B & S Fragrance & Cosmetics Inc v. Akhtar, 2016 ONSC 2320

CITATION: B & S Fragrance & Cosmetics Inc v. Akhtar, 2016 ONSC 2320

COURT FILE NO.: 10-CV-401001

Heard: November 4, 2015 and March 17, 2016

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: B & S Fragrance & Cosmetics Inc. v. Akhtar

BEFORE: Master Joan Haberman

COUNSEL: Iny, D. for moving party

Siddiqui, S. for responding party

REASONS

Master Joan M. Haberman:

[1] This action was dismissed for delay by order of the registrar on December 22, 2014, pursuant to the previous version of Rule 48.14. The motion before the court is to set that order aside.

[2] The motion arises in the context of a factually complex action and counterclaim. The factual matrix giving rise to this action is not entirely clear, as the parties disagree on most of the underlying facts. Despite that, I have been able to extract the following from the pleadings:

• Akhtar was employed by or worked with the plaintiff, a perfume wholesaler, in one or more capacities from 2001 and 2009, when B & S terminated their relationship. It remains to be determined if there was any interruption in that timeframe and if the nature of Akhtar’s duties changed between the start and finish of the parties’ association;
• Akhtar initially worked out of the plaintiff’s offices in Woodside, N.Y. He claims that from 2005-6 onwards, he worked out of his home in Markham Ontario. The plaintiff maintains that though he visited Markham, Akhtar continued to work out of the NY office, only;
• The plaintiff claims that while Akhtar was in their employ, he set up and began to operate two competing businesses, using their confidential information to do so and soliciting their clients and suppliers. That is the basis of the main action;
• Akhtar claims that he became an independent contractor, working for commission only, when he moved to Ontario, such that he was free to perform other work. He claims that the plaintiff was aware that he had begun another business in the same industry, but he states that he only provided services from his company when B & S did not have the product sought by a client. This is the basis for the counterclaim.

LAW

[3] In view of the factual complexity of this case, I believe starting with the applicable legal principles is appropriate.

[4] In their 2015 decision in H.B. Fuller v. Rogers 2015 ONCA 173, the Court of Appeal conducted a fairly detailed analysis of the legal principles to be applied by the court in motions to set aside administrative orders dismissing actions for delay. I have liberally borrowed from that analysis below.

[5] The starting point are the four Reid factors (see Reid v. Dow Corning Corp. (2011), 11 CPC (5th) 80) as they have become known. Essentially, the court must:

• examine the length of the litigation delay and decide if the plaintiff has provided an adequate, but not necessarily a perfect, explanation for it;
• consider if the failure to meet court or order-based timelines is the result of inadvertence or a deliberate decision not to move forward for a period of time;
• decide if the motion to set aside the dismissal order was brought promptly; and
• consider if the delay has prejudiced the defendant’s position in the action.

[6] Delay, in the context of this rule, is relevant only if caused by a deliberate decision to refrain from taking steps to move forward in the litigation (see Labelle v. Canada (Border Services Agency), 2016 ONCA 187). I note that defence counsel handed this decision, in first instance, to the court on the second day of the hearing, neglecting to include or mention the appeal decision by which it was overturned.

[7] An examination of only these four factors has been determined to be an overly rigid approach to the analysis (see Scaini v. Prochnicki, 2007 ONCA 63, and Marche D’Alimentation Denis Theriault v. Giant Tiger Stores Limited, 2007 ONCA 695). A contextual approach is mandated, such that, while the four Reid factors generally form the backbone of the analysis, any and all relevant factors that arise in each individual case must also be taken into account and considered in the balance.

[8] The ultimate goal of reviewing all relevant factors is to balance them, in order to facilitate the court’s ability to provide a just result.

[9] The court must be aware, when assessing the situation, that there is generally going to be a tension between two competing goals: having actions determined on their merits, rather than being administratively dismissed on the one hand, and not allowing an action to proceed where the magnitude of the delay is such as to undermine confidence in the administration of justice, on the other. Recent case law suggests that the court has a bias in favour of deciding cases on their merits (see Hamilton (City) v. Svedas Koyanagi Architects Inc. 2010 ONCA 887).

[10] That bias is evident when the court deals with delay resulting strictly from counsel’s error. In those situations, it is the rights of the litigants that are deemed to trump (see Habib v. Mucaj, 2012 ONCA 880). As a reslt, where counsel’s error is the sole factor leading to an administrative dismissal for delay, the dismissal order will generally not stand.

[11] Similarly, included in the mix of “all other factors” is the defendant’s conduct. While the plaintiff bears primary responsibility for moving an action forward, the defendant’s conduct is also relevant. Anything they do or fail to do that adds to the delay must also be considered.

[12] Recently cases have gone so far as to say that a defendant cannot simply sit back complacently. Failure on their part to nudge a tardy plaintiff forward can be taken as tacit approval of a dilatory approach. As the Court of Appeal stated in Aguas v. Rivard Estate, 2011 ONCA 494, (defence) counsel’s lack of display of any sense of urgency undercuts the claim of actual prejudice.

[13] While the Court of Appeal has repeatedly articulated the principle that prejudice is the key consideration in the analysis, in cases of extreme delay, an absence of prejudice will not necessarily be the deciding factor (see MDM Plastics Limited v. Vincor International Inc., 2015 ONCA 28).

[14] Added to the analysis in recent years are the amendments to the Rule 48.14 regime. In this case, the timing of those changes is extremely important, as the complete overhaul of this regime became effective January 1, 2014 – less than two weeks after this action was dismissed.

[15] While the rule that was in place at the time of this dismissal order required a plaintiff to set their action down for trial within two years of filing of the first defence, the rule now provides that a plaintiff has up to five years to do so from the commencement of the action. This claim was issued in April 2010. Under the regime that currently applies, B & S needn’t have set the action down for trial until April 2015, so they would have had an additional five months to set the action down for trial.

[16] Although there are transitional provisions, the court has, for the most part, found them to be less important when the dismissal order was made close in time to the enactment of the new provisions, as the fact of the change signaled a recognition by the legislature that the old regime was not working well for many cases.

[17] Thus, in Klaczkowski v. Blackmont Capital Inc., 2015 ONSC 1650, it was held that proportionality requires the court to incorporate this rule change into the contextual approach. This is, in effect, what the court has been doing.

[18] In view of the proximity of the date of the amendment to this dismissal, there is a very compelling basis for giving this factor significant weight.

[19] At the end of the day, the critical question to ask is whether a fair trial is still possible, or if the principles of finality and the defendant’s reliance on the security of its position should nonetheless prevail (see Wellwood v. Ontario Provincial Police, 2010 ONCA 386).

[20] Whether or not a fair trial remain possible turns, for the most part, on the issue of prejudice. As noted by the Court of Appeal in MDM Plastics Ltd., op sit:

The prejudice that the motion judge or master must consider is the defendant’s ability to defend the action that would [arise] from steps taken following dismissal, or which would result from restoration of the action following the registrar’s dismissal.

[21] I have reviewed the facts of this case within the parameters of the above legal principles to conclude that the motion to set aside the registrar’s order dismissal order should be granted for the reasons set out below.

APPLYING THE LEGAL PRINCIPLES to the FACTS

1. and 2: ALLEGED DELAY IN MOVING THE ACTION FORWARD and REASONS FOR IT

Concerns about what the defendants filed and what was omitted

[22] Mr. Akhtar swore a 43-page affidavit is response to this motion. He then swore a supplementary affidavit, running a further 5 pages. Much of what he states deals with his view of the merits of the action or pure conjecture regarding the defendants’ motives. Both editorial comment and rhetoric permeate the defendants’ evidence, which has not been presented chronologically, but rather, moves back and forth in time.

[23] The use of the heading “Fraudulently Missing Cash Books” is but one example of the problems with the defendants’ evidence. I am not in a position on a motion of this kind to assess why the cash books, if they exist, are missing, and, if missing, if that is due to fraud.

[24] These allegations therefore have no place here, and were used by the defendants to push this motion off to a tangent that really has no connection to the issues properly before the court on a motion of this kind.

[25] I find paragraph 114 of the affidavit to be of particular concern. It contains a 3-column table, with a space for “date”, perjury” and “actual truth.” No court has considered the issue of credibility with respect to the merits of these issues as yet and none has opined on whether the offence of perjury has been committed. This evidence, presented in such a fashion, has no place before the court on a motion of this kind and was obviously intended to colour the court’s views. While we see this type of thing from time to time from self-represented litigants, the defendants have had counsel throughout – they are currently working with their third counsel.

[26] This is not a motion for summary judgment, nor a motion for security for costs. The test established by the case law when dealing with motions to set aside administrative dismissal orders focuses on delay, prejudice, and on whether a fair trial can still be had, not on the merits of the case.

[27] Although the court is expected to take a contextual approach when resolving these motions, and to consider all relevant issues, making a determination about whether or not the action can proceed should not be based on whether I think the plaintiff does or does not have a good case at this stage of the proceedings.

[28] This is particularly so here, in light of the vastly different stories the parties tell. Credibility will be a critical issue at the end of the day, one to be resolved on the basis of viva voce evidence at trial.

[29] As a result, there is no need for me to consider the merits at this stage of the action, nor would it be appropriate for me to do so. This renders much of the evidence filed and many of the submissions made at the hearing superfluous. It seems to me that the defendants, having decided to oppose this motion, erected a wall of smoke and mirrors instead of responding to the issues properly raised and addressed by the plaintiff. Rather than do that, they have raised irrelevant issues to draw attention away from what the court is actually required to deal with.

[30] Accordingly, I have had to comb through the evidence filed to try to isolate facts that are actually relevant to this inquiry. I am concerned that the forest may have been lost among the trees in view of the volume of irrelevant material filed. These extraneous materials and submissions added to the length of the hearing, and hence, to costs incurred. This will be dealt with in the context of costs at some future time.

[31] The factum also offered little assistance in this regard, as it, too, focuses on what the defendants call “Irreconcilable Contradictions and Prejudice”. The defendants used much of their 27 pages to try to present the plaintiff as dishonest and cast themselves as blameless. A review of court orders already obtained and correspondence exchanged suggests that this characterization is not necessarily an accurate one.

[32] At this stage, there are effectively two men, each hurling serious allegations of wrong doing at the other. I have no sense of which of the two is providing the court with a clear and accurate view of the facts or if either is being forthright with the court about all issues. It may well be that Akhtar is believed at the end of the day and that his position prevails, but that in no way excuses the manner in which he approached this motion.

a. April 2010 to end of February 2012

[34] The plaintiff issued their statement of claim on April 13, 2010. On June 2, 2010, Akhtar filed his statement of defence and counterclaim, which the plaintiff defended on June 23, 2010. Pleadings closed.

[35] The action was plagued by various procedural difficulties from the outset, leading to considerable court intervention. In large part, there were productions problems going in both directions. This issue caused delays in the plaintiff’s ability to move the action forward.

[36] Though August and September 2010, plaintiff’s counsel actively pursued the defendants’ affidavits of documents and their input regarding discovery dates.

[37] From November 2010 onwards, the focus shifted as the plaintiff tried to resolve the defendants’ request for security for costs, making proposals that were met with what appears to have been less than reasonable counter proposals or no response at all. In the interim, the defendants failed to serve affidavits of documents.

[38] The defendants assert that he plaintiff’s failure to provide evidence of assets in Ontario in the face of a threatened motion for security for costs, though repeatedly asked for from October 14, 2010 to September 2, 2011 led to considerable delay.

[39] However, the correspondence clearly shows that, from November 2010 (less than a month after the request), the plaintiff acknowledged it would have to post security and thereafter, directed its efforts towards arriving at an agreed quantum. The impasse appears to have been, in large part, defence counsel’s expectation that security should be quantified on a substantial indemnity basis, which was not accurate, accompanied by his failure to discount the figure to account for the fact that his clients were asserting a counterclaim.

[40] I agree with defence counsel’s assertion in his affidavit where he remarks that it took over a year to resolve the simple issue of security for costs. In my view, however, this was not a delay caused by the plaintiff.

[41] When production issues were still not resolved by January 2011, the plaintiff indicated they would move for production and the defendants moved forward with their security for costs motion. This was still the state of affairs by the spring of 2011, such that the plaintiff served its motion record returnable July 11, 2011. The date was adjourned twice to accommodate the defendants, ultimately set for November 9, 2011.

[42] On that date, the parties both moved before Master Dash, seeking assorted relief. By order of that date, the master:

• granted the plaintiff leave to amend the statement of claim;
• set a timetable for exchange of amended pleadings;
• required the defendant, Akhtar, to serve his sworn affidavit of documents and copies of schedule “A” productions by January 15, 2012;
• ordered the completion of oral discoveries by February 29, 2012.

[43] At that time, the master also adjourned the plaintiff’s motions for a discovery plan, the defendant’s motion for security for costs and motions by both parties for further and better affidavit of documents to January 26, 2012.

[44] This timetable was very tight and left little time for all of the pieces to fall into place before the scheduled discovery dates. Its success depended on both sides completing each step fully as and when ordered.

[45] On January 26, 2012, the parties returned to complete their respective motions. At that time, the plaintiff was ordered to post security for costs and production orders were made in the favour of both parties. The plaintiff’s motion for a confidentiality order was put over to February 16, 2012 but as that date was not confirmed, the motion was marked as withdrawn.

[46] The moving party relies heavily on the two January 26, 2012 orders to show that deadlines were not met. They have provided transcribed copies of each of the master’s endorsements from that date.

[47] Dealing first with the plaintiff’s motion for productions, the master found that, in view of the breadth of the pleadings, all three defendants were required to provide documentation going to sales and disgorgement of profits …. limited to two years post-termination). Further parameters were set as regards the customers to which the order applied.

[48] Included in the list of documents that qualified as going to sales and disgorgement were invoices, order forms, cash receipts and any other sales records. In addition, all of the defendants’ tax returns up to and including tax year 2011 were to be produced, though the master was of the view that it was premature to order production of all bank records at that time. He gave the defendants a deadline of February 20, 2012 for compliance, but ordered the plaintiff to provide their customer list by February 6, 2012.

[49] With respect to the defendants’ motion, the master held that they were entitled to invoices sent to customers (from August 2001 to two years post termination) and sales reports generated by Akhtar while at the plaintiff, as well as invoices to the plaintiff for the cost of goods, to enable the defendant to calculate gross profit. The defendants were given until February 10, 2012 to identify customers about whom particulars were to be provided and the plaintiffs then had until February 20, 2012 to produce the requisite documents.

[50] Both production orders were unequivocal and unconditional.

[51] Despite these orders, the discoveries did not proceed as scheduled as both parties were in breach. The plaintiff’s supplementary affidavit of documents was served by courier on February 21, 2012, a day after the established deadline, however, the cover letter with it indicated that the plaintiff was only providing what counsel had obtained thus far. He advised that the rest of the documentation referred to in the master’s order would be produced on March 6, 2012, so not until after the scheduled discoveries. He also advised that he had been told that B & S did not maintain a cash book.

[52] Defence counsel wrote on February 22, 2012, to indicate that the defendant, Crescent, was refusing to produce some of its documents until receipt of certain documents from the plaintiffs. The master’s order had not made allowance for staggered productions, but simply set one date for compliance with production obligations by each party.

[53] Further, in the face of a direct and unqualified court order, defence counsel also indicated that his clients were only prepared to release their documents to plaintiff’s counsel but not to the plaintiff, without consent or further court order. Accordingly, neither side complied with the master’s order directed towards them.

[54] Defence counsel opted to rely on the plaintiff’s breach as a basis for calling off discoveries. On February 23, 2012, he wrote to state that he was not prepared to proceed to discoveries in view of the plaintiff’s delay in complying with the master’s order. Though the plaintiff remained of the view that the discoveries could still proceed, they were cancelled.

[55] In my view, neither party complied with the master’s orders production orders. Perhaps the target date of February 20, 2012 at both ends was overly ambitious and the fact that the confidentiality order was left to the end and did not proceed was problematic. As a result, these breaches are not surprising.

[56] Master Dash noted in his Endorsement of January 26, 2012, prior to the retainer of the defendants’ second counsel, there was a delay of over a year, going back to August 2012, in getting Defendants though their former counsel, to provide an affidavit of documents or discovery dates or a date for the threatened security for costs motion and then later to respond to the Plaintiff’s discovery plan. This led to the master imposing a cost order of $1500 against the defendants at that time.

[57] On the basis of the above evidence, I am unable to say the plaintiff is solely responsible for any significant litigation delay during this phase of the litigation. To the extent that there was delay, the defendant shares responsibility for it and the plaintiff has adequately explained their role.

[58] There is a gap in the evidentiary chronology between the end of February 2012 and June of that year, a period of about four months. This may have been caused by a change of counsel by the defendant. It is, in any event, a short period of time and, in my view, in the context of all of the facts, not a significant gap.

b. End of February 2012 to December 2012

[59] On June 12, 2012, current defence counsel delivered their Notice of Change of Solicitor and on June 21, 2012, they moved before Master Dash again, for a further order for productions from the plaintiff. This time, the master ordered that the various discrepancies raised by the defendants in the records would be dealt with at discoveries. He also ordered that discovery of Khan, the plaintiff’s representative, should take place as soon as possible.

[60] The plaintiff proposed a new timetable and a list of 3 mediators to defence counsel on June 25, 2012 and the timetable was approved on July 11, 2012. The defence put forward their mediator of choice at that time and it was agreed that the mediation would be conducted on September 17, 2012, before retired Justice Ground. A full day was scheduled.

[61] However, on September 10, 2012, counsel was advised that Khan’s sister had died so he was had to travel to Pakistan to make arrangements and was not available for the pre-trial. The mediation was put over to October 30, 2012, but the day before, it appears all flights from New York to Toronto were cancelled as a result of a hurricane. The mediation was therefore put over again, this time, to December 12, 2012.

[62] Again, to the extent that mediation was delayed, the plaintiff has adequately explained that, for the most part, the delay was caused by circumstances beyond their control. I see nothing in their conduct of the action during this phase that caused delay for which an adequate explanation had not been provided.

c. December 2012 – January 2014

[63] It appears the mediation was followed by settlement discussions in March and April 2013. This appears to be followed by another brief gap until August 19, 2013, when the plaintiff produced the remainder of what they say they were able to obtain. Likely as a result of the delay in accumulating the productions to comply with the productions order, discoveries had not yet taken place.

[64] After producing this tranche of documents in August, counsels’ assistants spoke on September 6, 2013 about setting discovery dates, and the plaintiff followed up by letters of September 10 and 25, 2013, as well as in an e-mail dated September 27, 2013, asking about availability for October 23 and 24, 2013.

[65] On October 4, 2013, defence counsel advised October dates did not work. Instead of proposing his preferred dates, he put the onus on the plaintiff to provide their available dates. Plaintiff’s counsel responded quickly, asking about the defendants’ dates for November and December 2013, and January 2014, following up two days later.

[66] Defence counsel replied on October 16, 2013 by way of voice-mail to advise that his clients could attend on December 3 and 4, 2013. Those were the only dates provided and as those dates were not available for the plaintiff, no mutually convenient dates could be identified between November 2013 and January 2014.

[67] On November 21, 2013, plaintiff’s counsel again set his mind to scheduling discoveries, making a further overture and noting that his client was still open to settlement discussions. On December 3, 2013, plaintiff’s counsel wrote to defence counsel asking that they speak to discuss a schedule for discoveries. He left a message to that effect on December 6, and on December 11, 2013 he canvased discovery dates for February or March 2014, confirming his client’s availability later that day for discoveries in Toronto on March 10 and 11 or April 2 and 3, 2014

[68] Despite the efforts that had been made since September 2013 to schedule discoveries, it was only on December 13, 2013 that defence counsel advised they were not prepared to schedule further dates until after bringing a motion for further production from the plaintiff.

[69] There was further correspondence about these issues between counsel and, ultimately, the defendants agreed, on December 16, 2013, to conduct discoveries in the action on April 2 and 3, 2014. This time, the discoveries went ahead as planned.

[70] On December 18, 2013, the parties agreed to an amended timetable. The draft order and proposed timetable were sent to the court via e-mail by Ms. Lui, an assistant to plaintiff’s counsel, on December 19, 2013 and, on January 10, 2014, Master Hawkins signed the order, establishing a new deadline of December 19, 2014 by which time the action had to be set down for trial. It is this deadline that was ultimately missed that led to the dismissal order.

[71] Although there is not a lot of evidence as to what the parties were doing from the early part of the year to September 2013, there were only one short gap of four months.

[72] There is nothing to indicate that, during this, the defendant was trying to move the action forward or encouraging the plaintiff to do so. In fact, it seems that it was the plaintiff who took steps repeatedly from September 2013 onwards to schedule discoveries, getting limited and at points, not timely, responses from defence counsel. There is certainly no evidence before the court to the effect that the defendants raised any issue of urgency with the plaintiff at this time.

[73] I am satisfied that, to the extent that there was any delay during this phase, it was either adequately explained by the plaintiff, inconsequential, or not contrary to the defendants’ wishes.

d. January 2014 – December 2014

[74] The action continued to move forward as discovery dates approached. In March 2014, the plaintiff provided a further supplementary affidavit of documents and discoveries took place in April 2014 as scheduled. There were settlement discussions in July but on August 1, 2014, the defendants indicated they wished to proceed with the litigation.

[75] Accordingly, upon receipt of discovery transcripts later that month, Ms. Stoddard made a list of undertakings, refusals and questions taken under advisement. She also summarized the evidence and left these materials, along with the file, in senior’s counsel’s office.

[76] I am therefore satisfied that the action remained on track until August, 2014. This was followed by a four-month gap, culminating in the registrar’s dismissal of the action for delay on December 22, 2014.

Explanation for having missed the deadline

[77] According to Ms. Stoddart, neither she nor Ms. Lui had placed the deadline in her diary, and as Ms. Lui had left the firm and moved to Hong Kong in September 2014, Ms. Stoddart was unable to confirm with her if she had left reminders for herself in her own diary.

[78] Ms. Stoddart accepts that the problem was the result of her own oversight as she ought to have ensured she had diarized this deadline in her and her principal’s diaries. She notes this was the result of inadvertence on her part. In view of Ms. Lui’s departure, she is unable to explain more about Ms. Lui’s role.

[79] It is worth noting that there was no evidence before the court of contact from defence counsel in the months preceding the dismissal. There is no correspondence from them in the record, suggesting next steps or asking the plaintiff to set the action down for trial.

[80] I am satisfied with Ms. Stoddart’s explanation that the deadline by which the action was to have been set down for trial was missed by inadvertence. While she accepts responsibility for the outcome, it seems the omission was that of a former clerk.

[81] The fact that inadvertence lay at the root of the problem is bolstered by the plaintiff’s principal having filed evidence to make it clear that it was always the plaintiff’s intention to proceed with the action.

[82] Saleem Khan states unequivocally that at all times, it was, and still is, the intention of B & S to continue to advance this litigation.

[83] He then lists the steps taken by the plaintiff to maintain the action and to move it forward:

• they posted $40,000 as security for costs on February 21, 2012;
• he travelled from New York to Toronto to participate in a mediation on December 13, 2012;
• he and other B & S employees spent a significant amount of time collecting documents in compliance with court orders;
• he travelled from New York to Toronto again on April 1, 2014 to attend discoveries, conducted in Toronto on April 2-3, 2014;
• he instructed his counsel, in July 2014, to approach defence counsel to see if the matter could be settled and was advised in mid-August that the defendants were not interested in making a settlement proposal;
• he provided counsel with responses to undertakings that were sent on in April 2015; and
• he asked his counsel to pursue compliance with undertakings given by the defendants and this was done in January 2015, but there has been no response.

Summary regarding delay

[84] I note that, during the course of the hearing, defence counsel made sweeping statements about delay that were contradicted by the plaintiff’s evidence and not supported by his own. He did not move chronologically or systematically through the evidence, either in his factum or in oral submission, but rather, picked a point here and another there so there was no natural flow. This made it difficult to follow his points.

[85] Similarly, defence counsel blames the plaintiff for several delays that were, in fact, either caused by both sides, unavoidable (a death and a hurricane) or delays caused primary by his own clients.

[86] First, he speaks of the full year delay in resolving the issue of security for costs, though the record is clear that the hold-up was at the defendants’ end. Rather than addressing the adequacy of their assets in Ontario, the plaintiff tried to resolve the motion in its entirely by arriving at a quantum that both sides could live with. Their efforts, however, were stymied by delay and a lack of understanding on the part of then defence counsel.

[87] The defendants also point to the collapse of the originally scheduled discovery dates in February 2012, neglecting to add that his client failed to comply with the master’s other order of January 26, 2012. It is clear that neither party had done all they were required to do to allow these discoveries to go forward.

[88] The master’s order required that both parties comply with his order by February 20. He did not provide for staggered deadlines, yet the defendants refused to produce certain documents until having received certain documentation from the plaintiff. The defendants also indicated they would release documents for counsel’s eyes only, not to be shared with the clients without a further court order. None of this is addressed by the defendants. As I see it, the defendants were in breach of the master’s order.

[89] The two year delay that followed in getting to discoveries was caused by many things, including:

• the fact that the parties decided to proceed to mediation first;
• new counsel going on record for the defendants;
• the death of the sister of the plaintiff’s principal in Pakistan requiring him to be away;
• a hurricane in New York preventing planes from taking off so that the principal could not get to Toronto for discoveries;
• the difficulty coordinating counsels’ mutually available dates; and
• some degree of delay on the part of defence counsel to respond when dates were sought or proposed.

[90] In the end, it was plaintiff’s counsel who pushed for new dates to be scheduled. The evidence outlines the various calls made and letters for that purpose. To the extent that either party was at fault for this, I would say the majority of the delay was the result of defence counsel not responding, or advising late in the day that he could not be available on dates that plaintiff’s counsel was holding for the event.

[91] The defendants have, at times, also ignored the plaintiff’s evidence, such that their material is not responsive to it. They have also been selective about what they have produced with their motion materials.

[92] The last element of delay relied on by the defendants is an assertion to the effect that after discoveries were completed in Aril 2014, the plaintiff took no tangible steps from April to December 2014.

[93] I have already indicated that this is contradicted by the plaintiff’s evidence and the correspondence, which shows that there were settlement discussions in that time frame, and that plaintiff’s counsel also reviewed the transcripts and prepared lists for post-discovery follow-up. If counsel uses the words tangible to suggest activities he could see, a review of the correspondence during this short time frame demonstrates, in a tangible way, what was taking place.

[94] Having reviewed the evidence, I find that the explanation for the missed deadline is adequate and reasonable and that no efforts appear to have been made by the defendants to either get the plaintiff to set the action down for trial or to do so themselves. It bears repeating that these defendants have a counterclaim, so as much of an interest in getting this proceeding off the ground as the plaintiff does.

3. GETTING THE SET-ASIDE MOTION BEFORE THE COURT

[95] The dismissal order arrived in the offices of the plaintiff’s counsel on December 24, 2014. Ms. Stoddart’s principal was out of the office on vacation at that time, and the problem only came to her attention on December 30, 2014. She immediately sought the defendants’ consent to proceed with a set aside motion, contacting their counsel that day, again on January 5, 2015 and following up yet again on January 19, 2015. She was advised on January 27, 2015 that the defendants would not consent and that they would resist this motion. Their response says no more than that. No reasons for this position were provided.

[96] This motion was first returnable on May 28, 2015. As is the case with far too many lawyers, there appears to have been a lack of awareness of the Toronto protocol which requires counsel to deliver and pay for their notices of motion within a short time of scheduling. As that was not done here, the date was lost.

[97] The motion was rescheduled for August 31, 2015, so three months later, and came before me that day as a two-hour motion, booked on a regular motions list. Although there was a plethora of materials filed, there was no factum or brief of authorities from defence counsel, who sought to simply hand up cases mid-motion. To exacerbate matters, plaintiff’s counsel had not notified their insurer of the situation.

[98] It was my view that the motion would take at least a half day to argue so I adjourned the matter to a half-day hearing before me on November 4, 2015. As it turned out, that time frame was not even adequate. We used that morning and counsel were advised to book a further 1.5 hours before me on a regular list. They did so and the motion was completed on March 16, 2016.

[99] The only aspect of the delay in getting the matter heard that can be fully attributed to plaintiff’s counsel is the three month period between May and August 2015, in view of counsel having failed to address the Toronto protocol. The issue was addressed as soon as it came to counsel’s attention and she took immediate steps at that time to reach a consensus. When that was not forthcoming, she scheduled an early date for the hearing.

[100] The hearing did not proceed in August for three reasons: 1) the plaintiff’s failure to alert Law Pro; 2) both parties having miscalculated the time needed to argue; and 3) the defendants having failed to file a factum or brief of authorities in the context of a very serious motion.

[101] I am therefore unable to say that there was any significant delay in getting the motion heard for which the plaintiff is accountable.

4. PREJUDICE

[102] The plaintiff asserts that the defendants will not suffer incompensable prejudice if the matter is permitted to proceed to trial. Ms. Stoddart points out in her evidence that the key witnesses in the action are Saleem Khan, his brother, Sultan, and Rashid Akhtar and that it appears all three are still available to testify.

[103] The plaintiff states that they complied with all discovery undertakings by letter of April 1, 2015, though the defendants’ undertakings remain outstanding.

[104] The plaintiff also notes that though the defendants are also plaintiffs by counterclaim, they have taken no steps to advance the litigation since August 1, 2014 so are not well-positioned to now argue that they have suffered prejudice as a result of delay. If that was a genuine concern, why did they not take steps to move the action forward?

[105] Defence counsel focused his submissions regarding prejudice on three issues: 1) the allegedly missing cash book; 2) the Chase Manhattan bank records and 3) the allegedly missing and very significant witness, Javez.

[106] While it is clear that the plaintiff denied having a cash book repeatedly, the evidence to the effect that they do have one is far less compelling and less convincing when the discovery transcript the defendants rely on is actually reviewed.

[107] As for the bank records, to the extent that the defendants claim they are now unable to get all of them in view of the retention period and when the plaintiff first asked for them, it appears only one year’s worth are now out of reach.

[108] In any event, after some discussion, it became clear that the defendants sought these documents exclusively for the purpose of advancing Akhtar’s claim for commissions allegedly not paid, rather than to assist them in defending the main action. As Akhtar states in his affidavit:

In the absence of the actual cash books, the only way I am able to determine my commission from cash-based transactions is to reconcile cash invoices that have been produced, cash-based bank deposits and my recollections as to work I did, and when did such work, for B & S.

[109] The commission is being sought in the context of the counterclaim. It is not relevant to the main action, or to the defendants’ ability to defend themselves in the main action.

[110] While it is clear that the court must consider on a motion of this kind whether the defendants could still have a fair trial notwithstanding whatever prejudice they say they would face if the action is reinstated, this refers to their ability to defend themselves, not to their ability to advance their own claim (see MDM v. Plastics Ltd. v. Vincor International Inc., op cit). To the extent that they have a counterclaim to pursue, it was up to them to speed up the pace of the litigation if, in their view, delay was having a negative impact on their ability to move their own claim forward.

[111] Defence counsel also seemed unable to grasp that the absence of these records means that the plaintiff will not be able to include those amounts in their gross profit in the main action. This will actually have the effect of reducing the plaintiff’s claim against them, as it is the older records they would want to use as a comparator that are now unavailable. In the context of the main action, to the extent that these documents are not available, this is actually favourable, rather than prejudicial, to the defendants.

[112] As for Javez, he did not make a prominent appearance in the factum. In any event, the evidence regarding this man is confusing, at best. What has been attached as an exhibit to Ahktar’s affidavit is allegedly an affidavit from Javez, dated March 10, 2012, which he claims shows that this man could have been a helpful witness for him.

[113] In fact, what appears in the responding record is page 2 of a two-page document. It is clearly set out at the top of it that what was provided continues from an earlier page. Although this omission was highlighted during day one of the hearing, the missing page one never appeared before or during day two of the hearing, conducted several months later. As the court does not have the entire document, little weight can be attribute to the portion that was filed.

[114] In any event, the Javez evidence, as well as the Chase Manhattan documents, appear to go to the issue of commissions, again, pertaining solely to the counterclaim, rather than the defendants’ ability to defend themselves in the main action. In fact, the defendants provided no actual evidence that they would suffer prejudice if the dismissal order is set aside.

[115] At the end of the day, this action was dismissed on December 22, 2014, only days before Rule 48.14 was amended to extend the set down deadline in such a manner that the plaintiff would have had a further five months to complete this step. When that fact is added to the mix of all relevant factors, including:

• The acceptable explanation for the alleged delay;
• Counsel’s inadvertence for having missed the deadline;
• The plaintiff’s intention to proceed throughout, as supported by his own affidavit;
• The motion having been brought promptly;
• The lack of evidence that the defendants tried to move the action forward in the face of delay or that they relied on the finality of the dismissal order, and that
• A fair trial is still available,

[116] I conclude that the order that is just in all the circumstances is one that sets aside the dismissal order.

[117] Accordingly, the relief sought is granted. This action shall be set down for trial no later than the end of May 2016, failing which it will be dismissed, with costs to the defendants.

[118] In terms of costs, the usual order on those motions where the plaintiff prevails is that no costs be awarded, as setting aside a dismissal order is generally seen as an indulgence of the court. In my view, this case is unlike the general situation. For all of the reasons set out above, I am hard pressed to understand, in the context of the evidence filed by both parties, why the defendants took what, in my view, was an untenable position and approached the motion as they did.

[119] I am therefore prepared to consider making a cost order in the plaintiff’s favour. If the parties cannot agree, I can be spoken to within 30 days.

_(original signed) _

Master Joan M. Haberman

Released: April 8, 2016