SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 06-CV-33589
DATE HEARD: March 28, 2013

RE: Elwood-James Carroll and Jason Flick et al

BEFORE: MASTER ROGER

COUNSEL:
Martin Diegel, for the Plaintiff
email: martindiegel@mdiegel.com
Ph: (613) 567-0235 Fax: (613) 567-1264

Steve Maddex, for the Defendants
email: smaddex@brazeauseller.com
Ph: (613) 237-4000 Fax: (613) 237-4001

E N D O R S E M E N T

[1]. This motion, served shortly after February 21, 2013, seeks an order pursuant to Rule 37.14 of the Rules of Civil Procedure setting aside the order of the registrar dated January 2, 2013, dismissing this action for delay and seeks, as well, an order establishing a new timetable.

Brief Factual Overview

[2]. This action, issued January 27, 2006, seeks an accounting, an interlocutory injunction, a declaration that the Plaintiff is the owner of a one-half interest in the Defendant Flick Software Inc. and damages for breach of contract, breach of fiduciary duty, defamation and interference with economic relations in the amount of $5 million or fifty percent of profits.

[3]. The Plaintiff is a computer design engineer. He alleges the existence of a verbal agreement with the Defendant Jason Flick dating back to about December 2001 and August 2002 relating to a joint venture for the development of software programs for mobile handheld computing devices. This business was launched December 2002 under the name Flick Software. The Plaintiff alleges that about December 2003 the Defendant Jason Flick incorporated another company, Flick Software Inc., and subsequently terminated the Plaintiff’s involvement and diverted all contracts, opportunities and revenues of the business to the Defendants, to the exclusion of the Plaintiff.

[4]. A statement of defence was served shortly after April 23, 2007.

[5]. The affidavits filed on this motion by the Plaintiff are sworn by an articling student with the Plaintiff’s current lawyer. The first affidavit provides that documentary discoveries and exchange of documents occurred (it does not say how or when). It provides that two mediations occurred before the same mediator: the first on March 26, 2009 and the second on November 5, 2012. Other than case conferences and a status hearing to establish timetables nothing else of substance occurred in this action.

[6]. On January 2 and February 27, 2008, counsel for the Defendants wrote to counsel for the Plaintiff requesting movement, a timeline or a case conference to establish a timeline. This eventually led to the March 26, 2009, mediation.

[7]. At the mediation, the parties agreed that the Defendants would produce additional documents to be requested by the Plaintiff. In April 2009 the Plaintiff requested documentation from the Defendants which the Defendants provided in June 2009.

[8]. Thereafter, by letter dated July 16, 2009, counsel for the Defendants attempted to schedule a mediation session, as the earlier mediation had been adjourned to allow for additional disclosure. The evidence is that no activity occurred subsequently in 2009.

[9]. In July 2010, the Plaintiff sent a draft amended-amended statement of claim seeking to add a new party defendant, You I Labs. Nothing further happened with respect to this proposed amendment.

[10]. A first status notice was received about July 27, 2010. A timetable was agreed between the parties. Very specific steps were to occur in 2011 (sworn affidavits of documents, examinations for discovery, motions on undertakings if required, expert reports and the action was to be set down by October 15, 2011). There is no evidence that any of this happened and no evidence explaining why not.

[11]. In November 2010, rather than seeking leave to amend the statement of claim, the Plaintiff had issued a new statement of claim against You I Labs and Jason Flick, the 10-49951 action.

[12]. There is no evidence that any other steps were thereafter taken by the Plaintiff to move this action along up until August 2011 when the current lawyer for the Plaintiff served a notice of change.

[13]. A letter was sent by the Plaintiff in September 2011 seeking to encourage settlement discussions and seeking to schedule a case conference to timeline both actions, as the previous timeline had not been met. The Order of Kane J., dated July 22, 2011, removing the previous lawyers for the Plaintiff from the record provides that a case conference is to be convened by October 15, 2011.

[14]. A case conference was scheduled for November 14, 2011. An order was then made that both actions be mediated by January 31, 2012, and the date to set this action down for trial was extended to December 31, 2012. It is obvious from this order that the parties felt that a further mediation session might be helpful and that it should be possible to schedule one between November 2011 and January 31, 2012. Thereafter, under this timeline, if the mediation was not successful then the parties would have over 10 months to do what was required before the action had to be set down by December 31, 2012.

[15]. The Defendants appointed their current lawyer in December 2011.

[16]. A number of letters were exchanged between lawyers to schedule the mediation.

[17]. The affidavits filed by the Plaintiff explain the many letters back and forth with ultimately the mediation finally occurring on November 5, 2012. It is fairly obvious, from reviewing this correspondence, that both parties made reasonable efforts to book a mediation session. Occasionally, one was not available at suggested dates, occasionally the other was not and occasionally the mediator was not. All of this delayed the mediation to November 5, 2012. The mediation was not successful.

[18]. The action was dismissed by the registrar on January 2, 2013. The order is typically faxed to the lawyers on or shortly after the date indicated on the order.

[19]. Thereafter, by letter dated February 8, 2013, the Plaintiff writes to request from the Defendants additional documents. No evidence was presented to address why the dismissal order was not noticed sooner, as it is not disputed that the dismissal order was received by the Plaintiff’s lawyer.

[20]. The evidence presented by the Plaintiff is that the failure to seek an extension was an oversight and that there appears to be no non-compensable prejudice. These are essentially the words used in the affidavit. No additional evidence was presented on these points by the Plaintiff. A new timetable is proposed by the Plaintiff that would see both actions set down by September 30, 2013.

[21]. The affidavit filed by the Defendant, Jason Flick, points out the many periods of unexplained inactivity in this action. It explains that the Defendants requested the Plaintiff to move the action along. It does not provide evidence of prejudice on the part of the Defendants. It states that the letter of February 8, 2013, was not received and that the Defendants had not received anything from the Plaintiff regarding his position on the dismissal prior to this motion being served. The date of service is not in evidence but it is not disputed that this motion was served on the Defendants shortly after February 21, 2013.

Administrative dismissal

[22]. Neither party filed a factum on this motion. The Defendants provided the court with a copy of the decision of the Court of Appeal in Hamilton (City) v. Svedas Koyanagi Architects Inc., 2010 ONCA 887.

[23]. The law applicable to setting aside the order of a registrar is well established. It involves an exercise of the court’s discretion to determine whether or not it is just to set aside the dismissal order considering all factors and circumstances relevant to each particular case. It’s a weighing exercise to determine the result that is just in the circumstances. The court must balance the interests of the parties and those of the public’s interest in the timely resolution of disputes. A contextual approach is to be adopted, not necessarily meeting each and every factor, with prejudice being a key consideration.

[24]. A summary is provided in Vogrin et al. v. Ticknor Estate, 2012 ONSC 1640 at para. 32:

• the court must consider and weigh all relevant factors, including the four Reid factors which are likely to be of central importance in most cases;
• the Reid factors, as cited by the Court of Appeal in Giant Tiger, are as follows:

• (1) Explanation of the Litigation Delay: 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.

• (2) Inadvertence in Missing the Deadline: 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.

• (3) The Motion is Brought Promptly: The plaintiff must demonstrate that she moved forthwith to set aside the dismissal order as soon as the order came to her attention.

• (4) No Prejudice to the Defendant: 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;

• a plaintiff need not satisfy all four of the Reid factors but rather a contextual approach is required;

• the key point is that the court is to consider and weigh all relevant factors to determine the order that is just in the circumstances of each particular case;

• all factors are important but prejudice is the key consideration;

• prejudice to a defendant may be presumed, particularly if a lengthy period of time has passed since the order was made or a limitation period has expired, in which case the plaintiff must lead evidence to rebut the presumption;

• once a plaintiff has rebutted the presumption of prejudice, the onus shifts to the defendant to establish actual prejudice;

• prejudice to a defendant is not prejudice inherent in facing an action in the first place but prejudice in reviving the action after it has been dismissed as a result of the plaintiff's delay or as a result of steps taken following the dismissal of the action;

• the party who commences the litigation bears the primary responsibility under the Rules for the progress of the action;

• in weighing the relevant factors, the court should not ordinarily engage in speculation concerning the rights of action a plaintiff may have against his or her lawyer but it may be a factor in certain circumstances, particularly where a lawyer's conduct has been deliberate. The primary focus should be on the rights of the litigants and not with the conduct of their counsel.

[25]. Competing principles include, on one hand, a bias that cases be resolved on their merits rather than on procedural grounds and, on the other hand, the promotion of timely resolution of civil actions. Doing what is just in the circumstances of each case will ensure the public’s continued confidence in the administration of justice.[^1]

[26]. The dismissal order is dated January 2, 2013. This motion was brought on February 21, 2013, with no earlier communication to the Defendants about the dismissal. More evidence should have been provided addressing why the motion was not brought sooner. The rule provides that such a motion be brought forthwith once it is brought to your attention. Although not addressed in an affidavit, Mr. Diegel indicated that the order had been received but only noticed after the February letter was prepared. The Defendants never received the February letter.

[27]. Although more evidence should have been presented by the Plaintiff addressing specifically when the order was received, noticed or not and why, in the circumstances considering the brief delay, I am satisfied that the Plaintiff brought this motion sufficiently promptly.

[28]. Not unlike the circumstances in Vogrin, the Plaintiff has not provided specific information explaining why the set down date was not met. The only information provided is that this was an oversight. No information is provided about how or why this happened. This is not sufficient to establish that the Plaintiff always intended to set the action down within the time limit but failed to do so through inadvertence. More evidence is required to establish inadvertence in missing such an important deadline.

[29]. I note, in passing, that although the 10-49951 action has also not been set down for trial, as required by December 31, 2012, it has to date not been dismissed by the registrar. At any moment the registrar could dismiss that action as apparently no steps have been taken to extend the earlier timeline. This should be addressed by the Plaintiff.

[30]. There have been several periods of delay from the time that this action was started. Very little has been done. Pleadings have been completed but examinations for discovery have not yet been conducted.

[31]. No evidence has been provided to explain delays up to 2010 other than the order made at the 2010 status hearing and subsequent order made at the November 14, 2011 case conference. Although a perfect accounting of every moment is not required to establish a sufficient explanation, some explanation is required. The Plaintiff should have provided an explanation for the period from the time the action was started to when their current lawyer was appointed. The explanation provided really only starts from August 2011 onwards.

[32]. The evidence establishes that the earlier timeline was extended at the November 14, 2011 case conference to allow firstly another attempt at a mediation session and thereafter, if required, over 10 months to complete what is required to set the action down for trial by December 31, 2012. Through no party’s fault, the mediation was not held until November 5, 2012. Sufficient information has been provided about the parties’ efforts at attempting to schedule this mediation session.

[33]. Considering the above, although evidence should have been presented to address delays predating 2011, I am satisfied “that steps were being taken to advance the litigation toward trial, or if such steps were not taken to explain why” such that overall, I am satisfied that an adequate explanation of the litigation delays has been provided. We have to remember and factor in the analysis that the added delay to date is of about three months.

[34]. Prejudice is a key consideration.[^2] On such a motion, the plaintiff must convince the court that the defendant has not been prejudiced in presenting its case at trial as a result of the plaintiff’s delays or as a result of steps taken following the dismissal of the action.[^3] The expiry of a limitation period creates a presumption of prejudice. Where the presumption arises, the plaintiff bears the burden of rebutting the presumption and if the presumption is displaced then the onus shifts to the defendant to establish actual prejudice. Prejudice is not prejudice inherent in defending the action in the first place but prejudice relating to the plaintiff’s delays or steps taken by the defendants following the dismissal order.[^4]

[35]. More evidence could have been presented by the Plaintiff on this point. However, the evidence establishes that the Plaintiff provided its relevant documents to the Defendant (see para. 5 of the affidavit). It also establishes that, unlike the factual situation present in both Vogrin and Hamilton, this case involves primarily Mr. Carroll and Mr. Flick. A verbal agreement is alleged. They will undoubtedly be the main witnesses at trial. This is not a case of witnesses no longer being available or of employees no longer being employed or remembering years after the fact or at least no such evidence is before the court.

[36]. Here the parties are clearly the protagonists in a business dispute. The evidence of the Plaintiff indicates that there “appears to be no non-compensable prejudice” as both sides extended timelines up to December 31, 2012, to move these claims ahead. As indicated in Vogrin, prejudice to a defendant is not prejudice inherent in facing an action in the first place but prejudice in reviving the action after it has been dismissed as a result of the plaintiff's delay or as a result of steps taken following the dismissal of the action. Consequently, faced with this albeit slight evidence that it appears the Defendants have no non-compensable prejudice, the Defendants had an onus to bring some evidence of actual prejudice.

[37]. The Defendants have not provided evidence of actual prejudice. They rely on the presumption of prejudice arising from the expiry of a limitation period and on their arguments that the Plaintiff has not sufficiently dealt with prejudice.

[38]. Considering the above, I am satisfied that the Defendants have not been prejudiced as a result of the Plaintiff’s delays or as a result of steps taken by the Defendants following the dismissal of the action.

[39]. Fairness includes the timely resolution of civil disputes with the absence of actual prejudice not always trumping the value of timeliness and efficiency. However, as explained above, I am satisfied that prejudice has been sufficiently addressed by the Plaintiff. [^5]

[40]. A contextual approach is to be adopted, weighing relevant factors to determine the result that is just in the circumstances. It is not necessary for the Plaintiff to satisfy all of the Reid factors and all other relevant factors.

[41]. In this case, the evidence presented by the Plaintiff is generally not the strongest. More and better evidence should have been presented on all relevant factors. Adopting a contextual approach I am however satisfied that the Plaintiff has met most of the Reid factors[^6] and that what is just in the circumstances is to allow this action to proceed on a very tight timeline.

[42]. On the issue of the costs of this motion, I find, considering the factors at rule 57, that costs should be payable to the Defendants on a partial indemnity basis.

[43]. This case is very close to the line and it was certainly reasonable in this case for the Defendants to oppose this motion right up to the time that it was argued, considering the limited evidence filed on the motion by the Plaintiff. Things might have been different had the written materials filed by the Plaintiff on this motion more fully addressed the relevant factors as defendants may certainly be responsible for the costs of these motions depending on the evidence.

[44]. If the Plaintiff had dealt with the approaching deadline of December 31, 2012, before it expired, this motion would likely not have been required. As a result of the Plaintiff’s failing to set the action down for trial, in these circumstances, the Defendants reasonably incurred costs in opposing this motion and should be reasonably compensated for this. This is analogous to cases that have granted costs against a party seeking an indulgence despite its success as part of the price of the indulgence, which I find reasonable in these circumstances considering the evidence before the court.

[45]. I find the amounts sought by the Defendants reasonable and will allow $2,500.00 all inclusive for the costs of this motion.

Disposition

[46]. I therefore order as follows:

a. The Order of the registrar dated January 2, 2013, dismissing this action for delay, is hereby set aside.

b. The following litigation timetable is ordered: any remaining documentary discovery to be completed by May 30, 2013; any examination for discovery to be completed by July 30, 2013; any motion on undertakings or refusals to be served by September 20, 2013; and, this action shall be set down for trial by September 30, 2013.

c. Costs of this motion are payable by the Plaintiff to the Defendants within the next 45 days in the amount of $2,500.00.

Master Pierre Roger

Date: April 3, 2013

[^1]: Hamilton (City) v. Svedas Koyanagi Architects Inc., 2010 ONCA 887 at paras. 20 and 21

[^2]: Vogrin et al. v. Ticknor Estate, 2012 ONSC 1640 at para. 32

[^3]: Marché D’Alimentation Denis Thériault Ltée v. Giant Tiger Stores Ltd. (2007), 2007 ONCA 695, 87 O.R. (3rd) 660 at para. 12

[^4]: Vogrin, supra at note 2

[^5]: 1196158 Ontario Inc. v. 6274013 Canada Limited, 2012 ONCA 544 at para. 33

[^6]: Reid v. Dow Corning Corp., 2001 O.J. no. 2365, reversed on other grounds 2002 O.J. No. 3414