Iroquois Falls Power Corp. v. Jacobs Canada Inc., 2017 ONSC 5515

CITATION: Iroquois Falls Power Corp. v. Jacobs Canada Inc., 2017 ONSC 5515

COURT FILE NO.: 05-CV-290557PD1

DATE: 20170920

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

IROQUOIS FALLS POWER CORP.

Plaintiff

– and –

JACOBS CANADA INC. and MCDERMOTT INCORPORATED and CHUBB INSURANCE COMPANY OF CANADA and AMERICAN HOME ASSURANCE COMPANY

Defendants

COUNSEL:

Paul Ivanoff and Evan Thomas, for the Plaintiff

Robert Rueter, for the Defendants Jacobs Canada Inc. and McDermott Incorporated

Duncan W. Glaholt, for the Defendants Chubb Insurance Company of Canada and American Home Assurance Company

HEARD: September 11, 2017

M. D. FAIETA J.

REASONS FOR DECISION

Introduction

[1] This decision is part of a long history of litigation between the plaintiff, Iroquois Falls Power Corp. (“IFPC”) and the defendants. This decision dismisses the action and determines this Court’s jurisdiction to award costs.

[2] IFPC owns and operates a natural gas-fired cogeneration station in Iroquois Falls, Ontario that can generate 120 MW of electricity (the “Facility”).

[3] In January 1995, IFPC’s parent corporation entered into an Engineering, Procurement and Construction Contract (“Contract”) for the construction of the Facility with Delta Hudson Engineering Limited (“Delta”) the corporate predecessor of the defendant Jacobs Canada Inc. (“Jacobs”). The defendant McDermott Incorporated (“McDermott”) guaranteed the performance of its subsidiary, Delta. The plaintiff’s parent corporation subsequently assigned its interest in the contract to the plaintiff. The defendants Chubb Insurance Company of Canada and American Home Assurance Company (the “Bonding Companies”) issued a $104 million performance bond in connection with the construction of the Facility.

[4] By the Fall of 1996, the Facility was built and generating electricity.

[5] The two principal components of the Facility were two gas turbines and two Heat Recovery Steam Generators (“HRSGs”) supplied by Jacobs’ subcontractor which was another subsidiary of McDermott. The function of the HRSGs was to use the hot exhaust gases from the natural gas-driven turbines to create steam which, in turn, was used drive a turbine to generate electricity.

[6] In April 2000, IFPC first observed cracks on the outer steel casing of the HRSGs. By 2002, IFPC concluded that the cracks were caused by “nitrate stress” arising from the reaction of nitrogen dioxide in the turbine exhaust with water. In May, 2002 IFPC investigated the possibility of using gas turbines with significantly lower levels of nitrogen dioxide in their exhaust. In 2003, at a cost of about $16 million, the gas turbines were replaced by turbines that generated low levels of nitrogen dioxide in their exhaust. In 2005, IFPC’s consultant determined that the probability of a major casing repair/replacement to the HRSGs was 90% within 10 years.

[7] IFPC commenced this action in 2005. IFPC alleges that the engineering work related to the design and construction of the HRSGs was negligently performed by Jacobs’ corporate predecessors.

[8] Extensive production of documents and examinations for discovery occurred in 2005 and 2006.

[9] Case management of this action was re-assigned to Master Graham by order of then Administrative Master MacLeod on December 11, 2006.

[10] The defendants Jacobs and McDermott (the “Engineering Companies”) brought a motion for summary judgment to dismiss the action. They relied on s. 46(2) of the Professional Engineers Act, R.S.O. 1990., c. P.28, now repealed, which provides that a proceeding shall not be commenced “… for damages arising from the provision of a service that is within the practice of professional engineering after 12 months after the date of which the service was, or ought to have been, performed.” IFPC had also brought a motion for leave to amend its Statement of Claim to include a claim for breach of the express product warranty found in the Contract. The parties agreed that the summary judgment motion would be heard as if the proposed amendments had been made and that a motion to amend would be heard later, if necessary.

[11] For reasons dated March 20, 2007, Justice Colin Campbell granted the motion for summary judgment and dismissed the action against all defendants. See Reasons for Decision (2009), 60 C.L.R. (3d) 163. Paragraph 2 of his Judgment states:

THIS COURT ORDERS that the costs of this proceeding payable by the Plaintiff to the Defendants shall be fixed by the Honorable Mr. Justice Colin Campbell following the disposition of the Plaintiff’s pending appeal from this Judgment.

[12] On April 28, 2008, the Ontario Court of Appeal, in part, allowed IFPC’s appeal. See Reasons for Decision 2008 ONCA 320, 69 C.L.R. (3d) 46. The Ontario Court of Appeal stated:

28. The question, then, is whether the appellant has advanced claims against the defendants that fall outside the definition of professional engineering practice. …

29. I would conclude that the substance and true nature of the claim that IFPC advances against Jacobs in its original Statement of Claim is entirely in respect of the practice of professional engineering. The motion judge was right to conclude that it was barred by the limitation period in the PEA. …

30. In my view the question whether the acts of Delta in product procurement, construction and warranty fall within the practice of professional engineering should not have been decided on a summary judgment motion. It is not plain and obvious to me that such claims relate to damages that arise from “the practice of professional engineering”. …

31. … The claim actually advanced against McDermott on the guarantee is limited to liability that flows from Delta’s failings in the practice of professional engineering.

32. However, the proposed amendments to the Statement of Claim broaden the claim against McDermott as guarantor, just as they would broaden the claim against Jacobs. …

33. Again, because the parties agreed the summary judgment motion would be determined as if the proposed amendments were made, I would set aside the summary judgment in favour of McDermott in respect of the claim advanced in the proposed amendments. Whether IFPC is entitled to amend its claim against McDermott is an issue to be determined on IFPC’s motion to amend the Statement of Claim, which the parties agreed would follow the summary judgment motion.

34. My analysis of the claim against the bonding companies follows the result on the claim against McDermott as guarantor … The proposed amended claim against the bonding companies is as broad as the proposed claim against Jacobs. I would also set aside the summary judgment granted in favour of the bonding companies on the claim advanced in the proposed amendments.

35. … I would allow the appeal and set aside the summary judgment granted by the motion judge. I would substitute an order dismissing – as against all respondents – those of the appellant’s claims that are based on alleged design deficiencies in the HRSGs as advanced in its existing Amended Statement of Claim. This order is made without prejudice to the appellant’s right to proceed with the motion to amend its existing Amended Statement of Claim to advance its product durability warranty claim against all respondents in accordance with its proposed Fresh Statement of Claim dated June 6, 2006.

36. I would fix costs in favour of the appellant in the amount of $50,000, inclusive of disbursements and GST.

[13] The Ontario Court of Appeal issued the following Supplementary Costs Endorsement, 2008 ONCA 398, on May 21, 2008:

Upon considering the written submissions of the parties regarding the costs of the summary judgment motion from which the appeal was taken, we direct that the costs of that motion be fixed by the motions judge in light of the result of the appeal, unfettered by the terms of paragraph 2 of his judgment dated March 20, 2007.

[14] The Order of the Ontario Court of Appeal dated April 28, 2008, which reflects the Supplementary Costs Endorsement, states:

1. THIS COURT ORDERS that the plaintiff’s appeal be allowed in part and that the summary judgment of the Honourable Justice Colin Campbell, dated March 20, 2007, be and is hereby set aside.

2. THIS COURT ORDERS that there be substituted for such summary judgment an Order dismissing the plaintiffs’ claims based on alleged design deficiencies in the heat recovery steam generators as advanced in its existing Amended Statement of Claim.

3. THIS COURT ORDERS that this Order is made without prejudice to the plaintiff’s right to proceed with its motion for leave to amend its existing Amended Statement of Claim to advance its product durability warranty claim against all defendants in accordance with its proposed Fresh Statement of Claim dated June 6, 2006.

4. AND THIS COURT ORDERS that costs fixed in the amount of $50,000, inclusive of disbursements and GST, be payable by the defendants to the plaintiff as the costs of this appeal.

5. AND THIS COURT DIRECTS that the costs of the summary judgment motion from which the appeal to this Court was taken, be fixed by the Motions Judge in light of the result of the appeal, unfettered by the terms of paragraph 2 of Justice Campbell’s Judgment dated March 20, 2007. [Emphasis added.]

[15] A legal secretarial assistant who works for IFPC’s current counsel has submitted that “it appears that IFPC’s original counsel, Mr. Mueller, prepared and delivered a bill of costs or cost outline to support IFPC’s claims for costs with the motions before Justices C. Campbell and Jennings”. Appended to her affidavit are documents. The first document is a Bill of Costs dated April 30, 2008. The second document is a Costs Outline dated September 15, 2008. There is nothing in these documents that suggests these documents were delivered to anyone.

[16] The Engineering Companies delivered costs submissions to Justice Campbell dated July 4, 2008 seeking partial indemnity costs of the motion fixed at $161,241.00 plus GST and partial indemnity costs of that portion of the proceeding which remain dismissed as a result of the decision of the Ontario Court of Appeal, fixed in the amount of $547,001.19 plus GST. Their submission also states, at paragraphs 4, 6-8:

4. The result of the summary judgment and the Ontario Court of Appeal’s decision is that the Plaintiff’s existing claim stands dismissed and there is no further claim unless and until the Plaintiff is able to obtain leave to amend its pleadings. In light of the current state of the Plaintiff’s action, these Defendants submit that their motion for summary judgment was substantially successful and that they should be awarded the costs of the motion and also the costs related to the dismissed portions of the action which do not relate to the proposed amended claims. …

5. As a result of the Ontario Court of Appeal’s decision, the Plaintiff’s existing claim has been defeated in its entirety, and the Plaintiff can only continue with the action if it is able to obtain leave to amend its claim to plead its new product durability warranty claim.

6. Even if the Plaintiff is granted leave to amend its Statement of Claim, the scope of its claim is now severely restricted. In particular, it is no longer able to sustain a claim that relates to the provision of engineering services. It is also no longer possible for the Plaintiff to bring a tort claim. In addition, the Plaintiff can no longer look to McDermott Incorporated or the bonding companies for relief in the event that Jacobs Canada is found not to be liable.

7. What the Plaintiff is left with is a potential warranty claim that it considered too weak to advance at the first instance as part of its original Statement of Claim, no doubt because it recognized that the express provisions of the contract precluded any such claim beyond the 365 day Warranty Period stipulated in the contract. Even if the six year statutory limitation period applies instead of the 365 day contractual warranty period, the claim likely is proscribed in any event since it was asserted more than nine years after performance under the contract was tendered and more than six years after the HRSG casing cracks were discovered.

[17] IFPC delivered responding costs submissions dated July 14, 2008. The Engineering Companies delivered reply costs submissions dated July 21, 2008.

[18] Justice C. Campbell sent the following letter, dated August 27, 2008, to the parties:

I have various pieces of correspondence for reply.

The letters of Mr. Mueller of August 21 and 25 raise disturbing concerns. I would have that the direction from the Court of Appeal was such that I was to deal with all cost issues that are currently outstanding. Mr. Mueller has suggested that some of the “costs thrown away” might be best dealt with by the motions judge in September. If the motions judge in September is persuaded that he or she should deal with some issue of “costs thrown away”, that will be the prerogative of the motions judge.

After the hearing of the amendments motion and the disposition of any costs by the motions judge, I will deal with any costs issues.

If any counsel disagrees with this direction, please arrange a conference call through my assistant Mrs. Bond. [Emphasis added]

[19] It does not appear that the parties brought their claim for costs back to the attention of Justice Campbell. As a result, the Engineering Companies’ claim for costs was not adjudicated by Justice Campbell prior to his resignation in 2013.

[20] A case conference was held in writing before Master Graham on September 8, 2008. His endorsement states:

I am addressing the correspondence of July 15, 2008 from Mr. Mueller requesting an in-person case conference, along with Mr. Rueter’s correspondence of July 16, 2008 and Mr. Mueller’s further correspondence of July 22, 2008, by way of case conference in writing.

Mr. Mueller and Mr. Rueter differ as to whether a timetable for further steps in the action should be ordered before the upcoming pleadings amendment motion on September 15, 2008. Mr. Rueter submits that at the case conference before Justice Campbell on May 26, 2008, Justice Campbell refused Mr. Mueller’s request to schedule mediation or any other pre-trial proceedings on the basis that such a schedule was premature until the pleadings issue is resolved. Mr. Mueller submits that there was no discussion on May 26, 2008 of Justice Campbell scheduling anything. As there is no way for me to resolve this disagreement, and as the pleadings amendment motion is proceeding next week, I will defer the scheduling of further steps in the action to the judge hearing the motion. If the motions judge wishes to refer the scheduling of further steps in the action to me following her or his decision on the motion, counsel may arrange a case conference with me … .

[21] On September 15, 2008 this court heard IFPC’s motion for leave to amend its Statement of Claim to assert the breach of warranty claim. Justice Jennings dismissed the motion on the basis that there was non-compensable prejudice to the defendants in respect of this new claim and the amendment would require IFPC to withdraw an admission in its original Statement of Claim. See (2008) 75 C.L.R. (3d) 1.

[22] Counsel for IFPC sent the following letter, dated November 3, 2008, to Justice C. Campbell:

Justice Jennings has dismissed the pleadings amendment motion but I am meeting with my client on November 7 to discuss an appeal I have recommended. I respectfully suggest the costs issues before you remain in abeyance pending resolution of the appeal issues, consistent with your attached letters dated August 11, 2008 and August 27, 2008.

[23] On June 25, 2009, the Ontario Court of Appeal granted the appeal. It stated, at paragraphs 42 and 43, of its Reasons for Decision (see 2009 ONCA 517):

I would allow the appeal, set aside the order of the motions judge and grant Iroquois Falls’ motion to amend its statement of claim. In my view, no prejudice would result from the proposed amendment, and the amendment would not require Iroquois Falls to withdraw any admission in its original statement of claim.

Iroquois Falls is entitled to its costs of the appeal, which I fix in the amount of $25,000, inclusive of disbursements and G.S.T. In accordance with the agreement of the parties, the costs of the motion are remitted to the motion judge.

[24] The Ontario Court of Appeal’s Order dated June 25, 2009 states:

1. THIS COURT ORDERS that the Plaintiff’s appeal is allowed and the Order of the Honourable Justice Jennings dated October 30, 2008 be and it is hereby set aside and the Plaintiff’s motion for leave to amend its Statement of Claim in accordance with the Reasons for Decision of this Court is granted subject to the right of the Defendants to raise their unadjudicated objections to the Amended Statement of Claim before Jennings J. or another Judge of the Superior Court if he so decides.

2. AND THIS COURT ORDERS that costs fixed in the amount of $25,000.00, inclusive of disbursements and GST, be payable by the Respondents McDermott and Jacobs to the Plaintiff as the costs of this appeal and the costs of the motion are remitted to the Honourable Mr. Justice Jennings.

[25] The defendants’ application for leave to appeal to the Supreme Court of Canada was dismissed on January 28, 2010.

[26] Neither the IFPC nor any other party delivered a claim to Justice Jennings for costs of the motion that he heard. Justice Jennings retired in 2012. Similarly, there is no evidence that the Engineering Companies or any other party asked Justice Campbell to proceed with adjudicating the costs of the motion that he heard.

[27] No further steps were taken to bring this action to trial. No formal amended Statement of Claim was issued. No further examinations for discovery were undertaken. The action was not set down for trial.

[28] Current counsel for IFPC sent the following letter, dated December 20, 2012, to the defendants:

As you know, since our client’s successful appeal to the Court of Appeal in 2009, our respective clients have made efforts to resolve this matter out of court. Our client is very frustrated with the lack of progress towards resolution, however, and so it wishes to move this litigation forward.

In our view, the first step is to address any pleadings issues outstanding following the Court of Appeal’s order allowing our client’s appeal from the dismissal of its motion for leave to amend, subject to certain “unadjudicated objections” raised by your clients. Would you please confirm whether your clients intend to pursue these “unadjudicated objections”? If so, we will need to make arrangements to have those issues heard and decided. In any event, counsel will need to seek directions regarding the costs of the motion for leave to amend.

We also understand that Justice Campbell has not decided costs of the summary judgment motion hearing in November 2006 and reversed on appeal in 2008. This outstanding matter should also be addressed. …

After hearing from you on this, we propose holding a conference call in late January among counsel to discuss the timing and order of procedural steps.

[29] The Engineering Companies responded on December 20, 2012:

I acknowledge receipt of two letters from you this afternoon. By letter of October 27, 2009 from your firm, we received a Notice of Change of Solicitors appointing your firm as new counsel for the Plaintiff. There does not appear to have been any further step taken by you in this litigation over the ensuing three years. Both my client and I have assumed the litigation is dead. Your telephone call to me earlier today came out of the blue and is a surprise. I will certainly seek my client’s instructions about the matters raised in your letter but in light of the three years that has elapsed since your firm’s last activity on the file, I hope you will appreciate that bearing in mind pre-existing commitments already occupying my January calendar, it may well take more than two weeks from when I return from Christmas break to review the file, contact the clients who will have to identify whom within their organization will be able to deal with this matter and assess the implications arising in relation to the matter.

[30] IFPC sent the following letter, dated December 9, 2013, to the other parties:

Further to our conversation this past summer and fall, it appears that the parties will need to return to court to address outstanding costs and pleadings matters.

In our letter of December 20, 2012, we asked Mr. Rueter to confirm whether his clients intend to pursue certain “unadjudicated objections” raised by his clients with respect to the proposed amended pleading. In his letter of January 15, 2013, he indicated that he anticipated that the unadjudicated objections would need to be determined, either by agreement or adjudication. We ask Mr. Rueter to confirm whether these objections will in fact be pursued and if so, which ones? After Mr. Rueter has confirmed which objections are maintained, counsel can make arrangements for a hearing, if necessary. As far as we are aware, any judge can hear the remaining “unadjudicated objections”.

We note that costs of the motion for leave to amend were remitted to the original motion judge, Justice Jennings, and that costs of the summary judgment motion were to be fixed by Justice Campbell. As you no doubt know, both Justice Jennings and Campbell have retired. We expect counsel will have to obtain direction from the Regional Senior Justice if costs of these motions are to be adjudicated at this stage.

We look forward to hearing from Mr. Rueter regarding the “unadjudicated objections” and from both Mr. Rueter and Mr. Glaholt regarding how they propose to deal with costs of the motions.

[31] The following letter, dated December 11, 2013, was sent by counsel for the Engineering Companies to counsel for IFPC:

I am puzzled by your letter of December 9, 2013. You appear to be asserting a claim for costs award paid long ago. … Of course, the costs entitlement of my client for the summary judgment motion and for costs of the action thrown away remains outstanding.

[32] The following letter, dated January 4, 2017, was sent to Regional Senior Justice Morawetz by counsel for the Engineering Companies:

… This action was commenced on June 1, 2005. I understand it will have been dismissed for delay by the Registrar January 1, 2017 pursuant to Rule 48.14(1) or if it is not within the scope of Rule 48.14(1). I am instructed to move for dismissal for delay.

I am seeking your direction as to whom we should bring a motion for adjudication of outstanding costs submissions formerly before Justice Campbell, who is now retired, as well as other remaining costs claims and the motion for dismissal for delay (if not covered by Rule 48.14(1)).

Costs submissions were made to Justice Campbell on July 4 and 24, 2008 in connection with Jacobs and McDermott’s successful summary judgment motion dismissing the Plaintiff Iroquois Falls Power Corp.’s action as originally pleaded. These costs submissions were made pursuant to the Court of Appeal’s direction given on May 21, 2008 and order issued and entered on July 18, 2008 that costs of the summary judgment motion be fixed by Justice Campbell. …

The costs claim was not adjudicated prior to Justice Campbell’s retirement due to intervening discussions directly between the parties, but now needs to be determined in conjunction with the contemplated dismissal for delay and related costs claim of the action.

I would be grateful for your direction as to which judge our motion should be brought, in light of Justice Campbell’s retirement.

[33] By letter dated March 3, 2017, R.S.J. Morawetz advised the parties that this matter had been assigned to me.

[34] IFPC sent the following letter, dated May 11, 2017, to R.S.J. Morawetz:

… The Jacobs and McDermott defendants have now brought motions in this matter which are scheduled to be heard by Justice Faieta on September 11, 2017. The defendants are seeking (i) to dismiss the action for delay if it is not dismissed by the Registrar pursuant to Rule 48.14(1) and (ii) to rehear the issue of and fixing the costs of a summary judgment motion (formerly before Justice Campbell).

As we advised during the case conference, there was also a motion to amend the statement of claim heard by Justice Jennings in 2008. Costs submissions were originally made to Justice Jennings on November 27 and 28, 2008 in connection with Justice Jennings’ decision to refuse to grant the plaintiff leave to amend its Statement of Claim. However, the plaintiff successfully appealed Justice Jennings’ decision to the Court of Appeal. The parties agreed that, following the appeal, Justice Jennings would re-hear the costs of the original motion. The parties’ agreement is referred to in the Court of Appeal’s decision on June 25, 2009 (at para. 43) that “costs of the motion are remitted to the motion judge”. These costs issues were not adjudicated prior to Justice Jennings’ retirement.

Although it is the plaintiff’s position that the parties should bear their own costs of the action and any motions, the plaintiff’s alternative position, in the event that Justice Faieta decides to grant any relief sought by the Jacobs and McDermott defendants, is that the court shall also address costs of the motion heard by Justice Jennings. The plaintiff intends to bring a motion seeking this alternative relief. …

[35] By letter dated May 15, 2017, R.S.J. Morawetz advised the parties that “all motions relating to the dismissal or costs of this action are to be brought to Justice Faieta”.

ISSUES

[36] The defendants asks that this action be dismissed for delay under Rule 24 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and that they be awarded costs of this action. IFPC acknowledges that costs may be awarded under Rule 24.05.1 when an action is dismissed under Rule 24. IFPC submits that costs should not be awarded because the parties have treated this action as “dead” for many years. In any event, IFPC submits that there are no costs consequences when an action is administratively dismissed pursuant to Rule 48.14 of the Rules of Civil Procedure and it asks for an order, nunc pro tunc, that this action be administratively dismissed effective January 1, 2017. Finally, IFPC asks that costs be assessed rather than fixed.

[37] Accordingly, the following issues are raised by this motion:

• Should this action be dismissed for delay pursuant to Rule 24?
• Does this Court have authority to award costs of this action in these circumstances? If so, to whom should costs be awarded?
• Should costs be fixed or assessed?

ISSUE #1: SHOULD THIS ACTION BE DISMISSED FOR DELAY PURSUANT TO RULE 24?

[38] The defendants submit that this action has been “dead” for many years and ask that this action be dismissed for delay under Rule 24 and that they be awarded costs of this action.

[39] Rule 24.01 states:

24.01 (1) A defendant who is not in default under these rules or an order of the court may move to have an action dismissed for delay where the plaintiff has failed,

(a) to serve the statement of claim on all the defendants within the prescribed time;

(b) to have noted in default any defendant who has failed to deliver a statement of defence, within thirty days after the default;

(c) to set the action down for trial within six months after the close of pleadings; or

(e) to move for leave to restore to a trial list an action that has been struck off the trial list, within thirty days after the action was struck off.

(2) The court shall, subject to subrule 24.02 (2), dismiss an action for delay if either of the circumstances described in paragraphs 1 and 2 of subrule 48.14 (1) applies to the action, unless the plaintiff demonstrates that dismissal of the action would be unjust. [Emphasis added.]

[40] Rule 48.14(1) states:

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 fifth anniversary of the commencement of the action.

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 second anniversary of being struck off. [Emphasis added.]

[41] Rule 24.05.1(1) states:

If an action is dismissed for delay, any party to the action may, within thirty days after the dismissal, make a motion respecting the costs of the action.

[42] The defendants rely on Rule 24.01(1) and this court’s inherent jurisdiction in support of its submission that this action should be dismissed for delay.

[43] In respect of Rule 24.01(1), the Ontario Court of Appeal in Ticchiarelli v. Ticchiarelli, 2017 ONCA 1, at para. 12, stated that: “… an order dismissing an action for delay will be justified where the delay is inordinate, inexcusable, and prejudicial to the defendants in that it gives rise to a substantial risk that a fair trial of the issues will not be possible”. IFPC does not dispute that this action should be dismissed for delay. I find that there has been inordinate delay in prosecuting this action given that this action was commenced more than 11 years before the defendants’ motion to dismiss was filed. No explanation, reasonable or otherwise, has been provided by the IFPC for the overall delay in prosecuting this action. For reasons not explained by IFPC, it did not proceed with amending its Statement of Claim despite having obtained leave from the Ontario Court of Appeal by Order dated June 25, 2009. I find that IFPC’s delay in prosecuting this action is inexcusable.

[44] The defendants submit that several potential engineer witnesses are no longer available because they are retired or are no longer employed by the Engineering Companies of their subsidiaries. Some of these engineers inspected the cracks in the HSRG walls and found that the cracks were caused by IFPC’s maintenance activities

[45] The delay in prosecuting this action has created a presumption of prejudice that IFPC has not tried to rebut. Accordingly, I find that the delay has been prejudicial to the defendants in that there exists a substantial risk that a fair trial of the issues will not be possible.

[46] Further, relying on this court’s inherent jurisdiction to control its processes, I find that this action should be dismissed as the following comments of Lauwers J.A.in Wallace v. Crate's Marine Sales Ltd., 2014 ONCA 671, at para. 22, are equally applicable in this case:

There comes a time…when enough is enough, and the civil justice system will no longer tolerate inordinate and inexplicable delay. A court may then eject the action as an exercise of its inherent jurisdiction, whether or not the relevant rules expressly mandate it.

[47] Finally, given that this action was commenced on June 1, 2005, and given that IFPC has not demonstrated that it would be unjust to dismiss this action, I find that this action should be dismissed for delay pursuant to Rule 48.14 (1) given that this action “… has not been set down for trial or terminated by any means by the fifth of the commencement of the action”.

ISSUE #2: DOES THIS COURT HAVE AUTHORITY TO AWARD COSTS IN THESE CIRCUMSTANCES?

[48] The defendants submit that they are entitled to costs of the summary judgment motion that was heard by Justice Campbell, this action and this motion.

[49] The Ontario Court of Appeal ordered that “the motions judge” was to fix cost of the summary judgment motion heard by Justice Campbell in light of the outcome of the appeal. Further, Rule 24.05.1(1) provides:

If an action is dismissed for delay, any party to the action may, within thirty days after the dismissal, make a motion respecting the costs of the action.

[50] IFPC submits that this court does not have the authority to award costs in these circumstances for the following reasons:

(a) this action should have been dismissed by the Registrar on January 1, 2017;

(b) this court should issue an order, nunc pro tunc, dismissing this action effective January 1, 2017; and,

(c) this court may not award costs when an action is dismissed pursuant to Rule 48.14.

[51] As explained below, I find that there is no merit to these submissions.

Should this action have been dismissed by the Registrar on January 1, 2017?

[52] Rule 48.14 was introduced in 2009 to allow for quicker dismissal of dormant actions. Its effect, until January 1, 2017, was that where an action was not set down for trial or terminated by other means within two years after the first defence was filed, the registrar was required to serve a status hearing notice advising that the action will be dismissed for delay if not set down for trial or otherwise terminated within ninety days. Under the former Rule 48.14, a party who received a status hearing notice could make a request to arrange a hearing, where the hearing judge had the power to dismiss the action.

[53] Effective January 1, 2015, Rule 48.14 was revoked and substituted by Ontario Regulation 170/14 which provided that on a rolling basis beginning January 1, 2017, an action commenced on or after January 1, 2012 would be dismissed by the Registrar, and without notice, five years after the action was commenced.

[54] In Daniels v Grizzell, [2016] O.J. No. 6083, 2016 ONSC 7351, at para. 10, Marrocco A. C. J. stated that Rule 28.14 does not apply to case managed actions. Marrocco A.C.J.’s reasoning was that case managed files would not be subject to the parties deciding to settle or discontinue a proceeding without informing the court. There is no order removing this case from case management, even though there has not been any active management since 2008. While the court may in the future develop a procedure for addressing this sort of case, I find that the Registrar acted appropriately in not dismissing this action on January 1, 2017.

Should this court issue an order, nunc pro tunc, dismissing this action effective January 1, 2017?

[55] Even if the Registrar should have dismissed this action under Rule 48.14(1) on January 1, 2017, it is my view that an order should not be issued, nunc pro tunc, dismissing this action effective January 1, 2017.

[56] In Dubuc v. 1663066 Ontario Inc. (c.o.b. Laurier Optical), 2009 ONCA 914, 99 O.R. (3d) 476, the Ontario Court of Appeal stated, at para. 13:

The Rules do not provide that a plaintiff can bring a motion to dismiss its own action. Under the Rules - for example r. 21 - a motion to dismiss is brought by an opposite party in the litigation. Although the Rules may not constitute a complete code of procedure, it seems to me where they have expressly set out a method of proceeding it is not open to a party to ignore that method and choose another one not authorized by the Rules. Here, in moving to dismiss their own action, the plaintiffs are seeking to do an end run around the costs consequences of r. 23.05. The motions judge correctly refused to permit them to do so.

[57] Dubuc remains good law. IFPC cannot bring a motion to dismiss its own action. IFPC could have consented to the defendants’ motion to dismiss for delay. Instead, IFPC has chosen to bring a motion to dismiss its own action in an attempt to avoid the cost consequences found in Rule 24.05.1(1). Accordingly, I decline to grant IFPC’s motion for an order dismissing this action, nunc pro tunc, to January 1, 2017.

Does this court have authority to award costs when an action is dismissed pursuant to Rule 48.14?

[58] IFPC submits that this court does not have the authority to award costs when an action is dismissed pursuant to Rule 48.14(1).

[59] IFPC relies on the following statement at para. 8 in Daniels:

The current Rule does not include a statement that the Registrar shall dismiss the action for delay with costs. Accordingly, actions dismissed for delay by the Registrar should not contain a costs order and the phrase "with costs" in Form 48D should be deleted when the dismissal order using that form is executed. I appreciate that Rule 1.06 provides that the Forms prescribed by these rules shall be used "where applicable and with such variation as the circumstances require." The fact that costs are not referred in Rule 48.14 (1) is a circumstance which requires a variation of Form 48D.

[60] While a Registrar in dismissing an action under Rule 48.14 does not have the authority to award costs.

[61] When read together, Rules 24.05(2) and 24.05.1(1) contemplate that a court, on the motion of a defendant, has the authority to award costs if an action could be dismissed for delay under Rule 48.14(1). However, there is nothing in the Rules or any statute that ousts this court’s inherent jurisdiction to award costs. Accordingly, even if I were inclined to issue an order dismissing this action under Rule 48.14, nunc pro tunc, to January 1, 2017, I find that this court has authority to order that costs of this action be paid.

CONCLUSIONS

[62] For the reasons described above, I dismiss this action and find that I have authority to award costs of this action. Two issues remain: (1) to whom, and on what scale, should costs be awarded, if anyone? (2) if costs are warranted, should they be fixed or assessed?

[63] At the hearing of this motion, IFPC submitted that the defendants are not entitled to costs of this action given that all parties have treated this action as “dead” for several years. The Engineering Companies sought to provide evidence of settlement discussions in support of their claim for costs. I declined to receive such evidence at that time and directed that such evidence be delivered only if I decided that I had the authority to award costs in these circumstances.

[64] Accordingly, I direct that the parties deliver any offers to settle that were exchanged by September 29, 2017 along with written submissions of no more than five pages in length in respect of their view of the costs consequences of the settlement offer(s). The parties may deliver responding submissions, three pages maximum, by October 5, 2017.

[65] After receiving those submissions I will determine the issues of which party or parties should be ordered to pay costs (in light of the submissions and the settlement offers), the scale on which such costs shall be paid and whether such costs should be assessed or fixed. However, I do not want any further submissions regarding whether costs should be assessed or fixed.

Mr. Justice M. D. Faieta

Released: September 20, 2017

CITATION: Iroquois Falls Power Corp. v. Jacobs Canada Inc., 2017 ONSC 5515

COURT FILE NO.: 05-CV-290557PD1

DATE: 20170919

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

IROQUOIS FALLS POWER CORP.

Plaintiff

– and –

JACOBS CANADA INC. and MCDERMOTT INCORPORATED and CHUBB INSURANCE COMPANY OF CANADA and AMERICAN HOME ASSURANCE COMPANY

Defendants

REASONS FOR DECISION

Mr. Justice M. D. Faieta

Released: September 20, 2017