would not be properly served if the claim was not also permitted to proceed.

[38] As in Cardon, it was not in the interests of justice to dismiss the appellant’s claim while permitting the respondents to litigate the very same issues in their counterclaim. The order did not promote the timely and efficient resolution of the proceeding. While the claim and counterclaim were well past their “best before” dates, neither party had displayed any diligence in moving the proceedings forward and there was no evidence of prejudice. When the litigation was finally ready for determination, the motion judge erred in failing to consider the fact that dismissing the claim would leave the counterclaim outstanding, exposing the appellant to liability in relation to the very same issue he was litigating.

[39] We do not think it was necessary for the motion judge to recuse herself from hearing the summary judgment motion, had she permitted the variation of the timetable. The parties waived privilege over the settlement discussions by referring to them in their materials. It does not appear that she was asked to recuse herself. Having received the evidence and heard the submissions, it would not have been efficient to refer the matter to another judge to decide the summary judgment motion.

[40] We cannot leave this matter without observing that this proceeding could have been resolved by a one-day trial. Liability turned on the credibility of the appellant and on one or two documents. Proof of the respondents’ damages, if any, should have been uncomplicated. Sometimes a trial is the just, most expeditious, and least expensive determination of a civil proceeding on its merits, as required by r. 1.04(1).

Disposition

[41] For these reasons, the appeal is allowed, the dismissal of the action and the costs award are set aside, and the matter is remitted to the Superior Court for determination. There were no submissions as to costs. In the particular circumstances of this case, the costs of this appeal are fixed at $5,000, inclusive of disbursements and all applicable taxes, in the cause.

“G.R. Strathy C.J.O.”

“P. Lauwers J.A.”

“K. van Rensburg J.A.”