COURT FILE NO.: 10-47533
DATE: 2012/10/23
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Quick Refunds a segment of 1479253 Ontario Inc. & Jean Claude Dubuisson, Plaintiffs
AND
Leroy Dundas & Karel Dundas, Defendants
BEFORE: Mr. Justice Peter Annis
COUNSEL: David Dwoskin, for the Plaintiffs
Jacquie El-Chammas, for the Defendants
HEARD: August 17, 2012 and October 15, 2012
ENDORSEMENT on motions
Introduction
[1] Mr. Dubuisson, one of the plaintiffs and a member of the Law Society of Upper Canada, acting on his own behalf and for 1479253 Ontario Inc. (“Quick Refunds”) a corporation solely owned by him, appeared before me on August 17, 2012 on a motion to set aside an Order of the Local Registrar dated May 23, 2012 dismissing his action for delay.
[2] After Mr. Dubuisson indicated that he had been suffering emotional stress such that he ought to have engaged a counsel to act for him, and having regard to the inadequacies of the plaintiffs’ materials before the court, I adjourned the motion to allow him to retain counsel.
[3] The matter came back before me on October 15, 2012 at which time the plaintiffs were represented by new counsel. After hearing submissions and materials filed by the parties, I have concluded that the interests of justice, and in particular the merits of the plaintiffs’ case, require that the administrative dismissal be set aside, with costs. My reasoning supporting this conclusion follows.
Factual Background
[4] The statement of claim was issued on January 26, 2010. Mr. Dubuisson and his company 1479253 Ontario Inc carrying on business as Quick Refunds sought to recover on a series of loans made to the two individual defendants between March 2006 and August 2008 totalling $96,800.00.
[5] A statement of defence and counterclaim was filed on February 11, 2010. The defendants admit that the loans were made and an amount not exceeding $75,891.97 remains unpaid.
[6] The defendants claim that $21,500.00 was retained by the plaintiffs from amounts received on the sale of their home to one of their parents on which Mr. Dubuisson acted for them. Documents filed by the plaintiffs would indicate that only $2,400.00 was retained of the amount claimed.
[7] In their counterclaim, the defendants allege that Mr. Dubuisson registered an unauthorized charge of $120,000.00 on their property to secure the loans. Because of the unlawful charge and the refusal of Mr. Dubuisson to consent to the sale, the defendants claim damages in the amount of $100,000.00.
[8] The defendants brought a summary judgment motion on February 23, 2010 to dismiss the mortgage. Justice McLean allowed it with costs of $7,000.00. He concluded that the charge was “to a dissolved Ontario corporation and ought never to have been registered against title to the property” due to the failure of Mr. Dubuisson to maintain the corporation’s filings. He added “the principle of the corporation is a solicitor and ought to have been aware of its status”. No appeal was taken from this decision.
[9] The defendants brought a further motion for summary judgment on July 6, 2010 seeking to dismiss the plaintiff corporation’s action in its entirety. It was abandoned as Mr. Dubuisson had revived the corporation in the meantime.
[10] In the same motion, because Mr. Dubuisson had not paid the outstanding cost award of $7,000.00 ordered by Justice McLean, Justice Kershman ordered security for costs against the plaintiffs of $30,000.00, payable in installments on scheduled dates. The order included a paragraph providing that failure to pay the security for costs would be grounds for dismissal of the plaintiffs’ action.
[11] The plaintiffs paid $20,000.00, but failed to pay the remainder putting them in default as of December 30, 2010. Despite the plaintiffs’ failure to comply with Kershman J.’s order, the defendants did not move to dismiss the action. During all this period there is no evidence that the plaintiffs took any steps to move the action along.
[12] On February 10, 2012, a Status Notice was served on the plaintiffs advising that their failure to bring the matter into good standing within 90 days in the manner prescribed in the form would result in dismissal of their action for delay, with costs.
[13] The plaintiffs took no steps during the 90 day warning period to set the matter down or obtain an order from a judge or master as required.
[14] On May 17, 2012, after the expiration of the 90 day period, Mr. Dubuisson provided the defendants’ solicitors with an affidavit of documents and requested that they agree to proceed to mediation with a named mediator.
[15] By letter of the same date, Mr. Dubuisson advised the Local Registrar that the matter was not ready to be set down for trial, but that he had provided his affidavit of documents to opposite counsel requesting available dates for the mediation. He added that once mediation was completed, he would get in touch with the court to set the matter down for trial.
[16] On May 23, 2012, an order dismissing the action for delay with costs to the defendants was served and filed in accordance with Rule 48.14 of the Rules of Civil Procedures.
[17] On June 14, 2012, the plaintiffs filed a motion to set aside the dismissal order. It appears to have been an ex parte “basket motion”, inasmuch as there is an endorsement on the motion record dated June 21, 2012 requiring the plaintiffs to serve the defendants and file proof of service.
[18] On June 22, 2012, the defendants served and filed a motion returnable on August 17, 2012 for an order assessing the costs of the action and paying the same out of monies held as security for costs. The defendants were not aware at that time that the plaintiffs had brought a motion to set aside the dismissal order.
[19] On June 27, 2012, the plaintiffs filed a notice of return of their motion to set aside. They made the motion returnable on August 2, 2012, despite having been served with the defendants' notice of motion returnable on August 17, 2012.
[20] In the plaintiffs’ notice of motion, in addition to describing the amounts owing on the loans, the plaintiffs’ sole ground for setting aside the order was that: “The matter has never been mediated; therefore it could not be set down for trial.”
[21] The affidavit in support, in addition to repeating the foregoing statement, included reference to Mr. Dubuisson’s letters of May 17, 2012 to the defendants’ lawyers and the Local Registrar, as well as describing a conversation with opposing counsel who indicated that they were not interested in responding to his letter because of the dismissal order of the Registrar.
[22] On the return of plaintiffs’ motion on August 2, 2012, the plaintiffs refused the request of the defendants to consolidate the two motions. McMunagle J. adjourned the motion to set aside the order to August 17, 2012 so as to allow the two motions to be heard and decided by the same judge.
[23] Before me, when asked as to why the plaintiffs would not agree to hear the two motions together on August 2, 2012, Mr. Dubuisson indicated that they were unrelated matters.
[24] On August 12, 2012, Mr. Dubuisson filed a further affidavit explaining that since 2010 he had been suffering emotional distress due to a number of causes: the earthquake in Haiti in which family members were lost, the death of a close uncle, and his son leaving home for an unknown address without any contact for over one year.
[25] He further deposed that because of these events, which started occurring shortly after the claims against the defendants, he had lost motivation and energy to prosecute the action as the explanation for not fully complying with the security for costs order of Kershman J. The alleged psychological problems of Mr. Dubuisson were not supported by evidence of a physician.
[26] The affidavit did not attempt to explain why he failed to take any steps during the 90 day period or recognize the totally inadequate reasons advanced as to why the dismissal order should be set aside.
[27] In court, Mr. Dubuisson indicated that he had been emotionally distracted by these events to the point that he acknowledged that he should have engaged counsel to represent him on the motion. I agreed and allowed the matter to be adjourned to permit him to retain counsel. I awarded costs to the defendants of $3,000.00 for their appearances before me and McMunagle J. which he has paid.
[28] Mr. Dubuisson also attempted to pay into court the $10,000.00 installment remaining from the order of Kershman J. Payment was refused by court staff as being out of time. I ordered an extension until October 22, 2012 to pay the outstanding installment into court. I have received confirmation that payment of $10,000.00 has now been made.
[29] The plaintiffs filed a supplementary motion record and factum and the parties returned before me after a short adjournment on consent necessitated by the complications of the plaintiffs’ attempt to pay the monies into court.
[30] The new materials contain additional facts concerning Mr. Dubuisson’s career as a solicitor. Although called to the Ontario bar since 1994, the overwhelming majority of his practice has been in criminal matters and not civil litigation. His lack of familiarity with civil litigation contributed to mistakes acknowledged to have been made in the conduct of this litigation. His intention is to retain counsel until this matter is concluded.
Issues:
- Should the dismissal order be set aside?
- Should the plaintiffs’ failure to fulfill the security for costs order be considered?
Analysis
Issue 1 Should the dismissal order be set aside?
[31] The court has a broad discretion to set aside a Registrar’s Dismissal Order on motion brought forth with notice to the defendants. In accordance with Hernandez v. Western Assurance Co. 2011 ONSC 6042 (C.A.) the court is required to apply a holistic test to make the Order that is just and equitable in the circumstances:
a) Explanation of the litigation delay;
b) Inadvertence in missing the deadline;
c) Promise of the motion;
d) The presence of prejudice to the defendants; and
e) The relative merits of the case.
[32] A moving party is not required to satisfy each factor. Rather, the court should favour a “contextual” approach in which it weighs all relevant considerations to determine the result that is just. See Scaini v. Prochnicki, 2007 ONCA 63, 85 O.R. (3d) 179 (C.A.).
[33] While the merits of the action may not be an appropriate consideration in all cases involving administrative dismissal orders, it may be an appropriate consideration where the evidence is clear and unchallenged. 744142 Ontario Limited v. Ticknor Estate, 2012 ONSC 1640 at para. 59.
[34] The plaintiffs have the overall onus on the motion to demonstrate, at least prima facie, that the defendants have suffered no prejudice as a result of the delay, or if there is a presumption of prejudice, of rebutting the presumption. If the onus is met, then the burden shifts to the defendants to demonstrate actual prejudice. See Vivace Tavern v. Ontario, 2011 ONSC 11 at para. 15.
(a) Explanation of the Litigation Delay
[35] I agree with the defendants that the plaintiffs have difficulty explaining the delay in the progress of the litigation. After more than two years the plaintiffs have not yet served an affidavit of documents and the action has not been mediated.
[36] The plaintiffs argue that they were faced with numerous motions brought by the defendants which impeded their ability to prosecute the action. In particular they point to the large security for costs order as well as responding to a summary judgment motion. I am somewhat sympathetic to the complications caused by the security for costs motion. The plaintiffs were unable to make payment of the December 2010 installment.
[37] On the other hand, the defendants did not move to dismiss the action as entitled to by the order of Kershman J. but seemed content to allow the delay to continue. In addition, I take cognizance of Mr. Dubuisson’s admission that he was facing emotional problems from the various factors cited in his affidavit. I also accept the plaintiffs’ position that at no time was it ever Mr. Dubuisson’s intention to abandon his claim for repayment of the loans which have never been denied.
(b) Inadvertence in Missing the Deadline
[38] Again I am in agreement with the defendants that the plaintiffs did not take any steps to proceed with the action once the Status Notice was received on February 10, 2012.
[39] I do not agree with the plaintiffs’ submission that Mr. Dubuisson on behalf of the plaintiffs made attempts to address the Status Notice within the time period allotted. His first steps were taken on May 17, 2012, after the expiration of the 90 day period.
[40] His actions in writing opposing counsel and the office of the Local Registrar were of course inadequate, demonstrating either a profound failure to understand basic civil procedure processes, or perhaps reflecting his emotional difficulties.
(c) The Motion Must be Brought Promptly
[41] I am satisfied that the plaintiffs moved with some degree of promptness inasmuch as they filed a motion to set aside 22 days after the dismissal order. Unfortunately by inadvertence, it was improperly constituted, being an ex parte basket motion. It was rejected by the court with instructions to serve and file proof of service on the defendants. This was done on June 27, 2012.
(d) No Prejudice to the Plaintiffs
[42] I am in agreement with the plaintiffs that the defendants have suffered no prejudice which cannot be remedied by an appropriate order in costs, none of which I am aware of, or reducing the interest owing on the loans.
[43] The passage of time is not significant except in the calculation of the interest. The fact that the defendants have taken steps and incurred further costs following the dismissal of the action to recover their costs does not fall within the form of prejudice that I would consider meaningful when the plaintiffs have moved with some degree of alacrity, and but for improperly bringing the motion ex parte as a basket motion, would have been in advance of the defendants’ motion for costs.
[44] I may add that even in an adversarial context, parties are not prevented from putting an opposing party on notice that they will be bringing their motion for costs of the proceeding unless a motion to set aside is promptly brought. I say this because the plaintiffs’ motion should not have been unanticipated given their attempts, though ineffectual as they were, to move the matter along after the expiration of the 90 days, but before the dismissal order was issued.
(e) The Merits of the Action
[45] In my view, it would be unjust to prevent the plaintiffs from proceeding with their claim to recover on loans acknowledged owing by the defendants. This factor far outweighs the problems encountered by the plaintiffs in bringing the action forward or responding appropriately to the Status Notice.
[46] The defendants have advanced a counterclaim for $100,000.00 on the basis of the improperly registered mortgage on their property. The mortgage was dismissed by order of McLean J. on February 23, 2010 with costs of $7,000.00 payable by the plaintiffs. The damages alleged to have been caused by the placement of this mortgage were not particularized in the counterclaim, nor in any materials brought to my attention in this matter.
[47] It is evident that Mr. Dubuisson has made a number of mistakes in prosecuting this litigation. The defendants, as they are entitled to, have brought motions and secured orders striking the mortgage used to secure the loan, in addition to obtaining a stringent order for security for costs which has complicated the plaintiffs’ action.
[48] I attribute these problems, either to Mr. Dubuisson’s limited experience in civil litigation matters or emotional problems that he alleges have affected his capacity to act. It is acknowledged that he practices mostly in the area of criminal law, but for the occasional foray into the civil side, which in this case has almost proven his undoing for lack of the appropriate skills to represent himself and his company.
[49] This cannot take away from the fact however, that the plaintiffs have owed the defendants an amount approaching well over $100,000.00 on which no payments, either for principal or interest, have been made since the loans were advanced from 2006 to 2008.
[50] It would be a sad circumstance to think that a simple loan claim of this magnitude should be thrown out for procedural failures, particularly now that the plaintiffs have retained experienced counsel who promises to move the matter along smartly.
Issue 2 Should the plaintiffs’ failure to fulfill the security for costs order be considered?
[51] The court has jurisdiction to vary the amount of security for costs granted in a previous order at any time.
[52] The plaintiffs have paid all outstanding legal cost awards, in addition to demonstrating that they have the means to pay $30,000.00 into court when ordered to do so. They reside in Ontario and appear to have a meritorious action, implying that an award of costs should be in their favour should the matter proceed to final determination.
[53] Given the change in circumstances by the plaintiffs retaining new counsel, and their payment of outstanding costs awards and the payment into court of the security for costs order of Kershman J., I cannot see any basis why the security for costs order should be maintained.
[54] Accordingly, I order that no further security for costs are required and the amounts paid into court pursuant to the order of Kershman J. and my order of October 15, 2012 extending the time for doing so, be paid out of court to the plaintiffs.
Defendants’ Motion for Costs on the Dismissal of the Action
[55] As the order dismissing the plaintiffs’ action has been set aside, the defendants’ motion for costs on dismissal of the action is dismissed.
Costs
[56] In my view, the defendants should have reassessed their chances for success when new experienced counsel was retained by the plaintiffs and when it appeared that the plaintiffs were making honest attempts to complete payment of the outstanding installments of the security for costs order prior to the motion date.
[57] Based on the information now before the court, any fair reading of the merits of the plaintiffs’ action and the lack of prejudice of the defendants, should have resulted in the defendants consenting to an order setting aside the Registrar’s dismissal, despite some of the delays attributable to Mr. Dubuisson’s ineffectiveness as a litigation counsel.
[58] In this regard, I adopt and apply Master Haberman’s conclusions in Kay v. Bezjak, supra, as follows:
Rules 48.14 and 48.15 were never intended to confer an unfair advantage on defendants. Most counsel are well aware of this and as a result, though I usually find 1-3 of these cases on every list, almost all of them are resolved without opposition, assuming the evidence filed supports inadvertence is the reason for the delay. Those few cases that are argued are generally those involving a lengthy delay, a large gap between the dismissal order and the motion to set it aside and actual or a serious level of presumptive prejudice.
[59] Accordingly, I award costs to the plaintiffs in the all-in-amount of $4,000.00. This award reflects a portion of the amounts for fees, disbursements and HST claimed in the costs outline filed at the conclusion of the motion. The amount claimed is based on reasonable tariffs and time spent on the matter, which are comparable to those in the defendants’ costs outline.
[60] I have however discounted the plaintiffs’ award for a portion of the costs incurred by the defendants to present its motion for costs on the dismissal. I attribute the occurrence of this motion in part to Mr. Dubuisson’s failed attempt at obtaining the order setting aside the dismissal of his action by an ex parte basket motion, which was clearly inappropriate.
[61] The discount also recognizes the delay occasioned to the defendants and extra costs thrown away by my decision to adjourn the August 17, 2012 motion to permit Mr. Dubuisson to retain new counsel.
[62] The defendants were justified in the first instance to bring their motion for costs and defend against the plaintiffs’ motion to set aside the dismissal on the basis of the circumstances and file materials before the court prior to the adjournment. The fact that those circumstances changed as a result of the adjournment must be accounted for in my costs award.
Orders
(1) Leave is granted permitting the plaintiffs to bring this motion for an order setting aside the order of the Local Registrar dated May 23, 2012 dismissing the within action for delay.
(2) The order of the Local Registrar dated May 23, 2012 dismissing the within action for delay is set aside.
(3) The order of Justice Kershman dated July 6, 2010 ordering security for costs against the plaintiffs of $30,000.00 is vacated.
(4) Costs are awarded the plaintiffs in the all-in-amount of $4,000.00.
(5) Counsel for the parties shall confer and send an order on consent to my attention setting out their joint plan and timetable for completion of this action; failing agreement on which, they may make submissions no later than November 9, 2012.
Annis J.
Date: October 23, 2012
COURT FILE NO.: 10-47533
DATE: 2012/10/23
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Quick Refunds a segment of 1479253 Ontario Inc. & Jean Claude Dubuisson, Plaintiffs
AND
Leroy Dundas & Karel Dundas, Defendants
BEFORE: Mr. Justice Peter Annis
COUNSEL: David Dwoskin, for the Plaintiffs
Jacquie El-Chammas, for the Defendants
ENDORSEMENT on motions
Annis J.
Released: October 23, 2012