2013 ONSC 5036

AXA Insurance Canada, et al. v. Aviva Insurance Company of Canada, et al.

Court File No.: 08-CV-359340

Motion Heard by: Master Abrams

Date of Hearing: May 27/13

In attendance: W.G. Scott, for lawyers for the plaintiffs

S. Wayne Morris, for Aviva Insurance Company of Canada

By the court:

[1] This action arises out of a fire which occurred on July 23/06. AXA Insurance (Canada) (“AXA”) and Aviva Insurance Company of Canada (“Aviva”) provided insurance coverage to the QM group of companies. It was at the QM group of companies’ premises that the fire occurred. AXA indemnified the QM group of companies in the amount of $27 million and is seeking more than $14 million in contribution or, in the alternative, damages from Aviva. Originally brought against Aviva and Will Insurance Brokers Ltd., the action has been discontinued as against Aviva’s co-defendant, Will Insurance Brokers Ltd.

[2] The claim was commenced against Aviva by way of notice of action in July 2008. A statement of claim was served in November/08. The plaintiffs’ lawyer’s predecessor firm had earlier represented AXA in an action against Aviva. The issue was raised with Aviva and, in June/09, confirmation that Aviva waived the conflict was put in writing by counsel for AXA. With the conflict issue resolved, Aviva served its statement of defence in September 2009.

[3] One month later, counsel for AXA requested of counsel for Aviva that the declarations and policy wording for the Aviva policy, in effect of the time of the fire, be produced. It was. In November 2009, Aviva requested the plaintiffs’ affidavit of documents and productions.

[4] In December of 2009, counsel for AXA advised that he had changed firms. In April 2010, AXA’s affidavit of documents was promised by AXA and a settlement meeting was proposed (by AXA’s lawyer) among counsel and their client representatives. The plaintiffs’ unsworn affidavit of documents was served in July 2010.

[5] Also in July 2010, efforts were made to schedule examinations for discovery; and Aviva requested the plaintiffs’ Schedule “A” documents.

[6] Litigation efforts continued thereafter, with communications in August and November/10 and January/11 as to when the discoveries might be scheduled.

[7] A status notice was issued by the court on January 17/11. The plaintiffs’ lawyer’s evidence is that he asked another lawyer in his firm to deal with the status notice by requesting a status hearing. No status hearing was requested. Counsel for Aviva points out that there is no evidence from the lawyer assigned the task as to why it was not; and, really, there should be. I agree with him.

[8] In May/11, the plaintiff’s lawyer produced the plaintiffs’ Schedule “A” documents and requested Aviva’s affidavit of documents and copies of its Schedule “A” documents.

[9] This action was dismissed by the Registrar for delay in May/11. Upon learning of the dismissal, the plaintiffs’ lawyer moved, without delay, for an Order setting aside the dismissal.

[10] The dismissal Order was set aside, on consent, with a new set down date of July 31/12 fixed by the court.

[11] It is noteworthy that between the time that the action was dismissed for delay and the time that the (first) dismissal Order was set aside, efforts continued to schedule examinations for discovery herein. Dates were set but not met, given that there was a delay in the plaintiffs’ receipt of Aviva’s affidavit of documents—the affidavit of documents not having been served until June/11.

[12] In December 2011, examinations for discovery took place. Undertakings remain outstanding. The witness proffered on behalf of the plaintiffs—an independent adjuster—has been away from the office on medical leave and, thus, has not fulfilled all of his undertakings. In March 2012, counsel for Aviva reminded the plaintiffs of the undertakings given and confirmed that Aviva was in the process of answering its own undertakings. Those undertakings, too, remain outstanding.

[13] On August 14/12, this action was again dismissed for delay in that it had not been set down and no extension of time had been sought and granted.

[14] Counsel for the plaintiffs says that he suffered a serious personal health issue on December 24/11 which required that he had to be hospitalized and undergo surgery. He was off work for approximately 3 weeks during his period of convalescence. He returned to work part-time until March/12 when he returned full-time. He says that he was not working “efficiently” and, as such, overlooked attending to this file and addressing the set down deadline. While there is no medical documentation before me[^1], I take counsel at his word, as an officer of the court, that he was ill and off work for a few weeks and did not return to full-time duties until March 2012. But, without knowing the nature of his illness and with no particulars as to how he was affected, I cannot evaluate the reasonableness of counsel’s comment that he was not working “efficiently”. He was working; and, though I am sympathetic to him, I say that if counsel for the plaintiffs could not focus on his work he could have and, with respect, should have sought the assistance of his partners or associates.

[15] That said, the fact that the schedule consented to by the parties and fixed by Master Glustein was not going to be met was known by Aviva. Its lawyer wrote to counsel for the plaintiffs suggesting that the timetable be amended to permit a delay in fulfillment of undertakings and the hearing of motions arising out of discoveries.

[16] I have looked at Master Glustein’s Order, dated August 24/11. Master Glustein ordered “each Party [to] carry out the step(s) assigned to him or her by the date(s) provided”. Of note is the fact that the fulfillment of undertakings by March 31/12 was an obligation imposed on “all parties”. So too was the completion of discovery motions by May 31/12 and the participation in mediation by June 30/12. All parties (and not simply the plaintiffs) were to have met those deadlines, unless they otherwise agreed.

[17] As for the obligation to set the action down for trial by July 31/12, the Order of Master Glustein does not impose the obligation on the plaintiffs and neither do the Rules (though, I acknowledge, that it is typically the plaintiff who sets an action down). The Order is silent as to who was to set the action down. Both the plaintiffs and Aviva could have addressed the set down deadline.

[18] By letter dated March 16/12, Aviva’s lawyer wrote to the plaintiffs’ lawyer advising that the undertakings and motions deadline were “optimistic” and “not…realistic”. He suggested that undertakings be fulfilled by May 31/12 and motions brought by August 31/12. August 31/12 was a date after the set down deadline fixed by Master Glustein. Implicit in this would have been an obligation to seek leave of the court for any discovery motion involving, inter alia, refusals or the need to obtain an Order to extend the July 31/12 deadline. Neither implication was specifically addressed; and, neither was there any indication that Aviva was particularly exorcised about the prospect of the parties not meeting the deadlines fixed by Master Glustein. Counsel for the plaintiffs suggests that the parties were considering (and are still considering) whether the better course might be a summary judgment motion or R. 21 motion.

[19] Once the dismissal came to the attention of counsel for the plaintiffs, he booked this motion. The delay in the hearing of the motion to May 27/13 is not the fault of any party.

[20] The question I must answer is whether I ought to set aside the dismissal of this action for delay—with this being the second time in the currency of this 2008 action that a dismissal Order has been made. Counsel for Aviva says that the plaintiffs were given one lifeline by Master Glustein and, in light of that fact, a second lifeline ought not to be given them. He points out that “the party who commences the proceeding bears primary responsibility for its progress” and therefore “the initiating litigant generally suffers the consequences of a dilatory regard for the pace of litigation” (see: Wellwood v. Ontario Provincial Police, 2010 ONCA 386, at para. 48).

[21] Mr. Scott says that though primary responsibility does fall to the plaintiffs, the conduct of a defendant is also relevant (see: 1196158 Ontario Inc. v. 6274013 Canada Limited, 2012 ONCA 544, at para. 29). He urges me to adopt a contextual approach and make what he says is the just Order of permitting this $14 million+ battle between two insurers to be determined on its merits.

[22] Of primary import, in my review of the circumstances here at play, are four considerations: I must ask: has the delay been adequately explained; was the failure to seek an extension of the set down deadline a function of inadvertence; was the motion to set aside the dismissal Order made promptly; and, is there prejudice to the defendants in presenting its case at trial?

[23] In this action, there has been delay. Of that, there is no doubt. There was delay between the time that the action was commenced by notice of action and the time that the statement of claim was served. There was delay between the time that the statement of claim was served and the statement of defence was delivered. There was delay in the exchange of affidavits of documents. There was delay in the scheduling of examinations for discovery. And there was delay in the fulfillment of undertakings and scheduling of mediation. The defendant did not cause the delay; but, it did contribute to it. By way of example, it delivered its statement of defence 10 months after the statement of claim was served; and, it served its draft affidavit of documents 11 months after the plaintiff delivered its draft affidavit of documents. The delays herein, delays on the part of all parties, were appreciable but not inordinate or inexcusable. Aviva’s delays exacerbated the plaintiffs’ delays: delays occasioned, in part, by their counsel’s change in firms and his health issues. I am not blaming Aviva; I am simply noting that, like the plaintiffs, it did not proceed with alacrity, throughout.

[24] There is nothing before me to suggest that plaintiffs’ counsel’s missing of the set down deadline was anything other than inadvertence. Counsel’s inadvertence is more easily excused than it might otherwise be given his health issues and the fact that Aviva’s counsel himself acknowledged that the timetable was compromised and would need to be revisited. While Aviva suggests that the reminder sent to the plaintiffs’ lawyer ought to have caused him to take action, I note that there was no specific reminder in the letter as to the need to extend the set down date. Again, I am not suggesting that Aviva did anything wrong. I am simply saying that I would be less sympathetic to the plaintiffs’ plight if there had been a specific reminder with respect to the impending dismissal.

[25] I accept that this motion was brought promptly, given that the dismissal Order was made in August/12 and a motion date booked in October/12 (after the lawyer for the plaintiffs returned from vacation).

[26] No evidence has been adduced as to any actual prejudice that will compromise the rights of the parties. Presumed prejudice is here rebutted by virtue of the nature of the dispute and its progress to date. The action involves a coverage dispute between two insurers and is, thus, largely a documents case. All of the relevant documents are available and have been or will be produced; and, the parties have been examined for discovery. There is nothing before me “…to indicate that a further [extension of the set down date would] in any way [affect] the security of the legal position of [Aviva]” (see: Graham v. Vandersloot, et al., 2012 ONCA 60, at para. 11).

[27] For all of these reasons, i.e. the plaintiffs’ imperfect but reasonable explanation for the delay, the obligations imposed not only on the plaintiffs but also on Aviva by virtue of Master Glustein’s Order, plaintiffs’ counsel’s inadvertence in missing the set down deadline--caused or contributed to by his illness about which I have no details but which I have no reason to doubt, the fact that this motion was brought promptly, the nature of this dispute and the absence of actual prejudice, I believe it to be in the overall interests of justice that the dismissal Order be set aside and I so order.

[28] A new timetable will need to be put in place; but, given the two dismissals to date, the new timetable will be peremptory to the plaintiffs. Counsel are to confer and to file, with me, a new timetable (including with respect to mediation) by August 30/13, which timetable will be imposed by way of court Order.

[29] Failing agreement on the issue of costs, I may be spoken to.

July 29/13 ___________________________

[^1]: I note that it would have been helpful if even a general-form doctor’s note had been filed, confirming the fact that counsel was ill and advising as to his period of incapacity (or reduced capacity).