ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 59546-08

DATE: 2013-05-30

BETWEEN:

RANDY O’CONNOR and JOHN O’CONNOR (by his Litigation Guardian, Randy O’Connor)

Plaintiffs

– and –

Dominion of Canada General Insurance Company

Defendant

O. Sabo, for the Plaintiffs

T. Kasi, for the Defendant

HEARD: May 22, 2013 at London

HEENEY r.s.j.:

Reasons for Decision

[1] This is a motion by the plaintiffs to set aside the Registrar’s order which dismissed the action for delay pursuant to Rule 48.14.

[2] The action arises out of a fire which occurred on September 14, 2007. The plaintiff John O’Connor was injured in the fire. He is under a psychological disability, and his brother Randy O’Connor acts as his litigation guardian in this action. Pursuant to the order of Hockin J. dated February 11, 2013, the Public Guardian and Trustee was given notice of these proceedings, as required by rule 48.14(14). They have declined to get involved, given that the plaintiff already has a litigation guardian.

[3] The relevant chronology for this action is as follows:

• September 14, 2007: Fire loss occurs;
• September 11, 2008: Notice of Action is issued;
• October 6, 2008: Statement of Claim is filed;
• January 26, 2009: Statement of Claim is served;
• February 5, 2009: Notice of Intent to Defend is served;
• March 6, 2009: Statement of Defence is served;
• March 12, 2011: Status Notice is issued by the Registrar;
• July 15, 2011: In response to the Status Notice, a timetable is proposed by the plaintiffs, agreed to by the defendant, and endorsed by Rady J., which mandated the following:

1. To provide Affidavit of Documents by November 15, 2011;
2. To have Examinations for Discovery completed by January 15, 2012;
3. To have all undertakings satisfied by April 15, 2012;
4. To complete undertaking and refusal motions by June 12, 2012;
5. To have action set down for trial by July 15, 2012.

• November 24, 2011: Affidavit of Documents is served by the defendant, with a request that plaintiffs’ counsel indicate whether he requires copies of productions;
• November 26, 2011: Plaintiffs’ counsel requests copies of Schedule “A” productions;
• November 28, 2011: Defence counsel forwards Schedule “A” productions;
• December 21, 2011: Plaintiffs’ counsel forwards a Proof of Loss to defence counsel;
• January 12, 2012: Defence counsel writes to acknowledge receipt of Proof of Loss, and points out that no steps have been taken to comply with the Status Hearing Order. The letter asks for confirmation whether or not the plaintiff intends to proceed with the action and comply with the Status Hearing Order. No response is forthcoming;
• March 9, 2012: Defence counsel writes a further letter enquiring whether the plaintiff is serious about proceeding with the claim. No response is forthcoming;
• August 2, 2012: Registrar signs an order for administrative dismissal of the action.

[4] It is clear from this chronology that, over the period of four years that elapsed from the commencement of the action to its dismissal, the plaintiffs did nothing to advance the prosecution of this case beyond the pleadings stage, save only for two things: requesting copies of the defendant’s Schedule “A” productions, and forwarding a Proof of Loss. It is also clear that the timetable set by Rady J. on July 15, 2011 has been completely ignored by the plaintiffs.

[5] The law that applies in this case is comprehensively set out by Master Muir in Taheem v. Palmer, [2012] O.J. No. 2252 (S.C.J. Master), at para. 19 (footnotes omitted):

In the last five years, the law relating to setting aside registrar's dismissal orders has been the subject of seven decisions of the Court of Appeal for Ontario. Although each of those decisions brings a slightly different approach to the decision making process, the general approach first set out by the Court of Appeal in Scaini has been followed consistently. The principles that emerge from those decisions can be summarized as follows:

• 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.

[6] The first factor to be considered is the plaintiffs’ explanation for the litigation delay.

[7] In support of the plaintiffs’ motion, an affidavit and a supplementary affidavit of Kevin Souch were filed. He was the counsel having carriage of the case for the plaintiffs. In his first affidavit, he said at para. 8 that “[c]ommunication with the plaintiff has been difficult and it was not possible to comply with the terms of the time table…”. At para. 16, he said that the “defendant had placed a lien on the property which prevented the plaintiff from disposing of same and he continued to incur expenses for property taxes and maintenance placing him in financial hardship and hindering his ability to continue with this litigation.”

[8] As to the first explanation for the delay, no details were offered as to why or in what way communication was “difficult”. There were no particulars as to letters written to the client but not answered, phone calls not returned, interviews missed or cancelled, and so on. I find this explanation for the delay to be wholly unsatisfactory. The bald statement that there were communication difficulties is unpersuasive without some supporting detail.

[9] As to the second explanation for the delay, it is correct that the defendant had a lien on the property, since they had paid off the TD mortgage pursuant to the insurance endorsement in the mortgage. When the plaintiffs requested that the lien be lifted so that the property could be sold, the defendant readily complied. I am advised that the property was then sold, generating a balance due on closing of about $20,000, which was completely consumed in paying outstanding property taxes and other similar expenses. It is difficult to understand how this could have had any effect on the progress of this litigation. It is clear that the plaintiffs were not “incurring” any carrying costs for the property, but instead allowed them to fall into arrears, leaving them to be paid off when the property was sold. It is also clear that the defendant fully cooperated with the sale of the property.

[10] In his second affidavit, Mr. Souch attested that the timetable imposed by Rady J. on July 15, 2011 was not properly diarized by his legal clerk, which resulted in the Proof of Loss being served upon the defendant after the date prescribed in the timetable. It states that Mr. Souch spoke to Mr. Dillon on January 18, 2012, and discussed, among other things, the plaintiffs’ intention to continue on in the litigation. He states that defence counsel’s reminder letter of March 9, 2012 “did not come to my attention”. It is not denied that the letter was received by Mr. Souch’s firm.

[11] Accepting that the law clerk bears the blame for not properly diarizing the timetable imposed by Rady J. does not explain why, when the defendant served its Affidavit of Documents, the plaintiffs did not immediately do the same. Obviously, the defendant’s compliance with the timetable (albeit 9 days late) would have served as a reminder to counsel for the plaintiffs as to the existence of the timetable. Nor does Mr. Souch’s affidavit satisfactorily explain why counsel for the plaintiffs did not arrange examinations for discovery forthwith, and get the matter ready to be set down for trial.

[12] Significantly, Mr. Souch states that he advised Mr. Dillon on January 18, 2012 that his client intended to proceed with the litigation. Why, then, did Mr. Souch not do so? The fact is that nothing at all was done to move the action forward from that point until it was dismissed by the Registrar.

[13] Furthermore, no attempt is even made to explain why no steps at all were taken to advance the litigation from the time that the action was commenced on September 11, 2008 until the Status Hearing Order was made on July 15, 2011. As to this, the comments of Sharpe J.A. in 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544, [2012] O.J. No. 3877 (C.A.) at para. 25 are germane:

I completely disagree with the contention that the plaintiff was somehow absolved for all prior delay by the order made at the January 2010 status hearing. That order, made despite over three years of delay, was properly described by the September 2011 status hearing judge as a "lifeline" that allowed the plaintiff to proceed on the basis of the timetable ordered. The plaintiff ignored the lifeline it had been given and failed to respect the timetable that had been set. Without repentance there can be no absolution. The plaintiff did not emerge from the January 2010 status hearing with a clean slate and it was open to the status hearing judge to consider the entire history of delay.

[14] The period in question amounts to almost three years, during which absolutely nothing was done to prosecute this case. I consider that delay to be a highly relevant factor.

[15] Overall, I find that no satisfactory explanation for the delay in prosecuting this action has been advanced. It is difficult to arrive at any conclusion other than that this file was deliberately allowed to remain dormant.

[16] The second factor requires the plaintiffs to 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. I have already discussed the alleged inadvertence of the law clerk in failing to diarize the Status Hearing timetable, and observed that this does not explain the failure to set the action down and otherwise comply with the timetable when it was brought, once again, to the attention of counsel for the plaintiff in November of 2011.

[17] It is significant that the only affidavit evidence offered by the plaintiffs on this motion is that of Mr. Souch. There is nothing at all from John O’Connor or from his litigation guardian Randy O’Connor to state that they always intended to proceed with the litigation, and believed that it was proceeding satisfactorily. The comments of Master Dash in the seminal case of Reid v. Dow Corning Corp., [2001] O.J. No. 2365 (S.C.J. Master) at para. 21 are relevant:

There is no evidence before me that the plaintiff at all times intended for the action to proceed, or that she always believed the action was proceeding in a normal manner, or that she was in regular contact with her solicitors inquiring about the course of the action, or that she urged her solicitors to advance the litigation or that it was always her intention to move the action forward and set it down for trial on a timely basis. There is in fact no evidence at all of the plaintiff's intentions during the critical period.

[18] Although those comments were made while Master Dash was discussing the first factor, they are equally applicable to the second. There is simply no direct evidence from the plaintiffs as to their intentions in prosecuting this litigation. The lack of any direct evidence from the plaintiff himself was found to be a compelling factor in Van Harten v. Rey, 2004 CarswellOnt 2236 (S.C.J.) at para. 13.

[19] Mr. Souch, in his supplementary affidavit, makes the bald statement that the plaintiffs “never intended to delay the litigation proceedings, and the plaintiffs instructed me at all times to carry forward with the litigation in an expeditious manner.” Once again, this assertion is entirely lacking in detail. When is it that the plaintiffs instructed him to carry the litigation forward? And, if they in fact did so, why did he not comply with their instructions? This assertion is completely at odds with his earlier explanation, that “communication difficulties” made it impossible to comply with the timetable.

[20] I find that the plaintiffs have failed to 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.

[21] The third factor is whether the plaintiffs proceeded promptly to move to set aside the dismissal order once it came to their attention. I am satisfied that they did so, and the defendant does not argue otherwise.

[22] The fourth factor is whether there is any significant prejudice to the defendants arising from the plaintiffs’ delay. Prejudice is presumed from the passage of time, requiring the plaintiffs to lead evidence to rebut that presumption. In that regard, Mr. Souch attested that all material witnesses are still available to give evidence and the defendant’s investigation into the matter is complete.

[23] The affidavit of Harold Ginn, filed by the defendant on this motion, suggests that the defendant has been prejudiced in obtaining disclosure of the names and addresses of witnesses to the event, which would have been obtained at discovery. However, Ms. Kasi, for the defendant, did not pursue this, and does not argue that there is evidence of actual prejudice.

[24] It is clear, however, that the case for the defendant will depend upon oral testimony from witnesses to the fire. As Mr. Ginn’s affidavit attests, the defence will be relying upon testimony from witnesses to the fire who will testify as to the activities of John O’Connor immediately before and after the fire, as circumstantial evidence from which the defence will ask the trier of fact to conclude that Mr. O’Connor intentionally set the fire.

[25] The memories of witnesses do, without doubt, fade with time. Although all witnesses have been interviewed by investigators, have given statements, and will be able to refer to those statements prior to giving evidence at trial, that does not diminish the reality that the memories of witnesses will become less reliable with time. A witness who refreshes his or her memory from a prior statement must still have an independent recollection of the matters he or she is testifying about. The passage of time may, at some point, render the memories of some witnesses so weak that they are incapable of being refreshed by the statements taken.

[26] For purposes of this analysis, I am not prepared to conclude that actual prejudice has been established, but I do conclude that the ability of the witnesses to the fire to give an accurate recollection of what happened continues to be compromised with each passing day.

[27] In balancing these factors, I am alive to the fact that prejudice is the key consideration. As against that, however, I find a complete lack of any reasonable explanation for the delay, coupled with a lack of any satisfactory evidence that the intention all along was to set the action down in compliance with the time limits set out in the Status Hearing Order.

[28] I find the facts in 1196158 Ontario Inc. (supra) to be virtually indistinguishable from the case at bar. There, there had been a lack of any real progress in prosecuting the case, beyond the pleadings stage, for a five year period. Here, the period is four years from the date the action was commenced, but five years from the date of the fire loss itself. There, as here, the plaintiff had been offered a “lifeline” at the Status Hearing, by being given a second chance to move the action forward through compliance with a defined timetable. There, as here, that timetable was completely ignored.

[29] The comments of Sharpe J.A. at paras. 33 to 35 apply equally to the case at bar:

As I have noted, the goal of the civil justice system is ensure "the just, most expeditious and least expensive determination of every civil proceeding on its merits". Consideration of actual prejudice focuses on the just determination of the dispute on its merits. The absence of actual prejudice does not automatically or inevitably trump the values of timeliness and efficiency. At some point, a party who has failed to respect the rules designed to ensure timely and efficient justice loses the right to have its dispute decided on the merits. If that were not the case, the rules and the time lines they impose would cease to have any meaning and any hope of ensuring timely and efficient justice would be seriously jeopardized.

Modern civil procedure recognizes the need to deal with unexplained delay and, through rules such as rule 48.14, provides for an active judicial role "to promote the timely resolution of disputes, to discourage delay in civil litigation and to give the courts a significant role in reducing delays": Todd Archibald, Gordon Killeen & James C. Morton, Ontario Superior Court Practice (Markham: LexisNexis Canada, 2011), at p. 1205. As judgments of this court and the Superior Court recognize, if an action could not be dismissed for delay unless there was proof of actual prejudice, time lines would become meaningless. Where a party fails to prosecute an action in a timely fashion, the court is entitled to exercise the powers conferred by the rules to dismiss actions absent an adequate explanation for the delay: Riggitano v. Standard Life Assurance Co., [2009] O.J. No. 1997 (S.C.), at para. 45, aff'd 2010 ONCA 70, [2010] O.J. No. 292.

It is surely not too much to expect a party to either set a matter down for trial within two years of the close of pleadings or be able to offer a reasonable explanation for why that is not possible to do so. In this case, the plaintiff had no explanation for an initial lengthy period of inaction. Despite that unexplained delay, the plaintiff was permitted to proceed with the action, but again failed to take any meaningful step towards trial for another period of almost eighteen months. In these circumstances, the status hearing judge did not err by concluding that the time for any further indulgence had passed.

[30] I arrive at the same conclusion in this case. The time for any further indulgence has passed. The motion to set aside the administrative dismissal is dismissed.

[31] If the parties cannot agree on costs, I will accept written submissions from the defendant within 15 days, with the response from the plaintiffs within 10 days thereafter and any reply within 5 days thereafter.

“Heeney R.S.J.”

Regional Senior Justice T. A. Heeney

Released: May 30, 2013

COURT FILE NO.: 59546-08

DATE: 2013-05-30

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

RANDY O’CONNOR and JOHN O’CONNOR (by his Litigation Guardian, Randy O’Connor)

Plaintiffs

– and –

Dominion of Canada General Insurance Company

Defendant

REASONS FOR JUDGMENT

T. A. Heeney R.S.J.

Released: May 30, 2013