SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 54320

DATE: 2012/07/27

RE: ROBERT YOUNG (Plaintiff) – and – SUCCESSION STRATEGIES INC., DANIEL CROSS, SHAWN P. COMISKEY and THANE STENNER (Defendants)

AND BETWEEN:

SUCCESSION STRATEGIES INC., DANIEL CROSS, SHAWN P. COMISKEY and THANE STENNER (Plaintiffs by Counterclaim) – and – ROBERT YOUNG, AIDA VAN WESS (Defendants by Counterclaim)

BEFORE: JUSTICE IAN F. LEACH

COUNSEL: Paul Hendrikx, for the Plaintiff/Defendants by Counterclaim

S. Michael Robertson, for the Defendants/Plaintiffs by Counterclaim

HEARD: July 9, 2012

E N D O R S E M E N T

[1] There are three motions before the court in this commercial litigation, which stems from a failed business relationship and its aftermath:

a) a motion by the plaintiff (and defendant by counterclaim) Robert Young, and Aida Van Weiss (defendant to the counterclaim), dated December 21, 2011, requesting an Order compelling responses to refusals given by the defendant (and plaintiff by counterclaim) Shawn Comiskey during an oral examination for discovery on April 11, 2007, and an order compelling Mr Comiskey attend a further examination to address the refusals;

b) a responding cross-motion brought by the defendants (plaintiffs by counterclaim), dated March 20, 2012, requesting an Order dismissing the plaintiff’s claim for delay, and consequential relief; and

c) a companion responding cross-motion brought by the defendants (plaintiffs by counterclaim), also dated March 20, 2012, seeking alternative relief in the form of an Order compelling the plaintiff to attend a further oral examination to answer refusals given during earlier discovery examinations on September 23, 2005, and April 10, 2007, and also “to address any and all matters that have arisen, or may have arisen and be relevant to the issues in this action since April, 2007, and during the five year hiatus of this action”.

Background and Nature of Claims

[2] As noted above, the parties’ respective claims flow from a failed business relationship.

[3] There have been successive, increasingly extensive and lengthy pleadings exchanged in the litigation. As a proper understanding of the facts and issues in dispute is necessary for determination of the motions, (e.g., to assess the reasonableness of the alleged delay and allegations of resulting prejudice, relevance in relation to the refusal motions, and the advisability of further oral examinations), more than a broad overview of the factual allegations and claims is required.

[4] Summarizing what seem to be the principal allegations and claims of the parties:

• Prior to August of 2002, the plaintiff Robert Young and the defendant Daniel Cross had worked in the life insurance industry, and the defendant Shawn Comiskey was a Chartered Accountant with a tax consulting practice.

• In or around August of 2002, following earlier discussion and/or agreement, Young, Cross and Comiskey formally came together as shareholders in the corporate defendant, Succession Strategies Inc. (“SSI”), to develop and market life insurance products and tax planning/saving concepts. It is common ground that, after initial incorporation and share transfer arrangements, shareholding in SSI was divided as follows: Young (40%), Cross (40%), and Comiskey (20%).

• It also seems to be common ground that there was no written shareholders agreement. Young nevertheless contends, inter alia, that any “net available cash after expenses resulting from SSI income would be paid out in equal 1/3 shares to Cross, Comiskey and Young when available”. This is denied by the defendants.

• The plaintiff also alleges that he made an initial shareholder loan to SSI, which remains unpaid. The defendants deny the existence of any such loan, and in any case take the position that it is the plaintiff who owes money as a result of the disputed expenses noted below.

• From creation of SSI until late 2002, the plaintiff held the position of “president” and, according to him, extensively and successfully promoted and developed business for SSI. The defendants argue that the plaintiff’s performance and conduct were very problematic during that period. Such problems are said to have included an ongoing pattern of misrepresentation to clients and potential clients of SSI concerning products and opportunities, and the plaintiff’s improper charging of personal expenses, debts and obligations to the company.

• In late 2002, in circumstances that are disputed, Young then transferred legal ownership of his shares in SSI to Cross and Comiskey, and resigned his presidency. It is not disputed that he thereafter continued to work with/for the company, (although the nature of his position and employment is disputed).

• Young contends:

• that he transferred legal but not beneficial title to the shares, in order to placate the concerns of a major life insurance underwriter that allegedly was refusing to have dealings with SSI while Young remained an SSI shareholder because of Young’s troubled financial history and reputation, (which included two prior bankruptcies);

• that he agreed to transfer legal title to the shares only after reaching an unconditional agreement with Cross and Comiskey, later embodied in a document dated January 10, 2003, giving Young an option to reacquire a certain number of shares in SSI at a future date, (which he says was exercisable on or after January 10, 2004), in exchange for payment of a nominal amount;

• that the beneficial shareholding of SSI was altered on January 7, 2003, so as to henceforth make Young, Cross and Comiskey equal owners of the equity of SSI, (i.e., with each having a 33% beneficial shareholding interest); and

• that the previous agreement to equal one-third divisions of all available net distributable funds of SSI remained unchanged.

• As for the defendants, they contend:

• that disposition of the plaintiff’s shares in the company was necessitated by economic and business realities acknowledged and accepted by the plaintiff, as the future of SSI was bleak unless the major life insurance underwriter in question agreed to have dealings with SSI, and that was not going to happen given the underwriter’s expressed concerns about the plaintiff’s financial situation and the fact he had been bankrupt;

• that the plaintiff’s share sale and resignation as a director and/or officer were absolute, (at least until such time as the option to repurchase was properly exercised), leaving him without any company authority, beneficial interest in shares, or corresponding financial entitlements; and

• that the share repurchase option admittedly granted to the plaintiff nevertheless was qualified, conditional, and dependent on insurers being satisfied as to the plaintiff’s financial stability and consenting to the plaintiff holding shares in SSI.

• It is not disputed that Young continued to work for/with SSI throughout 2003, and into early 2004. However, the parties have vastly different views of what took place during that period. Young contends that he and his extensive “on the road” marketing efforts were responsible for the overwhelming majority of SSI revenue. The defendants contend that Young was achieving very little for SSI while misrepresenting his authority and position within the company to others, and acting contrary to the defendants’ instructions. They also allege that the plaintiff continued with serious abuse of expense claims and credit facilities made available to him by SSI and/or the other defendants personally, thereby requiring SSI payment or reimbursement of alleged business expenditures that actually were personal in nature. They say these issues were raised repeatedly with the plaintiff, who consistently refused to provide reimbursement or change his behaviour.

• The parties’ relationship deteriorated further in November of 2003, in circumstances disputed by the parties. In particular:

• Young says Cross and Comiskey unilaterally reallocated, as a personal expense to Young, expenses that previously had been considered business expenses payable/reimbursable by SSI.

• The defendants say that personal expenses of the plaintiff properly were charged against the plaintiff’s account with SSI, (more than offsetting and thereby extinguishing any alleged loan by the plaintiff to the company), following the earlier expressed concerns and challenges conveyed to the plaintiff, and the plaintiff’s refusal to provide repayment or reimbursement in relation to allegedly improper expense claims and abused credit facilities.

• Young’s business relationship with SSI, Cross and Comiskey then terminated completely in January of 2004, in circumstances that are also disputed. In particular:

• Young says this was done without any prior warning, that Cross and Comiskey used his known financial distress to pressure him into accepting a $100,000 payment in full satisfaction of his entitlements to/from SSI, and that Cross and Comiskey improperly refused to honour Young’s option to repurchase shares in SSI when he tried to exercise it on January 21, 2004.

• The defendants say formal termination of the parties’ relationship was the culmination of the pattern of misconduct, warnings and deteriorating trust outlined above, which made it impossible to continue any working relationship with the plaintiff. They contend that their termination proposal in no way reflected the plaintiff’s former interest in SSI or contributions to its business, or the value of SSI, but was simply an attempt to bring finality to the parties’ dealings, and facilitate the plaintiff’s departure and transition to other opportunities. Although not expressly stated in the pleadings, it is implicit in the defendants’ allegations regarding the supposedly conditional nature of the share repurchase option, (and certainly evident from the submissions made during argument of the motions), that the defendants take the position the alleged conditions were not satisfied.

• The plaintiff alleges that the defendants thereafter continued to deprive him of the shares in SSI to which he was entitled, as well as his agreed entitlement to one third of all SSI distributions. The defendants allege that, after leaving SSI, the plaintiff competed with SSI, and that both the plaintiff and Ms Van Wess published a number of damaging statements, orally and by email, wrongly accusing Cross, Comiskey and SSI of various forms of misconduct.

• The plaintiff commenced this litigation, claiming “oppression” relief pursuant to the Business Corporations Act, R.S.O. 1990, c. B15 as amended, including:

• a declaration that the plaintiff should be regarded as the beneficial owner of a certain number of shares in SSI, (and/or an order that SSI formally issue that number of shares to him);

• an order requiring SSI to purchase that shareholding from the plaintiff at a fair value to be determined by the court, as of a valuation date to be determined by the court;

• an order compensating the plaintiff for the proportionate share of distributions from SSI that he should have received in accordance with his shareholding (as it was beneficially or should have been), and the parties’ agreement; and

• an accounting to determine the alleged unpaid balance of the plaintiff’s loan to SSI.

• The defendants responded with a statement of defence and a substantial counterclaim, seeking a total of $1.1 million in damages from the plaintiff and Aida Van Wess for injurious falsehood, libel, slander, intentional infliction of emotional or mental distress, intentional interference with economic relations and/or aggravated, exemplary and punitive damages.

Litigation History

[5] The litigation has progressed as follows:

• On May 7, 2004, the plaintiff Mr Young commenced this action in the City of Windsor by issuing a statement of claim.

• On June 18, 2004, the named defendants delivered a statement of defence and counterclaim. The counterclaim added a number of parties to the litigation, (as defendants by counterclaim), including Ms Van Wess.

• Between June and October of 2004, both the plaintiff and the defendants amended their respective pleadings, revising the claim and counterclaim, and discontinuing certain claims against previously named individuals, (a defendant and a defendant by counterclaim), who are no longer parties to the litigation.

• On October 4, 2004, pleadings were closed.

• On various dates in September and November of 2005, the parties completed three days of oral discovery examination.

• On July 12, 2006, the matter proceeded to a settlement conference before a Master, at which time a trial date was fixed for November 14, 2006, with an estimated trial time of four days.

• In September of 2006, the plaintiff brought an abortive motion for summary judgment, which was dismissed on consent with fixed costs.

• In October of 2006, the plaintiff then brought a motion for leave to make further amendments to the previously amended statement of claim. The contested motion was argued on October 10, 2006. The following day, Master Pope released a decision granting leave as requested, (with further cost to the defendants), and adjourning the trial scheduled for November of 2006, but making a further order putting both parties on a tight timeline obviously designed to keep the litigation moving forward towards a trial in the near future, as originally contemplated. In particular:

o the plaintiff was to serve a fresh as amended statement of claim by October 18, 2006;

o the defendants were to serve their further amended statement of defence, if any, by November 17, 2006;

o if further oral examinations were required as a result of the amendments, they were to be completed by December 29, 2006;

o any undertakings given during those examinations were to be satisfied by February 16, 2007;

o any motions relating to discovery were to have been completed by March 30, 2007; and

o a further case conference was to be scheduled by the court after April 1, 2007, in order to schedule a new trial date, (although either party was given leave to request scheduling of the contemplated conference after February 16, 2007, if neither had brought motions relating to discovery).

• Both sides complied with the pleading amendment deadlines imposed by Master Pope’s order, (with the plaintiff delivering a fresh amended statement of claim on October 13, 2006, and the defendants delivering a statement of defence and counterclaim to the plaintiff’s fresh pleading on November 15, 2006). As described below, the balance of the court ordered timetable nevertheless fell by the wayside, apparently by mutual consent of the parties, in the circumstances described below.

• On November 7, 2006, the plaintiff (and defendants by counterclaim) served a notice of change of solicitors.

• On April 10 and 11, 2007, the parties moved forward with the contemplated further oral discovery examinations relating to the recent pleading amendments. While this happened approximately 9 weeks after the deadline set by Master Pope, the extension no doubt was agreed upon to accommodate the change in representation of the plaintiff and defendants to counterclaim.

• In May of 2007, the parties agreed to the making of an Order, on consent, transferring all aspects of the litigation from Windsor to London.

• As for matters relating to undertakings and refusals arising from the further oral examinations in April of 2007, and any resulting motions, one might have thought and expected that the parties would have reinstated and followed a timetable with intervals corresponding to that put in place by Master Pope, albeit adjusting the dates to allow for the postponement necessitated by changes in representation. (As noted above, that timetable had contemplated satisfaction of all undertakings within approximately six weeks of the further oral examinations, and completion of any and all discovery motions within approximately three months of those further oral examinations, to be followed by prompt efforts to secure early rescheduling of the trial that had been delayed temporarily by further amendment of the pleadings.) However, all parties apparently were content to abandon that court ordered timetable altogether. In particular, the uncontradicted evidence before me, (documented at least in part by the exhibits), is that:

o letters were exchanged between the parties throughout 2008 and well into 2009 regarding answers to undertakings given during the further examinations in 2007;

o the plaintiff (defendant by counterclaim) completed satisfaction of his undertakings on December 1, 2008; and

o the defendants (plaintiffs by counterclaim) had not completed their answers to undertakings in 2008, wrote in January of 2009 to advise that their efforts were continuing in that regard, and continued to fulfill undertakings and provide further documents up to and including October 15, 2009.

• Evidence filed on the motion via affidavits from the plaintiff’s principal counsel and the plaintiff himself indicates that the plaintiff always has maintained a desire to have the litigation moved forward to completion, but that further progress of the matter was delayed by unfortunate complications and developments within the law office of counsel now representing the plaintiff (and defendants to counterclaim). In particular, the associate lawyer originally dealing with follow-up on discovery issues left the firm, and principal counsel’s ability to deal with the matter personally was limited unexpectedly by the illness of the firm’s other senior partner, (who was unable to practice on a full time basis, necessitating coverage by the firm’s other senior counsel). Although the matter was assigned in succession to two further associates, in an effort to keep the matter moving forward, they also each left the firm without having done so. In the result, despite the desire of the plaintiff “at all times” to move forward, and having communicated that desire to his counsel, it remained very difficult for plaintiff counsel to pursue this matter well into 2011. None of this candid evidence was challenged or questioned in any way by the defendants.

• On April 19, 2010, in the midst of the complications described in the previous sub-paragraph, principal counsel for the plaintiff pro-actively wrote to counsel for the defendants, (i.e., without any complaint of delay or other correspondence from the defendants having prompted the communication). The letter provided a brief outline of the reasons for an acknowledged a lack of action on their part since September of 2009, expressly emphasized that this had “not been caused by lack of a desire by [the plaintiff] to move on with the litigation”. It concluded with an indication or hope that “the horizon [was] looking better”, and that plaintiff counsel would be in contact.

• Counsel for the defendants did not respond in any way to the letter described in the previous sub-paragraph. Indeed, there seems to have been no further communication of any kind exchanged by counsel between the letter of April 19, 2010, and November of 2011.

• On November 14, 2011, a new associate lawyer joined the plaintiff’s law firm and, after receiving initial training, was instructed almost immediately to review this matter and take action in moving it towards trial.

• On November 16, 2011, the new associate sent a letter to the defendants’ counsel noting that he had recently joined the plaintiff law firm, and that he would be assisting principal counsel in moving the matter forward to trial. The letter stated that any delay in pursuing the matter related to “transition issues” within the plaintiff law firm, and again emphasized that the delay did “not in any way reflect a desire of [the plaintiff] to delay or draw out” the litigation. It went on to indicate that plaintiff counsel were determining whether to take further action on defendant refusals and would “advise of same soon”. The letter concluded by stating an intention to file a trial record and place the matter on the assignment court list “once any outstanding issues with respect to undertakings and refusals [had] been dealt with”.

• Subsequent correspondence indicates that, over the course of the next month, (between November 16, 2011, and December 14, 2011), there was some degree of further communication between counsel by letter and telephone, (although a complete record of those communications was not placed before the court in relation to the parties’ motions).

• On December 14, 2011, counsel for the defendants wrote to plaintiff counsel, referring to an earlier letter from plaintiff counsel sent December 9, 2011, and a telephone conversation between counsel on December 13, 2011. In both, it seems plaintiff counsel had expressed an urgent desire for the position of defence counsel and/or the defendants, apparently in relation to refusals given during the earlier examinations. Counsel for the defendants responded by questioning “the emergence of [the] matter now”, given seasonal holiday commitments, and the fact that the file had “sat idle for well over two years”. (This appears to be the first complaint of delay expressed on behalf of the defendants.) The letter suggested a further period of time, (i.e., to January 15, 2012), to allow for the review of transcripts and documents subsequently produced, and to obtain client instructions. It also noted the possibility of a reciprocal motion in relation to refusals given during the plaintiff’s examination, and suggested that all motions proceed at the same time by way of a special appointment hearing.

• On December 21, 2011, the plaintiff (and defendants by counterclaim) brought their motion, initially returnable January 18, 2012, for an order compelling answers to refusals given during an oral discovery examination conducted April 11, 2007.

• On March 20, 2012, noting that the plaintiff (and defendants by counterclaim) had yet to set the action down for trial or take any steps to have it placed on the trial list, the defendants answered with their aforesaid cross-motions to dismiss the claims against them based on “intentional, inordinate, contumelious and inexcusable delay”, (which in their submission has created a “substantial risk that a fair trial is not now possible”), or the alternative relief of compelling the plaintiff to attend a further discovery examination. As noted above, this contemplated further examination would not only address refusals provided during discovery examinations on September 13, 2005, and April 10, 2007, but also “any and all matters that have arisen, or may have arisen and may be relevant to the issues in this action since April, 2007, and during the five year hiatus of this action”.

• The hearing of all three motions eventually was put over to a mutually agreeable special appointment hearing date on July 9, 2012.

• It is common ground that the action has not yet been set down for trial.

Rule 24.01

[6] The defendants (plaintiffs by counterclaim) move for dismissal of the plaintiff’s claim pursuant to Rule 24.01, the relevant portions of which read as follows:

24.01 (1) A defendant who is not in default under these rules or an order of the court may move to have an action dismissed for delay where the plaintiff has failed …

(c) to set the action down for trial within six months after the close of pleadings.

[Emphasis added.]

Default by Moving Party

[7] In response to the defendants’ motion, the plaintiff raised a threshold issue based on the provisions of the Rule italicized above. In particular, it was the plaintiff’s submission that the defendants are precluded from use of Rule 24.01 because they have defaulted on their obligation, pursuant to Rules 30.03 and 30.07, to provide a sworn affidavit of documents and a sworn supplementary affidavit of documents when further documents were discovered and produced. The authorities confirm that such defaults may render a defendant ineligible to move for a dismissal based on a plaintiff’s delay. See, for example, Ship v. Longworth (1988), 1988 4585 (ON SC), 65 O.R. (2d) 124 (Div.Ct.), and Olendzki v. W.A. Baker Trucking Ltd. (2006), 27 C.P.C. (6th) 338 (Ont.S.C.J.).

[8] However, appellate authority also indicates that the proviso of Rule 24.01 requiring a moving defendant’s compliance with Rules and Orders should not be regarded as absolute, and that a failing of a defendant moving for dismissal may not be “a serious enough breach to trigger the jurisdictional impediment of rule 24.01(1)”. See Susin v. Baker, [2004] O.J. No. 723 (C.A.), at paragraph 6. This flexibility no doubt reflects the Court’s inherent and over-riding jurisdiction relating to control of its own process, (addressed in more detail below in the context of addressing the plaintiff’s submissions regarding estoppel).

[9] In the circumstances of this case, I do not regard the technical failures identified by the plaintiff as defaults providing a sufficient basis, in and of themselves, to frustrate the defendants’ resort to Rule 24.01. In that regard:

a) the defendants provided the plaintiff (and defendants to counterclaim) with an unsworn affidavit of documents on April 20, 2005;

b) the only subsequent production identified and relied upon in the plaintiff’s responding motion record concerns further documentation supplied by the defendants in July of 2006;

c) the plaintiff (and defendants by counterclaim) were content to proceed with the earlier examinations in 2005 and 2007, (where the intended affiant noted on the unsworn affidavit of documents was present and examined under oath, and questioned about documentation), without requiring an oath or signature in relation to the unsworn affidavit, or any sworn supplemental/updated affidavit;

d) the plaintiff seems to have taken no issue whatsoever with the defendants’ failure to provide a sworn affidavit of documents or sworn supplementary affidavit of documents, nor to have advanced any request in that regard, prior to filing material in May of 2012 responding to the defendants’ motion to dismiss; and

e) plaintiff counsel fairly indicated, during the course of submissions, that the plaintiff really has not been prejudiced in any way by the suggested defaults of the defendants.

Estoppel

[10] The plaintiff also argued that the doctrine of estoppel should operate in this general context and in these particular circumstances to preclude the defendants from bringing their Rule 24.01 motion to dismiss for delay. In that regard, the plaintiff’s specific contention was as follows:

The reasons for delay and the intentions of the plaintiff were clearly communicated by the lawyers for the plaintiff and the defendants’ silence and accompanying conduct caused the lawyers for the plaintiff to rely on the assumption that the defendants did not strongly object to the delay. This conduct should cause the defendants to be stopped from being successful on this motion for dismissal for delay.

[11] The plaintiff’s estoppel argument should be rejected based on the evidence, and as a matter of policy.

[12] Factually, the relevant evidence does not satisfy the basic and well-settled requirements for application of the doctrine of promissory estoppel, or estoppel by conduct, as outlined by the Supreme Court of Canada in Maracle v. Travellers Indemnity Co. of Canada, 1991 58 (SCC), [1991] 2 S.C.R. 50, at paragraph 13:[^1]

The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted upon. Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position. In John Burrows Ltd. v. Subsurface Surveys Ltd., 1968 81 (SCC), [1968] S.C.R. 607, Ritchie J. stated, at p.615:

It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations.

This passage was cited with approval by McIntyre J. in Engineered Homes Ltd. v. Mason, 1983 142 (SCC), [1983] 1 S.C.R. 641, at p. 647. McIntyre J. stated that the promise must be unambiguous but could be inferred from circumstances.

[13] In this case, operation of the promissory estoppel doctrine effectively would require a threshold finding that the defendants, by their silence following delivery of the letter from plaintiff counsel on April 19, 2010, intended to alter the parties’ legal relations by implicitly extending an “unambiguous” representation or promise, of indefinite duration, that they would not rely on the plaintiff’s delay or move to dismiss on that basis.

[14] Such a finding is not warranted in these circumstances.

[15] A party’s silence may indeed amount to acquiescence and thus constitute conduct giving rise to promissory estoppel. See Canadian Newspapers Company Limited v. Kansa, 1996 2482 (ON CA), [1996] 30 O.R. (3d) 257, at p.16. However, this presupposes silence in the face of a definite proposal or suggested agreement to which the silent recipient is taken to have acquiesced; cf. the suggested abeyance agreement in Hurst v. Société Nationale de L’Amiante (2008), 93. O.R. (3d) 338 (C.A.), or the suggested contract in Beer v. Townsgate I. Ltd., 1997 976 (ON CA), [1997] O.J. No. 4276 (C.A.). The relevant communication in this case is an acknowledgment and explanation of the plaintiff’s delay, and perhaps a statement of the plaintiff’s hope/intention to do better. It nevertheless falls far short of any “unambiguous” express or implicit proposal that the defendants agree in any binding way to prospective waiver of any legal recourse they otherwise might have to address the plaintiff’s past delay and/or possible further delay.

[16] Beyond the insufficiency of the underlying factual matrix, application of the promissory estoppel doctrine in this context generally seems both unnecessary and inappropriate.

[17] The equitable doctrines, including promissory estoppel, were developed and applied as required to mitigate harsh and unjust results that otherwise would follow from rigid application of inflexible rules of common law. As noted below, authorities interpreting and applying Rule 24.01 establish and confirm a very broad discretion of the court in this context, prior to balancing the rights of the litigants:

a) to determine whether there has been “unreasonable” delay, based on a wide-ranging consideration of “the issues raised by the case, the complexity of the issues, the explanation for the delay, and all relevant surrounding circumstances”; and

b) to determine whether a defendant has sustained prejudice, by a similar wide-ranging consideration of such matters as “the availability of its witnesses, whether the evidence is largely documentary or based on the recollection of individuals, the efforts made by the defendant to preserve its evidence and any other relevant consideration”.

[18] The broad discretion inherent in Rule 24.01 therefore provides the court with sufficient flexibility to avoid injustice, without the intervention of equity. Bringing the equitable doctrine of estoppel to bear in this context would represent a needless complication.

[19] Nor would it be appropriate, as a matter of policy, to fetter the court’s discretion in relation to such matters by application of a doctrine developed primarily to govern the disposition of parties’ rights inter se. Indeed, doing so wrongly would suggest that consequences of delay should turn entirely on party agreement, (express or implied), and improperly ignore other important interests at stake which transcend those of parties to the litigation.

[20] In particular, the court, representing the public generally, repeatedly has emphasized the importance of litigation proceeding in a timely manner, and the corresponding fundamental importance of its inherent and overriding jurisdiction to control its own process and determine whether actions should be dismissed for delay. In Marché D’Alimentation Denis Thériault Ltée v. Giant Tiger Stores Ltd. (2007), 2007 ONCA 695, 87 O.R. (3d) 660, at paragraphs 24 and 25, Sharpe J.A. stated:[^2]

Rule 24.01 allows a party to move to dismiss an action for delay where the plaintiff has failed to prosecute the action in a timely fashion in accordance with the rules. Moreover, courts may dismiss actions for delay even when the relevant rules do not mandate it. A court has inherent jurisdiction to control its own process, which “includes the discretionary power to dismiss an action for delay”. Housser v. Savin Canada Inc. (2005), 2005 35779 (ON SC), 77 O.R.(3d) 251 at para. 9 (S.C.J.) As the Manitoba Court of Appeal wrote, “The power of a superior court to strike a matter for want of prosecution does not hinge on the niceties of the rules, but rather flows from the inherent power of the court to prevent an abuse of its own process.” Kuhr v. Pearlman (1991), 1991 11776 (MB CA), 76 Man.R. (2d) 67 at para. 16. In at least two cases, this court has characterized lengthy, unexplained delays as “an abuse of the court’s process”. In Susin v. Baker, [2004] O.J. No. 723, at para. 7 (C.A.), the court wrote that “even if the action could not be dismissed under r. 24.01(1), given all of the circumstances, it could properly be dismissed as an abuse of the court’s process”. See also Convay v. Marsulex Inc., [2002] O.J. No. 4655 (C.A.)

These rules rest upon an important principle: there is a strong public interest in promoting the timely resolution of disputes.

[Emphasis added.]

[21] When delay is brought to the court’s attention, the court’s ability to deal with the situation as it sees fit accordingly can and should not be constrained by the manner in which the parties have chosen to deal with or react to the situation, (as application of the doctrine of estoppel otherwise might suggest).

Application of Rule 24.01 - Analysis

[22] Determination of the defendants’ motion to dismiss for delay therefore turns not on their alleged defaults or notions of promissory estoppel, but application of the analysis generally brought to bear in relation to such motions.

[23] The test for dismissal of an action for delay, and corresponding factors and considerations, have been addressed and confirmed repeatedly by our appellate courts. See, in particular, Woodheath Developments Ltd. v. Goldman (2003), 66 O.R. (3d) at 732, Christie Corp. v. Lee (1999), 29 C.P.C. (4th) 181 (Ont.C.A.), and Armstrong v. Neil, 2006 17248 (ON CA), 28 C.P.C. (6th) 12, at paragraphs 11-26. Having regard to those authorities, the relevant principles and considerations include the following:

• The action should not be dismissed unless it falls within one of two categories:

1. a case where the plaintiff’s default is “intentional and contumelious”; or

2. a case where the defendant establishes that the plaintiff or his or her lawyers are responsible for delay that:

▪ is unreasonable, in the sense that that it is inordinate and inexcusable; and

▪ creates the likelihood of prejudice to the defendant, giving rise to a substantial risk that a fair trial might not now be possible for the defendant when the case is actually tried, (if it is allowed to continue).

• Cases warranting dismissal for “intentional and contumelious” delay, (the first category), are relatively rare.

• In determining whether there has been unreasonable delay, (the first required hallmark of the second category):

1. The court should make efforts to identify the relevant period of delay and its corresponding significance. While it may be appropriate in some cases to consider the time elapsed since commencement of the action, in other cases there may be a different proper starting point for measuring the relevant delay and assessing its implications.

2. The court should consider the issues raised by the case, the complexity of the issues, the explanation for the delay, and all relevant circumstances.

• In determining whether the defendant has sustained prejudice, giving rise to a substantial risk that a fair trial might not now be possible, (the second required hallmark of the second category):

1. The court should consider the availability of the defendant’s witnesses, whether the evidence is largely documentary or based on the recollection of individuals, the efforts made by the defendant to preserve its evidence, and any other relevant consideration.

2. It is presumed that memories fade over time, and an inordinate delay after the cause of action arose or after the passage of the otherwise applicable limitation period gives rise to a presumption of prejudice. Where the presumption arises, the defendant need not lead evidence of actual prejudice, and the action will be dismissed for delay unless the plaintiff rebuts the presumption.

3. Presumption of prejudice may be rebutted by evidence; e.g., that all documentary evidence has been preserved, that the issues in the lawsuit do not depend on the recollection of witnesses, or that all necessary witnesses are available with detailed recollection of the underlying events. The impact passage of time otherwise might have on witness recollections may be offset or neutralized in cases where memory can be refreshed if necessary by reference to considerable preserved documentation and/or the transcribed evidence from oral discovery examinations that took place at an early stage in the proceedings.

4. If the presumption of prejudice is rebutted, then the action still may be dismissed if the defendant leads convincing evidence of actual prejudice; (e.g., death of a witness, the inability to locate a witness, the inability of a witness to recall important facts, or the loss of important evidence).

5. Prejudice to the defendant is to be considered relative to the time the case will likely be reached for trial if permitted to proceed.

6. The court also should consider whether any of the relevant delay is attributable to the defendants.

• The court will then balance the right of the plaintiffs to proceed to trial with the defendant’s right to a fair trial, and make its decision.

[24] In this case, the defendants argued that the plaintiff’s claim fell into both the first and second categories of actions that should be dismissed for delay.

[25] As far as the first category is concerned, “contumelious” has been defined in this context as delay that has been “intentionally disdainful or disrespectful”, in which the delay has “showed a contempt for the action, the process or the defendants”. See DeMarco v. Mascitelli, [2001] O.J. No. 3582 (S.C.J.), at paragraphs 22 and 13. See also Hutchison v. Hirosik, [2007] O.J. No. 1042 (S.C.J.), at paragraph 10, where the court noted the Oxford English Dictionary definition of “contumelious” as an adjective describing “insolent or insulting language or treatment”, and wonders if the proper word contemplated in this context should be “contumacious”, which is defined as “stubbornly or willfully disobedient to authority”.

[26] In their motion material, the defendants sought to characterize the plaintiff’s delay as “contumelious”. However, their counsel fairly conceded during the course of submissions that the plaintiff’s delay fell short of that contemplated by the term. He instead submitted that the plaintiff’s action still fell within the first category of actions warranting dismissal for “intentional and contumelious” delay, as the delay was at least “intentional”. In that regard, he submitted that “intentional” in this context should encompass delay of which the plaintiff is aware but takes no timely steps to remedy or end.

[27] The defendants’ submissions in that regard must be rejected for at least two reasons.

[28] First, the authorities in this area uniformly describe the first category of cases warranting dismissal for delay by the conjunctive description of delay that is both “intentional and contumelious”. Both aspects of such delay are required in order to warrant dismissal. Indeed, it apparently is the egregious nature of the plaintiff’s attitude or behaviour, (the essence of which the term “contumelious” tries to capture or emphasize), that justifies dismissal for such delay without any consideration of possible prejudice to the defendant. Reading the first category description disjunctively, so as to permit dismissal for delay that is either “intentional or contumelious”, therefore would be contrary to authority and the rationale for the distinction between the two categories.

[29] Second, even if “intentional delay” alone could be considered a sufficient justification for dismissal, basic definitions of “intentional” and “intent” connote something more than mere awareness or knowledge. For example, the Concise Oxford English Dictionary (11th ed. revised) defines the word “intentional” as “done on purpose” or “deliberate”, and the word “intention” as an “aim or plan”. Both definitions suggest that an “intentional” situation or result is one that a person deliberately set out to achieve or put in place. Mere awareness or knowledge of a situation or result therefore does not justify a conclusion that the situation or result was intended, as it obviously is possible to know of a situation or result that one did not plan or bring about on purpose. In this case, for example, the plaintiff and his counsel clearly knew of and acknowledged the existence of delay, (as demonstrated by the letter sent by plaintiff counsel on April 19, 2010), but unquestioned evidence tendered in response to the motion to dismiss makes it clear that the delay certainly was not their aim or plan. In fact, delay was contrary to the plaintiff’s desire, and plaintiff counsel were attempting, (albeit without success), to address and remedy the delay. In the circumstances, I find it impossible to characterize the plaintiff’s delay as “intentional”, and suggesting the delay becomes “intentional” because a plaintiff knows of delay and takes no timely steps to end it is an unhelpful tautology. In effect, it attempts to suggest that delay becomes intentional because a plaintiff “knew of delay and was delaying”.

[30] If the plaintiff’s action is to be dismissed for delay, it therefore must be shown to fall within the second category of Rule 24.01 cases; i.e., whereby dismissal is warranted based on unreasonable delay creating the likelihood of prejudice to the defendant in the sense required.

[31] The relevant period of delay was disputed by the parties.

[32] In their motion material and submissions, the defendants argued that the period of delay extended almost five years; i.e., from conclusion of the further oral examinations in April of 2007, or possibly the consent order transferring the litigation from Windsor to London in May of 2007, until March of 2012 when the defendants brought their motion to dismiss. (The defendants do not fault the plaintiff for subsequent delay involved in bringing the parties’ motions on for a special appointment hearing.) In particular, the defendants alleged that the plaintiff took no steps during that approximate five year period to set the matter down for trial or move the action forward. This included a submission that the plaintiff’s refusal motion in December of 2011 should not be regarded as a bona fide step to move the litigation forward, ending the delay. Rather, the defendants submitted that the plaintiff’s motion was really a somewhat desperate attempt to preclude operation of “new” Rule 48.15(6)2, which arguably mandated the deemed dismissal of various types of actions, including ones more than six months old, not set down for trial, in respect of which no “step” had been taken between January 1, 2010, and January 1, 2012.

[33] In my opinion, the defendants overstate the relevant period of delay, and/or the period of delay they suggest includes delay for which the defendants were responsible. In that regard, as noted above, the unchallenged evidence confirms that the plaintiffs were still taking active steps to address undertakings and refusals until at least December of 2008, and that the defendants themselves still had not fulfilled undertakings and provided relevant documentation until at least mid-October of 2009.

[34] Nor am I willing to disregard the plaintiff’s attempts to follow up on the defendants’ refusals, via their correspondence in November of 2011 and service of motion material in December of 2011, as bona fide efforts to move the litigation forward and bring an end to the delay. Such a conclusion runs counter to the unchallenged evidence tendered by the plaintiff’s solicitors, and as a theory makes little sense. In particular, if the plaintiff had little or no genuine interest in following upon the defendants’ refusals, operation of Rule 48.15 could have been precluded by the simple expedient of setting the matter down for trial. Moreover, by virtue of Rules 48.04(2)(b)(iii) and 48.04(3), setting the matter down for trial would not have precluded the plaintiff from pursuing a motion, without leave, to compel answers to the defendants’ refusals.

[35] In my opinion, the real period of plaintiff delay extends from mid-October of 2009 to mid-November of 2011. (I note in passing that this period of approximately two years and one month also conforms to the indication by the defendants’ counsel, in his letter of December 14, 2011, that the file at that point had “sat idle for well over two years now”; two years, not four or five.) This is not to say that the more extended course of the litigation has no relevance; e.g., insofar as the overall passage of time may have a bearing on possible prejudice to the defendants. However, the relevant period of relevant delay is that approximate two year period.

[36] For the reasons that follow, I am not prepared to conclude in the circumstances of this particular case that the relevant period of delay constitutes unreasonable, inordinate or inexcusable delay, resulting in likely prejudice to the defendants, thereby warranting dismissal of the plaintiff’s action.

[37] The relevant delay, while not praiseworthy, was at least explained by the unwanted supervening challenges faced by the plaintiff’s solicitors, who proactively acknowledged the delay and provided reasons for the delay to defendants counsel long before any motion to dismiss for delay. Having regard to the nature and history of the litigation, the delay was lamentable but not inordinate or inexcusable in the circumstances - particularly insofar as the defendants’ own approach to the litigation and complete silence subsequent to the acknowledgement of delay reasonably may have suggested to the plaintiff and plaintiff counsel that the additional passage of time represented no concerns or risk of serious prejudice to the possibility of a fair trial, (possibly for the reasons identified below).

[38] In any event, this case does not involve circumstances or a period of delay comparable to the authorities relied upon by the defendants.

[39] In particular, as noted above, there is nothing to suggest impropriety, (in the sense of intentional and contumelious delay, deliberately ignored warnings, multiplicity of successive abortive proceedings, or other egregious conduct), which warranted the dismissals for delay in Susin v. Baker, [2004] O.J. No. 723 (C.A), or Lafontaine-Rish Medical Group Ltd. v. Global TV News Inc., 2008 476 (ON SCDC), [2008] O.J. No. 76 (Div.Ct). Nor does the relevant period of delay come close to the five years of inexcusable delay in Woodheath Developments Ltd. v. Goldman, 2003 46735 (ON SCDC), [2003] O.J. No. 3440 (Div.Ct.).

[40] In my opinion, this case more closely resembles De Marco v. Mascitelli, [2001] O.J. No. 3582 (S.C.J.), where there was no plaintiff misconduct, but the litigation had remained static for three-and-a-half years. Treating that longer period of relevant delay as “borderline”, the court declined to regard it as sufficient to warrant dismissal without evidence of prejudice:

In my judgment the defendants in the within case have established that there has been delay that is longer than one would ordinarily hope. Although the plaintiffs herein did not strenuously argue the point, I believe the delay in the circumstances of this case is really borderline. It is no doubt longer than it should have been but it is not so long as to immediately assume that it must be prejudicial to a fair trial.

[41] As far as prejudice in this case is concerned, it was common ground that the primary events giving rise to the plaintiff’s oppression claims occurred in or about January of 2004, and that the plaintiff’s claims accordingly were subject to a limitation period of two years subject to discoverability, (which was not an issue in this case). Were it not for commencement of the plaintiff’s action, the limitation period accordingly would have expired in or about January of 2006. As the relevant period of delay occurred entirely outside the limitation period, it gives rise to a presumption of prejudice.

[42] Given that presumption, the defendants were not required to lead evidence of actual prejudice. They nevertheless made efforts to do so through an affidavit sworn by the defendant Mr Comiskey, whose evidence suggested that the plaintiff’s delay prejudiced the defendants’ ability to have a fair trial in the following ways:

• Mr Cross left SSI almost six-and-a-half years prior to the swearing of Mr Comiskey’s affidavit in March of 2012, (i.e., placing the departure in or around October of 2005), has retired from the business world, and recently expressed concerns to Mr Comiskey that his memory and ability to recall matters has faded, potentially putting the defendants at a marked disadvantage at trial.

• Various witnesses or potential witnesses who might reasonably be expected to give evidence, (including Thane Stenner, Judy Bolton/Hatcher, Chris Schnarr and other unspecified individuals), “might have been able to give evidence in support of the defendants’ position”, but have no personal stake in the outcome of the litigation and therefore lack incentive to recall events with clarity after the passage of many years.

• It was the intention of the defendants to call the plaintiff’s mother, Patricia Young, as a witness at trial, but she died on April 25, 2010.

[43] In addition to the evidence of its principal counsel outlined above, documenting the progress of the action and reasons for delay, the plaintiff tendered sworn affidavit evidence from Mr Young and from Andrew Corbett, (a law clerk working with the plaintiff’s principal counsel), addressing the matter of alleged prejudice. That evidence includes the following:

• Confirmation that oral discovery examinations of the parties took place on various successive dates in 2005 and 2007, generating extensive transcripts documenting the evidence of the parties.

• Evidence that the defendant Mr Cross gave evidence on December 1 and 2, 2010, in the context of an appeal to a reassessment under the Income Tax Act, about his business relationship with his co-defendant Mr Comiskey and the plaintiff Mr Young. (This evidence includes a judgment from the Tax Court of Canada, dated September 7, 2011, together with extended Reasons for Judgment delivered the same date, confirming that Mr Cross did indeed give evidence, reviewed by the Tax Court, in relation to such matters.)

• Evidence from Mr Young that his deceased mother was in no way involved in his business relationship with the defendants, and to Mr Young’s knowledge, had no relevant evidence to provide at the trial of this matter.

[44] Based on this evidence, the nature of the case, the litigation history, and the submissions of the parties, I find that the plaintiff has rebutted the presumption of prejudice that otherwise may have existed, and that the moving defendants have failed to lead convincing evidence of actual prejudice in the sense required.

[45] My considerations in that regard include the following:

• This is commercial litigation, in which documentation of transactions plays a significant role, and where the primary issues focus on the actions and agreements of the principal parties; e.g., as to the terms of their business relationship, their shareholding and profit distribution arrangements, the terms and conditions of the alleged share purchase option, and conduct of the plaintiff relied upon by the defendants as justification for refusing to honour the alleged share purchase option. These are fundamental issues going to the core of the parties’ relationship and therefore likely to be remembered by the parties, especially after the commencement of formal litigation focused on those very matters. They are also matters in respect of which the parties themselves are likely to have much more involvement and information than non-parties.

• The litigation was commenced shortly after the events in question, and therefore well within the relevant limitation period. This in turn led to relatively early exchange and preservation of all relevant documentation, (subject to the limited refusals addressed by the parties’ respective motions), as well as detailed questioning and transcribed documentation of the parties’ evidence relating to the issues in dispute. In Armstrong v. McCall, supra, the Court of Appeal specifically noted the ability of witnesses in commercial litigation cases to refresh memories if/as necessary by reference to documentation, and the general ability of parties to refresh memories using transcripts of discovery examinations taking place at an early stage of the proceedings. In my opinion, such considerations are likely to apply in this case as well.

• Subject to the specific points addressed below, the evidence offered by the defendants in support of prejudice was quite vague and did little more than request court recognition of the general proposition that memories fade over time. In effect, however, this simply reiterates the acknowledged presumption, confirmed by the authorities and noted above, that is brought to bear when the otherwise applicable limitation period has expired. Where there is evidence rebutting the presumption, and the defendant seeks to lead evidence of actual prejudice, something more must be required than reliance on the presumption. In particular, it cannot be sufficient to simply give the names of possible witnesses, allude to the possible existence of other unspecified witnesses, and suggest that any or all may have unspecified difficulty recalling unspecified topics relating to unspecified issues in the litigation.

• Evidence of the suggested inability of Mr Cross to give evidence at this stage is undermined by the above considerations relating to the use of documentation and transcripts to refresh memory, by the similarly vague nature of his professed inability to recall matters with clarity, by the willingness and apparent ability of Mr Cross to give evidence about the same business relationship in December of 2010 in the context of tax litigation, and by the fact that the evidence of the supposed inability is hearsay despite Mr Cross still being a party to the litigation and still being represented by the same defence counsel. (As indicated by the Court of Appeal in Armstrong v. McCall, supra, at paragraph 34, “a finding of actual prejudice based on untested hearsay evidence is not enough to justify the Draconian measure of depriving the [plaintiff] of an opportunity to prove his case on the merits”.)

• The defendants’ evidence as to the supposed prejudice arising from the passing of Mrs Young is similarly vague. In particular, there is nothing whatsoever in the evidence before me to suggest what information Mrs Young might have had relating to the issues in dispute, and the suggestion of Mrs Young having any such information is flatly contradicted by that of Mr Young, who indicates that his mother had nothing to do with his business affairs. If so, it seems improbable that she would have had anything to say relating to the issues in dispute, except in a very peripheral way. It also seems probable, given her obvious relationship to the plaintiff, that she would have been a hostile witness from the defendants’ perspective, and disinclined to offer them much by way of assistance. In any event, I am left without any real evidentiary basis to conclude that Mrs Young’s passing has prejudiced the defendants in any meaningful way.

[46] The defendants’ professed concerns about prejudice arising from the passage of time, and the impact on witness memories in particular, might have carried more credibility had the defendants themselves not been equally content to let progress of the litigation meander and stall.

[47] In that regard, I note that, notwithstanding the apparent departure of Mr Cross from SSI in or around October of 2005, expiry of the otherwise applicable limitation period in January of 2006, and Master Pope’s order effectively directing the parties to secure a new trial date in early 2007, the defendants were still working on satisfaction of undertakings and additional document production well into 2009, without having expressed or exhibited any concern whatsoever about the impact passage of time might have on party or witness evidence. Moreover, during the subsequent period of delay and prior to bringing their motion to dismiss for delay, the defendants apparently took no steps whatsoever, through correspondence or otherwise, to secure progress of the plaintiff’s claim -- or their own substantial counterclaim, (which similarly was allowed to languish).

[48] On the latter point, authority seems somewhat contradictory; i.e., when addressing the relevance of a defendant’s lack of effort to move litigation forward in the face of a plaintiff’s delay.

[49] For example, in Albrecht v. Meridian Building Group Ltd. (1988), 27 C.P.C. (2nd) 213 (Ont.Div.Ct.), at p.215, the Ontario Divisional Court reasoned as follows:

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

[Emphasis added.]

[50] In Armstrong v. McCall, supra, at paragraph 26, the Court of Appeal similarly noted the possible duty of the defendants to move the case forward.

[51] However, in Hurst v. Société Nationale de L’Amiante, supra, at paragraph 41, the Court of Appeal upheld a motion judge’s rejection of a plaintiff’s suggestion that there was an onus on defendants to move a case forward, or that defendants waived their right to object to delay by not doing so.

[52] Earlier Court of Appeal authority suggests the proper approach to assessing the possible impact of defendant action or inaction on motions to dismiss for delay is not absolute, but a case specific exercise. In particular, in Farrar v. McMullen, 1970 555 (ON CA), [1971] 1 O.R. 709 (C.A.), speaking for a unanimous court, Chief Justice Gale opined as follows:

I do not agree that in all cases a defendant must attempt to spur the plaintiff on or lose his right to successfully apply for dismissal of the action for want of prosecution. As in so many other instances, it all depends upon the particular facts as to whether such an order will go in the circumstances. … I do not wish to be taken as endeavouring to discourage solicitors for defendants from giving notice or collaborating with solicitors for plaintiffs before embarking upon a motion for dismissal of the action. I simply wish to make it clear that their failure to do so will not necessarily preclude them from succeeding on a motion if one is brought.

[Emphasis added.]

[53] In this case, counsel for the moving defendants alluded a number of times to the supposed dilemma faced by defendants faced with delay: to press for progress in the litigation and formal resolution/closure pursuant to the Rules, or avoid taking any steps that might “stir the pot” or “breathe new life” into dormant litigation that otherwise eventually might be terminated eventually by voluntary plaintiff abandonment or a defence motion somewhere further down the road, (i.e., to dismiss based on more accumulated delay and corresponding prejudice).

[54] With respect, the latter strategy and use of Rule 24.01, (i.e., embracing prolonged and mounting delay to lay in the weeds, and hope they grow tall enough to choke the plaintiff’s action without a substantive hearing), seems the antithesis of the guiding interpretive principle in Rule 1.04 emphasizing that the rules should be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits”. [Emphasis added.]

[55] Based on the authorities noted above, a defendant faced with delay who fails to take any steps to press for progress or move the matter forward to formal resolution may not necessarily be precluded from eventually seeking relief pursuant to Rule 24.01. However, it seems to me that, at the very least, a defendant’s intervening failure to take such steps or express any concerns whatsoever about mounting delay may undermine the credibility of later arguments that the delay has caused the defendant prejudice serious enough to warrant a dismissal without the plaintiff having an opportunity to argue the claim on the merits. That, in my view, is the case here.

[56] For the above reasons, the defendants’ motion for dismissal of the plaintiff’s action is dismissed.

MOTIONS ON REFUSALS, AND REQUEST FOR FURTHER EXAMINATIONS

[57] Dismissal of the defendants’ Rule 24.01 motion makes it necessary to consider the plaintiff’s motion on refusals given by the defendant Mr Comiskey, as well as the defendants’ cross-motion on refusals given by the plaintiff.

[58] As noted above, both motions include requests for orders compelling re-attendance of the relevant parties for further oral examinations.

[59] In considering whether to grant the relief requested, I think it important to note and emphasize that both motions are brought in clear contravention of Master Pope’s order of October 11, 2006, which neither side has sought to vary or otherwise address.

[60] Speaking for the court, Master Pope, faced with the necessity of adjourning a matter that was just weeks away from a scheduled trial date, clearly intended to keep the matter moving forward towards a rescheduled trial in the very near future. To that end, the parties were put on an extremely short figurative tether, which included an express direction that the hearing of all discovery motions was to be completed by March 30, 2007.

[61] Both sides nevertheless were content to entirely disregard that court ordered direction.

[62] Both sides did so well before the period of complications and delay addressed above.

[63] Both sides now come before the court with discovery motions more than five years beyond the court ordered deadline for such motions.

[64] As noted and emphasized above, (in the context of addressing the plaintiff’s estoppel arguments), the court’s interest in controlling its own process transcends those of the parties inter se. Express case management orders of the court therefore should not be ignored by simple express or implicit agreement of the parties.

[65] Where parties fail to comply with interlocutory orders, Rule 60.12(c) provides the court with broad discretion to make such other orders as may be just.

[66] In the circumstances of this case, I believe Master Pope’s order and the dilatory conduct of both parties would suffice to justify dismissal of all the parties’ very belated discovery motions.

[67] However, in an effort to focus the parties on what seem to be the real issues in dispute, and having regard to the general principle and reality that discovery facilitates resolution, I am prepared to consider the granting of further limited relief in relation to the refusals, in the manner set out below.

[68] I nevertheless am not content to direct or permit further attendances and oral examinations in relation to the refusals, the scheduling and completion of which would extend the litigation and possibly, (if not probably, given the history of the litigation), lead to further disputes and motions.

[69] For the same reasons, I certainly am not content to direct or permit an entirely fresh discovery, as requested by the defendants, to “address any and all matters that have arisen, or may have arisen and may be relevant to the issues in this action since April, 2007”. For the reasons that follow, I also fail to see how any intervening developments would have much (if any) bearing on the issues raised by the litigation, as framed by the pleadings.

[70] Before turning to the specific refusals in question, I generally note, as I did during hearing of the motions, that the submissions and transcript references to which I was referred strongly suggest that the litigation occasionally has drifted substantially from its moorings, as represented by the pleadings.

[71] Reduced to the essentials, the plaintiff claims:

a) that he owned a definite share of the company pursuant to alleged agreements (including the option agreement), with entitlement to a corresponding share of its value;

b) that he similarly was entitled to a definite agreed share of the company’s net income distributions; and

c) that he is still owed money in relation to an alleged loan to the company, (which arguably depends not only on proof of the loan, but on what the parties expressly or implicitly agreed in relation to the characterization and treatment of expenses).

[72] The plaintiff does not advance any “frees tanding” or “floating” claim for indeterminate damages. Nor does he claim an entitlement to an indeterminate or apportioned share of the company’s value or net distributions based on any form of quantum meruit claim, divergence or use of any particular corporate opportunities, or the particular origins of any corporate value or distributions. Nor has he advanced any claim for wrongful dismissal.

[73] As framed, the plaintiff’s claims therefore seem destined to stand or fall on the alleged agreements regarding shareholdings, income distributions, loans and expenses - all of which effectively are denied by the defendants.

[74] In the circumstances, it seems to me that detailed inquiries about how the corporation came to have or not have a certain value, (as opposed to determining what the relevant value was at the time when the corporation arguably should be compelled to make a retroactive purchase), what may have generated the corporate income available for distributions, (as opposed to determining what the quantum of that income was at material times, or whether the plaintiff had an entitlement to the alleged agreed share in them), or alleged misconduct by the plaintiff, (except insofar as it relates to the disputed expenses and satisfaction of the alleged conditions of the repurchase option at the time the plaintiff tried to exercise it), have peripheral relevance at best - and perhaps none at all.

[75] Similarly, given how the defendants have framed their pleading, insofar as the alleged conditional nature of the option agreement is concerned, the focus of inquiries in that regard should be on whether the alleged conditions were or were not satisfied at the time the plaintiff attempted to exercise the option. The defence otherwise does not warrant a free-ranging and detailed examination of the plaintiff’s entire financial dealings and situation over the years.

[76] With those general observations in mind, I turn to the specific refusals identified in the parties’ motion material.

[77] Using the same numbering as that used in the chart of Undertakings and Refusals submitted by the plaintiff:

1. This information is relevant to understanding the operations and relations of SSI, which in turn is relevant to determining its value, and therefore should be provided. The plaintiff has indicated that it would be content to have an unredacted copy of the document in question produced on a “solicitors eyes only” basis, and that should be done.

2. The relevant questioning focused on determining the particular sources of SSI’s indicated revenues; i.e., a request for a breakdown showing the portion of SSI revenue stemming from swap transactions from January of 2004 to date, and then on a further request for more particulars of the breakdown to indicate the particular clients associated with those swap transactions. On my reading of the transcript, the first was the subject of an undertaking, and pursuant to Rule 31.07(4), therefore should be produced in any event. (This relates to the only undertaking identified in the chart submitted by the plaintiff.) However, the identity of SSI clients and their continued ability to generate revenue for SSI is relevant to a valuation of the company in any case, and therefore also should be provided.

3. The relevant questions focused on determining the portion of company revenue, from January 2004 onwards, derived from clients with whom SSI was in contact prior to the plaintiff’s departure. For the reasons set out above, such an apportionment of revenue sources does not seem necessary or relevant, having regard to the manner in which the claim has been advanced. The refusal should stand.

4. The identity of SSI’s alleged “strategic partners” is relevant to a determination of the company’s value, and should be disclosed.

5. Whether or not SSI’s strategic partners include the particular names suggested should be answered by the response to the previously refused question number 4, supra. However, questions about the particular names should be answered anyway for the same reason, (and not because there seems to be any relevance, based on the pleadings, as to how such strategic partners may have been “brought to the table”).

6. Again, the identity of SSI clients and their continued ability to generate revenue for SSI is relevant to a valuation of the company, and this information therefore should be provided.

7. The names of these additional SSI clients should be provided, for the same reason.

[78] Using the same numbering as that used in the chart of Refusals submitted by the defendant:

1. This refusal was given during an examination of Mr Young on September 25, 2005; i.e., well before October of 2006, when the defendants were contesting the plaintiff’s amendment of pleadings in order to preserve the trial date scheduled for November of that year, and when Master Pope adjourned the trial for the purpose of allowing the parties to address only those matters stemming from the amendments. In the circumstances, the defendants should not be permitted to belatedly revisit and pursue this earlier refusal now. In any case, information about the specifics of debt cleared by the plaintiff’s earlier bankruptcies is irrelevant for the reasons set out above. The refusal should stand.

2. I do not see how the requested information is at all relevant to the issues in dispute. The refusal should stand.

3. The requested information about the plaintiff’s possible competitive activity following his departure from SSI is not relevant to the issues as framed by the pleadings. In particular, there is no counterclaim for breach of fiduciary duty, diversion of a corporate opportunity, breach of a non-competition covenant, or any similar claim. Valuation of SSI’s remaining business or quantification of its income distributions does not require examination of the plaintiff’s subsequent business or income. The refusal should stand.

4. Details concerning the specific remaining balance of a particular debt owed by the plaintiff to a non-party as of the date of his examination in April of 2007 are not relevant to the issues as framed by the pleadings; e.g., to whether the alleged conditions of the share repurchase option were satisfied when the plaintiff purported to exercise the option in January of 2004. The refusal should stand.

5. Given how the plaintiff’s claim has been framed, I do not how the passing reference in his pleading to having devoted himself to the business of SSI has any relevance to the issues really in dispute, apart from the possible propriety of his claimed expenses; e.g., if specific claimed expenses actually were incurred in relation to another enterprise. However, I do not see how production of the requested T4 slips and similar tax documentation would advance matters on that front in any meaningful way. The refusal should stand.

6. The refusal of this requested information and documentation should stand for the same reason as that given in the previous sub-paragraph.

7. The refusal in relation to this requested information and documentation should stand for the same reason as that given in relation to refusal number 3, supra.

8. The refusal in relation to this requested information and documentation should stand for the same reason as that given in relation to refusal number 3, supra.

9. The refusal in relation to this requested information and documentation should stand for the same reason as that given in relation to refusal number 3, supra.

10. The refusal in relation to this requested information and documentation should stand for the same reason as that given in relation to refusal number 3, supra.

11. The refusal in relation to this requested information and documentation should stand for the same reason as that given in relation to refusal number 3, supra.

12. The refusal in relation to this requested information and documentation should stand for the same reason as that given in relation to refusal number 3, supra.

13. The refusal in relation to this requested information and documentation should stand for the same reason as that given in relation to refusal number 3, supra.

14. The refusal in relation to this requested information and documentation should stand for the same reason as that given in relation to refusal number 3, supra.

15. The refusal in relation to this requested information and documentation should stand for the same reason as that given in relation to refusal number 3, supra.

ORDER

[79] For the above reasons, an order or orders shall go as follows:

a) The defendants’ motion to dismiss the plaintiff’s claim for delay is dismissed.

b) In relation to the plaintiff’s motion to compel answers to refused questions, and a further attendance by the defendant Mr Comiskey at an oral examination to address the same, the defendants shall provide the plaintiff with the information and/or documentation requested by the refused questions identified in items 1, 2, 4, 5, 6 and 7 of the Undertakings and Refusals chart filed by the plaintiff, as well as the document referenced by the undertaking indicated therein, for review only by the plaintiff’s solicitors. The plaintiff’s motion is otherwise dismissed. In particular, there shall be no further oral examination in relation to the information and documentation produced by the defendants in response to the previously refused questions.

c) The defendants’ motion to compel answers to questions refused by the plaintiff, a further attendance by the plaintiff at an oral examination to address the same, and a further discovery examination for discovery, is dismissed.

COSTS

[80] If necessary, the parties may address costs of the motions by way of written submissions, not to exceed three pages in length, (not including bills of costs), to be served and filed within 15 days of the release of this decision.

“Justice I. F. Leach”

Justice Ian F. Leach

DATE: July 27, 2012

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