Walderman v. CMC Markets Canada Inc., 2017 ONSC 6802

CITATION: Walderman v. CMC Markets Canada Inc., 2017 ONSC 6802

COURT FILE NO.: CV-10-4061-00 and CV-10-4060-00

DATE: 20171115

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Terri Walderman

Plaintiff

– and –

Investia Services Financiers Inc., Investia Financial Services Inc., ASL Direct Inc., ASG Financial Corp., Panfinancial Group Services Ltd., Panfinancial Investments Inc., Panfinancial Investments management Ltd., Panfin Wealth management Group Inc., Panfinancial Group Services Inc., Panfinancial investments Group Inc.,Panfinancial Investments Services Inc., Panfinancial Services Inc., Pan Financial Inc., Panfinancial Services Corp., Panfinancial Insurance Agencies Ltd., Panfin Equicap Ltd., Gordon Berger, Trevor Rabie, Aaron Cohen, Eran Ostfeld and Lily Ostfeld

Defendants

Julian Binavince, for the Plaintiff

Samuel Robinson, Counsel for the Defendant, Aaron Cohen

Alannah Fotheringham, Counsel for the Defendants CMC Markets Canada Inc., Investia Services Financiers Inc., and Investia Financial Services Inc.

AND RE:

Terri Walderman and Beverly Smith

Plaintiffs

• and -

CMC Markets Canada Inc., Shorcan Brokers Ltd., Panfinancial Group Services Ltd., Panfinancial Investments Inc., Panfinancial Investments management Ltd., Panfin Wealth management Group Inc., Panfinancial Group Services Inc., Panfinancial investments Group Inc.,Panfinancial Investments Services Inc., Panfinancial Services Inc., Pan Financial Inc., Panfinancial Services Corp., Panfinancial Insurance Agencies Ltd., Panfin Equicap Ltd., Gordon Berger, Trevor Rabie and Aaron Cohen

Defendants

HEARD: August 28, 2017

REASONS FOR JUDGMENT

PETERSEN, J.

[1] This is a contested status hearing under Rule 48.14(5) of the Rules of Civil Procedure, in respect of two related actions that were commenced on November 3, 2010.

Overview

[2] The actions arise out of three failed investment schemes in which the Plaintiffs lost a significant amount of money. They include claims based on breach of contract, breach of fiduciary duty, misrepresentation and negligence.

[3] Teri Walderman is the moving party. She is a Plaintiff in both actions. Commencing in 2004, at the age of 54, and through to 2006, she transferred almost all of her liquid assets and two-thirds of a recent divorce settlement (in excess of $1,000,000) into three investment funds, through the Panfinancial group of companies. Her investment goal was to preserve her capital and achieve modest gains. She received some initial dividend payments and interest payments as a return on her investments, but by 2008, those payments had stopped. She ultimately lost the principal that she had invested, which dramatically impacted her lifestyle and derailed her retirement plans.

[4] Beverly Smith is a second Plaintiff in Court file no. CV-10-4060. She was also an investor in one of the three funds. She is no longer pursuing any relief from the Defendants. She did not appear at the status hearing.

[5] There were initially multiple Defendants in both actions, with significant overlap. However, the only Defendants responding to this Motion are CMC Markets Canada Inc. (“CMC”), Investia Services Financiers Inc. and Investia Financial Services Inc. (“Investia”), and Aaron Cohen (collectively, “the Responding Defendants”). Investia’s exposure to liability in Court file no. CV-10-4061 is vicarious, in the event that Mr. Cohen is found to be liable.

[6] As set out below, Ms. Walderman’s claims against all other Defendants have been adjudicated, settled or abandoned.

Issue

[7] The only issue before me is whether the actions should be dismissed for delay or permitted to proceed to trial.

[8] Under Rule 48.14(1), actions that have not been set down for trial by the fifth anniversary of their commencement date may be dismissed for delay by the Registrar, unless the Court orders otherwise. In this case, although the five year deadline was on November 3, 2015, the Registrar did not administratively dismiss the actions once the anniversary date passed without them having been set down for trial.

[9] Ms. Walderman’s Notice of Motion for the status hearing was issued on December 7, 2016, more than six years after commencement of the actions. The Motion was initially returnable on December 20, 2016, at which time it was rescheduled to February 7, 2017. The Motion was then adjourned on consent to March 7, 2017, due to counsel scheduling conflicts. On March 7, 2017, Justice Bloom adjourned it again and ordered that it be scheduled for a “long motion” hearing on August 28, 2017.

[10] The status hearing proceeded before me on August 28, 2017, approximately six years and ten months after the commencement of the actions.

[11] In the Motion, Ms. Walderman seeks relief pursuant to Rule 48.14(7)(i). Specifically, she asks the Court to set a litigation timetable, with deadlines for the completion of the remaining steps necessary to have her actions set down for trial, including an Order that the actions be set down for trial within one year.

[12] The Responding Defendants ask the Court to dismiss the actions for delay pursuant to Rule 48.14(7)(a).

[13] At the outset of the hearing on August 28, 2017, Mr. Binavince advised the Court that Ms. Walderman had recently agreed to a dismissal of “the CMC action” (i.e., Court file no. CV-10-4060) as against Mr. Cohen, and that he anticipated that action would likely be resolved with respect to CMC as well. Thus the central issue for me to decide in this Motion is whether Ms. Walderman’s claims against Mr. Cohen and Investia, in Court file no. CV-10-4061, should proceed to trial or be dismissed for delay. The status of the action in Court file no.CV-10-4061 is also at issue, but is not as contentious.

Law

[14] Pursuant to Rule 48.14(7), the Plaintiff bears the onus at a status hearing “to show cause why the action should not be dismissed for delay”. The analytical framework for deciding this issue is established in the jurisprudence. Despite amendments to Rule 48.14 made in 2015, the test with respect to status hearings has not changed since it was articulated by the Ontario Court of Appeal in Khan v. Sun Life Assurance Co. of Canada, 2011 ONCA 650, at para.1. According to the test, Ms. Walderman bears the burden of demonstrating two things: (1) that there is an acceptable explanation for the delay in the litigation and (2) that the Defendants would not suffer non-compensable prejudice if the actions were allowed to proceed. This is a conjunctive, rather than disjunctive test. I may dismiss the actions for delay if either branch of the test is not satisfied. See 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544, at para.32, Faris v. Eftimovski, 2013 ONCA 360, at para.32, Nissar v. Toronto Transit Commission, 2013 ONCA 361, at para.31, Orsi Estate v. Fromstein, 2013 ONSC 7850, at para.33, and Postmedia Network Inc. v. Meltwater Holding B.V., 2017 ONSC 6036, at para.15.

[15] In exercising my discretion under Rule 48.14(7), there are competing interests that I must consider and balance. On the one hand, there is a public interest in discouraging delay in litigation and ensuring compliance with Rules of Civil Procedure that promote efficient and timely resolution of disputes. The Responding Defendants have a concurrent private interest in having the claims against them resolved within a reasonable period of time. On the other hand, it is also in the public interest for claims to be decided on their merits rather than on procedural deficiencies and Ms. Walderman has a concurrent private interest in obtaining an adjudication on the merits of her claims. See Faris, supra, at para.24.

Plaintiff’s Explanation for the Delay

[16] After Ms. Walderman served her Statements of Claim, the Responding Defendants and Shorcan Brokers Ltd. (“Shorcan”) each delivered Notices of Intent to Defend. In January 2011, CMC and Investia wrote to Ms. Walderman’s counsel demanding particulars. CMC also made a written request to inspect documents. There is no evidence that Mr. Binavince (Ms. Walderman’s lawyer) responded to those requests. The Responding Defendants and Shorcan subsequently delivered Statements of Defence and Cross-Claims against all other co-Defendants. In their Statements of Defence, Mr. Cohen and Investia pleaded, among other defences, that the actions were statute barred as a result of the expiry of the applicable two year limitation period.

[17] There is no evidence in the record showing that any of the other Defendants in either action delivered a Statement of Defence, except Gordon Berger, who delivered a Defence to Ms. Walderman’s Claims, as well as Defences to the other Defendants’ Cross-Claims.

[18] After serving the Responding Defendants with her Statements of Claim in or about December 2010, Ms. Walderman took no steps to advance the litigation against them and did not correspond with them until serving her Notice of Motion for a status hearing in December 2016. Her explanation for this delay is that she was busy pursuing other Defendants, whom she deemed to be most culpable, and she did not have sufficient financial resources to pursue her claims against the Responding Defendants concurrently.

[19] The record shows that Ms. Walderman took the following steps with respect to her claims against other Defendants in these actions:

(i) On September 30, 2011, she obtained default judgment against Trevor Rabie, Eran Ostfeld, Panfinancial Insurance Agencies Ltd. and Panfin Equicap Ltd. Justice Sproat ordered the defaulting Defendants to pay Ms. Walderman, jointly and severally, a total of $1,250,000, plus pre-judgment interest, in court file no.CV-10-4061 and $840,000, plus pre-judgment interest, in court file no.CV-10-4060. Mr. Rabie and Mr. Ostfeld were both bankrupt. Justice Sproat ordered that, if either of them obtained an order of discharge pursuant to the Bankruptcy and Insolvency Act, R.S.C. 1985, c.B-3 (“BIA”), it would not release them from liability in respect of payment of the amounts ordered to be paid to Ms. Walderman. The defaulting Defendants were also ordered to pay Ms. Walderman’s costs.

(ii) On September 30, 2011, Ms. Walderman obtained a second Order from Justice Sproat authorizing her to continue to prosecute her claims against Mr. Berger (President of the Panfinancial group of companies). This Order was required because Mr. Berger had made a Proposal to his creditors under the BIA, which resulted in a stay of proceedings prescribed by s.69 of the BIA. The stay was set aside by Justice Sproat, enabling Ms. Walderman to continue her action against Mr. Berger.

(iii) On January 16, 2012, Mr. Binavince examined Mr. Rabie in aid of execution of the default judgment against him.

(iv) On February 27, 2012, Mr. Binavince examined Mr. Berger in aid of execution of the default judgment against the Panfinancial Defendants.

(v) Mr. Rabie brought a Motion to set aside the default judgments against him, which was heard on July 11, 2012. Ms. Walderman objected to the Motion and was successful in having it dismissed. In an Endorsement dated August 23, 2012, Justice Donohue found that Mr. Rabie’s defence did not have an air of reality in light of the evidence presented on the Motion. She concluded, “I am not satisfied that a valid defence exists on the merits, nor is there a genuine issue requiring a trial. I deny the defendant Rabie’s motion to set aside the default judgments in the two actions.” Justice Donohue’s Order was not settled until earlier this year (2017), pursuant to a Notice of Motion brought by Mr. Rabie in July 2016.

(vi) Ms. Walderman brought a Motion for summary judgment against the Defendant Lily Ostfeld, returnable on July 11, 2012. The Motion was adjourned upon Ms. Ostfeld’s request and was scheduled for a mini-trial during the trial sittings commencing February 25, 2013, in order to obtain the evidence of Mr. Berger and Mr. Rabie by way of summons.

(vii) Mr. Binavince engaged in settlement discussions with Mr. Berger and Mr. Berger’s counsel. They also communicated about Mr. Berger’s willingness to assist Ms. Walderman to recover some of her financial losses. As a result of these discussions, Mr. Berger agreed to provide an affidavit in support of Ms. Walderman’s Motion for summary judgment against Ms. Ostfeld.

(viii) After obtaining Mr. Berger’s affidavit in mid February 2013, Mr. Binavince and Ms. Ostfeld’s lawyer agreed to adjourn the scheduled mini-trial and reschedule the summary judgment Motion to a fixed date of August 15, 2013. It is unclear from the record why the Motion was not heard on that date. Instead, it was rescheduled to September 17, 2013, then adjourned twice more to October 24, 2013 and November 18, 2013. Ms. Ostfeld paid Ms. Walderman’s costs thrown away for the court appearances on September 17 and October 24, 2013. I therefore infer that Ms. Ostfeld was responsible for those adjournments. The Motion was eventually re-scheduled to proceed by way of a one day trial on June 25, 2014, but it was adjourned again, at Ms. Ostfeld’s request, to July 15, 2014. The July 15, 2014 date was made peremptory on Ms. Ostfeld and she was ordered to pay Ms. Walderman’s costs thrown away for the appearance on June 25, 2014. On July 15, 2014, Justice Tzimas adjourned the Motion again and ordered a mini-trial, which was supposed to be heard on January 26, 2015. It was rescheduled to April 27, 2015 and then to October 19, 2015 because of scheduling issues with witnesses.

(ix) The mini-trial on the summary judgment Motion never proceeded. Instead, on October 19, 2015, Justice Tzimas granted Ms. Walderman a consent Order for judgment against Ms. Ostfeld in the amount of $500,000, plus pre-judgment interest and costs. Ms. Walderman subsequently assigned her claims against Ms. Ostfeld to a third party in exchange for a $100,000 payment.

(x) In early 2016, Ms. Walderman discovered that Mr. Rabie was working with an entity called Rosewater Capital. She attempted to garnish Rosewater, but did not realize any amounts.

[20] At the hearing before me on August 28, 2017, pursuant to an order of Justice Bloom dated March 7, 2017, Mr. Binavince provided the Court with an update on the current status of the proceedings with respect to each Defendant. He advised that the action in court file no.CV-10-4060 was dismissed as against Shorcan on consent and that the claims against Mr. Berger in both actions were settled earlier this year.

[21] Mr. Binavince explained that no other Defendants were served with Ms. Walderman’s Notice of Motion for a status hearing because ASL Direct Inc. and ASG Financial Corp. were no longer carrying on business and all other corporate Defendants in the Panfinancial group of companies have been dissolved.

[22] In her affidavit, Ms. Walderman deposed that she has expended significant resources and has “continuously pursued some aspect” of her claims in a manner that her “available resources permit”. She submits that this provides an acceptable explanation for her delay in pursuing her claims against the Responding Defendants and in bringing the actions to trial.

Is the Explanation Acceptable?

[23] In cases involving multiple defendants, a delay in proceeding against some of the defendants may be adequately explained by the fact that the plaintiff was engaged in preliminary disputes with other defendants. For example, in 2046085 Ontario Inc. v. Raby, 2014 ONSC 774 (“Raby”), the plaintiffs had taken steps to move the action forward as against some of the defendants but had taken no steps in over four years with respect to one of the defendants named Linton. Master Glustein held that preliminary disputes with other defendants provided an adequate explanation for the plaintiff’s delay in prosecuting its claims against Linton and in getting the action ready to be set down for trial.

[24] At the status hearing in Raby, supra, the Court was asked to dismiss the action against Linton alone. Master Glustein denied the requested relief (at paras.10-14) for the following reasons:

Linton provided no case law to support the proposition that a Rule 48 status hearing can be used to dismiss the claim against one defendant while continuing the claim against the other defendants to the action. I do not agree that such a position is consistent with Rule 48 or with the principles requiring the Plaintiff to move an action forward.

In particular, [Rule 48] requires the plaintiff at a status hearing to “show cause why the action should not be dismissed for delay.” It does not require the plaintiff to establish that steps have been taken against each individual defendant since the inception of the action.

In a case with multiple defendants, the plaintiff may well be engaged in preliminary disputes with certain defendants which could explain litigation delay, such as production issues, summary judgment or Rule 21 motions, or other matters. In those circumstances, a plaintiff reasonably pursing (or having to respond to) preliminary issues involving certain defendants ought to be able to demonstrate an adequate explanation for the litigation delay, and a defendant who was not a party to those preliminary issues ought not to be able to have the action dismissed only against that defendant at a status hearing.

Further, Linton’s submission would result in defendants being dismissed from actions in which there could be cross-claims or potential joint and several liability for damages to other defendants, simply because the other defendants have addressed preliminary matters through motions which have required additional time. Such a result would prejudice the rights of the remaining defendants.

[25] This case is distinguishable from Raby, supra, in several respects. The Responding Defendants are not seeking to have only the claims against them dismissed, while the actions proceed against other co-Defendants, potentially prejudicing the rights of other parties. At this stage of the proceeding, the Responding Defendants are the only remaining Defendants in the case. They seek to have the actions dismissed in their entirety, not just as against one of them. The fairness concerns expressed by Master Glustein in Raby, supra, therefore do not apply.

[26] Based on the specific facts of this case, I find that Ms. Walderman has not provided an acceptable explanation for the delay. “To be acceptable, the explanation need not cover every single minute of delay. However, it should explain most of the delay and certainly all periods of material delay.” See Madore v. Metro Toronto Condominium Corp. No.1228, 2015 ONSC 4750, at para.26.

[27] Ms. Walderman has not adequately explained all periods of material delay. Her actions were commenced on November 3, 2010. She obtained default judgment against some of the Defendants in September 2011, conducted examinations of two judgment debtors in aid of execution in January and February 2012, and successfully challenged Mr. Rabie’s motion to have the default judgment against him set aside in July 2012. These litigation activities constitute an acceptable explanation for the initial period of delay from November 2010 and July 2012, during which time she took no steps to advance her claims against the Responding Defendants. However, there is no adequate explanation for the further delay between July 2012 and October 2015. During that period, in excess of three years, there was no activity on the file, apart from some settlement discussions with Mr. Berger and multiple adjournments of a summary judgment Motion against Ms. Ostfeld.[^1] No affidavits of documents were prepared and no examinations for discovery were conducted. No pre-trial steps whatsoever were taken to advance the claims against the Responding Defendants. Ms. Walderman did not even correspond with the Responding Defendants to update them on the status of the proceeding.

[28] Apart from a vague reference in her affidavit to her “available resources”, Ms. Walderman has not submitted evidence to support her submission that she was required to prioritize which Defendants she initially pursued because she did not have sufficient financial resources to pursue them all simultaneously.

[29] Moreover, she has not adequately explained why, for over more than three years, she did not even respond to Investia’s and CMC’s demands for particulars or CMC’s request to inspect documents.

[30] Furthermore, Ms. Walderman did not convey her litigation strategy/priorities to the Responding Defendants. She did not solicit their consent to hold the actions in abeyance while she pursued default judgment and summary judgment against other co-Defendants.

[31] In addition, between the date of the consent judgment against Ms. Ostfeld in late October 2015 and the issuance of the Motion for a status hearing in early December 2016, the only litigation steps taken by Ms. Walderman were in respect of enforcement of judgments against other Defendants. The record shows that she made a failed attempt at garnishment of Mr. Rabie’s income and assigned her claims against Ms. Ostfeld to a third party. There is no evidence that she communicated with the Responding Defendants during this period of time. She did not take any steps to advance her claims against them or to prepare the actions for trial. She provided no explanation for this further period of delay.

[32] The absence of an acceptable explanation for years of delay is sufficient for me to conclude that Ms. Walderman has failed to show cause why her actions ought not to be dismissed for delay. In Faris, supra, at para.34, the Court of Appeal noted that, where a party fails to prosecute an action in a timely fashion, the Court is entitled to exercise the powers conferred by the Rules to dismiss the action absent an adequate explanation for the delay, without proof of actual prejudice to the Defendants. I have nevertheless considered the second branch of the test relating to prejudice to the Defendants and have concluded, for the reasons set out below, that it also supports dismissal of the actions for delay.

Non-Compensable Prejudice to the Defendants

[33] Ms. Walderman has the onus, under Rule 48.14(7), to establish that the Responding Defendants would suffer no non-compensable prejudice if I permit her actions to proceed to trial after such an extensive delay. In assessing this second branch of the test, the most important kind of prejudice for me to consider is potential impairment of the Defendants’ ability to present their case at trial as a result of the delay. See Madore, supra, at para.41.

[34] The Responding Defendants are under no obligation to prove actual case-specific prejudice resulting from Ms. Walderman’s delay, such as the death of a key witness. The Ontario Court of Appeal has ruled that “[p]rejudice is inherent in long delays. Memories fade and fail, witnesses become unavailable, and documents and other potential exhibits are lost. The longer the delay, the stronger the inference of prejudice to the defence case flowing from that delay.” Lagenecker v. Sauve, 2011 ONCA 803, at para.11. The Court of Appeal has also ruled that, as time goes on, it becomes “more and more difficult to defend a claim” relating to events that transpired years earlier and “that would be even more remote by the time a trial could be held. The more time that passes, the more difficult it is to defend the case. Memories fade and even if documents are not lost, their significance becomes shrouded.” 1196158 Ontario Inc. v. 6274013 Canada Ltd., supra, at para.43.

[35] Ms. Walderman relies on several cases in which the plaintiff was successful in overcoming the inference of inherent prejudice to the defendant, despite prolonged delay. In those cases, the Court’s decisions were based on findings that (1) the issues would likely be resolved based on documentary evidence, rather than witnesses’ recollections of events, and the relevant documents had been preserved, and/or (2) witnesses’ recollections of events could be refreshed using available documents and/or transcripts of examinations for discovery.

[36] For example, in Hart Stores Inc. v. 1808059 Ontario Ltd., 2014 ONSC 7010, at para.12, Master Muir concluded that there would be no prejudice to the defendant in part because the case involved “the kind of action that will most likely turn on expert evidence and an examination and interpretation of documents, all of which are available.” Master Muir noted that despite the plaintiff’s delay in setting the action down for trial, relevant documents had been exchanged, affidavit evidence had been served, and examinations for discovery had taken place.

[37] Similarly, in Orsi Estate v. Fromstein, 2013 ONSC 7850, at para.32, Master Muir observed that he viewed the action “as mostly a documents case” and since the defendants’ relevant documents were available, he concluded that there would be no prejudice to the defendants resulting from the plaintiff’s delay.

[38] In Raby, supra, at paras. 21-25, the Court inferred from the pleadings that the issues in the action were largely dependent on documents as opposed to witnesses’ recollection of events. The Court noted that all parties had either served affidavits of documents or produced relevant documents, thereby preserving the requisite evidence. The Court further noted that there had also been some examinations for discovery on a production motion. For all of these reasons, the Court concluded that the defendants would suffer no non-compensable prejudice if the action proceeded despite the plaintiff’s delay.

[39] In James v. Golden Mile Collision Ltd., 2013 ONSC 6433, at para.32, Justice Firestone held that there would be no non-compensable prejudice to the defendants if the matter was restored to the trial list, in part because the defendants had participated in documentary disclosure, examinations for discovery, mediation and a pre-trial conference.

[40] This case is distinguishable from those cited above. Ms. Walderman has taken no steps whatsoever to advance the litigation against the Responding Defendants since the close of pleadings in 2012. She did not request any information from them, did not prepare or request affidavits of documents, did not produce any documents or request production of any documents from them, and did not conduct (nor even seek to schedule) examinations for discovery. She took no steps that could have alleviated the prejudice to the Responding Defendants that inherently results from lengthy delay.

[41] Each of the Responding Defendants has submitted an affidavit deposing that, based on Ms. Walderman’s prolonged silence, they assumed that she did not intend to proceed with her actions against them. This evidence is uncontested. The Defendants’ assumption was reasonable in the circumstances. Mr. Cohen’s situation is particularly compelling in this regard, based on verbal communications that he had with Ms. Walderman shortly after he was served with her Statements of Claim.

[42] The record shows that Mr. Cohen spoke directly to Ms. Walderman about the litigation during either the winter or early spring of 2011. The parties disagree about the timing of their conversation and about precisely what was said, but it is uncontested that Ms. Walderman followed up by sending Mr. Cohen an email message dated April 20, 2011, containing the following text:

Please note that you held my mutual funds only when u were at panfinancial. The lawsuit that I have against you is for information purposes only. You had nothing to do with my other investments at panfinancial.

when we call upon you for information about other investments I made through panfinancial I would like to insure that you will assist us at anytime with whatever information you have

[43] Mr. Cohen relies on this correspondence, as well as Ms. Walderman’s subsequent years of silence, to explain his belief that she had no intention of pursuing her claims against him. Ms. Walderman argues that his decision to file a Statement of Defence in 2012 contradicts this assertion. Mr. Cohen deposed that he served Ms. Walderman with a Statement of Defence because she did not discontinue her action against him, despite having assured him, both verbally and in writing, that he was being sued “for information purposes only.” He notes that Ms. Walderman made no effort to examine him for discovery during the four years that elapsed after he filed his Statement of Defence, despite having advised him that she brought the lawsuit against him “for information purposes.” The record shows that she did not communicate with him in any way prior to serving him with her Notice of Motion for a status hearing in December 2016, more than five and a half years after she sent the above email in April 2011. In these circumstances, I accept Mr. Cohen’s evidence that he believed that Ms. Walderman had effectively abandoned the actions against him.

[44] Mr. Cohen asserts that, if the actions are permitted to proceed to trial at this time, he will be prejudiced in his ability to defend against Ms. Walderman’s claims due to loss of relevant documentary evidence and difficulties in witnesses recalling relevant events. Ms. Walderman alleges that he provided her with negligent advice in respect of investments that she made between 2004 and 2006. He deposed that documents relating to those investments may no longer be available because the mutual fund dealer through whom he was licenced in 2005, ASL Direct Inc., is no longer in business. Ms. Walderman led no evidence to contradict this statement.

[45] At the hearing, Mr. Binavince argued that the Defendants had a positive obligation to collect and preserve relevant documents once they became aware that they were being sued. He submitted that the Responding Defendants should not be permitted to rely on their own inaction to argue prejudice against them. That argument ignores the onus placed on Ms. Walderman (the Plaintiff) under Rule 48.14. As the Court of Appeal stated in 1196158 Ontario Inc., supra, at paras. 27 and 28:

After five years of inaction on the part of the plaintiff, it was virtually inevitable that the defendants would assume that the claim was not being pursued. At the very least, without some action on the part of the plaintiff, the defendants would be disinclined to spend any time or money in preparing affidavits of documents or taking any other steps in anticipation of a trial that, as time went by, became increasingly unlikely to happen.

The focus of the inquiry on a rule 48.14 status hearing is the conduct of the plaintiff and, as this court held in Wellwood v. Ontario Provincial Police (2010), 102 O.R. (3d) 555, 2010 ONCA 386, at para.18, “the party who commences the proceeding bears primary responsibility for its progress” and therefore “the initiating litigant generally suffers the consequence of a dilatory regard for the pace of litigation.”

[46] It should also be noted that this is not purely (nor even predominantly) a documentary case. In order to mount a defence, Mr. Cohen will need to rely on his memory of interactions that he had with Ms. Walderman more than ten years ago. The essence of her claim against him (and vicariously against Investia) is that he owed her a duty of care as her financial advisor and was negligent in the advice that he provided. The central issues raised by her claims are whether Mr. Cohen and Investia had an obligation to warn her, as their client, that she should not transfer her investments to high-risk funds and if so, whether they did in fact warn her. Mr. Cohen’s recollection of their personal interactions is critical evidence. He was never examined for discovery, and did not examine Ms. Walderman for discovery, so there are no transcripts of earlier statements to assist him in refreshing his memory.

[47] Mr. Binavince argues that statements contained in Mr. Cohen’s affidavit prove that he still has a clear recollection of the advice he gave Ms. Walderman over a decade ago. I disagree. The fact that he recalls the general thrust his discussions with her is not proof that he has specific recollection of advice he provided, or that his general recollection would withstand cross-examination after such a lengthy period of delay.

[48] For all of the above reasons, Ms. Walderman has not satisfied me that no non-compensable prejudice will be suffered by the Defendants if her actions are permitted to proceed. I conclude that there is a substantial risk that a fair trial of the issues will not be possible at the earliest date at which the actions would come to trial if they were permitted to continue.

[49] I am therefore of the view that the interests of justice and equity require that the actions be dismissed. While this is a severe outcome for Ms. Walderman, who will be denied an adjudication of the merits of her claims against the Responding Defendants, I find that an Order dismissing the actions for delay is the only Order that can adequately protect the integrity of the civil justice process and prevent an adjudication on the merits that would be unfair to the Responding Defendants. See Langenecker v. Sauve, supra, at para.3.

[50] Both actions are hereby dismissed pursuant to Rule 48.14(7)(a).

Costs

[51] The parties were invited to make costs submissions at the conclusion of the status hearing.

[52] In light of my decision to dismiss the actions, the Defendants are entitled to their costs. There are no circumstances that would support awarding costs on an elevated scale. Costs are therefore awarded on a partial indemnity basis, as set out below.

[53] CMC and Investia submitted Bills of Costs with respect to both actions and the contested status hearing Motion. CMC’s Outline shows actual costs in the amount of $6,739.22, inclusive of disbursements and HST, amounting to $4,254.35 at partial indemnity rates. Investia’s Outline shows actual costs in the amount of $7,173.22, inclusive of disbursements and HST, amounting to $4,423.66 at partial indemnity rates.

[54] Mr. Cohen requested his costs only of the Motion relating to Court file no.CV-10-4061, since Ms. Walderman agreed, just prior to the status hearing, that she would release him from all claims in Court file no. CV-10-4060. His Outline of Costs amounted to $4,508.70, inclusive of disbursements and HST, based on partial indemnity rates.

[55] Ms. Walderman did not resist the Defendants’ requests for costs, but Mr. Binavince made submissions with respect to the quanta of costs set out in the Defendants’ respective Outlines.

[56] Mr. Robinson (counsel for Mr. Cohen) readily conceded, in reply to Mr. Binavince’s submissions, that he ought not to have included in his Costs Outline 2.5 hours for attendance at the initial return of the Motion because the parties were not heard that day due to the Court’s overloaded docket. Mr. Cohen’s adjusted bill of costs amounts to $3,361.20, after this deduction is taken into account.

[57] Mr. Binavince argued that the hours reflected in CMC’s and Investia’s Costs Outlines are excessive, since there was extensive duplication of effort on the Motion and neither party was required to do anything to defend the actions, other than file their pleadings. He submitted that their costs should be reduced to $3,000.00 each, inclusive of disbursements and HST. I agree. The quanta of costs requested by CMC and Investia are excessive considering the nature of the proceeding.

[58] Based on a consideration of the factors set out in Rule 57 and of the parties’ submissions, I order Ms. Walderman to pay Mr. Cohen’s costs in the amount of $3,361.20, inclusive of disbursements and HST, and to pay CMC’s and Investia’s costs in the amount of $3,000.00 each, inclusive of disbursements and HST.

Petersen J.

Date: November 15, 2017

[^1]: Ms. Walderman was not responsible for these adjournments.