SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-13-474575
DATE: 20140325

RE: 217813 ONTARIO INC.
Plaintiff

AND:

SOLOMON GROSBERG, RAYMOND M. GROSBERG and
STEWART TITLE GUARANTY COMPANY
Defendants

BEFORE: LEDERER J.

COUNSEL:
Eric Kay, for the Plaintiff

Shawna Sosnovich, for the Defendants

HEARD: March 20, 2014

ENDORSEMENT

[1] On October 15, 2013, by order of the Registrar, this action was dismissed. Such a dismissal is an administrative and not a judicial order. This is a motion to set aside the order and to allow the matter to proceed.

[2] Reid v. Dow Corning Corp., [2001] O.J. No. 299 (C.A.) outlines factors to be taken into account in considering a motion of this kind:

1. explanation for the delay in proceeding with the litigation;

2. inadvertence in missing the deadline of ninety days to set the action down for trial, as set out in the Status Notice;

3. promptness in bringing the motion to set aside the dismissal order once made; and,

4. prejudice to the defendant if the dismissal order is set aside and the action is allowed to proceed.

[3] On May 16, 2008, the plaintiff agreed to purchase a commercial property located at 280 Jarvis Street in Toronto. The defendant law firm and Raymond Grosberg acted for the plaintiff. During November 2010, the plaintiff entered into a further agreement of purchase and sale, this time to sell the same property. A title search conducted in furtherance of the sale revealed two outstanding Building Permits and Work Orders which pre-dated the purchase of the property by the plaintiff. The plaintiff says that, as a result, it was required to withhold money from the sale proceeds in order to fund the completion of the work contemplated by the Building Permits and Work Orders.

[4] This action was commenced on February 20, 2013 seeking damages against the law firm, the lawyer and the title insurer. It seeks damages of $150,000. Attempts were made to settle the matter. The plaintiff agreed to provide evidence demonstrating the damages suffered as a result of the outstanding Building Permits and Work Orders. Additional material was delivered on August 13, 2013. Following its receipt, the defendants advised that they would not be able to make a settlement offer.

[5] As a result, the plaintiff requested the delivery of a Statement of Defence, a requirement that it had previously waived in the hope that the matter would be settled. The plaintiff demanded that the Statement of Defence be delivered by September 24, 2013. On September 18, 2013, the plaintiff again wrote to the defendants and enclosed a Notice That Action Will Be Dismissed which it had received from the office of the court. The Notice warned that the action would be dismissed unless a Statement of Defence was filed within forty-five days of August 20, 2013, being October 4, 2013.

[6] No Statement of Defence was delivered. Rather, the defendants retained their present counsel. Notwithstanding the Notice That Action Will Be Dismissed, the defendants, on September 20, 2013, delivered a Demand for Particulars and Production of Documents and advised that a Statement of Defence would be delivered following receipt of the documents and the particulars.

[7] In what counsel for the plaintiff says was inadvertence, they failed to diarize the date of the prospective dismissal or to take steps to prevent the action from being dismissed. The Registrar dismissed the action on October 15, 2013. The dismissal order was received by counsel for the plaintiff during the week of October 21, 2013. On October 23, 2013, he wrote to the counsel for the defendants requesting their consent to set aside the order. The defendants refused to provide their consent until they received documentation that responded to the Demand for Particulars and Production.

[8] These facts respond appropriately to each of the first three considerations outlined in Reid v. Dow Corning Corp. They explain the delay, they demonstrate that the plaintiff intended to set the action down within the time prescribed and confirm that the plaintiff moved quickly to commence this motion (see: Hydro One Networks Inc. v. Avonlea Holdings Ltd. (2009) CarswellOnt 4192, at para. 36 (Master), as quoted in Sesco v. Impact Electrical & Mechanical Inc. 2010 ONSC 6714, 5 C.P.C. (7th) 416, at para. 32 (Master)). Nonetheless, counsel for the defendant submitted that the fault rests with the plaintiff; the motion should be dismissed and the dismissal of the action left to stand.

[9] Counsel for the defendants began by submitting that there is no purpose in allowing the action to continue. It was out of time. Relying on an Undertaking signed on behalf of the plaintiff, counsel says that the transaction, by which the property was sold, closed on February 18, 2011. The Statement of Claim was issued on February 20, 2013. This is two days after the expiry of the applicable limitation period. Counsel for the plaintiff pointed out that the undertaking explicitly allowed the closing to take place even though the work necessary to respond to the outstanding Building Permits and Work Orders had not been completed. It provided for the work to be done, “…to satisfy the City of Toronto requirements within 60 days of the closing… ” While the undertaking provided for a hold-back of $50,000, presumably directed to the costs of completing the necessary work, counsel for the plaintiff submitted that it could not have been possible for the value of the damage to be known (or, in fact, whether there was any damage) until sometime after the closing. He also noted that, while the undertaking specified the date of the closing to be February 18, 2011, in fact, the actual closing took place four days later on February 22, 2011. I cannot say definitively whether or not there is an effective limitation defence. This is something that will have to be determined if, and as, the action proceeds.

[10] Counsel for the defendants went on to submit that any delay in the conduct of the action was the fault of counsel for the plaintiff. Following the service of the Statement of Claim, counsel for the plaintiff advised the defendant, Stewart Title Guarantee Company, that additional evidence confirming the damages sustained would be provided and that, for the time being, no Statement of Defence need be provided. One month later, no information had been delivered. The defendant, Stewart Title Guarantee Company, requested that the additional information be provided. On June 17, 2013, seven weeks later, the same defendant wrote again repeating its request. On August 14, 2013, the plaintiff provided documentation in support of damages valued at $71,055.08, which included $7,903.60 as the cost of commencing this action. The defendant was not satisfied and, by letter, dated August 28, 2013, requested further clarification of the information provided. A follow-up letter of September 6, 2013 indicated that the defendants would plead that the action was out of time. It was at this point, on September 13, 2013, that the plaintiff first wrote requesting that a Statement of Defence be served.

[11] Following the refusal to consent to the motion, counsel for the defendant continued to write asking for further information. She suggested that the failure to respond added to the delay attributable to the plaintiffs. Taken as whole, she submitted that the delay amounted to a demonstration that the plaintiffs had not formed the intent to continue with the action. I am not prepared to accept this proposition. Taken as whole, the effort to move this along, including the speed with which the request for consent to the dismissal being set aside was made, does not support the suggestion that the action was abandoned or that the plaintiff intended to do anything other than proceed.

[12] Counsel for the defendants relied on the fact that the particulars that had been requested were finally delivered on February 27, 2014. This was after the motion had been set down and the Motion Records of both sides exchanged. Counsel for the plaintiff said that it was only with receipt of the Motion Record of the Defendants/Responding Parties, on or about February 24, 2014, that he realized the particulars were relevant to this motion. Having said this, it does seem peculiar that, having failed to consent to the setting aside of an administrative dismissal, albeit until further material was delivered, that the defendants should be able to rely on the failure of the plaintiff to act until it was certain the action could proceed.

[13] These issues do nothing to set aside the prima facie determination that the first three of the Reid factors have been satisfied.

[14] As for the fourth factor raised by Reid v. Dow Corning Corp.: prejudice to the defendants if the dismissal order is set aside, counsel for the defendants says that there is a presumptive prejudice arising from the expiry of the limitation period (Gravelle v. Denis Grigoros Law 2013 ONCA 339, at para. 4). The Divisional Court, in Hudon v. Colliers Macaulay Nicolls Inc., [2001] O.J. No. 1588 (Ont. Div. Ct.), set out the test for determining whether to set aside a Court Registrar's Order dismissing an action, in that case under Rule 76.02:

The court should exercise its power to dismiss (or permit a dismissal to stand) only where the default has been intentional and ‘contumelious’ or where there has been inordinate and inexcusable delay giving rise to a substantial risk that a fair trial would not be possible, or where there would be serious prejudice to the defendant if the action were not dismissed.

[quoted in: Sesco v. Impact Electrical & Mechanical Inc. supra, at para. 36]

[15] There is no basis to believe that the default was intentional. The reverse is true. Moreover, there is nothing to suggest that any forthcoming trial will not be fair. First the delay, since the action commenced was not inordinate. It was eight months from its commencement to the dismissal. The question of whether the time limits have expired goes back to the closing of the sale transaction in 2011, but there is no suggestion that the memories of any prospective witnesses have faded or that the documentation is incomplete or unreliable. Any consideration of liability would not appear to be complicated: Were there outstanding Building Permits and Work Orders? Should the lawyers have discovered them and, if so, is there any explanation as to why they did not? All that would remain after these questions are answered, assuming there is liability, is an assessment of damages. There will be no prejudice to the defendant if the action is permitted to proceed.

[16] The motion is granted. The dismissal of the Registrar is set aside.

[17] No submissions as to costs were made. If the parties are unable to agree, I will consider written submissions on the following terms:

1. On behalf of the plaintiff, within fourteen days of the release of these reasons; such submissions are to be no longer than three pages, double-spaced, exclusive of any Bill of Costs or Costs Outline and case law that may be provided;

2. On behalf of the defendants, within ten days thereafter; such submissions are to be no longer than three pages, double-spaced, exclusive of any Bill of Costs or Costs Outline and case law that may be provided; and,

3. If necessary, on behalf of the plaintiff, in reply, within five days thereafter; such submissions are to be no longer than one page, double-spaced.

LEDERER J.

Date: 20140325