SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MDM Plastics Limited v. Vincor International Inc.
BEFORE: Master Glustein
COUNSEL: M. Carabetta for the plaintiff S. Irving for the defendant
HEARD: May 24, 2012
REASONS FOR DECISION
Nature of motion and overview
1The plaintiff MDM Plastics Limited (“MDM”) brings this motion under Rule 37.14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) to set aside the registrar’s dismissal order dated December 21, 2011 dismissing the action under Rule 48.14 (the “Second Dismissal Order”).1 The defendant Vincor International Inc. (“Vincor”) opposes the motion.
2For the reasons I discuss below, I dismiss the motion. There is no adequate explanation for the litigation delay. MDM took almost a year to address repeated requests for particulars, two years to address a request for security for costs, and for more than a year had no contact with Vincor. MDM proposed settlement discussions in July 2011, but then waited four more months between August 2011 and December 2011 before making a settlement offer, despite stating that MDM “will get back to you soon”. There is no explanation for any of this delay which cumulatively reached almost three years between the statement of claim and the Second Dismissal Order.
3MDM filed no evidence to rebut the presumption of prejudice, which is a key consideration for the court in exercising its discretion. The limitation period has long ago expired as the events at issue in the action took place in late 2006 and early 2007, and the court is required to presume prejudice as a result. MDM failed to lead evidence of documents being preserved or witnesses being available.
4There is some evidence of inadvertence since MDM did not receive the second status notice dated September 12, 2011 (the “Second Status Notice”) prior to the Second Dismissal Order. However, that inadvertence is attenuated by the failure of MDM to file any evidence of its efforts to determine whether the Second Status Notice had been issued, since MDM knew that a “fresh” status notice would be issued “forthwith” because it was an express term of the Set Aside Order.
5I accept, for the purposes of these reasons, that the motion was brought reasonably promptly.
6Given the key importance of prejudice, the lack of an adequate explanation for the litigation delay, and the attenuated evidence of inadvertence, I find that the just result is to dismiss the motion.
7There were no other contextual factors raised in support of the motion by MDM. However, a contextual factor which further supports not setting aside the Second Dismissal Order2 is that MDM failed to lead any evidence as to the steps it took to ensure that a second dismissal order would not be issued, particularly as it was aware that a “fresh” status notice was to be issued “forthwith” as a term of the Set Aside Order.
8For the reasons summarized above, I dismiss the motion.
Evidence on the motion
9The evidence before the court consisted of (i) an affidavit sworn on April 2, 2012 by Howard Manis (“Manis”), a partner at MDM’s law firm (the “Manis Affidavit”), and (ii) a responding affidavit sworn on April 19, 2012 by Pina Macri (“Macri”), a legal assistant to Shawn Irving (“Irving”), Vincor’s junior counsel (the “Macri Affidavit”).
10There were no cross-examinations on the affidavits.
11I review the evidence based on the factors set out by Master Dash in Reid v. Dow Corning Corp., [2001] O.J. No. 2365 (S.C.J. - Mast.) (“Reid”), reversed3 [2002] O.J. No. 3414 (Div. Ct.) (i.e. explanation of the litigation delay, inadvertence in not setting the action down for trial or seeking an extension of the set down date, promptness in bringing the motion, and prejudice to the defendant), as well as any contextual factors as required to be considered under Scaini v. Prochnicki (2007), 2007 ONCA 63, 85 O.R. (3d) 179 (C.A.) (“Scaini”) (Scaini, at paras. 21-23).
(a) The date of the events at issue
12The Manis Affidavit provides no evidence as to when the events at issue in the action took place. MDM did not file any of the pleadings in support of the motion and led no evidence as to the issues in the action.
13The Macri Affidavit sets out uncontested evidence that “The events at issue in the action took place in late 2006/early 2007”.
(b) Evidence as to steps taken in the action
(i) The period from February 27, 2009 to the First Dismissal Order (July 13, 2011)
14The Manis Affidavit refers to only the following steps in the action during the period from February 27, 2009 to the First Dismissal Order:
(i) The statement of claim was issued on February 27, 2009;
(ii) Vincor served a statement of defence on April 9, 2010;
(iii) MDM received a status notice from the court on March 24, 2011 (the “First Status Notice”) advising that the action would be dismissed for delay unless set down for trial or otherwise terminated within 90 days (i.e. by June 22, 2011); and
(iv) MDM “failed to provide [Manis] with instructions” and “As a result of this, the plaintiff failed to respond to the [First] Status Notice and on July 15, 2011, the plaintiff received [the First Dismissal Order]”.
15MDM’s only explanation for the delay during the above period of more than 26 months is that “Prior to [the First Dismissal Order], there had been discussions with the defendant’s counsel about the posting of security for costs. Discussions had transpired between myself and Shawn Irving about this, but we were not able to agree to an appropriate amount prior to the [First Dismissal Order] being issued”.
16Macri adds the following uncontested evidence relevant to the time period between the statement of claim and the First Dismissal Order:
(i) Vincor served a notice of intent to defend the action on March 18, 2009, less than three weeks after the statement of claim was issued;
(ii) On April 7, 2009, less than three weeks after serving Vincor’s notice of intent to defend, Vincor’s senior counsel, Mark Gelowitz (“Gelowitz”) sent two letters to Manis, one letter demanding particulars and a second letter requesting to inspect certain documents referred to in the statement of claim;
(iii) MDM did not respond to either of the April 7, 2009 letters;
(iv) On May 21, 2009, Gelowitz sent a follow-up email to Manis reiterating the demand for particulars and requesting inspection of documents, and further advising that Vincor would be seeking security for costs. Gelowitz asked Manis to “advise whether you are prepared to negotiate an acceptable level and form of security or if we need to bring a motion”.
In his May 21, 2009 email, Gelowitz further advised Manis that “it doesn’t sound like there’s any foundation … to try to resolve this” and that “As far as our client is concerned, your client has no claim against it”;
(v) By letter dated June 24, 20094, MDM enclosed certain documents, but failed to respond to Vincor’s demand for particulars or request for security for costs;
(vi) On September 17, 2009, Gelowitz sent another letter to follow-up on the issue of particulars. In his letter, Gelowitz also reiterated his request for MDM’s position on security for costs. Gelowitz stated that “To date, you have failed to provide a written response to our demand for particulars” and “you have failed to respond to my email dated May 21, 2009 with respect to the issue of security for costs in this matter”;
(vii) MDM did not respond to the September 17, 2009 Gelowitz letter;
(viii) On October 21, 2009, Gelowitz sent an email asking for a response to his September 17, 2009 letter;
(ix) Manis responded by email on the same day stating that “I was supposed to meet with my clients a few weeks ago and they got derailed on something else and I had to reschedule. We are meeting tomorrow afternoon and I will get instructions and respond to you thereafter”;5
(x) Despite stating in his October 21, 2009 email that he was meeting with his clients the next day and would provide instructions “thereafter”, it took two months until December 21, 2009 for Manis to send an email to Gelowitz advising that Manis’ law firm was holding $10,000 from MDM in its trust account as security;
(xi) On January 21, 2010, Gelowitz responded by letter to Manis’ December 21, 2009 email. Gelowitz stated that he had still not received a written response to the demand for particulars, and that he had been instructed by Vincor “to bring a motion for security for costs forthwith unless [MDM] is prepared to post $50,000 in court (as opposed to your firm’s trust account)”;
(xii) On March 4, 2010, eleven months after Vincor delivered its demand for particulars, MDM delivered its response to the demand for particulars. There is no evidence that MDM addressed the issue of security for costs in its response;6
(xiii) On March 31, 2010, Gelowitz sent an email to Manis advising that Vincor would deliver its statement of defence on April 9, 2010, and again asking if MDM would agree to post $50,000 as security for costs or whether a motion would be required;
(xiv) By email dated March 31, 2010, Manis responded and stated that that “As far as the security for costs are concerned, we will seek instructions and advise”;7
(xv) On April 9, 2010, within approximately one month from receipt of the particulars, Vincor delivered its statement of defence;
(xvi) On April 20, 2010, Gelowitz emailed Manis to ask him to confirm MDM’s position on security for costs;
(xvii) MDM did not respond to the April 20, 2010 email;
(xviii) On May 25, 2010, Gelowitz sent a further email asking for MDM’s position on the issue of security for costs and stating that Vincor would bring a motion if no response was forthcoming;
(xix) On May 26, 2010, Manis responded by email that he would “seek instructions and advise” on security for costs;8
(xx) Between May 26, 2010 and June 7, 2011, there is no evidence of any contact between MDM or its counsel with Vincor or its counsel;
(xxi) The lack of contact arose despite another letter from Gelowitz to Manis on December 2, 2010 in which Gelowitz outlined MDM’s failure to respond to Vincor’s numerous requests that MDM post security for costs in a satisfactory amount. In his letter, Gelowitz stated that:
“Given your lack of correspondence since May, I assume that your client has lost interest in this action. Accordingly, we have decided not to move for an order for security for costs at this time”;
(xxii) On June 7, 2011, two weeks prior to the expiry of the 90 day period under the First Status Notice, Manis emailed Gelowitz and stated that “our client wishes to resume the prosecution of the above-noted action” and that “We were stalled on the issue of the posting of security for costs and we have been instructed to post the sum of $25,000.00 as security now with the further $25,000.00 that you sought following the discoveries and prior to the mediation”;
(xxiii) Gelowitz was engaged in a trial but advised Manis by email on June 23, 2011 that Gelowitz would get back to Manis in early July;
(xxiv) On July 12, 2011, Manis sent an email to Gelowitz asking “Can we either get this action going or discuss settlement as we are instructed now to proceed”;9
(xx5) On July 13, 2011, Gelowitz responded to Manis’ email and stated that he wanted to review “where we were on the security for costs issue” with Irving, and would respond to Manis by the following week; and
(xxvi) On July 13, 2011, the registrar dismissed the action.
(ii) The period from the First Dismissal Order (July 14, 2011) to the Second Dismissal Order (December 21, 2011)
17On July 26, 2011, Manis sent an email to Gelowitz asking if there was “Any news on both the motion and proceeding with the action as our client now wishes to proceed”.
18Later on July 26, 2011, Irving responded to Manis by email and advised that “We now have instructions to consent to your motion to set aside the order dismissing the action for delay and to accept your most recent offer10 for the posting of security for costs”. Irving stated that “The security should be posted with the Accountant for the Superior Court of Justice”.
19In his July 26, 2011 email, Irving further stated that “I think it would be useful to have a call between counsel to discuss the possibility of settlement. I would like to understand your client’s expectations. Perhaps you can let me know when you are available in the next several days and hopefully we can find a time that we are both free”.
20On July 29, 2011, Irving and Manis had a brief telephone discussion about the prospect of settlement.
21On August 4, 2011, Manis emailed Irving and stated that “I am awaiting instructions further to our discussion of last Friday. I will get back to you soon”.
22On August 18, 2011, Master Sproat issued a consent order setting aside the First Dismissal Order (previously defined as the “Set Aside Order”). Under the terms of the Set Aside Order, Master Sproat ordered that “the Registrar forthwith issue a fresh status notice”.
23On September 6, 2011, the court faxed a copy of the Set Aside Order to both Manis and Gelowitz.
24On September 12, 2011, Vincor’s counsel received the Second Status Notice dated that day. The Second Status Notice provided that the action would be dismissed for delay unless set down for trial or otherwise terminated within 90 days.
25There is no evidence of any settlement discussions for more than four months between August 4, 2011 (when Manis advised Irving that Manis was “awaiting instructions” and “will get back to you soon”) and December 8, 2011.
26Manis states in his affidavit that “It was our position that there was no need to advance the matter and incur any additional costs if the parties would be able to settle the matter. It appears from the actions of the defendant, namely their failure to bring a motion on consent to post security for costs, that both parties were of the view that settlement discussions were ongoing”.11
27On December 8, 2011, Manis sent a brief email to Irving proposing an offer to settle the action.
28On December 10, 2011, Irving responded that he would obtain instructions from his client who was out of the office but that “Based on previous discussions that I have had with him” the proposed settlement “will not fly”.
29On December 21, 2011, the registrar dismissed the action (previously defined as the “Second Dismissal Order”).
30Manis states in his affidavit that “Our client has every intention of moving this action forward and only failed to do so as a result of its belief that settlement discussions were ongoing and that there would be a potential settlement”.12
31Manis further states in his affidavit that “It is my respectful submission that at no point did the plaintiff intend to abandon or delay the proceeding of the within action. Our client had always instructed us to move the matter forward”.13
(c) Evidence on inadvertence in missing the deadline to set down the action
32Manis’ evidence is that he did not receive the Second Status Notice.
33Manis filed no evidence as to any steps taken by MDM to determine whether the court had sent the Second Status Notice, even though Manis received the Set Aside Order that expressly stated that a “fresh” status notice would be delivered “forthwith” to the parties.
(d) Evidence as to moving promptly to set aside the Second Dismissal Order - the period between the Second Dismissal Order (December 22, 2011) and the present motion
34On January 3, 2012, Manis received the Second Dismissal Order. The same day, Manis emailed Irving to (i) advise that Manis had received the Second Dismissal Order and (ii) request that Vincor consent to MDM’s proposed motion to set aside the Second Dismissal Order.
35By letter dated January 12, 2012, Irving advised Manis that Vincor was not prepared to provide its consent to set aside the Second Dismissal Order.
36MDM served its motion record on April 3, 2012 for the motion returnable on May 24, 2012.
(e) Evidence as to prejudice
37Manis states in his affidavit: “There is no prejudice to any party as a result of the granting of the relief sought by the plaintiff in this motion”.
38No other evidence was filed on the issue of prejudice.
Analysis
(a) The applicable law
(i) A preliminary issue - the effect of non-receipt of the status notice
39As a preliminary matter, MDM submits that since it did not receive the Second Status Notice, the court must set aside the Second Dismissal Order, regardless of the other factors relevant to the court’s discretion in setting aside a dismissal order.
40MDM relies on a passage from Master Sproat in Marsden v. Alderville First Nation, [2008] O.J. No. 3342 (S.C.J. – Mast.) (“Marsden”) in which she held (Marsden, at para. 16):
In my view, where the status notice has not been received by the plaintiff such that the plaintiff is unaware of obligations and consequences following the Registrar’s delivery of a status notice, this factor alone would provide sufficient grounds upon which the court could exercise its discretion to set aside the Registrar’s dismissal for delay. In this case, I find that the plaintiffs and the plaintiffs’ counsel did not receive the status notice and were otherwise unaware that it had been issued by the Registrar. Accordingly, I would exercise my discretion to set aside the Registrar’s order dismissing the action for delay.
41To the extent that Marsden can be taken for the proposition that non-receipt of a status notice will trump all other factors including prejudice, lack of an adequate explanation for the litigation delay, lack of promptness, and any relevant contextual factor, I decline to adopt that proposition.
42The Court of Appeal since its decision in Scaini has repeatedly stated that a contextual approach is required. Consequently, a “free pass” to an action arising from inadvertence through non-receipt of a status notice, when there has been (i) no adequate explanation of a lengthy litigation delay and (ii) unrebutted presumed prejudice to the defendant would appear to be inconsistent with the contextual approach.
43Further, the decision of the Court of Appeal in Machacek v. Ontario Cycling Assn., 2011 ONCA 410, [2011] O.J. No. 2379 (C.A.) (“Machacek”) is inconsistent with the submission of MDM that non-receipt of a status notice requires setting aside the dismissal order. In Machacek, the Court of Appeal upheld the decision of the motions judge to dismiss the motion to set aside the dismissal order even though the motions judge accepted that plaintiff’s counsel did not receive the status notice (see Machacek v. Ontario Cycling Assn., [2010] O.J. No. 5560 (S.C.J.) at para. 13).
44In Marsden, the other factors in Scaini justified setting aside the dismissal order. In particular, Master Sproat held that “It is clear from the evidence that the parties were engaged in extensive litigation” with “numerous case conferences and motions” and that “the plaintiffs intended to and did pursue the action with a fair degree of fortitude and expense” (Marsden, at para. 18). Master Sproat also held that there was no prejudice from the plaintiff’s delay in prosecuting the action (Marsden, at para. 21).
45Finally, in Marsden, Master Sproat held that the registrar did not have jurisdiction to issue the status notice (Marsden, at para. 13).
46Consequently, I do not agree that the fact that MDM’s counsel did not receive the Second Status Notice constitutes an automatic bar against dismissal of the action.
(ii) The factors to be considered on a motion to set aside a dismissal order
47There have been numerous cases addressing the test on a motion to set aside a dismissal order under Rule 48.14. Both parties agree on the relevant factors. I adopt the cogent summary of Master Muir in the recent decision of 744142 Ontario Ltd. v. Ticknor Estate, 2012 ONSC 1640, [2012] O.J. No. 1119 (S.C.J. – Mast.) (“Ticknor Estate”) which sets out those factors (Ticknor Estate, at para. 32):
In the last five years, the law relating to setting aside registrar's dismissal orders has been the subject of seven decisions of the Court of Appeal for Ontario.1 Although each of those decisions brings a slightly different approach to the decision making process, the general approach first set out by the Court of Appeal in Scaini has been followed consistently. The principles that emerge from those decisions can be summarized as follows:
the court must consider and weigh all relevant factors, including the four Reid factors which are likely to be of central importance in most cases;3
the Reid factors, as cited by the Court of Appeal in Giant Tiger, are as follows:
(1) Explanation of the Litigation Delay: The plaintiff must adequately explain the delay in the progress of the litigation from the institution of the action until the deadline for setting the action down for trial as set out in the status notice. She must satisfy the court that steps were being taken to advance the litigation toward trial, or if such steps were not taken to explain why.... If either the solicitor or the client made a deliberate decision not to advance the litigation toward trial then the motion to set aside the dismissal will fail.
(2) Inadvertence in Missing the Deadline: The plaintiff or her solicitor must lead satisfactory evidence to explain that they always intended to set the action down within the time limit set out in the status notice, or request a status hearing, but failed to do so through inadvertence. In other words the penultimate dismissal order was made as a result of inadvertence.
(3) The Motion is Brought Promptly: The plaintiff must demonstrate that she moved forthwith to set aside the dismissal order as soon as the order came to her attention.
(4) No Prejudice to the Defendant: The plaintiff must convince the court that the defendants have not demonstrated any significant prejudice in presenting their case at trial as a result of the plaintiff's delay or as a result of steps taken following the dismissal of the action;
a plaintiff need not satisfy all four of the Reid factors but rather a contextual approach is required;
the key point is that the court is to consider and weigh all relevant factors to determine the order that is just in the circumstances of each particular case;
all factors are important but prejudice is the key consideration;
prejudice to a defendant may be presumed, particularly if a lengthy period of time has passed since the order was made or a limitation period has expired, in which case the plaintiff must lead evidence to rebut the presumption;
once a plaintiff has rebutted the presumption of prejudice, the onus shifts to the defendant to establish actual prejudice;
prejudice to a defendant is not prejudice inherent in facing an action in the first place but prejudice in reviving the action after it has been dismissed as a result of the plaintiff's delay or as a result of steps taken following the dismissal of the action;
the party who commences the litigation bears the primary responsibility under the Rules for the progress of the action;
in weighing the relevant factors, the court should not ordinarily engage in speculation concerning the rights of action a plaintiff may have against his or her lawyer but it may be a factor in certain circumstances, particularly where a lawyer's conduct has been deliberate. The primary focus should be on the rights of the litigants and not with the conduct of their counsel. [Footnotes omitted; italics in original.]
48Consequently, I consider the above factors in my analysis.
(iii) A second preliminary issue - the relevant dates to consider the explanation for litigation delay
49At the hearing, MDM submitted that the court should not consider the litigation delay until the time period after the First Dismissal Order. MDM submitted that the Set Aside Order “wiped the slate clean”. This position was not raised in MDM’s factum nor did MDM provide any authority to support this proposition.
50MDM’s submission has been rejected in several decisions of this court. All of the litigation delay is to be considered when the court determines whether it is just to set aside a subsequent dismissal order.
51I adopt the following analysis of Master Muir in Wetzel v. Ontario Realty Corp., [2009] O.J. No. 5147 (S.C.J. – Mast.) (“Wetzel”), in which he concludes (Wetzel, at paras. 39, 44-47):
The Court's assessment of the litigation delay must cover the entire period from the date the action was started to the time when the action should have been set down for trial. The order of Master Glustein setting aside the First Dismissal Order does not forgive or somehow expunge all of the delay that went before that Order. That Order was made on the condition that the parties adhere to a specific timetable incorporated as part of the Order. Whatever forgiveness one can infer from Master Glustein's Order, it was certainly conditional on adherence to the agreed upon timetable.
In Bayerische Landesbank Gironzentrale v. Sieber (Trustee of), [2008] O.J. No. 2372 (S.C.J. -- Master), Master Dash had occasion to deal with a motion to set aside a dismissal Order of the Registrar after the plaintiff had missed the set down date established at a status hearing. Master Dash characterized this as a "second kick at the can", the first being the status hearing itself, even though only one dismissal order was made.
At paragraph 15 of Bayerische Master Dash states as follows:
If the deadline for setting the action down made at the status hearing passes and the action has not been set down and in the result the action is dismissed by the Registrar under rule 48.14(4) the plaintiff, in asking to set aside that order, is in effect asking for a "second kick at the can". He is asking for a second indulgence. The first was to extend the deadline set out under rule 48.14(1) and which resulted in the status notice and the extension order at the status hearing. The second is to extend yet again the deadline set at the status hearing which has now passed and which resulted in the dismissal. In my view the court, while still considering all factors to arrive at the result that is just in all the circumstances, should examine most carefully and in some detail the cause of the additional delay and why the second deadline was missed. The delay to be considered is now twofold -- from the institution of the action to the date of the status hearing and then from the date of the status hearing to the date the action was dismissed.
This would also appear to be the general approach taken by Master Dash in Perera v. Pierre, [2009] O.J. No. 4241 (S.C.J. -- Master) and by Master Birnbaum in Murphy v. Barron, [2008] O.J. No. 4976, 2008 CarswellOnt 7398 (S.C.J. -- Master).
In my view, where the Court is dealing with a "second kick at the can", as it is here, it is necessary to carefully examine in some detail the cause of the additional delay along with the cause of the initial delay. The delay to be considered is now twofold, as Master Dash has stated. [Emphasis added.]
52Consequently, I consider the entire period from the institution of the action when reviewing whether there is an adequate explanation for the litigation delay, not just the five-month period between the First and Second Dismissal Orders.
(b) Analysis of the applicable factors
53I now consider the Reid factors and any other contextual factors as required under Scaini.
(i) Explanation of the litigation delay
54MDM failed to “satisfy the court that steps were being taken to advance the litigation toward trial, or if such steps were not taken to explain why” (Ticknor Estate, at para. 32, citing Reid).
55MDM took no procedural or substantive step in the action since it issued the statement of claim on February 27, 2009. Vincor was the party who acted promptly, filing a notice of intent to defend three weeks after the claim was issued, making repeated efforts (often without response from MDM) for particulars, inspection of documents, and security for costs, and promptly serving its statement of defence after receiving MDM’s written response to the demand for particulars.
56MDM either ignored Vincor’s communications, or failed to answer them properly. Requests in April and September 2009 were ignored. On June 24, 2009, MDM provided documents for inspection but ignored the outstanding particulars and security for costs issues. Despite the October 21, 2009 assertion by Manis that he would obtain instructions “tomorrow” at a meeting with his client, it took him two months (until December 21, 2009) to respond on the security for costs issue (again ignoring the particulars issue) and to advise only that Manis was holding $10,000 from MDM in his trust account as security.
57It took almost 11 months for MDM to respond to the demand for particulars (from April 7, 2009 until March 4, 2010).
58It took more than two years for MDM to address the posting of security for costs (from May 21, 2009 until June 7, 2011, including a year of no contact between May 26, 2010 and June 7, 2011) even though Gelowitz stated in his December 2, 2010 letter14 that “Given your lack of correspondence since May, I assume that your client has lost interest in this action. Accordingly, we have decided not to move for an order for security for costs at this time”.
59There is no evidence from MDM to explain the reasons for these delays. MDM filed no evidence to explain difficulties encountered in obtaining instructions, health issues affecting clients, or any other evidence which could have explained why legitimate and simple procedural steps raised by Vincor could not have been addressed at a more reasonable pace.
60Instead, MDM seeks to rely on the discussions about security for costs as an explanation for the delay up to the First Dismissal Order. However, the evidence summarized above demonstrates that MDM was responsible for the delay.
61After a year of repeated requests from Vincor (starting with Gelowitz’ email on May 21, 2009), Manis still required time, as stated in his May 26, 2010 email, to “seek instructions and advise” as to MDM’s position on security for costs. Another year then passed without any contact between MDM and Vincor’s counsel. Vincor did everything possible to move the security for costs issue forward as well as raise concerns about particulars and production of documents which were frequently ignored. Consequently, I do not accept MDM’s submission that discussions about security for costs adequately explain the litigation delay.
62MDM also seeks to rely on “ongoing” settlement discussions as a basis to explain the litigation delay. However, for more than two years between May 21, 2009 and July 12, 2011, there is no evidence to support Manis’ statement15 that “our client failed to [move the action forward] as a result of its belief that settlement discussions were ongoing and that there would be a potential settlement”. To the contrary, Gelowitz’ May 21, 2009 email was clear that “As far as [Vincor] was concerned, [MDM] has no claim against it”, and there was no evidence of any further discussion on settlement until more than two years later when the issue was raised by Manis in his July 12, 2011 email.
63Consequently, there is no evidence of “ongoing” settlement discussions as stated in Manis’ affidavit.
64There is no evidence to explain why there was no contact from MDM for over a year between May 26, 2010 and June 7, 2011. While Manis stated on May 26, 2010 that he was seeking instructions on the issue of security for costs, he failed to contact Gelowitz for more than a year, and only contacted Gelowitz two weeks before the scheduled dismissal of the action. Consequently, there is no explanation for the litigation delay during this time period.
65Manis’ emails in June and July 2011 also belie his “submission”16 that “at no point did the plaintiff intend to abandon or delay the proceeding of the within action”. In his June 7, 2011 email, Manis states that MDM “wishes to resume the prosecution of the above-noted action”. In his July 12, 2011 email, Manis states that “we are instructed now to proceed”. In his July 26, 2011 email, Manis states that “our client now wishes to proceed” [emphasis added]. All of these statements are consistent with the conclusion that there was no such intention prior to the First Dismissal Order.
66Further, even after the First Dismissal Order, MDM failed to lead evidence to adequately explain the litigation delay leading to the Second Dismissal Order. Manis stated that MDM wanted to “discuss settlement” by email on July 12, 2011. On July 29, 2011, Manis had a brief telephone conversation with Irving about the prospects of settlement. On August 4, 2011, Manis stated in an email that “I am awaiting instructions further to our discussion last Friday. I will get back to you soon”.
67However, for four months, MDM did nothing. MDM filed no evidence to explain the additional litigation delay.17 When MDM finally sent a settlement proposal more than four months later on December 8, 201118, Irving quickly responded to the proposal on December 10, 2011 and advised that the proposed settlement “will not fly”.19 Consequently, there is no evidence to support any “ongoing” settlement discussions during this four-month period, let alone during the two-year period between May 21, 2009 and July 12, 2011.
68Vincor promptly addressed all initial requests to discuss settlement in both May 2009 and July 2011, and on each occasion heard nothing further about settlement for extensive periods with no explanation and with no evidence before the court to explain the silence.
69It is not sufficient for Manis to state that it was his client’s “position” that settlement discussions were “ongoing” and that because Vincor did not bring a motion on consent to post security for costs, “both parties were of the view the settlement discussions were ongoing”.
70First, as I discuss above, there were no “ongoing” settlement discussions.
71Second, there is no evidence to explain why MDM required four months to provide a settlement offer when Manis stated on August 4, 2011 that “I will get back to you soon”.
72Third, it is MDM who “bears the primary responsibility under the Rules for the progress of the action” (Ticknor Estate, at para. 32). If MDM wanted to move the action forward, it could have obtained settlement instructions forthwith, and then insisted that Vincor take out a consent security for costs order so that MDM could prosecute the action. MDM could also have taken out the consent security for costs order itself.
73Consequently, there is no adequate explanation for either the more than two-year period between May 21, 2009 and July 12, 2011, or the four-month period between August and December 2011, with respect to the issue of settlement discussions. There is no evidence to support MDM’s submission that either party could have been “of the view the settlement discussions were ongoing”.
74There may be cases in which the defendant’s procedural motions take longer than anticipated, with the plaintiff taking reasonable steps to respond to those motions. Similarly, there may be cases in which there are complex settlement discussions which require significant time and negotiation. There is no evidence that this case fits either scenario.
75In the present case, simple procedural matters took more than two years, through no fault of Vincor, with numerous failures by MDM to respond to correspondence, a year-long gap from MDM with no communication and then an additional four months of no communication with no explanation for the delay. There were no ongoing settlement discussions. The evidence on this motion does not demonstrate that MDM intended to proceed with the action.
76For these reasons, I find that MDM failed to meet this Reid factor.
(ii) Inadvertence in missing the deadline
77As in Machacek, I accept Manis’ evidence that he did not receive the Second Status Notice. This evidence establishes inadvertence in failing to set the action down for trial within the 90 days required under the Second Status Notice.
78However, the inadvertence is attenuated by the evidence that the First Dismissal Order was faxed to Manis. Consequently, MDM knew on September 6, 2011 (the date of the fax cover sheet and transmission line on the Manis copy) that “a fresh status notice” was to be issued “forthwith”. MDM filed no evidence of any steps it took to determine whether a fresh status notice had been issued, which could have been done by attending at the court office or asking Vincor’s counsel.
79Instead, MDM filed no evidence of any steps it took during the period between September 2011 and the Second Dismissal Order in December 2011, the same period in which there is no explanation why four months passed before MDM provided a settlement offer.
80Consequently, even though I find that MDM met the test for “inadvertence” under Reid because MDM did not receive the Second Status Notice, this is a weak factor in favour of MDM for the reasons discussed above.
(iii) Promptness in bringing the motion
81Vincor’s counsel acknowledged at the hearing that the motion was brought promptly and raised no issue about promptness in his factum.
82The evidence reviewed at paragraphs 34 to 36 above demonstrates that MDM served the motion record three months after MDM received the Second Status Notice.
83While I do not find that a three-month delay in bringing a motion to set aside a dismissal order will always be considered to be “prompt”, I accept for the purposes of these reasons that MDM satisfied this aspect of the Reid test.
(iv) Prejudice to the defendant
84At the hearing, MDM’s counsel acknowledged that there was no evidence filed by MDM to rebut the presumption of prejudice. I agree with his acknowledgement. It is not “evidence” for a plaintiff’s lawyer to state in an affidavit that “There is no prejudice to any party as a result of the granting of the relief sought by the plaintiff in this motion”.
85In Wellwood v. Ontario (Provincial Police), 2010 ONCA 386, [2010] O.J. No. 2225 (C.A.) (“Wellwood”), the Court of Appeal held that the plaintiff must lead evidence to rebut the presumption of prejudice. The Court adopted the principle stated by Master Dash in Kassam v. Sitzer, [2004] O.T.C. 731 (S.C.J. – Mast.) at para. 53, affirmed [2005] O.J. No. 1849 (Div. Ct.) (Wellwood, at para. 62):
Prejudice will be presumed after passage of a limitation period and it will be presumed that memories of witnesses fade over time. If the defendant has been unaware of a claim being asserted either by notice of the claim or by service of the statement of claim, such that he has been unable to undertake a timely investigation, then this may be taken into account in determining whether there is a substantial risk that a fair trial would not be possible. The plaintiff can overcome the presumption of prejudice for example by evidence that relevant documents have been preserved, key witnesses are available, certain elements of the claim may not be in issue, and in the case of personal injury, that medical evidence of the progress of the injuries is available. The defendant would then have a burden of adducing actual evidence that there is a substantial risk that, as a result of the delay, a fair trial would not be possible. [Italics in original; emphasis added.]
(See also Ticknor Estate, at para. 52)
86There is no evidence before the court that documents have been preserved, key witnesses are available, or certain elements of the claim are not in issue. MDM had the obligation to lead such evidence and failed to do so.
87Consequently, the key consideration of prejudice is strong in this case. The events at issue are over five years old and the limitation period has expired. With no evidence to support a rebuttal of the presumption of prejudice, this Reid factor strongly favours dismissing the motion.
(v) Conclusion on the Reid factors
88On the basis of the Reid factors discussed above, I dismiss the motion. The paucity of evidence explaining the litigation delay and the lack of evidence rebutting the presumption of prejudice lead to the just result that the action be dismissed. There is a strong public interest in promoting the timely resolution of disputes (Marché D’Alimentation Denis Theriault Ltée et al. v. Giant Tiger Stores Ltd. (2007), 2007 ONCA 695, 87 O.R. (3d) 660 (C.A.) at para. 25). A plaintiff cannot allow an action to sit dormant for almost three years without an adequate explanation and then file no evidence to rebut the key presumption of prejudice arising from the passage of the limitation period. Consequently, even though there is some (albeit not strong) indication of inadvertence, and I accept for the purpose of these reasons that the motion was brought reasonably promptly, the just result is to dismiss the motion.
(vi) Other contextual factors
89As I discuss above, I dismiss the motion on the consideration of the factors in Reid. MDM did not rely on any other contextual factor to support setting aside the dismissal order.
90However, there is a contextual factor which further supports not setting aside the Second Dismissal Order. This motion arises after MDM already failed once to set the action down for trial. As Master Muir held in Wetzel, when dealing with a “second kick at the can”, it is necessary “to carefully examine in some detail the cause of the additional delay along with the cause of the initial delay” (Wetzel, at para. 47).
91In the present case, there is no evidence to explain any delay between August 4, 2011 and December 8, 2011, a critical period given that as of September 6, 2011, MDM received a copy of the Set Aside Order and knew that a status notice was to be issued “forthwith”. Manis’ evidence is that the First Dismissal Order arose because MDM “failed to provide [Manis] with instructions”, yet there is no evidence as to (i) whether MDM provided instructions on settlement for four months, (ii) reasons why no instructions were provided for four months (if there were no instructions) or (iii) whether MDM took any steps to determine whether the Second Status Notice had been issued, since it was to be done “forthwith”. Instead, there is no evidence that MDM took any steps to prevent a second dismissal order.
92In this context, the failure to meet the Reid factors is exacerbated by MDM’s lack of evidence as to what steps it took to ensure that a second dismissal order was not issued.
Order and costs
93I dismiss the motion for the reasons discussed above. Counsel for Vincor sought costs of the motion in the amount of $4,463.73 which is reasonable given the importance of the motion as well as the motion records, factums, and briefs of authorities filed. While counsel for MDM did not have a costs outline for the court, he acknowledged that the costs sought by Vincor were in the range of what an unsuccessful party would reasonably expect to pay.20 Consequently, I order costs payable by MDM to Vincor for the motion in the amount of $4,463.73 within 30 days of this order, with costs of the action to be assessed.
94I thank all counsel for their thorough written and oral submissions which were of great assistance to the court.
Master Benjamin Glustein
DATE: June 1, 2012
Footnotes
- By consent order dated August 18, 2011 discussed below (the “Set Aside Order”), Master Sproat set aside a prior registrar’s dismissal order dated July 13, 2011 (the “First Dismissal Order”).
- (although this factor is not necessary, as the other factors summarized above are sufficient to dismiss the motion)
- (but not on the factors to be considered in setting aside a dismissal order)
- Neither MDM nor Vincor included this letter in their motion material but it is referred to in Gelowitz’ September 17, 2009 letter discussed at subparagraph (vi) and in a letter from Gelowitz dated January 21, 2010 referred to at subparagraph (xi). While the June 24, 2009 Manis letter is not proper evidence before the court, Vincor’s counsel acknowledged receipt of the letter and did not oppose the court considering that letter, as described by Gelowitz in his September 17, 2009 and January 21, 2010 letters, in the chronology.
- MDM’s counsel sought to rely on this passage in the Manis email as an explanation that his client was in fact “derailed”, which resulted in litigation delay. However, on this point, MDM was required to lead evidence to explain any delay. Manis never states in his affidavit that any delay was caused by an inability to reach his client or that his client was “derailed”. To the contrary, Manis’ evidence (as discussed below) is that his client always instructed him to proceed with the action. Consequently, the court cannot accept a statement in counsel’s email as evidence explaining the client’s reason for litigation delay. MDM was required to lead either direct evidence from the client or hearsay evidence in the Manis Affidavit upon Manis being advised by the client and believing it to be true. There is no such evidence in the Manis Affidavit.
- The March 4, 2010 response to the April 7, 2009 demand for particulars was not filed by MDM or Vincor. The only evidence about the response is from Macri’s affidavit in which she makes no reference to any attempt by MDM in that letter to address the request for security for costs.
- Manis’ statement that he would “seek” instructions on security for costs was made more than ten months after Gelowitz’ initial request by email on May 21, 2009.
- This subsequent Manis’ statement that he would “seek instructions and advise” on security for costs was made over one year after Gelowitz’ initial request by email on May 21, 2009.
- This was the first mention of settlement since Gelowitz’ May 21, 2009 email which stated that there was no foundation to settle the action and that Vincor believed MDM “has no claim against it”.
- (as set out in Manis’ June 7, 2011 email)
- The second sentence is argument, not evidence. In any event, I do not accept the argument that Vincor was required to bring a consent motion for security for costs for reasons I discuss below. Even if the first sentence can be taken as an explanation as to why MDM did not move the action forward (which I do not accept for the reasons discussed below), there is no evidence as to why MDM required four months to deliver a settlement offer.
- A statement of a client’s belief or intention without stating the source of that belief and that counsel believes it to be true constitutes inadmissible hearsay. However, this evidentiary issue is irrelevant to my reasons as the evidence does not demonstrate such an intention or belief for the reasons discussed below.
- A “submission” does not constitute evidence. However, similar to my discussion in the above footnote, this evidentiary issue is irrelevant to my reasons as the evidence demonstrates that MDM did not pursue the action and was the source of excessive unexplained delay on simple procedural matters.
- (which was sent after more than six months of “dead air” from MDM which started on May 26, 2010, with the December 2, 2010 Gelowitz letter then followed by a subsequent six-month period of “dead air” until June 7, 2011)
- (and the evidence is inadmissible in any event, as I discuss at footnote 12 above)
- (stated as evidence in his affidavit which is not admissible in any event as I discuss at footnote 13 above)
- (unlike in Marsden in which the plaintiff filed such evidence – see Marsden at para. 19)
- (by a brief, five-line email which only set out the amount MDM was prepared to accept)
- (although Irving properly advised Manis that Irving would forward the settlement offer to Vincor for instructions)
- MDM’s counsel suggested costs in the amount of $3,500 would be appropriate but did not submit that Vincor’s costs were excessive.
