SUPERIOR COURT OF JUSTICE - ONTARIO
2013 ONSC 422
COURT FILE NOS.: 4082-11 & 08-141
DATE: 2013/01/17
BETWEEN: BUSINESS DEVELOPMENT BANK OF CANADA (Plaintiff)
- and –
1673747 ONTARIO INC. and 2045227 ONTARIO LTD. (Defendants)
AND BETWEEN: 1673747 ONTARIO INC. c.o.b. as GREW MFG. (Plaintiff)
- and –
GOODFELLOW INC. (Defendant)
BEFORE: JUSTICE I. F. LEACH
COUNSEL:
Michael Cassone, for the Plaintiff, Business Development Bank of Canada and Receiver, BDO Canada Limited
James R. Fisher, for the Defendant, Goodfellow Inc.
Allen Wilford, for the Plaintiff 1673747 Ontario Inc.
HEARD: January 11, 2013
E N D O R S E M E N T – S U P P L E M E N T A L
On January 14, 2013, I released my primary endorsement in relation to the special appointment hearing in this matter held on January 11, 2013.
In that endorsement, I described the two motions that were before me when I began the hearing as follows:
i. In 1673747 Ontario Inc. cob as Grew Mfg. v. Goodfellow Inc., the defendant (“Goodfellow”) had brought a motion for, inter alia, dismissal of the action against it on the basis of alleged prejudicial delay, primarily on the basis that no one had completed measures pursuant to Rule 11 of the Rules of Civil Procedure to obtain an “Order to Continue”, following the plaintiff corporation, (“Grew”), being placed in formal receivership on or about May 10, 2011; and
ii. In Business Development Bank of Canada v. 1673747 Ontario Inc. and 2045227 Ontario Ltd., (the formal proceeding dealing with Grew’s insolvency), BDO Canada limited, the court appointed receiver for Grew brought a motion for approval of its latest report, conduct and activities, including a request for approval of the receiver’s proposed assignement of Grew’s action against Goodfellow Inc. (“Goodfellow”) to Jessica Cameron, (daughter of Grew’s now deceased former principal, David Cameron).
For the reasons outlined in my endorsement, I granted the relief requested by the latter motion.
I nevertheless made no formal substantive ruling on Goodfellow’s motion to dismiss for delay. As indicated in my reasons, this reflected my understanding, based on comments made by Goodfellow’s counsel during the course of the hearing, that its formal motion effectively was being abandoned, (although it still was relying on its proffered evidence and arguments concerning delay as a reason why the relief requested by the receiver should be denied).
On January 16, 2013, (following release of my earlier endorsement), I received correspondence from Goodfellow’s counsel, (copied to counsel for the receiver and counsel for Ms Cameron). Its substantive content reads as follows:
We thank you for your endorsement of January 14, 2013, in connection with the above matter.
Following a review of your Reasons, we believe that a re-attendance of counsel may be required to deal with our Motion to dismiss in Superior Court of Justice Court File # 08-041 by reason of the failure of the Receiver to obtain an Order to Continue.
We wish to emphasize and clarify that the only relief abandoned in our Motion was our client’s request to have this matter dismissed for delay, based upon the provisions of Rule 24. At no time was our client prepared to abandon its request for a dismissal pursuant to the provisions of Rule 11. We apologize for any miscommunication and misunderstanding that may have occurred in this regard during the course of our closing submissions.
Following receipt of your endorsement, we spoke to [counsel for the receiver], who has confirmed our understanding that we were only abandoning any request for relief based upon the provisions of Rule 24 in our Notice of Motion.
It was our belief that we had already made our submissions with respect to the implications of Rule 11 and that it would be unnecessary to attend in the afternoon to deal with Rule 24.
We repeat that we regret that this misunderstanding has occurred and we request that you review your endorsement as it is our position that the balance of our Motion requesting relief under Rule 11 remained outstanding and was not abandoned.
For present purposes, I will accept counsel’s indication that there was an intended distinction and disconnect between Goodfellow’s request for relief pursuant to Rule 11 and its request for relief pursuant to Rule 24.
In particular, I will accept that Goodfellow intended to pursue its request for relief pursuant to Rule 11.03, despite abandoning its request for relief pursuant to Rule 24.01, (although I note that Rule 11.03 expressly links its application to the remaining provisions of Rule 24).
However, I do not agree with the suggestion that this requires a re-attendance of counsel to address the request.
In particular, I refrained from making a formal ruling on Goodfellow’s motion only because I understood that the motion formally was being abandoned in its entirety.
It was not because I did not receive submissions from Goodfellow on its suggested implications of Rule 11 and associated prejudice. (As noted in the above correspondence, Goodfellow has already made its submissions in that regard, and any misunderstanding concerning abandonment of its motion in whole or in part stemmed only from the closing submissions of Goodfellow’s counsel.)
Nor was it because I did not receive submissions in that regard from counsel for the receiver, (who was expressly asked for primary and reply submissions concerning the implications of Rule 11, including comment on Goodfellow’s suggestion of prejudicial delay).
Nor was it because I had not formed any opinion on the appropriate formal disposition of Goodfellow’s motion if it had not been formally abandoned in its entirety.
To the contrary, I would have thought it clear from my earlier endorsement that I completely reject Goodfellow’s suggestion that there has been unacceptable delay by the receiver in the circumstances of this case, particularly insofar as its failure to obtain an order pursuant to Rule 11 is concerned.
Again, the evidence before me clearly demonstrated that the receiver in this case was taking reasonable steps to address, evaluate and deal with Grew’s claim against Goodfellow, with a view to its eventual advancement or liquidation by way of assignment. In my opinion, the receiver was acting in a responsible manner within the formal stay period, could not be faulted for the lapse of time necessarily associated with proper execution of its duties, and had no obligation to obtain an Order to Continue pursuant to Rule 11 at any earlier time.
Consistent with that view, I felt and still feel there was no unacceptable delay for the purpose of any formal determination required in relation to Goodfellow’s motion, including its arguments based on Rule 11.03.
In my opinion, the absence of unacceptable delay was sufficient reason, by itself, to justify a formal dismissal of Goodfellow’s motion.
For the sake of completeness, I nevertheless note that I also did not find the grounds of prejudice suggested by Goodfellow to be persuasive. In particular:
i. Although Goodfellow made some attempt to particularize its suggestion of prejudice, (e.g., noting Mr Cameron’s death and the departure of some of its employees), I was inclined to agree with receiver counsel’s characterization of the suggestion as little more than “bald allegations”. Goodfellow certainly made no real effort, or offered any evidence, to explain why and how such developments would result in any serious prejudice to Goodfellow.
ii. Prior to imposition of the stay of proceedings, the litigation had progressed to oral discovery examination of Mr Cameron. His evidence therefore has been recorded and is available to some extent if/as necessary. (If the form of its receipt at trial weakens its impact, one would expect that to be more prejudicial to the plaintiff and thereby beneficial to Goodfellow.) Moreover, if Goodfellow has any remaining inquiries relating to the plaintiff’s claim for economic loss, after its review of the report from Grew’s accountant, the evidence before me, (including the evidence tendered by Ms Cameron), indicates that answers to such inquiries will be forthcoming from Grew’s accountant and/or surviving members of the Cameron family who were involved in Grew’s business operation.
iii. Employees may have left Goodfellow, but that does not mean their desired evidence is not still available; e.g., pursuant to Rules 31.10, 39.03 and 53.04. Moreover, given the extended history of the litigation, it would be surprising if Goodfellow had not made efforts long ago, (and certainly prior to Grew’s receivership), to ascertain and document the relevant evidence that might be expected from such witnesses.
iv. Although Grew’s claim is now somewhat dated, (insofar as it apparently relates to events as far back as 2003), it must be remembered that the period of “delay” alleged by Goodfellow began only with the appointment of the receiver in May of 2011. The evidence before me did not suggest that Goodfellow had any serious concerns of prejudicial delay before then.
v. As indicated in my earlier endorsement, if Goodfellow truly felt it was being prejudiced by passage of time during Grew’s receivership, Goodfellow was not without means to bring the matter before the court at an earlier date. Its failure to do so reinforced my impression that Goodfellow had no real concerns about prejudicial delay.
Having regard to the clarification now received from Goodfellow’s counsel, (which makes it necessary to make a formal substantive determination in relation to Goodfellow’s motion), Goodfellow’s motion is hereby dismissed.
This does not alter my preliminary view concerning an appropriate disposition as far as costs of Goodfellow’s motion are concerned.
In particular, although Goodfellow’s motion was unsuccessful, I still am not inclined in the circumstances, (especially given the uncertainty as to whether bringing of the motion prompted finalization of the assignment negotiations between the receiver and Ms Cameron), to penalize Goodfellow in costs for its effort to move the matter forward.
However, that preliminary view will be reconsidered, (along with the preliminary view expressed in my earlier endorsement concerning costs of the receiver’s motion), if the parties wish to make submissions on costs.
Such costs submissions now may be done in writing within thirty days of the release of this supplemental endorsement, failing which there shall be no order as to costs in relation to the BDO motion or the Goodfellow motion.
“Justice I. F. Leach”
Justice I. F. Leach
DATE: January 17, 2013