SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 11-50544
DATE: March 6th, 2014

RE: Platinum Broker’s Ltd. c.o.b. , as Platinum Home Design, Décor and Renovations, Plaintiff

AND:

Tammy Hyacienth et. al., defendants

BEFORE: MASTER MACLEOD

COUNSEL:
David Pomer, for the Plaintiff
Jennifer Katsuno, for the Defendant

HEARD: Feb 4, 2014

ENDORSEMENT

[1] This is a contested status hearing held pursuant to Rule 48.14 of the Rules of Civil Procedure. The question is whether or not the plaintiff has been able to “show cause why the action should not be dismissed for delay”. This is the test as set out in Rule 48.14 (13).

[2] The caselaw establishes that in order to meet this test the plaintiff must demonstrate two things. Firstly the plaintiff must provide a reasonable explanation for the delay. Secondly the plaintiff must show that the defendant will not be prejudiced if an extension of time is granted.[^1] If the plaintiff meets this onus and the court is satisfied that the action should proceed, the action may be permitted to continue on terms. If the plaintiff fails to meet this onus then the action must generally be dismissed for delay.

[3] For the reasons that follow, based on the evidence before me, this is not a case in which the plaintiff can adequately justify the delay. Dismissal is entirely justified on a strict application of the Khan / Oberding test.[^2] I consider that notwithstanding the failure to meet the onus the court retains a jurisdiction to impose a less draconian remedy than dismissal but on the basis of the material before the court this is not a case in which that discretion should be exercised.

Factual Background

[4] The facts are as follows. In November of 2009 the plaintiff was apparently hired to renovate two apartments in a building belonging to the defendants. For reasons that are in dispute the work was not completed as originally planned and the plaintiff was not paid the contract price. The plaintiff then retained David Pomer, a lawyer in the law firm of Pomer & Boccia Professional Corporation located in Woodbridge, Ontario to represent its interests and to seek payment.

[5] Apparently Pomer & Boccia registered a lien and commenced this court proceeding. The action was commenced on February 2nd, 2011 and Mr. Pomer is shown as lawyer of record. A statement of defence and counterclaim was delivered in June of 2011. Andrew McKenna of Gowling Lafleur Henderson LLP is lawyer of record for the defendant Hyacienth.[^3] In the counterclaim the homeowner alleged that the work was incomplete, deficient and delayed. It was also alleged that the lien was improper and was out of time.

[6] The plaintiff did not take proper steps to preserve its lien rights. Specifically no certificate of action was registered on title and accordingly the defendant obtained an ex parte order vacating the lien on April 11th, 2012. Although counsel for the plaintiff now blames the failure to obtain and register a certificate of action on its process server, that is not a defence under the Act. Unless the lien is specifically preserved and perfected in accordance with the Act, the lien rights lapse and the owner is entitled to move without notice for an order discharging the lien. This is precisely what happened.

[7] Since the action is pleaded in breach of contract and the plaintiff and the owner were the contracting parties, the cause of action and the court proceeding survived the discharge of the lien. Notwithstanding the loss of the lien rights, no steps were taken by the plaintiff to prosecute the action either before or after the order vacating the lien until there was a flurry of e-mail activity around the time of the status notice.

[8] Mr. McKenna wrote to Mr. Pomer on several occasions before bringing the motion asking if the plaintiff was serious about proceeding and if so requesting dates for a settlement meeting and cross examination on the lien pursuant to the Act. Subsequent to the motion he wrote advising that the lien had been discharged and asking if the plaintiff intended to proceed with the action. Letters were written on the following dates:

a. December 15th, 2011 – asking if the plaintiff was proposing to proceed and requesting dates

b. January 12th, 2012 – following up on December 15th

c. February 24th, 2012 – requesting the courtesy of a response

d. April 13th, 2012 – containing the order of Justice Lalonde vacating the lien and asking how the plaintiff wished to proceed now that there was no longer a lien claim.

e. May 22nd, 2012 – requesting a response to April 13th

f. June 11th, 2012 – following up on April 13th & May 22nd and asking for a response.

[9] There was no response of any sort to any of these letters. From the point of view of the defendant nothing more transpired on the file until July 22nd, 2013 when Brendan Holness, another lawyer at Pomer & Boccia contacted Mr. McKenna by voice mail and e-mail to ask about discovery dates. On July 24th, 2013 the court issued a status notice.

[10] Thereafter the following events took place.

a. On August 1st, 2013 Mr. Holness contacted Mr. McKenna by e-mail to advise he was attempting to draft a timetable and requesting his position about the status notice.

b. On August 7th, 2013 the plaintiff belatedly served a defence to counterclaim.

c. On August 12th, 2013 Mr. McKenna advised that he was seeking instructions as to whether or not to consent to a timetable or to require the plaintiff to attend at a status hearing. In the meantime he indicated his client might be open to a reasonable “resolution of the matter” given, the “unexplained delays, my client’s counterclaim and the time that has passed in this matter”.

d. On September 18th, 2013 Mr. McKenna advised that his client would not consent to a timetable and would be taking the position that the action should be dismissed for delay.

e. On October 15th, 2013 the status hearing took place. As it was contested, the hearing was adjourned to permit the plaintiff to file affidavit material. A timetable was set for exchange of affidavits.

f. An affidavit of Brendan Holness was subsequently served on November 4th, 2013.

g. A responding affidavit of Andrew McKenna was served on December 5th, 2013.

h. The status hearing continued on February 4th, 2014 at which time the court heard argument. Mr. Pomer attended by telephone.

Explanation for Delay

[11] There is an explanation for the delay. It is set out in the affidavit of Mr. Holness. It appears from that affidavit that Mr. Pomer had assigned the file to Doug LaFramboise, an associate in his office, around the end of 2011. It appears Mr. LaFramboise then did no work on the file. In fact if the information in Mr. Holness’ affidavit is accurate this lawyer took the file to Ottawa and then lied to Mr. Pomer and to the client about the progress of the action. The client was communicating with Mr. LaFramboise until September of 2012 and had been told by him that he was trying to arrange discoveries. According to Mr. Holness this was untrue.

[12] During much of this time the file may have been out of the physical control of the law firm and in the possession of Mr. LaFramboise. Certainly this was so between October of 2012 and December of 2012 during which time it was impossible to reach him. According to the affidavit, it took an e-mail from the client and the threat of a complaint to the Law Society to get the file returned.

[13] There is no affidavit from Mr. LaFramboise or from the client. The only evidence is that of Mr. Holness which is based largely on information gleaned from a file review and discussions with Mr. Pomer. For purposes of the motion however I accept that some portion of the delay was the fault of a rogue lawyer who was negligent or worse.[^4]

[14] The question is whether this unusual fact situation concerning the internal difficulties in Mr. Pomer’s office constitutes a reasonable explanation for the delay? Can this possibly meet the onus under the rule? One might sympathize with Mr. Pomer who put his trust in an associate lawyer but the court can hardly condone the lack of supervision or file monitoring which this evidence implies.

[15] Although Mr. Holness states that “the firm retained the services of Mr. LaFramboise”, this was not a case of transferring carriage of the file to an independent lawyer or subcontracting to an independent practice. At all times, Mr. Pomer remained the lawyer of record and Mr. LaFramboise was shown as a member of the firm on the firm’s letterhead. In fact at the time the motion was argued and indeed as of the date of writing these reasons, Mr. LaFramboise remains listed on the law firm’s web site. At all material times the firm represented that he was one of their lawyers. Defence counsel quite properly continued to correspond with Mr. Pomer and never had any reason to think he should be writing to Mr. LaFramboise or to anywhere other than the offices of Pomer & Boccia.

[16] The courts have stated that simply giving evidence that the file “fell through the cracks” in the lawyer’s office is not sufficient.[^5] Here there was no mere inadvertence. There were at least six letters from defence counsel over the space of two years which remained unanswered. During that entire time pleadings remained open, there was no attempt to make documentary production and there was only a belated attempt to schedule discoveries.

[17] Even accepting that Mr. Pomer was actively misled by the lawyer he had assigned to work on the file, internal conflict or disorganization within a law firm cannot be a reasonable explanation for a delay of this magnitude. The firm simply failed to supervise its files. During this whole period of time, Mr. Pomer was the lawyer of record. Mr. Pomer saw the letters from Mr. McKenna but he simply forwarded them to the associate he believed was looking after the files. There apparently was no system to track progress on these files or to ensure timely reporting to the client. The firm had not even defended against the counterclaim until Mr. Holness was assigned the file in July of 2013. There was never an intention that Mr. LaFramboise take over the file as lawyer of record.

[18] As lawyer of record Mr. Pomer has and continues to have responsibility for the file. Pomer and Boccia has responsibility to supervise the lawyers working on its files and to have systems in place to monitor progress. As Justice Morgan said in the Saini case, supra, “an explanation based on oversights or inertia within the Plaintiff’s lawyer’s office does not meet the evidentiary burden which the Court of Appeal says a Plaintiff must meet at a status hearing.”[^6]

[19] It appears the file was back under the control of Mr. Pomer by December of 2012. There is no explanation at all as to why nothing further was done until Mr. Holness appears to have become involved with the file in July of 2013. The explanation for delay is not a reasonable explanation which would meet the onus on a plaintiff under Rule 48.14. On this basis alone the action is amenable to dismissal.

Prejudice

[20] The second branch of the test is absence of prejudice. The onus is on the plaintiff to demonstrate its absence. In that regard, the affidavit of Mr. Holness simply asserts the absence of prejudice by stating that discoveries can be arranged without delay. Of course the prejudice in question is not the inevitable prejudice that results from being a defendant in a lawsuit, even one that the defendant views as frivolous. The prejudice in question is prejudice arising from delay or from a further extension of time.

[21] Even if the plaintiff provides a reasonable explanation for delay the court may refuse to allow the action to continue if it appears the defendant will suffer significant prejudice by an extension of time. The rule presumes such prejudice and the onus is on the plaintiff to displace it. Of course the presumption has increasing strength with the passage of time. Here the action was just over two years old when the status notice was sent and the status hearing was scheduled though of course it relates to a contract made in 2009 some 5 years ago.

[22] It would have been preferable for the plaintiff to propose a specific timetable for completion of all outstanding steps, to clearly identify the issues to be tried, the witnesses and documents that will be involved and any steps that have been taken to preserve that evidence. A mere assertion that there is no prejudice is insufficient.

[23] On the other hand counsel for the defendant has filed an affidavit dealing with the delay but the affidavit does not assert specific prejudice. A defendant is not required to prove prejudice though it may choose to do so and if there is specific evidence of prejudice that would be a relevant consideration.[^7] There is no evidence of specific prejudice in this case. Though I regard the plaintiff’s evidence about lack of prejudice to be inadequate since the defendant is not asserting any significant prejudice and the status hearing was scheduled promptly after the expiry of the time in Rule 48.14, I do not regard prejudice to be a significant factor in this case.

Residual Discretion

[24] Having reached the conclusion that the explanation for the delay is not reasonable, even in the absence of significant prejudice, the court will ordinarily dismiss the action for delay. Dismissal is of course the ultimate sanction for delay and although the design of the rule makes it presumptive, it is not mandatory. The court retains discretion as to whether to make such an order or not. The wording of the rule makes the discretionary nature of the remedy clear. The court “may” impose a timetable and other conditions if the court is persuaded that the action should be allowed to continue. The court “may” dismiss the action for delay if this onus is not met.

[25] Despite the undoubted discretionary nature of the remedy, however, the presumption is clear that if the plaintiff does not meet the onus of showing cause, the action will be dismissed. Indeed the Registrar is commanded by the rule to dismiss the action for delay unless the court at the status hearing “otherwise orders”. Dismissal will therefore take place either because the court orders it or because the court does not “order otherwise”. Though I have discretion to dismiss or not to dismiss, and to grant a further indulgence this is not a discretion that may be arbitrarily exercised.

[26] There are competing policy considerations between determining issues on their merits on the one hand but also discouraging delay and holding parties who commence litigation accountable for moving the action forward on the other. This is discussed at length by the Court of Appeal in the 1196158 Ontario case at paras. 31 – 44.[^8] In that case the court stresses that “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”. Moreover the Court of Appeal directs that “unless the basic ground rules of litigation – including time requirements – are enforced in a principled way, counsel cannot provide reliable advice and clients cannot plan their affairs in an orderly manner.”[^9]

[27] I recognize there are certain ameliorating factors in this case. Firstly, unlike some of the cases cited, where many years had passed and there have been more than one status hearing, this case was just over two years old when the status notice was issued. It is also true that there has been no breach of a court order or a timetable which would entitle the defendant to bring a motion for dismissal. There is a counterclaim and it would have been open to the plaintiff by counterclaim to take active steps to move the matter forward. Finally (though it would have been preferable to have an affidavit from the client) it appears the client had made occasional inquiries about the action and was misled into believing that it was the defendant who was stalling the action by refusing to give discovery dates. Dismissal would be harsh for the plaintiff but of course the defendants have been left for all this time facing a lawsuit, paying for counsel and hearing nothing.

[28] It would be open to me to impose a sanction other than dismissal and to allow the action to continue on strict terms. I might for example have been persuaded to impose a strict timetable, to order costs and perhaps security for costs. Perhaps had the plaintiff retained new counsel, filed an affidavit, apologized to the defendant for the delay, offered to pay costs, committed to a discovery plan and demonstrated that the case had evident merits this would have been appropriate. None of this was done.

[29] In fact viewed objectively, this is a relatively minor construction dispute for work that was never completed in which the defendants allege deficiencies, breach of contract and delay. On the face of it this is an action in which it is impossible to say that the termination of the action will be depriving the plaintiff of anything other than the right to prolong a fight with an uncertain outcome. The defendant has undertaken not to pursue the counterclaim if the action is dismissed but will be forced to do so if it continues.

[30] Dismissal of the action is the presumptive outcome of the status hearing and there is no principled reason to substitute an alternative remedy.

Summary and Conclusion

[31] For the reasons set out above, there will be an order dismissing the action and dismissing the counterclaim.

[32] I will entertain submissions on costs if the defendant wishes to pursue them.

Master Calum MacLeod

March 6, 2014

[^1]: Khan v. Sun Life Assurance Co. of Canada 2011 ONCA 650 (C.A.), Oberding v. Sun Life Financial Assurance Co. of Canada 2010 ONSC 3303 (Div.Ct.)

[^2]: Supra, note 1

[^3]: The defendant Fletcher Prospere has never been served.

[^4]: Mr. LaFramboise is not a party to the motion and has had no opportunity to respond to these allegations.

[^5]: See for example Saini v. Sun Life Assurance Co. 2013 ONSC 4463 (S.C.J.), leave to appeal refused 2013 ONSC 7434 (Div.Ct.)

[^6]: Supra, para. 13

[^7]: Samborski v. Prisitne Capital Inc. 2011 ONSC 3383 (Master)

[^8]: 2012 ONCA 544; (2012) 112 O.R. (3d) 67 (C.A.)

[^9]: Ibid, para. 41