990114 Ontario Ltd. v. Munsee-Delaware Nation, 2015 ONSC 2588

CITATION: 990114 Ontario Ltd. v. Munsee-Delaware Nation, 2015 ONSC 2588

COURT FILE NO.: 6997/12

DATE: 2015/04/20

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: 990114 Ontario Ltd. operating as Paradise Bingo, and Michael Duval (Plaintiffs)

AND: Munsee-Delaware Nation, Patrick Waddilove, Jody Waddilove and Carmen Dolson (Defendants)

BEFORE: Justice A. K. Mitchell

COUNSEL: Raymond G. Colautti, for the plaintiffs

Sean Flaherty, for the defendants

HEARD: March 27, 2015

ENDORSEMENT

Overview

[1] This is a status hearing under subrule 48.14(13). The plaintiffs ask that the matter be restored to the trial list. The defendants seek an order dismissing the action.

Factual Background and Procedural History

[2] This action was commenced by statement of claim issued June 6, 2008. At the time the action was commenced Gino Morga was counsel for the plaintiffs.

[3] In this action, the plaintiffs claim damages for breach of contract and for restitution in relation to the termination of the lease between the plaintiff, 990114 Ontario Ltd. operating as Paradise Bingo (“Paradise Bingo”), and the defendant, Munsee- Delaware Nation (the “Band”).

[4] The defendants filed their statement of defence on July 8, 2008. In the statement of defence the Band admits that the lease was entered into but denies the validity of the lease and pleads that it is void for non-compliance with s. 58 of the Indian Act.

[5] On October 25, 2010, the registrar issued a status notice (the “First Status Notice”).

[6] On March 21, 2011 a status hearing was held (the “First Status Hearing”) and, on consent of the parties, the presiding judge issued an order embodying a timetable for completion of the remaining steps in the action (the “Timetable”).

[7] On September 1, 2011 the action was transferred from Windsor to London.

[8] On March 21, 2012 a case conference was conducted and, on consent of the parties, the time to set down the action for trial set forth in the Timetable was extended from February 28, 2012 to December 31, 2012.

[9] On December 21, 2012 the plaintiffs filed their trial record.

[10] On December 27, 2012 the plaintiffs filed a Notice of Change of Solicitor transferring carriage of the matter from Mr. Morga to Ron Godard.

[11] On March 27, 2013 a mediation was conducted which was not successful.

[12] On April 2, 2013 the plaintiffs served their affidavit of documents.

[13] By correspondence dated April 29, 2013, counsel for the Band notified Mr. Godard that the defendants were not prepared to continue mediation and wanted to move the case to trial. In that same correspondence, counsel for the Band writes:

Since the March 27 mediation, we have learned that the plaintiff was represented by a lawyer in the negotiations between the plaintiff and the First Nation, and in particular the plaintiff’s lawyer drafted the first draft of the lease between the First Nation and the plaintiff. As such, it is beyond controversy that the plaintiff either knew or ought to have known that there were provisions of the Indian Act applicable to the arrangements between the parties and in particular the provisions in the intended lease. Should it be the case that the plaintiff did not comprehend the impact of the provisions of the Indian Act, that is a matter which the plaintiff should raise with its lawyer, not the defendant. When this information is combined with the incongruence of the plaintiff’s claim, we do not see any prospect that the plaintiff’s claim is capable of succeeding [Emphasis added.]

[14] At the time the lease was negotiated between Paradise Bingo and the Band, Danny Branoff was employed as in-house legal counsel with Champion Products Corp. (“Champion”). Champion had referred the plaintiffs to the Band to negotiate the subject lease.

[15] In light of the information contained in the correspondence of the Band’s counsel, Paradise Bingo commenced a separate action on August 23, 2013 against Mr. Branoff (the “Branoff Action”).

[16] Paradise Bingo denies that that Mr. Branoff was retained as their lawyer or at any time acted on their behalf with respect to negotiation of the subject lease. The plaintiffs further deny that they had any knowledge of, authorized or gave their consent to, the preparation of the lease by Mr. Branoff on their behalf.

[17] Mr. Branoff did not defend the Branoff Action. He made an assignment into bankruptcy in September 2013. As a result of Mr. Branoff’s bankruptcy, the Branoff Action was automatically stayed by operation of the provisions of the Bankruptcy and Insolvency Act.

[18] On October 18, 2013 the action was not ready to proceed to trial and, on consent of the parties, was struck from the trial list.

[19] On July 3, 2014 the registrar issued a status notice (the “Second Status Notice”) advising the parties that the action would be dismissed unless set down for trial within 90 days.

[20] In response to the Second Status Notice, Mr. Godard wrote to the registrar requesting a status hearing.

[21] On September 8, 2014 the parties were notified that a status hearing had been scheduled for September 19, 2014.

[22] At or about the same time as the Second Status Hearing, the plaintiffs determined that in order to have any chance of recovery in the Branoff Action, they would need to claim against Mr. Branoff’s employer, Champion.

[23] Since Mr. Godard was not in a position to act adverse to Champion, he declared his conflict of interest and removed himself as counsel for the plaintiffs in this action.

[24] On the return of the status hearing and upon being advised of the conflict of counsel, the Court adjourned the matter to December 19, 2014 to set a special appointment date for the argument of the status hearing and, in particular, the defendants’ request that the action be dismissed.

[25] On December 18, 2014, the plaintiffs filed a Notice of Change of Solicitor transferring carriage of the matter from Mr. Godard to Ray Colautti, the plaintiffs’ present solicitor of record.

Plaintiffs’ Position

[26] The plaintiffs acknowledge that under rule 48.14 (13) they bear the burden to show cause why the action should not be dismissed for delay.

[27] They argue that any blame to be attributed to the initial four and a half year delay and default in compliance with the Timetable should be directed towards the plaintiffs’ former solicitor, Mr. Morga, and should not be attributable to the plaintiffs.

[28] Mr. Colautti argues that once Mr. Godard took carriage of the file in December, 2012, there was obvious forward momentum. The matter was set down for trial, discoveries were waived, and a mediation, albeit unsuccessful, conducted. In addition, the Branoff Action was commenced following the Band’s disclosure that Mr. Branoff, a lawyer possibly connected to the plaintiffs drafted the lease. Relying on the testimony of Chief Waddilove given in unrelated criminal proceedings, the plaintiffs had believed the lease had been drafted by the Band’s counsel. The alleged involvement of Mr. Branoff was not pleaded by the defendants in their statement of defence and was unknown to the plaintiffs until April 2013.

[29] The plaintiffs submit that it was this change in position by the defendants which necessitated the action being struck from the trial list in the Fall 2013 and resulted in the lion’s share of the delay since Mr. Godard took carriage of the action. The plaintiffs argue that this change in the defendants’ position will necessitate amendments to the statement of claim and possibly a joinder of the Branoff Action or other related actions with this action. The plaintiffs seek the court’s direction with respect to setting a tight, yet realistic, timetable to complete the outstanding steps in these proceedings.

[30] The plaintiffs submit that the action is well-founded in law and is neither frivolous nor vexatious. Mr. Colautti assures me that the plaintiffs are now in a position to aggressively pursue this action without further delay. Furthermore, exercising the court’s discretion to allow the action to proceed will cause no prejudice to the defendants.

[31] The plaintiffs ask that the action be restored to the trial list and for an order “timetabling” production of documents and discoveries.

Defendants’ Position

[32] Not surprisingly, the defendants ask the court to exercise its discretion pursuant to rule 48.14(13) and dismiss the action.

[33] The defendants argue that the plaintiffs have failed to satisfy the onus to show cause why the action should not be dismissed for delay. The defendants point out that it is not their burden to show cause why the action should be dismissed. Under rule 48.14(13) the defendants are presumptively entitled to a dismissal of the action unless the plaintiffs are able to rebut the presumption on the evidence before the court.

[34] The defendants submit that the plaintiffs face a much more significant challenge since this is the second status hearing. They point to the noticeable absence from the record of any evidence explaining the plaintiffs’ conduct during the initial 4 ½ year period. They say it is not enough to simply lay the blame at the feet of their former lawyer. Evidence of the plaintiffs’ efforts to move the action forward during this same time, or an acceptable explanation for not having done so, is required. The plaintiffs cannot simply sit idle; rather, have an obligation to take “ownership” of the litigation and ensure it progresses.

[35] The defendants point to the absence of any explanation for the delay in prosecuting this action since the unsuccessful mediation was concluded two years ago. They say the plaintiffs ignored the defendants’ request to set a discovery plan in the Fall of 2013. In addition, much earlier in the litigation, examinations for discovery of the defendants were scheduled; however, the plaintiffs refused to conduct the discoveries when the party defendants asserted their right to be present at the examinations.

Analysis

[36] The test under rule 48.14(13) requires the plaintiff to demonstrate that there was an acceptable explanation for the delay and to further establish that, if the action were allowed to proceed, the defendant would suffer no non-compensable prejudice: Khan v. Sun Life Assurance Co. of Canada, 2011 ONCA 650 at paras.1-2; Faris v. Eftimovski, 2013 ONCA 360, at para. 32.

[37] The burden to “show cause” why this action should not be dismissed rests with the plaintiffs. The plaintiffs bear the consequences of conducting this action in a dilatory manner: Faris, supra at para. 33.

[38] The plaintiffs have been given numerous opportunities to advance their claims since Mr. Morga’s departure from the file in December 2012. Aside from a flurry of activity in the Fall of 2014 following issuance of the Second Status Notice, the plaintiffs and their lawyer, Mr. Godard, did little, if anything, to move this action forward following the failed mediation.

[39] The Timetable established by Master Pope on March 21, 2011 was ignored. A failure to enforce rules and orders undermines public confidence in the capacity of the justice system to process disputes fairly and efficiently: 1196158 Ontario Inc., supra, at paras. 12, 13, 19, 25 and 35.

[40] Even the efforts of the defendants from time to time to establish a discovery plan were ignored by the plaintiffs. No explanation as to why these efforts were ignored is before me in the evidence.

[41] I note that, aside from the normal prejudice occasioned by the passage of time, the defendants will suffer no prejudice if the action is allowed to proceed; however, a lack of prejudice is insufficient to satisfy the first prong of the test which requires the plaintiff to satisfy the Court on proper evidence that there is a reasonable explanation, supported by the evidence, for the delay. At some point, a party who has failed to respect the rules designed to ensure timely and efficient justice loses the right to have its dispute decided on the merits: 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544, at paras. 28,32-33.

[42] Even if I was to accept the plaintiffs’ explanation that the delay post-mediation was occasioned by the plaintiffs dealing with the Branoff Action, that does not explain the stagnation of this action and the Branoff Action once the plaintiffs received notification that Mr. Branoff made an assignment in bankruptcy in September 2013. What was being done between September 2013 and the plaintiffs’ meeting with Mr. Godard in September 2014 remains a mystery. The only development during that time was the court’s issuance of the Second Status Notice. It appears that only the threat of dismissal spurs the plaintiffs into action and then for only a brief period.

[43] The facts before me are very similar to the factual matrix before the court in 1196158 Ontario Inc. The delay in that case was five years as compared to the almost seven years here. In 1196158 Ontario Inc., the plaintiff had taken no steps to move the action beyond the pleading stage. Here, the plaintiffs have served their affidavit of documents although that step was not recent, having taken place in April 2013. No discovery plan has been agreed to by the parties and discoveries have not been scheduled let alone conducted. In 1196158 Ontario Inc., the action was dismissed following a second status hearing. In that case, the status hearing judge noted that the plaintiff had failed to move the action beyond the pleading stage despite having been given a “lifeline” at the first status hearing and an obligation to comply with the timeline. The status hearing judge noted: “[d]espite being given this opportunity, the plaintiff did nothing to move this action along for a further period-and-a-half! Other than serving the Hydro Defendants, the plaintiff simply ignored the January 19, 2010 Order”.

[44] This is the very situation before me. The plaintiffs were given a lifeline at the First Status Hearing in the form of a Timetable. Aside from setting the matter down for trial to avoid a Second Status Notice, the Timetable was ignored. The Branoff Action was stayed more than a year ago, with no efforts made by the plaintiffs to revive that action by seeking to add Champion as a party and/or to join the Branoff Action with this action.

[45] While I commend Mr. Colautti for his able and nearly-persuasive submissions, his involvement comes too late to save this action.

[46] The plaintiffs have failed to satisfy their onus under subrule 48.14(13) and accordingly, the defendants are entitled to have this action dismissed.

Disposition

[47] Action dismissed. Costs of the action, calculated on a partial indemnity basis, as assessed or agreed payable by the plaintiffs to the defendants.

“Justice A. K. Mitchell”

Justice A. K. Mitchell

Date: April 20, 2015