COURT FILE AND PARTIES

COURT FILE NO.: CV-08-10702CM

MOTION HEARD: 20130318

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Ray Piche, Michael Cote, Onorio Frezza and John Ross, Plaintiffs

AND:

TD Securities Inc. and Richard Maaten, Defendants

BEFORE: Master Lou Ann M. Pope

COUNSEL:
J. Alden Christian, for the Plaintiffs, Ray Piche, Michael Cote, Onorio Frezza
Laura Paglia, for the Defendant, TD Securities Inc.
Sara Erskine, for the Defendant, Richard Maaten

HEARD: March 18, 2013

REASONS FOR DECISION

[1] This is a contested status hearing. The defendant, Richard Maaten (“Maaten”), seeks an order that this action be dismissed for delay.

Background

[2] This action involves alleged advice given by Maaten to the plaintiffs that they commute their guaranteed indexed pensions to investments with TD Waterhouse. The pensions were eventually commuted and it is alleged that Maaten invested the resulting capital in a series of investments in 2000 that exposed the plaintiffs to risk of substantial loss inconsistent with his investment advice objectives which consequently generated significant losses.

[3] The plaintiffs seek damages of $5 million as a result of breaches of applicable duties of care, including fiduciary duties. There are further claims for breach of contract, negligent misrepresentation and negligence.

[4] The defendants plead that the plaintiffs’ claims are statute barred having commenced the action beyond the limitation period.

Steps in the Proceeding

[5] This action was commenced by notice of action dated February 26, 2008, and the statement of claim was filed on March 27, 2008.

[6] Thereafter, 21 months transpired before the statement of claim and notice of action were served on the defendants. During that time, the plaintiffs obtained several ex parte orders extending the time to serve the defendants. The evidence filed in support of the extensions were that of the plaintiffs’ former counsel who stated that the action was commenced to preserve the limitation date and to explore other avenues to resolve the issues. Also during the 21 months, this action was dismissed on July 8, 2009, pursuant to rule 77.08(1). The dismissal order was set aside on November 23, 2009, and the plaintiffs were granted until January 15, 2010 to serve the defendants.

[7] On January 12, 2010, plaintiffs’ former counsel brought a motion to be removed as counsel of record based on a complete breakdown of the solicitor and client relationship. Around the same time, plaintiffs’ current counsel filed a notice of change in representation.

[8] Shortly thereafter, the defendants delivered a request for particulars and the response was provided on May 26, 2010.

[9] In late August 2010, the plaintiffs delivered a draft fresh statement of claim. By mid-September 2010, Maaten had delivered a request for particulars regarding the specific TD accounts that were in issue and a request to inspect documents.

[10] Examinations for discovery were scheduled several times but have not been held. In May 2010, examinations for discovery were cancelled due to miscommunication between Maaten and his counsel regarding the date. In October 2010, examinations for discovery were cancelled given recent amendments to the statement of claim and the fact that statements of defence had not been delivered.

[11] In early November 2010, the plaintiffs obtained an order extending the time to complete mediation.

[12] A case conference was held on December 13, 2010, when a timetable order was made which required the plaintiffs to respond to the request for particulars, to issue the fresh statement of claim, to deliver statements of defence, and a partial discovery plan.

[13] At a further case conference held on January 24, 2011, a timetable and discovery plan were approved. The timetable required that the action be set down for trial by January 31, 2012.

[14] Statements of defence were delivered in February 2011.

[15] A further case conference was held on April 15, 2011. The plaintiffs had not delivered their affidavits of documents by March 31, 2011, as specified in the timetable order of January 24, 2011. Ross was given an extension until April 21, 2011 to deliver his sworn affidavit of documents. It is noted, however, that Maaten did not deliver his affidavit of documents until April 5, 2011.

[16] The defendants cross-examined the plaintiff, John Ross (“Ross), on his affidavit of documents on June 6, 2011.

[17] Thereafter, the defendants brought a motion, originally returnable September 26, 2011, seeking an order that Ross answer questions that were refused at his cross-examination. The motion was scheduled for a special motion on December 5, 2011. My decision, which was rendered on April 18, 2012, ordered that Ross reattend for cross-examination to answer certain questions that were refused.

[18] While the parties waited for my decision on the motion heard on December 5, 2011, the registrar issued a status notice dated February 1, 2012, because the action had not been set down for trial by January 31, 2012.

[19] A status hearing was held on May 11, 2012, when the defendants sought to have the action dismissed for delay pursuant to rule 48.14(13). Mr. Geller, counsel for the plaintiffs, indicated that he would no longer be representing Ross. The parties agreed to adjourn the status hearing to July 18, 2012, when they would make submissions on the costs of the refusals motions.

[20] Thereafter, the status hearing was adjourned several times. During that time, Ross’ action was dismissed and the defendants conducted the cross-examination of plaintiffs’ counsel on his affidavit filed for the status hearing. The status hearing was heard on March 18, 2013.

[21] There is evidence of an abundance of communications between counsel from the time Harold Geller became lawyer of record for the plaintiffs in January 2010 to the status hearing, which have not been included in the chronology set out above.

Law

[22] Pursuant to rule 48.14(13), at a status hearing, the plaintiff must show cause why the action should not be dismissed for delay. If the judge or case management master is not satisfied that the action should proceed, the action may be dismissed for delay.

[23] In my recent decision in Hersi v. Hotel Dieu, 2013 ONSC 5049, I set out the applicable test and principles to be considered, as follows:

At a status hearing under rule 48.14, a plaintiff has the onus to demonstrate why the action should not be dismissed for delay. In doing so, the plaintiff must satisfy a two-part conjunctive test; namely, that there is an acceptable explanation for the delay in the litigation, and if the action was allowed to proceed, the defendant would suffer no non-compensable prejudice (Faris v Eftimovski, 2013 ONCA 360; 1196158 Ontario Inc. v. 6274013 Canada Limited, 2012 ONCA 544, 295 O.A.C. 244 (“119”)). Notwithstanding that the test is conjunctive, the court retains discretion to dismiss the action when considering all of the circumstances. When exercising its discretion, a court must balance two competing interests—the plaintiff’s in having a hearing on the merits and the defendant’s interest in having the matter resolved in an expedient and time-efficient manner (Faris at para. 24).

Faris notes that the purpose of Rule 48 is to enable the court to control the pace of litigation and ensure that disputes are resolved in a time-effective manner (Faris at para. 33). It goes on to state that Rule 48 provides a number of mechanisms to enable the court to control the pace of litigation which supports the desirable objective of resolving legal disputes in a time-efficient manner. These mechanisms are outlined in subrule 48.14(13) (Faris at paras. 29-31).

In comparing the tests under rules 24.01 and 48.14, Faris notes that the onus placed on the plaintiff under rule 48.14(13) is “mandated not only by the plain wording of the rule but also by the greater severity of the plaintiff’s delinquency in pursuing its claim.” At the time of the status hearing, “the emphasis on the objectives expressed in rule 1.04(1) ‘to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits’ must necessarily shift towards ensuring that disputes be resolved expeditiously and in a time-efficient manner” (para. 41).

The focus of the inquiry at a status hearing is on the conduct of the plaintiff who is primarily responsible for the progress of the action. Therefore, it is the plaintiff who bears the consequences of conducting its action in a dilatory manner (Faris at para. 33; Wellwood v. Ontario Provincial Police, 2010 ONCA 386, 102 O.R. (3d) 555, at para. 48).

The conduct of the defendant may be relevant especially where the plaintiff tried to move the action along but was thwarted by the defendant’s actions intended to delay or impede the plaintiff.

As part of an explanation for delay, a plaintiff is required to put forward a clearly articulated plan for moving the case forward (Donsky v. Toronto Transit Commission (2008), 47020 (Ont. Div. Ct.) at para. 14).

The test is conjunctive; however, even if the plaintiff can provide a satisfactory explanation for the delay, the action will be dismissed if there would be prejudice to the defendant. Also, if the plaintiff is not able to provide a satisfactory explanation for the delay, it is still open to the court to dismiss the action even if there is no proof of actual prejudice to the defendant (119 at para. 32).

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 (119 at para. 33).

The court in Faris noted that the timelines the rules impose are relatively generous and there is a heavy price to be paid when they are not respected (para. 39). It further noted that if any action could not be dismissed for delay unless there was proof of actual prejudice, timelines would be 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 (para. 34).

Faris further noted that stale claims are more difficult to defend as memories fade and fairness includes allowing parties to have their actions resolved quickly (para. 43; Wellwood at para. 72).

Analysis

Litigation Delay

[24] The plaintiffs have the onus to demonstrate a satisfactory explanation for the delay in this action.

[25] Maaten submits that the plaintiffs caused delay early in this action by failing to serve the statement of claim within the requisite time. The plaintiffs obtained several ex parte orders extending the time to serve the statement of claim and to set aside the administrative dismissal. At the time the plaintiffs provided numerous grounds for the requests including the following:

(a) the plaintiffs had invested with the defendants from 1996 to 2007 and the statement of claim had been commenced on February 26, 2008 to preserve the limitation period;

(b) each of the plaintiffs filed complaints with the Investment Dealers Association (“IDA”) regarding the subject matter of this action;

(c) they did not serve the statement of claim because they were awaiting the results of the IDA investigation and by September 15, 2008, no report had been issued;

(d) the plaintiffs had made complaints to the Ombudsman for Banking Services and Investments (“OBSI”) and they were awaiting the results of the investigation and by May 22, 2009, the investigation was continuing;

(e) they wished to fully investigate their claims prior to serving the statement of claim and being exposed to potentially unfavourable costs awards;

(f) to explore their rights and remedies through the IDA and the OBSI and also to consult with other counsel with expertise in the prosecution of investment claims;

(g) three of the plaintiffs had retained Harold Geller to take over the future prosecution of this action;

(h) if a satisfactory resolution could be made through OBSI, the plaintiffs’ complaints may be resolved without incurring significant legal costs in the court action especially given their status as retirees with limited financial resources;

(i) the issue of the limitation period is a legal question and if the action was statute barred on or before that date the action was commenced, the defendants have a complete defence and it is immaterial when the claim was later served.

[26] The plaintiffs’ evidence is that by December 2009 both defence counsel were aware of the order extending the time to serve the statement of claim which was acknowledged in correspondence from defence counsel. It is further submitted that TD did not appeal the order.

[27] I am satisfied that the above grounds were and still are reasonable based on the facts of this action. Therefore, I am satisfied that the plaintiffs demonstrated an acceptable explanation for that period of delay.

[28] Maaten further submits that the plaintiffs caused additional delay by the fact that Harold Geller was retained in May 2009, however, he was not appointed as lawyer of record for the plaintiffs until January 4, 2010.

[29] Based on the chronology of the steps in this action as set out above, it is noted that this action was dismissed on July 8, 2009, pursuant to rule 77.08(1), the dismissal order was set aside on November 23, 2009, and the plaintiffs were granted until January 15, 2010 to serve the defendants. Therefore, despite the earlier evidence that the plaintiffs had retained Harold Geller in May 2009, it is clear that plaintiffs’ former counsel continued to represent the plaintiffs and took positive steps to seek an order to set aside the dismissal order.

[30] For the above reasons, I am satisfied that the plaintiffs demonstrated an acceptable explanation for that period of delay.

[31] Maaten further submits that the plaintiffs caused additional delay of approximately one year in failing to deliver the amended statement of claim until January 21, 2011, despite Mr. Geller having advised defence counsel in early 2010 that the statement of claim would be amended.

[32] It is acknowledged that the plaintiffs delivered an unissued fresh statement of claim on August 31, 2010. It is of importance that shortly after Harold Geller was appointed lawyer for the plaintiffs in January 2010, the defendants delivered a request to inspect documents in February 2010 and a response was provided on May 26, 2010. Further, examinations for discovery had been scheduled in May 2010 which had to be cancelled due to miscommunication between Maaten and his counsel regarding the date. Moreover, the plaintiffs delivered a draft affidavit of documents in August 2010.

[33] Therefore, it is my view that it was not an unreasonable period of time between January and August 2010 to deliver the unissued fresh statement of claim given the constant steps that took place in this action by all parties during that time. Therefore, the plaintiffs have demonstrated an acceptable explanation for the delay in delivering an amended statement of claim.

[34] Maaten further submits that the plaintiffs delayed in providing a response to TD’s request for particulars dated September 21, 2010 until January 4, 2011. In my view, a delay of just over three months to respond was not unreasonable given the constant steps that took place by all parties during this time. In particular, plaintiffs’ counsel took steps to obtain the consent of the defendants and to obtain an order to extend the time to mediate, and to reschedule examinations for discovery that had been cancelled in May 2010. Further, TD had also delivered a request to inspect documents, further disclosure of schedule A documents and a discovery plan.

[35] Therefore, the plaintiffs have demonstrated an acceptable explanation for the delay between September 21, 2010 and early January 4, 2011.

[36] Maaten further submits that there is no evidence from any of the plaintiffs of their intention to prosecute this action. The plaintiffs’ evidence consists of an affidavit of a law clerk employed by plaintiffs’ counsel that sets out a chronology of steps in this action, and an affidavit of Harold Geller, plaintiffs’ counsel. Mr. Geller’s evidence is that it has been the plaintiffs’ “unwavering intentions to prosecute this lawsuit.”

[37] While there is no requirement on a contested status hearing that a plaintiff file evidence regarding his intentions, it is the best evidence in that regard. However, there are circumstances when the evidence of plaintiff’s counsel is acceptable and, in my view, this is one of them. Aside from the fact that Mr. Geller’s statement regarding the plaintiffs’ intentions is hearsay, he has continuously and actively represented the plaintiffs since January 2010. In my view, his representation clearly demonstrates the plaintiffs’ intentions to prosecute this action.

[38] In my view, TD has caused some of the delay in this action by cross-examining Ross on his affidavit of documents in June 2011. Subsequently, TD brought a motion to compel Ross to answer questions refused. The decision from that motion was rendered in April 2012. Thereafter, Ross’ action was dismissed. Although it is positive that Ross’ action has been disposed, the above steps have delayed this action.

[39] It is my view that this action has been actively prosecuted by all parties. The plaintiffs produced voluminous documents and the defendants cannot be criticized for taking the pre-discovery steps that they took; however, and unfortunately it has delayed this action.

[40] All of the parties have been willing to enter in a timetable to complete certain steps in this action and in fact they did so at several case conferences.

[41] In conclusion, the plaintiffs have demonstrated an acceptable explanation for the delay in this action.

Prejudice

[42] The plaintiffs are required to demonstrate that if the action was allowed to proceed, Maaten would suffer no non-compensable prejudice.

[43] For the following reasons, I accept the plaintiffs’ argument that Maaten will suffer no non-compensable prejudice if this action were allowed to proceed. Firstly, the bulk of the documents produced by the plaintiffs were in the defendants’ possession given that the statements were produced by TD. As such, Maaten had knowledge of the plaintiffs’ investment accounts and their alleged poor performance before the action was commenced. Further, Maaten had knowledge of the plaintiffs’ complaints against him prior to being served with the statement of claim given the plaintiffs’ complaints to the IDA and the OBSI. Further, the plaintiffs’ documents have been accessible to Maaten for inspection at all times. Furthermore, it is acknowledged that delay may affect witnesses’ memories and, as such, this may cause prejudice to a defendant. The fresh statement of claim contains allegations that Maaten made certain oral representations to the plaintiffs about commuting their pensions. These allegations will require oral evidence of the parties at trial and the passage of time since the pensions were commuted; namely, Mr. Piche’s in June 1996, Mr. Cote’s and Mr. Frezza’s in July 1998, may be prejudicial to Maaten as he will have to rely on his memory dating back to those times. However, there is no evidence that any of the plaintiffs or Maaten will not be available to give evidence at trial. Furthermore, it is reasonable to assume that a financial advisor in Maaten’s position at the relevant times would have taken notes and kept records of his advice which would assist in refreshing his memory.

[44] For the above reasons, I am satisfied that the plaintiffs have rebutted any presumption of prejudice given the expiry of the limitation period.

Conclusion

[45] The plaintiffs have satisfied the onus on both parts of the test on a contested status hearing; therefore, this action is not dismissed for delay as requested by Maaten.

[46] The plaintiffs shall arrange a case conference to be held at a time that is mutually convenient for all counsel but no more than 30 days from the date this decision is released to set a timetable for completion of the remaining steps in this action. However, the parties are encouraged to proceed with this action while awaiting the case conference.

[47] I apologize for the delay in rendering this decision and I want to thank counsel and the parties for their understanding and patience in the circumstances.

Costs

[48] The plaintiffs have been successful; therefore, they are entitled to their costs. Maaten shall pay the plaintiffs’ costs of this contested status hearing on a partial indemnity basis.

[49] The plaintiffs shall have 14 days from the date this decision is released to serve and file a costs outline and costs submissions of no more than two pages double spaced, to be faxed to the office of the trial coordinator at Windsor to the attention of Ms. Sheila Favero at (519) 971-7207. Maaten shall have a further 14 days from the date he was served with the plaintiffs’ material to serve and file his responding costs submissions of the same length and to be faxed to Ms. Favero.

Original signed “Master Pope”

Master Lou Ann M. Pope
Case Management Master

Date: October 4, 2013