MOTION HEARD: 20120302
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Hercules Moulded Products Inc., Plaintiff
AND:
Timothy C. Rogers, Glenn F. Ploughman and Iva Ploughman, Defendants
BEFORE: Master Lou Ann M. Pope
COUNSEL: Gregory D. Wrigglesworth, Counsel, for the Plaintiff
Robert E. Houston, Counsel, for the Defendants, Glenn F. Ploughman and Iva Ploughman
Timothy C. Rogers, acting in person
HEARD: March 2, 2012
REASONS FOR DECISION
1This was a contested status hearing under rule 48.14(13) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The status hearing was adjourned from November 28, 2011 in order for the parties to file material.
2This action which was commenced on May 21, 2009 by statement of claim seeks a declaration of a fraudulent conveyance with respect to the Ploughmans’ matrimonial home in Ottawa and a declaration of either a resulting or constructive trust with regard to the condominium purchased in Iva Ploughman’s name in Phoenix, Arizona. In addition the action also seeks monetary damages which may or may not be over and above the amounts already the subject of a judgment in favour of the plaintiff.
3The plaintiff is required to show cause why the action should not be dismissed for delay. The defendants, Glenn F. Ploughman and Iva Ploughman (“Ploughmans”) seek to have the action dismissed. This request is opposed by the plaintiff. The defendant, Timothy C. Rogers (“Rogers”) did not appear at either status hearings.
Law
4I concur with the applicable legal principles set out by Master Glustein in 1001411 Ontario Limited c.o.b. as Cinespace Studios Management v. City of Toronto Economic Development Corporation, 2011 ONSC 6993 at para. 5, as follows:
(a) The onus is on the plaintiff to show (i) there is an explanation for delay such that the court would be satisfied that the action should proceed and (ii) whether there is prejudice to the defendant (Savundranayagam v. Sun Life Assurance Co. of Canada, 2008 CanLII 54788 (Ont. Div. Ct.) (“Sun Life”), at para. 13);
(b) The threshold for showing cause at a status hearing is low. The plaintiff must provide some reasonable explanation and justification for the delay (Kostruba & Sons Inc. v. Perez, 2011 ONSC 2411 (S.C.J. (“Kostruba”), at para. 51);
(c) In the context of a status hearing, prejudice means non-compensable prejudice (Samborski v. Pristine Capital Inc., 2011 ONSC 3383 (Mast.) (“Samborski”), at para. 4);
(d) Actual prejudice requires evidence, including evidence that witnesses are unavailable, or various documents and evidentiary materials are missing or lost for trial (Kostruba, at para. 55);
(e) An order dismissing an action at a status hearing is “drastic” and would be “unusual” (Clements v. Greenlaw, 2009 CanLII 33028 (Ont. Div. Ct.), at para. 39); and
(f) As a status hearing is a court-driven process and not a litigant-driven process, the plaintiff’s onus to satisfy a court that the action ought not to be dismissed at a status hearing is not as stringent as found in other procedural motions such as a motion to dismiss under Rule 24.01 (Kostruba, at paras. 31-34).
5I would add to the above legal principles two further legal principles:
(a) The court is required to make a determination regarding the plaintiff’s intention to prosecute the action throughout the period since the commencement of the action. (Oberding v. Sun Life Financial Assurance Co. of Canada, [2010] O.J. No. 3122, 2010 ONSC 3303 (Div. Ct.) at para. 15); and
(b) The plaintiff is required to not only explain the delay in the litigation, but also to provide a clearly articulated plan for moving the case forward. (Donskoy v. Toronto Transit Commission, 2008 CanLII 47020 (ON SCDC), [2008] O.J. No. 3634 at para. 14).
Analysis
Explanation for the delay
6Ploughmans raise the issue of delay relative to the following timelines:
(a) May 2009 to May 2011
7The Ploughmans submit that the plaintiff took no steps for two years from the commencement of the action until May 2011 when it first attempted to arrange for discovery of Rogers. They contend that the plaintiff has not explained this delay.
8The plaintiff does not dispute this statement; however, the court record indicates that Rogers’ statement of defence was filed on July 21, 2009 which would reduce this time frame by two months. Further, the plaintiff submits that between May 2009 and May 2011 it was active in the prosecution of this action including amending the statement of claim, conducting examinations for discovery of Iva Ploughman and conducting an examination in aid of execution of Glenn Ploughman, both held in Ottawa on May 26, 2010.
9I find that the plaintiff has not explained the delay in this action between May 26, 2010 and May 2011 when it first made attempts to schedule a discovery of Rogers and during which time no litigation steps were taken with respect to the Ploughmans. I will deal with this delay in more detail under (b) below.
(b) May 2010 to March 2, 2012 (status hearing)
10There is an overlap in the timelines between subparagraphs (a) and (b) above which I will address below.
11The Ploughmans do not argue delay relative to the action against them from the time the action was commenced in May 2009 to May 2010 when the plaintiff conducted the discovery and the examination in aid of execution. They submit however that since May 2010, the plaintiff took no steps to advance this action as against them.
12The Ploughmans further point to the fact that plaintiff’s counsel has not responded to inquiries made by their counsel by letter dated July 21, 2010. This is despite the statement made by Genevieve Belanger, in her affidavit sworn January 31, 2012, at paragraph 26, that she confirmed with Mr. Wrigglesworth, counsel for the plaintiff, that he has been in communication with the plaintiff’s representatives in order to respond to the inquiries made by Ploughmans’ counsel and that a response will be forthcoming.
13Again, the plaintiff does not dispute that it took no litigation steps specifically with respect to the Ploughmans during this time period. However, during that 21-month period, the plaintiff contends that it was active in its efforts to examine Rogers for discovery, albeit unsuccessful. Steps included numerous communications with Rogers’ counsel, James Morton, to schedule a date for discovery of Rogers which was followed by a series of events that ultimately led to Mr. Morton obtaining an order to be removed as counsel for Rogers and the plaintiff’s motion to strike Rogers’ defence.
14In particular, the following details the difficulties faced by the plaintiff when it attempted to examine Rogers. Initially, Mr. Morton advised plaintiff’s counsel in mid-May 2011 that he was unable to get instructions from his client and that he would be getting off the record. As Mr. Morton brought no such motion, plaintiff’s counsel was forced to serve Rogers, through his counsel, with a notice of examination scheduled for August 29, 2011 in Toronto. Following an exchange of letters between counsel and Mr. Morton again stating his intention to be removed as counsel for Rogers, neither Mr. Morton nor Rogers attended for discovery on August 29, 2011. As such, the plaintiff obtained a Certificate of Non-Attendance. Thereafter, and based on Mr. Morton’s further statements that he would be bringing a motion and failing to do so by early November 2011, the plaintiff served its motion to strike Rogers’ defence. Finally, Mr. Morton brought his motion returnable December 6, 2011 and the plaintiff adjourned its motion to that date to deal with both motions at the same time. Ultimately Mr. Morton’s motion was granted and he was removed as counsel for Rogers. The plaintiff adjourned its motion sine die pending service on Rogers of Mr. Morton’s order so that the plaintiff could deal directly with Rogers regarding its motion to strike Rogers’ defence. In January 2012, plaintiff’s counsel learned through his inquiry of Mr. Morton’s assistant that Rogers was served with the order on December 6, 2011. On January 23, 2012, plaintiff’s counsel requested that Mr. Morton provide him with a copy of the order removing Mr. Morton as counsel for Rogers, which request went unanswered.
15It is my view that although the plaintiff took no steps in this action with respect to the Ploughmans during this period of time, it was active in pursuing the action against Rogers from May 2011 to January 2012. Therefore, I find that between May 2010 and March 2, 2012 there was delay only between May 2010 (discovery of the Ploughmans) and May 2011, some 12 months, when the plaintiff began its attempts to arrange examinations for discovery of Rogers. I further find that the plaintiff has not provided any explanation or justification for that 12-month delay.
Prejudice
16The onus is on the plaintiff to show that there would be no prejudice to the Ploughmans if the case were allowed to continue.
17The plaintiff contends that although claimed, it has taken no steps to obtain an order encumbering the Ottawa property. It is further argued that the Ploughmans’ ability to defend the proceeding will not be prejudiced as there are no witnesses other than the parties.
18The Ploughmans submit that the statement made by Ms. Belanger, at paragraph 25 of her affidavit, to the effect that there are no witnesses other than the parties, is made based solely on her stated belief. As Ms. Belanger is a legal assistant employed by plaintiff’s counsel, the Ploughmans raise an issue regarding the reliability of her statements as it is unknown whether she is relying on information from others with respect to witnesses and, in particular, with respect to any possible prejudice to the Ploughmans. I tend to agree with that submission; however, it was open to the Ploughmans to show actual prejudice with respect to this point. They have not done so.
19The affidavit of Glenn Ploughman sworn December 20, 2011 contains no statements with respect to any actual prejudice that he might suffer should this action continue. Iva Ploughman’s evidence, as contained in her affidavit sworn February 23, 2012, is that she will suffer prejudice as long as this claim is outstanding. Her evidence is that the plaintiff’s accusations of aiding and abetting a fraud are “unfounded and outrageous” and remain outstanding. Further, her evidence at paragraph 5 of her affidavit is that “the commencement of this lawsuit has caused great stress and expense to both myself and my spouse Glenn.” Further, she states that “[A]s the claim has dragged on with no end in site (sic) the stressors and the emotional and financial expense have become more pronounced.” She goes on to state that her husband, and co-defendant, Glenn Ploughman, left her without notice on December 27, 2011 and they have been living separate and apart since that time. She has retained a lawyer to represent her with respect to their matrimonial issues. Lastly, her evidence at paragraph 6 is that she understands that “the continuation of this lawsuit will complicate the resolution of any matrimonial litigation between Glenn and this deponent.”
20I make two points with respect to Iva Ploughman’s evidence. Firstly, she attests on behalf of both her spouse, Glenn Ploughman, and herself that “the commencement of this lawsuit has caused great stress and expense to both myself and my spouse Glenn.” However, it is noteworthy that this is not Glenn Ploughman’s evidence as his affidavit contains no such statements. Secondly, she fails to give particulars of her bald statement that the continuation of this action will complicate the resolution of any matrimonial litigation. One is left to speculate. In fact, it appears that there was no matrimonial litigation at the time she swore her affidavit on February 3, 2012 given her statement of “any matrimonial litigation . . . .”
21The Ploughmans refer to Samborski v. Pristine Capital Inc., 2011 ONSC 3383, wherein Master Dash held that the fact that the defendant would suffer the cost of defending the action, the stress and aggravation of dealing with the litigation and the outstanding allegations of fraud, do not constitute prejudice to the defendant. Despite Master Dash’s findings, the Ploughmans urge this court to find actual prejudice based on Iva Ploughman’s evidence of looming matrimonial litigation which would be compounded by this outstanding action.
22I concur with the findings of Master Dash in Samborski as they relate to the facts of this action. I am not inclined to find that there is actual prejudice to the Ploughmans if this action were allowed to continue based on the possibility of matrimonial litigation and the further possibility that this action would compound the matrimonial litigation. It behooves me to make a finding of actual prejudice based on a possible future event and a speculative effect if that future event were to materialize. It is equally possible that the Ploughmans may resolve their matrimonial issues without the need for litigation or during the course of litigation, and, it is equally possible that the continuation of this action will not complicate any matrimonial litigation.
23Therefore, I find that the plaintiff has satisfied its onus by showing that there is no non-compensable prejudice to the Ploughmans if this action continues.
Conclusion
24My findings as set out above are that the plaintiff failed to explain the delay of some 12 months between May 2010 and May 2011 and that there is no non-compensable prejudice to the Ploughmans if this action continues.
25An order dismissing an action at a status hearing is drastic and to do so, in my view, would be rare and only made in exceptional circumstances. The plaintiff’s onus is a low one requiring the plaintiff to show cause why the action should not be dismissed for delay. I am required to balance the interests of the parties taking into consideration rule 1.04 which states that the rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits. Relative to the principle of proportionality now entrenched in rule 1.04(1.1), in applying the rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.
26Given that there is no prejudice to the Ploughmans if this action continues, and the fact that the 12-month delay was both preceded by and followed by significant litigation steps with respect to all defendants, I am of the view that the delay is excusable and the plaintiff ought not to be deprived of its rights to continue this action and to have it heard on its merits. However, the parties will be required to follow tight timelines for the completion of the steps in this action which shall include the plaintiff’s answers to the Ploughman’s written questioning and the hearing of the plaintiff’s motion to strike Rogers’ defence.
27In conclusion, I decline to grant the Ploughmans’ request that this action be dismissed for delay. The parties, through their counsel, shall arrange for a case conference to deal with establishing a timetable, which shall be held before me within 45 days of the release of this decision. The case conference may be conducted by telephone by Mr. Houston. In the meantime, I encourage counsel to consult with each other on a timetable prior to the case conference.
Costs
28If the parties cannot agree on costs, written submissions may be made by the plaintiff within 14 days of the release of this decision, and those of the Ploughmans within 14 days thereafter.
Original signed “Lou Ann M. Pope”
Master Lou Ann M. Pope
Date: May 30, 2012