PETERBOROUGH
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Kim Robert Wallace and Karen Lynn Wallace
Plaintiffs
– and –
Crate’s Marine Sales Ltd. and Carver Boats Corporation (bankrupt)
Defendants
John Adair and Gord McGuire, for the Plaintiffs
Morris Manning, for the Defendant , Crate’s Marine Sales Ltd.
HEARD: November 28, 2013
Gunsolus, J.
1Our civil courts are under constant scrutiny in relation to the length of time litigants must wait for motions and trials. This is a tale of litigants who, for over a decade, have not availed themselves of the assistance of our civil justice system. Rather, this is a tale about justice delayed solely by the litigants themselves.
Background of the Motion
[2]
Background of the Motion
The defendant, Crate’s Marine Sales Ltd. brings a motion seeking:
(1) Dismissal of the plaintiff’s action for delay, pursuant to rule 24 of the Rules of Practice; and
(2) For summary judgment in favour of the defendant, pursuant to rule 20 of the Rules of Practice alleging that there is no reasonable cause of action against Crate’s Marine Sales Ltd, as sales agent.
3The plaintiffs sought orders striking the defendant’s statement of defence and dismissing the defendant’s counterclaim and in the alternative requiring Steven Crate to attend for examinations on discovery on a date before January 31st, 2014.
4I advised counsel that I was only prepared to hear the motion in relation to the dismissal for delay. Dependent on the outcome of this motion, they were told to seek a new date in relation to the motion for summary judgment and for the striking of pleadings, attendances for discovery and so on.
Background Facts
[5]
Background Facts
The plaintiffs purchased a yacht in June of 2000, through the defendant Crate’s Marine Sales Ltd, from Carver Boat Corporation. Carver Boat Corporation declared bankruptcy in 2009 and these proceedings, of course, were automatically stayed as against that corporate defendant.
6The plaintiffs claim that the very first time they took the vessel onto the water, they determined that one of the vessel’s engines, as manufactured by Volvo, was malfunctioning.
7Their purchase included a 2-year warranty from Volvo on the engine, as well as a 3-year extended warranty on major components from said manufacturer, in relation to the engine. The purchase price was $1,016,500.
8The relief set out in the Statement of Claim includes, amongst other things, a declaration that Crate’s Marine is in fundamental breach of a term of the marine purchase contract and rescission of that contract. The plaintiffs seek repayment of all monies paid by them to the defendant, Crate’s Marine, and in the alternative, a declaration that Crate’s Marine is in breach of the implied condition of fitness under the Sales of Goods Act, RSO 1990, c. S.1, section 15, as well as damages in an amount equal to the difference between the value of the goods at the time of the delivery to the plaintiff and the value of the goods had the implied condition of fitness been satisfied by the defendant Crates.
9The defendant Crate’s takes the position that it’s involvement was as a sales agent for the manufacturer and that it provided no warranties. They further argue that they were excluded from all warranties as to merchant abilities or fitness, claiming that was the responsibility of the manufacturer, Carver, and the engine manufacturer, Volvo.
10The plaintiffs commenced this action by way of Notice of Action on the 29th July, 2003. The Statement of Claim was issued in August of 2003 and the defendant Crate’s delivered a Statement of Defence and Counterclaim in October 2003 (the defendant Carver delivered a Statement of Defence in January, 2004).
11The plaintiffs acknowledge that they did not set the action down for trial within six months following the close of proceedings, contrary to rule 24.01(c).[1] Discovery of the plaintiff Kim Robert Wallace partially took place in December, 2005 but was adjourned.
12The main complaint made by the plaintiffs related to one portside engine manufactured and warranted by Volvo. It is acknowledged that no action nor warranty claim was ever brought against Volvo by the plaintiffs as owners. From the time of the close of pleadings, essentially little was undertaken until the partial examinations in 2005 and there was again a lull of activity, other than exchanges of correspondence, until 2010/2011.
13The defendant Crate’s claims prejudice created by the plaintiff’s delay in that:
(1) The manufacturer of the boat, Carver Boat Corporation is now bankrupt.
(2) The Volvo warranty relating to the impugned engine in question was never pursued by the plaintiffs.
(3) The vessel has depreciated from its 2003 value of approximately $600,000-650,000 to a value of $250,000.
14The plaintiff’s position in relation to the alleged prejudice is as follows:
(1) The bankruptcy of Carver does not affect this litigation in and of itself other than that the pleading defendant no longer has a co-defendant against whom to claim over.
(2) The warranty from Volvo expired one year before this action commenced (I will deal with this later, however, suffice it to say, that was not the case).
(3) In relation to depreciation, the defendant has been in possession of the yacht since 2002 and the plaintiff takes the position the defendant should have re-sold the yacht and that depreciation was inevitable in any event. (In fact, the evidence showed the plaintiff Wallace stopped the defendant from attempting to sell the yacht as it was “now in my solicitor’s hands”)
15In relation to questions raised from the bench, both counsel acknowledged that no independent inspections or reports were created or exist in relation to the allegations. Further, there are no independent evaluations available. Neither of these steps were undertaken in or around the commencement of this litigation over 10 years ago.
Issues
[16]
Issues
The issues to be decided by this court are:
(1) Should the action be dismissed for delay pursuant to rule 24, based upon the defendant’s alleged prejudice caused by the delay?
(2) Should the action be dismissed for delay pursuant to the court’s inherent jurisdiction to control its process, which includes the power to dismiss an action for delay.
The Law
[17]
The Law
Rule 24.01(c) 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 has failed to set the action down for trial within six months after the close of pleadings.[2]
18An action should not be dismissed for delay unless:
(1) The delay is intentional and contumelious; or
(2) The plaintiff and/or his lawyer are responsible for the inexcusable delay such that:
(3) The delay gives rise to a substantial risk that a fair trial might not be possible.[3]
19Where such delay is not found to be intentional or contumelious, the defendant must establish that:
(a) There is an inexcusable delay;
(b) For which the plaintiff or his lawyer is responsible; and
(c) The delay gives rise to a substantial risk that “a fair trial might not now be possible”. [4]
20In determining whether such delay is inexcusable, the court must consider the complexity of the issues, the explanation for the delay and all relevant surrounding circumstances.[5] It is presumed that memories fade over time and an inordinate delay after the cause of action arose or after the passage of the limitation period, gives rise to a presumption of prejudice. Where there is a presumption of prejudice, the defendant, need not lead actual evidence of prejudice and the action will be dismissed for delay unless the plaintiff rebuts the presumption.
21The presumption of prejudice may be rebutted by evidence that for instance, all documentary evidence has been preserved and the issues in the lawsuit do not depend on the recollection of witnesses. If the presumption is indeed rebutted, then the action may still be dismissed if the defendant leads convincing evidence of actual prejudice.[6]
22While a defendant may risk, by sitting idly by, failure on a motion to dismiss an action for delay, such an action does not automatically preclude him from succeeding on such a motion. Rather it depends on the circumstances of the case. It is not “incumbent” upon the defendant to “spur” the plaintiff on.[7]
23Excusing long delays undermine public confidence in the administration of justice. The court may also dismiss actions for delay even where the relevant rules do not mandate it, as the court has inherent jurisdiction to control its own process.[8]
24In the Marché case, Sharpe J, quoted Justice Goudge in Scaini v. Prochnicki[9], wherein the court reversed the line of authority that had strictly required the moving party to satisfy each element of the four part test in Reid v. Dow Corning Corporation. To quote: “A contextual approach…is to be preferred to a rigid test requiring an appellant to satisfy each one of a fixed set of criteria.” The four Reid criteria are “likely to be of central importance in most cases”, but they are not exhaustive and the key point is that the court consider and weigh all relevant factors to determine the order that is just in the circumstances of a particular case. [10]
25At paragraph 24 of the Marché case, Justice Sharpe noted that dismissal for delay is not, an invention of case management but rather rule 24.01 allows a party to move to dismiss an action for delay where the plaintiff has failed to prosecute the action in a timely fashion in accordance with the rules. Moreover, the court has inherent jurisdiction to control its own process which, “includes the discretionary power to dismiss an action for delay” even in circumstances where the relevant rules do not mandate it. The court retains the power to prevent an abuse of its own process. [11]
26These rules and cases rest upon an important principle and that is there is a strong public interest in promoting the timely resolution of disputes. In Woodheath Developments[12], Justice Then accepted the principle laid out by Master Dash at (2001) 28019 (ONSC) as follows:
The principle to be applied in a motion to dismiss for delay is that the action should not be dismissed unless: (1) the default is intentional and contumelious; or (2) the plaintiff or his or her lawyers are responsible for an inexcusable delay that gives rise to a substantial risk that a fair trial might not now be possible. It is presumed that memories fade over time, and an inordinate delay after the cause of action arose or after the passage of limitation period gives rise to a presumption of prejudice. Where there is a presumption of prejudice, the defendant not lead actual evidence of prejudice and the action will be dismissed for delay unless the plaintiff rebuts the presumption. The presumption of prejudice may be rebutted by evidence that all documentary evidence has been preserved and the issues in the lawsuit do not depend on the recollection of witnesses or that all necessary witnesses are available with detailed recollection of the events. If the presumption is rebutted, then the action may still be dismissed if the defendant leads convincing evidence of actual prejudice.
27In Belanger v. Southwestern[13], examples of prejudice were said to include the death of a witness; the inability to locate a witness; the inability of a witness to recall important facts and the loss of important evidence. In considering whether a defendant has sustained prejudice, the court should consider the availability of its witnesses; whether the evidence is largely documentary or based on the recollection of individuals; the efforts made by the defendant to preserve its evidence; and any other relevant consideration. Prejudice to the defendant is to further be considered relative to the time the case will likely be reached for trial if permitted to proceed. The court will then balance the right of the plaintiff to proceed to trial against the defendant’s right to a fair trial. [14] I note this is not an exhaustive list of considerations.
The Arguments
[28]
The Arguments
Mr. Manning, for the defendant, wishes the court to attribute most of the delay in this matter to the plaintiffs Wallace. In the first instance, he relied upon the affidavit of Kim Robert Wallace, sworn the 23rd of October, 2013 wherein he acknowledged that Mr. Donald White of the Howell Fleming firm in Peterborough was his first counsel in this matter. Mr. White caused a Statement of Claim to be issued on August 29th, 2003; the defendant Crate’s filed their Statement of Defence and Counterclaim on October 30th, 2003; the plaintiffs delivered their Defence to Counterclaim on December 30, 2003 and the defendant Carver (now bankrupt) delivered its Statement of Defence on January 12th, 2004. The next step occurred when the plaintiffs retained Geoffrey D.E. Adair, Q.C. in early 2005 to take over conduct of this action. Thus, there was a delay of a little over a year from the close of pleadings until new counsel was retained.
29Mr. Wallace further attested in that affidavit that his examination for discovery began on December 1st, 2005 and was adjourned for what he claimed were reasons unclear to him. Mr. Manning argued that the plaintiff, Mr. Wallace in fact knew exactly why his original examinations on December 1, 2005 were adjourned by reference to comments made by counsel Mr. Adair. To quote Mr. Adair:
We have had a discussion off the record and I guess the best way to do it would be to say that it was a discussion intended to bring more focus to the claim. And I am prepared to formally advise my friends that the single complaint providing the foundation, if you will, for the entirety of the claims lies with the failure of the portside engine to drive the boat. I should say there were repeated instances of failure, to be more accurate, in terms of our allegation. When I say the “portside engine” we are uncertain…subject to what Mr. Wallace told you as to his belief, we are, as plaintiff, uncertain whether that is an engine problem, an electronic problem or whether the two are so closely considered we are better to use engine system. And I think, having had my attention directed to this Statement of Claim, that it would be helpful to everyone if I prepared an Amended Statement of Claim and spelled that out.
30Counsel then agreed to adjourn, pending the drafting, issuance and service of an amended statement of claim, which amended statement of claim was never pursued.
31At paragraph 50 of his affidavit, Mr. Wallace further acknowledged that there was then an approximate two year delay, in part due to the fact that he says he was engaged in unrelated litigation and in the result did not pursue rescheduling his examinations for an approximate two year time period.
32Mr. Wallace next attested to the fact that beginning in February, 2008, some three years later, several attempts were made to schedule dates for the examination of a representative from Crate’s Marine.
33Mr. Manning asked the court to review extensive correspondence that occurred between the parties commencing the 9th of December 2005 and culminated January 21st, 2013.
34Mr. Manning suggests that a review of that correspondence shows that the plaintiffs caused the delay and that they never pursued the amended statement of claim for which the original examinations on discovery were adjourned and never pursued a claim against the manufacturer of the allegedly defective engine, Volvo.
35He further argued that the defendant indeed did try to prod counsel for the plaintiffs to take the steps that he said he was going to undertake at the time that the examinations on discovery were adjourned on December 1, 2005.
36I do not intend to review each and every piece of correspondence, but some are worthy of note. For instance, on the 26th of May, 2006, Mr. Adair acknowledged that he had put this litigation aside due to other cases he was involved in that had to take precedence. He did acknowledge that he had to get on with the amendment to the statement of claim and complete examinations for discovery. On the 15th of February, 2008, Mr. Adair wrote to Mr. Manning’s office indicating that his client had now instructed him to move this matter forward. Mr. Manning noted that this was some four and a half years after the Statement of Claim was issued. A review of the correspondence reveals that defence counsel is writing to counsel for the plaintiffs on a regular basis, attempting to determine the plaintiffs’ position in relation to the amended statement of claim and getting on with the examinations for discovery. Although, admittedly, on a less frequent basis, counsel for the plaintiff is responding but no real progress is made through the efforts of either party.
37Suffice it to say that the parties exchanged proposed dates for continuation of examinations for discovery, enquiries as to the proposed amended statement of claim, the plaintiffs’ intention to pursue Volvo or not and commencing in early 2011, it is clear that Mr. Manning’s office was taking the position that since the plaintiff seemed to be limiting their claim to the defective motor manufactured by Volvo, there was no longer any basis for a claim against his client. He declined to provide a representative of his client for examinations for discovery.
38All in all, Mr. Manning argued, that the court cannot lay blame on the defendant Crate’s in relation to the delay, when in fact the defendant is “needling” the plaintiffs to get on with their case. In summary, he lays blame for the delay on the original counsel for the plaintiff, Mr. White; on Mr. Wallace himself, who acknowledged he did not pursue this litigation while was involved in other litigation for some two year period; and Mr. Adair, who he says put this case on the back burner while he dealt with other, more pressing litigation.
39Mr. Manning further argued that not only should the court presume prejudice against his client, but in fact urged the court to find that there is actual prejudice against his client in that:
(a) The co-defendant, Carver, declared bankruptcy in June of 2009;
(b) Even though his office wrote and warned Adair’s office that the Volvo warranty on the engine was about to expire, the plaintiffs allowed it to expire and did not pursue Volvo by way of a warranty claim or by including Volvo in this or a separate court action; and
(c) The vessel itself has been left to depreciate.
40Mr. Manning asks this court to dismiss this action, either under rule 24 or by way of the court’s inherent jurisdiction to control its own process.
41In short, Mr. Manning argues that the court should rely upon Justice Then’s findings in the Woodheath Developments case, suggesting that while the delay in this case may not be intentional or contumelious, it has been inordinate and inexcusable. There has been a delay in excess of ten years. He noted the loss of a claim against Volvo and the bankrupt defendant Carver. He suggests that here, as in that case, there is a presumption of prejudice and the onus should now be on the plaintiff to persuade this court that no prejudice would be suffered as a result of the delay and there is now a substantial risk that a fair trial cannot be conducted. He suggested that the plaintiff cannot possibly show, in these circumstances, that the defendant would not be prejudiced with the passage of the Volvo limitation period and the inability to mitigate damages, given the ongoing devaluation of the yacht in question.
42On behalf of the plaintiffs, Mr. Adair argued that there is no prejudice to the defendant in relation to the expired Volvo warranty, and he argued that it expired before the boat was returned to the defendant and this action commenced.
43In reply to this point, Mr. Manning pointed out that in fact the warranty did not run out until the end of 2005 and that his office had warned Mr. Adair’s office at the time of that pending limitation issue. He referred the court to the cross-examination of a representative of his client, which confirmed that the engine failure involving a major component enjoyed an extended 5 year warranty, which the plaintiffs did not pursue, to his client’s detriment.
44Mr. Adair argued that as in the Albrecht case, the defendant pleading did nothing to move this action along, and therefore the onus was on the defendant to move this action along to trial, if it was not satisfied with the pace that the plaintiff was undertaking.
45Mr. Adair asked the court to find that both the plaintiff and the defendant were dragging their feet from time to time in relation to the pursuit of this matter. He noted that both were engaged in typical correspondence that litigants engage in pursuing matters of this nature. He acknowledged that his office was sometimes perhaps neglectful in the time in which they responded to correspondence, however, he argues that this can be equally said of counsel for the defendant pleading.
46He referred the court to his client’s affidavit and argued that the timing from the close of the initial pleadings, until the change of counsel, some one and one half years later, should not be looked at as an inordinate length of time in a matter of this nature. He further suggests that the court should be cognizant of the fact that Mr. Wallace was engaged in other ligation for a two year period. He noted that that matter involved a lengthy four week trial and ultimately involved an appeal and thus required much of the plaintiff’s time, as well as Mr. Geoffrey Adair, Q.C.’s time, who was counsel for Mr. Wallace in that litigation as well.
47Mr. Adair took me through various pieces of the correspondence that Mr. Manning had earlier referred the court to, pointing out that indeed, there were sometimes gaps in relation to responses to correspondence from Mr. Manning’s office, stating that, “it’s not ideal, but it reflects a litigation practice.”
48He also pointed out that Mr. Manning’s office began an approach whereby he would establish unilateral dates for steps and even went so far as to serve notice for examinations on dates which Mr. Geoffrey Adair was not available. He points out that his office would provide alternate dates or time periods during which they were available, such that they were trying to move this matter forward in cooperation with counsel for the defendant.
49It is clear that Mr. Adair’s office even went so far as to indicate that they were going to take the step of actually making a telephone call to Mr. Manning’s office to set up a new date for examinations for discovery.
50Mr. Adair also pointed out that the Carver bankruptcy in June of 2009 meant that the plaintiff had to take time to reassess how best to proceed in relation to its claims.
51I was directed to one letter, dated August 25th, 2010, which Mr. Adair argued had never been responded to by Mr. Manning’s office. In it, Geoffrey Adair, Q.C., indicates that his instructions are now to pursue only the defendant Crate’s Marine Sales Ltd. and indicated that they wanted to get on with the litigation. He suggested that this correspondence was never responded to, however, Mr. Manning advised in reply that his office never received that correspondence and therefore could not possibly have replied to it.
52Mr. Adair noted that from 2009 through to 2011/12, the defendant took the position that there was no claim against it and that they intended to move for summary judgment to have this matter dismissed. The plaintiffs, throughout this period of time responded, indicating that they were going to move to strike the defence for failure to attend examinations on discovery.
53In short, Mr. Adair urges the court to find that the plaintiff is not solely responsible for the delay, but it should be put at the feet of both the plaintiff and the defendant and reflects, in large part, the normal give and take of litigation of this nature.
54Further, he points out that his client is able to provide an explanation in that he had other major litigation that took up two years of his time and that of his counsel. He argues that the defendant has sat idly by and should not now be heard to complain, as in Albrecht.
55Mr. Adair noted that the defendant’s correspondence “hardly raised” prejudice and delay as an issue. He urges the court to put the issue of prejudice in relation to a fair trial in the context of the circumstances of this case. He argues that we have to consider the nature of this case that involves: (a) contractual liability and (b) the factual matrix concerning the engine breakdowns, a mounting to what he argues was either a breach of the Sales of Goods Act, RSO 1990, c. S.1 or a fundamental breach of the warranties under the contract of sale.
56He notes that the state of the evidence in relation to this case involves:
(1) The contract, which is intact; and
(2) The failure of the boat motor, to which the two main witnesses, Mr. Wallace and Mr. Greg Crate, have both been at least partially examined, either by way of discovery or by cross-examination, and both have been able to provide details in relation to their respective positions, and both claim to have excellent recollection of this matter over the past decade.
57He noted that in addition to the contract, the maintenance records showing work undertaken, when it was undertaken and whether or not a problem existed, as well as the brochures relied upon by the plaintiff when they purchased the yacht in question through the defendant, are all intact.
58He suggests therefore that there is no prejudice to this defendant, in that all witnesses and documentation is available and both Mr. Crate and Mr. Wallace claim to have excellent recall.
59Mr. Adair went on to argue that the expiration of the Volvo warranty should also be at the feet of the defendant, as the defendant could have sued Volvo as well in relation to the defective engine. He argues that the bankruptcy of Carver is nothing more than a prevention of the defendant’s ability to claim over against someone else; and finally, he argued that the depreciation affecting the vessel should be at the defendant’s feet, as they only tried to sell the boat once, in 2003.
60Mr. Adair argues that it is the defendant’s burden to show that the plaintiff is at fault in relation to the inordinate delay in this case and that they have failed to do so.
61He suggests that a presumption of prejudice never arises in this case, as it is not like a motor vehicle accident that requires witnesses to recall events covering virtual “seconds”. He further argues that the defendant has not shown any actual prejudice to them and that the interests of justice require that the plaintiffs be permitted to have their matter heard, as they have a “very, very strong claim” in that the boat was totally unfit for the purposes of the plaintiff. He further notes that the defendants dragged their feet in not allowing their client to be examined by way of discovery in this matter.
62In reply to the arguments put forth by Mr. Adair on behalf of the plaintiffs, Mr. Manning, as I’ve already noted, demonstrated to the court that the warranty in relation to the engine, as would have been covered by Volvo, did not expire before the commencement of this action. Mr. Manning pointed out that his office warned plaintiff’s counsel of the impending owner’s warranty expiration and the need for them to get on with their amended statement of claim. For reasons never explained, that was not undertaken.
63Mr. Manning suggests that it will be impossible now for a fair trial to occur, as this will not just be a trial involving documentation. He noted that Mr. Wallace himself in the affidavit filed in relation to this motion sets out his version of facts and claims that a representative of the defendant had, in relation to various issues, gone back on their word. So, he argues, we do indeed have issues as to who said what, to whom, and when, in relation to a time period over a decade ago.
64He also points out that Mr. Wallace claimed that he first knew of the problem in relation to the Volvo engine in April, 2000 and failed to take any steps until July 29th, 2003 and this is an issue a trial court would have to determine in relation to warranty time periods.
65Mr. Manning further suggested that the explanation that both Mr. Geoffrey Adair and Mr. Wallace were involved in another case that took a considerable amount of their time should not be permitted as an excuse to delay this matter.
66In relation to Carver’s bankruptcy, he questioned why it took so much time for the plaintiffs to reassess their case. He argued that it was really a simple issue and should not have taken so long.
67Mr. Manning noted that in relation to the prejudice involving the depreciation of the vessel, the affidavit of Mr. Wallace discloses that he himself concluded that it was unlikely that a buyer would be found for the vessel and he advised Mr. Crate in 2003 that he was referring the matter to his solicitor. Therefore, Mr. Manning argues, his client could not possibly have attempted to resell the vessel after July, 2003. The title of the vessel remains in the names of both plaintiffs.
68Finally, Mr. Manning argues that whether or not the plaintiff has a strong case is not a factor in determining whether or not this case should be dismissed for delay. He said that even if it was, the plaintiffs, he argues, have no claim against the defendant insofar as plaintiffs’ counsel admitted that the case really revolved around the engine manufactured by Volvo and that the plaintiff Wallace himself does not say that there was a complete boat failure, but rather it was the engine manufactured by Volvo that intermittently failed.
69Mr. Manning suggested that the correspondence made it clear that not only did the defendant not try to frustrate the plaintiff in this case, but was indeed prodding the plaintiff to move the matter forward.
Discussion
[70]
Discussion
In this case, the delay was not intentional or contumelious, but it was inordinate and inexcusable. A delay in excess of 13 years from the events described in the Statement of Claim, in and of itself raises the presumption of prejudice which the plaintiff must rebut by showing that documents have been preserved and that the issues in dispute do not require the recollection of witnesses, or that necessary witnesses are available with detailed recollection of events. Even if the plaintiff rebuts the presumption, the action will be dismissed if the defendant leads evidence of actual prejudice.[17]
71The plaintiffs purchased a yacht from the defendant Crate’s and took delivery in the spring of 2000. The plaintiffs claim that during the boat’s maiden voyage, a portside engine failed and this began the civil war between these litigants. Over the 2000, 2001 and 2002 boating seasons, the plaintiffs used the boat, suffering intermittent engine failure, and the defendant undertook repairs from time to time.
72Although the exact facts are in dispute, in September 2002, the plaintiffs claim that they attempted to return the yacht to the defendant who instead offered to resell the boat, with all proceeds going to the plaintiffs upon sale. Initially, an attempt or attempts were made to resell the yacht, however, in July 2003 the plaintiffs advised a representative of the defendant that he was referring the matter to his solicitors, and the yacht has been sitting, depreciating, ever since.
73It is clear, based upon both counsel’s admissions, that neither party commissioned or obtained an independent or even a manufacturer’s report or opinion as to the state of the repair of the vessel. Neither party obtained independent opinions of value. Now, over a decade later, both believe in their own recollections of what occurred or what should have occurred – but much of that remains in dispute. This is not litigation driven solely by documentation.
74For example, beginning at page 61 of the transcript of the cross-examination of Mr. Greg Crate, (28th of February, 2013), a series of questions put to Mr. Crate by counsel for the plaintiff resulted in a suggestion by counsel for the plaintiff that as a result of the passage of time, it was difficult for Mr. Crate to recall events in full. A review of answers given by Mr. Crate as a result of that suggestion would indeed confirm that his recollection of events ten years prior may be somewhat weakened. Further, a review of the affidavit filed in relation to this matter, sworn by Kim Robert Wallace on the 23rd of October, 2013 includes a number of paragraphs setting out the numerous problems that he claims to have encountered in relation to the engine in question in this matter. He makes no mention whatsoever of an incident involving muskrats. However a review of Mr. Crate’s cross-examination transcript reveals that indeed there was an engine failure caused by muskrats, which Mr. Crate felt was an insurance issue for the plaintiffs. He says they did fix the damage caused by muskrats, tested the vessel and felt it to be seaworthy thereafter. Clearly, the plaintiff’s and the defendant’s recollections of what occurred over a decade ago would be an issue at trial, and indeed as suggested by counsel for the plaintiff, the passage of time “makes it difficult”.
75In spite of my questioning, I received no explanation as to why nothing occurred, once pleadings were complete in this matter in early January, 2004, for one and a half years, until the plaintiffs changed counsel in 2005.
76In fact, the court received no satisfactory explanation from the plaintiffs as to the cause for a delay of in excess of ten years. The plaintiff’s explanation is basically that he and his counsel were tied up in other, unrelated litigation for over two years of that time. Counsel for the plaintiff explained that they were busy with other cases and the realities of their litigation practice. The defendant sent ongoing correspondence trying to “needle” the matter forward on their own terms, but neither side availed themselves of motions, which is surprising, as neither counsel could be considered “wilting flowers” on the civil litigation stage.
77In 2005 examinations for discovery began but they were adjourned as plaintiff’s counsel felt there was a need to draft, serve and file an amended statement of claim in order to “zero in” on the real issue, that being the faulty portside engine manufactured by Volvo. That never happened.
78A review of the Statement of Claim in this matter discloses a litany of alleged defects in this vessel, but it is apparent, from the transcripts of the aborted 2005 discovery, that the only substantive defect related to the portside engine manufactured by Volvo. This was clearly and unequivocally confirmed by plaintiff’s counsel on the record during that discovery. (See transcript of Examinations on Discovery of Kim Robert Wallace, dated on the 1st of December, 2005; page 12 and 13, paragraphs 14-25 and 1-23 respectively.)
79In relation to the faulty Volvo engine, we do know that defendant’s counsel, by correspondence dated December 9th, 2005, warned the plaintiffs of the impending passage of the limitation period relating to the Volvo engine warranty. The plaintiffs never, as owners, pursued their Volvo warranty, and never amended their Statement of Claim. Years passed and correspondence continued to be exchanged, but no real attempt has ever been made to move this litigation forward, other than through the exchange of that correspondence.
80I find that the delay in this matter of in excess of ten years is inordinate and inexcusable as it has never really moved beyond the pleadings stage. This delay includes an unexplained ten year litigation delay after the issuance of the Statement of Claim, and an eight year delay following the expiry of a critical limitation period. It was over thirteen years ago when the original contract was entered into,
81No one argued that the delay was “intentional and contumelious” and therefore, I must be satisfied that the delay has given rise to a substantial risk that a fair trial of the issues would not be possible at the earliest date a trial could be held in this matter. I note that discoveries have never been completed in this matter and I would doubt that the matter could be made trial ready until 2015 at the earliest.
82The defendant relies upon the presumption that inexcusable delay since the cause of action arose, and the inordinate delay since the expiry of the limitation period, have resulted in prejudice to them such that there is a substantial risk that a fair trial will now not be possible. They suggest that the onus is on the plaintiff to show that no injustice will be done to the defendant should the court allow the action to proceed.
83While counsel for the plaintiff urged me to find that the plaintiff Kim Robert Wallace and a representative of the defendant Crate’s Marine Sales Ltd., Greg Crate, claim to have excellent recall such that their memories have not faded over time, that was not the evidence before me. What I do have are two litigants that believe that their own memories are exceptional; however, it is not uncommon for such litigants, when giving evidence under oath at trial, to be presented with documentation and transcripts from their own cross-examinations and discoveries to assist their faded memories. I also point out that neither party thought it necessary to obtain independent opinions as to the state of repair of the vessel in 2002, nor did they obtain independent opinions of value, and thus what the court would have thought was important evidence, will never be available at trial.
84The defendant has also raised the issue of delay in relation to the depreciation of the vessel in question. Indeed, the vessel has sat unused since 2003. The plaintiff did not take steps to mitigate their damages. One would have thought the plaintiff would have attempted to have the boat properly repaired (as they allege it never was) and resold. For the plaintiff to continue to pursue rescission in relation to a contract entered into over 10 years ago, in these circumstances is difficult to fathom. Even for the plaintiffs to now pursue their alternative remedy for damages in an amount equal to the difference between the value of goods at the time of the delivery to the plaintiff and the value of the goods had the implied condition of fitness been satisfied by the defendant, would be difficult to prove and defend over a decade later. Evidence of value and state of repair was not commissioned let alone preserved.
85Although counsel for the plaintiffs suggested that surely retroactive opinions of value could be obtained, that is speculative at best. The fact that the plaintiff did not take steps to resell the vessel, the fact that it has been sitting unused since 2003, is, from the defendant’s point of view, failure to properly mitigate and is significant to the defendant’s case.
86While the court is aware that documentary evidence such as sales brochures and repair invoices and work orders may be available, as stated above, this is not litigation driven solely by documentation. Both parties have their own views as to what occurred and what should have occurred, in relation to the use and repair of the vessel and they are now relying upon memories of events that occurred over a decade ago.
87Even if the defendant could not rely upon the presumption of prejudice, given the unexplained, inordinately lengthy delay, the defendant has demonstrated actual prejudice.
88The defendant argued that it is prejudiced by the fact that the plaintiff never amended its Statement of Claim to zero in on the Volvo engine issue and never pursued litigation against Volvo, let alone their owner’s warranty against Volvo. That clearly is significant to the defendant as the plaintiff suggests that this defendant should be solely responsible for all damages, in circumstances where the plaintiffs did not avail themselves of an owner’s warranty that was available to them. Further, the defendants say they are prejudiced because of the bankruptcy of their co-defendant, Carver Boat Corporation. The plaintiffs state that is the risk of any litigation with co-defendants, however, that does not answer the prejudice to the defendants. Clearly, had this litigation been pursued diligently from the get-go, and especially where rescission was being sought, both Volvo and the original manufacturer (Carver) would have been at the table and, would have presumably been forced to answer the problems with this vessel such that this litigation could have ended many years ago. Clearly the defendant has been prejudiced by the delay in these circumstances.
89The inordinate delay described above, has created a presumption that the defendant has been prejudiced by this delay. The onus was on the plaintiff to displace the prejudice and persuade the court with convincing evidence that no prejudice will be suffered as a result of its delay, and that there is not a substantial risk that a fair trial will not be possible. The plaintiff has failed to discharge that onus. Beyond that, the defendant has demonstrated actual prejudice in any event.
90Specifically, the plaintiff has failed to satisfy me that the defendant will not be prejudiced in pursuing a number of critical defences in this litigation, including mitigation of damages; passage of the limitation period in relation to the manufacturer’s warranty on the portside engine and the bankruptcy of Carver Boat Corporation.
91The plaintiffs’ position that the defendant is not prejudiced because the plaintiff did not pursue their owner’s warranty against Volvo and did not pursue the manufacturer of the boat in a timely fashion could not be substantiated by the plaintiff. Clearly, the defendants warned the plaintiffs of the pending passing of the Volvo warranty and they took no steps to pursue it. Further, this litigation began in 2000, and Carver’s did not become bankrupt until 2009 and thus the loss of the manufacturer’s warranty and possible liability lands at the feet of the plaintiffs.
92In any event, there is now a substantial risk that a fair trial of the issues will not be possible because of the plaintiffs’ delay and the action is therefore dismissed.
93While rule 24.03 provides that where an action is dismissed for delay, the defendant may elect, within 30 days, to proceed with their counterclaim, I have discretion to dismiss the counterclaim for delay, as it is equally clear that the defendant, over the life of this litigation, has not pursued its counterclaim with diligence. The claim and counterclaim both depend, to a large degree, on the same evidence and circumstances, and if there is a substantial risk that there cannot be a fair trial in the main action because of inexcusable delay, then there is a similar risk that a fair trial in the counterclaim may not be possible and therefore the counterclaim is dismissed.
94Even if I am wrong in relation to the application of the relevant rules in this matter, I would dismiss the claim and counterclaim for delay based on this court’s inherent jurisdiction to control its own process, which “includes the discretionary powers to dismiss an action for delay”.
95A lengthy, unexplained delay in a case of this nature could well be defined as an abuse of the court’s process. There is, indeed, a strong public interest in promoting the timely resolution of disputes in our civil justice system, which is already overburdened. Litigants and the public regularly complain about inordinate delays in obtaining civil motions and trial dates. The delay in this matter, of over a decade, strains the empathy of the court to excuse a delay of this “magnitude and gravity” and further undermines public confidence in the administration of our civil justice system.
Order
[96]
Order
The action is dismissed. The counterclaim is dismissed.
Costs
[97]
Costs
The parties may, if necessary, submit to me within ten days, their position as to costs of this motion. Said submissions shall be no more than three (3) pages in length. Submissions may be sent via email to my assistant, Toni McKenney, at Toni.McKenney@ontario.ca.
“Mr. Justice D.S. Gunsolus”
Released: December 10, 2013
