SUPERIOR COURT OF JUSTICE - ONTARIO

RE: JOSEPH WOJDAT and 1414037 ONTARIO LTD., Plaintiffs

AND:

VENTAWOOD MANAGEMENT INC., Defendant

BEFORE: F.L. Myers J.

COUNSEL:
D. Buntsma and D. Alli, for the plaintiffs

J. Jakubiak, for the defendant

HEARD: March 6, 2014

ENDORSEMENT

[1] The defendant’s counsel, Mr. Jakubiak, opened his argument of this motion with the submission that “...at first blush, this motion smells and the defendant’s position smells.” Unfortunately, I agree. The motion should not have been necessary and it certainly should not have been opposed.

[2] The plaintiff, Joseph Wojdat, claimed that in April 2007 the defendant hired him as an employee through his holding company. In his statement of claim, Mr. Wojdat pleaded that on Christmas Day of 2010, he had a seizure and was diagnosed with advanced lung cancer. He returned to work in January, 2011. He became ill from chemotherapy and radiation therapy in February and through the spring. On April 29, 2011, the defendant terminated the employment of Mr. Wojdat by email without providing any notice or any payment in lieu of notice.

[3] Mr. Wojdat sued the defendant for compensation for wrongful dismissal in June, 2011. By then he claimed that he had lost 40 pounds and his cancer had progressed to stage IV. The defendants delivered a statement of defence and counterclaim on July 20, 2011. The defendant denied that Mr. Wojdat was an employee and pleaded he was an independent contractor who therefore would not be entitled to notice of termination or payment in lieu of notice. In addition, it raises a number of issues of alleged cause for termination dating from prior to the onset of Mr. Wojdat’s cancer.

[4] Although the defendant denies that Mr. Wojdat was its employee, the plaintiffs put into evidence a letter from one of the defendant’s owners addressed “to whom it may concern” and dated weeks after Mr. Wojdat was hired. The letter says:

Please be advised that Joseph Wojdat has been employed by Ventawood Management Inc. since April 12, 2007. His current salary is $60,000 per year.

If you have any questions please do not hesitate to contact me.

[5] Mr. Jakubiak agreed that this is a typical confirmation of employment letter that the defendant would expect to be relied upon by third parties such as Mr. Wojdat’s banker among others.

[6] Joseph Wojdat died of cancer on September 6, 2011.

[7] In describing why he said that his client’s position on this motion smelled, Mr. Jakubiak accepted that Mr. Wojdat’s spouse, Monika Michalowska, lived through a harrowing experience. She lost her husband. She was left with three small children who were then ages 3, 5 and 6. Mr. Wojdat had been the sole source of income for the family.

[8] In June, 2012, due to the financial perils that had befallen her family, Ms Michalowska told the plaintiffs’ former lawyer that she could not afford to continue to pay. The plaintiffs’ former lawyer said she would deliver a Notice of Intention to Act in Person and asked the lawyer for Mr. Wojdat’s estate to confirm that Ms Michalowska was the estate trustee. The plaintiffs’ former lawyer sent an unsigned draft of a Notice of Intention to Act in Person to the defendant’s lawyer, Mr. Beranofsky (Mr. Jakubiak’s principal). It appears that the plaintiffs’ former lawyer went on maternity leave the next week before she heard back from the estates lawyer or at least before finalizing the Notice of Intention to Act in Person. The plaintiffs’ former lawyer did not serve a signed Notice of Intention to Act in Person on Mr. Beranofsky and she never filed one with the court. Hence, the plaintiffs’ former lawyer remained lawyer of record in the court files.

[9] On October 31, 2013, Ms Michalowska retained the plaintiffs’ current counsel to continue the lawsuit. The next day, November 1, 2013, new counsel served a Notice of Change of Lawyer and a Reply and Defence to Counterclaim on Mr. Beranofsky. That same day, the plaintiffs’ new counsel received a letter from the prior lawyer enclosing an Order of the Registrar dismissing the action under Rule 48.14 dated October 22, 2013.

[10] The Plaintiffs move under Rule 37.14 to re-open this case which was dismissed by the Registrar’s Order. The Registrar’s Order was issued because the action was not set down for trial within two years of the filing of the defendant’s statement of defence. The Registrar is required to give notice to the parties 90 days prior to dismissing an action for delay under Rule 48.14. He did so. As the plaintiffs’ former lawyer had not filed a Notice of Intention to Act in Person with the court as she had volunteered to do, the Registrar delivered the 90 day notice (a “Status Notice”) to the former lawyer who remained lawyer of record. (The Status Notice is not in the material before me, but the Registrar’s Order dismissing the action is in evidence. It shows that it was sent to the plaintiffs’ former lawyer as one would expect). The plaintiffs’ former lawyer did not provide Ms Michalowska with the Status Notice. Mr. Jakubiak agreed with me that in light of the timing, had Ms Michalowska retained her new counsel just a few days earlier, this motion would never have happened.

[11] By email dated November 5, 2013, the new counsel for the plaintiffs promptly asked Mr. Beranofsky to agree to set aside the Registrar’s Order. They explained the delay owing to Mr. Wojdat’s death and the consequences of his death on the family. They proposed a speedy timetable to see the action through discoveries and ready for trial by July 15, 2014. Mr. Beranofsky refused to consent. He asserted that,

The court initially sent out the Status Notice providing your clients with 90 days within which to take a positive step before an order dismissing the action was issued.

[12] Mr. Jakubiak submitted in argument that Mr. Beranofsky had no way to know that the plaintiffs’ former lawyer had not filed the Notice of Intention to Act in Person. But he did. Counsel for the plaintiffs told him so in the email of November 5, 2013. The plaintiffs’ new counsel told Mr. Beranofsky:

With respect to the above, we regret that we were not involved earlier, as it would appear that the predecessor counsel failed to notify our client of the Status Notice and Order.

[13] The plaintiffs’ new counsel responded with a lengthy letter to Mr. Beranofsky dated November 13, 2013 in which he re-asserted the facts and provided case references to try to convince the defendant to consent to a reasonable timetable but to no avail. The plaintiffs brought this motion on December 6, 2013.

[14] Mr. Jakubiak relies upon the decision of the Court of Appeal in Nissar v. The Toronto Transit Commission, 2013 ONCA 361, as the controlling authority for this motion. In that case, Ms Nissar alleged she was injured in a bus accident in 1999. She sued the TTC in 2001. Tulloch J.A. described the case as “plagued by significant delay”. Examinations for discovery occurred in April 2002. Transcripts were not ordered. The plaintiff’s lawyer set the action down for trial in November 2004. The matter was struck from the trial list by a judge in April 2005. The plaintiff found a new lawyer who, throughout 2006 and 2007, tried several times to arrange for mediation with the defendant. The defendant refused to mediate because the plaintiff had not provided answers to undertakings given by the plaintiff on discovery in 2002. In 2009, the plaintiff retained a third lawyer. He advised that the court reporter who recorded the examinations for discovery in 2002 had destroyed the original tape recordings of the examinations because transcripts had never been ordered. In June 2011, the plaintiff’s third lawyer moved for an order requiring the TTC to re-attend for a second examination for discovery and to restore the action to the trial list. The judge hearing the motion refused the order sought in the absence of an explanation of the seven-year delay between the time the action had been struck off the trial list and the time that the motion was brought.

[15] In the Court of Appeal, the plaintiff’s lawyer argued that the four-part “contextual” test that applies when a party moves to dismiss an action due to the opponent’s delay under Rule 24 should apply. (See: Reid v. Dow Corning Corp. (2001), 11 C.P.C. (5th) 80 (Ont. S.C.J.), rev’d on other grounds, 48 C.P.C. (5th) 93 (Ont. Div. Ct.)). Courts have applied this test on a status hearing too. (See Koepcke et al. v. Webster, 2012 ONSC 357 (Master) at para. 18.)

[16] In Nissar, the Court of Appeal made reference to a companion case released the same day, Faris v. Eftimovski, 2013 ONCA 360, which is more directly applicable to this case as it involved expressly the test on a status hearing under Rule 48. In both cases, the Court of Appeal distinguished a motion for dismissal for delay under Rule 24 from a status review motion under Rule 48 and said that a different test applies. In both Nissar and Faris, the Court of Appeal emphasized the burden on the plaintiff to prosecute his or her lawsuit diligently. In a motion under Rule 48 (or Rule 37.14 to set aside an order made under Rule 48) delay has already occurred by definition. Since these rules presuppose the existence of delay, the Court of Appeal held that rather than conducting a contextual analysis of several factors to assess whether the action should be allowed to proceed, the plaintiff should simply bear the onus to demonstrate both that it has an acceptable explanation for the delay in the litigation and that, if the action was allowed to proceed, the defendant would suffer no non-compensable prejudice. (See paragraph 31 of Nissar and paragraph 42 of Faris).

[17] In Nissar, in which 12 years had passed since the bus accident occurred, Tulloch J.A. found as a fact that OHIP records were not available for the period required to objectively assess the plaintiff’s health before and after the accident. Tulloch J.A. inferred that some doctors’ notes may no longer be available. Plus the discovery transcripts were no longer available. In the circumstances, Tulloch J.A. held that:

In my view, it would be unfair to force the respondent to deal with this matter after such inordinate delay and on such an incomplete record. The respondent has, in the words of Sharpe J.A. in 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544 been kept in a state of having the “claim hanging over its head in a kind of perpetual limbo.”

[18] In Faris, the plaintiff’s conduct came up for assessment under Rule 48 some 5 years after the action had been commenced and 9 years from the time of the events in issue. Two defendants had died during periods in which the plaintiff had taken no steps, ostensibly as an indulgence to other defendants who had asked for time to conduct internal investigations. The Court of Appeal held that the plaintiff had not satisfied the burden upon him. Moreover, there were two separate actions at issue in Faris and the Court of Appeal questioned the bona fides of the appellant in bringing its action in light of a prior existing action elsewhere.

[19] It is not clear to me that the Nissar/Faris test should apply at all in a case where the plaintiffs did not receive the Status Notice from the Registrar. In light of the steps that they took to reinvigorate the action without knowing of the Status Notice, I have little doubt that had they known of the Status Notice, they would have taken steps to regularize the proceedings. As I noted above, Mr. Jakubiak agreed that the motion would likely never have happened had the plaintiffs taken steps just a few days sooner. In Fraitekh et al. v. Demoe, 2011 ONSC 965, Master Hawkins opined at paragraph 65 that allowing a dismissal order that had been made without notice to stand “would be a just outcome only in very exceptional cases”. I agree.

[20] Assuming that the Nissar/Faris test applies, it seems to me that the facts in the case at bar are very different from the facts in those cases. Mr. Jakubiak forthrightly conceded that his argument that the plaintiffs had not explained the delay was “not the strongest part of my case”. I agree with his assessment that Ms Michalowska appears to have suffered a harrowing ordeal. The fact that she retained her current counsel and that the action proceeded without knowledge of the issuance of a Status Notice gives support to her position that she always intended to proceed with the case and that she did so “once [she] had the means to hire a lawyer” (see para. 16 of Ms Michalowska’s Affidavit sworn November 25, 2013).

[21] This case has not been plagued with delay. The defendant has not been suffering in perpetual limbo. Ms Michalowska allowed the action to lapse for approximately two years in light of the financial circumstances brought on by the death of her family’s sole bread winner.

[22] In the ensuing two years, the defendant did not note the plaintiffs in default in the counterclaim or take any step themselves. The defendant does not question the plaintiffs’ motives. Nor is there any suggestion by the defendant of any competing version of the facts. In my view, the plaintiffs have established an acceptable explanation for the delay in the litigation.

[23] Therefore, the issue resolves to whether the plaintiffs have established that the defendant would suffer no non-compensable prejudice if the action proceeds. Mr. Jakubiak argues that the burden is on the plaintiffs and their affidavits are silent on prejudice. Therefore, he submits, they cannot have met their burden; res ipsa loquitur. I asked Mr. Jakubiak if he could point to any actual prejudice that the defendant has suffered rather than just relying on the burden. His first response was that there was no evidence put forward as to the plaintiffs’ assets so that the defendant may be prejudiced if it wins the action and cannot recover costs. I do not read Nissar or Faris as mandating that each Rule 48 motion is to become a judgment debtor examination. Moreover, the test is whether there may be prejudice that cannot be compensated. Costs do not qualify as they are inherently a dollar item for which a party can readily be compensated. If the defendant had grounds to be concerned for its potential costs entitlement, it could have sought an order for security for costs as a term of an order re-instating the action. It can always bring a motion under Rule 56 for security for costs if so advised.

[24] Mr. Jakubiak also argued that the defendant is prejudiced by not knowing what evidence Mr. Wojdat would have given on discovery or at trial. He asks rhetorically “How will the defendant obtain evidence as to who else Mr. Wojdat was working for or what other businesses he had?” At first blush, it seems to me that the bulk of the evidence in a wrongful dismissal action comes from the defendant. The employer has the employment and pay records. The employer has records concerning control, ownership of tools, the mandate of the employee, etc. If anyone may be prejudiced by Mr. Wojdat’s absence, it is the plaintiffs who may have problems answering the defendant’s allegations. The plaintiffs’ lawyers are content to rely on the plaintiffs’ and defendant’s business records and they may have to seek evidence from third parties.

[25] In Rule 24 motions using the four-part contextual test from Reid, supra, it is clear that any prejudice relied upon by a party in claiming delay must be prejudice that was incurred or caused by the delay itself. See for example, Finlay v. Van Paassen, 2010 ONCA 204 at paras 25 and 34. It is obvious that Mr. Wojdat’s death or any prejudice arising from his death was not caused by the delay. The opposite is true. His death caused the delay. The defendants would not have had Mr. Wojdat as a witness whether Ms Michalowska continued the case within a day or a month or a year of Mr. Wojdat’s death. No one sought his evidence de bene esse despite knowing that his cancer was stage IV and, hence, terminal (see para. 9 of the statement of claim). Mr. Jakubiak argues that in Faris, the Court was not concerned with the cause of the prejudice. The fact that parties had died was simply prejudicial whether caused by the delay or not. I do not read the case that way. Tulloch J.A. deals with the procedural facts that amounted to the lengthy delay in that case in some detail before concluding at paragraph 50 that, “…it is not unfair to ascribe the prejudice caused by Laskowsky’s death to the appellant”. The whole point of this analysis is to determine if the defendant has been prejudiced by the plaintiffs’ delay in prosecuting the case. Prejudice that would have occurred or did occur regardless of the delay is of no consequence and cannot be ascribed to the plaintiffs.

[26] The oft-discussed concern that witnesses’ memories fade with time is not a factor here. Unlike Nissar and Faris, this action was brought within a month of the cause of action arising. It is not yet three years from the date that the defendant fired Mr. Wojdat. He died a very few months later. The defendant relies upon the decision of Master Brott in PDI Pharmaceuticals, Inc. v. Chemi S.P.A., 2013 ONSC 7728. In that case the Master was concerned that the plaintiff had not filed evidence about who would be available as witnesses to prove an alleged oral agreement made ten years earlier that was the underlying basis for the action. In this case, the plaintiffs put forward the evidence of the defendant’s own letter to establish the agreement on which they sue.

[27] The concerns of the public, the legal profession and the courts regarding issues of access to justice are widespread and well understood. Tactics such as those employed here to try to keep a plaintiff from having her day in court based on fortuitous timing and relying on the burden proof in the absence of any identifiable, real basis for concern are not appropriate. It is up to counsel to get instructions to consent to matters that should be consented to.

[28] The motion is granted. The Order of the Registrar dated October 22, 2013 dismissing the action for delay is set aside.

[29] The plaintiffs seek costs on a substantial indemnity basis. I have carefully reviewed the plaintiffs’ Costs Outline. Their counsel’s partial indemnity rate is two-thirds of their full rates. I think it appropriate to award them two-thirds of the fees sought plus disbursements and HST on fees rounded to $8,000 on a partial indemnity basis.

[30] As set out in my companion Endorsement, I did raise with counsel the issue of whether Rule 57.07 might apply to this case. Although the court is authorized to raise the issue on its own initiative under Rule 57.07(2), after hearing argument on the merits of the motion, I have determined that I will not do so.

[31] Mr. Jakubiak advised that he agreed to the terms of the schedule sought by the plaintiffs in the event that the motion was allowed. He and the plaintiffs’ counsel have also agreed that a term will be inserted allowing counsel to consent to minor variations in the schedule. A term should also be included authorizing either party to seek directions in the event that scheduling matters arise which cannot be dealt with on consent.

[32] If the parties cannot agree on the wording of an order within 14 days, they may speak to me by contacting my Assistant through Judge’s Administration.

F.L. MYERS J.

Date: March 10, 2014