CITATION: Corporation of the City of Brantford v The Guarantee Company of North America, 2017 ONSC 933

COURT FILE NO.: CV-10-398156

MOTION HEARD: August 24, 2016

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CORPORATION OF THE CITY OF BRANTFORD v. THE GUARANTEE COMPANY OF NORTH AMERICA, LOMBARD GENERAL INSURANCE COMPANY OF CANADA, TEMPLE INSURANCE COMPANY and LLOYD’S UNDERWRITERS

BEFORE: Master Lou Ann M. Pope

COUNSEL: Tamyrn Jacobson, Goodmans LLP, Counsel for Bennett Contracting Millgrove Ltd., moving party

Fax: 416-979-1234

Jonathan de Vries, Shillingtons LLP, Counsel for the defendants

Fax: 519-645-6955

REASONS FOR DECISION

[1] Bennett Contracting Millgrove Ltd. (“Bennett”) brings this motion for an order to set aside the registrar’s dismissal order dated January 23, 2013, an order to continue this action with Bennett as the plaintiff, and for a timetable to complete the remaining steps in this action.

Background

[2] This action arises out of losses incurred at the Holmedale Water Treatment Plant (owned by the Corporation of the City of Brantford (“Brantford”)) as a result of the settlement of the pre-treatment building on or about March 3, 2009 during a construction project (“building settlement”). Bennett was the general contractor for the project.

[3] Brantford had a Multi-Peril Insurance Policy (“Insurance Policy”) issued by the defendants (“Insurers”). The Holmedale Water Treatment Plant, including the pre-treatment building, is part of the property insured by the Insurance Policy.

[4] After the building settlement, Brantford gave the Insurers notice of the claim. At a meeting in July 2009, and subsequently by email, the Insurers advised Brantford that there was an exclusion in the policy that they believed applied. On February 25, 2010, Brantford formally filed a Proof of Loss with the Insurers. As a result of the Insurers’ refusal to confirm coverage, Brantford commenced this action by statement of claim on March 2, 2010, one day before expiry of the one-year limitation period established by the Insurance Policy.

[5] This action is factually linked to six other actions that arose out of the building settlement, which include Brantford and many others as parties, but not the Insurers (“Main Actions”). The Main Actions were consolidated into a single action of all parties by Order made on March 18, 2013. Included in the Order was a term directing the registrar not to dismiss the consolidated action for delay without further order of the Court.

[6] Initially the plaintiff did not intend to serve the statement of claim; however, by July 2010, when the Main Actions had not settled, Mr. Round, counsel for Brantford, advised defence counsel that they would be serving the statement of claim, but he expected the parties could come to an agreement to hold the action in abeyance until the Main Actions proceeded. The plaintiff requested that a notice of intent to defend be delivered in order to prevent the action from being dismissed as abandoned. Thus, on September 17, 2010, the defendants served a notice of intent to defend. To date, the defendants have not delivered a statement of defence.

[7] This action was dismissed for delay by the registrar on January 23, 2013 pursuant to rule 48.14. The plaintiff states that it did not receive the Status Notice issued by the court on October 15, 2012; however it did receive the dismissal order. Defence counsel received the status notice and the dismissal order.

[8] On February 21, 2013, Mr. Round wrote to Mr. Shillington, defence counsel, seeking the defendants consent to an order setting aside the dismissal order and thereafter staying the action pending the outcome of the consolidated proceeding. The content of Mr. Round’s letter is significant and is set out below.

Dear Mr. Shillington:

As you know, in March of 2010 the City issued a claim under its Multi-Peril Policy in order to preserve whatever rights it may have under that policy in relation to the damages it suffered to one of its buildings during certain construction activities being carried on by Bennett Contracting Millgrove. In response to a proof of claim that had been filed, your clients had taken the position that there was no coverage available.

As your clients are aware, numerous other actions were commenced by various parties involved in the construction, including an action by the City against all who were involved in the construction.

You filed a notice of intent to defend on behalf of all defendants, on the understanding that we would not require a defence until the “main actions” had been resolved.

A case management order was made in January of 2012 in relation to most of the actions that had been commenced arising out of the events giving rise to the damage to the building. On February 8, 2013, a further order was made on consent by the Case Management Master that will eventually have the effect of consolidating all of the outstanding actions into a single action. That action will address all issues arising out of the events that ultimately caused damage to the City’s building. Included in the order was an endorsement directing the Registrar to refrain from administratively dismissing the many actions that had been commenced, pending the consolidation.

Unfortunately, as you are now no doubt aware, the above noted action was missed, with the result that it has been dismissed by the Registrar.

We are of the view that there is no need for the defendants in this proceeding to be dragged in to the larger dispute. What would seem to make more sense for all involved is for this matter to remain in abeyance, in the hope that all issues will be resolved in the larger action and this one will never have to proceed.

We are therefore seeking your consent to an order setting aside the administrative dismissal and then staying this action pending the outcome of the consolidated proceeding.

Would you please advise whether your clients are prepared to proceed in this fashion?

As we are required to move promptly to set aside the dismissal order, I would appreciate hearing from you at your earliest convenience.

[9] On February 21, 2013, the same date that Mr. Round emailed his letter, Mr. Shillington responded that: “. . . we expect we will be able to consent but will not be able to confirm until early next month, which we trust is satisfactory.”

[10] Thereafter, Mr. Round received no further communication from Mr. Shillington. It is Mr. Shillington’s evidence that, through inadvertence, he did not seek instructions from his clients with respect to the Mr. Round’s proposal. It is Mr. Round’s affidavit evidence that he continued on the presumption that the parties were agreed that the within proceeding would be revisited once the Main Actions were finalized. On cross-examination, Mr. Round stated that he assumed when Mr. Shillington did not get back to him that there was not an issue and so they had no further communication about it.

[11] It is clear that there was no follow-up communication with Mr. Shillington after Mr. Round’s letter of February 21, 2013. In addition, plaintiff’s counsel did not diarize the file to follow up with defence counsel. Further, the plaintiff did not take steps to bring a motion to set aside the dismissal order despite Mr. Round’s statement in his letter that he was required to move promptly to set aside the order.

[12] It is Mr. Shillington’s evidence that in April 2014, he closed his file as he was instructed to do and as he believed that Brantford had abandoned this action.

[13] At a mediation held on May 11 and 12, 2015, the parties to the Main Actions reached a settlement. As part of the settlement, Brantford agreed to assign its rights in this action to Bennett so that Bennett could seek to recover from the Insurers the remaining losses and damages which were unavailable to it in the Main Actions as a result of the Insurers not having been party to that action.

[14] It is Mr. Round’s testimony on cross-examination that Bennett first became aware that this action had been dismissed at the mediation in May 2015. Paragraph 11 of the executed Minutes of Settlement on May 12, 2015, contains the term with respect to the assignment. It was provided that Brantford would fully cooperate with Bennett in respect of the assignment and pursuit of the claim and it would take any steps required to set aside the administrative dismissal of the action.

[15] On June 1, 2015, Mr. Round advised Mr. Shillington by letter that the Main Actions had been settled and sought consent to set aside the dismissal order. However, initially, Mr. Shillington did not respond to Mr. Round’s letter. It is Mr. Round’s evidence that over the following couple of months, he and Mr. Shillington exchanged emails and Mr. Round left voicemails for Mr. Shillington in an attempt to determine whether the insurers would consent to setting aside the dismissal order; however, he did not get an answer from Mr. Shillington. His evidence is also that Mr. Shillington advised him that he was getting himself familiar with the file again and the insurers were having difficulty locating their file.

[16] Mr. Round wrote again to Mr. Shillington on November 18, 2015, requesting confirmation that the insurers would consent to setting aside the dismissal order as well as providing non-confidential details of the minutes of settlement. Having had no response from Mr. Shillington, on December 9, 2015, Mr. Round wrote again. On December 10, 2015, Mr. Shillington advised that he did not have instructions but suggested advising Bennett that the insurers would not consent to set aside the dismissal order. Therefore, by early January 2016, Mr. Round advised that Bennett intended on bringing this motion and sought Mr. Shillington’s availability for the hearing in early to mid-March. In March, 2016, Bennett submitted a request to the court to schedule a long motion and at a subsequent case conference the hearing was scheduled for August 24, 2016.

Law

[17] This action was dismissed for delay on January 23, 2013, pursuant to former Rule 48.14(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”). It is important to note that the applicable Rules regarding administrative dismissals were amended effective January 1, 2015, whereby former Rules 48.14 and 48.15 were revoked and replaced with the current Rule 48.14.

[18] Former subrule 48.14(16) provided that an order under the rule dismissing an action may be set aside under rule 37.14.

[19] Rule 37.14(1) provides that a party who is affected by an order of a registrar may move to set aside 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. The court has discretion to set aside the order on such terms as are just. (subrule (2))

[20] The plaintiff has the onus to satisfy the court that this action should be permitted to proceed.

[21] In considering whether the dismissal order should be set aside, the court will consider the following four factors while taking a contextual approach in order to achieve a result that is just in all the circumstances. It is not necessary for the plaintiff to satisfy each of the four factors in order to have the order set aside. (Reid v. Dow Corning Corp. (2001), 11 C.P.C. (5^th) 80 (Ont. Master); Finlay v. Van Paassen, 2010 ONCA 204, 2010 CarswellOnt 1543 (C.A.), at paras 27-29; Wellwood v. Ontario Provincial Police, 2010 ONCA 386; Habib v. Mucaj, 2012 ONCA 880, [2012] O.J. No. 5946 (C.A.))

a) Explanation for the litigation delay

b) Inadvertence in missing the deadline

c) Promptness in bringing the motion to set aside

d) Prejudice to the defendants

[22] In Ross v. Hertz Canada, 2013 ONSC 1797, Master Dash provided the following helpful summary of the guiding principles:

a) A plaintiff need not satisfy all four of the Reid factors but rather a contextual approach is required;

b) The key point is that the court is to consider and weigh all relevant factors to determine the order that is just in the circumstances of each particular case;

c) All factors are important but prejudice is the key consideration;

d) Prejudice to a defendant may be presumed, particularly if a lengthy period of time has passed since the order was made or a limitation period has expired, in which case the plaintiff must lead evidence to rebut the presumption;

e) Once a plaintiff has rebutted the presumption of prejudice, the onus shifts to the defendant to establish actual prejudice;

f) Prejudice to a defendant is not prejudice inherent in facing an action in the first place but prejudice in reviving the action after it has been dismissed as a result of the plaintiff’s delay or as a result of steps taken following the dismissal of the action;

g) The party who commences the litigation bears the primary responsibility under the Rules for the progress of the action; and,

h) In weighing the relevant factors, the court should not ordinarily engage in speculation concerning the rights of action a plaintiff may have against his or her lawyer but it may be a factor in certain circumstances, particularly where a lawyer’s conduct has been deliberate. The primary focus should be on the rights of the litigants and not with the conduct of their counsel.

Positions of the Parties

[23] The plaintiff submits that on consideration of the Reid factors and the overall context of the circumstances in this action, the just result is to set aside the dismissal order.

[24] The defendants submit that besides not satisfying any of the Reid factors, there are two additional considerations that ought to compel the court to dismiss the plaintiff’s motion, including Bennett’s status in this action and the plaintiff’s evidence that are addressed later in this decision.

Analysis

[25] I will now address the four Reid factors.

Explanation for the Litigation Delay

[26] The plaintiff is required to adequately explain the delay in the progress of the action from the institution of the action until the deadline for setting the action down for trial. The plaintiff must satisfy the court that steps were being taken to advance the litigation toward trial, or if such steps were not taken to explain why. (Reid v. Dow Corning Corp. [2001] O.J. No. 2365, at para. 41)

[27] Pursuant to former Rule 48.14(1), an action would be dismissed for delay if it was not set down for trial within two years from the date of filing of the first defence (including a notice of intent to defend). In the within action, a notice of intent to defend was filed on October 14, 2010. According to the court file for the within action, a status notice was issued by the registrar on October 15, 2012, two years and a day after the two-year dismissal timeline. As no steps were taken to schedule a status hearing, the action was dismissed on January 23, 2013.

[28] Therefore, the plaintiff herein must adequately explain the delay from March 2, 2010 when the action was commenced to October 14, 2012, the two-year deadline for setting the action down for trial under former Rule 48.14(1).

[29] The plaintiff submits that as this action is factually related to the Main Actions, and the agreement of the parties to hold the action in abeyance pending resolution of the Main Action, it has adequately explained the litigation delay.

[30] The defendants’ position is that there was no agreement to hold this action in abeyance. It submits further that Brantford’s conduct after the dismissal of this action demonstrates a deliberate decision to not pursue this action.

[31] I find that there was no express agreement between the parties to hold this action in abeyance pending the outcome of the consolidated action. Early in 2013, Mr. Shillington expressed his expectation that the defendants would consent but he did not confirm same in early March 2013, as he said he would and, Mr. Round did not follow up with him. However, there is sufficient evidence which demonstrates that the defendants acquiesced in the plaintiff’s suggestion to hold the action in abeyance. For example, the defendants did not deliver a statement of defence. While the plaintiff requested only a notice of intent to defend, it is clear from the evidence that the defendants complied with that request and took no further steps. Further, the defendants did not inquire of the plaintiff whether the action would proceed nor did they ever raise an issue with the plaintiff regarding delay or prejudice.

[32] I find that it was logical to hold this action in abeyance given that the Main Actions were proceeding and depending on the result of those actions, the plaintiff might elect not to proceed against its insurers. For the above reasons, the plaintiff has adequately explained the delay from March 2, 2010 when the action was commenced to October 14, 2012, the two-year dismissal deadline for setting the action down for trial.

Inadvertence in Missing the Deadline

[33] The plaintiff or its solicitor must lead satisfactory evidence to explain that it always intended to set the action down for trial by the deadline, or request an order extending the deadline, but failed to do so through inadvertence. In other words, the dismissal order was made as a result of inadvertence. (Reid, at para.41)

[34] The plaintiff’s evidence is that it did not receive a copy of the status notice from the court prior to the action being dismissed. However, the evidence demonstrates that the plaintiff received a copy of the dismissal order from the Court shortly after it was issued. In addition, the fact that the plaintiff did not receive the status notice from the court does not excuse the fact that it can reasonably be inferred that plaintiff’s counsel did not diarize the two-year dismissal timeline such that it took no steps to bring a motion to extend the timeline to set the action down for trial.

[35] However, there is ample evidence regarding attempts by plaintiff’s counsel to come to an agreement with defence counsel to hold the action in abeyance pending the outcome of the Main Actions. Mr. Round addressed directly that issue when requesting that the defendants file a notice of intent to defend so that the action would not be dismissed as abandoned. I find that preventing the action from being dismissed was clearly in the mind of Mr. Round who communicated same to defence counsel.

[36] Therefore, I find that the passing of the two-year dismissal deadline was due to inadvertence by plaintiff’s counsel and not a deliberate decision to not pursue the action.

The Motion is Brought Promptly

[37] The plaintiff is required to demonstrate that it moved forthwith to set aside the dismissal order as soon as the order came to its attention. (Reid, at para. 41) Rule 37.14 requires that a motion to set aside an administrative dismissal order be brought forthwith after it comes to the plaintiff’s attention.

[38] Plaintiff’s counsel took initial steps promptly to set aside the dismissal order by contacting defence counsel on February 21, 2013 seeking the defendants’ consent to an order setting aside the dismissal order. Notably, Mr. Round acknowledged in his letter that the plaintiff was required to move promptly to set aside the dismissal order. Mr. Shillington responded the same day stating that while he expected the defendants would give their consent, he would not be able to confirm same until early in March 2013. However, Mr. Shillington did not confirm the defendants’ position as he said he would and Mr. Round did not follow up with Mr. Shillington. It was not until after the Main Actions settled in May 2015 and when Brantford and Bennett agreed that Bennett would take an assignment of the plaintiff’s rights in this action that Bennett took steps to bring this motion.

[39] Bennett, as distinct from the City of Brantford, makes a curious argument. Bennett submits that upon learning of the administrative dismissal and being assigned this action, it moved promptly to set aside the dismissal. Bennett seems to suggest that the court ought to disregard the actions of Brantford up to the time Brantford assigned the action to Bennett in May 2015, and consider only Bennett’s actions thereafter. In my view, that position is absurd given the law regarding assignment of contractual rights, an excerpt of which plaintiff’s counsel provided to the court at the hearing of this motion. Corbin on Contracts, 2007, Revised Edition, Vol. 9, pp 243-245, confirms the well-settled law in this area that an assignee stands in the shoes of the assignor acquiring no more rights than the assignor and the assignee takes the assignment subject to all defences. Applied to contractual relationships, an assignee is subject to all of the terms and conditions of a contract between the obligor and the assignor, and any defence arising from the contract itself is available against the assignee. Therefore, based on the law of assignment of contractual rights, I find that in Bennett agreeing to an assignment of Brantford’s rights in this action, Bennett acquired no greater right than Brantford had in moving to set aside the dismissal order. In other words, by virtue of the assignment, Bennett stands in the position of Brantford and is therefore prevented from taking the position that it is in a better position than Brantford by asserting that the court ought to disregard Brantford’s actions and consider only the actions of Bennett from the time Bennett acquired the assignment in May 2015. For those reasons, I decline to accept Bennett’s submission.

[40] I find that the plaintiff has failed to demonstrate that it moved forthwith to set aside the dismissal order.

Prejudice to the Defendant

[41] 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 his 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. (Reid, at para. 41)

[42] There is no automatic presumption of prejudice with the passage of time or the limitation period. Prejudice to a defendant may be presumed, particularly if a lengthy period of time has passed since the dismissal order was made or the limitation period has expired. This is to be determined by the court taking a contextual approach to all of the facts. Prejudice to a defendant is not prejudice inherent in facing an action in the first place but prejudice in reviving the action after it has been dismissed as a result of the plaintiff’s delay or as a result of steps taken following the dismissal of the action. (Ross v. Hertz Canada)

[43] Where the presumption arises, the plaintiff bears the burden of rebutting the presumption, on proper evidence. Where the presumption is so displaced, the onus shifts to the defendant to establish actual prejudice. The plaintiff can overcome the presumption by leading evidence that all relevant documents have been preserved, that key witnesses are available or that certain aspects of the claim are not in issue. (Wellwood v. Ontario Provincial Police, 2010 ONCA 386, at paras. 60, 62)

[44] The main issue in this action relates to contractual interpretation of the Insurance Policy. As such, it is accepted that there will be few witnesses required for the trial and the evidence will consist primarily of the Insurance Policy. The plaintiff submits that to the extent evidence is required with respect to the underlying facts and Brantford’s damages, the Main Actions proceeded through extensive documentary production and examinations for discovery.

[45] The plaintiff submits further that there is no prejudice alleged by the defendants that is related to any delay. The plaintiff relies on the decision in Labelle v. Canada (Border Services Agency), 2016 ONCA 187, para. 23, for the general principle that only prejudice to the defendants caused by the plaintiff’s delay in the proceeding is a relevant factor in determining whether the registrar’s dismissal order should be set aside. The Court of Appeal in LaBelle went on to affirm the Court of Appeal’s determination in Habib v. Mucaj, 2012 ONCA 880 (Ont. C.A.), at para. 5, that prejudice to the defence that exists regardless of the plaintiff’s delay is not relevant.

[46] The plaintiff submits that the only prejudice alleged by the defendants is prejudice to its subrogation rights resulting from the settlement of the Main Actions. It submits further that the prejudice alleged by the insurers is unrelated to any delay in this action, which is evident by the fact that Mr. Shillington’s testimony in cross-examination was that the same alleged prejudice would have existed if the Main Actions had settled in 2010, or 2011, as opposed to 2015. Furthermore, the plaintiff relies on Mr. Shillington’s admission that this alleged prejudice is completely separate and apart from any passage of time, although he refused to answer in cross-examination whether the alleged prejudice was separate and apart from any delay or whether the items of alleged prejudice could be raised by the insurers as a substantive defence to the action. Lastly, the plaintiff argues that since the Court of Appeal has determined that the prejudice that must be considered is to the defendant’s ability to defend the action that would result from restoration of the action following the registrar’s dismissal, defence counsel’s refusal to answer this question is to their detriment.

[47] The defendants’ position is that the expiration of the limitation period which expired over six years ago, gives rise to a presumption of prejudice which the plaintiff must rebut with evidence. They argue further, that the only evidence Bennett relies on is Round’s statement that there is no prejudice to the defendants in setting aside the administrative dismissal.

[48] The defendants’ evidence is that had this action been pursued, they would have, in turn, pursued subrogated claims for any amount paid out under the policy; however, they note that in the Main Actions, Brantford had already commenced an action that would have been the vehicle by which the defendants would have done this. Therefore, they contend that the settlement and sale of this action to Bennett, coupled with the execution of a release and an order dismissing the Main Actions with prejudice has irretrievably compromised the defendants’ subrogation rights.

[49] For the following reasons, I find that there is no prejudice alleged by the defendants that is related to delay in this action. I am satisfied that the plaintiff has rebutted the presumption of prejudice due to the expiration of the limitation period in light of Mr. Shillington’s testimony in cross-examination that the same alleged prejudice would have existed if the Main Actions had settled in 2010 or 2011 as opposed to 2015. Therefore, the defendants have failed to establish that the alleged prejudice will affect their ability to defend the action if restored. This is especially so given Mr. Shillington’s refusal to answer questions as to whether the alleged prejudice was separate and apart from any delay or whether the alleged prejudice could be raised by the insurers as a substantive defence to the action.

[50] The decision in McNeil v. Great West Life Assurance Co., 2014 ONSC 4195, can be distinguished on the basis that the insurer relied on the dismissal order to its detriment when it settled its subrogated claim against the at-fault driver for the accident benefits it paid to the plaintiff. In those circumstances, the court found that the settlement constituted material actual prejudice to the insurer as a result of the steps the insurer took following the dismissal of the action.

[51] Whereas in the within action the defendants have not demonstrated that they will suffer any 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 defendants’ evidence is that they never asked to be kept apprised of the status of the Main Actions, nor did they ask to be consulted before any settlement was reached. Simply put, the fact that Brantford settled the Main Actions after this action was administratively dismissed has not caused prejudice to the defendants because, as admitted, the same alleged prejudice would have existed if the Main Actions had settled in 2010 or 2011 as opposed to 2015. Therefore, the only logical conclusion is that there has been no prejudice to the defendants as a result of the plaintiff’s delay, nor has any prejudice resulted from the settlement of the Main Actions after this action was administratively dismissed.

Order To Continue

[52] The defendants raised an issue regarding Bennett’s status in this action. Bennett’s position is that it was unable to obtain an Order To Contonue this action in Bennett’s name as the action had been dismissed.

[53] Rule 11.02(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 192, permits “any interested person” to obtain an order to continue where a transfer or transmission of the interest of a party takes place while a proceeding is pending on filing an affidavit verifying the transfer or transmission of interest.

[54] The relevant provisions are:

11.01 Where at any stage of a proceeding the interest or liability of a party is transferred or transmitted to another person by assignment, bankruptcy, death or other means, the proceeding shall be stayed, with respect to the party whose interest or liability has been transferred or transmitted until an order to continue the proceeding by or against the other person has been obtained.

11.02(1) Where a transfer or transmission of the interest or liability of a party takes place while a proceeding is pending any interested person may, on filing an affidavit verifying the transfer or transmission of interest or liability, obtain on requisition from the registrar an order to continue, without notice to any other party.

[55] I am satisfied that Bennett is an “interested person” as set out in rule 11.02(1) and that Bennett has verified the assignment of Brantford’s rights in this action to Bennett based on Mr. Round’s affidavit evidence at paragraph 16 and the Minutes of Settlement at Exhibit “K”.

[56] Therefore, Bennett is hereby granted an order to continue this action. Bennett shall submit for my signature an Order to Continue as set out in Form 11A, which shall set out that the proceeding continue under the title of proceeding set out in paragraph 2 of the notice of motion.

Plaintiff’s Evidence

[57] The defendants submit that there is no viable evidence led as to Brantford’s actual intentions, knowledge and beliefs in this matter. It is further submitted that there is no evidence from Brantford directly nor any explanation as to why such evidence was not led.

[58] While there is no strict rule that the evidence on a motion under Rule 37.14 must come from the plaintiff’s directly, it is normally required that such evidence be led or, failing that, the Court should at least be told why the plaintiff cannot give evidence.

[59] Here, the action was commenced against the insurers to protect the one-year limitation period and Brantford’s counsel sought agreement from defence counsel to hold the action in abeyance pending the outcome of the Main Actions. Further, Brantford at no time abandoned this action in the sense that it did not discontinue it.

[60] Brantford assigned its rights in this action to Bennett in May 2015. One of the terms of the Minutes of Settlement in the Main Actions, which were filed on this motion, was that Brantford and its counsel would cooperate with Bennett and take any steps required to set aside the administrative dismissal of this action.

[61] Brantford’s counsel throughout this action and the Main Actions has always been Mr. Round.

[62] Mr. Round gave evidence on this motion and he was cross-examined on his affidavit evidence.

[63] Mr. Round has been involved in this action from its commencement to date including the settlement of the Main Actions when Brantford assigned its rights in this action to Bennett and thereafter. Had a representative of Brantford given evidence on this motion, that person’s evidence would have consisted of references to Mr. Round’s letter and other communications with Mr. Shillington. Other than to have stated the obvious that Brantford always intended to proceed with this action, the representative’s evidence would have mirrored Mr. Round’s evidence. Therefore, in these rather unusual set of facts, in my view, Mr. Round’s evidence was the best evidence.

Conclusion – Motion to Set Aside Administrative Dismissal

[64] I have found that the plaintiff has satisfied three of the four Reid factors, including there being no prejudice to the defendants if the action is restored.

[65] Having considered all of the circumstances in this action, including the granting of an Order to Continue, in my view it is just that Bennett’s motion be granted and the registrar’s order dated January 23, 2013 dismissing this action for delay is hereby set aside.

Timetable

[66] The following timetable shall apply to this action:

(a) delivery of statement of defence by March 31, 2017;

(b) exchange affidavit of documents by May 31, 2017;

(c) complete examinations for discovery by September 30, 2017;

(d) comply with undertakings within 60 days of completion of the party’s examination;

(d) complete mediation by January 31, 2018;

(e) set action down for trial by April 1, 2018.

Costs

[67] As Bennett has been successful in obtaining an order setting aside the dismissal order, it seeks costs.

[68] The defendants seek their costs despite Bennett’s success. The defendants rely on case law which stands for the principle that when a party seeks an indulgence of the court and as long as there is merit to the opposing party’s position on the motion, the opposing party is entitled to costs.

[69] In his decision on costs on a motion to set aside a registrar’s dismissal order issued two years prior, M.G.J. Quigley J. in Mollicone v. Caledon (Town), 2011 ONSC 833, at paras. 13-14, discussed the meaning of an indulgence in the context of the motion and whether in granting such an order was the court granting the plaintiff an indulgence which gave the defendant the right to claim that its costs ought to be paid rather than the plaintiff’s costs. He stated:

An indulgence is something that is granted as a favour or privilege. It contemplates liberal or lenient treatment to the person who receives it, embracing notions of tolerance. In the context of business or the law in which it is used here it signifies the granting of permission to do something that is time or performance related that would not otherwise be permissible, such as extending a period of time to permit what would otherwise be out of time payment of a sum or performance of an obligation.

[70] Here, the action was commenced in 2010 and it has not proceeded past the notice of intent to defend. I found that the plaintiff satisfied three of the four Reid factors. The fact is that the plaintiff failed to obtain an order extending the two-year dismissal timeline prior to the expiration of that deadline which resulted in the dismissal order. Further, I found that the plaintiff did not bring this motion promptly upon learning of the dismissal order. The action was dismissed on January 23, 2013 yet this motion was not brought until early 2016. Essentially, the plaintiff allowed this action to be delayed; however, for reasons that I found the defendants to have acquiesced; that is, until the Main Actions were resolved or determined. The plaintiff did not keep the defendants apprised of the status of the Main Actions, nor did the defendants inquire of their status.

[71] The background facts in this action are somewhat unique. In typical actions that involve construction projects, the insurers would have paid the plaintiff’s claim and thereafter asserted its subrogation rights by commencing an action against the general contractor, and possibly others. However, in the within action, given the insurer’s position that there was no coverage available to Brantford under the policy, Brantford sued its general contractor, Bennett, while at the same time it commenced action against its insurers to preserve whatever rights it may have had under that policy in relation to the damages it suffered to one of its buildings during construction. Thereafter, Brantford elected to proceed with its action against its general contractor rather than proceed with both actions at the same time. Ultimately, upon settlement of the Main Actions, Brantford agreed to assign its rights in this action to Bennett.

[72] I have come to the conclusion that in setting aside the dismissal order Bennett is being granted an indulgence which I found to be just in the circumstances.

[73] For the above reasons, I concur with the defendants that they ought to have some of their costs of this motion despite being unsuccessful.

[74] Bennett seeks costs in the amount of $11,071.10 inclusive of tax and disbursements on a partial indemnity scale. The defendants seek partial indemnity costs of $18,183.67. I find that the hours spent by defence counsel on this motion of some 76 hours to be excessive, particularly where Bennett’s Costs Outline provides that its counsel spent some 40 hours. Therefore, the defendants shall be entitled to recover costs on a partial indemnity basis for the indulgence granted to Bennett which are fixed in the amount of $6,000, payable within 30 days.

[75] In summary, the following orders shall be issued:

a) the registrar’s order dated January 23, 2013 shall be set aside;

b) the parties shall abide by the following timetable for completion of steps in this action:

(i) delivery of statement of defence by March 31, 2017;

(ii) exchange affidavit of documents by May 31, 2017;

(iii) complete examinations for discovery by September 30, 2017;

(iv) comply with undertakings within 60 days of completion of the party’s examination;

(v) complete mediation by January 31, 2018;

(vi) set action down for trial by April 1, 2018.

c) Bennett shall be entitled to an Order to Continue. Bennett shall submit an Order to Continue for my signature using Form 11A, which shall set out that the proceeding continue under the title of proceeding as set out in paragraph 2 of the notice of motion.

d) The defendant shall be entitled to costs of this motion fixed in the amount of $6,000 payable within 30 days.

February 7, 2017 (original signed)

Master Lou Ann Pope