Court File and Parties

COURT FILE NO.: CV-07-333183PD1 DATE: April 4, 2017

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Joseph Iacolucci and Anna Iacolucci v. TD Waterhouse Canada Inc. and Carrie Anderson;

BEFORE: MASTER C. WIEBE

COUNSEL: Alfred J. Esterbauer for Lissaman & Associates, lawyers for Joseph Iacolucci and Anna Iacolucci; Gillian Dingle for TD Waterhouse Canada Inc. and Carrie Anderson;

HEARD: February 17, 2017 at Toronto, Ontario.

REASONS FOR DECISION

I. INTRODUCTION

[1] This is a motion by the plaintiffs, Joseph Iacolucci and Anna Iacolucci (together “the Iacoluccis”), for an order setting aside the Registrar’s dismissal order dated November 20, 2013 and setting a fresh timetable for this action. The defendants, TD Waterhouse Canada Inc. (“TD”) and Carrie Anderson oppose the motion.

[2] For the reasons stated herein, I dismiss the motion.

II. BACKGROUND

[3] The following is a detailed rendition of the facts that are not in dispute.

[4] Mr. Iacolucci, a semi-retired businessman with a career in real estate and high net worth, obtained substantial money in 2000 on the sale of certain real estate holdings. In 2001, he and his wife, Ms. Iacolucci, opened investments accounts with TD, a registered stockbroker and investment dealer. Ms. Anderson was their investment advisor. They had investment accounts with other investment dealers at the time.

[5] In 2003, the Iacoluccis invested through TD in certain investment funds issued by Olympus United Funds (“Olympus”). The plaintiffs allege that by the summer of 2005, they had sustained losses with this investment in excess of $1.2 million, as the Olympus had entered into receivership.

[6] On May 17, 2007 the plaintiffs commenced this action against the defendants claiming $1,647,001 in damages for breach of contract, negligence, negligent misrepresentation and breach of fiduciary duty. In the Statement of Claim they allege that in 2001 they had never had an investment advisor, and that they advised Ms. Anderson at that time “that their investment objectives were conservative, and their risk tolerance was low, but [that] they were prepared to explore some potential for capital growth.” They alleged that they told Ms. Anderson that their investment experience was “limited to bonds and income mutual funds.”

[7] In the Statement of Claim the Iacoluccis also allege that Ms. Anderson in 2003 advised them to invest in “First Horizons Holdings Ltd.,” an Olympus company, and that this was as safe an investment as a GIC but with more growth potential. They allege that they invested $250,000 in this company based on their trust of Ms. Anderson, and that Ms. Anderson without informing them then invested in other Olympus funds, all of which lost value by 2005. They allege that Ms. Anderson’s investment recommendation concerning Olympus “was wholly inappropriate for their investment objectives, risk tolerance and level of experience.” They allege that the Olympus investments were unauthorized, as these investments were contrary to industry standards, practice, rules and regulations, including the “Know Your Client” rule.

[8] The defendants delivered their Statement of Defence on July 6, 2007. In their Statement of Defence, the defendants deny any liability. They deny that the plaintiffs had no prior investment advisors, that the plaintiffs told them that they needed an income stream and would periodically be removing capital, and that the plaintiffs were conservative investors. They allege that Mr. Iacolucci demanded “above average market performance.” They allege that the plaintiffs signed documents in which they represented that they were capable of evaluating and bearing the risks of securities that TD bought and sold for them. They allege that the plaintiffs signed documents in 2003 concerning the Olympus investments in which they represented that they had the knowledge and experience to evaluate and assess the merits of that investment. They allege that they kept the plaintiffs fully informed of the Olympus investment throughout, and received the plaintiffs’ informed approval. They deny “any dependence or vulnerability” on the part of the Plaintiffs.

[9] The parties started preparing their affidavits of documents and productions. In February, 2008, Mr. Lissaman sent correspondence seeking to set up discoveries. On February 21, 2008 Laura Paglia, then counsel for the defendants, emailed Mr. Lissaman advising that her clients were “generally available provided, of course, full production is made in advance.”

[10] Four months later, on June 25, 2008, Mr. Lissaman’s office emailed asking for discovery dates. Ms. Paglia responded by email dated July 9, 2008 stating that she was prepared to proceed with discoveries on four specified September, 2008 dates, but on condition that full production by the plaintiffs take place by August 15, 2008. She specified that the plaintiffs’ productions had to include two sets of documents: account opening documents and month-end statements from brokerage firms in which the Iacoluccis held accounts prior to and at the same time as the TD investments; and relevant tax returns and notices of assessment in order to determine the tax benefit the Iacoluccis claimed from their losses. Concerning the first set of documents, Ms. Paglia invited Mr. Lissaman to inform her of the identity of the plaintiffs’ other investment firms for the purpose of getting them to disclose the specified documents in the event the Iacoluccis had not kept those documents. Mr. Lissaman responded by email dated August 20, 2008 stating that his client “was providing me with some tax info,” and that his office would be forwarding some discovery dates.

[11] It is undisputed that the rules governing investment firms at the time, those of the Investment Industry Regulatory Organization of Canada (“IIROC”), required them to retain documents for no longer than 7 years.

[12] Nothing happened for almost a year. There was no production and discovery. On June 4, 2009 the Registrar issued and served a Status Notice. On September 2, 2009, three months later, Mr. Lissaman sent Ms. Paglia a Status Hearing Request Form which indicated that the parties could not agree to a timetable or status hearing in writing because of “production of documents and timing of discoveries.” Ms. Paglia responded by email dated September 3, 2009 enclosing her clients’ draft affidavit of documents and stating she did not think there was a disagreement about production and discovery. She invited Mr. Lissaman to propose a timetable that would include the plaintiffs’ production “in a manner responsive to the issues we’ve raised in the past.” Counsel eventually executed a timetable on September 18, 2009 which provided for deadlines for discoveries, undertakings, motions and a mediation, and required that the case be set down for trial by June 30, 2010. Master Glustein signed the timetable order on September 25, 2009.

[13] On November 18, 2009, Mr. Lissaman delivered Mr. Iacolucci’s affidavit of documents. On November 20, 2009 Ms. Paglia emailed Mr. Lissaman advising that this affidavit of documents included Mr. Iacolucci’s notices of assessment from 2003 to 2006, that she required the previously requested other tax documents and “any documentation regarding his other investment experience,” and that Mrs. Iacolucci’s affidavit of documents remained outstanding. There was no response.

[14] On May 13, 2010 Mr. Lissaman advised Ms. Paglia by fax that he was “forwarding” Mrs. Iacolucci’s affidavit of documents plus “Document Briefs.” This in fact was not done at that time.

[15] On May 25, 2010 the defendants delivered copies of their productions. On June 23, 2010 Mr. Lissaman’s clerk delivered a new timetable as “we are going to require more time to complete discoveries and mediation before this matter is set down for trial.” The parties then agreed to a new timetable, a second timetable, specifying deadlines for discoveries, undertakings, motions and a mediation, and requiring that the action be set down for trial by March 31, 2011. Master Glustein signed the new timetable order on June 6, 2010.

[16] On July 8, 2010 Mr. Lissaman wrote Ms. Paglia a letter seeking discovery dates in September and October, 2010. On August 9, 2010, Mr. Lissaman sent Ms. Paglia an email addressing for the first time in writing the issue of the two sets of documents Ms. Paglia had demanded two years earlier on July 9, 2008. He stated that his clients did not have new account forms or statements of investments prior to or contemporaneously with their time at TD as they “never had an investment advisor before Carrie Anderson.” As to the tax documents, Mr. Lissaman stated that he had contacted his clients’ accountant for particulars of the tax treatment of the losses.

[17] On August 24, 2010, Ms. Paglia responded by email pointing out that the statement about the investment experience of the plaintiffs was inaccurate as three documents in the defendants’ productions referred to Mr. Iacolucci’s investments at Nesbitt Burns. She reiterated her request for the investment experience documentation. On September 30, 2010, Mr. Lissaman forwarded a statement of capital gains and losses for 2005 for Mr. Iacolucci. On October 1, 2010 Ms. Paglia sent an email requesting Mr. Iacolucci’s notice of assessment for 2005 and reiterating her demand for the investment experience documentation. Mr. Lissaman forwarded the requested notice of assessment on October 21, 2010.

[18] Again, nothing happened for an extended period of time. On March 29 and April 8, 2011, Mr. Lissaman finally delivered Mrs. Iacolucci’s affidavit of documents.

[19] On May 2, 2011 Mr. Lissaman sent an email requesting discovery dates. Shortly thereafter he delivered another timetable. After a discussion, counsel agreed to a timetable on May 19, 2011. The consent timetable order, the third one, was dated July 6, 2011. For the first time, the timetable specified a deadline for “further Discussion regarding Productions.” This was to be done by July 31, 2011. It set deadlines for discoveries, motions for undertakings and refusals and a mediation, and required that the action be set down by July 31, 2012.

[20] Nothing happened for almost a year, including no “discussion.” On June 21, 2012, Mr. Lissaman’s assistant emailed Ms. Paglia enclosing a new timetable and advising that another timetable order was “in order,” as the set down deadline was approaching. Mr. Lissaman prepared a motion record for a status hearing, which motion record contained an affidavit of his assistant stating that the plaintiffs had obtained and served “their expertise,” and that the progress of the action had been impeded by “scheduling conflicts.” Ms. Paglia responded by email dated July 17, 2012 pointing out that both statements were wrong and needed to be amended. She stated that the “scheduling conflicts” were Mr. Lissaman’s.

[21] The parties agreed to a new timetable on July 16, 2012, a fourth one. It called for the “further Discussion regarding Productions” to be completed by September 30, 2012, and set deadlines for discoveries, motions for undertakings and refusals and mediation, and specified a set down deadline of July 31, 2013. Master Hawkins signed the timetable order on August 3, 2012.

[22] Nothing happened for months. As to the “discussion,” on October 23, 3012, Ms. Paglia sent Mr. Lissaman an email stating that the matter was not ready for discovery given the outstanding investment experience documentation. She stated that, if the plaintiffs had not retained that documentation, she was prepared to obtain it. She enclosed authorization forms and directions to be filled out by the plaintiffs in this regard.

[23] Nothing happened for six months. On April 30, 2013, Mr. Lissaman’s assistant emailed Ms. Paglia advising, for the first time, that the Iacoluccis held accounts with Scotia McLeod and The Cable Group prior to and contemporaneously with the TD accounts. She advised that they had been in contact with Scotia McCleod, and she advised as to the cost of retrieving the documents from that firm. Ms. Paglia responded by email dated May 2, 2013 stating that Mr. Lissaman should get the documents from those two firms. On May 23, 2013, Mr. Lissaman’s assistant advised by email that they had also requested documents from Echlin Investments and BMO Nesbitt Burns. In this email, the assistant asked for discovery dates and advised that Mr. Lissaman would be preparing a motion for yet another timetable order.

[24] On June 13, 2013, Mr. Lissaman’s assistant forwarded to Ms. Paglia signed copies of the authorization forms for Echlin and BMO Nesbitt. She also enclosed a proposed new timetable, a fifth one, which included deadlines for the conclusion of the “further Discussion regarding Productions” (September 30, 2013), discoveries (March 31, 2014), motions for undertakings and refusals (45 days after receipt of the transcript) and mediation (May 31, 2014), and set a deadline of July 31, 2014 for setting the action down for trial. Ms. Paglia consented to the timetable on June 17, 2013.

[25] Mr. Lissaman prepared an in writing motion for the new timetable and filed it on June 18, 2013. The motion came before Master Dash on July 24, 2013. He adjourned the motion to a case conference before him on August 19, 2013. In his endorsement, Master Dash stated that it had been 3 ½ years since the first discovery deadline and no discoveries had taken place, with the excuse each time being “scheduling conflicts” and difficulties in obtaining documents. He required counsel to appear and explain the delay, and provide him with peremptory dates for discoveries and a mediation. He also extended the deadline for the dismissal of the action to August 30, 2013. There is no evidence that this endorsement was delivered. Mr. Lissaman made no effort to investigate the status of his in writing motion.

[26] On August 19, 2013, Master Dash made a further endorsement indicating that no one had attended the case conference that day. He dismissed the motion for the new timetable without prejudice to the moving party moving again in this regard in motions court. There is no evidence that this endorsement was delivered.

[27] On September 22, 2013, and responding to a call from Mr. Lissaman’s assistant for discovery dates, Ms. Paglia send an email to Mr. Lissaman advising that she had not received any documentation from “the Cable Group, BMO Nesbitt Burns or Echlin Investments.” She advised that she had “followed up directly” with the latter two. She asked Mr. Lissaman to make inquiries from these third parties as the documentation was necessary for the discoveries.

[28] On September 24, 2013 Echlin sent Ms. Paglia a memo advising that she should ask the Iacoluccis for their account application forms and monthly statements. Ms. Paglia emailed this memo to Mr. Lissaman on September 30, 2013. Four months passed. On January 28, 2014 Mr. Lissaman emailed Ms. Paglia advising that Mr. Iacolucci could not locate Echlin records, and that “a third party motion” may be the way to secure those records.

[29] In the meantime, the extended deadline for setting the action down for trial passed. The Registrar dismissed the action for delay on November 20, 2013. This order appeared in Ms. Paglia’s file, but not in Mr. Lissaman’s. There is no evidence that the order was delivered to Mr. Lissaman.

[30] John A. Fabello took over carriage of the defence. In January, 2014, Mr. Lissaman phoned Mr. Fabello seeking discovery dates. On January 28, 2014, Mr. Fabello left Mr. Lissaman a voicemail message that the action was dismissed. On the same day he sent Mr. Lissaman an email enclosing a copy of the dismissal order. Mr. Lissaman, at his cross-examination, was asked for the metadata that would confirm whether he opened that email, but he has not produced it. Mr. Lissaman did nothing in relation to the order. In his affidavits, he states he was not aware of it.

[31] Mr. Lissaman’s affidavits indicate that in the latter half of 2013 he suffered from a health issue, namely sleep apnea, depression and anxiety. This caused difficulty with stress, sleep, memory and concentration. He sought medical treatment in November, 2013. He states that, as a result, he “was unable to attend to the demands of my busy practice.” He took a leave from the office in February, 2014, but returned to his practice thereafter. He blames this medical condition for his lack of action concerning the dismissal order.

[32] On March 10, 2014 Mr. Lissaman left Mr. Fabello a voicemail message seeking to discuss the case. There was then an exchange of emails between the two between March 11, 2014 and April 18, 2014 all of which concern the proposed discussion and all of which contain the January 28, 2014 Fabello email referencing and enclosing the dismissal order. Again, Mr. Lissaman did nothing about the order. He states he was not aware of it. No discussion took place.

[33] Nothing happened for over 16 months. On August 27, 2015, Mr. Lissaman sent Mr. Fabello a letter enclosing the Supplementary Affidavit of Documents of Mr. Iacolucci which contained 14 documents. 11 of these documents are listed under the Echlin name and have dates ranging from June 11, 2006 to April 16, 2008. The other 3 documents are tax related. In the covering letter, Mr. Lissaman stated that this Supplementary Affidavit of Documents contained “the additional documentation that the defendants had been requesting of the plaintiffs before being prepared to move this file forward.”

[34] On September 1, 2015 Mr. Fabello sent a responding letter stating that the “sole cause” of the substantial delays in this action, “and of the fact that the action was dismissed for delay,” was the plaintiffs. Mr. Lissaman says he then examined the court file as to the status of this matter, which file showed that the action had been administratively dismissed on November 20, 2013. Lissaman put his insurer on notice. He states in his affidavit that, until this time, he was not aware of the dismissal order and believed that the fifth timetable had been ordered.

[35] The professional liability insurers appointed Mr. Esterbauer. He investigated the matter. On February 23, 2016, Mr. Esterbauer sent an email to Mr. Fabello stating that “this is a case in which there was inadvertence on the part of counsel.” At the argument of the motion, Ms. Dingle, counsel for the defendants, confirmed that her clients had no issue with events in this action after February 23, 2016.

[36] On August 24, 2016 the plaintiffs brought this motion returnable October 17, 2016. The motion contained two affidavits, one sworn by Mr. Lissaman on May 10, 2016 and the other sworn by Iacolucci on May 6, 2016. In his affidavit Mr. Iacolucci stated that he intended throughout to pursue this action, and that he had kept “in regular contact” with Mr. Lissaman. The parties adjourned the motion. The defendants served their responding motion record on December 8, 2016 containing the affidavit of Mr. Fabello. The plaintiff filed another affidavit sworn by Mr. Lissaman on January 19, 2017. Cross-examinations of Messrs. Lissaman and Iacolucci took place on January 19 and 25, 2017.

[37] At the argument of the motion, Ms. Dingle, counsel for the defendants, confirmed that of the documents that had been requested by Ms. Dingle on July 9, 2008, the following had been produced: concerning Scotia McLeod, monthly trading statements for 2001 to 2006, but not the account opening documents; concerning Nesbitt Burns, the client account agreement dated August, 2000 plus some, but not all, monthly trading statements; concerning Echlin, a portfolio month-end value dated June 11, 2006, a summary of dispositions of capital property in 2006 plus letters attaching trading summaries and calculations of investment management fees, but no contract document; concerning the Cable Group, no documents.

III. ISSUES

[38] Having reviewed the facta, authorities and heard the arguments, I believe that the following are the issues to be determined:

a) Is the explanation for the delay in the action adequate? b) Was the failure to meet the mandated time limit due to inadvertence? c) Was the motion to set aside the dismissal brought promptly? d) Has the delay prejudiced the defendants? e) What is the overall just result in the context of this case?

IV. ANALYSIS

(a) Is the explanation for the delay adequate?

[39] In deciding whether to set aside a dismissal order, the Court of Appeal has made it clear that a contextual approach must be taken by the court, namely one through which it must “consider and weigh all relevant factors to determine the order that is just in the circumstances of the particular case”; see Sciani v. Prochnicki, 2007 ONCA 63 at paragraph 23. In conducting this contextual analysis, courts are guided by the four factors identified in the case of Reid v. Dow Corning Corp., [2001] O.J. No. 2365 at paragraph 41: whether the explanation for the delay is adequate; whether there was inadvertence (by the plaintiffs or their lawyer) in missing the deadline in question; whether the motion to set aside the dismissal order was brought promptly; and whether the defendants have suffered no significant prejudice on account of the delay.

[40] The onus to establish these factors rests on the plaintiffs. A failure to establish some, but not all, of these factors may or may not be fatal to the motion depending on the circumstances. The Reid factors must be considered in the overall context of the case. The two competing values that must be balanced on these motions are the following: the need to enforce timelines to promote timely justice; and the need to instill flexibility to allow cases to be determined on their merits and avoid “draconian” results; see Kara v. Arnold, 2014 ONCA 871 (Ont. C.A.) at paragraph 9.

[41] I will, therefore, consider the Reid factors in order. First, was there an adequate explanation for the delay in this case? The period of delay to be accounted for runs from the date of the statement of defence, July 6, 2007, to the final deadline for setting the action down for trial, August 30, 2013; see Kara, op. cit., at paragraph 15. This is a period of over 6 years.

[42] That there was an inordinate delay in this case during that 6 year period is undisputed. The case has not even embarked on examinations for discovery. The explanation offered by the plaintiffs is twofold: the fault for the delay lies with the defendants in requiring consistently and unnecessarily that the plaintiff provide third party documentation before proceeding to discovery; and defendants essentially forgave any fault by the plaintiff for the delay by consenting to the five timetable orders.

[43] Concerning the third party documentation, I do not accept the plaintiffs’ argument. The issue was the investment experience documentation, not the tax records. First, the defendants were entitled to insist on full production before going to discovery; see Machacek v. Ontario Cycling Assn., 2010 ONSC 7065 (SCJ) at paragraph 41. There was no dispute that the third party documentation was either in the possession of the plaintiffs or in their “power” to obtain. Furthermore, the defendants were in not position to move for third party production without being made aware of the identity of all the other firms and without getting the plaintiffs’ authorization to get the third party documentation, all of which did not happen before April, 2013. Finally, the documents requested were, in my view, quite relevant, as the investment profile of the plaintiffs at the time of the TD investment accounts was made a central issue in the case by the pleadings.

[44] Second, the plaintiffs never challenged the entitlement of the defendants to these documents prior to discovery. They never took steps (such as a motion for a discovery plan) to force the issue of discoveries. Mr. Lissaman stated in cross-examination that he did not object to the defendants’ position because he had worked with Ms. Paglia in the past and wanted to draw on the established goodwill between them to deal with this “hurdle.” That might explain a short delay of perhaps a half year in dealing with this issue. But not one, like this one, of over 5 years of delay (and beyond) from the defendants’ first demand for the documentation, all without objection. I note that the parties eventually included in the third timetable order a deadline for “further Discussion about Productions,” which clearly referred to this third party production process. The inference to be drawn is the plaintiffs, implicitly if not explicitly, undertook to obtain the requested documentation before discoveries. It was incumbent on them, therefore, to do so as quickly as possible.

[45] The evidence on the motion indicates that the plaintiffs did not comply with this undertaking at all, or at best in an evasive or dilatory manner. First, it took the plaintiffs over two years just to respond to Ms. Pagllia’s July 9, 2008 demand for the documentation. Second, when they finally did respond through Mr. Lissaman’s email of August 9, 2010, they did so untruthfully. They denied that they had had another investment advisor other than Ms. Anderson and that there were prior or contemporaneous investment documents. This was untrue, as Ms. Paglia immediately pointed out by referring Mr. Lissaman to the plaintiffs own productions. Third, it then took the plaintiffs until April and May, 2013, almost three years later, to confirm the truth about their other investment experience and make inquiries of the four other firms. This was almost five years after the demand was made. Fourth, there was no explanation given for this delay other than the general and unsubstantiated statements in Mr. Lissaman’s affidavits that the plaintiffs “continued to make efforts” to find this documentation. I note that, when Mr. Lissaman tried to justify his fourth timetable to the court by referring to “scheduling conflicts,” Ms. Paglia was careful to point out in response that it was Mr. Lissaman’s scheduling conflicts that were at fault, a response that was not denied. Fifth, and mostly importantly, this delay is not that of Mr. Lissaman, or at least not his alone, as Mr. Iacolucci confirmed in his affidavit and on cross-examination that he kept in regular contact with his lawyer and was advised in a timely way of the third party document issue. The inference I draw from these facts is that the plaintiffs caused the delay that lay the foundation for the dismissal order, and that they do not have an adequate explanation for it.

[46] Concerning the “forgiveness” argument, I do not accept it. The Court of Appeal made it clear in 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544 at paragraph 25 that a consent timetable order is a “lifeline” provided to the plaintiff, not a forgiveness of the delay. The Court stated the following in that paragraph: “The plaintiff did not emerge from the January 2010 status hearing [where a consent timetable was ordered] with a clean slate and it was open to the status hearing judge to consider the entire history of delay.” I say the same in relation to this case concerning each of the five timetables the defendants consented to. They were nothing more than “lifelines,” and the whole history of delay remains open for consideration.

[47] Mr. Esterbauer argued that I should consider the defendants’ conduct in reviewing the delay. I agree that I should do so, but only when the defendants have interfered with the reasonable advancement of the case. The basic rule is that plaintiff has the primary responsibility to move a case forward, and generally suffers the consequences of delay as a result; see Wellwood v. Ontario Provincial Police, 2010 ONCA 386 at paragraph 48. When the defendants offer resistance or engage in tactics that are not consistent with a willingness to move a case forward expeditiously, the court can consider the conduct of the defendants; see 1196158 Ontario Inc., op. cit., at paragraph 29. Passivity by the defendants has been viewed as an adequate explanation for delay, as was made clear by the Court of Appeal in H. B. Fuller Co. v. Rogers, 2015 ONCA 173 at paragraph 42.

[48] The case before me, however, is not one of unreasonably disruptive or passive defendants. The defendants consistently demonstrated a willingness to proceed with discoveries as long as the plaintiffs made timely disclosure as required by the Rules and their own undertaking to do so. The defendants did not sit on their hands while demanding the third party documents. They prepared and delivered their affidavit of documents and productions by May, 2010, three years after the close of pleadings. As stated earlier, they were not in a position to move for the third party production until they were made aware of the identity of the other firms and had obtained the authorization of the plaintiffs to obtain the production. This happened no sooner than in 2013, namely about 5 years after the demand for the third party documentation. Furthermore, the defendants reasonably relied on the undertaking of the plaintiffs to obtain the documentation. I do not find that the defendants were at fault for failing to move this case forward.

[49] I, therefore, find that that the plaintiffs delayed this case prior to August 30, 2013, and have not provided an adequate explanation for the delay.

(b) Was the failure to meet the required time limit due to inadvertence?

[50] The fourth consent timetable order required that this action be set down for trial by July 31, 2013. The parties signed a new consent timetable and Mr. Lissamore brought an in writing motion in a timely way to have it ordered. It appears that Master Dash’s endorsement requiring an attendance by counsel to explain the delay and impose firm deadlines was not sent to the parties. However, Mr. Lissaman acknowledged in cross-examination that he made no effort to follow up on his motion. His evidence was that he just assumed the new timetable had been ordered, and acted according to that timetable. It was undisputed that he should have followed up on his motion.

[51] Was there inadvertence in missing the set down deadline, a deadline that Master Dash extended to the end of August, 2013? Evidence came out in the motion that Mr. Lissaman was suffering from a medical condition at this time, a condition that caused him to avoid his practice. This evidence was not disputed. I concede that this medical condition may have played some role in causing Mr. Lissaman to avoid investigating his in writing motion, thereby causing the plaintiffs to miss the set down deadline. This is what Mr. Esterbauer maintained. Generally, such evidence would, in my view, be sufficient to conclude that the missing of the set down deadline was inadvertent. However, I am not prepared to do so in this case. As Ms. Dingle pointed out, the evidence must be placed into a broader context.

[52] The plaintiffs made no real effort to abide by the fifth consent timetable. The fifth consent timetable set four deadlines for interlocutory steps and a deadline of July 31, 2014 for setting the case down for trial. The first deadline was September 30, 2013, namely before the dismissal order. This deadline was for the conclusion of the “further Discussion regarding Productions.” It was the defendants, not the plaintiffs, who attempted to meet this deadline with correspondence in September, 2013. Mr. Lissaman took four months to respond to these inquiries in January, 2014. There was then an exchange of correspondence between counsel in March and April, 2014 about “discussing” the case, a discussion that never happened. This last exchange was after Mr. Lissaman had dealt with his health issue in February, 2014. There was then nothing that happened for 16 months when suddenly Mr. Lissaman delivered a Supplementary Affidavit of Documents on August 27, 2015. There was no explanation for this 16 month delay other than Mr. Lissaman’s unsubstantiated statement that the plaintiffs continued to look for the third party documentation.

[53] I note an important absence during this time period. For the first time, the plaintiffs made no attempt to get a sixth timetable when the set down deadline in the fifth timetable approached in July 2014, and indeed after it passed. I note again the evidence of Mr. Iacolucci that he kept in regular contact with his lawyer. A reasonable inference to draw from these and the above noted facts, and that I do draw, is that, contrary to their protestations to the contrary, the plaintiffs effectively abandoned their case after the fifth timetable, at least for two years.

[54] There are facts surrounding the discovery of the dismissal order that bolster this inference of an abandonment of this case by the plaintiffs. I will discuss these additional facts below.

[55] As a result, I do not find that the failure by the plaintiffs to meet the set down deadline was due to inadvertence.

(c) Was the motion to set aside the dismissal order brought promptly?

[56] There is no issue about a delay in bringing this motion after Mr. Esterbauer sent his email to Mr. Fabello on February 23, 2016. The issue is whether there was a delay in bringing the motion prior to that date.

[57] Based on the evidence in this motion, I find that there was a substantial delay. Mr. Lissaman maintains that he first learned about the dismissal order when Mr. Fabello advised him of it in his letter dated September 1, 2015. That assertion is simply not credible. Mr. Fabello not only advised Mr. Lissaman of the order by phone on January 28, 2014, 19 months earlier, but sent Mr. Lissaman a copy of the order by email that same day. Mr. Lissaman did not disclose the metadata concerning that email which would have confirmed that he had opened and read the email, including the order. I draw an adverse inference from this that Mr. Lissaman in fact opened and read the email and the dismissal order on January 28, 2014.

[58] While Mr. Lissaman was suffering from his health condition at this time, a seasoned lawyer like Mr. Lissaman would have, and should have, known enough to at least get another lawyer to bring the necessary motion in a timely way. This is the case if Mr. Lissaman in fact had instructions from the plaintiffs to move the case forward. That did not happen.

[59] That did not happen after Mr. Lissaman and Mr. Fabello exchanged emails in March and April, 2014, all of which enclosed that same January 28, 2014 Fabello email referring to the dismissal order. This exchange is important because it was after Mr. Lissaman dealt with his health issue in February, 2014. I note again the evidence of Mr. Iacolucci that he kept in regular contact with his lawyer. The reasonable inference to draw from these facts, and from the facts concerning the plaintiffs’ non-compliance with the fifth timetable discussed earlier, and that I do draw, is that at this time prior to August, 2015 the plaintiffs had effectively abandoned their case.

[60] I, therefore, find that there was an unjustified delay in bringing the motion.

(d) Has the delay prejudiced the defendants?

[61] The issue of prejudice is important. The plaintiff has the onus of proving that the delay in the action and the motion has not prejudiced the defendants in fact. Such actual prejudice may include the following: the death of an important witness, the inability to locate a witness, the inability of a witness to recall important facts or the loss of important evidence, including documents; see 1196158 Ontario Inc., op. cit., at paragraph 31.

[62] There is evidence on this motion that some of the long-requested investment experience documentation was lost due the delay. It is undisputed that the rules of the Investment Industry Regulatory Organization of Canada in effect at the time required investment firms to hold documents for no more than 7 years. The period of the TD account in question was 2003 to 2005. When the plaintiffs finally acknowledged the truth on April 30, 2013 that they had had other investment advisors and other investment documents, it was beyond 7 years from the period in question. Had the plaintiffs responded in a timely way to the request in 2008, presumably all of the documents for the relevant period could have been retrieved from the other firms. This, in my view, creates a presumption of prejudice on account of the delay due to the missing documents, a presumption the plaintiffs must rebut.

[63] What were the missing documents? Some of the investment experience documentation was obtained in the end. At the time of the motion, what was missing were the two account opening statements from Scotia McLeod and Echlin and some monthly trading statements from Nesbitt Burns. The account opening statements appear to be the important documents as they bear directly on the plaintiffs’ assertion in the action that they were inexperienced and had a conservative investment profile at the relevant time. I note that in the client account agreement for Nesbitt Burns dated August, 2000 Mr. Iacolucci indicated that he had a “good” knowledge of investing, and that his investment objective was “growth” as opposed to “conservative income.” The missing account opening statements would have, in my view, assisted the defendants in establishing that this “growth” profile was consistent for the plaintiffs throughout the relevant period.

[64] Mr. Esterbauer argued that the missing documents are not of critical importance to the case. He argued that the central issue in the case is whether Ms. Anderson received instructions to make the Olympus investments. I agree that the missing documents may not have been critical, but they were important. In reviewing the pleadings, I conclude that the issue of Ms. Anderson’s authority to invest is more subtle than as portrayed by Mr. Esterbauer. What is alleged is that Ms. Anderson relied on general authority for most of the Olympus investments, which general authority turned on the plaintiffs’ investment profile. Therefore, it is an issue as to whether she assessed her clients’ investment profile properly in making the subject investments. The missing documents, it appears, would have assisted in determining the plaintiffs’ investment profile at the time, namely whether it was aggressive or conservative, and therefore are important.

[65] Mr. Esterbauer made the further argument, however, that the defendants will be protected from any such prejudice by the adverse inference the court can draw against the plaintiffs from their failure to disclose the missing documents. He relied on the decision of Justice Wilson in Klaczkowski v. Blackmount Capital Inc., 2015 ONSC 1600 (SCJ), a decision that involved facts very similar to this case. Here the plaintiffs were suing their investment advisers for breach of contract, breach of fiduciary duties, negligence and fraudulent misrepresentation in relation to alleged losses in the plaintiffs’ investment accounts. The appeal in question was from a master’s order refusing to set aside a dismissal order issued after the failure to set the action down for trial in accordance with a first status hearing timetable order issued 2 ½ years after the commencement of the action. There were only two years and two months between the statement of defence and the relevant set down deadline in the status hearing order. The defendants alleged in part that they were prejudiced by the failure of the plaintiffs to produce documentation about their investment experience with other firms. Justice Wilson did not accept that argument, stating in paragraph 22 that “an adverse inference may be drawn against the plaintiffs if the documents are no longer available as a result of delays caused by the plaintiffs after the date that defence counsel requested their production.” The dismissal order was set aside.

[66] Ms. Dingle argued that this decision is inconsistent with the decisions of other judges. For instance, she pointed to the decision of Justice Goodman in Melanson v. ControlChem Canada Ltd., 2013 ONSC 4990 (SCJ) where the underlying action was by the plaintiff for wrongful termination of employment. The motion was by the plaintiff to set aside a dismissal order issued for failure to set an action down for trial by the deadline set in a status hearing order. The deadline was three years and three months after the commencement of the action. The defendants argued that they had been prejudiced by the repeated refusal by the plaintiff to produce “Visa credit card statements.” The court found these statements to be relevant, stated that their contents may support the issues raised in the statement of defence, and used this as a basis for finding that there was prejudice in the delay. The dismissal order was not set aside.

[67] On balance, I prefer the latter line of authority, at least for this case. The contents of the missing investment documents may have had value to the defendants in excess of what a simple adverse inference could bring them. For instance, the missing documents might have shown that the plaintiffs not only had a general “growth” investment profile at the time, but were in fact high risk takers. This could have given the defendants an advantage they now will not have. Therefore, I am drawn to the conclusion, and I do conclude, that the plaintiffs have not rebutted the presumption of some actual prejudice to the defendants on account of the lost documents due to the delay.

[68] I also add a comment about the prejudice arising from simply the passage of time. A presumption of prejudice arises when an action is dismissed after the passage of a limitation period, “the strength of which [presumption] increases with the passage of time”; see Wellwood, op. cit. at paragraph 60. Memories are presumed to fade, and “even if documents are not lost, their significance becomes shrouded”; see Wellwood, op. cit. at paragraph 72. In this case, the facts on which the action are based date from 2001 to 2005, namely 12 and 16 years ago. The limitation period has passed several times, which per se creates a strong presumption of prejudice. Furthermore, there is actual evidence of faded memory in this motion. In his cross-examination, Mr. Iacolucci, when asked as to when Mr. Lissaman advised him to look for the investment documentation, he said “don’t ask me exactly when, because it’s a long time ago and, you know, I don’t remember if I ate breakfast yesterday.”

[69] I, therefore, conclude that the plaintiffs have failed to establish that the defendants are not prejudiced by the delay of this case.

(e) What is the overall just result in the context of this case?

[70] As stated earlier, the four Reid must be weighed in the general context of this case for the purpose of this motion. I have found that the plaintiffs have failed to meet all four Reid factors. The contextual analysis requires that I balance the following two competing values to make my final determination: the need to enforce timelines to maintain public confidence in the administration of justice; and the need to determine cases on their merits and avoid “draconian” results flowing from timeline violations; see Kara, op. cit., at paragraph 9. In balancing these two factors, I must be mindful that the court is to be biased in favour of determining a case on its merits, particularly when the primary culprit of the delay is counsel as opposed to the client; see Fuller, op. cit., at paragraph 27.

[71] In weighing these competing values, and being mindful of the court’s bias in favour of determining cases on their merits, I have reached the conclusion in this case that the motion to set aside the dismissal order must be dismissed. To resurrect the action over 3 years after it was dismissed when the original delay of over 6 years that laid the foundation for the dismissal order was caused by the plaintiffs’ evasive and dilatory conduct in fulfilling their undertaking to obtain third party documentation, and when later they effectively abandoned the action for a significant period of time at and after the time of the dismissal order, would bring the administration of justice into disrepute. Notably, the evidence indicates that this conduct was as much that of the plaintiffs as of their lawyer. Furthermore, there was actual prejudice to the defendants resulting from this delay. Also, there is a heavy presumption that the passage of between 12 and 16 years from the time of the events in issue have caused prejudice due to fading memories. In addition, the defendants were not disruptive or passive during the delay. This all outweighs the court’s natural bias in favour of trying cases on their merits. I have determined that to try this case on its merits at this late hour would cause an unfairness to the defendants that must guide the court.

V. CONCLUSION

[72] I, therefore, dismiss the plaintiffs’ motion.

[73] Concerning the costs of this motion, Mr. Esterbauer indicated that the moving party is not seeking costs. Ms. Dingle filed a costs outline that shows a partial indemnity amount of $13,441.91. Costs usually follow the event. In this case, the defendants were successful in defeating the motion. If the parties cannot agree on costs, I herewith require that the defendants make written submissions on costs, to be served and filed on or before April 18, 2017. The plaintiffs have up to and including May 2, 2017 to serve and file written responding submissions on costs. Reply written submissions on costs can be served and filed on or before May 5, 2017.

DATE: April 4, 2017

MASTER C. WIEBE