SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: 08/56515

DATE: 2013/04/16

RE: LEONARD BATES (Plaintiff)

• and -

JOHNSON DIVERSEY CANADA INC. (Defendant)

BEFORE: JUSTICE L. C. LEITCH

COUNSEL:
Ian S. Wright, for the Plaintiff
Neil Paris, for the Defendant

HEARD: March 25, 2013

ENDORSEMENT

[1] The plaintiff seeks an order setting aside the Registrar’s dismissal of his action for delay pursuant to Rule 48.14(4).

[2] The plaintiff’s motion is pursuant to Rule 37.14 which permits a party to move to set aside an order of a Registrar. Pursuant to Rule 37.14(2), on such a motion the court may set aside or vary the order on such terms as are just.

[3] The defendant resists the relief sought by the plaintiff asserting that the plaintiff has not met his burden to revive his action.

Background

[4] The plaintiff’s action relates to his claim that he was wrongfully dismissed by the defendant. He was terminated from his employment with the plaintiff on November 22, 2007.

[5] The plaintiff issued his statement of claim on January 3, 2008.

[6] The statement of defence was filed February 22, 2008.

[7] Examinations for discovery were scheduled for July 2009, however those examinations were cancelled.

[8] The plaintiff amended his statement of claim on July 21, 2009 so that the action could proceed under the Simplified Procedure set out in Rule 76. He discontinued his claim for a declaration of entitlement to various benefits, damages for bad faith and special damages, and reduced his other damages to $50,000. The amended statement of claim was served August 6, 2009.

[9] On June 7, 2010 the Registrar dismissed the action pursuant to Rule 48.14(4).

[10] There was no contact between counsel from August 2009 until November 28, 2012.

[11] Mr. Wright corresponded with the solicitor for the defendant on November 28, 2012. This correspondence enclosed the following: a third supplementary affidavit of documents of the plaintiff sworn November 8, 2012 (an unsworn copy having been previously provided March 12, 2009); a fourth supplementary affidavit of documents of the plaintiff sworn November 8, 2012; the plaintiff’s income tax returns for 2007, 2008, 2009; a notice under Rule 76; and, schedule D to the various sworn affidavits of documents of the plaintiff. In this correspondence, Mr. Wright indicated that he would not be examining a representative of the defendant for discovery and the defendant was invited to contact his office if the defendant wished to examine the plaintiff for discovery. He also indicated that he would obtain a date for a pre-trial conference which would be the next step if the defendant did not wish to examine the plaintiff for discovery.

[12] The affidavit filed in support of this motion was from Mr. Goudy, another lawyer in Mr. Wright’s office, who had no independent knowledge of the facts outlined in his affidavit. Mr. Goudy based his deposition on the information obtained from Mr. Wright.

[13] Mr. Goudy’s affidavit outlined the procedural steps taken in the action and the fact that Mr. Wright had not received the status notice served by the Registrar pursuant to Rule 48.14(1) and thus was not alerted to the fact that the action would be dismissed for delay unless the action was set down for trial or documents filed in accordance with Rule 48.14(10). The affidavit also set out that Mr. Goudy was informed by Mr. Wright that he had not received the Registrar’s order dismissing the action and had only become aware of the dismissal order when he received a copy from the defendant’s counsel on December 12, 2012 in response to his letter of November 28, 2012.

[14] Mr. Goudy also deposed in para. 9 of his affidavit that Mr. Wright informed him that “a portion of this delay in responding was as a result of documents which Ian Wright had requested from Bates to be provided to him to calculate and quantify the claim of Bates against Johnson Diversey”.

The Test to be met by the Plaintiff on this motion

[15] A party seeking to set aside an order dismissing an action for delay under Rule 48.14 must satisfy the following criteria set out in Reid v. Dow Corning Corp. (2001), 11 C.P.C. (5th) 80 (Ont. S.C.), rev’d on other grounds (2002), 48 C.P.C. (5th) 93 (Ont. S.C. (Div. Ct.)) which are referred to as the “Reid factors”:

(i) the plaintiff must explain the delay in the progress of the litigation;

(ii) the plaintiff or plaintiff’s counsel must explain that the dismissal order was made as a result of inadvertence and they always intended to have the action proceed in accordance with the required time period;

(iii) the motion to set aside the dismissal order must be brought promptly; and

(iv) the plaintiff must convince the court that there will be no significant prejudice to the defendant as a result of the plaintiff’s delay or as a result of steps taken following the dismissal of the action.

[16] The Ontario Court of Appeal in Scaini v. Prochnicki (2007), 2007 ONCA 63, 85 O.R. (3d) 179 (C.A.), at para. 23, provided the following guidance in relation to the application of the Reid factors:

...a contextual approach to this question is to be preferred to a rigid test requiring an appellant to satisfy each one of a fixed set of criteria. The latter approach is not mandated by the jurisprudence on the other hand, the applicable rules clearly point to the former. In particular, the motion to set aside the Registrar’s order dismissing the action for delay engages Rule 37.14(1)(c) and (2). The latter invites the court to make the order that is just in the circumstances. A fixed formula like that applied by the motion judge [who found that if the plaintiff fails to satisfy any one of the Reid factors, the Registrar’s order will stand] is simply too inflexible to allow the court in each case to reach the just result contemplated by the rules.

[17] The Ontario Court of Appeal commented further in Marche D’Alimentation Denis Theriault Ltee v. Giant Tiger Stores Ltd. (2007), 2007 ONCA 695, 87 O.R. (3d) 660 (C.A.) at para. 21:

The contextual approach mandated by Scaini to determine what “is just in the circumstances of the particular case” invites the application of important underlying principles and values of the civil justice system that are inherent in the four Reid factors...

[18] As the defendant noted, the court, in Marche emphasized at para. 23 that “the Reid test requirement of an explanation for the litigation delay ties into a dominant theme in modern civil procedure: a discouragement of delay and the enhancement of an active judicial role to ensure timely justice.”

[19] In addition, the Court of Appeal commented in Finlay v. Van Paassen, 2010 ONCA 204, 101 O.R. (3d) 390, at para. 33, that:

...on a motion to set aside a dismissal order, the court should be concerned primarily with the rights of the litigants, not with the conduct of their counsel.

[20] The Court of Appeal further reiterated this perspective in Habib v. Mucaj, 2012 ONCA 880, [2012] O.J. No. 5946, at para. 7, as follows:

Furthermore, on a motion to set aside a dismissal order, the court should be concerned primarily with the rights of litigants, not with the conduct of their counsel. However, where the lawyer’s conduct is not inadvertent but deliberate this may be different. Here, the plaintiff’s lawyer’s conduct was found by the Master not to be deliberate. Simply because the appeal judge’s view is that the conduct was “negligent” or “bordering on negligent”, does not mean the Master was not entitled to find the conduct not to be deliberate or not intentional. (citations omitted)

The Plaintiff’s Position on the Motion

[21] At the hearing of the motion Mr. Wright indicated that he had to acknowledge he was inattentive and that it was poor practice not to follow up with the plaintiff to move the matter forward. He further acknowledged his portion of fault and responsibility for the delay. He stated that he should have insisted that he received the required documentation more promptly from the plaintiff and he ought to have followed up with him.

[22] There was no affidavit evidence from the plaintiff. Mr. Wright relies on his letter of November 28, 2012 as evidence that the plaintiff intended to move forward with his action.

The Defendant’s Position on the Motion

[23] The defendant takes the position the plaintiff has not met its burden on this motion. The defendant refers to the observation of Master Haberman in Li v. Powermar, [2006] O.J. No. 4264 (S.C.) at para. 36, that:

...a party seeking to set aside a dismissal order and, in effect, reinstate their action, must demonstrate a very compelling basis for doing so.

[24] The defendant emphasizes that there were nearly forty months during which the plaintiff took no steps whatsoever to advance the action. The defence asserts that the plaintiff has not adequately explained the delay.

[25] Further, the defendant submits that these circumstances are not ones of mere inadvertence but rather of negligence because counsel should have known the consequences of not setting down the action for trial on a timely basis irrespective of the fact that he did not receive the notice under r. 48.14(1).

[26] Finally, the defendant submits that, because the applicable limitation period expired in November 2009, the plaintiff faces a presumption that the defendant is now prejudiced. In addition to this presumed prejudice, the defendant pleads actual prejudice at para. 17 of its factum, stating: “...for nearly 3 years, Johnson Diversey has relied on this action being disposed of in its favour”. It is the defendant’s position that the plaintiff has not met his burden in rebutting the presumption, and actual claim, of prejudice.

Disposition

[27] I agree with the defendant that it was faced with responding to a motion supported by an affidavit given by a deponent who had no direct knowledge of the matter in issue. Although the time table in relation to this special appointment motion contemplated cross-examinations, as Mr. Paris noted, Mr. Goudy was insulated from cross-examination given the fact that he had no independent knowledge of what he was deposing to.

[28] Also, as I noted at the hearing of this motion, Mr. Wright ought to have prepared a factum. Indeed he committed himself to doing so by signing the certification of readiness for this motion. However, no factum was filed on behalf of the plaintiff. Failure to file a factum puts a party at a disadvantage at the hearing of the motion.

[29] As set out in Rule 37.14(2), to use the words of Goudge J.A. in Scaini, the court must reach a “just result” on this motion.

[30] It is clear that Mr. Wright moved promptly to set aside the dismissal order thus clearly satisfying one of the Reid factors.

[31] Turning to the other Reid factors on which there is some controversy, I will first deal with the defendant’s contention that there is an inadequate explanation for the litigation delay of more than three years. With respect to litigation delay, the period of time to consider is the time between the issuance of the statement of claim and the date of the dismissal order. On this motion, the contentious time period is between August 6, 2009, when the amended statement of claim was served, and November 28, 2012, when Mr. Wright wrote to defendant’s counsel. Mr. Wright conceded there was no contact between counsel during this period of time and he did not follow up with the plaintiff.

[32] There were no steps taken to advance the litigation after August 2009. Here, the explanation for this delay is that the plaintiff late delivery of documents to Mr. Wright. At the hearing of this motion, Mr. Wright accepted responsibility for not following up with the plaintiff and proffered that his inattentiveness was poor practice. The defendant takes issue with the fact that this “mea culpa evidence” was not previously outlined in the affidavit in support of this motion and that there ought to have been evidence from the plaintiff personally that he did not agree with his counsel’s inattentiveness.

[33] However, it seems to me that the purpose of this first Reid factor is to require a plaintiff to disclose his intentions with respect to the litigation. As set out in Reid, “if the solicitor or plaintiff made a deliberate decision not to advance litigation toward trial then the motion to set aside the dismissal will fail” (Reid at para. 41). Master Dash further observed at para. 51 that “...there is, in fact, no evidence at all of the plaintiff’s intentions during the critical period”. As a result, Master Dash concluded that the plaintiff’s failure to satisfy this criterion justified the dismissal of his motion for relief from the dismissal order.

[34] However, the approach in Reid has been modified by the guidance from the Ontario Court of Appeal outlined above in Scaini. In Scaini, what was described as a “shortage of detail in the applicant’s explanation of delay” was not determinative of the issue where the plaintiff had moved promptly to set aside the order, there was a complete absence of prejudice and the plaintiff’s solicitor had been inadvertent.

[35] The circumstances of this case, including the fact that Mr. Wright did not receive the status notice under R.48.14 (1) and that the dismissal order is the result of counsel’s inattentiveness, are analogous to the circumstances in Scaini.

[36] These circumstances are quite distinct from those in Marche, where the Master found that the conduct of the plaintiff’s solicitors indicated “a deliberate intention not to advance a litigation toward trial” and the Divisional Court found the delay flowed from the solicitor’s “intentional and stubborn refusal to proceed with the action”: see Marche at para. 26.

[37] Unlike in Marche where the motion to set aside the dismissal order was heard six years after the order was made, I do not find that “the nature of the delay and the solicitor’s conduct in this case amount to more than the kind of lapse or inadvertent mistake that the legal system can countenance” (Marche at para. 31).

[38] The remaining issue relates to the defendant’s prejudice arising from the delay.

[39] As previously noted, the limitation period has expired. The Court of Appeal indicated in Wellwoood v. Ontario Provincial Police, 2010 ONCA 386, 102 O.R. (3d) 555, at para. 60:

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.

[40] The defendant submits that these circumstances are akin to those before Master Glustein in MDM Plastics Ltd. v. Vincor International Inc., 2012 ONSC 3101, [2012] O.J. No. 2462. In that decision, it was noted, at para. 86, that there was “no evidence before the court that documents have been preserved, key witnesses are available, or certain elements of the claim are not an issue” and the moving party “had the obligation to lead such evidence and failed to do so”. Master Glustein ultimately concluded that the motion to set aside the dismissal order should be dismissed because of the “paucity of evidence explaining the litigation delay and the lack of evidence rebutting the presumption of prejudice” (MDM at para. 88). In arriving at the conclusion the just result was to dismiss the motion, the Master emphasized the finality principle as referred to in Marche.

[41] In my view, the context of this motion is different from the facts before Master Glustein in MDM. In that decision, there was only some indication of inadvertence and the fact that that action had already been dismissed once was important. In addition, in MDM the evidence was that the solicitor for MDM had not responded to the other parties’ demand for particulars and a request to inspect certain documents referred to in the statement of claim, despite follow-up by counsel making these requests over a six month period.

[42] Furthermore, the demand for particulars remained outstanding for 11 months and the issue of security for costs was never addressed, although it was an outstanding issue for roughly the same period of time. There was considerable follow up correspondence to counsel for MDM. In addition, although counsel for MDM ultimately indicated he would seek instructions on the security for costs issue, there was no further communication by that counsel for over one year even though opposing counsel had written in the interim expressing an assumption that MDM had lost interest in the action. All of this occurred before the action was first dismissed by the registrar and thereafter revived on consent with a term that the registrar forthwith issue a fresh status notice.

[43] Master Glustein noted that the evidence from counsel for MDM was that he did not receive the second status notice. However, he had received the order setting aside the

first dismissal order which expressly stated that a fresh status notice would be delivered forthwith.

[44] Here the inadvertence of counsel is much more obvious than in MDM. In addition, it appears to me that it was significant to the decision of the Court of Appeal in Wellwood that the Master, whose decision was under review, was not satisfied that the delay in that case was unintentional: see Wellwood at para. 87.

[45] In this case, affidavits of documents have been exchanged. The plaintiff does not intend to conduct any examination for discovery. The action is now subject to the simplified procedure rules. There is no indication that any specific witnesses are no longer available to give evidence (although I am not suggesting that the defendant was obliged to state otherwise).

[46] Considering the Reid factors in the context of these circumstances, I conclude that it would be just for the plaintiff’s motion to be granted subject to a number of conditions.

[47] The first condition is a provision that pre-judgment interest will not accrue during the period from August 2009 to the date of this order.

[48] The second condition is that the parties forthwith agree on a time table in relation to the following: the plaintiff’s examination for discovery, if any; the date of a pre-trial; and thereafter the date for trial.

[49] The third condition is that the plaintiff ought to pay costs to the defendant notwithstanding the plaintiff’s success on the motion. Considering the materials filed on the motion it was not unreasonable for the defendant to have opposed the relief sought.

[50] It is my expectation that this cost issue can be resolved between the parties, but failing such resolution, counsel may file brief written submissions within the next 30 days.

Justice L.C. Leith
Justice L. C. Leitch

Date: April 16, 2013