COURT FILE NO.: C-7221/03 and 9435/06
DATE: 20120423
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1239122 Ontario Inc. and Transport Development Inc. and William George Armstrong and William George Armstrong, Estate Trustee for the Estate of George Armstrong, deceased
Plaintiffs
– and –
Randall Russell, Glenn Fuller, 1417338 Ontario Limited and 1447311 Ontario Limited and Leighton Roslyn
Defendants
AND RE:
George Armstrong Investments Ltd., George Armstrong and William George Armstrong
Plaintiffs
– and –
Randall Russell, Glenn Fuller, and 1311913 Ontario Inc.
Defendants
Michael S. Hebert, Counsel for the Plaintiffs in both Actions
Leighton T. Roslyn, Counsel for the Defendants Russell and Fuller “Ottawa Action”
D. Peter Best, Counsel for the Defendants “Sudbury Action”
HEARD at Sudbury: February 16, 2012, and April 10, 2012
REASONS FOR JUDGMENT
Del Frate J.:
[1] On this contested status hearing in both actions, the defendants are seeking an order dismissing the plaintiffs’ actions as a result of delay.
[2] It should be noted that although Mr. Hebert was present on February 16, 2012, he was not present on April 10, 2012. His client, Mr. Armstrong, presented the court with a consent removing Beament Green as lawyers of record for George Armstrong Investments Limited.
[3] Further, a Notice of Intention to act in person was presented whereby the plaintiff William George Armstrong and William George Armstrong, Estate Trustee for the Estate of George Armstrong, deceased, formerly represented by Michael S. Hebert of Beament Green, intends to act in person.
[4] These documents were faxed to opposing counsel and to the court by letter dated April 10, 2012.
[5] I did not accept these documents in view of the history of this matter and ordered that Mr. Hebert serve counsel and his clients with the appropriate notices of motion and supporting affidavits thus permitting all parties to respond to this request if they so chose.
[6] Because today’s date had been set aside for the completion of the status hearings and because the substantive arguments had already been presented by Mr. Hebert, I asked Mr. Armstrong if he consented to the completion of the hearing. He agreed to it and thus the status hearing was concluded.
[7] These are complex and convoluted proceedings that have been litigated in a very adversarial and antagonistic fashion. Accordingly, I will briefly summarize their history.
Background
[8] There are two actions that are being referred to as “Sudbury action” and “Ottawa action”.
[9] The “Ottawa action” relates to dealings in certain properties in the Sudbury area where the plaintiffs allege that the defendants wrongfully deprived the plaintiffs of certain rights pursuant to agreements made between the plaintiffs and the defendants.
[10] These agreements allegedly were entered into in early 2000 and this action was started in Ottawa on December 20, 2004.
[11] The “Sudbury action” was issued on January 30, 2003, against numerous defendants. Eventually, the action as against Leighton Roslyn and Canadian Imperial Bank of Commerce was dismissed.
[12] The plaintiffs allege in this action that the remaining defendants deprived the plaintiffs of certain assets and of certain financial benefits as a result of the restructuring of the plaintiffs’ companies which held lucrative contracts with Inco Ltd.
[13] Although at first blush it may appear that there is no factual connection between the two actions, other judges on other motions have determined that there is a nexus between the two actions. Accordingly, on March 13, 2009, Nadeau J. ordered that the actions be tried together even though “the decision in one case will not necessarily dispose of the essential cause of action in the other” (para. 3 of the endorsement).
[14] Justice Nadeau further ordered that “this order shall be stayed pending payment of the outstanding costs ordered on January 23, 2009” (para. 4 of the endorsement).
[15] Those costs are still outstanding and accordingly, Nadeau J.’s order is still stayed. Since then, it appears that these actions proceeded in tandem on certain issues. However, at this hearing, the defendants in both actions contend that the actions are separate and apart. I will now outline the chronology in both of these actions.
“Ottawa Action”
Chronology
| Date | Particulars |
|---|---|
| June 11, 2001 | Real Estate Transactions Close |
| December 20, 2004 | Statement of Claim |
| February 15, 2005 | Statement of Claim amended |
| April 7, 2005 | Statement of Defence and Counter Claim |
| May 6, 2005 | Defence to Counter Claim |
| July 8, 2005 | Mediation deadline extended to September 6, 2005 |
| August 29, 2005 | Mediation deadline extended to December 30, 2005 |
| February 1, 2006 | Consent Order Transferring Action from Ottawa to Sudbury |
| March 20, 2006 | Status Notice |
| March 27, 2006 | George Armstrong Investments Ltd. dissolved |
| July 15, 2008 | Order Dismissing the Action |
| November 19, 2008 | Order of Hennessy J.: • Setting aside Order Dismissing the Action • Awarding costs of $3,043.31 |
| January 23, 2009 | Status Hearing Endorsement |
| January 30, 2009 | Status Hearing Endorsement |
| February 23, 2009 | Status Hearing Endorsement |
| March 13, 2009 | Endorsement of Nadeau J. re Sudbury Action and Ottawa Action to be heard together but order stayed pending payment of costs |
| March 4, 2010 | George Armstrong dies |
| August 5, 2010 | Justice Del Frate in Assignment Court again advises Armstrong to get formalities dealt with |
| September 8, 2010 | Assignment Court: Struck from List |
| March 8, 2010 | Status Notice |
| May 9, 2011 | Certificate of Appointment of Estate Trustee without a Will granted to William Armstrong re Estate of George Armstrong |
| June 3, 2011 | Beament Green letter to the Court requesting Status Hearing |
| July 3, 2011 | Status Hearing Endorsement of Del Frate J. Hearing adjourned to allow filings and examinations |
| September 1, 2011 | Deadline for plaintiffs affidavits |
| September 15, 2011 | Deadline for defendants affidavits |
| October 1, 2011 | Deadline for rectification of procedural defects |
| December 19, 2011 | Hearing Date: peremptory |
| February 16, 2012 | Status Hearing held |
“Sudbury Action”
Chronology
| Date | Particulars |
|---|---|
| June 20, 2003 | Action commenced |
| September 16, 2004 | Second Fresh Statement of Claim |
| November 2004 | Pleadings completed |
| October 23, 2006 | TDI dissolved pursuant to BCA |
| May 11, 2007 | Status Hearing (no plaintiffs appeared except George Armstrong) |
| January 25, 2008 | Status Hearing |
| June 13, 2008 | Status Hearing |
| July 30 to August 1, 2008 | Cross-Examinations held |
| November 19, 2008 | Justice Hennessy comments on plaintiffs’ delay in present action (Tab B – motion record) |
| November 28, 2008 | Argue defendants’ motion for security for costs (first day) |
| January 23, 2009 | Status Hearing |
| June 30, 2009 | Status Hearing |
| March 13, 2009 | Consolidated Order of Nadeau J. – stayed until costs paid – costs still not paid – actions still not consolidated |
| April 21, 2009 | Complete argument of defendants’ security for costs motion |
| July 10, 2009 | Order of Tranmer J. – dismissed motion for security for costs – ordered plaintiffs to answer undertakings |
| January 4, 2010 | Notice of Intention to Act in Person filed by George Armstrong & William Armstrong |
| January 8, 2010 | Application for leave to appeal dismissed |
| March 4, 2010 | George Armstrong dies |
| April 5, 2011 | Summary judgement issued dismissing action against Leighton Roslyn by O’Neill J. |
| June 7, 2011 | Justice O’Neill orders plaintiffs to pay $12,000.00 costs (unpaid) |
| July 8, 2011 | Status Hearing – status hearing adjourned by Del Frate J. to December 19, 2011, before himself |
| October 5, 2011 | Present motion issued – served |
| October 26, 2011 | First response to motion received from Mr. Hebert (No response from Mr. Armstrong) |
| October 28, 2011 | Hearing of present motion |
| December 19, 2011 | Hearing on undertakings adjourned to February 1, 2012 |
| February 1, 2012 | Motion on undertaking completed - Status hearing cannot be commenced due to lack of time |
| February 16, 2012 | Status hearing commenced |
| April 10, 2012 | Status hearing completed |
Position of the Plaintiffs
[16] Although these matters have been outstanding for close to eight years, there are reasonable explanations as to why the actions have not been set down for trial. There have been numerous interlocutory proceedings which have delayed the progress of the actions. The plaintiffs allege that many of these proceedings were not necessary but were brought on by the defendants to bankrupt the plaintiffs. Of note is the motion brought in the “Sudbury action” and which was consented to by counsel in the “Ottawa action” for security for costs. Following the decision of Tranmer J., the defendants appealed and were not successful. This motion was commenced in November 2008 and a decision was not obtained until July 10, 2009. Leave to appeal to the Court of Appeal was denied on January 8, 2010.
[17] The plaintiffs also allege that there has been no prejudice to the defendants in both actions since all of the defendants were aware of the proceedings that were being undertaking and all participated in most if not all of the interlocutory motions. If anyone has been prejudiced, it is the plaintiffs in view of the death of George Armstrong. The plaintiffs contend that dismissing the action at this stage would be a travesty of justice since several judges in the interlocutory proceedings have ruled that the plaintiffs’ actions are meritorious.
Position of the Defendants in the “Ottawa action”
[18] These defendants submit that the test enunciated in the Samborski v. Pristine Capital Inc., 2011 ONSC 3383, a decision of Master Dash, has not been met by the plaintiffs. The plaintiffs have not given a reasonable explanation for the delay and further, they have not shown that the defendants have not been prejudiced by this delay.
[19] These defendants also submit that they have been prejudiced since George Armstrong’s testimony is no longer available and his testimony would have assisted the defendants. Of greater prejudice is the recent death of Mr. Bill Cook who was Inco’s in-house Sudbury lawyer and who, allegedly, was instrumental in cancelling TDI’s haulage contract in the fall of 2001. Mr. Cook would have been an objective and unbiased witness who would have corroborated the evidence of these defendants.
[20] Lastly, these defendants remind me that the plaintiffs have deliberately failed to pay the costs order of Hennessy J. even though the plaintiffs would have received sufficient funds to discharge that order. Accordingly, because of the delay and resulting prejudice, the test enunciated in Samborski has not been met and thus an end should be put to this litigation.
Position of the Defendants in the “Sudbury action”
[21] These defendants adopt the submissions of the defendants in the “Ottawa action” as to the failure to provide an adequate explanation for the delay and in the plaintiffs’ failure to show that the defendants have not been prejudiced.
[22] Additionally, the defendants submit that the plaintiffs’ action, as it now stands, has very little chance of success. Accordingly, if it is permitted to continue, further costs will be incurred by all parties and in particular by the defendants. If in fact the action is eventually dismissed, and even if costs are awarded to the defendants, the defendants will never be able to recover their expenses on a total indemnity basis.
[23] Alternatively, these defendants submit that if the action is permitted to continue, then I should consider imposing very strict conditions in a guillotine order.
The Law
[24] Although counsel have filed numerous decisions as to what the test is pursuant to rule 48.14(8), I adopt the reasoning of Master Dash in the Samborski decision whereby he sets out the test to be met at a status hearing. He states at para. 2:
The presiding judge or master must be satisfied that there is an explanation for the delay that justifies continuation of the action and that there is no prejudice to the defendant. The onus is on the plaintiff to satisfy both aspects of the test. In summary, rule 48.14(8) imposes an onus on the plaintiff to show cause why the hearing should not be dismissed for delay.
Discussion
[25] It is clear from the history of these proceedings that even though the two actions have not been consolidated as of yet, the defendants in both actions were fully aware of what was happening in both actions. Both participated actively in many of the interlocutory proceedings brought by any of the parties. For example, in the motion for security for costs before Tranmer J. in November 2008, the style of cause reflects that the “Sudbury action” initiated the motion. The style of cause reflects that Mr. Guy represented the defendant Roslyn and that Mr. Best represented the personal defendants Russell and Fuller as well as companies 141 and 144.
[26] In the “Ottawa action”, Mr. Roslyn, who in the “Sudbury action” was a personal defendant, represented Randall Russell and Glenn Fuller and the corporate defendant 131. In both actions, the personal defendants are the same.
[27] These have been convoluted proceedings where the defendants in both actions were satisfied to proceed in tandem on certain aspects of the action and, when not to their liking, decided to proceed individually without notice that those proceedings were intended to be separate and apart from the other action.
[28] Some of the defendants’ proceedings have contributed to the delay as well. The motion for security of costs took some fifteen months from its inception to the finalization of the appeal.
[29] In my view, there was never any indication by the plaintiffs in either action that they intended to abandon their actions. In fact, it was clear that the plaintiffs intended to pursue these actions vigorously.
[30] I find that the plaintiffs at certain times were lax in advancing these actions in a timely fashion. I also find that the defendants have not been prejudiced. In my view, the death of George Armstrong causes more prejudice to the plaintiffs than to the defendants. Obviously, evidentiary issues will now arise as to how his evidence will be presented to the trial judge.
[31] From the defendants’ perspective, the death of Mr. Bill Cook is problematic. However, the materials indicate that two other witnesses would have knowledge of the discussions that took place commencing in May 2001 relating to the problems that the corporate plaintiffs were having at that time. These two witnesses, Mr. Stewart and Mr. Higgins, were present at some of these discussions. There is no indication that they are not available to testify.
[32] It also appears from the materials filed that correspondence would have been exchanged between Inco Ltd. and the plaintiffs. In my view, this correspondence constitutes records made in the ordinary course of business and the Evidence Act, R.S.O. 1990, c. F.23, s. 35, provides for their admission in certain cases.
[33] I accept the plaintiffs’ explanation as to the delay but henceforth, the plaintiffs must proceed expeditiously. To some extent, this fact situation is similar to the facts in Bolohan v. Hull, 2012 ONCA 121, where even though the court of appeal found that the delay was troubling, the plaintiff was permitted to continue.
[34] I also find that this fact situation is not similar to Samborski or Riggitano v. Standard Life Assurance Company, 2009 ONSC 23892, aff’d in 2010 ONCA 70. In both of these decisions, the actions laid dormant for years. Even though the Riggitano action was dismissed, the Samborski action was permitted to continue.
[35] Dismissal at this stage would be a draconian step which in my view would be unfair in all the circumstances. However, the plaintiffs must realize that the onus is on them to proceed expeditiously.
[36] Accordingly, strict guidelines must be set and the parties must abide by them. A “guillotine” order is appropriate under the circumstances. As opposed to my setting a schedule, I would appreciate the input of the parties bearing in mind that these actions must be set down for trial by December 31, 2012.
[37] If, for whatever reasons, the plaintiffs do not abide by the timetable, then these actions will be dismissed by the Registrar without further notice under rule 48.13(5).
[38] I invite the parties to contact the trial co-ordinator to set a date on my hearing submissions as to the timetable and conditions and on the issue of costs within the next 10 days.
Mr. Justice Robert G.S. Del Frate
Date: April 23, 2012
COURT FILE NO.: C-7221/03 and 9435/06
DATE: 20120423
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1239122 Ontario Inc. and Transport Development Inc. and William George Armstrong and William George Armstrong, Estate Trustee for the Estate of George Armstrong, deceased
Plaintiffs
– and –
Randall Russell, Glenn Fuller, 1417338 Ontario Limited and 1447311 Ontario Limited and Leighton Roslyn
Defendants
AND RE:
George Armstrong Investments Ltd., George Armstrong and William George Armstrong
Plaintiffs
– and –
Randall Russell, Glenn Fuller, and 1311913 Ontario Inc.
Defendants
REASONS FOR JUDGMENT
Del Frate J.
Released: April 23, 2012