ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

ANGELA ORSI, LITIGATION ADMINISTRATOR FOR THE ESTATE OF FRANCESCO ORSI and ANGELA ORSI, ANTHONY ORSI and PAUL ORSI, IN THEIR CAPACITIES AS TRUSTEES OF THE ESTATE OF VINCENZA ORSI

Plaintiffs/Respondents

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PAUL FROMSTEIN

Defendant/Appellant

Kim Mullin,
for the Plaintiffs/ Respondents

Gaynor Roger,
for the Defendant/ Appellant

HEARD: April 22, 2014

F.L. MYERS J.

REASONS FOR DECISION

1This is an appeal from the order of Master Muir dated December 19, 2013. The Master allowed this action to continue under Rule 48.14(13). He also ordered that examination for discovery of the defendant proceed by way of written questions in light of the ill health of the defendant. The Master declined to order costs to either party in the circumstances. The defendant appeals from the merits and the costs aspects of the decision and asks that I dismiss the action.

2The action began as two separate actions which were commenced by notices of action issued in June and September 2010, respectively. The actions involve income taxes arising from a real estate transaction in the United States in the late 1990s. The plaintiffs claim that Mr. and Mrs. Orsi – both now deceased – unnecessarily incurred substantial income tax liability in the U.S. as a result of the negligence and breaches of contract of their accountant, the defendant. There is a very live limitation period issue in the action.

3The action has not proceeded smoothly. The plaintiffs’ lawyer failed to file statements of claim within 30 days of the commencement of each proceeding as required by the Rules of Civil Procedure. The statements of claim were not delivered until December, 2010. The Master found that there was no valid excuse proffered for this initial delay of two months. The defendant deferred consenting to the late filing of the claims for three months, until March, 2011.

4In paragraph 24 of his reasons, the Master found the following facts:

[24] …The defendant requested further particulars before he would plead to the statements of claim. Providing those particulars proved to be a complicated and time consuming exercise involving lawyers in another jurisdiction. A comparison of the original claims with the fresh statement of claim makes it clear that a significant investigation was undertaken by the plaintiffs in order to provide the defendant with the additional information he was seeking…

5The defendant claims that the Master erred in finding these facts. However, there was certainly evidence in the record to support the findings. While the defendant can point to some contest in the evidence, he cannot establish that the Master made a palpable or overriding error in finding the facts as is required to support an appeal on the facts.

6The Master found that this aspect of delay was explained to the requisite degree of satisfaction. Further, delay occurred as a result of the death of the plaintiff, Vicenza Orsi, efforts to continue the action under Rule 11, and to obtain an order to consolidate the two actions into the current action. This was ultimately all ordered by Brown J. on August 20, 2013.

7I agree with the Master that the fresh claim has much more detail than the initial claim as a result of some of the investigations conducted by counsel in the interim. The defendant argued before the Master and before me that given that the claims were commenced a decade after the events occurred, the investigations ought to have occurred prior to the commencement of the claims. The Master dismissed this argument because Rule 48.14 applies only to post-litigation delay and is not concerned with the plaintiffs’ conduct before the litigation (See para. 22 of the Master’s Reasons for Decision).

8The defendant says that the Master erred in failing to find there should not have been a post-litigation delay of 15 months necessary to investigate and produce the fresh amended statement of claim. The plaintiffs took years before bringing the claim and should not be excused for delivering a bald pleading that the plaintiffs’ counsel themselves agreed required particularization.

9The Master recited the applicable law including the most recent glosses from the Court of Appeal. (Khan v. Sun Life Assurance Co. of Canada, 2011 ONCA 650; 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544; and Faris v. Eftomovski, 2013 ONCA 360) He correctly and more than once recited that the burden was on the plaintiffs. He also noted the decision of Morgan J. of this Court in Saini v. Sun Life Assurance Co. of Canada, 2013 ONSC 4463, interpreting the effect of the recent developments in this area of the law as follows:

The thrust of the recent case law from the Court of Appeal is that the judge or master presiding at a status hearing is not to aim at fixing a tardy action but at dismissing it, unless there is cogent evidence in the record establishing a reason not to do so.

10However, the Court of Appeal has not simply demanded that all actions that do not proceed as quickly as possible be dismissed. Rather, as the Master noted, in 1196158 Ontario Inc., supra, the Court of Appeal held that there is a need to balance competing interests - the desirability for a just outcome of the dispute on the merits as compared to the private and public interests in discouraging delays in litigation.

11No doubt the pendulum has swung. The old notion of the plaintiff being dominus litus or “master of the lawsuit” has returned at least to a degree. The plaintiff must keep the case moving forward expeditiously. The delays and consequent costs of litigation have grown to the point where a change in approach has been demanded from all sides – users of the system and managers alike. It is no longer sufficient for lawsuits to languish in file cabinets. The plaintiff bears the onus to push the case forward and not to allow delays without good reason for doing so. Even if there was a satisfactory explanation for a delay, the plaintiff must also bear responsibility for any prejudice to the defendant caused by delay that is fairly attributable to the plaintiff.

12In my view, the Master exercised his discretion in accordance with the correct principles. He did not reverse the onus in paragraph 29 of his Reasons for Decision by noting that in light of the evidence before him from the plaintiffs, a practical burden to respond had swung to the defendant. He committed no error in noting that the case involves the application of accounting standards to U.S. taxation laws and therefore the evidence of the deceased plaintiffs is not likely to be nearly as relevant at trial as the content of contemporaneous documents and expert evidence. Therefore, while he recognized that the evidence before him concerning alternatives to Mrs. Orsi’s evidence was thin, he was within the proper scope of his discretion to find that there was no real prejudice to the defendant’s case as a result of her death. Similarly, the defendant’s ill health is not a defence to a lawsuit. There is no indication that his memory is affected in any way that will significantly prejudice his defence at trial. The Master exercised his discretion to excuse the defendant from appearing in person for examination for discovery to attempt to alleviate the stress upon him.

13The defendant says that his general ill-health prejudices his ability to participate in his defence. The defendant’s health deteriorated in early 2012. Thankfully, his physical condition has stabilized. The trial could not have been held by early 2012 even on the most optimistic of schedules. Therefore, the defendant’s ongoing health issues would have occurred in any event and are not a prejudice that can be blamed on any delay by the plaintiffs.

14The Master also correctly noted that the test is satisfaction, not perfection (see para. 26 of his Reasons for Decision). The Court of Appeal`s decisions do not mean that every case that has a small, explicable delay or some small prejudice that can be remedied, must be dismissed. Cases must now proceed more efficiently. Plaintiffs bear the principal onus to ensure that this happens. But that does not mean that defendant’s counsel should be inaptly seizing upon every possible issue of delay to try to prevent a plaintiff from having his or her day in court.

15The defendant argues that the plaintiffs’ evidence was deficient to rebut the existence of prejudice. The defendant says that the plaintiffs were required:

a. to provide full particulars of their counsel’s investigation;

b. to prove that they relied on the defendant’s ill-health in deferring steps;

c. to provide details of the evidence that will be available from the deceased plaintiffs’ daughter as compared to what the plaintiffs might have testified to; and

d. to provide an affidavit of documents or list their 3,000-plus documents so the defendant can explore now his allegation that the deceased plaintiffs destroyed documents.

16The first issue would require an assessment of the details of counsels’ preparation of the case and raises all kinds of privilege issues. Delving into a collateral inquiry on this issue risks delaying the case more than assisting it to move forward.

17As to the second issue, the defendant essentially argued that the plaintiffs’ counsel should not have agreed to indulgences sought by the defendant’s counsel based on their client’s ill-health. While the result of the Court of Appeal’s decisions may well limit indulgences among counsel in future, it hardly lies in the defendant’s mouth to suggest that his counsel’s word ought to have been questioned. Counsel before me argued that in view of court scheduling delays, the plaintiffs should have set a motion date in advance assuming Ms Dawe would not fulfill her word to provide a consent. Of course, she provided the consent as soon as she obtained instructions, as she said. The Court of Appeal has not required that a motion be brought for every possible event including moving on spec just in case counsel opposite does not fulfil his or her word. The goal is to move cases efficiently not to bog cases down in endless motions.

18There was evidence from the plaintiffs’ counsel that the Master accepted concerning the deceased plaintiffs’ daughter’s evidence. The Master made no palpable or overriding error. The defendant will determine what the daughter can and cannot say at discovery. If she cannot prove the plaintiffs’ case, that only benefits the defendant.

19Lastly, as to documents, if the deceased plaintiffs destroyed documents, then they will not be available even if a list of documents were provided. With the plaintiffs gone, the defendant may find it easier to make that allegation if he has evidence to do so.

20I do not see it as desirable to turn status hearings into collateral inquisitions on every imaginable procedural decision made in the case. Similarly, I do not see status hearings involving a set of mini-discoveries. That just causes more cost and delay. The substance of the defendant’s argument regarding pre-litigation delay is a limitation period defence. This defence is extensively and cogently pleaded in the statement of defence. Just prior to the defendant’s counsel advising that they would be contesting this motion below, they also advised the plaintiffs’ counsel that they would be bringing a motion for summary judgment on the limitation period. They should feel free to do so. But status hearings should not be opposed because of concerns with the particularity of pleadings, to try to test limitation defences, or to bog down a case in procedures covered elsewhere in the Rules and the law. Cases with real delay causing real prejudice will be dismissed much more readily now than in past. But the Rules of Civil Procedure remain focused on providing the most efficient means to resolve disputes on the merits.

21I see no error of law and no palpable and overriding error of mixed fact and law or fact. Therefore, I dismiss the appeal on the merits.

22The defendant says that the Master erred in failing to award him costs since, although successful, the order below is essentially an indulgence being provided to the plaintiff. Had the defendant actually provided an indulgence to the plaintiffs so as to get on with the action on the merits, then neither side would have incurred costs below. Costs decisions are discretionary and I see no error in principle that would allow me to interfere with the Master’s exercise of his discretion in this case. Moreover, I would not have awarded the defendant costs in light of his inapt use of Rule 48.14 below.

23In light of the plaintiffs’ success in this appeal, the plaintiffs are entitled to costs on a partial indemnity basis which I fix in the amount of $8,000 inclusive of disbursements and HST. The costs are payable by the defendant to the plaintiffs jointly and severally payable forthwith.

F.L. Myers, J.

DATE: April 23, 2014

ONTARIO
SUPERIOR COURT OF JUSTICE

B E T W E E N:

ANGELA ORSI, LITIGATION ADMINISTRATOR FOR THE ESTATE OF FRANCESCO ORSI and ANGELA ORSI, ANTHONY ORSI and PAUL ORSI, IN THEIR CAPACITIES AS TRUSTEES OF THE ESTATE OF VINCENZA ORSI

Plaintiffs/Respondents

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