SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Chilakos v. LBC International Investigative Accounting Inc.

Court File No.: CV-10-415280

2014 ONSC 7479

HEARD: December 29, 2014

BEFORE: MASTER R.A. MUIR

COUNSEL: Jeffrey Radnoff for the plaintiff

Alison Carr for the defendants

ENDORSEMENT

[1] The plaintiff brings a motion pursuant to Rule 37.14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) for an order setting aside the order of the registrar dated March 14, 2013 dismissing this action for delay.

[2] The defendants oppose the granting of the relief requested on this motion.

[3] This is partly a wrongful dismissal action along with issues involving a dispute among shareholders of the defendant corporation.

[4] The statement of claim was issued on November 29, 2010. Pleadings were then exchanged. Pleadings closed in February 2011 with the delivery of the plaintiff’s reply. A mediation session was held on March 14, 2011 at which time a portion of the plaintiff’s claim was settled. The only remaining issue is the valuation of the plaintiff’s shares in the defendant corporation.

[5] Very little else has been done to move this action forward. There has been no oral or documentary discovery. The plaintiff did make sporadic attempts to amend her statement of claim. A draft amended statement of claim was prepared but a motion to obtain the necessary order was never brought. There are long periods of delay between the fall of 2012 and the spring of 2014.

[6] This action was dismissed for delay on March 14, 2013. It appears from the evidence that neither of the plaintiff’s lawyers (not Mr. Radnoff) received the status notice or the dismissal order. Of course, the plaintiff and her lawyers are deemed to be aware of the provisions of Rule 48.14.

[7] The law relating to motions for an order setting aside an administrative dismissal order is summarized in my decision in Kamboj v. Sidhu, 2013 ONSC 2478 (Master) at paragraphs 17-20. Four factors are of central importance. The court must consider the explanation for the delay, whether the deadline was missed due to inadvertence, any delay in bringing the motion to set aside the dismissal order and prejudice to the defendant. I have considered and applied those factors and the other principles set out in Kamboj. In my view, it is just that the dismissal order be set aside.

[8] In my view, this motion was brought promptly. After learning of the dismissal order, the plaintiff’s lawyer immediately contacted the lawyer for the defendants and advised of his client’s intention to seek an order setting aside the dismissal and asked for the defendants’ consent. When that consent was not forthcoming notice of this motion was served within a few weeks.

[9] I am also satisfied that the set-down deadline was missed due to inadvertence. The affidavit and documentary evidence demonstrates that the plaintiff and her lawyers always intended to proceed with this action. Periodic correspondence was sent to the defendants’ lawyers. An amended statement of claim was drafted and revised. The plaintiff herself has provided evidence of her intention to proceed and her attempts to follow up with her lawyers. In my view, the failure to comply with the set-down deadline or to seek an extension of time must have been inadvertent. No other explanation makes sense. This factor has been satisfied.

[10] However, I do agree with the defendants that there has been some unexplained delay with this action. Very little was done to move this action forward after the mediation. No motion was brought to obtain leave to amend the statement of claim. The file was set aside for many months at a time.

[11] These periods of unexplained delay should not be condoned. However, when viewed in context, they are not inordinately long. This action was started very soon after the plaintiff left the employ of the corporate defendant. The delay is certainly not of the magnitude seen in several of the Court of Appeal decisions where dismissal orders have been upheld. As I have said in other decisions, the plaintiff’s explanation need not be perfect. It simply needs to be adequate. Some of the issues have been resolved and a draft amended statement of claim has been prepared. The only remaining issue involves a valuation of the plaintiff’s shares in the corporate defendant. That is not an issue that will require significant viva voce evidence from the parties. It will be determined on the basis of the corporate defendant’s financial records and expert evidence.

[12] In my view, the plaintiff has, on balance, satisfied this element of the test.

[13] Putting aside the issue of whether a limitation period has passed with respect to the plaintiff’s remaining claims, I am satisfied that the plaintiff has rebutted any applicable presumption of prejudice. I say this because of the unique nature of the plaintiff’s remaining claims. She is simply seeking an order that the corporate defendant buy her shares. The only issue is a valuation of those shares. As I have stated above, that issue will be determined on the basis of the corporate defendant’s financial records and expert evidence. Finally, I note that there is no evidence from the defendants of actual prejudice.

[14] When deciding motions of this nature, the court is to adopt a contextual approach in which it weighs all relevant considerations to determine the result that is just in the circumstances. The court must, of course, balance the strong public and private interest in promoting the timely resolution of disputes with the entitlement of a plaintiff to have her claim decided on the merits. However, the general preference in our system of civil justice is for the determination of disputes on their merits.

[15] In my view, the plaintiff has satisfied the four Reid factors, including the key consideration of prejudice.

[16] For these reasons, I have concluded that it is just in the circumstances of this action that the dismissal order of the registrar dated March 14, 2013 be set aside, but as against the corporate defendant only.

[17] The plaintiff has received an indulgence. However, I do not view that indulgence as being a particularly significant one. The plaintiff has satisfied all of the Reid factors. This is not a situation where the unsuccessful party should be awarded costs. There shall be no order for the costs of this motion.

[18] I therefore order as follows:

(a) The order of the registrar of March 14, 2013 is hereby set aside as against the corporate defendant only;

(b) The plaintiff’s motion to amend her statement of claim shall be served by January 15, 2015;

(c) Affidavits of documents shall be served by March 31, 2015

(d) Discovery shall be completed by May 31, 2015;

(e) Undertakings shall be answered by July 31, 2015;

(f) Discovery motions shall be booked by August 31, 2015;

(g) This action shall be set down for trial by January 31, 2016; and,

(h) There shall be no order with respect to the costs of this motion.

Master R.A. Muir

DATE: December 29, 2014