Superior Court of Justice - Ontario

Released: 2018/11/02

Re: Sohail Shah et al., Plaintiffs

And: Sai Mohammed, Landmark Worldwide Canada Ltd. et al., Defendants

Before: Master Graham

Counsel: Alex Smith and Mark Strychar-Bodnar, for the plaintiffs Eli Karp, counsel for the defendants (except Landmark)

Heard: September 6, 2018

Endorsement

(Plaintiffs’ motion to extend time for service)

[1] The statement of claim in this action was issued on June 22, 2017. Under rule 14.08(1), the statement of claim was to be served within six months of being issued, i.e. by December 22, 2017. The statement of claim was not served on the defendants until service of the plaintiff’s supplementary motion record on the defendant Landmark Worldwide Canada Ltd. (“Landmark”) on May 31, 2018 and on all other defendants on June 13, 2018. The plaintiffs now move under rule 3.02(1) to extend the time for service of the statement of claim and to validate service. As stated in rule 3.02(2) “A motion for an order extending time may be made before or after the expiration of the time prescribed”. The defendant Landmark does not oppose the motion.

[2] The case law on the issue of the factors to be considered on a motion to extend the time for service of a statement of claim is set out by Perell J. in Rowland v. Wright Medical Technology Canada Ltd., 2015 ONSC 3280, [2015] O.J. No. 2643 at paragraphs 16-19:

16 The key factor in determining whether to grant an extension for service of the statement of claim is prejudice from the delay in service; if the defendant is not prejudiced by the delay in service, the court may extend the time for service of the statement of claim: Chiarelli v. Wiens (2000), 2000 CanLII 3904 (ON CA), 46 O.R. (3d) 780 (C.A.); Khroad v. Hill, [2010] O.J. No. 581 (Ont. S.C.J.); Chudzik v. Fehr, 2006 CanLII 19 (ON SC), [2006] O.J. No. 4 (S.C.J.) at para. 17.

17 The plaintiff has the onus of showing that extending the time for service of the statement of claim will not result in prejudice to the defendant: Khroad v. Hill, supra, at para. 26. In determining whether there is any prejudice, the court will consider whether: (a) material witnesses have disappeared or died; (b) relevant documents have been preserved; (c) the delay is such that it can reasonably be assumed that memories have faded; and (d) any new facts are being alleged: Chiarelli v. Wiens, supra; Eade (Litigation Guardian of) v. Browne Estate, [2005] O.J. No. 1753 (S.C.J.) at para. 5; Khroad v. Hill, [2010] O.J. No. 581 (S.C.J.) at para. 28.

18 On a motion to extend, the focus is on the discrete prejudice caused by the delay in serving the documents and not any prejudice from the passage of time from the relevant events to the commencement of the action; McGroarty v. CIBC Mellon Trust Co., 2012 ONCA 241; Chiarelli v. Wiens, supra at para. 16.

19 In Chiarelli v. Wiens, supra, at paras. 14-16, the Court of Appeal articulated the following principles for determining whether to grant an extension of time for the delivery of the statement of claim: (1) although the onus is on the plaintiff to show that the defendant will not be prejudiced by an extension of time, the plaintiff cannot be expected to speculate and the defendant has at least an evidentiary obligation to provide some details of prejudice; (2) the defendant cannot create prejudice by his or her failure to do something that could reasonably have been done; (3) the prejudice that will defeat an extension of time for service must be caused by the delay; (4) an extension of the time for service should not be denied simply because the delay is longer than the applicable limitation period; and (5) each case should be decided on its facts, focusing on whether the defendant is prejudiced by the delay. See also Nash Estate v. Schell Estate, 2013 ONSC 4813 (Div. Ct.).

[3] The defendants’ counsel submits that the delay in service has resulted from the plaintiffs’ litigation strategy, and accordingly, there should be a higher standard on the plaintiffs to demonstrate that there has been no prejudice to the defendants arising during the period of delay. The defendants rely on McGroarty v. CIBC Mellon Trust Co., 2012 ONCA 241, [2012] O.J. No. 1692 (C.A.) at paragraph 14:

14 A tactical decision to delay service beyond the timeframe allowed for service by the Rules will certainly redound against a party who subsequently seeks an extension of time. Delay precipitated by tactical considerations does not, however, in and of itself prejudice the other side. It is that prejudice which must remain the primary focus on a motion to extend the time for service of the statement of claim. The fact that the brief delay in issue here was the product of a tactical choice is not, in my view, a reason to refuse the extension. [emphasis added]

[4] Although the court in McGroarty does state that such tactical decisions will “redound” against the plaintiff seeking an extension of time, it says in the next breath that tactical delay does not in itself prejudice the other side, that prejudice must remain the primary focus, and that the brief tactical delay in the case before it was not a reason to refuse the extension. Most importantly, it does not say what the defendants in this case are attempting to argue, that tactical delay changes the weight of the onus on the plaintiffs to demonstrate no prejudice. Therefore, if the court is satisfied that the delay in service has not resulted in prejudice to the defendants, then the order extending time should be granted, regardless of whether any delay could be characterized as tactical.

[5] The issue on this motion is whether the plaintiffs have demonstrated that no prejudice to the defendants has arisen during the period of delay in service, being from December 22, 2017, the initial six month deadline for serving the statement of claim, to June 13, 2018, when the responding defendants were served with the motion record. As set out in paragraph 17 of Rowland, supra, the factors to be considered in determining whether an extension of the time for service would result in prejudice to the defendants are:

(a) whether material witnesses have disappeared or died;

(b) whether relevant documents have been preserved;

(c) whether the delay is such that it can reasonably be assumed that memories have faded;

(d) whether any new facts are being alleged.

[6] The plaintiffs have the prima facie onus of establishing that there would be no prejudice to the defendants if the order extending time for service and validating service were granted. However, as stated by the Court of Appeal in Chiarelli v. Wiens, cited in paragraph 19 of Rowland, supra, “although the onus is on the plaintiff to show that the defendant will not be prejudiced by an extension of time, the plaintiff cannot be expected to speculate and the defendant has at least an evidentiary obligation to provide some details of prejudice”.

[7] The plaintiffs submit that there would be no prejudice to the defendants if the time for service of the statement of claim were extended because the first two corporate plaintiffs and the defendant Mohammed have been involved in ongoing litigation relating to the same property that is the subject of this action (“the Scollard property”) in a receivership application in Stanbarr Services et al. v. Mohammed et al. (CV-14-10585-CL). The appeal in Stanbarr Services, ultimately decided by the Court of Appeal on March 14, 2018, was pending at the time that the statement of claim in this action was issued on June 22, 2017.

[8] Essentially, the issue resolved by the Court of Appeal in Stanbarr Services was that the plaintiff 241 Ontario did, in fact, acquire title to the Scollard property. The issue in this action is whether there was any negligence, negligent misrepresentation or breach of fiduciary duty on the part of the defendants that resulted in the plaintiffs’ decision to invest in the property in the first place. The gist of the plaintiffs’ pleading is that information allegedly provided by various defendants with respect to the Scollard property was communicated by two individuals named Ramnauth and/or Kermani to Fahira Jafri (the plaintiff Shah’s sister) who in turn communicated it to Shah, who relied on it when deciding to purchase the property.

[9] The defendants submit that the issues in Stanbarr Services were sufficiently different than those in this action that the involvement of any of them in Stanbarr would not necessarily result in the preservation of any evidence necessary to defend the current action. The defendant Estrabillo, in his affidavit, focuses on the difference between the issues in the Stanbarr proceeding and in this action and the role played by the potential witnesses Ramnauth, Kermani and Jafri.

[10] The parties’ submissions as to whether the issues in Stanbarr Services and in this action are similar do not assist in resolving this motion, because the evidence in that regard does not directly address the factors relating to preservation or loss of evidence set out in paragraph 17 of Rowland, supra.

[11] The first Rowland factor is whether material witnesses have disappeared or died. The cross-examination evidence of plaintiff’s counsel David Lees is that the witnesses Ramnauth, Kermani and Jafri were also his clients. Mr. Lees also testified that all three of these individuals have notes that were prepared at the time of the events described in the statement of claim. Accordingly, Mr. Lees has been in contact with these three witnesses, and they would be available for trial. None of the defendants provided any evidence that these three witnesses or any other material witnesses were no longer available.

[12] On the issue of whether relevant documents have been preserved, Mr. Lees deposes in paragraphs 61 and 62 of his affidavit that he has preserved various categories of documents, including correspondence between the plaintiff Shah and other witnesses in relation to the acquisition of the Scollard property and reporting letters and enclosures that Shah received from the defendant Ricci during the course of the transaction.

[13] On cross-examination, Mr. Lees elaborated that he has documentation from Jafri, Ramnauth and Kermani that is relevant to the events described in the statement of claim, including emails and notes. Mr. Lees made a broad request of these three individuals and was satisfied that they provided him with “everything that they did have”.

[14] The defendants’ evidence consists primarily of speculation about the plaintiff Shah and various witnesses not having preserved various electronic messages. Based on Mr. Lees’ concrete evidence with respect to the preservation of documents, I conclude that relevant documents have been preserved.

[15] On the issue of whether the delay is such that it can reasonably be assumed that memories have faded, the crucial fact is that the delay between the expiry of the initial six month period for service and the service of the motion record, which included the statement of claim, is less than six months. In the absence of any evidence to the contrary, I can only conclude that witnesses’ memories would not significantly fade during a delay of such short duration.

[16] Finally, there are no new facts being alleged that would affect the issue of whether the requested extension should be granted.

[17] Based on the portion of Chiarelli v. Wiens cited in paragraph 19 of Rowland, supra, if there were any prejudice to the defendants’ ability to defend the action arising during the period of delay, it would be incumbent on the defendants to provide at least some evidence in that regard. The defendants have provided no such evidence.

[18] The most significant feature of this motion is that the delay between the expiry of the initial six month period for service of the statement of claim, and the bringing of this motion, between December 22, 2017 and June 13, 2018, is less than six months. To summarize my findings above, I do not accept that any witnesses became unavailable or any documentary evidence was lost during this relatively brief period of time such as to prejudice the defendants’ ability to defend the action. Similarly, I do not accept that witnesses’ memories would fade significantly during this period.

[19] I therefore find that the plaintiffs have met their onus to demonstrate that no prejudice to the defendants resulted from the delay in serving the statement of claim. I hereby order that the time for service of the statement of claim be extended nunc pro tunc to June 30, 2018 and that service of the statement of claim on the defendant Landmark on May 31, 2018 and on all other defendants on June 13, 2018 be hereby validated.

[20] The plaintiffs also move for an order to amend the statement of claim to correct the name of the plaintiff named as “2421995 Ontario Inc.” to “2421955 Ontario Inc.” This relief not being opposed by any of the defendants, I so order.

Costs

[21] Counsel agreed following the hearing that the successful party or parties on the motion should recover costs fixed at $10,000.00, inclusive of fees, HST and disbursements. As the plaintiff was successful on the motion, the defendants (other than the defendant Landmark, which did not oppose the motion) shall pay the costs of the motion fixed at $10,000.00 payable within 30 days.

MASTER GRAHAM

Date: November 2, 2018