Woodheath Developments Ltd. v. Goldman

Woodheath Developments Ltd. v. Goldman [[2001 28019 (ON SC), 56 O.R. (3d) 658]

66 O.R. (3d) 731

[2003] O.J. No. 3440

Court File No. 726/01

Ontario Superior Court of Justice

Divisional Court

Then J.

September 8, 2003

Civil procedure -- Dismissal for delay -- Inexcusable delay -- Passage of limitation period -- Presumption of prejudice -- Burden of proof on plaintiff to rebut presumption of prejudice -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 24.01(1)(c).

NOTE: The catchlines above relate to a decision of Master Dash of the Superior Court of Justice. An appeal of this judgment to the Superior Court of Justice, Divisional Court (Then J.), was dismissed on September 8, 2003. The court's endorsement is as follows:

[1] THEN J.: -- The plaintiff, Woodheath Developments Ltd., appeals to the court from the order of Master Dash dismissing the action for want of prosecution on motion by the defendant, Goldman. The reasons of the learned Master are reported at (2001), 2001 28019 (ON SC), 56 O.R. (3d) 658.

[2] I agree with the respondent that the standard of review by this court in reviewing the final order of a master requires a measure of deference to the court of first instance and only to interfere in the event of palpable and overriding error in the decision rendering it clearly wrong. This standard applies both to findings of fact and to the application of legal principals. See, e.g. Stein v. "Kathy K" (The), [1975 146 (SCC), [1976] 2 S.C.R. 802, 62 D.L.R. (3d) 1; General Signal Ltd. (c.o.b. Aurora/ Hydromatic Canada Operations) v. Magnum Express Inc., [1995] O.J. No. 528 (QL), 79 O.A.C. 287 (Div. Ct.). Similarly, judicial discretion ought not to be interfered with unless it is apparent that the judge applied erroneous principles that rendered the result "clearly wrong". The judge must have acted on a wrong principle or disregarded or misinterpreted material evidence: see, for example, Cosyns v. Canada (Attorney General) (1992), [1992 8529 (ON SCDC), 7 O.R. (3d) 641, 88 D.L.R. (4th) 507 (Div. Ct.).

[3] Even if the standard were "correctness", I accept as correct the principles applied by Master Dash as well as his conclusions in applying the principles to the facts of this case. The record discloses no error in the Master's appreciation of the relevant authorities or in the application of those authorities to the facts [page732] of this case. There was evidence to support the Master's conclusion that the plaintiff's total delay of 12 years in bringing the action to [trial] and the delay of five years after the expiration of the limitation period was both inordinately lengthy and (admittedly) inexcusable.

[4] Specifically, I accept as correct the principles applicable to motions to dismiss for delay derived by the learned Master from the case law and accurately summarized in the headnote at (2001), 2001 28019 (ON SC), 56 O.R. (3d) 658 as follows:

The principle to be applied on a motion to dismiss for delay is that the action should not be dismissed unless: (1) the default is intentional and contumelious; or (2) the plaintiff or his or her lawyers are responsible for the inexcusable delay that gives rise to a substantial risk that a fair trial might not now be possible. It is presumed that memories fade over time, and an inordinate delay after the cause of action arose or after the passage of limitation period gives rise to a presumption of prejudice. 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.

[5] I also accept as correct the conclusions of the Master with respect to the applicability of those principles to the facts of this case which are also accurately summarized in the headnote at 2001 28019 (ON SC), 56 O.R. (3d) 658, at pp. 658-59 as follows:

In this case the delay was not intentional or contumelious, but it was inordinate and inexcusable. There was an inexcusable ten-year delay after the commencement of the action and a six-year delay after the expiry of the limitation period, which occurred on July 26, 1995, six years after the aborted closing date. In this case, there was a presumption of prejudice and the onus was on the plaintiff to persuade the court with convincing evidence that no prejudice would be suffered as a result of the delay and that there was not a substantial risk that a fair trial would not be possible. The plaintiff failed to discharge that onus. In particular, the plaintiff failed to show that the defendant would not be prejudiced in pursuing the critical defences of mitigation of damages and the allegation of a settlement. Accordingly, the action should be dismissed. The counterclaim should also be dismissed because there was a similar risk that a fair trial of the counterclaim would not be possible.

[6] During the course of argument, much emphasis was placed by the plaintiff/appellant on the failure of the defendant to "spur the action along" and on the failure of the Master in turn to take that factor into account in assessing whether the defendant/respondent had sustained substantial prejudice. Reliance was placed by the appellant on the following passage in [page733] Albrecht v. Meridian Building Group Ltd. (1988), 27 C.P.C. (2d) 213, 29 O.A.C. 399 (Div. Ct.), at p. 215 C.P.C.:

When, however, an action has been commenced within the prescribed limitation period, a defendant has it within his power to move the action along to trial. If the defendant does what he can do to keep the action moving on towards trial and the plaintiff delays him, the Court can be asked for assistance. But a defendant who just sits idly by waiting for time to pass and does nothing to move the action on to completion is hard put to complain that he did not want the action handing over his head.

[7] In assessing the effect of this passage on this case, it would appear to me that the observations of Chief Justice Gale in Farrar v. McMullen, [1970 555 (ON CA), [1971] 1 O.R. 709 (C.A.), at p. 711 are particularly apt:

There is, however, one further matter to which I should like to make reference. I expressly do not accept one part of the reasons given by the Senior Master where he says:

From the reasons given by the Court of Appeal in two recent decisions, namely, Clairmonte v. Canadian Imperial Bank of Commerce, [1970 470 (ON CA), [1970] 3 O.R. 97, 12 D.L.R. (3d) 425, and International Formed Tubes Ltd. v. Ohio Crankshaft Co. et al. [unreported], it would appear that a defendant cannot as this defendant has done, lull the plaintiff into a false sense of security by waiting, without complaint, for the plaintiff to take the next step in his action and, after the limitation period has expired within which the plaintiff could commence another action, and without warning, successfully move to dismiss the plaintiff's action for want of prosecution.

I was responsible for the judgment in International Formed Tubes Ltd. v. Ohio Crankshaft Co. et al., and I cannot extract from it any such principle. So far as the Clairmonte case is concerned only one member of the Court alluded to a principle similar to that stated by the Senior Master as being the state of the law of this Province. Speaking only for myself, I should like to disclaim my adherence to any such principle as that appearing in the passage I have quoted. I do not agree that in all cases a defendant must attempt to spur the plaintiff on or lose his right to successfully apply for dismissal of the action for want of prosecution. As in so many other instances, it all depends upon the particular facts as to whether such an order will go in the circumstances. In commenting upon the passage above, which I have quoted from the learned Senior Master's judgment, I do not wish to be taken as endeavouring to discourage solicitors for defendants from giving notice or collaborating with solicitors for plaintiffs before embarking upon a motion for dismissal of the action. I simply wish to make it clear that their failure to do so will not necessarily preclude them from succeeding on a motion if one is brought.

[8] In my respectful view, it appears clear that while the defendant may run a risk by sitting idly by, such inaction does not automatically preclude him from succeeding on a motion to dismiss the action for delay; it depends as the Chief Justice has pointed out on the circumstances of the case. [page734]

[9] In this case, the plaintiff specifically ordered his counsel not to prosecute the action or to take any steps in requiring the defendant to defend the action until a statement of defence was demanded on September 5, 1996, and received on September 9, 1996. The plaintiff allowed the limitation period to expire on July 28, 1998. The settlement discussions took place July 12-18, 1996, and the claim of settlement was rejected by appellant's counsel on September 5, 1996. After receiving the statement of defence on September 9, 1995, the appellant took no steps to advance the action between the pleadings stage. The appellant admits that the delay from 1996 to 2001 is inexcusable.

[10] In such circumstances, I cannot accept that it was incumbent upon the defendant to "spur" the plaintiff on especially when such action on his part could be taken as an indication that the action had not been settled as the defendant claimed in her statement of defence.

[11] In my view, the learned Master did not make any palpable error in law in failing to take into account the inaction of the defendant as that failure would not affect the result in the circumstances of this case. Accordingly the appeal must be dismissed.

[12] If the parties cannot agree as to costs, they may submit brief oral submissions within 30 days of the release of this decision.

A.J. Esterbauer, for plaintiff (appellant).

Kevin Fisher, for defendant (respondent).