SUPERIOR COURT OF JUSTICE – ONTARIO

HART STORES INC. v. 1808059 ONTARIO LIMITED

CV-12-462148

2014 ONSC 7010

HEARD: December 3, 2014

COUNSEL: Ranjan Das and Adam J. Wygodny for the plaintiff

Robert Malen for the defendant

ENDORSEMENT

Master R.A. Muir –

[1] This endorsement is in relation to a contested status hearing at which the plaintiff was required to show cause why its action should not be dismissed for delay pursuant to Rule 48.14(13) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”).

[2] This is a commercial landlord/tenant dispute. The plaintiff alleges breaches of certain terms of a lease agreement by the defendant. The defendant denies the allegations.

[3] The plaintiff remains a tenant of the defendant and continues to operate its business out of premises owned by the defendant.

[4] Rule 48.14(13) provides as follows:

48.14(13) At the status hearing, the plaintiff shall show cause why the action should not be dismissed for delay and,

(a) if the presiding judge or case management master is satisfied that the action should proceed, the judge or case management master may,

(i) set time periods for the completion of the remaining steps necessary to have the action placed on or restored to a trial list and order that it be placed on or restored to a trial list within a specified time,

(ii) adjourn the status hearing to a specified date on such terms as are just, or

(iii) if the action is an action to which Rule 77 may apply under rule 77.02, assign the action for case management under that Rule, subject to the direction of the regional senior judge,

(iv) make such other order as is just; or

(b) if the presiding judge or case management master is not satisfied that the action should proceed, the judge or case management master may dismiss the action for delay.

[5] The principles the court is to apply on contested status hearings are summarized in my decision in Wodzynski v. Costa Law Firm, 2014 ONSC 3429 (S.C.J. – Master) at paragraphs 4 to 6 where I state as follows:

4 The applicable test to be applied on a contested status hearing is set out in the decision of the Court of Appeal in Khan v. Sun Life Assurance Co. Of Canada, 2011 ONCA 650 at paragraph 1:

[T]he appellant [plaintiff] bore the burden of demonstrating that there was an acceptable explanation for the involved litigation delay and that, if the action were allowed to proceed, the respondent [defendant] would suffer no non-compensable prejudice.

5 The test is conjunctive. The presiding judge or case management master may still dismiss the plaintiff’s action even in situations where the delay has been satisfactorily explained or the plaintiff has demonstrated that the defendant would not be prejudiced. In 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544, the Court of Appeal described the Khan test as follows at paragraph 32:

The test is conjunctive, not disjunctive. Even if the plaintiff can provide a satisfactory explanation for the delay, the action will be dismissed if there would be prejudice to the defendant. And if the plaintiff is not able to provide a satisfactory explanation for the delay, it is still open to the judge to dismiss the action, even if there is no proof of actual prejudice to the defendant.

6 Rule 48.14(13)(b) provides that the presiding judicial officer at a status hearing may dismiss the action for delay. The Court of Appeal has held that it is “open to the judge to dismiss the action” [emphasis added]. The court’s decision is therefore a discretionary one. However, the Court of Appeal has recently confirmed the test to be applied, as set out in Khan and 1196158 Ontario Inc., above and specifically emphasized that a plaintiff is responsible for moving an action forward and it is the plaintiff who must bear the consequences of conducting his or her action in a dilatory manner. See Faris v. Eftimovski, 2013 ONCA 360 at paragraph 33.

[6] These are the factors and principles I have followed in determining the issues before me on this status hearing. Having done so, I have determined that the plaintiff’s action should be allowed to continue.

[7] With respect to the first part of the test, I am satisfied, on balance, that the plaintiff has provided an acceptable explanation for the litigation delay.

[8] It appears that there has been a great deal of procedural difficulty with this action. However, I do not view any of the procedural steps as part of a delay strategy on the part of the plaintiff. Some of the initial steps taken by the plaintiff may have been ill-advised, at least in hindsight, but I do not view them as amounting to a pattern of delay.

[9] In fact, it is my view that much has been done to advance this claim since it was first commenced as an application on August 24, 2012. The plaintiff initially sought an interim injunction, which was ultimately abandoned. This matter was converted to an action and a trial of an issue was ordered in November 2012. Pleadings were exchanged and discoveries took place in May 2013. At that point, it appears that the plaintiff formed a preliminary intention to amend its statement of claim and thereafter set about conducting an investigation in order to establish a reasonable basis for the proposed new claims.

[10] I do agree with the defendant that there has been some unexplained delay by the plaintiff in bringing its motion to amend. However, in my view, that delay is excusable given its limited duration, coupled with the progress made prior to May 2013. Moreover, this claim is only two years old and the fact scenario giving rise to the claim is ongoing. The motion to amend has now been served and is apparently returnable in February 2015. In my view, it was reasonable for the plaintiff to undertake at least some investigation before advancing a somewhat complicated new cause of action that required the involvement of additional parties. It is regrettable that the amended statement of claim was promised in September 2013 and not provided until June 2014 but I accept that the new claims the plaintiff was considering were subject to ongoing events that took place as late as the spring of 2014. Of course the ultimate utility of this investigation will be determined in another place.

[11] This is obviously not a situation where a plaintiff has done nothing to advance its claim over long periods of time. The overall delay or inactivity cannot be compared to the cases cited where actions have been dismissed at status hearings.

[12] I am also of the view that the plaintiff has met its onus with respect to prejudice. Documents have been exchanged. Affidavit evidence has been served. Examinations for discovery have taken place. Witnesses are available. In my view, this is the kind of action that will most likely turn on expert evidence and an examination and interpretation of documents, all of which are available. The defendant does not seriously contest this.

[13] I am therefore not prepared to dismiss this action. As well, it is not appropriate for me to set a timetable for this matter going forward. This action has been the subject of several timetable and procedural orders made by judges sitting in motion and trial scheduling court. Furthermore, this action was struck from the trial list by the order of Justice Low and I do not have the jurisdiction to set aside that order or restore this action to the trial list. In my view, the parties should return to motion scheduling court to address any timetable orders once the pending motion to amend has been determined. In the interim, I am ordering that the registrar not dismiss this action without further order of the court.

[14] The plaintiff has been successful, however it does not seek costs. The defendant does seek costs even though unsuccessful. In my view, this is not a situation for such an order. The delay with this action was not significant and the indulgence granted to the plaintiff was not a substantial one. There shall be no order with respect to the costs of this status hearing.

Master R.A. Muir

DATE: December 3, 2014