Court File and Parties
COURT FILE NO.: CV-13-485967
DATE: 2018/11/14
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MAPLE LEAF FOODS INC. et al., Plaintiff
AND:
DAVID GUEST, GLOBAL MEAT et al., Defendant
BEFORE: MASTER RONNA M. BROTT
COUNSEL: Emma Nicholl, for the Plaintiff/Responding Parties Fax: 416-366-6110
Aidan Fishman, articling student, for the Defendants/Moving Parties Fax: 416-367-6749
HEARD: October 29, 2018
ENDORSEMENT
[1] This action was commenced by Notice of Action on July 31, 2013. The Statement of Claim alleged, inter alia, that between December 2004 and January 2012, the defendants engaged in a fraudulent secret commission scheme to purchase raw meat products. The defendants David Guest, Global Meat Exports Company, Inc. (Ontario corporation number 1856276), Global Meat Exports Company, Inc. (Ontario corporation number 641668), Global Food Processing Inc. and Ninja Holdings Corporation (the “Guest defendants”) served the plaintiffs with a Notice of Intent to Defend on February 26, 2014. The Guest defendants did not file a Statement of Defence in the action.
[2] On August 1, 2018 the action was dismissed for delay by the registrar, pursuant to Rule 48.14, for failure to set the action down for trial by the fifth anniversary of the commencement of the action.
[3] On August 30, 2018 the Guest defendants advised the plaintiffs that they intended to seek their costs of the action. The plaintiffs refused to pay costs. On this motion the Guest defendants seek their costs of the action on a substantial indemnity basis.
Entitlement to Costs
Rule 24.05.1
[4] Rule 48.14(1) came into force on January 1, 2017 and provides as follows:
Unless the court orders otherwise, the registrar shall dismiss an action for delay in either of the following circumstances, subject to subrules (4) to (8):
The action has not been set down for trial or terminated by any means by the fifth anniversary of the commencement of the action.
The action was struck off a trial list and has not been restored to a trial list or otherwise terminated by any means by the second anniversary of being struck off.
[5] It is pursuant to Rule 48.14 that the within action was dismissed by the registrar. The Rule makes no reference to costs.
[6] The Guest defendants rely on Rule 24.05.1(1) in support of their submission that they are entitled to costs. Rule 24.05.1(1) provides:
If an action is dismissed for delay, any party to the action may, within thirty days after the dismissal, make a motion respecting the costs of the action.
[7] In Iroquois Falls v Jacobs Canada Inc., 2017 ONSC 5515 the plaintiff argued that a court does not have authority to award costs when an action is dismissed pursuant to Rule 48.14. Justice Faieta rejected the contention, finding that while a registrar is barred from awarding costs when dismissing an action pursuant to Rule 48.14, the Court retains authority to award costs. The Court of Appeal upheld Justice Faieta’s decision. The Guest defendants rely on Iroquois Falls asserting the court’s right to order costs.
[8] In Daniels v Grizzel 2016 ONSC 7351 Marrocco A.C.J.S.C. found that Rule 48.14(9) incorporates the provisions of Rule 24 that are to apply to administrative dismissals. Rule 48.14(9) provides:
Rules 24.03 to 24.05 (effect of dismissal for delay) other than subrule 24.04(1.1) apply to an action dismissed under subrule (1).
[9] In his view, Rule 24.05.1 is specifically not included. He states:
Rule 24.05.1(1) does not apply to actions dismissed for delay pursuant to Rule 48.14. The phrase “dismissal for delay” in Rule 24.05.1 (1) does not include a dismissal under Rule 48.14(1) because Rule 48.14(9) does not incorporate Rule 24.05.1 into administrative dismissals; it only applies, per its plain wording, to Rule 24.03 to 24.05.
[10] Iroquois Falls is higher authority but it is clearly distinguishable on the facts. In that case the defendants brought a motion to dismiss the underlying action for delay prior to the action being administratively dismissed under Rule 48.14(1). In Iroquois Falls, the defendant’s motion was successful, the action was dismissed and then the defendant sought costs under Rule 24.05.1. The plaintiff’s submission that because the action would have been subject to administrative dismissal in any event, (although no registrar’s dismissal was ever issued) and therefore should not be subject to a costs award, was rejected by Faieta J. The Court of Appeal confirmed that whether costs could be awarded pursuant to Rule 48.14 was not relevant given there was no Rule 48.14 registrar’s order and that the motions judge ultimately considered his jurisdiction and authority under Rule 24.01.
[11] In the case at bar, the Guest defendants did not bring a motion to dismiss the action for delay. The defendants waited for five years and ultimately the action was administratively dismissed by the registrar. Had the Guest defendants been proactive and had they chosen to move under rule 24 to dismiss for delay or alternatively, had they brought a motion for summary judgment, they would be entitled to costs under Rule 24.05.1(1). Here, the Guest defendants must accept the consequences of their choice to wait for the administrative dismissal and be subject to Rule 48.14 which results in no entitlement to costs in the proceeding.
Section 131 of the Courts of Justice Act
[12] Alternatively, the Guest defendants submit that this Court may exercise its inherent jurisdiction to award costs in any situation, pursuant to Section 131(1) of the Courts of Justice Act which sets out:
Subject to the provision of an Act or rules of the court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
[13] So long as no statutory provisions explicitly prohibit the court from making a costs award, the court may exercise its discretion in accordance with and guided by the rules of the court.
[14] Rule 48.14 makes no mention of costs. The Guest defendants submit that the court’s inherent jurisdiction should only be displaced by clear language and because such language is absent from Rule 48.14, the court should grant them their costs. They have not brought before the court any case law where costs were awarded following an administrative dismissal under Rule 48.14.
[15] As Rule 48.14 serves to deny the defendants their right to costs, Section 131 cannot operate to allow this court to exercise its discretion to order costs. It would be contrary to the statutory authority of the Rules.
[16] Even if this court could exercise discretion, in light of the fact that the defendants did absolutely nothing other than serve and file a Notice of Intent to Defend over the course of five years, this is not a circumstance in which the court should order costs.
Policy Reasons
[17] The Guest defendants have shown no basis in law for granting them the costs order they seek, nor have they demonstrated that these are circumstances which warrant the exercise of this court’s discretion to award costs. There is no valid basis to depart from the clear language and intention of rule 48.14. To do so would open the door to numerous costs awards when there has been an administrative dismissal under rule 48.14 which would be contrary to the intention and purpose of rule 48.14.
[18] As it has been found that the defendants are not entitled to costs following the registrar’s administrative dismissal of this action, it is not necessary to discuss the substantial or partial indemnity scale nor quantum. If costs were to be ordered, the appropriate scale would be partial indemnity. Other than failing to prosecute the action on a timely basis, there is no conduct by the plaintiff which was so egregious as to warrant an award on a substantial indemnity scale. As for quantum, the only active step that the defendant took in this litigation was the filing of a Notice of Intent to Defend. Any costs which might have been awarded but for the ruling above, would have been nominal.
[19] The Guest defendants’ motion for costs of this action on a substantial indemnity basis is dismissed.
[20] The parties agreed that they shall, within thirty days, attempt to agree on the issue of costs of this motion. If unable to do so, the parties shall by December 20, 2018, exchange and file their costs outlines and brief written submissions (1-2 pages). No reply costs submissions may be served without leave.
MASTER RONNA M. BROTT