Court File and Parties

COURT FILE NO.: CV-09-13117 CM
MOTION HEARD: 20130910

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Hercules Moulded Products Inc., Plaintiff

AND:

Timothy C. Rogers, Glenn F. Ploughman and Iva Ploughman, Defendants

BEFORE: Master Pope

COUNSEL:
Gregory D. Wrigglesworth, Counsel, for the Plaintiff

Robert E. Houston, Q.C., Counsel, for the Defendants, Glenn F. Ploughman and Iva Ploughman

HEARD: March 11, 2013

REASONS FOR DECISION

[1] The defendants, Glenn F. Ploughman and Iva Ploughman (“Ploughmans”), move for an order to dismiss this action for failure of the plaintiff to abide by the order of this court dated June 21, 2012 and for delay.

[2] The plaintiff filed no material in response to this motion.

Background

[3] In June 2007, the defendants, Timothy C. Rogers (“Rogers”), and Glenn F. Ploughman (“Glenn”) entered into negotiations with the owners of an apartment building known as Montana Apartments located in Sough Mountain Village, Arizona to purchase the building. Rogers and Glenn planned to convert the apartments to condominiums.

[4] Rogers and Glenn discussed their business plan with Emmanuel Azzopardi (“Azzopardi”), the principal of the plaintiff, Hercules Moulded Products Inc. (“Hercules”). On August 2, 2007, Agua-Artistone Capital Partners (U.S.) Inc. (“Agua (US)) purchased the apartment building. Agua (US) is owned essentially by Rogers and Glenn.

[5] On the same date, Azzopardi, Rogers and Glenn executed a Participation Agreement which called for a payment by Hercules of $600,000 USD to be paid between August 2 and September 19, 2007. Hercules’ funds were to be used to cover expenses involved in the apartment to condominium conversion.

[6] However the closing of the said property did not take place.

[7] In September 2008, Hercules commenced an action against Rogers, Glenn, Agua Canada and Agua US for the sum of $600,000 USD (“former action”). The statement of claim states that Rogers and Glenn were personal guarantees of the loan and that the funds were advanced by Hercules in August and September 2007. It further states that payment of principal and interest was to be made within thirty days of closing the purchase of the Montana Apartment complex which was scheduled for December 31, 2007. The statement of claim further states that the Participation Agreement provided that Hercules would be provided with security for the loan by way of ownership to four units in the Montana apartments. Neither Rogers nor Glenn filed a defence to that action. As a result Hercules obtained default judgment on December 5, 2008 against all four defendants in the amount of $673,258.60, together with a fixed amount of costs plus interest at 10 per cent. The said judgment with interest stands at approximately $940,000.

[8] Subsequently on May 21, 2009, Hercules commenced this action. Hercules claims the following:

a) declaration that Rogers and Glenn made fraudulent misrepresentations with the intent and which had the effect of inducing Hercules to enter into a loan agreement and damages of $600,000 USD;

b) damages of $600,000 against Iva Ploughman (“Iva”) for aiding and abetting the aforesaid fraudulent misrepresentations and a declaration that Hercules is the beneficiary of a constructive trust in title to a certain property in Arizona;

c) declaration that a conveyance of property in Ottawa that was owned jointly by Glenn and Iva and subsequently transferred to Iva in 2002 was a fraudulent conveyance made with the intent to defeat, hinder, delay or defraud creditors of Glenn, and an order setting aside the conveyance;

d) certificate of pending litigation with respect to the above-noted property.

[9] The Ploughmans filed a statement of defence on July 3, 2009. The defence pleads that this action is an attempt to relitigate the claim in the former action for which judgment was obtained in favour of the plaintiff. It is further pleaded that none of the monies advanced by the plaintiff were used in the acquisition of the Arizona property, and that there is no basis to set aside the conveyance of the Ploughmans’ property in Ottawa.

[10] Counsel for the Ploughmans wrote to counsel for Hercules on several occasions between September 2009 and July 2010 regarding the basis for Hercules’ claim against the Ploughmans.

[11] On November 17, 2009 the Ploughmans delivered their draft affidavit of documents and copies of Iva’s documents that related to the acquisition of the Arizona property.

[12] Hercules conducted examinations for discovery of the Ploughmans on May 26, 2010. Counsel for the parties agreed that examinations for discovery of Hercules would be conducted by written questioning. Ploughmans’ questions were forwarded to counsel for Hercules by letter dated July 21, 2010. In August 2010, counsel for the Ploughmans wrote to counsel for Hercules which provided that since Hercules had not answered any of the questions by the timeline that had passed, the Ploughmans would be bringing a motion to dismiss. Counsel for the Ploughmans advised the court at the hearing of this motion on March 11, 2013 that Hercules provided its written answers that day. Of course, counsel for the Ploughmans did not have the opportunity to review the answers prior to this hearing.

[13] A status notice was issued by the court dated July 19, 2011 and a status hearing was held on November 28, 2011. As the Ploughmans sought to have the action dismissed, the status hearing was adjourned to March 2, 2013 in order for the parties to file material. Pursuant to my reasons dated May 30, 3013, the action was not dismissed; however, my endorsement specified that the “parties will be required to follow tight timelines for the completion of the steps in this action which shall include the plaintiff’s answers to the Ploughman’s written question . . . .”

[14] Subsequently on June 21, 2012 at a case conference, it was ordered that Hercules respond to the Ploughmans’ written questioning by July 31, 2012.

[15] Hercules failed to comply with that order.

[16] The Ploughmans served this motion on Hercules on January 22, 2013 for the first return date of February 8, 2013. At the hearing, counsel for Hercules sought an adjournment in order to file responding material. Counsel for the Ploughmans opposed the request. After oral submissions, I granted a short adjournment for several reasons including the fact that there was little notice of the motion in order for Hercules to respond given the significance of the relief sought and the possible significance of a dismissal of the action on Hercules. Hercules was ordered to serve and file responding material including a factum and brief of authorities by February 15, 2013. Hercules failed to do so and in fact it filed no responding material to this motion.

Motion To Dismiss For Delay

[17] Rule 24.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that a defendant who is not in default under these rules or an order of the court may move to have an action dismissed for delay where the plaintiff failed to take any of the enumerated steps. The Ploughmans’ material does not specify what subrule they rely on for the order requested. Therefore, I am left to speculate that they rely on subrule 24.01(c) “to set the action down for trial within six months after the close of pleadings” as none of the other subrules apply.

[18] The Ploughmans rely on the Court of Appeal’s decision in Woodheath Developments Ltd. v. Goldman (2003), 2003 46735 (ON SCDC), 175 O.A.C. 259, which upheld Master Dash’s order dismissing the action for want of prosecution ((2001), 2001 28019 (ON SC), 56 O.R. (3d) 658 (“Woodheath” )).

[19] Justice Then affirmed the correct principles applicable to motions to dismiss for delay. The principles are that an action should not be dismissed unless the default is intentional or contumelious or, the plaintiff or his or her lawyers are responsible for the inexcusable delay that gives rise to a substantial risk that a fair trial might not now be possible. A finding that either of two branches of this test was met is sufficient to dismiss the action.

[20] A default will be considered contumelious if “the plaintiff has acted in an intentionally disdainful or disrespectful fashion” (New Solutions Financial Corp. v. Zilkey, 2011 ONSC 448 (“New Solutions”), relying on DeMarco v. Mascitelli, [2001] O.J. No. 3582 (Ont. S.C.J.) at para. 22 (“DeMarco”)), or in a “contemptible” manner (Woodheath, at para. 15).

[21] Inexcusable delay exists if “there is no ‘reasonable and cogent’ excuse for the delay” (New Solutions, at para. 14, relying on DeMarco, at para. 22) or “no justifiable excuse is given for the inordinate delay” (Woodheath, at para. 15).

[22] Inordinate delay after the cause of action arose or after the passage of the limitation period gives rise to a presumption of prejudice.

[23] Where there is a presumption of prejudice, the following principles apply:

i) undue delay following the passing of a limitation period will also give rise to a presumption of prejudice;

ii) if there is a presumption of prejudice, there is no onus on a defendant to prove actual prejudice. The plaintiff must lead satisfactory evidence to rebut the presumption of prejudice, failing which the action may be dismissed;

iii) the presumption of prejudice may be displaced by evidence that the issues in the lawsuit do not depend on the recollection of witnesses for their resolution, or that all necessary witnesses are available and they recall their testimony in detail, and that all documentary evidence has been preserved;

iv) if the presumption is rebutted, the onus shifts to the defendant to lead convincing evidence of actual prejudice (Woodheath, at para. 15).

[24] The Ploughmans also rely on rule 60.12 for failure of Hercules to comply with the case conference order of June 21, 2012. That rule provides that where a party fails to comply with an interlocutory order, the court may in addition to any other sanction provided by the rules, stay the party’s proceeding, dismiss the party’s proceeding or make such other order as is just.

[25] The Ploughmans contend that Hercules has taken no steps to advance this action since May 2010 when the examinations for discovery of the Ploughmans were held. They argue that although the parties agreed to conduct examinations for discovery of Hercules by written questions in July 2010, the fact that Hercules failed to answer any of the questions constitutes no discovery of Hercules.

[26] The Ploughmans further submit that despite the action not being dismissed at the status hearing, Hercules subsequently failed to comply with the case conference order made on June 21, 2012 by not answering the questions by July 31, 2012. Further, Hercules had not answered any of the questions by the time this motion was heard on March 11, 2013.

[27] Hercules submits that given the decision on the status hearing, it was permitted to proceed with this action and that the only step not met thereafter was for Hercules to respond to written questioning by July 31, 2012.

[28] Hercules argues that there is no prejudice to the Ploughmans if this action were allowed to proceed because the delay is due to the fault of both Hercules and the Ploughmans. Hercules submits that it obtained a timetable to move the action forward but recognizing that the outside timelines were fast approaching.[^1] It further submits that the date by which this action was to be set down for trial had not passed; namely, March 31, 2013, but recognizing that that date was only a few weeks away. Further, it states that mediation was ordered to be held by January 31, 2013; however, Ploughmans’ counsel was not available because the Ploughmans had separated. This evidence is not properly before the court as Hercules filed no responding material to this motion.

[29] Lastly, Hercules’ counsel submits that it is his fault that no responding material was filed to this motion; therefore, any costs should be made against him personally.

Analysis and Conclusion

[30] Counsel for Hercules, Mr. Wrigglesworth, stated that he was responsible for not filing responding material to this motion; however, he filed no evidence to that effect or to explain why he was responsible. It is noteworthy that Hercules had notice of this motion since January 22, 2013 and further that Hercules requested only a short adjournment at the return of the motion on February 8, 2013 in order to file material. As such, it was given an extension to February 15, 2013 to file material and the motion was adjourned to March 11, 2013. Therefore, Hercules had from January 22 to March 11, 2013, or six and one half weeks to file material even if it was filed late. Therefore, it is my view that at a minimum, Mr. Wrigglesworth ought to have filed an affidavit to explain why failure to file responding material was his fault. He had six and one half weeks to do so.

[31] In my view, Hercules is required to explain the delay in this action from its commencement on May 21, 2009, not merely from the decision on the status hearing on May 20, 2012.

[32] Hercules has not explained the delay in failing to comply with the timetable order of June 21, 2012, nor has it explained the subsequent long delay in failing to answer the written questions. Notably, there was a delay of some 21 months in answering the Ploughmans’ written questions from the time the questions were delivered to Mr. Wrigglesworth, on or about July 21, 2010. This of course is accepting that the questions were in fact answered when Hercules delivered answers the day of this hearing. Nor is there any explanation why Hercules did not answer the questions in the face of a court order on June 21, 2012.

[33] Hercules has not explained why it took no steps to advance this action since May 26, 2010 when discoveries of the Ploughmans were held. The status hearing was not a step that was taken by Hercules. The status hearing was a rule-generated step (48.14(1)). Although Hercules was successful in satisfying the court that the action should not be dismissed for delay at the status hearing, Hercules has done nothing since that time to advance this action.

[34] Further, there is no evidence from Hercules as to its intention to proceed with this action.

[35] Hercules did not dispute that it did not take any steps against the Ploughmans for a 21-month period between May 2010 and March 2012 although it was active in pursuing the action against Rogers. For the reasons given, it was my finding that there was unexplained delay of one year from May 2010 to May 2011, when Hercules began its attempts to arrange examinations for discovery of Rogers (Reasons for Endorsement of Master Pope, dated May 30, 2012).

[36] For the reasons set out above, it is my view that there has been inexcusable and unexplained delay by Hercules.

[37] Further, although the Ploughmans did not make submissions regarding the limitation period and prejudice, counsel for Hercules submitted that there was no prejudice to the Ploughmans if this action were to proceed as the delay was caused by both parties.

[38] In my view, there is a presumption of prejudice as it appears that the limitation period expired on or about January 31, 2009, being two years from the date when payment on the loan agreement was to be made (Statement of Claim in the former action, at para.10).

[39] As there is a presumption of prejudice, Hercules has the onus to lead satisfactory evidence to rebut the presumption of prejudice. Hercules has failed to do so.

[40] Further, it is my view that Hercules has acted in a contemptible manner. Although Hercules was successful at the status hearing and granted additional time to answer written questions, it still failed to answer the questions in full or at least in part, and further, it gave the Ploughmans no explanation whatsoever for not doing so. Moreover, even after Hercules was given an extension of time to answer the questions, it still failed to comply with the timetable order and, moreover, it failed to give the Ploughmans any explanation for not doing so. Lastly, I find it contemptible that Hercules failed to respond to this motion when it was granted an extension of time to do so.

[41] In summary, I find that the delay has been contumelious and that Hercules is responsible for the inexcusable and unexplained delay.

Disposition

[42] This action against the Ploughmans is hereby dismissed.

[43] The Ploughmans are entitled to their costs of this motion and of the action.

[44] If the parties cannot agree on the costs, then the Ploughmans shall serve and file within 20 days of the date this decision is released a costs outline regarding the costs of this motion and a bill of costs regarding the costs of the action, as well as short written submissions of no more than two pages double spaced. Hercules will have a further 20 days from the date the Ploughmans serve their material to file responding costs submissions of no more than two pages double spaced.

Original signed “Master Pope”

Master Lou Ann M. Pope

Date: September 10, 2013

[^1]: The timetable referred to by counsel for Hercules was not filed by Hercules for this motion, nor was it a part of Ploughmans’ material. I made a request of the office of the trial coordinator to locate the timetable; however, one was not found in the court file.