1147335 Ontario Inc., et al. 2012 ONSC 6505
COURT FILE NO.: CV-07-086847-00 CV-07-86848-00 CV-07-86849-00
DATE: 20121129
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
VAL METAL FABRICATIONS LTD.
Plaintiff
William G. Scott, for the Appellant
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1147335 ONTARIO INC. carrying on business under the firm and style of WESTON ROAD MANAGEMENT
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1298781 ONTARIO INC. c.o.b. under the firm name and style of LANSDOWNE PROPERTY MANAGEMENT
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1241676 ONTARIO INC. c.o.b. under the firm name and style of HUMBER PROPERTY MANAGEMENT
Defendants
Leroy A. Bleta, for the Respondents
HEARD: November 16, 2012
REASONS FOR DECISION
LAUWERS J.:
[1] The Plaintiff seeks to set aside administrative dismissals in actions CV-07-086847, CV-07-86848SR and CV-07-86849, which I will refer to in these reasons by the last three digits.
[2] For the reasons set out below, I dismiss the Plaintiff’s motions with costs.
The Facts
[3] Action 847 claiming $58,851 relates to invoices dated from June 6, 2005, to October 20, 2005; action 848SR (Simplified Rules) claiming $23,256 relates to invoices dated from December 13, 2005, to September 13, 2006, and action 849 claiming $57,114 relates to an invoice dated September 13, 2006.
[4] All three Statements of Claim were issued on December 7, 2007, against the three related Defendants. On January 9, 2008, the Plaintiff’s counsel at the time, Jay H. Krieger, wrote to the Defendants’ lawyer, Leroy A. Bleta, stating: “My instructions are to proceed with these matters as expeditiously as possible.” The Statements of Defence in 848SR and 849 were dated February 2, 2008, and in 847 the Statement of Defence was dated February 20, 2008; they were served and filed shortly thereafter. The pleadings in all three actions were noted closed on or about March 2, 2008. The Plaintiff took no steps to advance the actions.
[5] On June 16, 2008, the Court’s Notice of Action Dismissal (Defence) in 848SR was sent to the Plaintiff’s counsel. The action in 848SR was dismissed as abandoned on August 11, 2008, and the Order was sent to the Plaintiff’s counsel.
[6] On March 1, 2010, the Court’s Status Notices: Action Not on a Trial List in actions 847 and 849 were sent to the Plaintiff’s counsel. On June 10, 2010, the Plaintiff’s actions in 847 and 849 were dismissed for delay and the Orders were sent to Mr. Krieger.
[7] The Plaintiff brought Notices of Motion dated March 10, 2011, to set aside all three Local Orders, returnable March 22, 2011. They were adjourned to this hearing.
[8] The Defendants do not deny that the Plaintiff provided services. The defence is more technical, asserting that:
The defendant has a strict management policy of requiring purchase orders to be executed by its authorized personnel prior to any work being performed. This was communicated to plaintiff representatives at all material times.
[9] The defence factum asserts simply that:
These actions apparently arise out of an alleged contract for elevator repairs and service. There is no written contract or agreement, and there is no claim for quantum meruit, and the time for doing so has expired.
[10] The Defendants also assert that the arrangements between the Plaintiff and the Defendants were affected by illegality since the Plaintiff’s employees who carried out the work were not licensed to do so.
Issues
[11] The legal principles on setting aside administrative dismissals are set out in a number of cases including Marché D'Alimentation Denis Theriault Ltée et al. v. Giant Tiger Stores Ltd., (2007), 2007 ONCA 695, 87 O.R. (3d) 660 (C.A.), Scaini v. Prochnicki (2007), 2007 ONCA 63, 85 O.R. (3d) 179 (C.A.), and Shome v. Apotex Inc., 2012 ONSC 5708, [2012] O.J. No. 4896 (Master R. Dash). The analysis involves the four Reid factors, after Reid v. Dow Corning Corp., [2001] O.J. No. 2365, 11 C.P.C. (5th) 80 (S.C.) at para. 41, rev’d on other grounds [2002] O.J. No. 3414, 48 C.P.C. (5th) 93 (Div. Ct.): the explanation for the litigation delay, inadvertence in missing the deadline, bringing the motion to set aside the dismissal promptly, and the absence of prejudice to the defence. The burden of proof is on the Plaintiff.
Analysis
[12] I consider each of the Reid factors.
The Plaintiff’s Explanation for the Litigation Delay
[13] In Marché D'Alimentation Denis Theriault Ltée the Court of Appeal adopted the following description of this factor at paragraph 12:
The plaintiff must adequately explain the delay in the progress of the litigation from the institution of the action until the deadline for setting the action down for trial as set out in the status notice. She must satisfy the court that steps were being taken to advance the litigation toward trial, or if such steps were not taken to explain why ... If either the solicitor or the client made a deliberate decision not to advance the litigation toward trial then the motion to set aside the dismissal will fail.
[14] In Marché D'Alimentation Denis Theriault Ltée Sharpe J.A. added a gloss at paragraph 23: “The Reid test’s requirement of an explanation for the litigation delay ties into a dominant theme in modern civil procedure: the discouragement of delay and the enhancement of an active judicial role to ensure timely justice.” He noted at paragraph 25:
These rules and cases rest upon an important principle: there is a strong public interest in promoting the timely resolution of disputes…The interest of litigants involved in the civil justice system in timely justice is obvious. Litigants are entitled to have their disputes resolved quickly so that they can get on with their lives. Delay multiplies costs and breeds frustration and unfairness.
[15] In Aguas v. Rivard Estate, 2011 ONCA 494, [2011] O.J. No. 3108 the Court of Appeal considered an explanation for delay that was rooted in the confounding effects of a second motor vehicle accident. Rosenberg J.A. noted at paragraph 16, distinguishing the case from Marché, that:
This action was not proceeding with lightning speed but steps were being taken. Discoveries were held in August 2005 and April 2007 before the dismissal of the action. The pace of the litigation was also complicated and directly affected by the second accident. Obviously, the assessment of damages from the first accident would be impacted by the second accident. …
The court set aside the dismissal order and reinstated the action, noting at paragraph 21 that: “The appellant continued to move the action along, participating in five examinations for discovery with respect of the two actions, before and after the first action was dismissed,” and that there was no actual prejudice or reliance on finality on the respondent’s part.
[16] Here, however, there is no evidence, as defence counsel rightly asserts:
…to support Mr. Krieger’s bald assertion that “my client and I had intention to set the matter down for trial in accordance with the timetable that we discussed”, or, that “the matter was proceeding in the ordinary course and the parties were also attempting to negotiate a resolution”. Contrary to Mr. Krieger’s initial suggestion, there were NO attempts to negotiate to any of the three actions at any material time.”
[17] Plaintiff’s counsel did not prepare and serve Affidavits of Documents, did not arrange examinations for discovery and did not communicate with counsel for the defence. Although Mr. Krieger deposed that he prepared draft Affidavits of Documents, I draw the contrary inference from the fact that Val Tersigni, the Plaintiff’s principal, testified that he did not recall seeing any drafts before he saw the Affidavit of Documents sworn February 22, 2012, and no evidence of earlier drafts has been provided by the Plaintiff despite an undertaking to do so. He did not preserve relevant documents as he would normally have been instructed to do.
[18] The Plaintiff has provided no explanation for the litigation delay that happened after pleadings were closed on March 2, 2008, in any of the three actions. That said, the evidence does not establish that the Plaintiff, its principal or its lawyer intended to abandon the actions.
Inadvertence in Missing the Deadline
[19] In Marché D'Alimentation Denis Theriault Ltée the Court of Appeal adopted the following description of this factor at paragraph 12:
The plaintiff or her solicitor must lead satisfactory evidence to explain that they always intended to set the action down within the time limit set out in the status notice, or request a status hearing, but failed to do so through inadvertence. In other words the penultimate dismissal order was made as a result of inadvertence.
[20] As noted, on June 16, 2008, the Court’s Notice of Action Dismissal (Defence) in 848SR was sent to the Plaintiff’s counsel at the time, Mr. Krieger. The action was dismissed as abandoned on August 11, 2008, and the Order was also sent to him.
[21] Mr. Krieger’s evidence is that he notified Mr. Tersigni on August 18, 2008, that action 848SR had been dismissed and that he “would do what is necessary to get matter restored”. Nothing was done. The matter languished until March 2011 when these motions were brought. Mr. Scott concedes that he can offer no explanation for this lengthy delay, except for Mr. Krieger’s sparse evidence: “Through inadvertence and mistake, my assistant failed to diary the file to bring a Motion and I failed to review the file myself and bring the Motion.”
[22] On March 1, 2010, the Court’s Status Notices: Action Not on a Trial List in actions 847 and 849 were sent to the Plaintiff’s counsel. Mr. Krieger filed Affidavits in both actions, saying:
I believe that on or about March 1, 2010, I received a Status Notice: Action Not on a Trial List from the Registrar indicating that the action will be dismissed ninety (90) days thereafter unless one of the steps as set out in the Notice was taken.
My system unfortunately did not diarize the date for the dismissal in my electronic calendar. In addition, my elderly aunt in New York City fell ill in April 2010 and being the only family member able to travel, I made three trips to see her and arranged for her transfer to hospital, then to a nursing home, and then back to her home with a live-in caregiver.
[23] On March 12, 2010, Mr. Krieger discussed the three collection files with Mr. Tersigni and, according to his handwritten note, informed his client of the receipt of the Status Notices; the need to meet, review, sign and serve Affidavits of Documents, to ask the court for Status Hearings in all three matters, and to “take a prescribed step before June 1st (emphasis in original note).” Mr. Krieger deposed that he:
…then forwarded those notes to my legal assistant, Lucy, with the instructions that she schedule a status hearing or motion for the implementation of this timetable. The timetable I had in mind included a provision that the matter be set down for trial by on or about December 31, 2010.
[24] Mr. Krieger added: “Unfortunately, and notwithstanding the instructions given to my legal assistant, neither a status hearing nor a motion to implement the timetable was ever brought and the action was dismissed by the Registrar.” On June 10, 2010, actions 847 and 849 were dismissed for delay and the Orders were sent to Mr. Krieger.
[25] As I stated earlier, despite this sorry record, there is no evidence to suggest that the Plaintiff or counsel wanted to abandon the cases; the inadvertence is still inadvertence even though it might also be negligence on Mr. Krieger’s part.
Bringing the Motion to Set Aside the Dismissal Promptly
[26] In Marché D'Alimentation Denis Theriault Ltée the Court of Appeal held at paragraph 12 that a Plaintiff must demonstrate that it moved forthwith to set aside the dismissal order as soon as the order came to its attention.
[27] There is no doubt that the Plaintiff, or more directly its counsel, fails under this requirement. The Plaintiff once again proffers inadvertence as the explanation that it now asks the court to indulge.
[28] In relation to action 848SR Mr. Krieger deposed:
The explanation I have for the delay in bringing the motion to set aside the Registrar’s order of dismissal is inadvertence. I simply and completely inadvertently failed to ensure that a motion date was obtained to set aside the dismissal.
[29] In relation to actions 847 and 849, Mr. Krieger was on holiday when the dismissal orders were received and did not return until June 21, 2010. The Plaintiff’s factum fairly summarizes Mr. Krieger’s Affidavit:
Mr. Krieger’s ability to deal with this and other files was complicated by a very busy period in his real estate practice, a vacation by his legal assistant, deaths in his wife’s family and an injury to his elderly mother and the subsequent heart attack by his elderly father both of whom required his personal care and attention in their treatment and convalescence.
Mr. Krieger then went on a short holiday in November, 2010. On his return he had a problem with his office email which he had to deal with and then became ill for a number of days.
As a result of foregoing issues, he did not at that time turn his attention to bringing a motion to set aside the Registrar’s Dismissal Order.
[30] In actions 847 and 849, Mr. Krieger provided the same explanation:
The explanation I have for the delay in bringing the motion to set aside the Registrar’s Order of dismissal is inadvertence. Given that I had thought this matter was being dealt with through a motion establishing a new timetable, and given that I was at the time focusing my attention on caring for my parents and the other matters outlined above, I simply and completely inadvertently failed to ensure that a motion date was obtained and a new time table established.
[31] The Defendants’ counsel received a facsimile on February 7, 2011, from Mr. Porco, then Plaintiff’s counsel, advising that motion materials to set aside the dismissals of the three actions would be served shortly. The Plaintiff brought Notices of Motion dated March 10, 2011, to set aside all three dismissal Orders, returnable March 22, 2011, and these motions are now before me.
[32] In respect of action 848SR, by my calculation the delay between the dismissal of the action on August 11, 2008, and the Plaintiff’s motion to set aside the dismissal on March 10, 2011, is about 31 months. With respect to actions 847 and 849, which were dismissed on June 10, 2010, the delay is about nine months.
[33] In my view, Mr. Krieger simply failed to address the dismissal orders with sufficient professional urgency. This is not a situation in which inadvertence, which is already recognized by the second Reid factor, should be indulged again.
No Prejudice to the Defendant
[34] In Marché D'Alimentation Denis Theriault Ltée the Court of Appeal held at paragraph 12 that: “The plaintiff must convince the court that the Defendants have not demonstrated any significant prejudice in presenting their case at trial as a result of the plaintiff’s delay or as a result of steps taken following the dismissal of the action.”
[35] I agree with Mr. Scott that the burden is on the Plaintiff to dispel the concern about prejudice to the defence, and if the Plaintiff successfully does so, the evidentiary burden then shifts to the defence to establish prejudice.
[36] In Wellwood v. Ontario Provincial Police, 2010 ONCA 386, 102 O.R. (3d) 555, Cronk J.A. for the majority described the principles involved in assessing prejudice at paragraph 60:
… as I read the applicable authorities, the expiry of a limitation period can give rise to some presumptive prejudice, the strength of which increases with the passage of time. Where the presumption arises, the plaintiff bears the burden of rebutting the presumption, on proper evidence. Where the presumption is so displaced, the onus shifts to the defendant to establish actual prejudice.
[37] At paragraph 62, Cronk J.A. approved Master Dash’s analysis in Kassam v. Sitzer, [2004] O.J. No. 3431, [2004] O.T.C. 731 (S.C.), aff’d [2005] O.J. No. 1849 (Div. Ct.) at paragraph 52:
If the delay is inordinate and is inexcusable, in that it results from the inadvertence, inattention or negligence of counsel (or a self-represented plaintiff), then the court must ascertain whether the delay gives rise to a substantial risk that a fair trial would not be possible. A “substantial risk” may not require proof of actual prejudice. Prejudice will be presumed after passage of a limitation period and it will be presumed that memories of witnesses fade over time. If the defendant has been unaware of a claim being asserted either by notice of the claim or by service of the statement of claim, such that he has been unable to undertake a timely investigation, then this may be taken into account in determining whether there is a substantial risk that a fair trial would not be possible. The plaintiff can overcome the presumption of prejudice for example by evidence that relevant documents have been preserved, key witnesses are available, certain elements of the claim may not be in issue, and in the case of personal injury, that medical evidence of the progress of the injuries is available. The defendant would then have a burden of adducing actual evidence that there is a substantial risk that, as a result of the delay, a fair trial would not be possible.
[38] It appears that in action 848SR the limitation period expired in 2007, before the action was started. Mr. Scott offers no argument on this point. In actions 847 and 849 the limitation period would have expired in 2008 at the latest, so there is a clear presumption of prejudice operating in favour of the defence. Counsel for the defence did not hear from counsel for the Plaintiff between the latter’s letter of January 9, 2008, advising of his intent to proceed “expeditiously”, and new counsel’s letter of February 7, 2011, advising of the Plaintiff’s intent to bring motions to set aside the dismissals, a period of about three years.
[39] The Plaintiff submits that there would be no prejudice to the defence in reinstating all three actions. Mr. Tersigni personally supervised the work that was carried out by a crew of two employees and can testify about it, although he is now unable to identify or to locate them. If his evidence is not accepted then the Plaintiff loses and that is its risk. The Plaintiff submits that the principals of the Defendant are still in place including Roslyn Brown who swore the Affidavit for the Defendants. They were aware of the actions and should have preserved any relevant evidence.
[40] Ms. Brown deposes for the Defendants that: “There has been a turnover of the Defendant’s personnel of the three properties in terms of personnel since 2005 and 2006 when the alleged events occurred.” She adds that:
…contrary to the Plaintiff’s Statement of Claim @ paragraph 6 no invoices, let alone supporting documents have been disclosed. It is extremely unfair and prejudicial for the Defendants to now have to retrace events that took place between five and six years ago. The Defendants’ operations involved many transactions, contracts and deals that are “papered” such that it would now be a virtual impossibility that any and/or all of the Defendants’ witnesses would be able to recall the facts in issue in these actions in which not even invoices have been produced.
[41] Since Ms. Brown swore the Affidavit, an Affidavit of Documents has been prepared including invoices and some supporting documentation. Even so, Mr. Tersigni testified that he does not have records of the employees; they have been destroyed. All that remains is in the Affidavit of Documents. This is a two-edged sword which can work to the detriment of both the Plaintiff in establishing the claims, and the Defendant, in resisting them.
[42] Some cases turn more on the evidence and others more on the law, and the prejudice analysis should take account of the differences. In this case, while the evidence is not pristine given the flow of time, the real issue, without overly discounting the other technical defences, appears to be not whether the Plaintiff did the work, but that its two employees were not licensed to do it, giving rise to a possible defence of illegality. The relevant facts seem capable of proof even yet. This attenuates the factor of prejudice to some extent. I am not able to find that the prejudice is significant on the facts.
Balancing the Reid Factors
[43] In Scaini v. Prochnicki, the Court of Appeal noted that it is an error in principle to require the moving party to satisfy each of the four criteria separately to succeed in setting aside a Registrar’s order. Instead, the Court found that the factors must be weighed and considered using a contextual approach. The cases add principles to be considered in the balancing task
[44] I agree with the observations of Master Dash in Shome at paragraph 5:
…the two competing themes articulated in the various decisions of the court of appeal, on one hand the discouragement of delay, which could result in the denial of reinstatement in appropriate cases even when there has been no actual prejudice to the defendant and on the other hand the importance of determining actions on their merits and granting an indulgence to an innocent plaintiff who should not be denied his day in court due to the actions of his lawyer, provided there be no prejudice to the defendant.
See also Hamilton (City) v. Svedas Koyanagi Architects Inc., 2010 ONCA 887, 104 O.R. (3d) 689, per Laskin J.A. at paragraphs 20-23.
[45] In Marché D'Alimentation Denis Theriault Ltée Sharpe J.A. noted at paragraph 34: “expeditious justice is only one value to be weighed against others and that delay may be excused where necessary to ensure complete justice.” He added:
Expeditious justice must be balanced with the public interest in having disputes determined on their merits. Where, despite the delay, the defendant would not be unfairly prejudiced should the matter proceed for resolution on the merits, according the plaintiff an indulgence is generally favoured.
[46] But this general orientation can be displaced. Sharpe J.A. invoked the principle of finality at paragraph 37 as “a central principle in the administration of justice,” and explained at paragraph 38:
When an action has been disposed of in favour of a party, that party’s entitlement to rely on the finality principle grows stronger as the years pass. Even when the order dismissing the action was made for delay or default and not on the merits, and even when the party relying on the order could still defend itself despite the delay, it seems to me that at some point the interest in finality must trump the opposite party’s plea for an indulgence. This is especially true where, as in the present case, the opposite party appears to have another remedy available.
The remedy he was referring to was an action against counsel for negligence.
[47] In Marché D'Alimentation Denis Theriault Ltée the Court of Appeal concluded that the five-year delay after the dismissal of the action was simply too long. Sharpe J.A. noted at paragraph 32 that “Excusing a delay of this magnitude and gravity risks undermining public confidence in the administration of justice,” and found that: “The nature of the delay and the solicitors’ conduct in this case amount to more than that kind of lapse or inadvertent mistake that the legal system can countenance.”
[48] In paragraph 15 of Wellwood, Cronk J.A. considered delay in bringing the motion to set aside the dismissal:
The respondent’s motions materials were finally served on April 24, 2007. By that time, more than 27 months from the date of the dismissal of the First Action, almost 17 months from the date of the dismissal of the Second Action and approximately 15 and one-half months since the expiry of the applicable limitation period had elapsed.
[49] She concluded at paragraph 70 that this amounted to inordinate delay. In relation to the finality principle, she said at paragraph 79: “that this is the type of case described by Sharpe J.A. in Marché, in which finality must trump.”
[50] To summarize, in relation to litigation delay, I found that the Plaintiff provided no explanation for the litigation delay that happened after pleadings were closed on March 2, 2008, in any of the three actions. I also found, however, that the evidence does not establish that the Plaintiff, its principal or its lawyer intended to abandon the actions. In relation to the Plaintiff’s inadvertence in missing the deadlines, I found that the Plaintiff had established inadvertence, and noted that inadvertence is still inadvertence even though it might also be negligence on Mr. Krieger’s part. In relation to the Plaintiff’s obligation to bring the motions to set aside the dismissals promptly, I found that the Plaintiff, more notably its counsel, had failed to do so. The explanation was inadvertence. Finally, in relation to prejudice to the defence, I found that the passing of the limitation periods made the delay presumptively prejudicial. That said, however, on the facts of the case I was not persuaded that the prejudice was significant.
[51] Was the delay in these cases inordinate? In respect of action 848SR, the delay between the dismissal of the action on August 11, 2008, and the Plaintiff’s motion to set aside the dismissal on March 10, 2011, was about 31 months. The action was apparently brought after the expiry of the limitation period in any event. With respect to actions 847 and 849, which were dismissed on June 10, 2010, the delay was about nine months.
[52] In my view the individual elements of delay and their overall effect, taken together with the conduct of counsel place this action in that group of rare cases in which finality must trump. Mr. Krieger was manifestly indifferent to his obligations and the obligations of his client to the Defendants and to the system of justice. He then failed to address the dismissal orders with sufficient professional urgency. He provided explanations for much of the delay that are both professional, relating to his extraordinarily poor office practice, and personal. While the court is sympathetic to the ways in which personal events can overtake professional life, there must be a reasonable limit. If Mr. Krieger was unable to proceed with the necessary alacrity, then his professional obligation was to refer the Plaintiff to another lawyer who could, and he failed to do so. As I noted above, this is not a situation in which inadvertence, which is already recognized by the second Reid factor, should be indulged again in relation to the party’s obligation to bring the motion to set aside the dismissal promptly. I therefore decline to set aside the dismissal orders and dismiss the Plaintiff’s motions.
Costs
[53] The parties have agreed that the successful party should be awarded $13,000.00 in costs, all-inclusive. This amount shall be paid to counsel for the defendants within 30 days.
P.D. Lauwers J.
Released: November 29, 2012