CITATION: Environmental v. Huron, 2017 ONSC 7697

COURT FILE NO.: 10-2087 (Stratford)

DATE: 20171222

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Environmental Waterproofing Inc. and Randy Wilson c.o.b. as Maple Hill Electric

Plaintiffs

– and –

Huron Tract Holdings Inc., John D. Marshall, The Estate of Richard Lehnen, Jake Bulk and United Communities Credit Union

Defendants

Martha Cook, for the Plaintiffs

Luigi E. Circelli, for the Defendant, Jake Bulk

HEARD: September 26, 2017

ruling on motion

HEBNER J.

[1] This is a breach of trust action under the Construction Lien Act, R.S.O. 1990, c. C.30. The only defendant remaining is Jake Bulk.

[2] This motion was brought by the plaintiffs for an order striking Mr. Bulk’s statement of defence or, in the alternative, an order amending the timetable set by order of Hockin J. dated February 14, 2017.

Background Facts

[3] According to the statement of claim, the claim is for construction supplies and materials to properties in May and June 2008. The action was commenced by notice of action on May 12, 2010. The statement of claim is dated June 14, 2010. Mr. Bulk and another defendant, John D. Marshall, challenged the timeliness of the filing of the statement of claim beyond 30 days. On January 12, 2012 an order was granted to the plaintiffs extending the 30 day requirement.

[4] As between the plaintiffs and the defendant, Jake Bulk, nothing further transpired in the action until December 5, 2016 when the plaintiffs brought a motion by way of a status hearing under r. 48.14(6) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, for leave of the court to allow the action to proceed notwithstanding that the action had not been set down for trial by January 1, 2017. The motion was heard by Hockin J. who determined that the action would not be dismissed and set a procedural timetable. In his endorsement, dated February 14, 2017, Hockin J. said:

After review of the plaintiffs’ affidavit material, it is certainly the case that the delay has been great (and Ms. Cook fairly concedes this). But I am satisfied that in the absence of prejudice, the delay is explained, and does not justify the imposition of a “guillotine” order, the dismissal of an action, where there is at hand a timetable for its speedy and proper resolution.

[5] The timetable set by Hockin J. was as follows:

1. Mr. Bulk was required to deliver his affidavit of documents not later than April 30, 2017;
2. Examinations for discovery were to be completed by June 30, 2017;
3. Answers to undertakings from examinations, if any, were to be fulfilled by no later than August 15, 2017; and
4. The action must be set down for trial by no later than September 30, 2017.

[6] Mr. Bulk appealed the order of Hockin J. by notice of appeal dated March 10, 2017. The appeal was scheduled to be heard on November 27, 2017. In the interim, the plaintiffs brought a motion to quash the appeal and the motion was heard on September 20, 2017, in Toronto. The motion was successful and the appeal was quashed.

[7] While the appeal was underway, Mr. Bulk ignored the timetable set by Hockin J. despite requests from counsel for the plaintiffs that the timetable be complied with. On March 10, 2017, the date the notice of appeal was served, Ms. Cook wrote to Mr. Circelli advising that the appeal did not stay the operation of the order of Hockin J. and requesting that Mr. Bulk’s affidavit of documents be provided by April 30, 2017. Further letters were sent on April 7 and May 17, 2017. Mr. Bulk’s affidavit of documents was not served.

[8] Ms. Cook continued with her efforts to ensure that the timetable was complied with. On June 21, 2017 she wrote to Mr. Circelli advising that she had arranged an examination for discovery of Mr. Bulk on June 30, 2017. On June 22, 2017, Mr. Circelli responded and indicated he was not available on June 30, 2017. He further indicated his position that the order of Hockin J. ought to be stayed until the disposition of the then outstanding motion to quash the appeal and indicated that if Ms. Cook did not agree, then he would commence a motion to have the order stayed. Ms. Cook’s response on June 23, 2017 was, “Your client must comply with the order of Hockin J. or obtain an order staying it pending disposition of the appeal.” The motion to obtain a stay order was not brought. Mr. Bulk did not attend the examination for discovery and a certificate of non-attendance was obtained. This motion to strike Mr. Bulk’s defence was served prior to the order quashing the appeal.

Position of the Parties

[9] The position of the plaintiffs is that the defendant’s pleading ought to be struck by reason of repeated failures to comply with the Hockin J. order in the face of requests to do so. The plaintiffs submit that it is clear that Mr. Bulk instructed his lawyers to not comply with the court order and such conduct cannot be tolerated.

[10] The plaintiff relies upon the decision of Gorman J. in the case of Kohlsmith v. Sterling Mutuals Inc., 2014 ONSC 4696. In that case, an order was made by Leitch J. setting a deadline for answers to refused questions on discovery and for service of a sworn affidavit of documents. In addition, a timetable was set by Rady J. at a status hearing for the completion of examinations for discovery and compliance with undertakings. The defendants did not comply with the orders. Their statement of defence was struck.

[11] The position of the defendant is that the plaintiffs did nothing to move the action forward from 2010 to 2016 and that inaction created an attitude of complacency. The defendant does not dispute the allegation that it failed to comply with the court order. The defendant submits that he did not comply given the outstanding appeal was proceeding expeditiously and, if the appeal had been successful, the legal expenses incurred to provide an affidavit of documents and conduct examinations for discovery would have been for naught.

[12] The defendant distinguishes the case of Kohlsmith v. Sterling Mutuals Inc. on the basis that the defendants in that case had disregarded several orders and there was no outstanding appeal from those orders.

Analysis

[13] The order of Hockin J. was made following a fully contested status hearing where Mr. Bulk sought to dismiss the action for delay. The terms of the order are clear. They should have been complied with or, alternatively, a motion brought for a stay pending the appeal from that order. In Kohlsmith v. Sterling Mutuals Inc., Gorman J. referred to the Court of Appeal decision in 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544, 2012 CarswellOnt 10154 (Ont. C.A.), where it said at para. 19:

Timelines prescribed by the Rules of Civil Procedure or imposed by judicial orders should be complied with. Failure to enforce rules and orders undermines public confidence in the capacity of the justice system to process disputes fairly and efficiently. On the other hand, procedural rules are the servants of justice not its master. We must allow some attitude for unexpected and unusual contingencies that make it difficult or impossible for a party to comply.

[14] In this case, there were no “unexpected and unusual contingencies”. Instead, the defendant made a deliberate choice to fail to comply with the order and refrain from bringing a motion for a stay in order to avoid legal fees that could have become unnecessary depending on the outcome of the appeal.

[15] In Essa Carpentry Inc. v. Falconwin Holdings Ltd., 2014 ONSC 6527, the Master struck the defendant’s statement of defence and counterclaim by reason of nondisclosure, noncompliance with undertakings, and noncompliance with procedural orders. The appeal was dismissed. Harvison Young J. referred to the decision of Vacca v. Banks, [2005] O.J. No. 147 (Ont. Div. Ct.), where there had been repeated breaches of court orders requiring the plaintiffs to answer outstanding undertakings and provide a damages brief. Ferrier J. declined to set aside the order of the Master dismissing the action. He said, at paragraph 27:

There comes a time when this court is obliged to meet its responsibility for the effective administration of justice through case management by dismissing an action. Such is the case when the plaintiff repeatedly fails to comply with orders of the court whether or not there has been prejudice to the defendants.

[16] In Torres v. McPherson Lawn & Snow, 2012 ONSC 2501, the plaintiff failed to comply with two court orders. The defendants brought a motion to dismiss the action on the basis of noncompliance. The motion was dismissed. The Master found that even though orders had not been complied with, the plaintiff had not abandoned the action. At para. 65, Master Haberman said:

There is no hard and fast test regarding breach of court orders as a ground for dismissing an action. Instead, a far more fluid approach appears to be taken than when the court is dealing with dismissal for delay. Some of the factors the court appears to consider are the number of orders breached; the nature of those orders; the impact of the breach(es) on the case and on the integrity of the administration of justice.”

[17] In this case, Mr. Bulk, when faced with the Hockin J. order, had three choices: he could comply with the order by providing his affidavit of documents and attending to be examined for discovery; he could move for a stay of the order pending appeal; he could ignore the order. Mr. Bulk ignored the order. He made a deliberate choice not to comply with a court order. It is trite to say that court orders are not suggestions. They must be obeyed. Mr. Bulk had no justifiable excuse for failure to comply with the order or bring a motion for a stay pending appeal.

[18] However, striking out a statement of defence is a severe remedy, as identified in the Court of Appeal decision of Bell Expressvu Limited Partnership v. Torroni, 2009 ONCA 85, 94 O.R. (3d) 614. The remedy of striking a litigant’s pleadings is “generally not to be a remedy of first resort…, without at least providing the defaulting defendant with an opportunity to cure the default.”

[19] I must consider the entire history of this action. The plaintiff did not move the case forward against Mr. Bulk for a period of six years. The plaintiff has received two indulgences, the first being an extension of the time to file a statement of claim and the second being the order of Hockin J. allowing the action to proceed despite the plaintiffs’ delays. Given the indulgences the plaintiffs have received, in my view it would be improper to impose the severe remedy of striking a statement of defence on the defendant, despite the defendant’s deliberate noncompliance of a court order.

[20] I wish, however, to make it crystal clear to the defendant that the court will not tolerate any further breaches of its orders. The defendant’s conduct cannot be taken lightly. Quite frankly, if the plaintiff had not received the indulgences, most likely the defence would have been struck.

Disposition

[21] For the foregoing reasons, I make the following order:

1. The plaintiffs’ motion for an order striking the defence of the defendant, Jake Bulk, is dismissed.
2. The timetable set by the order of Hockin J., dated February 14, 2017, shall be amended as follows: a) The defendant, Jake Bulk, shall deliver his affidavit of documents no later than January 26, 2018; b) Examinations for discovery shall be completed by April 20, 2018; c) Answers to undertakings from examinations, if any, are to be fulfilled no later than June 29, 2018; and d) This action shall be set down for trial by no later than August 24, 2018.
3. The registrar shall not dismiss this action for delay under r. 48.14(1) of the Rules of Civil Procedure, or otherwise, before October 26, 2018.
4. In the event either party wishes to make written submissions as to costs, they may do so within 20 days, along with a costs outline and any relevant offers to settle. The other party may respond within 10 days thereafter.

“original signed and released by Hebner J.”

Pamela L. Hebner

Justice

Released: December 22, 2017

CITATION: Environmental v. Huron, 2017 ONSC 7697

COURT FILE NO.: 10-2087 (Stratford)

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Environmental Waterproofing Inc. and Randy Wilson c.o.b. as Maple Hill Electric

Plaintiffs

– and –

Huron Tract Holdings Inc., John D. Marshall, The Estate of Richard Lehnen, Jake Bulk and United Communities Credit Union

Defendants

RULING ON MOTION

Pamela L. Hebner

Justice

Released: December 22, 2017