SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 07-CV-328669
MOTION HEARD: August 2, 2012

RE: 1125278 Ontario Limited c.o.b. as
Dean Myers Leasing (1995)

v.

On Route Professional Dry Cleaners
Inc. et al

BEFORE: Master Thomas Hawkins

COUNSEL:
Jermone H. Stanleigh for
moving plaintiff
Fax No. 416-924-2887

Maurice Vaturi for responding defendants
Anthony Moia and Vincenzo Moia
Fax No.: 416-665-5752

No one for other defendant On Route Professional Dry
Cleaners Inc.

REASONS FOR DECISION

[ 1 ] This is a motion by the plaintiff (“Dean Meyers”) under subrules 37.14 (1)(c) and (2) for an order setting aside the January 10, 2012 order of the registrar dismissing this action for delay. This is the second time the registrar has dismissed this action for delay.

[ 2 ] Subrules 37.14 (1)(c) and (2) provide as follows.

37.14 (1) A party or other person who,

(c) is affected by an order of a registrar,

may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.

(2) On a motion under subrule (1), the court may set aside or vary the order on such terms as are just.

[ 3 ] The registrar previously dismissed this action for delay on March 3, 2010. On May 18, 2011 Haberman M. made a consent order setting aside the first registrar’s dismissal order. At that time Haberman M. also made a timetable order for this action. That timetable order set a deadline of December 28, 2011 for setting this action down for trial.

[ 4 ] This action is in part against the defendants Anthony and Vincenzo Moia as the alleged guarantors of several Chevrolet truck leases executed in 2002. Dean Myers was the lessor under each lease and the defendant On Route Professional Dry Cleaners Inc. (“On Route”) was the lessee under each lease.

[ 5 ] On Route made an assignment in bankruptcy on February 13, 2006. This action was commenced on March 1, 2007. Dean Myers has not obtained an order granting it leave to commence this action as against On Route.

[ 6 ] Dean Myers has settled this action with the defendant Domenico Moia. The action has been dismissed as against him.

[ 7 ] I will now proceed to determine whether Dean Myers has met the four criteria for setting aside a registrar’s dismissal order which Dash M. laid down in Reid v. Dow Corning Corp. (2001), 11 C.P.C. (5 th ) 80 , using a contextual approach while considering and weighing all relevant factors in order to determine the order that is just in the circumstances of this case. See Scaini v. Prochnicki , 2007 ONCA 63 () , [2007] O.J. No. 299 per Goudge J.A. at paragraphs 23 and 24.

[ 8 ] The first Reid criterion is whether the plaintiff has provided a satisfactory explanation for the litigation delay.

[ 9 ] At the outset of this action the three Moia defendants served a demand for particulars of certain allegations in the statement of claim. The plaintiff took just over two years to respond to this demand for particulars. One of the particulars demanded was a copy of the truck leases and guarantees sued upon. The plaintiff provided copies of two of the leases sued upon but no signed guarantees. The bottom of the first page of each of the leases where the guarantees were located was cut off. On February 23, 2010 the plaintiff provided complete copies of two of the leases including the guarantee sections. One guarantee was unsigned. The other guarantee may have been signed by Vincenzo Moia alone.

[ 10 ] Dean Myers has not provided an explanation as to why it took so long to respond to the demand for particulars.

[ 11 ] The parties also agreed to a litigation timetable in April and May 2009 which provided deadlines for the completion of discoveries. Neither side complied with these deadlines. Attempts were made to set up discoveries but discoveries were never held. Dean Myers was to set this action down for trial by March 1, 2010. Dean Myers did not meet this deadline either, with the result that the registrar dismissed this action for delay for the first time on March 3, 2010.

[ 12 ] While the defendants Anthony and Vincenzo Moia must accept some of the responsibility for the overall delay, under our system of civil justice the plaintiff (here Dean Meyers) bears the primary responsibility for moving an action forward to trial.

[ 13 ] On the evidence before me, Dean Myers has not provided an explanation for the litigation delay and thus has not met the first Reid criterion.

[ 14 ] The second Reid criterion is whether the plaintiff (that is, Dean Myers) missed the deadline for setting the action down for trial due to inadvertence. This criterion is intended to identify situations in which a litigant or counsel are deliberately flouting court orders or the Rules of Civil Procedure or both.

[ 15 ] Here, under the timetable order which Haberman M. made, Dean Myers was to set this action down for trial by December 28, 2011.

[ 16 ] By December 9, 2011 the parties had agreed on a mediator and on a mediation date of February 8, 2012. However, neither side filed a Form 24.1 A (identifying the mediator’s name and a date for the mediation) with the mediation coordinator. Under subrule 24.1.09(5) this must be done by one of the parties before the action can be set down for trial.

[ 17 ] Dean Myers’ lawyer sent an agent to the court registry to set this action down for trial on December 28, 2011, the last day for doing so. The registry staff would not let him set the action down for trial because no one had filed the required Form 24.1A with the mediation coordinator.

[ 18 ] There simply was insufficient time left on December 28, 2011 for Dean Myers’ lawyer to complete a Form 24.1A, file it with the mediation coordinator and have his agent return to the court registry to set the action down for trial. As a result, the set down deadline in the order of Haberman M. was missed and the registrar dismissed this action for delay a second time.

[ 19 ] In my view, these facts amount to inadvertence in missing the deadline for setting this action down for trial. Dean Myers has therefore met the second Reid criterion.

[ 20 ] The third Reid criterion is whether the plaintiff has promptly brought the motion to set aside the registrar’s dismissal order.

[ 21 ] Dean Myers’ lawyer booked a hearing date of March 21, 2012 for the motion to set aside the registrar’s dismissal order. However he gave priority to other matters and did not prepare motion materials before March 21, 2012. That hearing date was lost as a result.

[ 22 ] Dean Myers’ lawyer then booked a hearing date of May 17, 2012 for the motion. Materials were served and filed on May 4, 2012. Responding materials were served and filed by May 10, 2012.

[ 23 ] The motion came before Haberman M. on May 17, 2012. She noted that this was a serious situation because this was the second time the registrar had dismissed this action for delay. She therefore directed both sides to deliver factums and briefs of authorities and adjourned the motion to August 2, 2012, a date cleared with the motions scheduling unit. I heard the motion on August 2, 2012.

[ 24 ] I consider the period of delay in bringing this motion to run from mid-January when Dean Myers’ lawyer learned of the dismissal order to mid-May 2012, a period of four months, when the matter came before Haberman M., because the Rules of Civil Procedure do not require that the parties to a motion of this kind to deliver factums and briefs of authorities. That said, I found the factums and briefs of authorities quite helpful in deciding this motion.

[ 25 ] While this motion could clearly have been brought sooner had Dean Myers’ lawyer been more diligent, I do not consider a period of delay of four months to be so great that I should dismiss this motion on that ground alone.

[ 26 ] Dean Myers has therefore met the third Reid criterion.

[ 27 ] I now turn to the fourth Reid criterion. In the context of this action that is whether the defendants Anthony and Vincenzo Moia have been significantly prejudiced in presenting their case at trial as a result Dean Myers’ delay in the prosecution of this action or as a result of steps taken following the dismissal of this action.

[ 28 ] The court takes note that witnesses’ memories tend to fade over time and that sometimes it is difficult to locate witnesses and documents. However to bar a plaintiff from proceeding with an action the defendant or defendants must lead evidence of actual prejudice. This might include evidence that specific documents have been lost over time or destroyed following a dismissal or evidence that specific witnesses have died or disappeared and the defendants have been unable to locate them despite diligent efforts to do so. While litigation is pending defendants must take care to obtain and preserve evidence. See Reid, supra, at paragraph 41.4 per Dash M.

[ 29 ] To my mind, the fourth Reid criterion is the most important one.

[ 30 ] Angelo Capogna, the general manager of Dean Myers, has sworn the only affidavit in support of this motion. His affidavit does not deal with the subject of prejudice to Anthony and Vincenzo Moia. Sometimes plaintiffs in motions like the present one tender affidavit evidence to the effect that all material witnesses are still available to testify at trial and that all material relevant documents have been preserved. Mr. Capogna’s affidavit does not address these points.

[ 31 ] Mr. Capogna does state in his affidavit that Dean Myers has a strong case against the defendants and that Vincenzo Moia signed a personal guarantee of one of the leases sued upon. The implication I draw from this statement is that Anthony Moia did not sign a guarantee of any of the truck leases sued upon.

[ 32 ] The defence motion record used on this motion includes two affidavits from Vincenzo Moia. The first affidavit was sworn on June 16, 2010 in response to Dean myers’ motion to set aside the registrar’s dismissal order of March 3, 2010 and deals with events up to June 2010. The second affidavit was sworn on May 9, 2012.

[ 33 ] Vincenzo Moia’s second affidavit of May 9, 2012 does address the subject of prejudice to him. He makes several points.

[ 34 ] He points out that the documents sued upon (truck leases and a guarantee) were signed in 2002, some ten years ago. He says that his recollection of signing such documents and the circumstances surrounding the signing of the documents is very vague.

[ 35 ] The amended statement of defence of the Moia defendants raises two issues respecting the allegations that they personally guaranteed the truck leases sued upon. First, they deny that they signed any guarantee of those truck leases.

[ 36 ] The denial also seems to be true for Vincenzo Moia and three of the four truck leases sued upon. So far as concerns the guarantee of the fourth lease which Vincenzo Moia may have signed, Vincenzo Moia says that he has a very vague recollection of signing the documents sued upon. He does not go so far as to say that he is unable to remember whether or not he signed any guarantee of any of the truck leases sued upon.

[ 37 ] In his second affidavit Vincenzo Moia says that his brother Dominico Moia can no longer assist him with Domenico Moia’s own recollection since Domenico Moia now suffers from dementia.

[ 38 ] On the evidence before me I am unable to weigh how serious this prejudice is. I do not know to what extent, if any, Domenico Moia was involved in the events surrounding the signing of the truck leases and guarantee in question. I do not know if the evidence of Domenico Moia would be helpful to Vincenzo Moia (e.g. I was present and Vincenzo Moia did not sign any guarantee) or harmful (e.g. I saw Vincenzo Moia sign at least one guarantee).

[ 39 ] The second issue which the amended statement of defence of the Moia defendants raises respecting the claim of Dean Myers on alleged guarantees is in essence that the assignment in bankruptcy of On Route discharged any liability of any Moia defendant who signed a guarantee.

[ 40 ] Since neither side disputes the fact that On Route made an assignment in bankruptcy on February 13, 2006, before this action was commenced, this defence is not one which depends upon the memories of witnesses. It is a matter of law (does the bankruptcy of the principal debtor – On Route – discharge any guarantor – Vincenzo Moia – from liability for the debts of the principal debtor?) or a matter of the interpretation of the language of the guarantee document which Vincenzo Moia allegedly signed.

[ 41 ] As I have said, Vincenzo Moia has sworn two affidavits that were used on this motion. Neither affidavit deals specifically with the subject of whether Anthony Moia has suffered prejudice that is different from the prejudice which Vincenzo Moia says that he has suffered. Anthony Moia did not swear any affidavit in connection with this motion. I therefore assume that Anthony Moia has not suffered prejudice serious enough to disclose to the court.

[ 42 ] As Dash M. said in Reid , while litigation is pending defendants must take care to obtain and preserve evidence. There is no evidence that promptly after being served with the statement of claim in this action in 2007 the Moia defendants took steps to determine who besides themselves might be helpful witnesses and took witness statements from those witnesses and prepared statements of their own evidence when their memories were five years fresher than they are today. Similarly there is no evidence that in 2007 the Moia defendants took steps to ensure that all documents relevant to the issues in this action were preserved pending the outcome of this action.

[ 43 ] The Moia defendants have yet to examine Dean Myers for discovery (The same is true of Dean Myers. Dean Myers has yet to examine Vincenzo and Anthony Moia for discovery.)

[ 44 ] There is no evidence that either side has approached the trustee in the bankruptcy of On Route to determine if the trustee still has documents relevant to any issue in this action or asked the trustee to preserve documents pending the outcome of this action.

[ 45 ] In his second affidavit Vincenzo Moia noted that Dean Myers has made a number of bold allegations of fraud by the defendants. He further stated as follows.

The bold allegations of fraud were denied in our defence, yet by now with the passage of time, it may be difficult to substantiate such denials properly with the proper records, especially since On Route had filed for bankruptcy six years ago and there was no apparent reason to retain records.

[ 46 ] This statement is speculative. Vincenzo Moia does not state that it will in fact be difficult to substantiate such denials. He merely states that it may be difficult to do so. Secondly, Vincenzo Moia does not state that any helpful records were actually thrown out or destroyed following the bankruptcy of On Route. He merely states that there was no apparent reason to retain records.

[ 47 ] Certainly, once the Moia defendants were served with the statement of claim in March 2007 there was an apparent reason to retain records.

[ 48 ] Dash M. said in Reid that sometimes the prejudice to a defendant takes the form of one or more witnesses who have died or disappeared. Here there is no evidence that any witness helpful to the defence has died or disappeared. I have already dealt with the subject of prejudice to the defence because Domenico Moia now suffers from dementia.

[ 49 ] These reasons for decision have dealt mainly with the Dean Myers’ guarantee claims. I am aware that Dean Myers has advanced other claims against the Moia defendants. The Moia defendants have not complained of prejudice in the defence of these other claims with the sole exception of the speculative statement respecting records discussed in paragraph [44] and [45] above.

[ 50 ] On this evidence I have come to the conclusion that Anthony and Vincenzo Moia have not suffered sufficient prejudice to justify me in allowing the registrar’s dismissal order to stand on that ground alone. In other words, Dean Myers has satisfied the fourth Reid criterion.

[ 51 ] As Goudge J.A. said in Scaini , supra , it is not necessary for a plaintiff like Dean Myers to show that it has met all four Reid criteria. Here Dean Myers did not meet the first Reid criterion. What is necessary for me to do is to consider and weigh all the relevant facts, balance the interests of the parties, and make the order that is just in the circumstances. Having do so, and considering the absence of material prejudice to Anthony and Vincenzo Moia, I have come to the conclusion that the just order in the circumstances is one setting aside the registrar’s dismissal order of January 10, 2012. So ordered.

[ 52 ] In his factum counsel for Dean Myers says that the only remaining steps for Dean Myers to take before trial is to file the trial record (if it has already been served) and go through mediation. I assume from this statement that Dan Myers has waived its right to examine Anthony and Vincenzo Moia for discovery. I therefore direct Dean Myers within 20 days of the final disposition of this motion to serve the trial record (if this has not already been done) and file it, and to proceed to mediation within 90 days of the final disposition of this motion.

[ 53 ] If either side wishes me to timetable the balance of this action they may write me requesting that I convene a case conference and make a timetable order.

[ 54 ] In disposing of this motion in the way that I have, I consider that I have granted Dean Myers a considerable indulgence. The price of an indulgence is the payment of the costs of those who have sought, unsuccessfully, to prevent its being granted. See Fox v. Bourget, (1987), 17 C.P.C. (2d) 94 (Ont. Dist. Ct.) .

[ 55 ] I therefore order Dean Myers to pay Anthony and Vincenzo Moia the costs of this motion fixed at $5,000 within 30 days.

Master Thomas Hawkins

DATE: October 22 , 2012