Gill v Khindria, 2016 ONSC 5057

COURT FILE NO.: CV-07-1073-00 DATE: 2016 08 09 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Manjeet Gill and 1251226 Ontario Inc., c.o.b. “Paramount Furniture Mfg.”, Plaintiffs AND: Monika Khindria, Dinesh Khindria and Dinkar Khindria, Defendants

BEFORE: Trimble, J.

COUNSEL: Plaintiffs: John J. Adair and Valerie A. Matthews (Adair Barristers LLP) Defendants: Pathik Baxi (Simmons da Silva LLP)

HEARD: June 22, 2016

Endorsement

Nature of the Action

1This Simplified Rules action involves a dispute between a creditor and debtors that began with a loan the Plaintiff made to one of the Defendants of $86,764.43 in September, 2004. That loan was to be secured by a mortgage on the debtor’s property. The debtor Defendant allegedly delayed giving the mortgage and did not repay the loan. The debtor Defendant is said to have transferred the property to which the mortgage was to attach, to a family member. The owners of the property gave mortgages to others that stood in priority to the Plaintiffs’. While the Defendants allegedly delayed registering the mortgage in favour of the Plaintiff, the Plaintiff and one of the Defendants borrowed between $100,000 and $125,000 USD for an investment. One of the Defendants signed a promissory note in favour of the Plaintiff in December 25, 2006. The Plaintiff says that was never repaid. The Plaintiffs claim approximately $145,000 from the Defendants.

Nature of the Motion

2There are two motions before the court.

3In the first, the Plaintiffs move for an order to restore the action to the trial list. In the second, the Defendants seek an order dismissing the plaintiffs’ action for delay as they have failed to restore the action to the trial list within 30 days of the action being struck from the list.

4Bielby J. struck the action from the list on May 16, 2012, to be returned on consent or by court order.

Facts

5I have stated the basic facts of the action above. The facts relevant to the litigation are as follows:

• September 2005: Loan advanced
• September 19, 2006: Loan and interest came due
• April 3, 2007: Statement of Claim issued
• June 1, 2007: Statement of Defence served and filed
• June 6, 2007: Reply served and filed
• March 4, 2008: Amended Statement of Claim issued, to include claims for the $100,000 loan.
• April 2, 2008: Amended Statement of Defence delivered
• September 9, 2009: Plaintiffs serve and file Trial Record
• May 15, 2012: Counsel for the Defendants receives letter from lawyer for the Plaintiffs advising counsel must withdraw and requesting adjournment of trial
• May 16, 2012: Action was set to proceed to trial. Bielby J. ordered that the trial be adjourned and struck from the trial list, to be returned on consent or court order
• June 2014: Plaintiffs retain new counsel
• June 20, 2014: Defendants bring motion to dismiss this action for delay and discharge two CPLs against Defendants’ two properties. The motion was settled with a consent order withdrawing the Defendants’ motion on consent and without costs. Only one of the CPLs was discharged.
• November 9, 2014: Mr. Adair sends email to Mr. Baxi suggesting mediation. Mr. Baxi does not respond.
• December 17, 2014: Mr. Adair requests response to November 9 email. Mr. Baxi responds – agrees to mediation if Defendants pay the entire fee.
• January 23, 2015: Mr. Adair suggests scheduling a trial and pre-trial instead of mediation. Mr. Baxi does not respond.
• July 1, 2015: Mr. Adair sends email noting he never received a response to January email. Mr. Baxi responds, advising he would be scheduling this motion to dismiss the action for delay.
• August 27, 2015: Plaintiffs file motion to restore action to the trial list
• September 15, 2015: Defendants file motion to dismiss action for delay

Issues

1. Should leave be granted to return the action to the trial list?
2. Should the action be dismissed for delay?

Positions of the Parties

Issue 1: Should leave be granted to return the action to the trial list?

Plaintiffs’ Position

6The Plaintiffs seek leave pursuant to Rule 48.11 of the Rules of Civil Procedure to restore this action to the trial list. The test for restoring an action to the trial list is conjunctive: there must be an explanation for the delay and the defendants must not have suffered prejudice that cannot be compensated in costs.

7The delay in this case is explained and the Defendants have not suffered irremediable prejudice. Current counsel for the Plaintiffs was retained in June 2014 in response to the Defendants’ motion to dismiss the action for delay at that time. The motion was withdrawn on consent. Since that time, the Plaintiffs have attempted to mediate a settlement between the parties, but the Defendants either failed to respond or refused to mediate on reasonable terms.

8The “delay” if any, is measured from the consent order withdrawing the Defendants’ motion to dismiss for delay, that motion and its resolution having vitiated any delay before that time.

9Since there is no inexcusable delay, there is no presumption of prejudice. Furthermore, the Defendants have not led sufficient evidence to show actual prejudice. The Defendants have not provided any evidence in respect of difficulties experienced in efforts to locate witnesses. Speculation that witnesses will be hard to find or that their memories will be faded should not be relied on by the court.

Defendants’ Position

10The Defendants submit advanced the same arguments in respect of the Plaintiffs’ motion to restore the action to the trial list as in their motion to dismiss the action for delay under Rule 24.01 of the Rules of Civil Procedure.

11The Defendant says that the Plaintiff has an onus to proceed with the action expeditiously and to demonstrate a commitment to have the action tried.

12The Court can dismiss an action where it is satisfied the Plaintiff’s delay is either:

a) Intentional and contumelious; b) Inordinate and inexcusable such that the delay will give rise to a substantial risk that a fair trial will not be possible, or will likely prejudice the defendant.

13The Defendants submit that the Plaintiffs’ delay is inordinate and inexcusable and gives rise to a substantial risk that a fair trial will not be possible and will prejudice the Defendants. The action was struck from the trial list in 2012 and nothing was done to move it forward for several years. The events giving rise to the action happened more than 10 years ago.

14The defendants have been prejudiced for several reasons:

• There is a presumption of prejudice because there has been an inordinate delay;
• Where a limitation period has elapsed, there is a presumption of prejudice. The limitation period in this case expired on September 17, 2008, more than seven years ago;
• Only one of the two CPLs initially granted against the Defendants’ properties has been discharged, preventing the Defendants from dealing with their property;
• The Plaintiffs have led no evidence to rebut the presumption of prejudice;
• Prejudgment interest has been allowed to excessively and unnecessarily accrue;
• The passage of time has negatively affected the memory of witnesses that will be called at trial;
• There will be actual prejudice to the Defendants as the events giving rise to the action took place over 10 years ago and several key witnesses will not be available at trial as a result of the delay.

15The action should not be restored to the trial list the same reasons that the action should be dismissed for delay.

Issue 2: Should the action be dismissed for delay?

Defendants’ Position

16See the Defendants’ position, above.

Plaintiffs’ Position

17The Plaintiffs submit that any delay in this matter is not inordinate or inexcusable, and that it has not caused prejudice to the defendant. Moreover, the delay is explained. The action was stalled for several months while the Plaintiffs sought the Defendants’ agreement to mediate and the Defendants either failed to respond or refused to mediate on reasonable terms. The Defendants cannot take advantage of their own failure to respond to communications and intransigence with respect to mediation.

18The delay since June 2014 is hardly inordinate and is excusable. Counsel for the Plaintiffs attempted to arrange for mediation with counsel for the Defendants, but was unsuccessful. Counsel for the Defendants was either slow to reply or did not reply to communications from counsel for the Plaintiffs.

19Since there is no inordinate or inexcusable delay, there is no presumption of prejudice. Furthermore, the Defendants have not led sufficient evidence to show actual prejudice. The Defendants have not provided any evidence in respect of difficulties experienced in efforts to locate witnesses. Speculation that witnesses will be hard to find or that their memories will be faded should not be relied on by the court.

Disposition

20The action is restored to the trial list. The Defendants’ motion is dismissed.

Analysis

Restoring the Action to the List

21Rule 48.11 of the Rules of Civil Procedure permits a Judge to restore an action to the Trial List, if it has been struck off by another Judge.

22The most recent pronouncement of the law on Rule 48.11 is that of the Court of Appeal in Carioca’s Import & Export Inc. v. Canadian Pacific Railway Limited, 2015 ONCA 592. In that case, van Rensburg, J.A. made it clear that in all but the clearest of cases, an action should not be dismissed for delay. In reaching her decision, van Rensburg, J., considered the earlier seminal decision of Nissar v. Toronto Transit Commission, 2013 ONCA 361; 115 O.R. (3d) 713 and 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544; 112 O.R.(3d) 67. She said:

“43. 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: see 1196158 Ontario Inc., at para. 20, Fuller v. Fuller, 2015 ONCA 173 at para. 25, Faris v. Eftimovski, 2013 ONCA 360, 306 O.A.C. 264, at para. 24, and Kara v. Arnold, 2014 ONCA 871, 328 O.A.C. 382, at para. 9.

(i) Delay

44. Nissar was an appeal from a refusal to restore an action to the trial list, where there had been many years of completely unexplained delay and no resistance by the defendant to moving the case along. The primary issue in Nissar was whether a Rule 48 or a Rule 24 test should be applied in a contested motion to restore. At para. 29, this court stated that the legal test for determining whether an action should be dismissed under rule 48.14 should be "adapt[ed]" to determine when an action should be restored the trial list. The plaintiff is required to provide an "acceptable explanation" for the delay and to satisfy the court that there would be no prejudice to the defendant if the action were to proceed: Nissar, at paras. 29-31. The court dismissed the appeal.

45 As to the nature of the explanation for delay, in the judgment followed in Nissar, 1196158 Ontario Inc., Sharpe J.A. referred variously to the requirement for the plaintiff to show an "acceptable""satisfactory", or "reasonable" explanation for the delay. Therefore I take these adjectives to be interchangeable in this context. The motion judge in this case referred to the appellant's requirement to show a "reasonable explanation" for the delay, not an "acceptable explanation" as worded in Nissar. No error is alleged by either party with regard to the articulation of the test.

46. A motion to restore an action to the trial list is not a "blame game", where counsel should be required or encouraged to take a defensive stance and justify their conduct of the litigation on a month-by-month basis. Rather, in assessing whether a plaintiff's explanation for delay is reasonable, a motion judge should consider the overall conduct of the litigation, in the context of local practices, which can vary quite widely between jurisdictions. Practices for scheduling pre-trial conferences and trials differ throughout the province, because they must meet the needs of particular regions and courthouses. These practices can affect the expectations of the parties, their counsel and the courts as to timing.

47. …. a proper delay analysis does not consider the conduct of an action in a vacuum.” [emphasis mine]

When does the period of delay start?

23The Plaintiff says that the period of delay in this matter begins with the consent order in June, 2014 withdrawing the Defendants’’ motion to dismiss the action for delay. The Defendants say that the delay is measured from the action’s outset.

24The delay period begins to run from June 20, 2014 and ends with the bringing of the Defendants’’ motion to dismiss. In Christie v. Lee, [199] O. J. No. 495 (C.A.) the Court of Appeal addressed the effect that an amendment of a Statement of Claim, amended on consent of the Defended, had on the calculation of delay. The Court held at paragraph 6 that the period of delay began to run not from the initial issuing of the Statement of Claim, but from the date it was amended. While there may have been inexcusable delay up to that time it was “excused” by the Defendant when he consented to the amendment of the Statement of Claim.

25Reading Christie more broadly, but still within its spirit, if a Plaintiff takes a step in an action in which there has been the type of delay that R. 24 (or 48.11) applies, and the Defendant consents to (or does not object to that step in circumstances where the Defendant ought to have objected to and announced his intention to move for dismissal for delay), that consent (or lack of objection) vitiates delay to that point. For example, where an inordinate or inexcusable delay exists, if the Plaintiff serves an updated Affidavit of Documents or serves more recent medicals, and the Defence does not object, if the Plaintiff serves a Notice of Examination and the Defendant attends, or if the Defendant serves a Notice of Examination, in light of those steps it is unfair and unreasonable for the Defence to rely on the delay.

26In this case, the Defendants brought a motion to Dismiss for Delay. The motion was settled and the Defendants withdrew it without any agreement that the withdrawal would be without prejudice to the Defendants’ right to bring another motion for delay, measuring that delay from the outset of the action. When such an agreement was not reached, the Defendants could have, but did not declare, unilaterally, that their withdrawal of the motion to Dismiss for Delay would be without prejudice to their bringing another such motion.

Issue 1: Restoring the Action

27Under the Carioca’s test, the onus is on the Plaintiff to give a reasonable explanation for the delay and to show that there is no non-compensable prejudice to the Defendants.

28Explanation: In this case, the delay is not inordinate or unacceptable. The explanation for any delay (if it is of the nature to engage a Carioca’s analysis) is reasonable. The delay is measured from June, 2014 to September 15, 2015. The facts indicate that from June 20, 2014 onward, Plaintiffs’ counsel took steps to attempt to resolve the action. Counsel of perfection might have done more, especially in the face of the Defendants’ silence to most requests to resolve the matter. The standard set out in Carioca’s is low, and certainly not that of the Counsel of perfection.

29Prejudice: The onus is on the Plaintiff to prove prejudice. It is presumed where the limitation has expired, as it has done in this case. The Plaintiff says that since the Defendants said in October 2011 and May, 2012, that they were ready to go to trial, one can infer that their files are still trial ready. Any prejudice should be addressed by costs. I accept this as discharging the Plaintiffs’ onus on prejudice. The evidentiary onus now shifts to the Defendant to show actual prejudice. Presumed prejudice is not sufficient.

30In Carioca’s, the Court looked at prejudice under R. 48. The Court of Appeal rejected bald or bare assertions that people’s memories fade with age. Van Rensburg, J.A. commented that if a witness is important to the defence and it does not take the steps that a reasonable defendant would take to capture the memory of witnesses as early as possible by taking a statement, for example, then the prejudice does not arise from the delay, but from the Defendant’s failure to prepare its case. The failure to take statements or to contact witnesses early (as opposed to on the eve of the motion to dismiss) undermines the position of the Defendants.

31I take a stronger view that the Court of Appeal. A Defendant’s failure to interview witnesses in a timely way, to take statements, and to locate the witnesses again well before the trial date, is a problem created by the Defendant’s approach to the litigation, in whole or in part. A Defendant may have valid reasons to delay doing any of this, but the decision to delay interviewing material witnesses, taking statements, and making sure they are located for the purpose of trial, is one that has attendant risks that are the Defendant’s to bear.

32In this case, the Defendants’ case on prejudice is without merit. The evidence of the Defendant Dinesh Khindria on prejudice is twofold. First he says that memories fade after 10 years. Second, he says that he spoke to 4 witnesses and reports that the individuals reported to him that their memories have faded. This is hearsay evidence. It is not admissible.

Issue 2: Dismissal for Delay

33There is much overlap in the law and analysis between restoring the action to the Trial List, and dismissal for delay.

34Under Rule 24.1 of the Rules of Civil Procedure, the onus is on the Defendant to show that the delay was intentional and contumelious, or that the delay for which the Plaintiff is responsible is inexcusable and that it gives rise to a substantial risk that a fair trial of the issues will not be possible, the action should be dismissed (Clairmonte v CIBC, [1970] 3 O.R. 97 (C.A.), adopted in Wallace v. Crate’s Marine Sales Ltd., 2014 ONCA 671).

35Delay: The relevant period of the delay in this action, as indicated above, is from June, 2014 to September, 2015. The Defendants have not met their burden to show that the delay was either intentional, or contumelious, or both. In any event, the duration of the delay is only 14 months, not a delay of significance in these circumstances.

36Prejudice: The onus is on the Defendant to prove actual prejudice. The presumption of prejudice arises after the expiry of the limitation period. The time lapse between the limitation’s expiry and the motion to restore the action affects the strength of the presumption. Generally, however, the presumption of prejudice must be sustained by evidence of prejudice (see Loblaw Co.s v. Lido Ind. Prod.s Ltd. (1993) 19 CPC (3d) 183 (Ont. Gen. Div)).

37I have held, above, that the Plaintiffs’ have rebutted the presumption of prejudice. The evidentiary onus shifts to the Defendant to prove prejudice arising from the Plaintiffs’’ delay. I have held that they have failed to do so.

Disposition

38The Plaintiffs’ motion is allowed. The Action is restored to the Trial List. The Defendants’ motion is dismissed.

Costs

39The parties may address in writing who shall pay whom costs, and in what amount. Costs submissions are not to exceed 4 double spaced pages, excluding bills of costs or cases. The Plaintiffs’ submissions are to be served and filed by 4 p.m., August 26, 2016, and the Defendants’ by 4 p.m. Friday September 9, 2016.

Trimble, J. Date: August 9, 2016

COURT FILE NO.: CV-07-1073-00 DATE: 2016 08 09 ONTARIO SUPERIOR COURT OF JUSTICE RE: Manjeet Gill and 1251226 Ontario Inc., c.o.b. “Paramount Furniture Mfg.” AND: Monika Khindria, Dinesh Khindria and Dinkar Khindria