SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-08-352614
MOTION HEARD: FEBRUARY 26, 2014

RE: Velmurugu Sivanantharajah

v.

Mahaluxmy Arunthavarajah and Velummylum Arunthavarajah

BEFORE: MASTER R.A. MUIR

COUNSEL: Daniel Iny, agent for the lawyer for the plaintiff
Keith Lee-Whiting for the defendant Mahaluxmy Arunthavarajah

REASONS FOR DECISION

[1] The plaintiff brings this motion pursuant to Rule 37.14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) for an order setting aside the order of the registrar dated January 6, 2011, dismissing this action for delay. This action was dismissed by the registrar due to the failure on the part of the plaintiff to comply with the requirements of Rule 48.14. An action may be dismissed by the registrar under Rule 48.14 if it has not been set down for trial, or otherwise disposed of, within two years of the filing of the first defence.

[2] The defendant Mahaluxmy Arunthavarajah (“Mahaluxmy “) opposes the granting of the relief requested on this motion.

Background and History of the Litigation

[3] This is a simple claim for the repayment of allegedly outstanding loans of approximately $58,000.00. The loans were made in 2006 and 2007. The plaintiff alleges that the defendants have failed to repay the loans.

[4] The plaintiff started this action on April 14, 2008. The statement of claim was served on the defendants shortly thereafter. The defendant Velummylum Arunthavarajah passed away on May 5, 2008. No order to continue has been obtained. As a result, this action is stayed against Velummylum Arunthavarajah pursuant to Rule 11.01.[^1]

[5] Mahaluxmy did not immediately defend this action and was noted in default. The plaintiff ultimately agreed to set aside the noting in default and Mahaluxmy then delivered her defence on September 17, 2008.

[6] On October 15, 2008, the plaintiff served an unsworn affidavit of documents and copies of his productions.

[7] Mahaluxmy then decided to bring a motion for summary judgment. Most of 2009 was taken up by the steps related to the summary judgment motion (exchange of motion materials, cross-examinations and argument). Mahaluxmy’s summary judgment motion was ultimately dismissed by Madam Justice Klowak on November 24, 2009. Justice Klowak ordered Mahaluxmy to pay $6,000.00 in costs. Those costs have yet to be paid.

[8] Regrettably, very little has been done to advance this claim since that date. In 2010, the plaintiff’s lawyer did make a few attempts to settle this action but those efforts were sporadic and ultimately unsuccessful.

[9] On September 20, 2010 the court issued a status notice. The plaintiff’s lawyer did not receive the status notice. It appears that there is an error in the court records as another lawyer unconnected with this action is referenced as acting for the plaintiff.

[10] The registrar dismissed this action for delay on January 6, 2011. Again, the plaintiff’s lawyer did not receive a copy of the dismissal order, for the same reason he did not receive a copy of the status notice.

[11] Between January 2011 and April 2013, the plaintiff and his lawyer did nothing to move this matter forward except for sending one email to counsel for Mahaluxmy on March 17, 2011 inquiring about Mahaluxmy’s settlement position.

[12] The plaintiff hired a new lawyer in April 2013. The new lawyer discovered that this action has been administratively dismissed on January 6, 2011. The plaintiff’s former lawyer was notified and the matter was reported to his insurer. A notice of motion seeking an order setting aside the dismissal was served on July 2, 2013. The motion was ultimately argued before me on February 26, 2014.

Setting Aside a Dismissal Order

[13] The law relating to motions for an order setting aside an administrative dismissal order is summarized in my decision in 744142 Ontario Ltd. v. Ticknor Estate, 2012 ONSC 1640 (Master). At paragraph 32 of that decision I set out the applicable principles as follows:[^2]

32. In the last five years, the law relating to setting aside registrar’s dismissal orders has been the subject of seven decisions of the Court of Appeal for Ontario. Although each of those decisions brings a slightly different approach to the decision making process, the general approach first set out by the Court of Appeal in Scaini has been followed consistently. The principles that emerge from those decisions can be summarized as follows:

● the court must consider and weigh all relevant factors, including the four Reid factors which are likely to be of central importance in most cases;

● the Reid factors, as cited by the Court of Appeal in Giant Tiger, are as follows:

(1) Explanation of the Litigation Delay: The plaintiff must adequately explain the delay in the progress of the litigation from the institution of the action until the deadline for setting the action down for trial as set out in the status notice. She must satisfy the court that steps were being taken to advance the litigation toward trial, or if such steps were not taken to explain why.... If either the solicitor or the client made a deliberate decision not to advance the litigation toward trial then the motion to set aside the dismissal will fail.

(2) Inadvertence in Missing the Deadline: The plaintiff or her solicitor must lead satisfactory evidence to explain that they always intended to set the action down within the time limit set out in the status notice, or request a status hearing, but failed to do so through inadvertence. In other words the penultimate dismissal order was made as a result of inadvertence.

(3) The Motion is Brought Promptly: The plaintiff must demonstrate that she moved forthwith to set aside the dismissal order as soon as the order came to her attention.

(4) No Prejudice to the Defendant: The plaintiff must convince the court that the defendants have not demonstrated any significant prejudice in presenting their case at trial as a result of the plaintiff’s delay or as a result of steps taken following the dismissal of the action;

● a plaintiff need not satisfy all four of the Reid factors but rather a contextual approach is required;

● the key point is that the court is to consider and weigh all relevant factors to determine the order that is just in the circumstances of each particular case;

● all factors are important but prejudice is the key consideration;

● prejudice to a defendant may be presumed, particularly if a lengthy period of time has passed since the order was made or a limitation period has expired, in which case the plaintiff must lead evidence to rebut the presumption;

● once a plaintiff has rebutted the presumption of prejudice, the onus shifts to the defendant to establish actual prejudice;

● prejudice to a defendant is not prejudice inherent in facing an action in the first place but prejudice in reviving the action after it has been dismissed as a result of the plaintiff’s delay or as a result of steps taken following the dismissal of the action;

● the party who commences the litigation bears the primary responsibility under the Rules for the progress of the action;

● in weighing the relevant factors, the court should not ordinarily engage in speculation concerning the rights of action a plaintiff may have against his or her lawyer but it may be a factor in certain circumstances, particularly where a lawyer’s conduct has been deliberate. The primary focus should be on the rights of the litigants and not with the conduct of their counsel.

[Footnotes Omitted]

[14] I am also mindful of the observations of the Court of Appeal in its decision in Hamilton (City). At paragraphs 20-22 of that decision Justice Laskin notes as follows:

20 Two principles of our civil justice system and our Rules of Civil Procedure come into play. The first, reflected in rule 1.04(1), is that civil actions should be decided on their merits. As the motion judge said at para. 31 of his reasons: "the court's bias is in favour of deciding matters on their merits rather than terminating rights on procedural grounds."

21 The second principle, reflected in the various time limits mandated by our rules, and indeed, as noted by the motion judge, in the provision for a status notice and hearing, is that civil actions should be resolved within a reasonable timeframe. In Marché, at para. 25, my colleague Sharpe J.A. wrote about the strong public interest in promoting the timely resolution of disputes. Both the litigants and the public have an interest in timely justice. Their confidence in the administration of our civil justice system depends on it.

22 On motions to set aside an order dismissing an action for delay, invariably there is tension between these two principles.

[15] I also note that the Court of Appeal has recently emphasized the principle that these motions involve an exercise of the court’s discretion. The court must weigh all relevant considerations to determine the result that is just in the circumstances. See Habib v. Mucaj, 2012 ONCA 880 at paragraph 6.

[16] Finally, it should be emphasized that the general preference in our system of civil justice is for disputes to be decided on their merits. See MDM Plastics Ltd. v. Vincor International Inc., 2013 ONSC 710 (S.C.J.) at paragraphs 24 and 28.

[17] These are the factors and principles I have considered and applied in determining the issues on this motion. My analysis leads me to the conclusion that it is in the interest of justice that the dismissal order of the registrar be set aside.

Motion Brought Promptly

[18] Rule 37.14(1) requires that motions of this nature be brought by way of a notice of motion served forthwith after the order in question comes to the attention of the person affected. The applicable authorities also require these motions to be brought promptly.

[19] In my view, the plaintiff has done so. I am satisfied that the dismissal order did not come to the attention of the plaintiff or his lawyer until April 2013. The plaintiff’s former lawyer and his insurer were then advised of the dismissal order in short order. Notice of this motion was served in early July 2013. I am satisfied that this motion has been brought promptly having regard to the circumstances of this action.

[20] Counsel for Mahaluxmy argued that the plaintiff’s lawyer should have known that the action had been dismissed as a result of an email sent to him by Mr. Lee-Whiting on March 18, 2011. I have carefully reviewed that email. Nowhere does it state that the action has been dismissed. It simply states that Mr. Lee-Whiting had thought the plaintiff had “closed” the file and that the “action [was] over”. In my view, this language does not send the message that the action had been formally dismissed by the court. At best, it suggests that Mahaluxmy and her lawyer had assumed that the plaintiff had abandoned his claim given the lack of effort to advance the matter.

[21] In my view, the plaintiff has satisfied this element of the Reid test.

Litigation Delay

[22] I am not satisfied that the plaintiff has provided a satisfactory explanation for the delay encountered with this action following the dismissal of the summary judgment motion. Very little was done to advance this claim from November 2009 to April 2013. A few letters and email messages exploring the possibility of settlement is not sufficient. The explanation from the plaintiff’s lawyer that he was busy with other matters is not a satisfactory answer either. If the plaintiff’s lawyer was too busy to properly handle this claim he should have transferred the matter to another lawyer who had the necessary capacity. This is a very simple collection action. There is simply no excuse for the prolonged delay.

[23] I should note that as part of my consideration of this element of the Reid test, I have considered the delay from the commencement of the litigation up to April 2013. I appreciate that Reid only refers to delay to the date the action was dismissed. However, it is my view that the additional post dismissal delay should be considered in the context of this action. I take this approach because the lawyer for the plaintiff always assumed that this action was alive and ongoing up until April or May 2013 and still did very little to move the matter forward.

[24] For these reasons, I am not satisfied that the plaintiff has met this element of the Reid test.

Inadvertence

[25] In my view, the plaintiff has met this aspect of the Reid test. The plaintiff’s lawyer did not receive the status notice from the court. The plaintiff’s evidence is that he always intended to proceed with the claim. The plaintiff’s lawyer did write a letter exploring the issue of settlement in March 2011 after the action had been dismissed. Finally, the plaintiff retained a new lawyer in April 2013. In my view, the failure of the plaintiff to meet the Rule 48.14 deadline can only be explained by inadvertence. Nothing in the evidence would suggest a deliberate intention to abandon the claim. Inadvertence is the only explanation that makes sense.

[26] In my view, the plaintiff has satisfied this element of the Reid test.

Prejudice

[27] I am also satisfied that the plaintiff has met the onus placed upon him to rebut the presumption of prejudice. Where a limitation period has passed, as it has here (at least for the first two loans), a presumption of prejudice arises and the onus rests with the plaintiff to rebut that presumption. The strength of this presumptive prejudice increases with the passage of time. See Wellwood at paragraph 60.

[28] A plaintiff can overcome the presumption of prejudice by leading evidence that all relevant documents have been preserved, that key witnesses are available or that certain aspects of the claim are not in issue. See Wellwood at paragraph 62. I have concluded that the plaintiff has done so. It appears that all documents are available. The plaintiff’s productions were served in 2008. It is true that the plaintiff’s affidavit of documents has never been sworn, however, that does not alter the fact that the documents themselves have been preserved and produced.

[29] In addition, the evidence of the parties has been preserved as a result of the summary judgment motion. Affidavits were sworn and exchanged. Cross-examinations were conducted and transcripts prepared. The plaintiff and Mahaluxmy remain available to be examined for discovery and give evidence at trial, if necessary.

[30] I acknowledge that the defendant Velummylum Arunthavarajah is not available to give evidence. However, his unavailability is not connected to any delay on the part of the plaintiff as Velummylum Arunthavarajah died in May 2008, shortly after this action was started.

[31] Mahaluxmy has not provided any specific evidence of actual prejudice. She does argue that a potential witness named Mohan has disappeared. However, no details are provided of the relevant evidence he might give and his whereabouts have been unknown since at least 2009, well before any delay on the part of the plaintiff.

[32] For these reasons, it is my view that this element of the Reid test has been met.

The Merits

[33] Much of Mahaluxmy’s evidence in response to this motion deals with the merits of her defence. In my view, the merits are not a relevant factor on this motion. As I stated in my decision in Tribar Industries Inc. v. KPMG LLP, 2011 ONSC 1699 (Master) at paragraphs 34-39, the merits may be an appropriate consideration on motions of this nature but only in the clearest of cases and where the action is so clearly devoid of merit that it has no chance of success. That is simply not the situation before the court on this motion as is made obvious by Justice Klowak’s decision on Mahaluxmy’s summary judgment motion.

Conclusion

[34] When deciding motions of this nature, the court is to adopt a contextual approach in which it weighs all relevant considerations to determine the result that is just in the circumstances. The court must, of course, balance the strong public and private interest in promoting the timely resolution of disputes with the entitlement of a plaintiff to have his claim decided on the merits. However, the preference in our system of civil justice is for the determination of disputes on their merits.

[35] The plaintiff has failed to provide a satisfactory explanation for the delay encountered to date. However, the plaintiff has brought this motion promptly and established that his failure to comply with Rule 48.14 was inadvertent. Importantly, he has also satisfied the key consideration of prejudice.

[36] The plaintiff’s delay in advancing this action has been lengthy and troubling. However, it is my view that the delay is not of such magnitude that setting aside the dismissal order will bring the administration of justice into disrepute. The effects of any further delay can be obviated with an appropriate timetable order. I also note that similar delays can be found in Finlay and Aguas. In both cases, the Court of Appeal concluded that the dismissal orders should be set aside.

[37] For these reasons, I have concluded that it is just in the circumstances of this action that the dismissal order of the registrar of January 6, 2011 be set aside.

Order

[38] I therefore order as follows:

(a) the dismissal order of the registrar dated January 6, 2011 is hereby set aside;

(b) the parties shall confer and attempt to agree on a timetable for the remaining steps in this action with the proposed timetable being provided to the court for approval by March 18, 2014;

(c) if the parties are unable to agree on a timetable, they shall provide the court with written submissions by March 18, 2014; and,

(d) if the parties are unable to resolve the issue of costs, they shall make brief submissions in writing by March 18, 2014.

Master R.A. Muir

DATE: March 4, 2014

[^1]: Mahaluxmy’s counsel argued that the entire action was stayed as a result of the death of Velummylum Arunthavarajah. I do not accept that argument. Rule 11.01 specifically refers to the action being stayed “with respect to the party whose interest or liability has been transferred”. I also note that Mahaluxmy’s subsequent decision to launch a summary judgment motion is not consistent with her argument that the entire action has been stayed.

[^2]: The applicable principles are derived from seven decisions of the Court of Appeal for Ontario released over the last several years: Scaini v. Prochnicki, 2007 ONCA 63, [2007] O.J. No. 299 (C.A.); Marché D’Alimentation Denis Thériault Lteé v. Giant Tiger Stores Ltd., 2007 ONCA 695, [2007] O.J. No. 3872 (C.A.); Finlay v. Van Paassen, 2010 ONCA 204, [2010] O.J. No. 1097 (C.A.); Wellwood v. Ontario (Provincial Police), 2010 ONCA 386, [2010] O.J. No. 2225 (C.A.); Hamilton (City) v. Svedas Koyanagi Architects Inc., 2010 ONCA 887, [2010] O.J. No. 5572 (C.A.); Machacek v. Ontario Cycling Assn., 2011 ONCA 410, [2011] O.J. No. 2379 (C.A.); Aguas v. Rivard Estate, 2011 ONCA 494, [2011] O.J. No. 3108 (C.A.).