Shepherdson v. Echelon, 2016 ONSC 3022

CITATION: Shepherdson v. Echelon, 2016 ONSC 3022

COURT FILE NO.: 10-20248

DATE: 2016September15

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

OWEN SHEPHERDSON

William Scott, Counsel to the Lawyers for the Plaintiff

Plaintiff

• and -

ECHELON GENERAL INSURANCE COMPANY and JAY PAHK

Daniel Himelfarb, for the Defendants

Defendants

HEARD: May 4, 2016 in Hamilton

REASONS FOR JUDGMENT

The Honourable Mr. R.J. Harper

The Issue

The Issue

1The Plaintiff seeks an Order setting aside the Order Dismissing the Action for Delay, dated December 27, 2012.

Background

Background

2This action pertains to a motor vehicle accident that occurred on January 31, 2004 in which the Plaintiff’s wife was involved. The Plaintiff claims that he suffered mental distress and loss of his wife’s care, guidance, and companionship as a result of the Defendants’ negligent administration of his wife’s benefits policy.

Litigation Chronology

Litigation Chronology

3The Plaintiff retained the law firm of Ferro and Company (Ferro) to pursue a claim against Echelon Insurance Co. on March 12, 2010. The following represents the significant steps taken within these proceedings to the point of the bringing of this motion:

a) Plaintiff issues a Statement of Claim on May 26, 2010;

b) The Statement of Claim was served on the Defendants on August 26, 2010;

c) Ferro wrote to Echelon General Insurance Company confirming a Waiver of Defence on August 30, 2010;

d) Defendants served a Notice of Intent to Defend on September 7, 2010;

e) The Defendants served a Notice of Motion to strike the Plaintiffs claim showing no cause of action, on September 21, 2010;

f) The Motion to strike was finally heard by Justice Kim Carpenter-Gunn on October 5, 2011. She dismissed the Defendants motion to strike.

g) The Defendants brought a motion to seek leave to appeal the order of Justice Carpenter-Gunn;

h) The Plaintiff requested that the Defendants file a Statement of Defence on February 5, 2012. The request stated that this was to be done within 15 days.

i) On March 1, 2012 Justice Ramsay denied the Defendants’ motion for leave to appeal and ordered costs to be paid by the Defendants in the amount of $3,000;

j) On March 21, 2012, the Plaintiff noted the Defendant in Default.

k) The Defendants served their Statement of Defence on June 13, 2012. When they attempted to file their Statement of Claim on August 1, 2012 they learned that they were noted in default. They wrote to the Plaintiffs and sought an agreement to set that aside. They also requested medical evidence the Plaintiff intended to rely on.

l) A Status Notice was served on the Plaintiff on September 17, 2012. This provided notice that the action would be dismissed pursuant to Rule 48, unless the matter was set on the trial list within 90 days.

m) An Order Dismissing the Action was issued on December 27, 2012.

n) The Plaintiff brought this motion to set aside the Dismissal of the Action. This motion was finally made returnable on April 3, 2014. This is the motion that is presently before this court.

The Law and Analysis

The Law and Analysis

4In Thomas v. McLelland, 2012 ONSC 6533, Justice G. A Campbell had almost identical issues that were before him, relative to the same motion request and the same law firm. Justice Campbell reviewed the law and the circumstances that unfortunately continued to present themselves relative to this issue, commencing at para 13:

13The parties agree that the factors that the court should consider in setting aside a dismissal order were established in Reid v. Dow Corning Corp., (2001) 11 C.P.C. (5th) 80 at para. 41 (Ont. S.C.J.) reversed on other grounds 48 C.P.C. (5th) 93 (Ont. Div. Ct.):

1. Explanation of Litigation Delay

2. Inadvertence in Missing the Deadline

3. The Motion is Brought Promptly

4. No Prejudice to the Defendant

14The Ontario Court of Appeal has indicated that a contextual approach to evaluating these factors is preferable to a rigid test in which plaintiffs must satisfy each of the factors (Scaini v. Prochnicki, 2007 ONCA 63, 85 O.R. (3d) 179 at paras. 21-24). As a result, courts must consider and weigh all four factors to determine what is just in all the circumstances of the particular case.

Explanation of Litigation Delay

15The litigation prior to the administrative dismissal in February 2008 could have been conducted much more efficiently; however, Mr. Ferro has explained the steps his office took during that time to move the action forward.

16On the other hand, Mr. Ferro did not explain the large gaps in communication after the dismissal order in February 2008. It took Mr. Ferro until April 2010 to write to Mr. McLelland’s counsel inquiring about mediation. Moreover, Mr. Ferro did not explain the lapse of an additional two years before bringing this motion in March 2012.

17The fact that counsel for the Defendant closed his file on this action strongly suggests that Mr. Ferro did not demonstrate any intention to advance the litigation towards trial. Moreover, without the pressure exerted by the Defendant’s counsel, I speculate that this action would have progressed even more slowly.

Inadvertence in Missing the Deadline

18Mr. Ferro and his office must establish that they always intended to pursue this action within the time limits, but failed to do so through inadvertence. In Soldatova v. Bruno, 2011 ONSC 2003, 105 O.R. (3d) 468, Justice Cavarzan for this Court noted that counsel ought not to be permitted to claim no knowledge of key events because of a breakdown of communication between himself and his agents who were delegated to act in his stead. In the case before me, Mr. Ferro twice indicated that there was a communication break-down in his office. First, a law clerk misunderstood Justice Crane’s Order and second, a process server failed to report whether motion material had been filed with court. Mr. Ferro must be held responsible for the actions (or inaction) of his agents.

19Interestingly, in Soldatova v. Bruno the counsel whose actions were being considered was also Mr. Ferro.

20Justice Cavarzan, in that case, found that Mr. Ferro successfully demonstrated that his actions were inadvertent, but cautioned Mr. Ferro not to expect similar indulgences in the future (at para. 26). Due to the similarities between these two cases, I feel it is salutary to set out the paragraph in full:

Mr. Ferro ought not to be permitted to claim no knowledge of key events because of a breakdown of communication between him and his agents who were assigned to act in his stead. The administrative chaos reflected in the handling of this file borders on negligence. It is a major irritant and a source of frustration to opposing counsel, not to mention justice delayed to their clients. Mr. Ferro, in effect, sets a leisurely pace to suit his own convenience. I conclude, reluctantly however, that the claim of inadvertence has been made out. “Inadvertent” is defined in the Concise Oxford English Dictionary as “not resulting from or achieved through deliberate planning”. “Inadvertence” has a corresponding meaning i.e., “the fact or habit of being inadvertent; failure to observe or pay attention; inattention” (from the Shorter Oxford English Dictionary). Mr. Ferro should not expect to receive similar consideration and indulgences in the future.

21Justice Cavarzan stated at paragraph 15 that Mr. Ferro was notorious for the significant number of “motions against Mr. Ferro’s clients for failure to fulfil undertakings.” Justice Cavarzan found that a pattern of chaos emerged, beyond mere “sloppiness”.

22Mr. Ferro’s chronic delays were also noted in Hernandez v. Western Assurance Company, 2011 ONSC 6042. In that case, Justice Ramsay upheld a dismissal order, finding “The deadline was missed because Ferro and Company have inadequate file management practices and they rely on staff who are inadequately supervised” (at para. 9). I conclude on the facts of this case that despite Ramsay J.’s comment, nothing has changed in Mr. Ferro’s office since then.

23Mr. Ferro also represented the plaintiff in Finlay v. Van Paassen, 2010 ONCA 204, 101 O.R. (3d) 390, a matter in which the action was dismissed due to chronic delays. Counsel from Mr. Ferro’s office waited two years before bringing a motion to set aside the dismissal. The motion judge upheld the dismissal order. Mr. Ferro appealed. The Court of Appeal explained that, on a motion to set aside a dismissal order “the court should be concerned primarily with the rights of the litigants, not with the conduct of their counsel” (at para. 33). The Court of Appeal distinguished “inadvertent” from “deliberate” conduct. A client should not be punished for the inadvertent misconduct of counsel. On the other hand, to excuse the deliberate misconduct by counsel would undermine the integrity of the justice system.

24In Finlay, the Court of Appeal found that Mr. Ferro’s conduct was merely inadvertent and set aside the dismissal order.

25Mr. Ferro’s chronic casual and cavalier approach to his duties and the apparent continued lack of supervision of his office (in the face of multiple entreaties by the Defendant’s counsel to address his oversights and two emphatic court orders to proceed with the action by a specific date) has clearly passed the point of “inadvertence”. Within the context of this case and after the various admonitions from my colleagues in prior cases, Mr. Ferro’s inaction can fairly be interpreted as both intentional and deliberate. It is far past time for Mr. Ferro to take responsibility for his actions and for the court to respond to a clear pattern of inattentiveness and neglect.

26As Justice Sharpe found with regard to a five-year delay (Marche D’Alimentation Denis Theriault Ltee. v. Giant Tiger Stores, 2007 ONCA 695 at para. 32):

…excusing a delay of this magnitude and gravity risks undermining public confidence in the administration of justice. Lawyers who fail to serve their clients threaten public confidence in the administration of justice. […] There is a risk that the public would perceive disregarding the solicitor’s conduct in the circumstances of this case as the legal system protecting its own. Excusing a delay of this kind would through [sic] into question the willingness of the courts to live up to the stated goal of timely justice.

27The continued tolerance and accommodation of Mr. Ferro’s systemic flaunting of timelines, rules and court orders risks rendering another serious blow to public confidence in the court’s commitment to timely justice.

The motion is brought promptly

28The Court’s finding in Soldatova v. Bruno (at para. 27) applies equally to Mr. Ferro’s conduct in this case: It cannot be said, in the circumstances here, that the motion was brought promptly. Indeed, the four year hiatus is inexcusable and inexplicable.

Prejudice to the Defendant

29As discoveries have already taken place and the matter is all but ready to advance to trial, it cannot be said that the Defendant would suffer prejudice if the case were re-instated to proceed. All documents are available as are all witnesses. Though the Court of Appeal has found that the expiry of a limitation period raises a presumptive prejudice, plaintiffs may rebut the presumption, as was done in this case (see Wellwood v. Ontario Provincial Police, 2010 ONCA 386).

30In Machacek v. Ontario Cycling Assn., supra, Justice MacPherson, for the Court of Appeal, upheld a motion judge’s decision not to set aside a dismissal. Justice MacPherson found that “Virtually all of the delay between September 2006 and March 2010 is attributable to the failure of counsel for the appellants to move the action along” (at para. 9). Justice MacPherson concluded that although the motion judge found no evidence of prejudice to the defendant, “While this is an important factor, it has to be balanced by a consideration of the finality principle. In our view, the delay in the case and the conduct of counsel tips the balance towards the latter” (at para. 10).

31Justice MacPherson also noted that, “the appellants are not left without a remedy as they still have recourse through an action in solicitor’s negligence.” (Machacek v. Ontario Cycling Assn., 2011 ONCA 410 at para. 10). I also note that at para. 32 of Finlay v. Van Paassen 2010 ONCA 204, the Court of Appeal stated: “To protect the claim of the innocent party, the judge will often raise the possibility of a negligence action against the party’s own lawyer. Although perhaps understandable, I do not find this helpful. Speculation about whether a party has a lawsuit against its own lawyer, or the potential success of that lawsuit, should not inform the court’s analysis of whether the registrar’s dismissal order ought to be set aside.” I agree with that latter approach. Mr. Thomas may seek advice as to which of his options he might choose. His decision is irrelevant to this analysis.

36Accordingly, notwithstanding the fact that no prejudice arises to the defendant in this case, given the other three Reid factors, I am persuaded that, in the context of these facts in this case, to allow this motion would bring the administration of justice into disrepute. Therefore the relief sought in this motion is denied and the dismissal order of February 4, 2008 is upheld.

5I agree with many of the comments of my judicial colleagues as set out in Justice Campbell’s judgment. It is an unfortunate and sad state of affairs when cases are not presented in a manner that would result on a fair and just determination as a result of the conduct of counsel. I find that is the circumstance in the case before me. In my view, when all four factors set out in Reid are considered, the motion must fail.

6In this case, I find that the Plaintiff has not provided a reasonable explanation for the litigation delay. I agree with the submissions of the Defendants: the only evidence that the Plaintiff advances with respect to any reason for delay is an affidavit of Nick Madhavi, sworn January 15, 2013. Mr Madhavi is a legal assistant at the Ferro law firm. The notice of motion is dated one year after Mr Madhavi’s affidavit was sworn. No explanation is given for this one year delay in bringing the motion.

7The plaintiff did not provide evidence that he always intended to proceed to trial without delay, nor that he did or did not assent to the delay of the action. The Plaintiff did not file an affidavit in support of the motion to set aside the dismissal. In my view this is a significant omission.

8This motion was not brought “forthwith” as alluded to above. The Plaintiff simply placed before the court an affidavit sworn a year before the motion was brought, with no explanation. The mere assertion that there was inadvertence layered upon inadvertence is not a satisfactory explanation. In my view, the actions and inactions on the part of the Plaintiff’s counsel amount to a negligent disregard for the processes of this court.

9I agree with the Defendants’ submission that there is real prejudice in this case to the Defendants. Despite the action being started in 2010, there are significant omissions by the Plaintiff that prejudice the Defendants at this stage. Some of these omissions are as follows:

The Plaintiff never provided an affidavit of documents;

The Plaintiff never provided any medical reports that detail his injuries and claimed mental distress. These documents were requested early on in the proceedings. The issue of their existence over this lengthy period of time is a real concern. The issue of any reasonable recollection on the part of treating physicians is also a concern, since the accident is rooted in a motor vehicle accident that occurred in 2004.

10As a result of my findings, as set out above, the motion to set aside the Dismissal of this Action is dismissed.

11Counsel may provide written submissions with respect to costs within 30 days if costs cannot be settled.

Harper J.