Gil v. Shapiro et al., 2015 ONSC 6584

COURT FILE NO.: 11-CV-423821

Heard: September 3, 2015

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Gil v. Shapiro et al.

BEFORE: Master Joan Haberman

COUNSEL: Di Monte, P. for the moving party Donavan, C. for the responding party

ENDORSEMENT

1Master Haberman: On July 23, 2013, Gil set this matter down for trial. As the requisite certification form was never filed with the court, the action was struck off the trial list on September 26, 2014 pursuant to the Practice Direction. Gil now moves to have the matter restored to the list. While the defendant, Jafari, does not oppose the motion, the remaining two defendants oppose the relief sought.

THE CONTEXT

2This motion arises in the context of the following facts:

• Gil and Jafari were joint venture partners with respect to the purchase property located in Toronto. Though both were beneficial partners, only Gil’s name appeared on title;
• On January 13, 2011, Gil retained Shapiro, a solicitor, to assist with the sale of the property;
• On January 18, 2011, after the property sold, Shapiro was put on notice that there was a dispute between the beneficial owners with respect to the distribution of the proceeds of sale;
• In view of the dispute, Shapiro placed these funds, a total of $261,075.18, into his trust account;
• Instead of initiating interpleading proceedings, Gil issued a statement of claim against the Shapiro defendants, only, in April 2011;
• The Shapiro defendants delivered a motion for interpleader within the action, which was heard on July 18, 2011;
• The master ordered that the proceeds be paid into court, less Shapiro’s costs of $8269.60, declaring that this extinguished the Shapiro defendants’ liability with respect to this sum. That was all that could be achieved at that time as Gil had not yet named Jafari as a party to this action;
• On August 5, 2011, Gil served a fresh as amended statement of claim, reconstituting his allegations against the Shapiro defendants and adding Jafari as a defendant. Jafari’s defence confirms that there is a dispute between him and Gil regarding the manner in which the funds should be divided as between them;
• In 2011, pleadings closed and the Shapiro affidavit of documents was served. A motion was brought to compel Gil to comply with his disclosure obligations in July 2012;
• Gil was not examined for discovery until March 2013, despite ongoing efforts on the part of Shapiro. By this time, Gil was working with his 4th counsel;
• Mr. Di Monte received the Status Notice on April 29, 2013, though he was not formally on the record until July 23, 2013;
• Although the action was not yet ready for trial, Mr. Di Monte’s response to the Status Notice was to set the action down for trial on July 23, 2013, having obtained Jafari’s consent to being examined for discovery afterwards. The more appropriate course of action would have been to seek to extend the date for this step;
• Discovery of Jafari was never been scheduled, nor has Gil examined the Shapiro defendants. At the return of this motion, Mr. Di Monte advised that he would waive his rights to examine all defendants;
• Mediation took place in December 2013; and
• on September 25, 2014, only one day before the action was due to be struck from the list for failure to file the certification form, Mr. Di Monte sent it to the two defence counsel for their input. In view of the short timelines, they did not respond and the matter was struck from the list on September 26, 2015;
• Although mediation failed at the end of 2013, and negotiations ended in mid-2014, this matter was not placed on a trial list.

3Now, almost 5 years after the action was initiated, the funds remain in court and the issue of how they should be distributed remains unresolved.

4This motion did not come before me until September 2015, it was first submitted to the court as in in writing motion, on consent, for July 7, 2015. This turned out to have been an error as the Shapiro defendants had not consented. In any event, counsel failed to serve it and pay for it as per the Toronto protocol, so it was struck from the motions list at that time.

QUALITY OF THE EVIDENCE and ADDITIONAL COMPLICATION

5One issue that made this a challenging motion is the fact that Mr. Di Monte is Gil’s fourth lawyer. The record he filed is sparse, consisting of only five pages, perhaps because he only went of record on July 23, 2013, the same day he filed the trial record. The supporting affidavit filed by Gil for the motion contains very little about the procedural history of the case, and is based almost entirely on what the deponent, Mr. Di Monte’s clerk, was told by him. For the most part, I extracted the history from Shapiro’s material and the case history.

6Although Gil’s first lawyer passed away, that occurred in 2011, so the previous two were available to provide their evidence. It does not appear that either was asked. Further, although Mr. Di Monte has been on the record for well over 2 years, he says little about his involvement with the matter. This is the entirety of the evidence, contained in his clerk’s affidavit, regarding their failure to deliver the certification form within the specified deadline:

I had diarized the prescriptive date (sic) of September 26, 2014 (the date by which the certification form had to be filed). Accordingly, on September 25, 2014, I located the certification form in the file but unfortunately it had not been completed.

Through inadvertence or otherwise, the pre-trial dates and trial dates had not been scheduled. Accordingly, just to be sure, I telephoned the office of Singer, Keyfetz, Crackower & Saltzman and Dewart Gleason LLP about this matter.

7The deponent says nothing about why she placed the form in the file and left it there for over a year without getting dates and input from Mr. Di Monte and circulating it to the others. She also says nothing about why she diarized the matter for the last day of the deadline, leaving her with effectively no time to do much of anything with it.

8There is really no tangible explanation for this delay, one which only Mr. Di Monte’s office can speak to. All the deponent says is that the pre-trial and trial dates were not set due to inadvertence or otherwise. No hints are provided to the reader as to what or otherwise might involve- presumably something other than inadvertence. This is troubling. Regardless of what which legal test applied here, providing the court with insight as to why a matter has been delayed is always helpful.

9Equally troubling is the fact that Gil’s counsel appeared to have little understanding of the court’s process and procedures. Based on what the deponent says she was told by Jafari’s counsel, she believed that a status hearing had been scheduled for September 25, 2015.

10It is a rare event when a party other than a plaintiff seeks a status hearing and, when they do so they are required to serve the request on all parties, so it ought to have been clear to the deponent that what she was told was not accurate. Further, a status hearing is sought following the plaintiff’s receipt of a status notice. As none was issued in this case, it is unclear why this was accepted as correct information.

11Perhaps of more significance is the fact that the certification form itself made it clear what would transpire if the completed form was not filed by the due date: It will be struck off the trial list without further notice. It simply makes no sense for Gil’s counsel to have believed that the court would schedule a status hearing of its own volition in the face of this warning.

12Turning to a different point, the day after I heard this motion, I learned that, only two days earlier, the Court of Appeal had released its decision in Carioca’s Import & Export Inc. v. Canadian Pacific Railway Limited 2015 ONCA 592. As the lower court decision, among the materials that had been filed for this motion, was overturned on appeal, it was my view that both counsels should have an opportunity to address the impact, if any, of the new decision on this motion.

13I therefore set a timetable for exchange of submission and counsels have now filed written submission accordingly. To the extent that Mr. Di Monte included unsworn evidence in his submissions, this is not properly before me and has been ignored.

WHAT IS THE CASE AGAINST THE SHAPIRO DEFENDANTS and AGAINST JAFARI?

14Gil’s counsel neglected to include the pleadings in their record but they were included in the responding record. The Fresh as Amended Statement of Claim runs for only 5 pages, almost a full page of which has been deleted.

15Gil claims a declaration that the Shapiro defendants committed a breach of trust. He seeks an accounting from them with respect to the proceeds of sale of the properties; a mandatory order requiring them to convey the net proceeds of sale following an accounting; general damages of $900,000 and punitive damages of $100,000.

16As against Jafari, Gil claims only $600,000 for breach of contract. The claim appears to be based on Gil having to borrow money, secured by a mortgage, so he could assist Jafari with his share of the funding for these purchases and for construction costs.

17As a result of the master’s order and the payment of the proceeds of sale into court, the Shapiro defendants no longer have exposure with respect to the proceeds of sale. This leaves a claim of $1 million for breach of trust and punitive damages.

18This is not an easy pleading to read. What I extract from it is that Shapiro acted for Gil and for Jafari at different times, and that he allegedly favoured Jafari’s interest over Gil’s. Gil seems to be saying that this resulted in Jafari obtaining a greater share of the proceeds of sale than he was entitled to.

19Though the various events that led to this outcome are asserted, there is no suggestion in the pleading that Shapiro knew about any of it, or how he would have known, aside from the fact that there was a mortgage that had to be discharged before closing. What is critical for Gil to establish is that Shapiro was aware of the terms of his joint venture agreement with Jafari.

20Jafari denies any wrong doing and asserts that funds were distributed in accordance with the joint venture agreement. He counterclaims against Gil, asserting that Gil committed a breach of trust and he seeks, among other things, damages of $600,000 for breach of contract.

21Shapiro defended on the basis that Gil instructed him to close the transaction. He alleges that he has been unable to distribute the proceeds of sale following the closing as the issue of who was entitled to how much has never been resolved. He claims Gil attended at his office and was verbally abusive and threatening. He then pleads and relies on the master’s order and the fact that all liability was extinguished for the monies held back and then paid into court on the master’s order.

THE LAW, ANALYSIS and CONCLUSION

22The plaintiff filed no case law or factum for this motion. I have therefore relied on the law as put before the court by the Shapiro defendants, as well as the recent decision of the Court of Appeal in Carioca’s Import & Export Inc. supra.

23The leading case on point before Carioca’s is Nissar v. TTC, 2013 ONCA 361, [2013] OJ No. 2553, also a decision of the Ontario Court of Appeal. Nissar involved a personal injury claim commenced in 2001 for injuries allegedly sustained while the plaintiff was a passenger on a TTC bus in 1999. The plaintiff set the matter down for trial in 2004 and was not aware that it had been struck from the trial list until several years later.

24The motion to restore the matter to the trial list was therefore not brought until 2011, adjourned to 2012 and ultimately dismissed. The court found that there was no evidence to explain the lengthy delay in bringing the motion. Further, as the plaintiff ’s pre-accident records were no longer available in their entirety and there was concern about the ability of the bus driver to recall details of an accident that had taken place 13 years earlier, the court determined that the defendant’s access to a fair trial was no longer available. This was a form of prejudice that could not be compensated for by costs.

25The plaintiff appealed and the appeal was also dismissed. In discussing the generic issue of restoring a matter to the trial list pursuant to Rule 48.11, the Court indicated that this was simply another weapon in the Rule 48 judicial arsenal “to promote the timely resolution of disputes, to discourage delay in civil litigation and to give the courts a significant role in reducing delays.”

26Tulloch J.A., writing for the court, held that the onus was on the plaintiff to explain the delay and to satisfy the court that it would not be unfairly prejudicial for the defendants to have the action restored. He repeated the motion’s judge view that no matter how the test was formulated, the plaintiff would fail as he was not satisfied with the explanation provided as to why it had taken seven years to bring the motion forward.

27Looking at that delay, Tulloch J.A. found that, though the majority of it lay at the feet of the first two plaintiff’s counsel, the issue of prejudice was real and actual as OHIP records only went back as far as 1997, two years pre-accident. Further, the discovery transcripts of the bus driver had not been ordered and as that proceeding took place in 2002, the tapes would have already been destroyed so access to a transcript was no longer available. He also found that the driver could not be expected to recall these events in great detail so many years after the incident. Tulloch J.A. concluded that it would be unfair to now force the defendant to deal with this matter in light of these issues.

28Carioca’s Import & Export Inc. v. Canadian Pacific Railway Limited also involved a motion to restore a matter to the trial list, but in the context of a far more complicated factual matrix. There, in a recent decision, the Court of Appeal allowed an appeal from the motion in first instance, restoring the action to the trial list. In this case, the court held that one of two tests applies to these motions, and which applies in each instance will vary with the facts. The factual scenario within which an action is struck from the list is therefore critical.

29In that case, examinations for discovery had been completed by September 2008 and the plaintiff set the action down for trial in June 2009. Mediation took place in November 2009 but failed to resolve the case.

30In the interim, the plaintiff was slowly complying with outstanding undertakings and the defendant only began to press for compliance in 2010. By this point, the completed certification form was due, but the defendant refused to sign it in view of these outstanding undertakings. As a result, the requisite deadline was missed and the action was struck from the trial list on October 27, 2010

31The matter was eventually restored to the trial list in January 2012, in the context of an unopposed motion, and the outstanding undertakings were not raised during the course of that event.

32In October 2012, the court sent a second certification form to plaintiff’s counsel. At that point, the only remaining undertaking of significance involved providing the plaintiff’s corporate tax return for the year 2008, which had not yet been received from Revenue Canada. This time, the parties were able to come to terms. The parties agreed to conduct a pre-trial in September 2013 and start the trial in November of that year. All seemed to be in order and moving forward as expected.

33However, as a term for the defendant agreeing to this order, the plaintiff agreed to comply with the remaining 3 undertakings and this they failed to do until April 2014. In the interim, the dates scheduled for pre-trial and trial were adjourned, again by agreement, with a commitment from the plaintiff to provide the responses by mid-December 2013.

34This time, counsel arranged for and attended a “to be spoken to” court on October 28, 2013, to obtain the new dates for pre-trial and trial that they had agreed to. Despite their agreement, the presiding judge struck the matter from the list as being “not ready”, though the mid-December deadline for compliance they had agreed to had not yet expired. Her rationale was that expert reports were yet to be served and the plaintiff’s damage disclosure remained to be completed.

35The plaintiff continued to comply with undertakings and by December 9, 2013, all but the tax returns for the previous year had been provided and the plaintiff had promised to provide that return once it was completed. The plaintiff had also managed access the necessary funds to pay for the required expert.

36Having accomplished all that, the motion to again restore the matter to the trial list was brought in April 2014, but it was struck as it was not confirmed. This time, the Defendant refused to consent to a new date, so a new motion to restore was served on May 5, 2014.

37In the interim, a status notice was issued by the court on May 16, 2014, under Rule 48.14(2). The motion to restore was heard on August 14, 2014 and dismissed. This resulted in the administrative dismissal of the action in September 2014.

38The motions judge expressed the view that the first time the action was struck from the list ought to have been a wake-up call to counsel. He noted that the expert report was not yet complete and expressed concern about the memories of witnesses over such a long period of time. In his view, the case would, in large part, be decided on the basis of oral evidence, such that the credibility and reliability of witnesses may be critical to the outcome on both liability and damages.

39Van Rensberg J.A., writing for the court, began her Reasons by pointing out that, as a result of the dismissal of the motion, the action was administratively dismissed under Rule 48.14. In that context, though she agreed that the motions judge had applied the correct test, as set out in Nissar (supra), she noted that it was with respect to the application of that test that there been an error, as the motions judge had focused on laying blame for delay instead of assessing whether a reasonable explanation for it had been provided.

40The Court of Appeal was also of the view that prejudice had been considered in a mechanical way, rather than as a question of fact in the context of the facts of that case. The Court of Appeal therefore determined that it was appropriate for them to reweigh the evidence and, in doing so, they concluded the dismissal should be set aside and action restored to the trial list.

41In reviewing what was done in first instance, the Court of Appeal asked first if there was an acceptable explanation for the delay in the litigation and then turned to the issue of whether the defendant would suffer non-compensable prejudice, following the test articulated in Nissar.

42The court went on to explain that this was one of two very different approaches to be utilized by the court, noting that the choice of approach turned on the factual context. For the purpose of the matter before this court, this is the crux of the decision:

Where there is no impending dismissal, the question on a Rule 48.11 motions is simply whether the plaintiff has shown that the action is “ready for trial” within the meaning of Rule 48.01, that is whether it is at a stage where pre-trial and trial dates can be scheduled. If restoration to the trial list is premature, the court should consider the imposition of a timetable or terms.

Where, as here, the refusal to restore an action to the trial list will result in its dismissal, the Nissar test, informed by the case law respecting rule 48.14 dismissals, will apply. This is because the inevitable result of the failure to restore the action to the trial list would be dismissal, as occurred here. As discussed in several decisions of this court concerning dismissal for delay, a motion judge must strike a balance between the need for efficiency and the need for flexibility, such that cases can be tried on the merits where there is a reasonable explanation for non-compliance with the rules.

43On the facts before me, the case at Bar is unlike either Nissar or Carioca’s. No status notice has been issued so there is no impending dismissal. In Carioca’s the Court of Appeal made it clear that the two pronged test utilized in Nissar was appropriate in cases where there had been a status notice issued, as they were akin to motions to set aside dismissals for delay. In both instances, delay and prejudice were appropriately the focal points for the analysis.

44This is not that type of case. As a result, the focus of the analysis must be on whether or not this action is ready for trial. If not, I can exercise my discretion to get it ready for trial by to creating a timetable to ensure that it will be.

45The current status of the action is as follows:

• The plaintiff has waived its rights to examine both defendants for discovery, so examinations for discovery are, effectively, complete;
• At the time the motion was heard, mediation had not yet been scheduled;
• It is unclear if there are outstanding undertakings.

46The action is therefore not quite ready for trial even now, more than two years after it was prematurely set down for trial. As a result, a timetable is in order to ensure readiness.

Accordingly, it is ordered that:

1. To the extent that there are any outstanding undertakings that remain, they shall be answered by the end of November 2015. If the parties are unable to agree whether there are any that remain, and if the responding party is of the view that there are and that they must be pursued, he shall requisition a motion on a regular motions list to complete undertakings no later than December 15, 2015 to be heard early in the new year;
2. This matter shall proceed to mandatory mediation, to be completed no later than the end of April 2016;
3. The plaintiff has leave to restore this matter to the trial list and shall do so by the end of May 2016;
4. The parties shall cooperate in completing the certification form, which shall be submitted to the court no later than the end of July 2016.

COSTS and OTHER ISSUES

47Although the plaintiff has, more or less, succeeded in obtaining the relief sought this order reflects an indulgence of the court in a case that has not been well-run from the outset. It seems to me that the real issues here are between Gil and Jafari and that the Shapiro defendants found themselves in the middle of a tug of war over the proceeds of disposition of the property held by the joint venture. In view of Master Graham’s order, it is difficult to understand why they remain in the action, in its newly constituted form.

48Gil ought to have initiated interpleading proceedings from the outset, instead of adding Jafari to the action after the defendants interpleaded. Had he proceeded in that fashion, these issues would have been resolved long ago. I urge Gil to give serious consideration at this time to whether the Sharpiro defendants should remain in the proceeding at this time.

49Further, this case is a good illustration of why actions should not be set down for trial prematurely – before they are actually ready for trial. Being struck from the list can lead to dire consequences.

50In view of all of the above, this is not, in my view, a case where costs ought to follow the event. Further, the appeal decision in Carioaca’s was only released the day before the hearing before me, such that none of us was aware of it until a day later.

51Finally, Gil put no law before the court, so was floundering when it came to his oral submissions. Essentially, he accepted that the Nissar was the applicable test here. It is not appropriate for him to now seek costs.

52If the parties do not agree with my preliminary views regarding costs, I can be spoken to within 30 days of the release of these Reasons.

(original signed)_

Master Joan M. Haberman