CITATION: KRIESER v. SELIGMAN, 2015 ONSC 3596
COURT FILE NOs.: CV-07-332316 and CV-07-333901
MOTION HEARD: JUNE 1, 2015
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Shari Krieser
v.
Gregory Evan Seligman, G.E.S. Construction Limited, Greenstone Gardens Inc., 1665610 Ontario Inc. and Bonavista Pools Limited
and
Shari Krieser and George Krieser
v.
Gregory Evan Seligman, Vintage Landscape Contractors Limited, Greenstone Gardens Inc., G.E.S. Construction Limited, Eduardo Leal, 1415952 Ontario Inc. and John Doe No. 1
BEFORE: MASTER R.A. MUIR
COUNSEL: Alfred J. Esterbauer and Kalev Anniko, counsel to the lawyers for the plaintiffs in both actions Andrea M. Habas for the defendants in both actions, other than Bonavista Pools Limited
REASONS FOR DECISION
[1] The plaintiffs bring these motions 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 orders of the registrar dated March 1, 2011, dismissing both actions for delay. These actions were dismissed by the registrar due to the failure on the part of the plaintiffs to comply with status hearing orders made by Master McAfee on October 8, 2009. Those orders required that these actions be set down for trial by February 28, 2011, failing which they would be dismissed by the registrar.
[2] The defendants represented by Ms. Habas (the “GES Defendants”) are opposed to the relief the plaintiffs are seeking. The defendant Bonavista Pools Limited (“Bonavista Pools”) takes no position on these motions.
[3] These actions arise from a significant home construction project involving a property owned by the plaintiffs in the city of Toronto. The defendant G.E.S. Construction Limited (“GES”) acted as the project manager. Most of the GES Defendants are related parties and are apparently controlled by the defendant Gregory Evan Seligman.
[4] The project was substantially completed in early 2007. A dispute arose among the parties and thereafter GES preserved and perfected a lien on the project.
[5] The plaintiffs retained Ted Kerzner to act on their behalf and commenced two proceedings of their own. The first sought an accounting from the defendants along with other relief in relation to alleged improper billing, misuse of funds and allegations relating to the performance of GES under the construction management contract. The second action commenced by the plaintiffs alleges that the defendants conspired and harassed the plaintiffs. It also alleges trespass to property and intimidation. All three actions were issued within weeks of each other in May 2007. The GES Defendants deny all of the plaintiffs’ allegations and take the position that the plaintiffs are indebted to GES.
[6] Pleadings were exchanged in a timely manner. The plaintiffs then brought several motions between 2007 and 2009 seeking orders for further and better production, trial together, compliance with the production orders and a motion in the GES lien action for an order discharging the GES lien. The plaintiffs were successful on all of those motions and were awarded costs. At the same time, the parties were exchanging affidavits of documents and copies of productions. It appears that the GES Defendants’ production was completed as of June 2009.
[7] In the spring of 2009, the court issued status notices in both of the plaintiffs’ actions. A status hearing was then scheduled for October 8, 2009, at which time Master McAfee made an order establishing a timetable and requiring these actions to be set down for trial by February 28, 2011.
[8] The plaintiffs were examined for discovery on January 19 and 20, 2010 and a representative of Bonavista Pools was examined on April 5, 2010. A notice of examination was served to examine Mr. Seligman beginning on May 18, 2010. On the morning of May 18, 2010, counsel for the GES Defendants advised counsel for the plaintiffs that she was not available to attend the discoveries due to an unexpected trial commitment.
[9] Mr. Kerzner followed up with several communications over the following few days in an effort to re-schedule the examinations but no new dates were agreed to.
[10] The GES Defendants concede that there was no unexplained delay between May 2007 and June 2010.
[11] Nothing further appears to have taken place with these actions until March 1, 2011 when the registrar issued the dismissal orders. Mr. Kerzner did not follow up with Ms. Habas with respect to re-scheduling the cancelled examinations. No effort was made to obtain an extension of the set down deadline in Master McAfee’s timetable order.
[12] In August 2011, Mr. Kerzner’s office contacted the motion scheduling office and booked a motion to set aside the dismissal orders. The motion was returnable on October 4, 2011. However, no materials were prepared and the motion did not proceed.
[13] Nothing further took place until December 30, 2011 when Mr. Kerzner contacted Ms. Habas in a further effort to re-schedule the outstanding examinations. Ms. Habas responded by suggesting that the parties agree to a dismissal of all three actions on a without costs basis. The plaintiffs rejected this proposal and instructed Mr. Kerzner to move these matters forward. Each side then proposed dates for the examination of Mr. Seligman. However, by the end of February 2012, no discovery dates had been agreed to and these actions fell into a long period of delay once again.
[14] In the middle of 2012 Mr. Kerzner became ill. He was hospitalized for eight days in December 2012. He was hospitalized twice in 2013 and had surgery in July 2013. Although Mr. Kerzner continued his practice he did not return to work on a full time basis. Mr. Kerzner passed away on August 24, 2014.
[15] After Mr. Kerzner’s passing, other lawyers from his firm conducted a review of his files. On September 4, 2014, they discovered the dismissal orders in these actions. Mr. Kerzner’s liability insurer was notified. Ms. Habas was also contacted with a view to seeking the consent of her clients to an order setting aside the dismissals. This was the first activity on these matters since February 2012. The GES Defendants declined to provide such consent and these motions were then scheduled in a timely manner.
[16] The law relating to motions seeking an order setting aside an administrative dismissal order is summarized in my decision in Bagus v. Telesford, 2014 ONSC 3512 (SCJ – Master) at paragraphs 23 to 26. The court must apply a contextual analysis and consider all relevant factors. However, four factors are of central importance, generally referred to as the Reid factors. 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. Of these factors, prejudice is the key consideration. In most cases, the issue of prejudice figures largely in determining whether to set aside a dismissal for delay. See MDM Plastics Limited v. Vincor International Inc., 2015 ONCA 28 at paragraph 24.
[17] In addition, the court should be mindful of the preference in our system of civil justice for the determination of disputes on the merits. This preference is more pronounced where the delay results from errors committed by counsel and not the parties themselves. See H.B. Fuller Company v. Rogers (Rogers Law Office), 2015 ONCA 173 at paragraphs 26 and 27. Ultimately, the court must consider all of the circumstances of each particular case and make the order that is just. See Fuller at paragraphs 21 to 23.
[18] These are the factors and principles I have considered and applied in determining the issues on these motions. My analysis leads me to the conclusion that it is in the interest of justice that the dismissal orders of the registrar be set aside.
[19] I come to this conclusion notwithstanding that it is my view that the plaintiffs have failed to meet the first three Reid factors. These motions were not brought promptly. Mr. Kerzner was aware of the dismissal orders in the summer of 2011 but did nothing to bring these motions other than booking a date. These motions were not brought until the fall of 2014, more than three years after the dismissal orders were made.
[20] The record before me also discloses long periods of unexplained delay. No effort was made to re-schedule the discoveries of the GES Defendants between June 2010 and late December 2011 when a few email messages were exchanged. Further unexplained delay took place between February 2012 and September 2014. Nothing was done to advance these actions during that time period despite the fact that Mr. Kerzner was practicing at least part time and was with a firm that employed other lawyers and support staff who could have assisted.
[21] Finally, the record is silent with respect to the issue of inadvertence. We simply do not know why Mr. Kerzner failed to set these actions down in a timely manner or at least seek an extension order.
[22] I accept that the plaintiffs are in a difficult position. We do not have the benefit of Mr. Kerzner’s evidence explaining the delay and the default. The plaintiffs’ evidence suggests that Mr. Kerzner’s health issues may be part of the explanation. They suggest that a lapse of this nature would have been out of character for Mr. Kerzner. However, there is evidence that Mr. Kerzner was practicing during the periods of delay with these actions and even appeared as counsel for George Krieser on a relatively lengthy trial. We simply do not know and cannot know why these matters were not attended to. Under such circumstances, I am unable to conclude that the plaintiffs have met their onus with respect to these factors.
[23] It is important to note, however, that there is no evidence that the plaintiffs themselves ever intended to abandon these actions. The evidence shows that the opposite is true. George Krieser followed up with Mr. Kerzner on a number of occasions regarding the status of these proceedings. His email messages make it clear that he was intent on proceeding with these claims and was unhappy with the delay. Mr. Kerzner acknowledged receipt of some of these messages and promised action. However, nothing substantive was done. There is no explanation in the evidence. It remains a mystery.
[24] Nevertheless, I am satisfied that the plaintiffs have met the onus placed upon them to rebut the presumption of prejudice. Where a limitation period has passed, as it has here, a presumption of prejudice arises and the onus rests with the plaintiff to rebut that presumption. The strength of this presumptive prejudice increases with the passage of time. See Bagus at paragraph 34.
[25] One way a plaintiff can overcome the presumption of prejudice is by leading evidence that all relevant documents have been preserved and that key witnesses are available. See Bagus at paragraph 35.
[26] I am satisfied that all relevant documents have been preserved. The parties have exchanged a great deal of documentary production and the plaintiffs have been examined for discovery along with Bonavista Pools. Transcripts are available. The GES Defendants argue that they do not know the particulars of the plaintiffs’ claims even at this late date. They point to the plaintiffs’ unanswered undertakings. I agree that the plaintiffs’ failure to answer their undertakings is obviously unsatisfactory. However, the GES Defendants have been aware of the scope of this claim from the very beginning and they have responded to it. The statements of claim certainly cast a very wide net. However, the GES Defendants have responded with lengthy and detailed statements of defence, along with a counterclaim. The GES Defendants were prepared to attend at discovery as early as May 2010, without receiving answers to the plaintiffs’ undertakings. These defendants and their counsel must have been satisfied that they were properly prepared at that time and in a position to respond to the plaintiffs’ allegations. I note that the May 2010 examinations were only cancelled on the morning of the first scheduled date.
[27] In addition, it appears that the GES Defendants were prepared to agree to discovery dates in early 2012, many months after these actions were dismissed for delay. None of the email messages exchanged between Mr. Kerzner and Ms. Habas between December 2011 and February 2012 make reference to the dismissal orders. Ms. Habas provided two dates in March 2012 on which Mr. Seligman could be examined. In my view, it is reasonable to infer that the GES Defendants were not overly concerned about prejudice in early 2012. Apart from the simple passage of time, it is difficult to see what changed in terms of prejudice between February 2012 and September 2014. There is no suggestion in the evidence that the GES Defendants have been prejudiced as a result of steps taken in reliance on the dismissal orders. The conduct of the GES Defendants is simply not consistent with a finding of prejudice. The presumption of prejudice has been rebutted by the GES Defendants’ own actions. Support for such an analysis can be found in MDM Plastics at paragraphs 33-39.
[28] It is also important to note that many of the unanswered undertakings relate to the quantification of the plaintiffs’ damages. Obviously, if the plaintiffs are unable to provide evidentiary support for their claims, they will not succeed at trial. This does not result in prejudice to the GES Defendants.
[29] Counsel for the GES Defendants suggested in argument that a party who seeks an order setting aside a registrar’s dismissal order must not be otherwise in default under the Rules. However, the court was not provided with any authority for that proposition. In my view, any such default is simply one factor for the court to consider and not a condition precedent for the granting of the relief sought.
[30] It also appears that all key witnesses are available to give evidence. The GES Defendants point to their lack of knowledge of the whereabouts of one potential witness, Jeffrey McDonald. Mr. McDonald apparently managed the plaintiffs’ home for them while construction was ongoing. However, I note that it appears that Mr. McDonald was let go by the plaintiffs in 2007, long before there was any delay with these actions. In addition, the GES Defendants have not provided any evidence of their efforts to locate Mr. McDonald. The GES Defendants have been aware of these claims from the very beginning and have been represented by counsel throughout. They had every opportunity to preserve the evidence of all important witnesses if they considered it necessary.
[31] Finally, the GES Defendants point out that that the plaintiffs are making very serious reputational allegations against them. These allegations have been hanging over their heads for many years and this fact amounts to a form of prejudice. I do not accept that potential harm to the reputation of defendants constitutes the kind of prejudice the court should be concerned with on a motion of this nature. Several decisions of the Court of Appeal make it clear that the issue is prejudice in terms of the inability of a party to defend itself at trial. See for example Fuller at paragraph 37. I am satisfied on the evidence before me that the GES Defendants will be able to mount a full defence at trial.
[32] In my view, this element of the Reid test has been met.
[33] When deciding a motion to set aside an administrative dismissal order, the court must adopt an overall contextual approach in which it weighs all relevant considerations to determine the result that is just in the circumstances. The court must step back and answer the ultimate question of what order would do justice in all of the circumstances.
[34] The plaintiffs have failed to meet three of the four Reid factors. However, the plaintiffs have satisfied the key consideration of prejudice. It is also important, in the circumstances of these motions, to emphasize the court’s finding that the plaintiffs have always intended to pursue these actions and the responsibility for the unexplained delay appears to lie with their counsel at the time. For these reasons, I have concluded that it is just in the circumstances of these actions that the dismissal orders of the registrar dated March 1, 2011 be set aside.
[35] I therefore order as follows:
(a) the orders of the registrar dated March 1, 2011 are hereby set aside;
(b) the plaintiffs shall use best efforts to answer their outstanding undertakings as set out at Tab C of the GES Defendants’ factum by no later than July 10, 2015;
(c) the plaintiffs shall serve a supplementary affidavit of documents in respect of the further production referred to at pages 13 to 15 of the transcript of the cross-examination of George Krieser, also by July 10, 2015;
(d) the parties shall confer and attempt to agree on a timetable to govern the remaining steps in these actions and the GES action;
(e) any agreed upon timetable shall be provided to the court for approval by July 10, 2015;
(f) if the parties are unable to agree on a timetable, they shall provide the court with written submissions by July 10, 2015; and,
(g) if the parties are unable to agree on the issue of costs, they shall make brief written submissions by no later than July 10, 2015.
Master R.A. Muir
DATE: June 3, 2015