Court File and Parties

COURT FILE NO.: CV-14-1065700-CL DATE: 2018-08-24 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Clifford Todd Monaghan AND: Mark Stephen Kent and Adam Mitchell Rose

BEFORE: Regional Senior Justice G.B. Morawetz

COUNSEL: Natasha Carew, for the Defendant Mark Stephen Kent C. Todd Monaghan, Self-Represented

HEARD:

Endorsement

[1] The defendant, Mr. Mark Stephen Kent brings this motion for:

(a) an order dismissing the action with costs, pursuant to subsections 57.3(2), 60.12 and 24.01(1)(c) of the Rules of Civil Procedure (the “Rules”), as a result of:

i. the plaintiff’s failure to comply with the Order of McEwen J. dated October 31, 2017, ordering the plaintiff to pay costs in the total amount of $35,403.80 plus interest, by December 31, 2017 (the “McEwen J. Order”); and

ii. the plaintiff’s delayed prosecution of the action and failure to set the action down for trial within six months after the close of pleadings.

[2] The costs awarded in the McEwen J. Order arose out of Mr. Monaghan’s failed motion for leave of the court to:

(a) add Laurier Capital Holdings Inc. (“Laurier Holdings”) and the Investment Industry Regulatory Organization of Canada (“IIROC”) as defendants to this action; and

(b) amend the Statement of Claim to add a new cause of action as against the existing defendants, Mr. Kent and Mr. Rose.

[3] Justice McEwen dismissed Mr. Monaghan’s motion in its entirety, with costs fixed in the amounts set out below, plus interest at the rate of 2% per year commencing October 31, 2017:

(a) to Mr. Kent and the proposed defendant Laurier Holdings: $16,889.01;

(b) to Mr. Rose: $5,563.49; and;

(c) to the proposed defendant IIROC: $12,951.30.

[4] The total amount of $35,403.80 plus interest was to be paid by December 31, 2017.

[5] To date, Mr. Monaghan has failed to pay the outstanding costs award.

[6] Counsel to Mr. Kent noted that no further steps have been taken by Mr. Monaghan in respect of this action since the McEwen J. Order. As a result of what counsel submits is a purposeful and egregious delay, the action ought to be dismissed, with costs.

[7] By way of background, it is noted that Mr. Monaghan is a shareholder of Laurier Holdings and he commenced this action by Statement of Claim on May 15, 2014. The Statement of Claim alleges that Mr. Kent and Mr. Rose, as officers, directors and shareholders, conducted the business of Laurier Holdings in a manner which was oppressive, unfairly prejudicial to or which unfairly disregarded the interests of Mr. Monaghan as a shareholder.

[8] The hearing of this motion was scheduled by Hainey J. on May 23, 2018. In his Endorsement, Hainey J. stated, “I have advised Mr. Monaghan to pay the outstanding costs order of McEwen J. before August 15, 2018, to avoid the costs of that motion.”

[9] Counsel to Mr. Kent sent a copy of McEwen J.’s Endorsement to Mr. Monaghan on May 23, 2018 but did not receive a response. A further reminder was sent to Mr. Monaghan on July 24, 2018, but again, no response was received. A further reminder was again sent to Mr. Monaghan on August 3, 2018 to advise that, as a result of his lack of response and lack of payment, it was necessary to proceed with drafting and filing a factum and brief of authorities in preparation for the motion. The reminder also stated that substantial indemnity costs would be sought. Counsel did not receive a response to the August 3, 2018 email.

[10] Mr. Monaghan did not file any responding material for this motion. There was no evidence that his failure to pay the costs award was on account of impecuniosity. In argument, he mentioned that he was pursuing a Small Claims Court action, which is not connected to the within proceeding. Mr. Monaghan indicated that it was his intention to comply with the outstanding costs order and to make payment of same once he received compensation in the Small Claims Court action.

[11] Counsel to Mr. Kent submits that there are two issues on this motion:

(a) ISSUE #1: Whether, pursuant to Rules 57.03(2) and 60.12, Mr. Monaghan’s claims should be dismissed, for failure to comply with the McEwen J. Order;

(b) ISSUE #2: Whether, pursuant to Rule 24.01(1)(c), Mr. Monaghan’s claim should be dismissed as a result of his delayed prosecution of the action and failure to set the action down for trial within six months after the close of pleadings.

[12] Counsel to Mr. Kent advised that the other two defendants, Mr. Rose and IIROC, are each owed costs. Mr. Rose specifically supports the position being taken by Mr. Kent.

[13] Counsel referenced Baradaran v. Tarion Corporation, 2014 ONSC 6870; Appeal to the Court of Appeal for Ontario quashed in Baradaran v. Tarion Warranty Corp., 2015 ONCA 490; and Peters v. Prince, for the proposition that the failure to adhere to court orders must have consequences, failing which the orders become meaningless.

[14] Counsel also submitted that, in any event, “… a party should not be able to set up his own impecuniosity as a shield against cost sanctions. To allow that would mean that a plaintiff could bring, resist, or appeal motions with no fear of consequences, and would emasculate the powers provided in Rules 57.03(2) and 60.12.” (see: Baksh v. Sun Media (Toronto) Corp., [2003] OJ No. 68).

[15] Counsel submits that Mr. Monaghan’s claim should be dismissed for failure to comply with the McEwen J. Order.

[16] In the alternative, counsel submits that the action should be stayed until Mr. Monaghan pays the costs awarded in the McEwen J. Order and if the costs are not paid and the stay order is not lifted within one month of the date of the order, then the defendant may move, in writing, for an order dismissing the action with costs.

[17] Mr. Kent also moves, pursuant to Rule 24.01(1)(c) for an order dismissing the plaintiff’s claim. This rule provides that 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 “… to set the action down for trial within six months after the close of pleadings…”.

[18] Counsel cited Woodheath Developments Ltd. v. Goldman, [2003] OJ No. 3440, leave to appeal refused [2004] OJ No. 1021 for the proposition that to have an action dismissed for delay or want of prosecution by the defendant, the defendant must show either (i) that the default is intentional and contumelious, or (ii) the plaintiff or his or her lawyers are responsible for the inexcusable delay that give rise to a substantial risk that a fair trial might not now be possible.

[19] In Sickinger v. Krek, 2016 ONCA 459 at paragraph 29, the Court of Appeal affirmed the test for dismissal for delay of a third party claim in these terms:

The principles that apply on a motion to dismiss an action for delay were set out by this court in Langenecker v. Sauvé, 2011 ONCA 803. As noted in paras. 6-7 of that decision, an action may be dismissed for delay where the delay is (1) inordinate; (2) inexcusable; and (3) such that it gives rise to a substantial risk that a fair trial of the issues in the litigation will not be possible because of the delay.

[20] Counsel submits that the following guidelines be considered for evaluating the three requirements:

Inordinate: A court will measure the length of time from the commencement of the proceeding to the motion to dismiss to determine if the delay is inordinate. When considering the delay, the court should remember that some cases will move slower than others because of the issues raised, the parties involved, and/or the nature of the action: Langenecker, at paras. 8 and 11.

Inexcusable: A court should consider the reasons offered for the delay and whether those reasons provide an adequate explanation, with regard to the credibility of the explanations, the explanations for individual parts of the delay, the overall delay and the effect of the explanations considered as a whole: Langenecker, at paras. 9-10.

Prejudice: The third factor considers the prejudice caused by the delay to a defendant who knows he can put forward its case for adjudication on the merits. An inordinate delay will give rise to a presumption of prejudice and, unless rebutted, that presumption may result in the action being dismissed: Armstrong v. McCall. A defendant may also suffer, and demonstrate case specific prejudice: Langenecker at para. 12.

[21] In this case, the only explanation provided by Mr. Monaghan was that he had to wait to collect a judgment in a Small Claims Court action that has nothing to do with this action, before he was going to be able to pay the costs. There is no evidentiary foundation for this statement. This falls far short of being able to demonstrate impecuniosity. In any event, as noted in Baksh, supra, a party should not be able to set up his own impecuniosity as a shield against cost sanctions.

Disposition

[22] There is a clear failure to comply with the Order of McEwen J. and consequently, I am satisfied that the basis for dismissing this action pursuant to Rules 57.03(2), 60.12 for failure to comply with the McEwen J. Order has been established. I am also satisfied that there is a basis to dismiss the action pursuant to Rule 24.01(1)(c) for the delay in the prosecution of this action. There has been inordinate and inexcusable delay on the part of the plaintiff and the presumption of prejudice to the defendants has not been rebutted.

[23] The relief requested by Mr. Kent, namely a dismissal of the plaintiff`s claim is, in my view, justified. However, the consequences of an outright dismissal is such that, in my view, it is appropriate to provide Mr. Monaghan with one final opportunity to comply with the McEwen J. Order.

[24] At paragraph 33 of counsel’s factum, alternative relief is set out, namely, the plaintiff’s action should be stayed until the plaintiff pays the costs awarded in the McEwen J. Order and if the costs are not paid and the stay order is not lifted within a specified period of time, then the defendant may move, in writing, for an order dismissing the action with costs.

[25] In these circumstances, I find that this is the appropriate disposition for this motion. Counsel to Mr. Kent specified that the time period before moving for an order dismissing the action should be one month from the date of the order. In these circumstances I am of the view that the time period should be two months.

[26] Accordingly, I order that Mr. Monaghan’s action be stayed until he pays the costs awarded in the McEwen J. Order. If the costs are not paid and the stay order is not lifted within two months of the date of this endorsement, then the defendant may move, in writing, for an order dismissing the action with costs.

[27] Mr. Kent has been successful in this motion. A Costs Outline was submitted requesting costs of $11,708.18 on a substantial indemnity scale (90%) or $8,035.97 on a partial indemnity scale (60%).

[28] The record establishes that Mr. Monaghan did not respond to any of the email correspondence with respect to this motion. Mr. Monaghan has clearly put Mr. Kent to unnecessary expense in the preparation of this motion. Mr. Monaghan was warned that Mr. Kent would be seeking costs on a substantial indemnity basis. Having reviewed the provisions of Rule 57.01(1) and taking into account the conduct of Mr. Monaghan in putting Mr. Kent to unnecessary expense, an award on a substantial indemnity basis is justified. Costs of this motion are fixed in the amount of $10,000.00, inclusive of disbursements and HST. These costs are payable within 60 days.

Regional Senior Justice G.B. Morawetz Date: August 24, 2018