SUPERIOR COURT OF JUSTICE - ONTARIO

Court File No.: CV-09-380534 Date Heard: January 11, 2012 Endorsement Released: January 23, 2012

Re: Marc Koepcke and Steven Block v. Michael Webster

Before: Master R. Dash

Counsel: Jeffrey Radnoff, for the plaintiffs Aaron Postelnik, for the defendant

REASONS FOR DECISION

[1] This is a contested status hearing where the plaintiffs are required under rule 48.14(13) to show cause why the action should not be dismissed for delay. The action is for solicitor’s negligence in which it is alleged that the defendant lawyer failed to take steps to prosecute an underlying fraud action on behalf of the plaintiffs against certain persons.

[2] At issue is whether there are obligations on a plaintiff to take steps in an action commenced out of precaution, which action may ultimately not proceed depending on the results of a related action and whether the precautionary action should be dismissed for delay at a status hearing if no steps have been taken.

[3] Affidavits were filed at the status hearing from the plaintiff’s law clerk and from a lawyer in the defendant’s law firm. None of the parties themselves filed an affidavit.

BACKGROUND AND THE UNDERLYING ACTIONS

[4] It is alleged that in the summer of 2003 the plaintiffs and others invested in licences to distribute a product based on representations by various persons (the “fraudsters”), including a representation that it was legal to sell the product in Canada and the United States. That representation was false and no regulatory approval had ever been obtained to sell the product. Although the alleged fraudsters were advised of this by the regulatory agencies in March 2004, there is no evidence before me as to when the plaintiffs discovered that the representations were false. It is however pleaded that in January 2005 the defendant lawyer, Michael Webster (“Webster”), contacted the plaintiffs and others offering to commence an action to recover the lost investments.

[5] On June 23, 2006 Webster commenced action 06-CV-313878 against the fraudsters on behalf of the plaintiffs and 29 other investors (“the First Underlying Action”). The statement of claim in the First Underlying Action was never served and Webster took no further steps in that action. The First Underlying Action was ultimately dismissed as abandoned on August 18, 2008 under what was then rule 78.06 for failure to have a defence filed within two years.

[6] The plaintiffs’ current lawyer, Jeffrey Radnoff (“Radnoff”), commenced a fresh action (CV-08-363786) against the fraudsters on October 6, 2008 (the “Second Underlying Action”). Radnoff does not represent nor has he commenced action on behalf of any of the other 29 investors named as plaintiffs in the First Underlying Action. The Second Underlying Action has proceeded through productions and discovery and was set down for trial on March 16, 2011. The certification forms have been sent to the trial office and a mediation that had been cancelled is currently being re-scheduled. The fraudsters have not pleaded a limitations defence to the Second Underlying Action. The limitations issue however was raised at discoveries but there has been no motion to amend, at least as of this date.

[7] Radnoff commenced this action against Webster on June 9, 2009 (the “Lawyer’s Negligence Action”), which is the action for which the plaintiffs must show cause at this status hearing. The statement of claim alleges that as a result of Webster’s negligence and breach of retainer the Second Underlying Action “may be statute barred” and due to lapse of time “it may not now be possible to recover” against the fraudsters. I have no evidence as to when the statement of claim was served but Webster filed a statement of defence on October 2, 2009. (In his statement of defence Webster pleads that no further steps were taken in the First Underlying Action because of the limited nature of his retainer.)

[8] Absolutely no further steps were taken in the Lawyer’s Negligence Action since the statement of defence was filed on October 2, 2009 until after the status notice was issued on October 3, 2011, two years later. There were no productions exchanged and no discoveries arranged. Indeed there were no communications whatsoever, not even a single piece of correspondence.

[9] Mr. Radnoff’s law clerk, in her affidavit filed at this status hearing, states that “it is not known at this time if there are damages arising from [Webster’s] negligence because if the plaintiffs collect their damages” from the fraudsters in the Second Underlying Action “they have mitigated their loss.” Although not in the affidavit, Mr. Radnoff submitted at the status hearing that the Lawyer’s Negligence Action is a “precautionary action” and it would not be prudent or cost effective to proceed with that action until it is first determined whether the Second Underlying Action is defeated on limitations grounds. Mr. Radnoff was in effect holding the Lawyer’s Negligence Action “in abeyance” pending the determination of the Second Underlying Action. His intention was to proceed with the Lawyer’s Negligence Action only if the Second Underlying Action was unsuccessful.

[10] Unfortunately Mr. Radnoff never communicated this plan to Mr. Postelnik, the lawyer for Webster. The first communication to Postelnik was on October 26, 2011, after receipt of the status notice, enclosing a request for a status hearing because “this action is not ready for trial”. When Mr. Postelnik responded that he required the plaintiffs to show cause why the action should not be dismissed for delay at the status hearing, Mr. Radnoff wrote on November 8, 2011 that Webster was sued because his actions may have prejudiced the plaintiffs in the Second Underlying Action. He enclosed a copy of the statement of claim in the Second Underlying Action and advised of the status of that action. Although the statement of claim in the Lawyer’s Negligence Action pleaded that Webster’s actions may have resulted in the Second Underlying Action being statute barred, there was no indication ever given to Postelnik of any plan to hold the Lawyer’s Negligence Action in abeyance until the November 8, 2011 letter and even that letter does not specifically reference such plan.

[11] It is clear that the plaintiffs’ decision to hold the Lawyer’s Negligence Action in abeyance for over two years was a unilateral decision made by the plaintiffs or Mr. Radnoff with no indication to, let alone approval of, the defendant Webster.

THE LAW

The Test at a Status Hearing

[12] Pursuant to rule 48.14(1), the registrar sends out a status notice if an action has not been placed on a trial list or otherwise terminated within two years after the first defence. Pursuant to rule 48.14(4) the registrar will dismiss the action 90 days after the status notice unless the action has been set down or terminated, a compliant litigation timetable filed or “the judge or case management master presiding at a status hearing has ordered otherwise.” The plaintiffs herein requested a status hearing. In accordance with rule 48.14(13), at the status hearing “the plaintiff shall show cause why the action should not be dismissed for delay” and if the judge or case management master “is satisfied that the action should proceed” a timetable may be set or other orders made as are just. If “not satisfied that the action should proceed, the judge or case management master may dismiss the action for delay.”

[13] In most cases the parties attend the status hearing and file a consent timetable or make submissions if they cannot agree on an appropriate timetable and the court determines what is appropriate. If the defendant, as in this case, opposes the setting of a timetable and demands that the plaintiff show cause why the action should proceed, then the status hearing is conducted on a contested basis, typically on affidavit evidence. If no evidence has been filed, the status hearing is sometimes adjourned to enable parties to file evidence.[^1] (In the matter before me, affidavits were filed in advance of the status hearing.)

[14] The test that a plaintiff must meet at a contested status hearings has been set out in a number of decisions of the Superior Court and the Divisional Court[^2] and has now been confirmed by the Court of Appeal in Khan as follows: The plaintiff bears “the burden of demonstrating that there was an acceptable explanation for the involved litigation delay and that, if the action was allowed to proceed, the [defendant] would suffer no non-compensable prejudice.”[^3] The plaintiff bears the burden of satisfying both aspects of the test.[^4] In summary, rule 48.14(13) imposes an onus on the plaintiff to show cause why the hearing should not be dismissed for delay.[^5]

[15] The explanation for the delay must be such as to justify continuance of the action[^6] or put another way to satisfy the court that the action should be permitted to proceed.[^7] This “requires, among other things, a determination regarding the plaintiff’s intention to prosecute the action throughout the period since the commencement of the action.”[^8] “Legal proceedings are not to be undertaken lightly. Plaintiffs have a responsibility to prosecute their actions diligently and in accordance with the rules of civil procedure.”[^9] The court at a status hearing “must be fundamentally concerned with the progression of cases and the impact this has on the appearance of justice...there is ‘an important value of having disputes resolved in a timely fashion.’”[^10] There is a dominant theme in the civil justice system to discourage delay and encourage judicial involvement to ensure timely justice.[^11]

[16] If the court permits the action to proceed there should be a clearly articulated plan by the plaintiff for moving the case forward and this is a factor for the court to consider in deciding whether to permit the action to proceed.[^12]

[17] There is no onus on the defendant to demonstrate prejudice, but if he does adduce evidence of actual prejudice that will be a factor for the court to consider.[^13] The reference to prejudice means non-compensable prejudice.[^14]

A Contextual Approach, Competing Principles and the Exercise of Discretion

[18] In my view, the plaintiff need not rigidly satisfy both aspects of the test but the two factors, acceptable explanation for the delay and demonstrating absence of prejudice to the defendant, must be considered, together with any other relevant factors, on a contextual basis. Although the Court of Appeal in Khan did not addressed a contextual approach at a status hearing, other decisions of the Court of Appeal have determined that a contextual approach is required on motions to set aside a registrar’s dismissal of an action that resulted from a failure to set an action down within the time set out in a status notice (where no status hearing was requested) or as set out in a status hearing order. The Court of Appeal set out the four principal factors (known as the “Reid factors”) to be addressed on motions to set aside a registrar’s dismissal. Two of those factors are the same as the two factors to be addressed at a contested status hearing. (The other two factors do not apply at a status hearing, but only where the action has been dismissed.[^15]) The Court of Appeal held that when considering the setting aside of a registrar’s dismissal the plaintiff need not rigidly satisfy each of the four factors but they are to be considered together with any other relevant factors on a contextual basis to make such order as is most just in the circumstances of the particular case.[^16] If a contextual approach is to be used after an action has been dismissed for failure to comply with a status hearing order it speaks even louder that a contextual approach should be followed at a contested status hearing, before the action is dismissed.

[19] Some of the jurisprudence considering the approach at a status hearing indicate that even where the plaintiff does not satisfy both aspects of the test the court has discretion to permit the action to proceed at a status hearing. For example in Donskoy at the Divisional Court, J. Wilson J. indicated that it may be reversible error to dismiss an action at a status hearing where there are no outstanding orders and which has now come before the court for the first time, in which case a “guillotine” order requiring compliance may be the appropriate order, provided that there is a credible explanation for the delay and the plaintiff has articulated a plan to move the case forward.[^17] At the Divisional Court in Clements, J. Wilson J. repeated her above referenced reasoning in Donskoy.[^18] She also indicated that the practice at status hearings is for counsel to speak to the matter and set a timetable for moving the case forward. In particular, she noted that “status hearings are a management tool to get cases on track, and move a case forward in a reasonable fashion if it has been languishing.”[^19] She concluded that “unless there are clear, extraordinary circumstances, it would not be appropriate to dismiss an action at the first status hearing”.[^20] The Divisional Court in Oberding did not however share the view in Clements that it was inappropriate to dismiss an action at a first status hearing and concluded that actions could be dismissed if the plaintiffs failed to satisfy the court that there was an explanation for the delay that justified continuation of the action and that there was no prejudice to the defendant.[^21]

[20] In Kostruba,[^22] Goodman J. relied on Donskoy and Clements to state that dismissal would be an unusual remedy for a case before the courts for the first time at a status hearing but went further and indicated that dismissal was reserved for cases of actual prejudice, flagrant breaches of various court orders, intentional defaults or inexcusable delay giving rise to a substantial risk that a fair trial may not be possible. Kostruba was decided before the Court of Appeal decision in Khan and goes much further than any of the other jurisprudence, none of which refers to flagrant breaches and intentional defaults as a pre-condition for dismissal at a status hearing. In my view Kostruba mistakenly applied the test used on motions to dismiss for delay under rule 24.01 where the onus is on the defendant and is not good law when applied to status hearings.

[21] Indeed, in the more recent decision in Canadian Champion, O’Connell J. indicated his disagreement with the test as articulated by Goodman J. in Kostruba. [^23] He confirmed that the onus is on the plaintiff to meet both branches of the test as set out by the Court of Appeal in Khan.[^24] He specifically rejected the notion that “the mere fact that this case has only seen the light of day at one status hearing has any bearing on the outcome.” The fact that the case is before the courts for the first time at a status hearing may “be a factor in some cases [but] it is not determinative. Indeed if it were otherwise a first status hearing would be a simple conduit for further delay.”[^25] O’Connell J. recognized however that the court must be “cautious and scrupulously apply the test on a status hearing” before the court takes away a right to have the case determined at trial, the test being that articulated in Khan.[^26] In Riggitano Glithero J. noted that rule 48.14 “clearly contemplates that two years” after the first defence is sufficient time to set an action down “absent some satisfactory explanation”. He stated that the common submission that dismissing an action at a status hearing is unfair to the plaintiff should not always “trump the provision in the rules contemplating a reasonably timely procedure for the disposition of actions” or else “the rule would be effectively gutted.”[^27]

[22] Finally, although the court at a contested status hearing must be guided by the two-part test articulated in Khan, and recognizing that the onus is on the plaintiff to satisfy both branches of the test, the determination whether to allow the action to proceed is discretionary. Rule 48.14(13)(b) provides that the court “may” dismiss for delay. There will be some cases where a plaintiff can show cause that “on the whole, it would be unfair for the action to be dismissed. Determining fairness or unfairness requires a consideration of all the circumstances and a certain balancing of the respective interests of the parties.”[^28] As Master MacLeod stated in Amirrahmani, what the court accepts as a justifiable or acceptable explanation is “case dependant.”[^29]

[23] To some extent this echoes the sentiment echoed by the Court of Appeal on motions to set aside a registrar’s dismissal where the court must exercise its discretion based on a consideration of two competing principles in our civil justice system – the public interest in discouraging delay and permitting actions to be determined on their merits. In particular Laskin J.A. said in exercising discretion on such motions, “two principles of our civil justice system...come into play...The first...is that civil actions should be decided on their merits...The second principle is that civil actions should be resolved within a reasonable timeframe...Both the litigants and the public have an interest in timely justice. Their confidence in the administration of our civil justice system depends on it. On motions to set aside an order dismissing an action for delay, inevitably there is a tension between those two principles.” [^30] Justice Laskin adds that the amount of weight to be assigned to each consideration “will vary from case to case. The court’s overriding objective is to achieve a just result – a result that balances the interests of the parties and takes into account the public’s interest in the timely resolution of disputes.”[^31] In my view, this approach is equally applicable at a contested status hearing.

ANALYSIS

Is There an Acceptable Explanation for the Litigation Delay?

[24] As indicated, no steps were taken in this litigation after delivery of the statement of defence until over two years later when the status notice was issued. Not a single letter or email was sent by either lawyer over that time. Mr. Radnoff argues that there would be no damages claimable against Webster unless and until the Second Underlying Action was dismissed on limitations grounds as a result of Webster’s negligence in not pursuing the First Underlying Action. He states that the Lawyer’s Negligence Action was commenced as a “precautionary action”. Although it could be argued that the cause of action against Webster would not accrue and the limitation period not start to run until the plaintiffs had suffered damages as a result of Webster’s negligence, Mr. Radnoff submits that it was prudent of him to commence the action and forestall any limitations argument by Webster. I agree with Mr. Radnoff that it was prudent of him to commence this action.[^32]

[25] Mr. Radnoff further submits that that it was reasonable to hold the Lawyer’s Negligence Action in abeyance and not incur the costs of productions and discovery until after the conclusion of the Second Underlying Action since if the plaintiffs recovered against the fraudsters there would be no damages to pursue against Webster and the Lawyer’s Negligence Action may never proceed. He submits that as the Second Underlying Action has not yet been tried, this is a reasonable explanation for the delay and for taking no steps beyond pleadings in the Lawyer’s Negligence Action.

[26] I agree that it was reasonable for the plaintiffs to commence a precautionary action and to avoid, if possible, costly and potentially unnecessary steps to advance the litigation until final determination of the Second Underlying Action and an assessment then made whether the Lawyer’s Negligence Action would proceed. I do not however agree that it was reasonable to do nothing over those two years. The plaintiff, if it wished the action to be held in abeyance, should have sought a stay of the action from the court under section 106 of the Courts of Justice Act, R.S.O. 1990 c. C.43.

[27] There is case law that suggests that such a stay may be appropriate where determination of a related action with common issues may avoid a multiplicity of proceedings, such as by making the second action moot or where determination of the issues in one action may affect the outcome in the other.[^33] Of course sometimes a stay will have the opposite effect and result in duplication of evidence and a second trial of a common issue if both actions must ultimately be tried.[^34] For example in this case, if the trial court in the Second Underlying Action determines that the claim against the fraudsters was time barred, resulting in the plaintiffs proceeding with the Lawyer’s Negligence Action, it may be argued that Webster, not having participated in the Second Underlying Action, is not bound by the limitations finding. It may then be open to Webster to assert by way of defence at the trial of the Lawyer’s Negligence Action that the limitation period for suing the fraudsters had not expired.

[28] What was particularly unreasonable about the plaintiffs doing nothing in order to hold the file in abeyance was their failure to write to the defendant and advise that such was their plan. The plaintiffs could have sought consent from the defendant to a stay order or at least to hold off productions and discovery. Holding the file in abeyance is not a decision the plaintiffs can make unilaterally. The defendant should have had an opportunity to take part in the determination of whether the action proceeds or be held in abeyance. The defendant could have taken a number of different positions in response to such a request. For example:

(a) The defendant may have consented to a stay of the action pending determination of the Second Underlying Action so that he too may avoid the costs of taking steps to advance an action that may end up not proceedings if the Second Underlying Action is successful. He may have also agreed to hold the action in abeyance without a stay, at least until the matter must be dealt with after receipt of a status notice.

(b) The defendant may have insisted that the action proceed and that there be common discovery, productions and trial with the Second Underlying Action. The defendant may take that position in order to join with the plaintiff in arguing at trial that the Second Underlying Action is not time barred, thereby eliminating or reducing damages that could be claimed against Webster. This would also have the advantage of binding Webster to the court’s determination as to whether the Second Underlying Action is time barred. Such a step would require a motion for trial together on notice to all parties in both actions.

(c) The defendant may have insisted that the action proceed but separately from the Second Underlying Action. The plaintiffs may also wish the actions to proceed separately if there are communications between Webster and the plaintiffs protected by solicitor-client privilege that they may not wish revealed to the fraudsters.

[29] Mr. Postelnik has no instructions on which of these (or other) positions he would have taken if advised or what position the defendant will now take if I permit the action to proceed.

[30] In conclusion, the decision whether to hold the action in abeyance is one that must be made with the knowledge of the defendant and either with the defendant’s consent or by order of the court. It was not reasonable for the plaintiff to make this decision unilaterally and not tell the defendant. It was not reasonable to take no steps in the litigation for over two years. Such steps would have included informing the defendant of their intent to hold the file in abeyance and seeking the defendant’s consent or moving for a stay. The resulting litigation delay was not reasonable.

Has the Plaintiff Demonstrated No Prejudice to Defendant if the Action Proceeds?

[31] The plaintiffs have adduced no evidence whatsoever to meet the onus of demonstrating that if the action were allowed to proceed the defendant would suffer no non-compensable prejudice. For example there is no evidence before the court that the plaintiffs have preserved their own documents, that their memories are intact and their witnesses still available. Of course the plaintiffs have put themselves in the position of not knowing if the defendant’s documents are preserved and witnesses available. That is because the plaintiffs have not demanded an affidavit of documents and not conducted any form of discovery. This is compounded by the failure to file an affidavit from the plaintiffs personally at this status hearing. Although the defendant has adduced no evidence of actual prejudice there is no onus on him to do so. The onus is on the plaintiffs to demonstrate that the defendant will not be prejudiced.

[32] The plaintiffs suggest in argument that paragraph 8 of Webster’s statement of defence, which reads that Webster by the end of 2006 “had complied 2-3 bankers’ boxes of materials in his attempt to locate the defendants and any assets against which a judgment may be executed”, demonstrates that Webster has preserved his evidence. That may be true as far as documents related to the claim against the fraudsters. Although there is no evidence that Webster has preserved his notes and correspondence, which are of considerable importance for a defence of limited instructions, I agree with the plaintiffs that Webster had an obligation to preserve his file, which file was created in 2005 and 2006, and in particular his notes and correspondence.

[33] The Law Society advises lawyers that prior to closing a file and after purging the file of documents which are the property of the clients, certain original documents should be retained “to serve as evidence in defence of any possible future claims of malpractice...” Lawyers should “retain copies of documents that evidence the client’s instructions, changes in instructions, solicitor-client...communications and work performed on behalf of the client,”[^35] including correspondence to and from clients respecting retainers, instructions and advice. The Society suggests that such documents be retained for 15 years after a file is closed, the ultimate limitation period under the Limitations Act, 2002.

[34] The defendant has adduced no evidence of actual prejudice. While there is no onus on the defendant to provide evidence of actual prejudice, it would be considered if filed, and in this case would have been most helpful. It would have been preferable if Webster had provided evidence indicating whether he has preserved his client file and whether he is aware of any missing witnesses. While I appreciate that allegations of negligence against a lawyer can cause not only stress, but also issues with respect to professional reputation and insurance, Webster has not so advised. I am also aware that the Law Society has revoked Webster’s licence to practise law as a result of complaints unrelated to the matters raised in this action (although these plaintiffs also complained to the Law Society about Webster). To a great extent that makes complaints about damage to professional reputation redundant.

Conclusion: Should the Action be Permitted to Proceed?

[35] The ultimate question I must answer is whether I am satisfied that the action should proceed and if so, whether to fix a timetable or make such other orders as are just. If I am not satisfied, the action will be dismissed for delay.

[36] On a strict application of the Khan test, the action should be dismissed for delay. No steps whatsoever were taken in the action for over two years between the close of pleadings and issuance of the status notice. The plaintiffs’ explanation was that the action was commenced as a precautionary action and would proceed only if the Second Underlying Action were dismissed as a result of the defendant’s negligence in taking no steps to prosecute the First Underlying Action. Until then it was uncertain if the plaintiffs had suffered damages because of the defendant’s negligence and as a result the plaintiffs held this action in abeyance. While I found this to be an acceptable explanation for the delay in taking steps in the litigation such as productions and discovery, I found that the plaintiffs failed to provide an acceptable explanation for no taking no steps whatsoever, such as moving for a stay of proceedings or advising the defendant of their intentions and seeking his consent. The defendant, if advised, may or may not have agreed with a stay or with holding the action in abeyance. I also found that the plaintiffs had provided no evidence to demonstrate that the defendant had not suffered prejudice as a result of the delay.

[37] On the other hand, considering the delay contextually and considering fairness to both parties, I am of the view that the action should be permitted to proceed. The plaintiffs acted in good faith in not proceeding with this action and in avoiding costs to be incurred by both parties unless and until it became necessary to proceed with the action. It was in my view however an error in judgment for Mr. Radnoff not to advise the defendant or move for a stay. The defendant should have been given the option of consenting to a stay or proceeding with the action. That error in judgment in my view should not deprive the plaintiffs of the ability to claim against the allegedly negligent lawyer if it is later discovered that they have incurred damages as a result of that negligence unless the defendant has been prejudiced by the delay

[38] Although not directly addressed in evidence it is hard to imagine how Webster may have been prejudiced by this two year delay. Firstly, it is likely that Webster’s file has been preserved based on the plea in his statement of defence that boxes of documents were retained and based on the proper procedures for file retention as outlined by the Law Society as set out earlier in this endorsement. Further, Webster created his file in 2005 and 2006, has known about this action against him since the summer of 2009 and would have been obliged to preserve his documents, which appears to have been done given his statement of defence.

[39] Secondly, I am of the view that Webster was not prejudiced by not having earlier had the opportunity to argue whether this action should be stayed or proceed and whether it should be joined with the Second Underlying Action. It may yet be determined that a stay is appropriate either on consent or by determination on a contested motion. In such case, the defendant is in the same position he would have been in if the stay had been requested and granted within the two years prior to the issuance of the status notice. If a stay is not sought or is denied, there is no reason that a timetable cannot be set now to move this action forward. If Webster wants to join this action with the Second Underlying Action, for example to have a say in whether the Second Underlying Action is time barred, it is not too late. The Second Underlying Action has not yet proceeded to mediation, pre-trial or trial. Although Webster has missed out on discoveries, there being no lis between Webster and the fraudsters, he would have had no right to question the fraudsters. In any event, the discoveries in the Second Underlying Action were completed shortly prior to the commencement of the Lawyer’s Negligence Action.[^36] If the actions are to be joined, this would require an aggressive timetable for the Lawyer’s Negligence Action to catch up and become trial ready as well as a motion on notice to the lawyers for the fraudsters.

[40] I also note that the question of delay has come before the court for the first time at this status hearing and there are no outstanding court orders. The explanation for delay, while deficient, was credible and incurred in good faith. Mr. Radnoff is now prepared to proceed with a stay motion or with prosecution of this action, after the defendant makes his position known. In my view this is a case where fairness to the plaintiffs in having the actions determined on the merits outweighs the interest of the public in discouraging delay.

[41] It would best serve the interests of justice to permit this action to proceed, by way of stay (pending determination of the Second Underlying Action) or by litigation timetable, as may be determined.

APPROPRIATE STATUS HEARING ORDER

[42] Until Mr. Postelnik obtains instructions and advises whether he consents to a stay or whether he wishes to proceed with the action at this time and if so, whether separately or in concert with the Second Underlying Action it is not possible to set an appropriate timetable, except as to the determination of that issue. If a stay is ultimately ordered, I anticipate it will be with leave to either party to move to lift the stay after final determination of the Second Underlying Action. If a litigation timetable is to be set, it will include a deadline for productions, discovery, mediation and setting the action down. If either party wishes trial together with the Second Underlying Action, productions and discovery will need to be expedited to make this action trial ready. Mr. Postelnik indicates that if the action proceeds, the defendant may be bringing a motion for security for costs. If the defendant wishes the two actions to be tried together a motion on notice to the parties in both actions will be necessary. Deadlines for both such motions would need to be incorporated into the timetable once the defendant’s intentions are made known. A short extension of the deadline under rule 48.14(5) for dismissal for delay will be granted at this time until the course of the litigation is determined. That deadline may be extended when a litigation timetable is set. Of course a stay of the action will prevent any dismissal of the action for delay by the registrar until the stay is lifted.

COSTS

[43] Although the action was not dismissed for delay, it was reasonable for the defendant to have compelled the plaintiffs to show cause and to have resisted the setting of a timetable. By permitting the action to proceed I have granted a substantial indulgence to the plaintiffs, who failed to share their plans to hold the action in abeyance with the defendant and to allow his input into that decision. Although the defendant also took no steps to move the action forward, the primary obligation for doing so rested with the plaintiff, who commenced the action. The defendant should have his costs of the status hearing. To order otherwise would encourage other plaintiffs who commence a precautionary action or for other reason wish not to take steps in the litigation to unilaterally hold the action in abeyance without telling the defendant. If the parties are unable to agree on the quantum of costs the defendant may forward a costs outline to me within 10 days and the plaintiff may forward any brief responding submissions restricted to issues of quantum within seven days thereafter.

ORDER

[44] I hereby order as follows:

(a) This action is permitted to proceed.

(b) Within 14 days each counsel shall have and communicate to the other instructions from their respective clients whether they wish to have the action stayed or whether they wish to proceed with the action at this time, and if so whether to proceed separately or together with action CV-08-363786. If they wish the action to proceed they must suggest an appropriate litigation timetable.

(c) Within 21 days the plaintiffs shall arrange a case conference with me. At the case conference, either a consent order will be made for a stay or a litigation timetable or in the absence of agreement a process will be set to determine these issues.

(d) Master Dash shall remain seized of any motions with respect to a stay of this action or the setting of a litigation timetable.

(e) This action will be set down for trial or otherwise terminated by April 30, 2012, failing which it will be dismissed for delay by the registrar under rule 48.14(5) without further notice. This deadline may be further extended by order of the court.

Master R. Dash

DATE: January 23, 2012

[^1]: See Amirrahmani v. Wal-Mart, 2011 ONSC 6608, [2001] O.J. No. 4987 (SCJ-Master) at paras. 2 and 36(e). See also Clements v. Greenlaw, 2009 33028 (ON SCDC), [2009] O.J. No. 2688(Div. Ct.) at para. 34. [^2]: Savundranayagam v. Sun Life Assurance Co. of Canada, 2008 54788 (ON SCDC), [2008] O.J. No. 4215, 73 C.P.C. (6th) 379 (Div. Ct..) at para. 13; Oberding v. Sun Life Financial Assurance Co. of Canada, [2010] O.J. No. 3122, 2010 ONSC 3303 (Div. Ct.) at para. 15; Riggitano v. Standard Life Assurance Co., [2009] O.J. No. 1997 (S.C.J.) at para. 34, affirmed [2010] O.J. No. 292, 2010 ONCA 70 (C.A.); Samborski v. Pristine Capital Inc., 2011 ONSC 3383, [2011] O.J. No. 2731 (SCJ-Master) at para. 2 [^3]: Khan v. Sun Life Assurance of Canada, 2011 ONCA 650, [2011] O.J. No. 4590 (C.A.), affirming 2011 ONSC 455, [2011] O.J. No. 510 (SCJ) [^4]: Savundranayagam, supra at para. 13; Oberding, supra at para. 15; Samborski, supra at para. 2, [^5]: Oberding, supra at para. 14; Samborski, supra at para. 2, [^6]: Oberding, supra at para. 15; Samborski, supra at para. 2, [^7]: Savundranayagam, supra at para. 13; Riggitano, supra SCJ at para 34, C.A. at para. 1. [^8]: Oberding, supra at para. 19 [^9]: Sepehr Industrial Mineral exports Co. v. Alternative Marketing Bridge Enterprises Inc. (2007), 2007 23175 (ON SC), 86 O.R. (3d) 550 (S.C.J.) at para. 21. To the same effect see Khan, supra (SCJ) at para. 13 [^10]: Canadian Champion Auto Services Ltd. v. Petro-Canada, 2011 ONSC 6794 (SCJ), quoting Marche d’Alimentation v. Giant Tiger Stores Ltd., 2007 ONCA 695 (C.A.) [^11]: Donskoy v. Toronto Transit Commission, 2008 47020 (ON SCDC), [2008] O.J. No. 3634 (Div. Ct.) at para. 11 [^12]: Donskoy, supra at paras. 13, 14 and 16 [^13]: Riggitano, supra at para. 34; Khan, supra (SCJ) at para. 14-15; Samborski, supra at para. 4, [^14]: Oberding, supra at para. 15; Samborski, supra at para. 4. [^15]: The other two factors are inadvertence in missing the set down deadline and moving forthwith after learning of the dismissal. [^16]: Scaini v. Prochnicki, 2007 ONCA 63, 86 O.R. (3d) 179, [2007] O.J. No. 299 (C.A.) at paras. 23-24. This approach was subsequently followed by the Court of Appeal in six subsequent decisions: Marché D’Alimentation Denis Thériault Lteé v. Giant Tiger Stores Ltd., 2007 ONCA 695, (2007), 87 O.R. (3d) 660, [2007] O.J. No. 3872 (C.A.); Finlay v. Van Paassen, 2010 ONCA 204, (2010), 101 O.R. (3d) 390, [2010] O.J. No. 1097 (C.A.); Wellwood v. Ontario (Provincial Police), 2010 ONCA 386, 102 O.R. (3d) 555, [2010] O.J. No. 2225 (C.A.); Hamilton (City) v. Svedas Koyanagi Architects Inc., 2010 ONCA 887, 104 O.R. (3d) 689, [2010] O.J. No. 5572 (C.A.); Machacek v. Ontario Cycling Assn., 2011 ONCA 410, [2011] O.J. No. 2379 (C.A.); Aguas v. Rivard Estate, 2011 ONCA 494, 107 O.R. (3d) 142, [2011] O.J. No. 3108 (C.A.) [^17]: Donskoy, supra at para 16. [^18]: Clements v. Greenlaw, 2009 33028 (ON SCDC), [2009] O.J. No. 2688(Div. Ct.) at para. 20 [^19]: Clements, supra at para. 31. [^20]: Clements, supra at para. 34. [^21]: Oberding, supra at paras. 9 and 15-17 [^22]: Kostruba and Sons Inc. v. Pervez, [2011] O.J. No. 2088 (SCJ) [^23]: Canadian Champion, supra at para. 81. In any event he notes that In Kostruba, Goodman J. found some explanation for the delay. [^24]: Canadian Champion, supra at para. 88 [^25]: Canadian Champion, supra at para. 82 [^26]: Canadian Champion, supra at paras. 84 and 88. [^27]: Riggitano, supra at para. 45. [^28]: Sepehr, supra at para. 20; Samborski, supra at para. 5. [^29]: Amirrahmani, supra, at para. 42 [^30]: Hamilton (City) v. Svedas Koyanagi Architects Inc., supra at paras. 20-22 [^31]: Hamilton (City) v. Svedas Koyanagi Architects Inc., supra at para. 23 [^32]: I came to a similar conclusion in Gowling Lafleur Henderson LLP v. Meredith, 2011 ONSC 2686, [2011] O.J. No. 2298 at para. 30 (SCJ –Master) [^33]: Gowling v. Meredith, supra, at paras. 12-18; Reider v. Lawyers’ Professional Indemnity Co., [1997] O.J. No. 4819 (OCGD) at para. 13. [^34]: Gowling v. Meredith, supra, at para. 25 [^35]: See Law society of Upper Canada website, Practice Resource Centre at http://rc.lsuc.on.ca/jsp/kt/loadKnowledgeTreeQuestionPage.do?levelId=11&sublevelId=21 [^36]: It was the raising of a limitations defence for the first time at the examinations for discovery in the Second Underlying Action that led the plaintiffs to commence the Lawyer’s Negligence Action as a precaution.