COURT FILE NO.: 03-CV-243823
DATE: 2015/06/30
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Robert Poshnjari and 1505287 Ontario Limited v. Timothy’s Coffees of the World Inc.
BEFORE: MASTER GRAHAM
HEARD: March 30, 2015
COUNSEL: Patrick DiMonte for the plaintiffs
Matthew Lerner and Danielle Glatt for the defendant
REASONS FOR DECISION
(Defendant’s motion to dismiss for delay and plaintiffs’ motion to restore the action to the trial list)
[1] The plaintiffs’ action, which was commenced by a statement of claim issued on February 12, 2003, is for damages arising from a franchise agreement dated October 26, 2001 for a Timothy’s World Coffees (“Timothy’s”) franchise located at 150 York Street in Toronto. The action of the plaintiff 1505287 Ontario Limited was stayed by Master Birnbaum on August 4, 2009 because the corporation had been dissolved. The action was set down for trial when the plaintiff’s former lawyer delivered the trial record on January 12, 2007 and it was struck from the trial list on July 5, 2010. Further details of the steps taken in the action are set out below.
[2] The action now comes before the court because the defendant has moved to dismiss the action for delay. The plaintiff served a motion to restore the action to the trial list on March 18, 2015, more than three months after the service of the defendant’s motion record on December 3, 2014. Based on the sequence in which the motions were brought, I will first rule on the defendant’s motion to dismiss the action for delay and then, if necessary, will rule on the plaintiff’s motion to restore the action to the trial list.
Law re: dismissal for delay
[3] The defendant’s motion is brought under rule 24.01(1)(e):
24.01(1) A defendant who is not in default under these rules or an order of the court may move to have an action dismissed for delay where the plaintiff has failed,
(e) to move for leave to restore to a trial list an action that has been struck off the trial list, within thirty days after the action was struck off.
[4] This action falls within rule 24.01(1)(e) because it was struck from the trial list on July 5, 2010 and it was not until March 18, 2015, more than four and half years later, that the plaintiff Poshnjari moved to restore the action.
[5] The test on a motion to dismiss for delay was set out by Master Dash in Woodheath Developments v. Goldman, 2001 28019 (ON SC), [2001] O.J. No. 4018 and approved on appeal by Then J. sitting as a judge of the Divisional Court at 2003 46735 (ON SCDC), [2003] O.J. No. 3440 at paragraph 4:
4 Specifically, I accept as correct the principles applicable to motions to dismiss for delay derived by the learned master from the case law and accurately summarized in the headnote at 56 O.R. (3d) p. 658 as follows:
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 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.
[6] In Turczinski v. Fernandes, [2013] O.J. No. 4791, the Court of Appeal stated the test as follows (at paragraph 3):
3 . . . Although the motion judge did not expressly set out the test on a rule 24 motion for dismissal for delay, his reasons addressed the two essential elements of the test: whether the plaintiff had adequately explained the delay, and whether the plaintiff had shown an absence of non-compensable prejudice arising from the delay. [emphasis added]
[7] More recently, in Wallace v. Crate’s Marine Sales Ltd., 2014 ONCA 671, [2014] O.J. No. 4606, the Court of Appeal cited Woodheath, supra with approval and acknowledged that the motion judge properly instructed himself on the test for dismissing an action under rule 24 (at paragraphs 5 and 6):
6 The motion judge . . . instructed himself that, under Rule 24, he had to be satisfied that the delay gave rise to “a substantial risk that a fair trial of the issues would not be possible at the earliest date a trial could be held in this matter” (para.81). The motion judge also noted the expiry of the applicable limitation period and the presumption of prejudice that arises in circumstances of inordinate delay.
The issues on the motion to dismiss for delay
[8] Based on these cases, the issue to be addressed on this motion is whether the plaintiff is responsible for a period of inordinate and unexplained delay that gives rise to a substantial risk that a fair trial will no longer be possible. The resolution of this issue requires the court to address two questions:
Is the plaintiff responsible for a period or periods of inordinate and unexplained delay?
Is there prejudice arising during the period of delay that gives rise to a substantial risk that a fair trial will no longer be possible?
Is the plaintiff responsible for a period or periods of inordinate and unexplained delay?
[9] The court’s consideration of both the defendant’s and the plaintiff’s motions requires a review of the chronology of the action to determine whether any periods of delay are both inordinate and unexplained. The chronology of the action between the issuing of the statement of claim and the setting down of the action on January 12, 2007 is as follows:
February 12, 2003: Statement of claim issued.
March 10, 2003: Statement of defence and counterclaim served.
November 3, 2003: Master Birnbaum ordered a timetable for examinations for discovery, answers to undertakings and discovery motions and requiring the parties to attend Trial Scheduling Court on June 9, 2004 to set the matter down for trial.
March 4 and 5, 2004: Examinations for discovery of the plaintiff Poshnarji and the defendant’s representative were held.
July 8, 2004: The plaintiffs answered the majority of their undertakings.
September 17. 2004: The plaintiffs answered the balance of their undertakings.
May, 2005: The plaintiffs changed counsel from Mr. McFarlane to Michael Webster.
January 12, 2007: Mr. Webster, on behalf of the plaintiffs, served and filed the trial record.
[10] The period between the plaintiffs answering their outstanding undertakings on September 17, 2004 and setting down the action on January 12, 2007 is two years and approximately three months. Although the court can fairly assume that the change of counsel would result in some delay while new counsel Mr. Webster acquainted himself with the file, any such delay should not reasonably exceed three or four months, particularly in the absence of any communication from Mr. Webster explaining why more time might have been required. Although there is a period of two years of unexplained delay between the plaintiffs answering their undertakings and setting the action down for trial, the fact is that this delay occurred on Mr. Webster’s watch, and consistent with my comments with respect to the next period of delay, it appears to have resulted from Mr. Webster’s neglect of the file and not as a result of any conduct of the plaintiff himself.
[11] The chronology of the action between the setting down of the action on January 12, 2007 and the striking of the action from the trial list on July 5, 2010 is as follows:
January 12, 2007: Defendant’s counsel delivered a settlement offer.
July 6, 2007: Mr. Webster confirmed receipt of defendant’s counsel’s letter from six months previously.
October 17, 2007: Defendant’s counsel asked plaintiffs’ counsel to schedule a pre-trial. Plaintiff’s counsel’s response, while prompt, consisted only of statements that he would like to discuss where the matter was on the trial list and a suggestion that they would have to set up a comprehensive trial schedule.
October 24, 2007: Defendant’s counsel suggested in writing that Mr. Webster deliver a draft trial scheduling form, and received no response.
January 29, 2008: Defendant’s counsel followed up with respect to his previous letter.
February 11, 2008: Mr. Webster responded that “a pre-trial would be useful” but still took no action to schedule a pre-trial.
February 14, 2008: Defendant’s counsel followed up to request that Mr. Webster schedule a pre-trial. Mr. Webster did not reply.
November 11, 2008: Defendant’s counsel again followed up to request that Mr. Webster schedule a pre-trial. Mr. Webster did not reply.
January 23, 2009: Defendant’s counsel asked Mr. Webster to advise whether the plaintiff Poshnarji was ordinarily resident in Canada for the purpose of determining whether to bring a security for costs motion.
February 4, 2009: Defendant’s counsel wrote to Mr. Webster advising him that the defendant had scheduled a security for costs motion returnable April 7, 2009.
February 10 and March 17, 2009: Defendant’s counsel followed up with respect to the proposed security for costs motion.
April 1, 2009: Mr. Webster contacted defendant’s counsel to request an adjournment of the motion. This was the first contact from Mr. Webster since his non-responsive reply of February 11, 2008, more than 13 months previously, that “a pre-trial would be useful”.
April 7, 2009: Defendant’s counsel obtained a consent adjournment of the security for costs motion to May 29, 2009. Prior to the return date, plaintiffs’ counsel delayed in delivering a complete version of Mr. Poshnarji’s affidavit and Mr. Poshnarji failed to attend his cross-examination on May 26, 2009.
May 29, 2009: At Mr. Webster’s request, the security for costs motion was adjourned with costs of $1,500.00 ordered paid to the defendant.
July 30, 2009: Mr. Webster provided evidence that Mr. Poshnarji was ordinarily resident in Canada and the defendant withdrew the security for costs motion.
August 4, 2009: Master Birnbaum stayed the action of the corporate plaintiff and ordered that the plaintiffs provide an updated witness list and contact the trial office to determine whether the action was still on the trial list by August 14, 2009.
August 14, 2009: Defendant’s counsel informed Mr. Webster in writing that he expected an updated witness list and an update on the status of the action. Mr. Webster never replied.
July 5, 2010: The action was struck from the trial list.
[12] Between when he set the action down and when it was struck from the trial list, plaintiff’s counsel did nothing to advance the action. It took six months for Mr. Webster to reply to defendant’s counsel’s letter of January 12, 2007. The balance of the correspondence consisted of defendant’s counsel trying to prompt plaintiff’s counsel to move the action forward and the plaintiff’s counsel either not responding at all or giving unresponsive replies like “a pre-trial would be useful”. There was no contact whatsoever from plaintiff’s counsel between February 11, 2008 and April 1, 2009, a period of more than 13 months. The delay in the hearing of the security for costs motion resulted from adjournments requested by the plaintiff, the plaintiff’s failure to attend his scheduled cross-examination and the plaintiff’s delay in providing evidence that Mr. Poshnarji was ordinarily resident in Canada. There was then no communication from plaintiff’s counsel between the attendance before Master Birnbaum on August 4, 2009 and the striking of the action from the trial list on July 5, 2010.
[13] The plaintiff Poshnarji does not dispute the chronology set out above. Although Mr. Poshnarji deposes in his affidavit of February 13, 2013 that he was not aware of the security for costs motion, this evidence cannot be completely accurate because at some point after the motion was brought, Mr. Poshnarji swore an affidavit in response to it.
[14] Mr. Poshnarji also deposes that he was not certain what transpired from August 14, 2009 until the middle of 2011 except that he became concerned that he had not heard from Mr. Webster for some time. He made repeated telephone calls to him all of which were unreturned and finally Mr. Webster called back and said that he could no longer handle the case because of personal issues and that Mr. Poshnarji should look for another lawyer. At that point, Mr. Poshnarji contacted Mr. DiMonte.
[15] On the basis of all of this evidence, there is a period of inordinate delay of 3.5 years between the plaintiff setting the action down on January 12, 2007 and the striking of the action from the trial list on July 5, 2010. However, for some part of this period, Mr. Poshnarji was attempting to determine the status of the action from Mr. Webster. He also deposes that he paid Mr. Webster a total retainer of $20,000.00.
[16] Mr. Poshnarji should reasonably have been able to assume that his lawyer Mr. Webster was attending to his interests, particularly having given him a $20,000.00 retainer. As indicated, I am concerned that Mr. Poshnarji has deposed that he was not aware of the security for costs motion where he must have learned of it when he swore his responding affidavit, but that motion was withdrawn as of August 4, 2009 and Mr. Webster continued to do nothing. Mr. Webster’s almost complete neglect of the action was the cause of this period of delay from January 12, 2007 to July 5, 2010.
[17] The chronology of the action between the striking of the action from the trial list on July 5, 2010 and the plaintiff’s motion to restore the action served on March 18, 2015 is as follows:
January 16, 2012: Mr. Poshnarji contacted his current counsel Mr. DiMonte.
February 6, 2012: Mr. DiMonte informed defendant’s counsel that he had been retained by the plaintiffs.
February 13, 2012: Defendant’s counsel informed Mr. DiMonte that the action had been dismissed for delay pursuant to rule 48.15(6)2, the plaintiff had done nothing since the trial record was served on January 12, 2007 and the defendant was still owed $1,500.00 for costs with respect to the security for costs motion. (Defendant’s counsel acknowledged on the motion that he was mistaken in stating that the action had been dismissed.)
March 5, 2012: Mr. DiMonte advised that he would request that Mr. Webster report the matter to LawPro, expressed the view that the file was repairable and sought defendant’s counsel’s consent to an order setting aside the dismissal of the action.
March 14, 2012: Defendant’s counsel responded, alleging prejudice to the defendant arising from the delay in the matter, and stating that his client “will not consent to set aside the dismissal”.
April 9, 2012: Mr. DiMonte wrote to Mr. Webster asking him to report the matter to LawPro.
August 3, 2012: Mr. DiMonte wrote to Law Pro informing it that “Apparently, my client through Mr. Webster served a Trial Record on January 15, 2007 and no steps were taken since that time, almost 5 years ago.” (It had actually been five years and six months.) Mr. DiMonte also stated that he had asked Mr. Webster to report the matter to LawPro but was not sure whether he had done so.
August 15, 2012: LawPro responded that “we are unable to accept this matter, as it is the responsibility of the lawyer involved to report any claim or potential claim to LawPro”, and advised that it had invited a report from Mr. Webster.
August 17, 2012: It was reported in the Ontario Reports that Mr. Webster was suspended by the Law Society.
October 19, 2012: LawPro informed Mr. DiMonte in correspondence that Mr. Webster had not reported the claim, and that, without prejudice, LawPro would investigate the claim. Law Pro also requested documents relating to the dismissal of the action and information as to any efforts being made to set aside the dismissal.
October 24, 2012: Mr. DiMonte informed LawPro that he would “put together the package of information that you need”, and that he had instructions to set aside the dismissal. Mr. DiMonte made the entire file available to LawPro; the material was picked up on October 26, 2012 and returned on October 30, 2012.
November 19, 2012 to December 7, 2012: Mr. DiMonte was involved in trials in Newmarket.
June 27, 2013: LawPro advised that it would not be bringing the motion to restore the action to the trial list.
August 16, 2013: The plaintiff had picked this date for the motion. Despite LawPro’s statement on June 27, 2013 that it would not be bringing the motion to restore the action to the trial list, LawPro booked a motion returnable November 7, 2013, on which Mr. DiMonte was not able to attend owing to prior court commitments.
November 26, 2013: According to Mr. Poshnarji’s affidavit sworn November 26, 2013, the plaintiff scheduled the motion to be heard by me on March 4, 2014.
January 16, 2014: Mr. DiMonte sent his first communication to defendant’s counsel since March 5, 2012, one year and 10 months previously, stating that “it does not appear from a review of the court record that a formal dismissal order has been made” and asking whether he had any notice of dismissal. Mr. DiMonte acknowledged at this time that absent the defendant’s consent, he needed to bring a motion to restore the action and stated that he had tentatively booked March 4, 2014 for such a motion.
January 16, 2014: The plaintiff issued a statement of claim against Mr. Webster.
February 5, 2014: Defendant’s counsel responded that he had not said that a formal dismissal order had been made but rather that the action was deemed to have been dismissed as abandoned. He also confirmed his instructions to oppose the reinstatement of the action, stated that he was not available to argue the motion on March 4, 2014 and proposed other dates in March.
February 27, 2014: Mr. DiMonte stated that he would cancel the March 4, 2014 motion date and that because the action was case managed it was not subject to the rule under which defendant’s counsel had said that the action was deemed to be dismissed. He also advised that the plaintiff had commenced an action against Mr. Webster.
March 18, 2014: Mr. DiMonte forwarded a cheque for $1,500.00 in satisfaction of the costs awarded by Master Birnbaum on May 29, 2009.
July 22, 2014: Defendant’s counsel wrote to Mr. DiMonte stating that he had heard nothing further with respect to the scheduling of the motion to reinstate the action and advising that if the plaintiff did not bring his proposed motion, he would move to dismiss the action for delay.
August 19, 2014: Mr. DiMonte provided available dates for a motion before me, and provided a notice of motion with a return date of December 10, 2014.
October 8, 2014: Defendant’s counsel wrote, referring to a letter of October 7, 2014 which is not in the material, to advise of his availability for a motion on dates in early January, 2015.
December 2, 2014: Defendant’s counsel stated that, having received no response to his October 8, 2014 letter, he learned that Mr. DiMonte had failed to book the plaintiff’s proposed motion and that the defendant would bring a motion to dismiss the action for delay on either March 6 or March 30, 2015.
December 3, 2014: The defendant served its motion record for the motion to dismiss the action for delay returnable March 30, 2015.
March 18, 2015: The plaintiff served its motion record for his motion to restore the action to the trial list.
[18] As with the delay prior to the striking of the action from the list on July 5, 2010, some of this subsequent period of delay can be explained by Mr. Webster’s neglect of the file. Mr. Poshnarji has deposed in his affidavit that he repeatedly told Mr. Webster that he wanted the matter resolved and the response he received was that “it would take time”. I accept that the delay prior to Mr. DiMonte’s retainer on January 16, 2012 is attributable to Mr. Webster’s abandonment of his responsibilities. However, the delay subsequent to the end of Mr. Webster’s involvement requires further explanation.
[19] Mr. Poshnarji’s evidence is that on about January 16, 2012, he contacted Mr. DiMonte whose first correspondence to Mr. Webster prompted an email reply to the effect that he had to “get the materials out of storage”. Mr. Webster did provide Mr. Poshnarji with a box of material, which Mr. Poshnarji provided to Mr. DiMonte. After being retained in January, 2012, Mr. DiMonte sought the defendant’s consent to an order setting aside the dismissal of the action, which the defendant refused in its counsel’s letter of March 14, 2012.
[20] Although a period of one year and 10 months elapsed between defendant’s counsel’s letter of March 14, 2012 and Mr. DiMonte’s letter of January 16, 2014, Mr. DiMonte did take some steps in the intervening period.
[21] First, on April 9, 2012, Mr. DiMonte attempted to communicate with Mr. Webster to ask him to report the matter to LawPro which Mr. Webster failed to do. Mr. DiMonte then allowed slightly less than four months to pass until August 3, 2012 when he communicated with LawPro himself. LawPro responded shortly thereafter and informed counsel that it was unable to accept the matter. Then, on October 19, 2012, LawPro stated that it would investigate the matter on a without prejudice basis and apparently received the file in late October of that year. It was not until June 27, 2013 that LawPro informed Mr. DiMonte that they would not be moving to restore the action to the trial list.
[22] For the period until June 27, 2013 when LawPro advised that it would not be bringing the motion to restore the action, Mr. DiMonte was justified in allowing LawPro to complete its investigation for the purpose of determining whether it would attempt the repair required as a result of Mr. Webster’s neglect of the file. The first part of the delay of four months between April 9, 2012 when Mr. DiMonte asked Mr. Webster to report the matter to LawPro and when he communicated directly with LawPro on August 3, 2012 is explained by the fact that he was awaiting a reply from Mr. Webster and the additional delay of at most three months is relatively negligible.
[23] Subsequent to June 27, 2013, Mr. DiMonte purported to arrange various dates for a motion to reinstate the action. Although the earliest affidavit from the plaintiff was sworn February 13, 2013, and the plaintiff’s evidence is that August 16, 2013 had been selected as a motion date, no notice of motion was ever served. According to the court records, motions dates were booked by a LawPro counsel for November 7, 2013 and by Mr. DiMonte for March 4, 2014, but the first date was withdrawn because the motion was not confirmed and the second was vacated because no notice of motion was filed within ten days of booking the date. The plaintiff did not actually serve and file a notice of motion until he served his “responding motion record” on March 18, 2015.
[24] Once LawPro told Mr. DiMonte that it would not be bringing the required motion, it was incumbent on him to move expeditiously to schedule the motion himself. This would have required a call to the motions office to determine the court’s availability, a call to opposing counsel to find a mutually convenient date and the serving and filing of a notice of motion. This could and should have been done within weeks of receiving LawPro’s correspondence of June 27, 2013 stating that they would not be bringing the motion. Mr. DiMonte failed to do so until more than three months after the defendant served its motion record for the motion to dismiss for delay on December 3, 2014.
[25] I conclude that there is a period of unjustified delay of one year and nine months between LawPro’s June 27, 2013 correspondence and the service of the plaintiff’s motion record on March 18, 2015. This delay appears to be a consequence of Mr. DiMonte’s failure to move more promptly to restore the action to the trial list rather than deliberate action or neglect on the part of the plaintiff himself.
[26] Plaintiff’s counsel on this motion submits that he was misled by the statement by defendant’s counsel that the action had been dismissed for delay. Defendant’s counsel acknowledges his error in this regard. However, regardless of whether the action had been dismissed for delay or struck from the list, once Mr. DiMonte assumed carriage of the matter, he should have ascertained the status of the action and, if necessary, moved to reinstate it. The fact that the required motion was to restore the action to the trial list rather than to set aside an administrative dismissal is irrelevant.
[27] To summarize, although no specific explanation is offered for the delay in the matter during the two years immediately before the action was set down for trial on January 12, 2007, the fact that Mr. Webster was counsel of record during that period, combined with his clear neglect of the file subsequent to the setting down of the action, raises a strong inference that he, rather than the plaintiff himself, was responsible for the earlier delay.
[28] As indicated above, the delay of slightly less than four months between Mr. DiMonte’s request to Mr. Webster of April 9, 2012 that he refer the matter to LawPro and his own letter of August 3, 2012 to LawPro is mitigated by the fact that during the first month of this period, Mr. DiMonte could reasonably be said to have been awaiting a reply from Mr. Webster. The remaining three month period is attributable to Mr. DiMonte but is not a significant delay.
[29] Finally, the delay of one year and nine months between when LawPro informed Mr. DiMonte on June 27, 2013 that they would not be moving to restore the action and the service of the plaintiff’s motion record on March 18, 2015 is attributable to Mr. DiMonte’s failure to bring the motion sooner and not to the plaintiff himself. It certainly appears that Mr. DiMonte was aware that a motion would be necessary because the first affidavit of the plaintiff on this motion was sworn February 13, 2013.
[30] Although the plaintiff himself does not appear to have been responsible for the delay that led to the striking of the action from the trial list, it is still necessary to determine whether the delay has resulted in any prejudice to the defendants such that a fair trial is no longer possible.
Is there prejudice arising during the period of delay that gives rise to a substantial risk that a fair trial will no longer be possible?
[31] The issue of whether there is a substantial risk that a fair trial will no longer be possible requires the court to address whether the delay has resulted in any non-compensable prejudice to the defendant. As stated in Woodheath Developments, supra, inordinate delay gives rise to a presumption of prejudice which the plaintiff may rebut with evidence that documentary evidence has been preserved and that all necessary witnesses are available and their memories of events intact. I would add, however, that given that the defendant will be in the best position to know what evidence it will require to defend the action, a defendant who asserts that delay has made a fair trial impossible must lead evidence of the alleged prejudice. Further, any relevant prejudice must result from the delay; prejudice that occurs irrespective of the delay is not fatal to the action.
[32] The defendant submits that it has undergone several restructuring transactions and ownership changes. The most recent such transaction was in 2009 when Green Mountain Coffee Roasters Inc. acquired Timothy’s wholesale business. Also in 2009, Bruegger’s Enterprises Inc. purchased Timothy’s retail business and assigned all leases to a wholly owned subsidiary called ThreeCaf Brands Canada Inc.. The defendant’s evidence is that relevant human resources documents, including documents that contained the contact information of the individuals employed by Timothy’s in 2001-2009, were transferred to Green Mountain when it purchased the wholesale business, and are no longer available.
[33] As a result of the various changes in ownership since 2007, none of the Timothy’s employees who were involved in negotiating the franchise agreement that is the subject of the action remain employed with Timothy’s. Specifically, Rebecca McKinnon, who was the president of Timothy’s during the relevant time, and who signed the franchise documents, left in or around 2008. David Black, the vice president, real estate and franchise development, who played the largest role in the events involving the plaintiffs and Timothy’s, and who was the defendant’s representative at examinations for discovery, left the company in 2009.
[34] In addition, Michelle Weir, the director of franchise development, who corresponded with Mr. Poshnarji and his counsel prior to execution of the franchise agreement, left Timothy’s in 2002. Margaret Zellarmayer, Mr. Poshnarji’s district manager at the time he was a franchisee and who addressed his complaints with respect to the traffic in the lobby of the building, Joanne Floropoulos, Timothy’s franchise development manager who provided Mr. Poshnarji with information regarding Timothy’s disclosure obligations and Dawn Ahle, franchise administrator who corresponded with Mr. Poshnarji with respect to Timothy’s pre-opening protocols, left Timothy’s in or around 2004.
[35] Finally, Timothy’s unchallenged evidence is that there are no other employees currently employed by Timothy’s with knowledge of the dispute with the plaintiffs.
[36] Timothy’s submits that the viva voce evidence of their employees who dealt directly with the plaintiff at the time that the franchise agreement was entered into is particularly important given Mr. Poshnarji’s allegations in paragraph 7 of the statement of claim of various representations made to him during discussions with respect to his entering into the franchise for the 150 York Street location and the allegation in paragraph 10 that he relied on and was induced by those representations in agreeing to enter into the franchise agreement.
[37] With respect to the issue of prejudice, Mr. Poshnarji deposes that he is not aware of the defendant altering its corporate structure to the point where it has lost carriage of its affairs; i.e. it is still a viable corporation. The documentation in the action was preserved in the affidavits of documents that were prepared “very early on”. Discovery transcripts were ordered and are available. He is not aware that any witness has died and in any event, very little will turn on the opinion or recollection of witnesses. He states that he cannot identify any actual prejudice. Similarly, his counsel submits that the case does not turn on the memories of witnesses because “the documentation and facts are papered”.
[38] Even accepting the plaintiff’s submission that the documentary record is complete, I accept based on the plaintiff’s allegations in paragraphs 7 and 10 of the statement of claim that the defendants will require viva voce evidence to defend the action. The defendant submits that the departure of various of its employees during the course of the action creates prejudice with respect to its ability to defend against those allegations.
[39] The lengthy period of delay in this action did not start until late 2004, after the plaintiff answered the balance of his undertakings. Accordingly, the departure of some of the defendant’s employees in 2002 and 2004, while possibly prejudicial to its ability to defend the claims, occurred sufficiently early in the action that any prejudice arising from the fact that those employees are no longer available cannot be attributable to the delay and therefore cannot be fatal to the action continuing.
[40] The departure from Timothy’s of Ms. McKinnon in 2008 and Mr. Black in 2009 must be seen in a different light. The defendant’s unchallenged evidence is that Ms. McKinnon was the president of Timothy’s during the relevant time and signed the franchise documents with the plaintiff and that Mr. Black, one of the vice presidents, played the largest role in the events involving the plaintiff and Timothy’s.
[41] Once again, these former employees’ viva voce evidence is necessary for the defendant to respond to the allegations in paragraphs 7 and 10 of the statement of claim. The fact that the plaintiff chose to examine Mr. Black for discovery supports the defendant’s submission that he would be an important witness at trial. Both individuals left Timothy’s at least four years after the start of the significant period of delay that began in September, 2004 and accordingly, the fact that they are no longer available for trial does result from the delay in the action. The fact that these two witnesses are no longer available therefore does constitute prejudice arising from the delay such that there is a substantial risk that a fair trial is no longer possible.
[42] As indicated above, I accept that the delay in the action from September, 2004 until January, 2012, the period during which the prejudice arose, is a consequence of the neglect of the file by the plaintiff’s previous lawyer Mr. Webster and not the fault of the plaintiff himself. Generally, the courts should be reluctant to impose the consequences of a lawyer’s neglect of a file on the client. However, the delay giving rise to the prejudice in this case is also not the fault of the defendant. It would be unjust to force a defendant to continue to defend a 12 year old action where its ability to do so has been prejudiced by delay for which it is not responsible. For these reasons, the action is hereby dismissed.
[43] As the defendant’s motion has resulted in the dismissal of the action for delay, there is no need to consider the plaintiff’s motion to restore the action to the trial list.
Costs
[44] At the conclusion of the hearing, both counsel filed costs outlines but they should be given the opportunity to make full submissions now that they know the outcome of the motion. If they cannot agree to the costs of the motion and the action, they shall make written submissions, not exceeding four pages in addition to the costs outlines, the defendant within 30 days and the plaintiff within 30 days following receipt of the defendant’s submission.
MASTER GRAHAM
June 30, 2015