Les Fibres J.C. Inc./J.C. Fibers Inc. v. OGO Fibers Inc.

[Indexed as: J.C. Fibers Inc. v. OGO Fibers Inc.]

Ontario Reports

Ontario Superior Court of Justice,

Matheson J.

September 9, 2013

118 O.R. (3d) 75 | 2013 ONSC 5584

Case Summary

Civil procedure — Dismissal for delay — Setting aside — Parties agreeing that defendant would set action down for trial by date specified by master — Defendant failing to do so — Action dismissed for delay — Defendant's failure to file trial record coming to plaintiff's attention only after it received dismissal order — Plaintiff moving promptly to set aside order — Plaintiff providing acceptable explanation for delay — Defendant suffering no prejudice if action were allowed to proceed — Order dismissing action set aside.

The parties agreed that the defendant would set the action down for trial within the time specified by the master. The defendant failed to do so, and the action was dismissed for delay. The defendant's failure to file the trial record came to the plaintiff's attention only after it received the dismissal order. It moved to set aside the order.

Held, the motion should be granted.

The plaintiff had provided an acceptable explanation for the delay. The defendant ought not to seek to benefit from its own failure to set the matter down in an attempt to defeat the plaintiff's claim. As the defendant had admitted the essential elements of the plaintiff's claim at discovery, it would suffer no prejudice if the action were allowed to proceed. [page76 ]

Cases referred to

Faris v. Eftimovski, [2013] O.J. No. 2551, 2013 ONCA 360, 306 O.A.C. 264, 87 E.T.R. (3d) 204; O'Connor v. Dominion of Canada General Insurance Co., [2013] O.J. No. 2542, 2013 ONSC 3184 (S.C.J.); Wellwood v. Ontario Provincial Police (2010), 102 O.R. (3d) 555, [2010] O.J. No. 2225, 2010 ONCA 386, 262 O.A.C. 349, 90 C.P.C. (6th) 101

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 48

MOTION to set aside an order dismissing an action for delay.

Harjaap Mann, for plaintiff/moving party.

Ken MacDonald, for defendant/respondent.

[1] MATHESON J.: — The plaintiff moves to set aside an order of the registrar dated April 3, 2013, dismissing this action for delay. The plaintiff also seeks an order restoring this action to the trial list and providing a new deadline within which the action should be set down for trial.

[2] In this case, it was the defendant who agreed to set the action down for trial, which was required to be done by a specific date. The trial record was served within that time period, but it was not filed with the court office. As a result, the above order dismissing the action was made. The defendant's failure to file the trial record came to the plaintiff's attention only after receiving the dismissal order.

[3] The defendant does not dispute the fact that the defendant, not the plaintiff, was obliged to file the trial record, yet it disputes this motion as set out below.

[4] Over a period of years, the defendant purchased waste paper products from the plaintiff. In December 2006, the plaintiff commenced this action seeking damages for the defendant's alleged failure to pay certain invoices totalling about US$96,000 in regard to some of the waste paper purchases.

[5] The defendant not only defended the plaintiff's claim but also initiated a counterclaim for more than $5 million alleging business losses due to some paper allegedly being either lower grade or unacceptable material, causing losses. Pleadings closed in 2007.

[6] The action and counterclaim proceeded. The plaintiff examined the defendant for discovery in January 2009. However, in February 2009, the registrar dismissed the action as abandoned. That order was set aside in April 2009 by an order of [page77 ]Master Haberman that imposed a schedule requiring that the action be set down for trial by December 31, 2009. A further schedule was imposed by Master Graham on September 15, 2011, requiring that this action be set down by March 31, 2012. None of these orders specified that the plaintiff, in particular, was required to set the action down for trial. The action was not set down within those time periods, either by the plaintiff or the defendant (plaintiff by counterclaim). At a status hearing before Master Graham on April 4, 2012, Master Graham ordered that the action be set down for trial by March 31, 2013.

[7] The parties agreed that counsel for the defendant would be filing the trial record and setting down the action for trial by the deadline of March 31, 2013, as required by the timetable set at the status hearing.

[8] In June 2012, the statement of defence and counterclaim was amended to add, among other things, a defence of legal and equitable set-off. Defendant's counsel conducted an examination for discovery in early 2013.

[9] In keeping with the agreement that the defendant set the action down for trial by the court-ordered deadline of March 31, 2013, plaintiff's counsel was served with the trial record on March 25, 2013.

[10] On April 5, 2013, plaintiff's counsel received the registrar's order of April 3, 2013, dismissing this action for delay under Rule 48 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194]. Plaintiff's counsel promptly e-mailed defendant's counsel, as well as attempting to contact him by phone. Plaintiff's counsel asked for confirmation that the matter had been set down for trial before the deadline in March, as agreed. When defendant's counsel replied, he indicated: "The process server tells me he failed to file the trial record. I understand that the line up at the court office was long." The defendant did not consent to an order setting the dismissal aside, instead opposing this motion.

Setting Aside Order Under Rule 48

[11] The Ontario Court of Appeal has recently confirmed the principles that must be applied on this motion, in Faris v. Eftimovski, [2013] O.J. No. 2551,2013 ONCA 360, at para. 32, as follows:

(a) the onus is on the plaintiff to demonstrate why the action should not be dismissed for delay; and

(b) the plaintiff must "demonstrate that there was an acceptable explanation for the delay and establish that, if the [page78 ]action were allowed to proceed, the defendant would suffer no non-compensable prejudice".

[12] One unusual aspect of this case is the role of the counterclaim. A party that commences the proceeding bears primary responsibility for its progress: Faris, supra, at para. 46, citing Wellwood v. Ontario Provincial Police (2010), 102 O.R. (3d) 555, [2010] O.J. No. 2225, 2010 ONCA 386, at para. 48. It follows that a plaintiff by counterclaim (i.e., the defendant) has a commensurate responsibility to move its counterclaim forward in a timely way.

[13] The second unusual aspect of this case is the defendant's role in precipitating the dismissal order.

Analysis

(i) Explanation for the delay

[14] There is no issue that the immediate cause of the registrar's dismissal is the failure to set this action down by March 31, 2013. There is also no issue that it was the defendant that failed to meet its commitment to do so. The plaintiff moved promptly once it was alerted that there was a problem. I am satisfied that the plaintiff has adequately explained the delay.

[15] The defendant ought not seek to benefit from its own failure to set this matter down in an attempt to defeat the plaintiff's claim.

[16] The defendant points to the earlier schedules imposed in this case, and earlier failures to set the action down for trial, and essentially says that those failures led to the dismissal, notwithstanding the defendant's role in the precipitating step. I do not find that the failure to meet earlier schedules defeats the plaintiff's reasonable explanation. Those earlier orders placed obligations on both parties and did not specifically call for the plaintiff, rather than the defendant (plaintiff by counterclaim), to set the matter down. The record before me does not support the defendant's suggestion that the delay, and any steps not taken under those earlier orders, are attributable solely or even largely to the plaintiff's prosecution of its claim, rather than the defendant's (plaintiff by counterclaim) prosecution of its counterclaim. In any event, the entitlement to each of those orders was decided on the motions when the orders were made, and those orders are not under review by me.

[17] The plaintiff has met the first requirement for the relief sought. [page79 ]

(ii) Prejudice

[18] In support of its position that there is no prejudice to the defendant, the plaintiff filed excerpts from its examination for discovery of the defendant conducted in January of 2009. In short, the plaintiff contends that the defendant admitted the essential elements of the plaintiff's claim at discovery, and there is therefore no prejudice to the defendant at all.

[19] The transcript excerpts demonstrate that the defendant admitted receiving the goods that each of the unpaid invoices related to, and admitted that there was no issue regarding the quantity or quality of those particular goods. Thus, as of January of 2009, two years after the claim was commenced, the plaintiff's claim was admitted.

[20] Defendant's counsel did not disagree with the plaintiff's characterization of the discovery admissions.

[21] The defendant relies on the principle that prejudice may be presumed, given the passage of time since the action was commenced, and given the passage of the two-year limitation for breach of contract claims, as set out in O'Connor v. Dominion of Canada General Insurance Co., [2013] O.J. No. 2542, 2013 ONSC 3184 (S.C.J.), at para. 5, and the cases cited therein.

[22] Given the discovery admissions, I conclude that the plaintiff has met its onus to rebut a presumption of prejudice, subject to the issue of the recently added defence of set-off addressed below. Simply put, an admitted claim cannot be prejudiced.

[23] The defendant's argument for prejudice is also based upon the witness and documentary evidence said to be needed to prove the counterclaim and in turn establish the defence of set-off. That defence was added in June of 2012, after the schedule was set requiring this matter be set down for trial by March 31, 2013.

[24] The defendant filed affidavit evidence regarding a number of witnesses that could be required by it and identifying various problems obtaining the evidence of those people and potentially documents as well. Even accepting that those witnesses and documents are needed, it was the defendant's responsibility to move the counterclaim forward after its commencement in 2007. Thus, for at least five of the six intervening years it was the defendant's responsibility to take the steps needed to obtain and preserve evidence in regard to its counterclaim. The evidence filed on this motion did not explain when the defendant first began to seek out the evidence now referred [page80 ]to in its affidavit, and what steps, if any, it took to preserve the evidence.

[25] The passage of an inordinate length of time can make stale claims more difficult to defend; however, here the stale claim is the defendant's counterclaim. Only a year has passed since it became not only a counterclaim but also a defence. The principles of fairness that underlie this type of motion do not auger in favour of the defendant in the circumstances.

[26] I conclude that the defence of set-off does not give rise to a presumption of prejudice because it was asserted just last year, nor has the defendant proved actual prejudice that should be the responsibility of the plaintiff rather than the defendant.

Decision

[27] I therefore order as follows:

(a) the order of the registrar dated April 3, 2013 dismissing this action is set aside;

(b) this action is restored to the trial list; and

(c) this action shall be set down for trial by November 29, 2013.

[28] If costs are sought regarding this motion, brief written submissions must be delivered to me by September 30, 2013, together with a bill of costs. The responding party to a costs request shall deliver a brief written response, if any, by October 21, 2013.

Motion granted.

End of Document