ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-12-464017
DATE: 20150724
BETWEEN:
COBALT CAPTIAL CA TEXTILE INVESTMENTS, L.P.
Plaintiff
– and –
SPIROS PANTZIRIS and JULIE PANTZIRIS also known as JULIE TAYLOR also known as JULIE TAYLOR PANTZIRIS
Defendants
Sean N. Zeitz, for the Plaintiff
Steve Bellissimo, for the Defendant Julie Pantziris
HEARD: July 17, 2015
M. D. FAIETA, j
REASONS FOR DECISION
INTRODUCTION
[1] On June 26, 2014 the Registrar dismissed this action for delay pursuant to Rule 48.14 of the Rules of Civil Procedure¸ R.R.O. 1990, Reg. 194. On March 11, 2015 the plaintiff Cobalt Capital CA Textile Investments, L.P. obtained an order from Master Short that set aside the Registrar’s dismissal. The defendant Julie Pantziris appeals the Master’s Order and asks that it be set aside on the basis that he erred in finding that there was no prejudice to her in setting aside the dismissal. I have dismissed this appeal for the reasons described below.
BACKGROUND
[2] Cobalt is a judgment creditor of the defendant Spiros Pantziris. Cobalt issued this claim on February 9, 2012. Cobalt alleges that Spiros fraudulently conveyed his interest in a property to his spouse, the defendant Julie Pantziris, with the intent to defeat Cobalt and other creditors. Cobalt seeks to set aside the conveyance. A Certificate of Pending Litigation was obtained and remains registered against the property.
[3] Spiros and Julie filed a Statement of Defence on April 16, 2012.
[4] A judgment debtor examination was held in June 2012. Spiros refused to answer any questions at the examination because a representative of Cobalt was present. As a result of a motion held on February 27, 2013 Spiros was ordered to attend a further judgment debtor examination in May 2013. At the judgment debtor examination held in May 2013, Spiros refused to answer any questions after being served with Cobalt’s application for a bankruptcy order.
[5] Spiros disputed the application for a bankruptcy order. A trial was ordered. However, on October 8, 2013 and with the consent of Spiros, Justice Morawetz issued a Bankruptcy Order against Spiros and appointed Albert Gelman Inc. as Trustee of his Estate.
[6] The affidavit of Mr. O’Brien, counsel for Cobalt, sworn September 15, 2014, states:
While these steps were taking place this action did not proceed because of the likelihood that if there was a bankruptcy the matter might be pursued by the Trustee for the general benefit of creditors and if not the examinations in aid of execution process would provide evidence in regard to the action. There was always an intention to proceed either by Cobalt or to transfer the action to a Trustee should one be appointed.
[7] A Notice of Pending Dismissal was received by counsel for Cobalt in April, 2014. A Notice of Request for a Status Hearing was sent by fax to counsel for Spiros and Julie on April 23, 2014. It indicated that the action cannot be listed for trial because an “Order to continue with Trustee taking over action required” and “[h]ave to determine who will be pursuing action and in what venue.”
[8] In April 2014 a process server attempted to file the Request for Status Hearing with the court but was unable to do so because counsel for Cobalt had failed to file a Notice of Change of Solicitors after it assumed carriage of the file from another law firm. Mr. O’Brien suffered a detached retina and underwent two operations in April 2014. In his absence, his assistant placed the rejected Request for Status Hearing in another file and served a Notice of Change of Solicitors on May 18, 2014.
[9] Mr. O’Brien states that after he suffered a detached retina in April 2014 he was not available for three weeks and then re-commenced work intermittently. He only looked at his file again for the purpose of assigning the action to the Trustee which was accomplished in June 2014.
[10] Mr. O’Brien states that once Spiros was adjudged bankrupt, Cobalt recognized that the action would most likely vest in the Trustee if it wanted to pursue the matter. Accordingly, in February 2014 Cobalt agreed to assign the action to the Trustee to be pursued for the general benefit of all creditors. The formal assignment was made on or about May 30, 2014.
[11] The Registrar’s Order dismissing this action for delay was issued on June 26, 2014. Mr. O’Brien admits that this dismissal occurred as a result of inadvertence.
[12] Mr. O’Brien became aware of the Registrar’s Order on June 27, 2014 when he received an email from counsel for the Trustee who had submitted a requisition to the court to continue the action in the Trustee’s name. On June 27, 2014 counsel for the Trustee advised Mr. O’Brien that “…the action will need to be reinstated promptly with a motion to set aside the administrative dismissal.”
[13] On July 2, 2014 Mr. O’Brien received the Registrar’s Order dismissing this action.
[14] On July 22, 2014 the Trustee issued a fresh Statement of Claim (CV-14-10638-00CL) seeking various relief, including the fraudulent conveyance relief sought in this action and a consolidation of the two actions.
[15] A Notice of Motion to set aside the Registrar’s Order pursuant to Rule 37.14 of the Rules of Civil Procedure, dated July 29, 2014, was served.
[16] The motion was to be heard on December 1, 2014. However, the motion was adjourned at the court’s request due to concern regarding the time booked for the motion. The motion was heard on March 11, 2015.
[17] Master Short set aside the Registrar’s Dismissal Order on March 11, 2015 for the following reasons:
Here in February of 2012 a CPL was obtained with respect to a matrimonial home transferred by a husband to his wife. A Judgment resulting from an Arbitration was obtained against the Husband for an amount in excess of $3 million plus costs. The Plaintiff seeks to recover part of its award from the Home.
Judgment Debtor examinations were sought in 2013. In May of 2013 the husband refused to answer questions on JD exam when served with Plaintiff’s Application for bankruptcy Order against him.
The application was disputed under October 8, 2013 when Mr. Pantziris consent to Order and adjudge Bankruptcy.
In my view by virtue of section 69 of the BIA this action was stayed as against the husband on October 8, 2013. He remains undischarged.
The action was therefore stayed as against him and could not be effectively dismissed under Rule 48.
I am satisfied plaintiff’s counsel through a series of inadvertent events failed to properly file notice of their request for a Status Hearing in Time. They moved promptly when they learned of dismissal.
Trustee, also brought action in Bankruptcy action on Commercial List for Order setting aside Deemed Preference.
That action continues for similar relief but, includes not only wife but other defendants.
Some issues alive in both matters. I see no prejudice to wife in setting aside dismissal.
If parties cannot agree on timetable, I will commence case conference with Trustee and counsel for joint timetable and will grant Order considerably matters or trial together if parties agree.
Matter was not without doubt and indulgence being granted.
No Order as to costs. [emphasis added]
[18] On the hearing of this appeal counsel for Julie pressed the following issues raised in her Notice of Appeal which are closely connected:
(1) The learned Master erred in finding that there is “no prejudice” to Julie in setting aside the dismissal when Cobalt failed to lead and present any evidence of “no prejudice”;
(2) The learned Master erred in law in failing to apply the test, set out by the Ontario Court of Appeal, on the issue of “prejudice.”
ANALYSIS
[19] In H.B. Fuller Co. v. Rogers, 2015 ONCA 173, at para. 19, the Ontario Court of Appeal heard an appeal from a decision made by a judge to set aside a Registrar’s Order dismissing an action for delay as follows and described the standard of review as follows:
The decision of a motions judge made pursuant to rule 37.14 is discretionary and is entitled to deference on appeal…The decision may be set aside if the motion judge proceeded on an erroneous legal principle or made a palpable and overriding error with respect to the facts…Reversing a lower court’s discretionary decision is also appropriate where the lower court gives no or insufficient weight to relevant considerations…
[20] Fuller is the latest guidance from the Ontario Court of Appeal on the test to be applied in hearing a motion of this type. The Court stated, at para. 20-28:
When hearing a motion to set aside a registrar’s order dismissing an action for delay, a judge must consider and weigh the following four well-known factors: the length of the litigation delay and whether the plaintiff has provided an adequate explanation for it; whether the failure to meet the mandated time limits was due to inadvertence; whether the motion to set aside the dismissal order was brought promptly; and whether the delay has prejudiced the defendant…
Requiring a party moving to set aside the order dismissing its action for delay to satisfy each of the four factors is too rigid an approach. That approach … was overruled in Scaini v. Prochnicki, 2007 ONCA 63. … . Instead, the judge must adopt an overall contextual approach and, as well, take factors unique to the case into consideration. The factors are not an end in themselves. Rule 37.14(2) requires that a judge arrive at a just result in the particular circumstances of the case.
Some of the later authorities from this court have applied a two-part test that is conjunctive, requiring a plaintiff to provide an acceptable explanation for the delay and to show that the defendant would suffer no non-compensable prejudice if the action were allowed to proceed…This test emerged in the contest of the similar consideration of whether an action should be dismissed for delay following a status hearing under the old rule 48.14(13).
As Blair J.A. stated on behalf of the court in Kara, at para. 13:
[L]ittle is to be gained by debating whether there is a bright line between the “contextual approach” [enunciated in Scaini] and the approach enunciated in later authorities such as Fairs and 1196158 Ontario Inc. v. 6274013 Canada Ltd.
Neither the four-factor approach nor the two-part test provides an exhaustive list of considerations. Regardless of which is followed, all of the circumstances of the case must be considered in order to arrive at a just result … Furthermore, it is not only the plaintiff’s conduct that must be considered. While the plaintiff bears primary responsibility for the conduct of the action, the defendant’s conduct in the litigation is a relevant circumstance …
The factors that guide the court’s choice between ending the plaintiff’s action before trial and forcing the opposite party to defend the case despite the delay require a judge to resolve the tension between two underlying policies. The first is that civil actions should be decided on their merits. The second is that civil actions should be resolved in a timely and efficient manner in order to maintain public confidence in the administration of justice …
When reviewing a registrar’s dismissal for delay under the former rule 48.14, the weight of authority from this court has leaned towards the first policy consideration. …
The court’s preference for deciding matters on their merits is all the more pronounced where delay results from an error committed by counsel. … In Marche, Sharpe J.A. stated, at para. 28, “The law will not ordinarily allow an innocent client to suffer the irrevocable loss of the right to proceed by reason of the inadvertence of his or her solicitor”.
In determining whether to reinstate an action that has been dismissed for delay, keeping in mind the above observations, the court must consider the rights of all litigants. This necessarily requires consideration not only of the plaintiff’s right to have its action decided on its merits, but also consideration of whether the defendant has suffered non-compensable prejudice as a result of the delay, whether or not a fair trial is still possible, and even if it is, whether it is just that the principle of finality and the defendant’s reliance on the security of its position should nonetheless prevail… [emphasis added]
ISSUE #1: Did the learned Master err in law in failing to apply the test, set out by the Ontario Court of Appeal, on the issue of “prejudice”?
[21] The Master stated: “I see no prejudice to [the] wife in setting aside dismissal.”
[22] The only affirmative evidence before Master Short regarding prejudice was the following statement found in the Mr. O’Brien’s affidavit:
I therefore believe that the Trustee in Bankruptcy and his counsel are going to enter into a reasonable time table to move the action forward and that there has been no prejudice as a result of the delay… [emphasis added]
[23] The Appellant submits that the Master erred in finding that there was no prejudice to her if the action was to be reinstated. The Appellant submits that the Court of Appeal places the burden on the plaintiff to establish no prejudice and that the bald assertion of no prejudice provided by affidavit evidence is an insufficient basis to do so.
[24] The Appellant relies upon Faris v. Eftimovski, 2013 ONCA 360, 363 D.L.R. (4th) 111, at para. 32:
The plain wording of rule 48.14(13) makes clear that the onus is on the plaintiff to demonstrate why the action should not be dismissed for delay. The test, as stated by the status hearing judge in the case at bar, requires the plaintiff to demonstrate that there was an acceptable explanation for the delay and establish that, if the action were allowed to proceed, the defendant would suffer no non-compensable prejudice … [emphasis added]
[25] The Appellant also relies upon Nissar v. Toronto Transit Commission, 2013 ONCA 361, 115 O.R. (3d) 713, at paras. 30-31:
In my view, it is preferable to place the onus on a plaintiff to explain the delay and satisfy the court that it would not be unfairly prejudicial for the defendant to have the action restored to the trial list. …
Therefore, the applicable test is conjunctive: a plaintiff bears the burden of demonstrating that there is an acceptable explanation for the delay in the litigation and that, if the action was allowed to proceed, the defendant would suffer no non-compensable prejudice. [emphasis added]
[26] Neither Faris nor Nissar address the extent of affirmative evidence that must be adduced by the plaintiff. In my view, it is open to the plaintiff to baldly assert that there would be no prejudice to the defendant if the action were to proceed. In face of that position, it is open to defendant to counter such evidence. The defendant is best suited to identify and explain how her ability to defend the action has been prejudiced. Nevertheless, the burden rests on the plaintiff to demonstrate no prejudice. However, if the defendant chooses to file no evidence in face of an affidavit from the plaintiff which states that the defendant will not be prejudiced by the reinstatement of the action, then the defendant should not complain that the Master did not have a sufficient evidentiary basis to find that there was no prejudice to the defendant in the reinstatement of the action.
[27] In any event, in MDM Plastics Ltd. v. Vincor International Inc., 2015 ONCA 28, the Ontario Court of Appeal has taken a more flexible approach on the need for affirmative evidence to show that no prejudice will result from setting aside a dismissal. In MDM the Court stated that the plaintiff is not required to adduce affirmative evidence that the reinstatement of an action will not result in prejudice. Instead, the Court must consider all the circumstances in evaluating prejudice. The Court stated, at para. 32:
I do not read Wellwood as standing for the general proposition that the plaintiff must lead affirmative evidence to rebut a presumption of prejudice that arises from the passage of time in prosecuting an action or from the expiry of a limitation period. Rather, in evaluating the strength of the presumption of prejudice, the master or motion judge must consider all of the circumstances, including the defendant’s conduct in the litigation.
[28] For all of the above reasons, it is my view that the Master did not commit an error of law. It appears that, in accordance with Fuller, the Master took into account a variety of considerations, including the inadvertence of counsel that led to the administrative dismissal and the broader context of this action in arriving at a just result.
ISSUE #2: Did the Master commit a “palpable and overriding error” in finding that there was no prejudice to Julie in setting aside the dismissal?
[29] In light of the reasons given above, it is my view that the Master did not make a “palpable and overriding error” in finding that there was no prejudice to Julie in setting aside the dismissal as the only evidence before the Master was that there would be no prejudice to her in setting aside the dismissal.
CONCLUSION
[30] The appeal is dismissed.
[31] Cobalt seeks its costs of this appeal. I award costs in the amount of $7,000, inclusive of HST, to Cobalt. Having considered the submissions of counsel and their outlines of costs which claimed costs of about $7,000 for the Appellant and about $11,000 for Cobalt, it is my view that an award of costs in the amount of $7,000, inclusive of HST, is fair and reasonable to the Appellant.
Mr. Justice M. D. Faieta
Released: July 24, 2015
COURT FILE NO.: CV-12-464017
DATE: 20150724
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
COBALT CAPTIAL CA TEXTILE INVESTMENTS, L.P.
Plaintiff
– and –
SPIROS PANTZIRIS and JULIE PANTZIRIS also known as JULIE TAYLOR also known as JULIE TAYLOR PANTZIRIS
Defendants
REASONS FOR DECISION
Mr. Justice M. D. Faieta
Released: July 24, 2015