Court File and Parties

COURT FILE NO.: CV-12-451084 MOTION HEARD: 2017-05-02 REASONS RELEASED: 2017-05-11 SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

KWIK SNAKS LTD. Plaintiff/Defendant by Counterclaim

- and-

ANTHONY CHEPIL a.k.a. TONY CHEPIL, RICHARD ZINCK, ANTHONY CHEPIL a.k.a. TONY CHEPIL carrying on business as SOUTH STREET SANDWICHES, RICHARD ZINCK carrying on business as SOUTH STREET SANDWICHES and SOUTH STREET SANDWICHES INC. Defendants/Plaintiffs by Counterclaim

BEFORE: MASTER M.P. McGRAW

COUNSEL: Domenic Saverino Email : domenic@westonlaw.ca Fax: (905) 856-1213 -for the Plaintiff, Kwik Snaks Ltd.

Anthony Chepil Email: tonychepil@gmail.com Fax: (416) 628-2454 -self-represented and representative for the other Defendants/Plaintiffs by Counterclaim

REASONS RELEASED: May 11, 2017

Reasons for Endorsement

I. Overview

[1] This is a motion by the plaintiff/defendant by counterclaim, Kwik Snaks Ltd. (“Kwik Snaks” or the “Plaintiff”) under Rule 37.14(8) of the Rules of Civil Procedure seeking to set aside the Order of the Registrar Dismissing Action For Delay dated January 25, 2017 pursuant to Rule 48.14(1) (the “Dismissal Order”) and establish a new timetable. This motion is opposed by the defendants/plaintiffs by counterclaim (the “Defendants”). The defendant Anthony Chepil, principal of the defendant South Street Sandwiches Inc., represents himself and the other Defendants.

[2] Although this is a relatively straightforward action for the collection of amounts arising from outstanding invoices, this matter has a long procedural history. The Defendants have brought 3 motions for documentary production (twice seeking to dismiss this action) and the parties have exchanged over 10 Affidavits of Documents and produced over 5,000 documents on a piecemeal basis. The Plaintiff set this matter down for trial in February 2013 and tried to book pre-trial and trial dates over the Defendants’ objections, however, this action was struck from the trial list on March 31, 2014. The deluge of documentary production, multiple motions and procedural steps have delayed this action such that over 5 years after it was commenced, examinations for discovery have yet to take place.

II. Background

[3] This action was commenced by the Plaintiff on April 12, 2012. The Plaintiff seeks payment of invoices in the amount of $115,369.25 with respect to the supply of food and related goods by Kwik Snaks to the Defendants from in or about March 2010 to February 2012.

[4] In October 2012, the Plaintiff requested that a roster mediator be appointed and on February 12, 2013 mediation was confirmed for March 7, 2013. As pleadings had closed, the invoices in dispute had been produced by the Plaintiff and mediation was scheduled, the Plaintiff set this matter down for trial on or about February 13, 2013.

[5] At the request of Mr. Chepil, who took the position that mediation was premature, the mediation was adjourned to July 29, 2013. On March 4, 2013, the parties agreed to a Discovery Plan. Mr. Chepil then refused to attend the mediation given that he had scheduled a motion seeking a further and better Affidavit of Documents which proceeded before Master Dash on November 7, 2013.

[6] Among other things, Master Dash ordered Kwik Snaks to produce all purchase orders and any records of orders downloaded and other documents. Master Dash declined to order production of documentation with an accounting software and business consultant sought by the Defendants.

[7] The Plaintiff sought to book pre-trial and trial dates on or about March 28, 2014, however, the Defendants refused to consent on the basis that the Plaintiff had not produced all documents ordered by Master Dash. The Plaintiff filed the certificate with respect to these dates with the court, noting the Defendants’ position, however, because it was not joint filed it was rejected and the matter was struck from the trial list on March 31, 2014 because a trial had not been scheduled.

[8] The parties continued to exchange affidavits of documents and productions leading up to the Defendants’ second motion for productions before Master McAfee on August 15, 2014. Master McAfee concluded that the Plaintiff had not made best efforts to comply with certain provisions of Master Dash’s order dated November 7, 2013, including with respect to the production of invoices, and ordered the Plaintiff to make further reasonable efforts to search for the documents ordered produced by Master Dash. Master McAfee denied the Defendants’ request to dismiss the Plaintiff’s action for failure to comply with Master’s Dash order.

[9] After the parties exchanged yet more Supplementary Affidavits of Documents and productions, the Defendants brought a third motion which was heard by Master Pope on May 7, 2015. The Defendants again sought to have this action dismissed for the Plaintiff’s alleged failure to comply with the previous orders of Master Dash and Master McAfee.

[10] At the attendance before Master Pope, Mr. Chepil advised that he would be serving another Supplementary Affidavit of Documents listing a voluminous number of e-mails he had located from Jinfeng Huang, an employee of the Plaintiff who was responsible for placing Kwik Snaks’ orders, which he says the Plaintiff should have produced. Master Pope ordered the Plaintiff to make best efforts to obtain and produce the purchase orders which corresponded to these e-mails within 60 days of receipt of the Supplementary Affidavit of Documents.

[11] The Defendants served their Supplementary Affidavit of Documents on the Plaintiff on July 21, 2015. On December 31, 2015, counsel for the Plaintiff advised Mr. Chephil that the Plaintiff had located and copied a voluminous number of documents (including purchase orders) sufficient to fill two bankers’ boxes. Plaintiff’s counsel requested that Mr. Chepil make arrangements to pick up the documents and pay the amount of $1,695.00 to reimburse the Plaintiff for the cost of making over 6,000 copies. Counsel also requested Mr. Chepil’s availability for mediation and examinations for discovery.

[12] Counsel for the Plaintiff says a copy of the Plaintiff’s Sixth Supplementary Affidavit of Documents, listing over 2,400 documents, was sent to Mr. Chepil by regular mail on December 31, 2015. Mr. Chepil states that he never received it.

[13] By letter dated February 3, 2016, Mr. Chepil refused to reimburse the Plaintiff for photocopying costs given that this was the first time that any such payment had been requested and that the appropriate time to do so was when the parties agreed to the Discovery Plan (the “February 3 Letter”). Mr. Chepil further noted that, on this basis, the Defendants had previously produced voluminous amounts of documents without requiring reimbursement. Accordingly, Mr. Chepil requested that Plaintiff’s counsel release the documents without payment. Counsel for the Plaintiff did not respond to February 3 Letter.

[14] The February 3 Letter was the last contact between counsel and Mr. Chepil until after counsel received the Dismissal Order on or about February 1, 2017. On February 6, 2017, counsel for the Plaintiff sought to schedule this motion and confirmed the first available motion date, which was today.

[15] The two bankers’ boxes containing over 2,400 documents comprising over 6,000 photocopied pages remain in the possession of Plaintiff’s counsel.

III. The Law and Analysis

[16] Rule 48.14 of the Rules of Civil Procedure provides as follows:

(1) Unless the court orders otherwise, the registrar shall dismiss an action for delay in either of the following circumstances, subject to subrules (4) to (8):

1. The action has not been set down for trial or terminated by any means by the later of the fifth anniversary of the commencement of the action and January 1, 2017.
2. The action was struck off a trial list and has not been restored to a trial list or otherwise terminated by any means by the later of the second anniversary of being struck off and January 1, 2017.

(10) The dismissal of an action under subrule (1) may be set aside under rule 37.14.

[17] Rule 37.14 of the Rules of Civil Procedure provides as follows:

(1) A party or other person who,

(c) is affected by an order of a registrar,

may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.

(2) On a motion under subrule (1), the court may set aside or vary the order on such terms as are just.

(3) A motion under subrule (1) or any other rule to set aside, vary or amend an order of a registrar may be made to a judge or master, at a place determined in accordance with rule 37.03 (place of hearing of motions).

[18] The parties agree that the applicable test on a motion to set aside a dismissal order of the registrar under Rule 37.14 is set out in Reid v. Dow Corning Corp., [2001] O.J. No. 2365 (S.C.J.). At paragraph 41 of Reid, Master Dash set out four (4) factors which a plaintiff must satisfy:

i.) The plaintiff must adequately explain the delay in the progress of the litigation from the institution of the action until the deadline for setting the action down for trial, satisfying the court that steps were being taken to advance the litigation toward trial or if such steps were not taken to explain why. For example, the complexities of the case and the number of parties may have required significantly more time to move the action toward trial or the delay was caused by interlocutory matters or appeals. The plaintiff could also explain that the action was stalled due to the inattention or negligence of her solicitors which was contrary to her instructions or expectations. It is absolutely essential that the plaintiff lead satisfactory evidence that she personally always intended the action to proceed to trial without delay;

ii.) The plaintiff or her counsel must lead satisfactory evidence to explain that she always intended to set the action down within the applicable time limit but failed to do so out of inadvertence such that the dismissal order was made as a result of inadvertence;

iii.) The plaintiff must demonstrate that she moved forthwith to set aside the dismissal order as soon as it came to their attention;

iv.) The plaintiff must convince the court that the defendants have not demonstrated any significant prejudice in presenting their case at trial as a result of the plaintiff’s delay or as a result of steps taken following the dismissal of the action. The court takes note that witnesses’ memories generally tend to fade over time and that sometimes it is difficult to locate witnesses or documents, however, to bar the plaintiff from proceeding with her action on the ground of prejudice, the defendant must lead evidence of actual prejudice. This might include evidence of specified documents lost over time, or destroyed following a dismissal, or of specific witnesses who have died, or have disappeared and the defendant has been unable to locate them with due diligence. While litigation is outstanding the defendants must take care to obtain and preserve evidence;

[19] In Scaini v. Prochnicki, 2007 ONCA 63, the Court of Appeal held that a plaintiff is not required to satisfy each of the 4 factors set out in Reid. Rather than applying a rigid test, the court is to take a contextual approach considering and weighing all relevant factors to determine the order that is just in the circumstances of the particular case. While there may be other relevant factors, these 4 will be the main ones. It may be that in a particular case, one factor on which the plaintiff comes up short is of such importance that, taken together with the other factors, the plaintiff’s motion must fail (see Scaini at paras 21-28).

[20] I am also mindful of the Court of Appeal’s decisions in Marche D’Alimentation Denis Theriault Ltee. v. Giant Tiger Stores Ltd., 2007 ONCA 695 and MDM Plastics Limited v. Vincor International Inc., 2015 ONCA 28. In particular, Sharpe J.A. noted at para. 34 of Giant Tiger:

“Expeditious justice must be balanced with the public interest in having disputes determined on their merits. Where, despite the delay, the defendant would not be unfairly prejudiced should the matter proceed for resolution on the merits, according the plaintiff an indulgence is generally favoured.”

[21] Further, in Giant Tiger and MDM Plastics, the Court of Appeal held that the principle of finality is also relevant to the fourth Reid factor such that, when an action has been disposed of in a party’s favour, even as a result of delay and not on the merits, the party’s entitlement to rely on the finality principle grows stronger as the years pass. Even where the party relying on the order could still defend itself despite the delay, at some point the interest in finality must trump the plaintiff’s request for an indulgence (see MDM Plastics, para. 27).

[22] The Plaintiff submits that the history of these proceedings demonstrates that Kwik Snaks always intended that this action would proceed to trial and that the delays in moving the action forward were largely caused by the voluminous productions and related motions. Plaintiff’s counsel also notes that he moved immediately to set aside the Dismissal Order.

[23] Counsel for the Plaintiff states that it was out of inadvertence that he did not respond to the February 3 Letter. He admits that he should have responded to the letter and does not know why he did not as he normally would have done so. He further states that it was out of inadvertence and the fact that the action was stalled as a result of the dispute over the reimbursement for photocopying charges that he took no further steps in the approximately one-year period between receiving the February 3 Letter and the Dismissal Order. Plaintiff’s counsel further advises that it was his decision, not his client’s, to insist on reimbursement for the photocopies.

[24] The Plaintiff also submits that the Defendants would not suffer any actual prejudice if this action proceeds to trial this is a document driven collection matter based on invoices and all relevant documents have been preserved.

[25] Mr. Chepil submits that the failure of Plaintiff’s counsel to respond to the February 3 Letter is evidence of the Plaintiff’s intention to no longer pursue this action to trial. He also states that the Plaintiff is responsible for much of the delay in moving this action forward given the Plaintiff’s inadequate production of documents and failure to comply with the orders of Masters Dash and McAfee which required the Defendants to bring 3 motions.

[26] Mr. Chepil further submits that setting aside the Dismissal Order would result in significant prejudice to the Defendants in presenting their case at trial. He says that after more than 5 years there has been a complete lack of discovery such that other than the 433 invoices which the Plaintiff relies on, few relevant documents have been produced. He says the Plaintiff admits as much in Schedule “C” of the Plaintiff’s Fourth Supplementary Affidavit of Documents (where the Plaintiffs state that all purchase orders for invoices-purchase orders, including internet purchaser order records were not preserved). Mr. Chepil further states that prejudice is presumed after 5 years in these circumstances.

[27] As a result of these circumstances, Mr. Chepil states that the Defendants will be forced to rely on witness testimony which he says is apparent from the Defendants’ pleadings. While Mr. Chepil acknowledges that this is “usually uncommon in Liquidated cases” this case is an exception. Among the 14 witnesses proposed by the Defendants are the owner and manager of Kwik Snaks, the Plaintiff’s former bookkeeper and numerous former drivers and kitchen workers, some of whom cannot be located while those who can will have waning memories. The Plaintiff intends to call one witness, the manager of Kwik Snaks.

[28] Applying the Reid factors and taking the contextual approach set out above, in my view, the history of this action demonstrates that the Plaintiff always intended this action to proceed to trial. Specifically, the Plaintiff set this matter down for trial and tried to schedule mediation, pre-trial and trial dates and examinations for discovery. While the Plaintiff’s production of documents has been less than ideal, the Defendants must also bear some responsibility for the 3 production motions (and twice trying to dismiss the Plaintiff’s action) including the late discovery of the e-mails which resulted in Master Pope’s order and the current, undelivered photocopies. Up to the February 3 Letter, this action was moving forward, albeit at a slow pace, but a pace for which both parties share responsibility.

[29] After the February 3 Letter, I accept the explanation of Plaintiff’s counsel that his failure to respond or to take any further steps was inadvertent and related to the overall delay in these proceedings arising from the disagreement over reimbursement for photocopying charges and not evidence of any intention by the Plaintiff to not pursue this action. Accordingly, I find that the Plaintiff has provided an acceptable explanation for the delay, that the Dismissal Order arose out of inadvertence and, as is apparent from the record, the Plaintiff moved forthwith to set the Dismissal Order aside.

[30] I also conclude that the Defendants have not demonstrated that they would suffer any actual prejudice if the Dismissal Order is set aside and this action proceeds to trial to be determined on its merits. This is a claim for unpaid invoices in which over 5,000 documents have already been produced. The purchase orders and related documents, currently copied and in the possession of counsel for the Plaintiff, have been preserved and will be produced to the Defendants in short order. The nature of the Plaintiff’s claim as a collection matter combined with the sheer volume of productions, support the conclusion that this is a document driven case. Mr. Chepil’s ongoing and significant efforts over the last 5 years to obtain more documents, including bringing 3 production motions, further supports this conclusion. There is also no evidence before me to support Mr. Chepil’s submission that this particular collection matter is an exception.

[31] To the extent to which the Defendants must rely on witness testimony, which the Defendants submit is obvious from their pleadings (indicating that they knew this from the outset), as set out in Reid, the Defendants have a responsibility to obtain and preserve this evidence while litigation is ongoing.

[32] Having weighed all of the factors and applied a contextual approach, I conclude that the most just result in the circumstances is that the Dismissal Order be set aside so that this action can proceed to trial to be decided on its merits. Accordingly, the Plaintiff’s motion is granted and the Dismissal Order is set aside and the Plaintiff is granted leave to restore this matter to the trial list.

[33] In order to provide sufficient time to complete the remaining steps leading up to trial, and being mindful that this action must proceed more expeditiously than it has in the past, it is appropriate to extend the time to set this matter down for trial until May 31, 2018.

[34] To that end, the current stalemate over reimbursement for the photocopies must end immediately. In this regard, I agree with Mr. Chepil that pursuant to Rule 29.01.03(3)(c), such a requirement should have been provided for in the Discovery Plan agreed to by the parties. It was not, and the parties previously produced documents without the requirement for reimbursement. It was not open to Plaintiff’s counsel to unilaterally alter this term of the Discovery Plan without the consent of the Defendants, which is unchanged by the number of copies made (which I note were made before consulting with Mr. Chepil). Accordingly, the Plaintiff shall release the photocopies to Mr. Chephil within 3 days of my order below without charge.

[35] Finally, having regard to the principle of proportionality, the parties need to move efficiently to examinations for discovery. Any relevant questions with respect to documents produced or additional documents can be asked at discoveries, which shall be completed no later than August 31, 2017.

VI. Disposition

[36] Order to go as follows:

i.) the Dismissal Order is set aside and the Plaintiff is granted leave to restore this matter to the trial list; ii.) the deadline to set this action down for trial is extended to May 31, 2018; iii.) the Plaintiff shall release the photocopied documents to Mr. Chepil within 3 days of this order at no charge; and iv.) Examinations for Discovery in this matter shall be completed by August 31, 2017.

[37] With respect to the costs of this motion, the circumstances giving rise to this motion were caused by the Plaintiff. The Plaintiff sought and received an indulgence from the court to allow its action to proceed on a straightforward, non-complex motion. Accordingly, and in light of my agreement with the Defendants regarding reimbursement for the photocopies, and having considered the relevant factors under Rule 57.01, in my view, it is appropriate that the parties bear their own costs of this motion.

Released: May 11, 2017

Master M.P. McGraw