Court File and Parties

COURT FILE NO.: 98-CV-150255

DATE: 2014-11-19

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Jose-Bernard Jacob, Plaintiff

AND:

Playa El Agua Development Limited Partnership, Playa El Agua Development General Partner Ltd. Morris, Rose Ledgett, The Estate of John Church, Carlos Torcat, Michael Paterson, Harvey Wortsman, Hwa Lee, Dennis Derry, and Seaview Developments de Venezuela C.A., Defendants

BEFORE: Madam Justice Darla A. Wilson

COUNSEL: Robert A. Maxwell, for the Plaintiff Jack Berkow & Ranjan Das, for the Defendants Morris, Rose, Ledgett & Harvey Wortsman; David Brooker, for the Defendant Hwa Lee, personally and as litigation administrator for the Estate of John Church

HEARD: October 14 & 15, 2014

ENDORSEMENT

[1] The moving Defendants Morris, Rose, Ledgett ["MRL"], Harvey Wortsman ["Wortsman"], and Hwa Lee ["Lee"] bring this motion for an order dismissing this action for delay. A history of the action is necessary to give context to the motion.

Background

[2] This claim arises from an alleged fraudulent conveyance of property in Venezuela during the period of time between 1996 and 1998. The Plaintiff, Jose-Bernard Jacob, alleges that he invested approximately $100,000 into a percentage of shares of a partnership which indirectly held an interest in the Venezuelan property. The property was owned by a Venezuelan company which is not a party to this action. The Defendant Playa el Agua Development Limited Partnership is an Ontario limited partnership formed in 1987 ["Ontario limited partnership"]. The Defendant Playa el Agua General Partner Ltd. is an Ontario corporation which was created in 1988 ["Ontario general partner"]. The Plaintiff alleges that 99.9% of the shares in the Venezuelan company were owned by the Ontario limited partnership. The defendant Harvey Wortsman was a lawyer who was a partner of the law firm Morris, Rose, Ledgett. The Plaintiff alleges he retained Wortsman and/or MRL for legal advice and assistance concerning the Venezuelan property; this retainer is denied by Wortsman and MRL. It is pleaded that the Defendant John Church ["Church"] was a businessman who owned certain shares in the Ontario limited partnership and was instrumental in improperly conveying the property to the Defendant Seaview Developments, a Venezuelan company controlled by the Defendant Carlos Torcat ["Torcat"], a Venezuelan businessman. The Defendant Hwa Lee is/was the wife of Church. The Defendant Dennis Derry was a businessman alleged to have been involved in the sale of the property; the action has been dismissed against him.

[3] It is alleged that while Wortsman was retained by Jacob in his effort to purchase the property, he assisted Church and Torcat in the alleged fraudulent conveyance of the property. It is the position of the Plaintiff that Wortsman signed a power of attorney in May 1997 to effect this conveyance, and Church concurs with this; Wortsman, however, denies that it is his signature on the power of attorney. The Plaintiff asserts that the partnership unlawfully conveyed the property away and that he was the victim of a conspiracy by the Defendants. Church pleads that he had the authority of the other partners to convey the property, which is disputed.

[4] This claim was commenced by Notice of Action issued June 25, 1998. The Statements of Defence were served and filed by December 1998. There was another action commenced in Venezuela related to the same property, but it was abandoned in 2005.

[5] The Ontario action was case managed initially by Master MacLeod. Various timelines were set by the Master for the conduct of the action. Affidavits of Documents were exchanged in January 2002. The examination for discovery of Derry and Lee was done by the Plaintiff on January 23, 2002. The discovery of Church was conducted by the Plaintiff on February 20 and 21, 2002, but it was not completed. The Plaintiff brought a motion before the Master for an order for re-attendance at discovery by Lee, Derry, and Church. Certain dates were agreed upon between counsel for these examinations in July 2002. Lee’s discovery was finished in August 2002.

[6] Unfortunately, the Defendant Church died June 22, 2002, and counsel were informed of this immediately by Mr. Brooker. Thus, his discovery was never completed and the other Defendants did not examine him for discovery at all.

[7] Counsel for MRL and for Church commenced the discovery of the Plaintiff in July of 2002 but did not finish it. Wortsman was examined by the solicitor for the Plaintiff in July 2002 but his discovery was not finished. Torcat was self-represented from January 2002 onwards and he was examined by the solicitor for the Plaintiff on July 18 and 19, 2002, but his discovery was not completed.

[8] Certain pleadings were amended in 2002 and further discovery of Jacob and of Wortsman was done in 2003 and 2004. Torcat’s discovery by the Plaintiff’s lawyer was continued in February 2004 but not completed.

[9] On January 29, 2004, Torcat issued a Statement of Claim against Wortsman, action 04-CV-262790CM3. It involved relief arising out of the same transaction as the claim before me.

[10] On May 14, 2002, the Plaintiff obtained an Order to Continue against the Estate of Church. The action appeared in Trial Scheduling Court in May 2004 but a trial date was not fixed. Master MacLeod ordered undertakings be answered by September 17, 2004. At the case conference held December 10, 2004, the Master ordered the Torcat action to be managed with the main action. At that time, counsel for Lee advised that he was bringing a Summary Judgment motion in the main action.

[11] The action against the Defendant Derry was dismissed on consent in February 2005. The continued discovery of Torcat was held in April 2005 but not finished at that time. There was another case conference in June 2005, at which time Master MacLeod ordered all outstanding undertakings be answered by the end of July 2005. There was a motion by the Defendant Lee to strike the responding material filed by the Plaintiff on the Summary Judgment motion, and that motion was heard by the Master on September 28, 2005.

[12] The Summary Judgment motion was initially returnable September 27 and 28, 2006, but was adjourned due to the illness of Mr. Maxwell and the fact that his cross examination was not completed.

[13] In June 2008, the solicitor for the Plaintiff sent a letter indicating he wished to set pre-trial and trial dates. The moving Defendants objected as the undertakings of the Plaintiff had not been completed, a fact which was not disputed by the solicitor for the Plaintiff. Whether the undertakings have been answered at the present time is the matter of considerable dispute.

[14] A case conference was held before Justice Sanderson in January 2009 and counsel were ordered to agree on the length of trial. In January 2010, Justice Moore fixed the trial for March 28, 2011, lasting six to eight weeks, and a pre-trial was set for December 2010.

[15] On November 19, 2010, the solicitor for the Plaintiff served a report from a handwriting expert that was dated January 28, 2004. The author of that report opined that the Defendant Wortsman signed a power of attorney, which is one of the critical issues in this action.

[16] The pre-trial was commenced before Justice Moore on December 6, 2010, and continued on January 4, 2011. On December 13, 2010, the solicitor for the Plaintiff served an expert appraisal of the property, which report was dated March 23, 1999, and was in Spanish, without an official translation. At a case conference with Justice Moore in March 2011, the solicitor for the Plaintiff advised that the expert appraiser could not be located, and the trial date was adjourned. It was determined the appraiser had died and a new expert had to be retained.

[17] There was a further pre-trial scheduled for December 19, 2011. On December 15, the solicitor for the Plaintiff sent an e-mail containing various values for the property and advised that there was an appraisal report by Belkys Acuna which was in the process of being translated. At the pre-trial, a new trial date of April 7, 2014, was set.

[18] I was appointed the case management judge and convened a case conference on January 10, 2014. The new appraisal report had not been served at that point, despite assurances by the solicitor for the Plaintiff from 2011 onwards. During this conference, the court was advised that the Defendant Torcat had died in the fall of 2013. I ordered that the Plaintiff deliver his expert report on damages, including an official translation, on or before January 20, 2014. The appraisal report was served by the Plaintiff on January 17, 2014, but the moving Defendants complain that there is no indication of who prepared the translation of the document, nor is there a signed acknowledgement of expert’s duty.

[19] At a subsequent case conference in February, I was advised that the Defendants MRL and Wortsman intended to launch a motion to dismiss the action for delay and that counsel for Lee was renewing his Summary Judgment motion. As a result, the trial date of April 8 was vacated, as it was agreed the matter was not ready for trial. The motions were fixed for April 29 and 30 and May 1, 2014.

[20] The motions were not able to be heard at the end of April due to my involvement in a jury trial. Thus, the dates of July 14, 15, and 16 were set for the hearing of the motions. Due to the illness of Mr. Maxwell, the motions were not heard at that time and they were adjourned to October 14 and 15.

Positions of the Parties

MRL and Wortsman

[21] Mr. Berkow and Mr. Das, counsel for these Defendants, assert that the Plaintiff has not pursued this action diligently; rather, he has allowed it to languish and now, 15 years later, there is insurmountable prejudice to the defence. This action turns on the credibility of the parties, and two of the Defendants have died. From the outset, despite alleging damages in the range of $6 million, at every step in the proceeding there has been unexplained delay. Counsel for these Defendants point to the following examples: it took ten years for the action to be set down for trial; it took six years and two court orders before the Plaintiff even attempted to answer undertakings from discovery; the Plaintiff waited six years to serve an expert report which he had in his possession from 2004; he served the damages expert report only after the pre-trial, though it was dated eleven years prior to that time; and he has failed to serve anything that indicates the action is actually ready to proceed to trial. At the present time, there are undertakings that are still not satisfied and the expert report does not comply with the Rules, so the action is not ready for trial. In sum, these Defendants submit that the delay has been inordinate and inexcusable and there has been demonstrable prejudice such that the action ought to be dismissed.

Lee and the Estate of Church

[22] Mr. Brooker echoes the submissions of Mr. Berkow. Further, he submits that the claim is without merit and questions why the Plaintiff did not swear an affidavit in response to this motion to offer an explanation for the delay. It is noted that the affidavit of solicitor Douglas Cunningham is rife with conjecture, opinion, and argument. While the Plaintiff attempts to cast blame on the Defendants for any delay, it is submitted this is not correct and the Plaintiff has failed to move the action forth expeditiously and as a result, there has been prejudice to the Defendants.

[23] Mr. Brooker notes that upon service of the motion for Summary Judgment, the Plaintiff served a huge motion for injunctive relief which ended up being abandoned. Instead of dealing with the merits of this action, the Plaintiff has delayed, refused to answer undertakings, and failed to deliver expert reports in a timely fashion. It is submitted that the onus is on the Plaintiff in an action to move the case forward; instead, there has been intentional and contumelious delay. The passage of more than 15 years gives rise to a presumption of prejudice, which the materials of the Plaintiff have failed to address.

The Plaintiff

[24] Mr. Maxwell, for the Plaintiff, denies that the contents of the Cunningham affidavit are improper. It is the Defendants who have delayed. Lee brought a motion for Summary Judgment in 2005, cross examinations were held and it was only brought on for hearing in 2014. The motions prevented the trial from commencing in April 2014; it is submitted that the Plaintiff was ready to go to trial at that time.

[25] Further, it is submitted that the Defendants cannot argue any prejudice has resulted from the amount of time it has taken to get to trial. Wortsman testified that he did not recall signing the power of attorney so the passage of time has not affected his memory. Similarly, Lee testified that she had no knowledge of the transaction so her evidence has not been jeopardized with the amount of time that has passed.

[26] Mr. Maxwell argues that any delay on the part of the Plaintiff was not intentional and there must be a substantial risk that a fair trial of the action cannot be held, and there is no evidence to support this contention.

[27] Counsel submits that the trial date of April 2014 was set by the court in 2011 and the Plaintiff cannot be faulted for the court’s delay. Even if there was a delay in answering undertakings or serving expert reports, it is submitted nothing turns on this because it did not delay the trial. The delay between 2011 and 2014 was not the fault of the Plaintiff.

[28] There is no demonstrable prejudice as the trial can be heard on its merits. The Defendants are aware of the theory of the Plaintiff’s case and the witnesses who will testify, so they have always known the case they have to meet.

Analysis

[29] Rule 24 of the Rules of Civil Procedure provides that a Defendant can move to have an action dismissed for delay where the Plaintiff has failed, inter alia, to set the action down for trial within six months of the close of pleadings. As well, the court has inherent jurisdiction, which includes the discretionary power to dismiss an action for delay: Marché D’Alimentation Denis Thériault Ltée v. Giant Tiger Stores Ltd., 2007 ONCA 695, 87 O.R. (3d) 660 at para. 24.

[30] The principle of timely resolution of disputes before the courts has always been held to be important. I agree with the comments of Sharpe J.A. in Marché, supra, where he noted, “The interest of litigants involved in the civil justice system in timely justice is obvious. Litigants are entitled to have their disputes resolved quickly so that they can get on with their lives. Delay multiplies costs and breeds frustration and unfairness” (at para. 25). At the present time, with the delays encountered by parties wishing to fix trial dates in Toronto, the concern about matters moving forward appropriately has become even more important.

[31] The test on a motion to dismiss an action for delay has been discussed in numerous cases and is not in dispute. The test was summarized by the Court of Appeal in Armstrong v. McCall (2006), 213 O.A.C. 229 at para. 11:

The principle to be applied on a motion to dismiss for delay is that the action should not be dismissed unless: (1) the default is intentional and contumelious; or (2) the plaintiff or his or her lawyers are responsible for the inexcusable delay that gives rise to a substantial risk that a fair trial might not now be possible. It is presumed that memories fade over time, and an inordinate delay after the cause of action arose or after the passage of a limitation period gives rise to a presumption of prejudice. Where there is a presumption of prejudice, the defendant need not lead actual evidence of prejudice and the action will be dismissed for delay unless the plaintiff rebuts the presumption. The presumption of prejudice may be rebutted by evidence that all documentary evidence has been preserved and the issues in the lawsuit do not depend on the recollection of witnesses or that all necessary witnesses are available with detailed recollection of the events. If the presumption is rebutted then the action may still be dismissed if the defendant leads convincing evidence of actual prejudice.

[32] In Belanger v. Southwestern Insulation Contractors Ltd. (1993), 16 O.R. (3d) 457 (Gen. Div.), which was approved by the Court of Appeal in Christie Corp. v. Lee (1999), 29 C.P.C. (4th) 181 (Ont. C.A.) and in Armstrong v. McCall, supra, the court considered factors to be taken into account when considering the second type of delay described above, in which the Plaintiff or his or her lawyers are responsible for the inexcusable delay. The court stated at page 471,

In order to succeed on a motion to dismiss a plaintiff’s claim for delay the defendant must establish that the delay has been unreasonable in the sense that it is inordinate and inexcusable and that there is a substantial risk that a fair trial will not be possible for the defendant at the time the action is tried if it is allowed to continue.

[33] More recently, the Court of Appeal had the occasion to revisit the test for dismissing an action for delay pursuant to Rule 24. In Wallace v. Crate’s Marine Sales Ltd., 2014 ONCA 671, the court reviewed and upheld the order of the motions judge dismissing the action for delay. Justice Lauwers noted at para. 22 that while the dismissal of an action is a severe remedy, “there comes a time, in short, when enough is enough, and the civil justice system will no longer tolerate inordinate and inexplicable delay. A court may then eject the action as an exercise of its inherent jurisdiction, whether or not the relevant rules expressly mandate it.”

Was the delay inordinate and inexcusable?

[34] Turning to the case before me, I note that the events giving rise to this claim occurred in 1997, 17 years ago. The comments of Doherty J.A. in Langenecker v. Sauvé, 2011 ONCA 803 at paras. 8-10, are of assistance on the determination of whether or not the delay was inordinate and inexcusable:

The inordinance of the delay is measured simply by reference to the length of time from the commencement of the proceeding to the motion to dismiss.… [T]here can be no doubt that 15 years from the commencement of the action to the motion to dismiss constitutes inordinate delay. The requirement that the delay be “inexcusable” requires a determination of the reasons for the delay and an assessment of whether those reasons afford an adequate explanation for the delay.… In assessing the explanations offered, the court will consider not only the credibility of those explanations and the explanations offered for individual parts of the delay, but also the overall delay and the effect of the explanations considered as a whole.

[35] The Statement of Claim was issued in 1998 and the pleadings were closed by December 1998. Two fixed trial dates for six to eight weeks of trial were set in 2011 and 2014, but the trial did not commence. There is no trial date for this action at the present time, 16 years after the commencement of the proceeding.

[36] On the evidence before me on this motion, most of 1999 and 2000 was spent dealing with a motion for security for costs brought by the Defendants MRL and Wortsman and the subsequent appeal. I do not find that the delay arising from that motion was the fault of the Plaintiff, although certain steps taken by counsel for the Plaintiff contributed to the delay. Nor do I find on the facts of the case that the motion for security for costs, although unsuccessful, was unreasonable.

[37] A case management master was appointed in 2001 and Jacob’s discovery was done in July 2002. An order was made that productions, discovery, and answers to undertakings be completed by the end of September 2002. This order was not complied with and the Master eventually made a further order with respect to the undertakings, that they be answered by September 17, 2004, almost two years after they were supposed to be answered and after the examination for discovery of the Plaintiff. A further order of the Master required the undertakings be answered by July 2005. According to the affidavit of Karen Sampson sworn March 28, 2014 ["Sampson affidavit"], the answers to the undertakings of the Plaintiff were “purportedly made by way of correspondence from his lawyer, Mr. Cunningham, on November 21, 2008, more than 6 years after the examinations” (paragraph 20). Furthermore, some of the undertakings remain outstanding at the present time, more than 12 years after the discovery.

[38] One of the undertakings was to produce proof of the purchase of shares that the Plaintiff alleges he bought in the Ontario Limited Partnership in 1997. Given that the Plaintiff has the onus of proof in this action, it is astonishing that this undertaking has not been satisfied. Furthermore, the affidavit of solicitor Douglas Cunningham sworn April 8, 2014 ["Cunningham affidavit"] is absolutely silent on the issue of the outstanding undertakings. Mr. Cunningham deposes that the Plaintiff is ready to proceed to trial, and could do so “in a couple of weeks if the Court so directs” (paragraph 351). This is a bald statement that fails to address the issue of the lack of compliance with undertakings and the breaches of court orders.

[39] There were other delays in moving the claim forward. I agree with the assertion of the moving parties that credibility is a central issue in this action. Allegations of fraud and conspiracy are made against a number of the Defendants, including Church, Torcat, Wortsman (in his capacity as a solicitor), and Lee. Reliance is placed by the Plaintiff on the power of attorney allegedly signed by Wortsman in 1997; he denies the signature is his. According to the Cunningham affidavit, Church testified at discovery that he saw Wortsman execute the power of attorney, and the evidence of Torcat was that he relied on the Wortsman power of attorney as an indication of Church’s authority to sell the property (paragraphs 144, 145).

[40] Notwithstanding that the Plaintiff was aware from the outset of the position of Wortsman concerning the signature on the power of attorney, no expert report was served on this issue until November 19, 2010, when the report of handwriting expert Diane Kruger was served by Mr. Cunningham. This report is dated January 28, 2004. Surprisingly, no explanation is provided in the Cunningham affidavit for the delay in serving this expert report. Rather, Cunningham deposes that he believes that the Defendants MRL and Wortsman have obtained their own analysis of the signature on the power of attorney. That assertion misses the point and fails to address the issue of why the expert report was not served soon after its receipt. The Plaintiff has the obligation to move the action forward expeditiously. On a motion to dismiss an action for delay, it is incumbent on a Plaintiff to explain the delay, and there is no explanation even offered for the fact that the Plaintiff had an expert opinion on the signature issue on which it intended to rely and yet, it failed to serve the report on the Defendants, thereby withholding evidence on a relevant, central issue in the litigation and preventing the opposing party from securing a responding expert report.

[41] One wonders how this conduct advances the interests of Jacob. Perhaps if the expert report had been served on defence counsel when it was obtained in 2004, counsel for Wortsman might have assessed the relative strength of his case differently. One of the motivating factors behind the amendments to Rule 53 in January of 2010 to provide that expert reports had to be served much earlier on in the litigation, prior to pre-trial, was to foster early disclosure between the parties and allow earlier resolution of actions. Counsel for the Plaintiff, for reasons best known to him and certainly not explained to the court, chose to “sit in the weeds” with the handwriting expert’s report.

[42] There was delay in providing evidence on the damages alleged. The Plaintiff is claiming that he lost approximately $6 million as a result of the actions of the Defendants in selling the property in Venezuela. The Plaintiff must prove his damages, and yet he failed to serve an expert report valuing the property prior to the initial pre-trial in December 2010. The Plaintiff’s discovery was conducted in 2002 and completed in 2004. He must have given evidence about the nature of his losses being claimed. According to the evidence before me on this motion, the solicitor for the Plaintiff served the appraisal report, which was in Spanish and not translated through an accredited interpreter, only on December 13, 2010 (paragraph 70 of the affidavit of solicitor Stephanie Turnham, sworn March 24, 2014 ["Turnham affidavit"]). The report was dated March 23, 1999, and as Mr. Brooker noted in a letter to Mr. Cunningham dated January 7, 2011, the report did not comply with the requirements of Rule 53. Again, no explanation is offered by the Plaintiff for the delay in serving the opinion, which he had in his possession for more than 10 years before it was served. Counsel must have known that the defence would have to secure a responding expert report on the valuation issue. By serving the 1999 expert report in December 2010 with a fixed trial date of March 2011, the solicitor for the Plaintiff must have known the trial date would be jeopardized.

[43] Shortly after serving the report, Mr. Cunningham advised counsel and Justice Moore, who was then case-managing the action, that the appraiser who had done the 1999 report could not be located. As a result, the trial dates in 2011 had to be vacated. Soon thereafter, the solicitor for the Plaintiff advised that the expert had died and a new appraiser had to be retained. In an e-mail dated June 2011, Mr. Cunningham told counsel that the “plaintiff’s expert report from Venezuela is well underway and should be completed soon” (paragraph 74 of Turnham affidavit).

[44] The report was not served. However, figures from an appraisal done by Beklys Acuna were sent to defence counsel in December 2011. When I became involved as case management judge in January 2014, the expert property appraisal report had not been served by the Plaintiff, despite the fact that the trial was set for April 2014 and had been fixed since December 2011. I made an order that the expert report be served, and by letter dated January 17, 2014, Mr. Cunningham served “the Spanish and English versions of the report of Belkys Acuna Blohm dated 10 January 2014, proposed real estate expert for the Plaintiff” (paragraph 84 of Turnham affidavit). The appraisal report of Acuna-Blohm does not comply with Rule 53. It is unclear whether this individual would be accepted by the court as an expert. More importantly, no explanation is offered by the Plaintiff for the delay in providing this damages report.

[45] According to the evidence, counsel for the Defendants MRL and Wortsman has attempted to retain experts to opine on the handwriting issue and the valuation of the property. It is asserted that there is prejudice as a result of the delay in service of the expert handwriting report because the original notarial seal specimen of Wortsman, which was reviewed by the Plaintiff expert, has not been made available to the defence by the Ontario Management Board Secretariat, where the specimen is held.

[46] Again, the issue of the late service of the appraiser’s report is not explained in the Cunningham affidavit, and the delay in service of the expert report is not even addressed. Counsel for the Plaintiff had to have known from the outset of this litigation that the damages of the Plaintiff arising from the sale of the land had to be proven on a balance of probabilities in order for the action to be successful. The actions of the Defendants, including any delay, could not possibly have had any impact on the ability of the Plaintiff to secure this necessary evidence for his case. Yet, the uncontradicted evidence before me is that the expert report was served in January 2014 only after I made an order requiring the timing of its delivery. At that time, there had already been an adjournment of the trial three years previously because the Plaintiff’s damage expert was unable to be located. The solicitor for the Plaintiff told the opposing counsel in early 2011 that the new report was underway and would be available “soon.” No explanation is provided for the three-year delay in serving the new report, or why it was only delivered to counsel three months prior to the scheduled April 2014 trial date, or why it continues to be non-compliant with the requirements of Rule 53.

[47] The solicitor for the Plaintiff filed the trial record in January 2008, and at that time certified to the court that the matter was ready for trial. Notwithstanding the passage of almost seven years, and the assertion of the solicitor for the Plaintiff that he can be ready for trial in two weeks, the evidence before me indicates that undertakings remain outstanding, summaries of witnesses’ anticipated testimony have not been provided, and the “expert” reports do not comply with Rule 53 and no leave has been sought for relief from the obligation to comply. Such conduct is not amenable to early settlement of an action, results in delay, and is contrary to the spirit of the Rules of Civil Procedure.

[48] The materials filed in response to this motion do not set out any reasonable explanation for the inordinate delay in answering undertakings, producing documentation and serving expert reports on both liability and damages. Rather, the Cunningham affidavit attempts to cast blame on the Defendants for the delay by pointing to motions brought, refusal of proper questions at examinations for discovery, and amendments of pleadings. The affidavit of Cunningham focuses on issues that are of no particular significance on a motion to dismiss an action for delay, instead of responding to the allegations of delay and resulting prejudice which are contained in the materials of the moving parties.

[49] I agree that much of the Cunningham affidavit is improper as it consists of argument and the personal opinions of the deponent as opposed to evidence. I would have expected the affidavit to have contained a reasonable explanation for the delays complained of by the Defendants, such as the amount of time it took to provide answers to some of the undertakings or why the expert reports were not served in a timely fashion. The Cunningham affidavit fails to do this; rather, it seeks to point fingers at the conduct of the various Defendants or their counsel. Clearly, it is responsibility of the Plaintiff to move an action forward and ensure the plaintiff is ready to proceed to trial. In a case such as the one before me, that includes having properly qualified expert reports served and documentary production completed.

[50] On the issue of the summary judgment motion initiated by Church and Lee in 2004, I do not find that this motion resulted in any lengthy delay. At the same time, the plaintiff brought a large motion to freeze the assets of Lee and of the Church estate and for payment into court. This motion was eventually abandoned in March 2014. According to the affidavit of Cunningham, during 2006 and 2007 he was dealing with his own health issues, his mother’s health issues and litigation with his former spouse all of which “adversely affected” his ability to deal with his law practice. The fact that the Defendants Church and Lee had brought a motion for summary judgment did not affect the ability of the solicitor for the plaintiff to set the action down for trial, complete productions and obtain the requisite expert opinions. There is no satisfactory explanation from the Plaintiff for the overall delay of more than 16 years from the time the action was commenced until the present time. After considering the facts of this case and its history, I am of the view that that the Defendants have satisfied the onus of establishing that the delay is inordinate and inexcusable.

Is there prejudice to the Defendants caused by the delay such that there is a substantial risk that a fair trial is not possible?

[51] The case law makes it clear that once inordinate delay has been found, there is a heavy onus on a plaintiff to “persuade the court with convincing evidence that no prejudice will be suffered as a result of its delay, and that there is not a substantial risk that a fair trial will not be possible”: Wallace v. Crate’s Marine Sales Ltd., supra, at para. 11.

[52] This action, which has a trial time of eight weeks according to the estimates of counsel, cannot be fixed for trial in Toronto until at least the fall of 2016, two years hence. The inordinate, inexcusable delay creates the presumption of prejudice. While the solicitor for the Plaintiff asserts in his affidavit that there is no prejudice on the Defendants and that all of the evidence has been preserved in transcripts and documents, I reject this submission. The evidence filed by the Plaintiff ignores the reality that credibility is central to this claim; something the initial case management Master Haberman noted back in 2001 in her written reasons on the motion for security for costs.

[53] The passage of over 16 years since the issuance of the Statement of Claim gives rise to the presumption of prejudice. The Plaintiff has failed to rebut this presumption.

[54] The Cunningham affidavit contains the following bald statements:

No prejudice will be suffered by Wortsman, MRL or Lee given the preservation of the evidence in document form. The evidence to prove and defend the allegations in this action exists principally in document form. So far as the oral evidence of the defendants and the Plaintiff is concerned, there were certain cross-examinations and lengthy examinations for discovery and the evidence of the parties on the issues in the action has been preserved in transcripts. The idea that Church’s death has prejudiced Wortsman and MRL in this action simply does not make sense given that he was adverse in interest. Similarly, Torcat’s recent death has meant that a party significantly adverse in interest to Wortsman and MRL will not be available at trial.

[55] The onus is on the Plaintiff to persuade the court that notwithstanding the delay and the passage of time, a fair trial is still possible. In determining whether there has been prejudice as a result of the delay, each case must be examined upon its facts. In certain types of cases, professional negligence for example, there is not a significant dispute about the facts. Rather, the outcome is determined by which expert opinion the court accepts. Other cases turn on an interpretation of the law.

[56] In the case before me, however, what transpired around the time of the Plaintiff’s offer to purchase the property and the aftermath is the subject of much controversy in the evidence. While many of the documents concerning the transactions may be available, that alone does not equate with a finding by the court that a fair trial can still take place after many years. The memories of people fade over time, and given the disparate evidence from the parties as to how the sale of the property took place, the testimony of the parties is extremely important. Given the delay, by the time of trial the witnesses would be giving evidence about events that occurred at least 19 years ago. As noted by Justice Doherty in Langenecker, supra, at paras. 10-11,

Prejudice is inherent in long delays. Memories fade and fail, witnesses become unavailable, and documents and other potential exhibits are lost. The longer the delay, the stronger the inference of prejudice to the defence case flowing from that delay…. In addition to the prejudice inherent in lengthy delays, a long delay can cause case-specific prejudice.

The Plaintiff has failed to address the inherent prejudice which is a direct result of the inordinate delay.

[57] Moreover, and perhaps more importantly, the Plaintiff has failed to deal with the assertions of actual prejudice contained in the materials of the moving parties. In my view, the Defendants have demonstrated actual prejudice as a result of the unexplained delay of the Plaintiff. This is an action with allegations of fraud and conspiracy. The Plaintiff pleads that Wortsman conspired with Torcat and Church to enable the latter to fraudulently convey the property to a company in which Torcat had a financial interest. Church and Torcat are not simply witnesses; they are Defendants in the action, and both of them have died since this action was commenced.

[58] Further, the examination for discovery of Church by the Plaintiff was never finished, and of more concern, none of the other counsel had the opportunity to conduct a discovery of Church prior to his death. Similarly, neither of the moving Defendants conducted a discovery of Torcat prior to his death. The fact that the parties who died were adverse in interest to the moving Defendants is of no particular significance. What is important is the fact that given the position of Wortsman that he did not execute a power of attorney and the dispute on the evidence as to his precise involvement in the sale of the property, he now no longer has the opportunity to cross examine his co-Defendants on these matters and test their credibility in court. This is actual prejudice, not presumed.

[59] The Plaintiff asserts that no prejudice will result from the death of Church or Torcat because the documents have been preserved and there are “ample discovery transcripts” such that there is not a substantial risk that a fair trial will not be secured. This bald statement fails to address the fact that the discovery transcripts do not automatically go in as evidence at the trial; leave must be sought from the trial judge pursuant to rule 31.11. In addition, using a transcript from an examination for discovery is not the same as having a witness in the stand to give evidence and be subject to cross-examination. As Justice Swinton aptly noted on a motion to dismiss an action for delay where a defendant had died,

Even if leave were given by the trial judge to admit the discovery pursuant to Rule 31.11(6)(a) and 31.11(7), the defendants would be deprived of their ability to have Mr. Pasztor present his story in an organized fashion. I accept that the lack of viva voce evidence from Mr. Pasztor, in a case where his credibility is very important, is extremely prejudicial to the defendants. [Rubino v. Nesbitt Thomson Inc., [2001] O.J. No. 1306 at para. 36.]

[60] Another issue of concern relates to the power of attorney itself. There are apparently 2 copies of the power of attorney dated March 5, 1997. The Cunningham affidavit refers to a power of attorney dated December 13, 1996 (Paragraph 158) signed by Wortsman, but I am uncertain as to the relevance of this document. The Plaintiff asserts that Wortsman signed the 1997 power of attorney and affixed his notarial seal to it and this enabled the fraudulent conveyance of the property. Wortsman does not agree that he signed this document, and the Plaintiff secured the expert opinion of a handwriting expert in 2004. This expert, Kruger, examined the powers of attorney and notarial seal in order to come to her opinion that the signature was that of Wortsman.

[61] According to the evidence before me in the affidavit of Turnham, the solicitor for the Defendants MRL and Wortsman has attempted to obtain access to the original notarial seal specimen which is held at the Ontario Management Board Secretariat, Official Documents office. but has been unsuccessful. Thus, any expert retained by these Defendants may not be able to examine the power of attorney and notarial seal as Kruger did and thus will arguably be in an inferior position to offer the court an expert opinion on the signature on that document. In my view, this is an example of actual prejudice which has resulted from the inordinate delay on the part of the Plaintiff.

[62] Furthermore, the Turnham affidavit deposes that Wortsman is now 73 years old, and has not practiced law since leaving MRL 15 years ago. He has suffered a number of significant health issues, including cancer requiring chemotherapy, and a heart attack. The passage of 16 years itself creates a strong inference of prejudice to the ability of Wortsman to defend the allegations of fraud and conspiracy levelled against him by the Plaintiff; the fact that this Defendant has suffered serious health issues in those years only adds to this presumption of prejudice. This is particularly serious in a case where credibility is critical and the facts surrounding the sale of the Venezuelan property are hotly disputed by the various parties. I am satisfied that there is a substantial risk that the passage of more than 16 years and the intervening ill health of Wortsman will have a negative impact on his ability to recall details of the transactions at issue in the lawsuit.

[63] Hockin J. in Farhi Holdings Corp. v. Lambton (County), [2009] O.J. No. 5475 noted as follows:

I ask, how could any trier of fact reasonably expect any witness to offer reliable evidence at the time of this trial? If I should proceed, witnesses will be asked to recall events and conversations which took place thirteen or fourteen years ago. It would be grossly unfair and represent an attack on basic trial fairness if Farhi, through counsel, was permitted to impugn, at trial, Lambton’s witnesses as unreliable on the basis of poor or absent memory after waiting 13 or 14 years to get its action to trial. The responsibility to move a case along rests always with the plaintiff; there is no onus on the defence to move the action forward.

I agree with these comments, and in my view, when a person is elderly and has undergone serious health difficulties in the intervening years, the concern about lack of trial fairness is heightened.

[64] The Defendant Lee was the wife of Church. The Statement of Claim pleads at paragraph 88, “On January 30, 1998 and unbeknownst to the plaintiff at the time, the defendant Church without valid authorization from the Venezuelan Limited Partnership or the Ontario Limited Partnership, fraudulently conveyed the property to the defendant Seaview Developments.” It is alleged Lee held herself out as a representative of the Venezuelan Limited Partnership without authority and that she had a fiduciary duty to the plaintiff which she breached. It is further alleged she fraudulently concealed the existence of the May 15, 1997, power of attorney and she used it to effect the fraudulent conveyance of the property to Seaview.

[65] In the Amended Statement of Defence and Crossclaim of Lee and Church, it is pleaded that Lee had no involvement at all in the property sale and that she served tea at a meeting held January 1, 1998. At her examination for discovery, she testified that she had no involvement in her husband’s business affairs, apart from typing some documents for him. It is the Plaintiff’s position that Church received monies from the sale of the Venezuelan property, which he used to purchase a condominium in Ontario. It is alleged that Church transferred this property into his wife’s name. My review of the materials filed by the Plaintiff in response to this dismissal motion do not articulate a cause of action against Lee or any evidence that will be called at trial to suggest that she had any involvement in this Venezuelan business deal. As her counsel pointed out, if she was the beneficiary of funds from the sale of the property, that is an enforcement issue, assuming a judgment is granted.

[66] The inordinate delay in proceeding with this action gives rise to the presumption of prejudice to Lee. She is alleged to have been involved in the business affairs of her husband and to have had knowledge of the Venezuelan land deal, which she denies. She has had to live with this litigation over her head for 16 years, which is unfair. The Plaintiff has failed to rebut the presumption of prejudice and seems to ignore Lee’s continued involvement as a Defendant in these proceedings. Instead, the broad brush approach has been adopted, including Lee as “the defendants.”

[67] In my view, with the death of her husband, who clearly had some knowledge of the Venezuelan property deal, Lee has suffered prejudice, as her husband cannot attend trial and provide evidence corroborating her lack of involvement. Further, he is unable to testify as to what transpired at the material times. The Plaintiff has filed in its responding motion record affidavits from James Noble sworn May 17, 1999, Gilbert Lemay sworn May 31, 1999, and Larry Kelln sworn May 18, 1999. The deponents swear that Church was not authorized to deal with any offers of purchase and sale of the Venezuelan property nor did he have a proxy from the partners to make decisions on behalf of the partnership. Church is unable to provide viva voce testimony to dispute this sworn evidence. The fact that another person who had some involvement, Torcat, has died only adds to the actual prejudice sustained by Lee as a result of the inordinate and inexplicable delay of the Plaintiff.

[68] It is not necessary on this motion for me to make a finding on the merits of the action. However, I note that the Cunningham affidavit sets out the “uncontradicted evidence relating to the sale of the property on Margarita Island in Venezuela in January 1998.” Mr. Cunningham deposes that the documents surrounding the transaction have been preserved and will demonstrate the unauthorized sale. A number of the documents that are appended as exhibits to the Cunningham affidavit are from Venezuela and have not been translated appropriately. Other documents are signed by individuals whose names are not included on the list of witnesses intended to be called at trial by the Plaintiff. Some of the documents are signed by Church and Torcat, both of whom are now dead. It is unclear to me how the Plaintiff intends to have these documents, which Mr. Cunningham describes as central to the Plaintiff’s case, introduced as evidence at the trial of this action. Mr. Cunningham set this matter down for trial in 2008, yet it is clear to me that in November 2014, the Plaintiff is not ready for trial.

[69] In my view, the time has come to put an end to this matter. While I recognize the dismissal of an action is a serious remedy, Rule 24 is intended to provide for the dismissal of actions where the delay has been inordinate and inexplicable and to move forward to trial would be unfair to the defendants. As the court noted in Wallace v. Crate’s Marine Sales Ltd., supra, “enough is enough.” The action is dismissed against the moving Defendants MRL, Wortsman, and Lee personally and as the litigation administrator for the Estate of Church. If the parties cannot agree on costs, I may be contacted.

D.A. Wilson J.

Date: November 19, 2014