Court File and Parties

COURT FILE NO.: CV-06-324947 MOTION HEARD: MARCH 15, 2017

Superior Court of Justice - Ontario

RE: Tarion Warranty Corporation

v.

1398796 Ontario Inc., John Bargis, Katina Bargis, Marketpoint Development Corp., John Rego, Core Architects Inc., Able Engineering Inc., and The Corporation of the City of Toronto

BEFORE: MASTER R.A. MUIR

COUNSEL: Tim Gleason and Ian McKellar, agents for the lawyer for the plaintiff Peter J. Mitchell for Able Engineering Inc. and as agent for the defendants Core Architects Inc. and City of Toronto

Reasons for Decision

[1] The plaintiff brings this motion pursuant to Rule 48.11 (b) of the Rules of Civil Procedure, RRO 1990, Reg. 194 (the “Rules”) for an order restoring this action to the trial list. The plaintiff also seeks an order dispensing with mandatory mediation or, alternatively, an order establishing a timetable for the future conduct of this action.

[2] In December 2016, the plaintiff brought a motion for status hearing pursuant to Rule 48.14(5). The plaintiff’s action was due to be dismissed on January 1, 2017 pursuant to Rule 48.14(1). Master Hawkins made an order on December 22, 2016, adjourning the status hearing motion to March 15, 2017 to be heard at the same time as this motion.

[3] The parties agree that the test to be applied on a motion for a status hearing and a motion to restore an action to the trial list is the same. The onus is on the plaintiff to demonstrate that there is an acceptable explanation for the litigation delay and that the defendants will not suffer non-compensable prejudice if the action proceeds to trial. See Nissar v. Toronto Transit Commission, 2013 ONCA 361 at paragraphs 19-31.

[4] The defendants Able Engineering Inc., Core Architects Inc. and City of Toronto are opposed to the plaintiff’s motion (the “Opposing Defendants”). They ask the court for an order dismissing this action. The defendants 1398796 Ontario Inc. (“139”) and Marketpoint Development Corp. have been dissolved and did not defend this action. The defendant John Rego made an assignment in bankruptcy and is now a discharged bankrupt. The defendants John Bargis and Katina Bargis took no position on this motion.

[5] For the reasons that follow, it is my view that the plaintiff has established an acceptable explanation for the delay and that the Opposing Defendants will not suffer any non-compensable prejudice if the action is allowed to continue.

Background

[6] The events giving rise to this action began in 2000. In that year, 139 began the construction of a 61 unit townhouse condominium project near the intersection of Bloor and Kipling in the city of Toronto (the “Project”). The Project was ultimately registered as Toronto Standard Condominium Corporation No. 1592 (“1592”).

[7] Beginning in the spring of 2004, 1592, and its individual unit holders, started submitting claims to the plaintiff under the Ontario New Home Warranties Plan Act, RSO 1990 c O.31 (“ONHWP”). By that time, 139 had ceased operations and had been dissolved.

[8] The claimants alleged that 139 was in breach of its ONHWP warranties. The plaintiff assessed the situation and determined that many of the claims were valid. The plaintiff then embarked on a process of identifying, assessing and repairing the deficiencies.

[9] The plaintiff started this action on December 28, 2006. It seeks to recover damages from various parties involved in the Project who it alleges were responsible for building deficiencies giving rise to the warranty claims. It appears that the statement of claim was served soon after it was issued. The defendants delivered statements of defence between March and August 2007. The first discovery of one of the defendants took place about one year later in September 2008. It apparently became clear during this examination that many relevant documents were in the possession of a non-party. The examination was then adjourned to deal with the missing documents.

[10] In the spring of 2009, the parties agreed to an initial timetable. At the same time, efforts were being made to secure production of the additional documents. Ultimately, Master Glustein made an order on May 26, 2009 ordering this further production. Master Glustein’s order resulted in the production of thousands of additional documents.

[11] Further discoveries were scheduled for April 2010. They were then rescheduled at the request of certain defendants. A new timetable order was made by Master Haberman on June 3, 2010.

[12] Examinations for discovery took place between November 2010 and July 2011, including four days of examination of the plaintiff’s witness.

[13] The plaintiff then brought a motion to amend its statement of claim. The motion was opposed by the defendants John Bargis and Katina Bargis. On February 23, 2012, Master Dash granted the relief requested by the plaintiff and ordered costs against the Bargis defendants. A dispute arose over the form of the order that delayed the issuing of the amended claim to August 17, 2012.

[14] The parties provided answers to undertakings between December 2012 and January 2014. Most, but not all, of the plaintiff’s undertakings were answered by January 2013.

[15] At about the same time, it appears that various discussions took place regarding a possible mediation. However, some of the defendants took the position that they were not prepared to attend a mediation until the plaintiff’s damages had been sufficiently particularized.

[16] The plaintiff delivered its trial record on July 12, 2013. However, the plaintiff subsequently allowed this action to be struck from the trial list due to the mediation dispute.

[17] At the same time as the plaintiff was pursuing this action, 1592 commenced an action against the plaintiff for damages relating to what it alleged was improper and inadequate repair work undertaken pursuant to the warranty.

[18] Very few steps were taken by the plaintiff between mid-2013 and late 2016, at least in terms of this particular action. The plaintiff submits that it was busy with the 1592 action during this time as it was necessary to resolve that claim before its damages claim in this action could be fully particularized. The 1592 action was settled in November 2016.

Analysis

[19] I am satisfied that the plaintiff has provided an acceptable explanation for the delay to date. This is a complex construction claim involving many units and deficiencies. The claim involves multiple defendants. The plaintiff was not the builder. It was required to step into the shoes of the builder and assess the Project and the claims being made under the ONHWP warranty on an item by item basis. The parties have produced an enormous volume of documents. Many days of discovery have taken place.

[20] The progress of this action has not been perfect. However, that is not the applicable standard. The plaintiff only needs to provide an acceptable explanation and in my view it has done so. There has been significant documentary production. Oral discovery is mostly complete other than follow-up questions from the defendants in response to the plaintiff’s undertakings. A few of the plaintiff’s many undertakings remain outstanding but they largely relate to damages and expert evidence issues which the plaintiff submits it could not finalize until the 1592 action was resolved.

[21] I accept the plaintiff’s argument that the lengthy period of delay between 2013 and 2016 was due to it dealing with the 1592 action. At least some of the damages it is claiming in this action are a flow-through from the 1592 action. The extent of those damages is not in evidence on this motion but it is clear from the evidence that the plaintiff was and is pursuing claims in this action that arise from the 1592 action. Obviously, the plaintiff could have made this position much clearer to the defendants. It appears that the defendants were mostly kept in the dark about the 1592 claim. They were advised it existed and the potential that claims from that action may be passed along as part of this action, but very little in the way of detail was provided. The plaintiff did not advise the defendants of the progress of the 1592 claim in any meaningful way. Clearly it would have been preferable for the plaintiff to have done so. However, this lack of communication does not mean that the plaintiff has failed to explain its delay. I accept that it was taking steps to advance this claim by working toward a resolution of the 1592 claim. That is the unchallenged evidence of the plaintiff’s lawyer. It is obvious that he devoted a great number of hours to the defence and resolution of the 1592 claim. The plaintiff is now ready to finalize its expert reports and provide a full damages summary to the defendants. This action is close to being ready for mediation on the terms requested by the defendants.

[22] A motion of this nature should not be a week by week or month by month analysis of the progress of an action. The court should look at the overall delay and determine whether the explanation provided by the plaintiff is acceptable in the circumstances. In my view, it is clear from the evidence that the plaintiff always intended to continue with this action. It may not have communicated its intention to the defendants as effectively as it could have, but the intention remains. This is not a situation where an action has been ignored and forgotten. Much has been done. The plaintiff’s case is close to being ready for trial.

[23] I have therefore concluded that the plaintiff has met this element of the test. I am satisfied with its explanation for the litigation delay.

[24] I am also satisfied that the plaintiff has met its burden in terms of prejudice. Frankly, I do not see what more the plaintiff could do in the circumstances. Documents have been preserved. The parties have been extensively examined for discovery and transcripts are available. Witnesses are available. Undertakings have been answered. I agree with the plaintiff’s position that the matters in issue in this construction dispute will largely be determined on the basis of a review of documents and expert evidence. The Opposing Defendants have been aware of this claim from the outset and represented by counsel throughout. Presumably they have taken the necessary steps to preserve evidence and interview witnesses. The Opposing Defendants have not provided any specific evidence of actual prejudice. Their evidence of prejudice simply amounts to vague allegations of fading memories and a general reference to retired employees. The Opposing Defendants have not suggested that they have done anything to their detriment in reliance on the plaintiff’s delay and lack of communication. There is no evidence from the Opposing Defendants of destroyed documents or other lost evidence.

[25] The Opposing Defendants suggested in argument that at some point the delay in pursuing an action simply reaches a point where the presumption of prejudice cannot be rebutted under any circumstances. I note that the court was not provided with any authority for this proposition. I do agree with the Opposing Defendants that the presumption of prejudice grows stronger as the delay increases. The presumption of prejudice is quite strong in this case. However, for the reasons noted above, I am satisfied that the plaintiff’s evidence has rebutted even a strong presumption of prejudice.

[26] The plaintiff has met this element of the test as well.

Order

[27] I therefore order as follows:

(a) this action is hereby restored to the trial list effective December 29, 2017; (b) the plaintiff shall answer its outstanding undertakings by June 23, 2017; (c) any follow up examination of the plaintiff shall be completed by September 15, 2017; (d) mediation shall take place by October 2, 2017; (e) any further discovery motions shall be brought by November 30, 2017; (f) this timetable may be varied on consent of the parties without further court order; and, (g) if the parties are unable to agree on the issue of the costs of this motion, they shall make brief submissions in writing by no later than April 21, 2017.

Master R.A. Muir DATE: March 23, 2017