Court File and Parties
COURT FILE NO.: CV-12-464232 MOTION HEARD: 20190329 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Upscale Getaways Inc., Plaintiff AND: Lais Hotel Properties Limited, Defendant
AND BETWEEN: Lais Hotel Properties Limited, Plaintiff by Counterclaim AND: Upscale Getaways Inc., Benjamin Camille, Dov Weisman, Sam Moses, David Becker and Upscale Getaways Niagara Limited Liability Company, Defendants by Counterclaim
BEFORE: Master Jolley
COUNSEL: Jonathan Jacobs, Counsel for the Moving Party Plaintiff Christopher Dilts, Counsel for the Responding Party Defendant
HEARD: 29 March 2019
Reasons for Decision
[1] The plaintiff brings this motion to set aside the order of the registrar made 18 October 2017 dismissing the action for delay.
[2] The defendant objects to the relief sought. In the event the relief is granted, the defendant seeks an order requiring the plaintiff to post security for costs pursuant to Rule 56.09 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
A. Motion to Set Aside the Dismissal Order
[3] The governing principles are well established:
(a) The plaintiff must provide a reasonable explanation for the delay; the deadline must have been missed through inadvertence; the motion must have been brought promptly; and the plaintiff must rebut the presumption of prejudice. If the presumption is rebutted, the defendant then has the onus of demonstrating it would suffer actual prejudice should the dismissal order be set aside. (Reid v. Dow Corning Corp. (2001), 11 C.P.C. (5th) 80).
(b) The plaintiff need not satisfy each criterion listed above. The analysis is to be a contextual one which considers the overall dynamics of the litigation to determine what is just in the circumstances (Carioca’s Import and Export Inc. v. Canadian Pacific Railway, 2015 ONCA 592 at paragraph 54 and Whapmagoostui First Nation and MPT 39 Inc. v. Perron, 2017 ONSC 4311 at paragraph 7).
Relevant Facts
[4] This action arises out of an agreement between the parties whereby the defendant was to provide the plaintiff with accommodation, dining and related services at its property in Niagara on the Lake from April 6-12, 2012 for a Passover getaway.
[5] The plaintiff claims the defendant breached the contract and it commenced this action in September 2012 seeking damages for breach of contract as well as punitive damages. The defendant counterclaimed on 24 October 2012 seeking payment of $241,178.76 USD in respect of the unpaid invoice it rendered on 11 May 2012. The defendants by counterclaim delivered their reply and defence to counterclaim five months later, on 24 March 2013.
[6] Thereafter both the claim and the counterclaim sat. For years. Neither party delivered even an affidavit of documents. Neither party arranged for examinations for discovery. On 18 October 2017 the action was administratively dismissed for delay.
[7] On 10 November 2017 the defendant/plaintiff by counterclaim filed its notice of election to proceed with counterclaim.
Reasonable Explanation for the Delay
[8] The plaintiff offers no substantive explanation for the delay in prosecuting its claim. By all accounts, it seems as long as neither party was moving forward with its claim, the other was content to let its claim sit.
[9] The plaintiff blames the delay on the merger of the firm of his then lawyer with the firm of Miller Thomson. However, that merger took place sometime after August 2016. There is no explanation for the delay between March 2013, when the last pleading was filed, and August 2016.
[10] The principal of the plaintiff deposed that “over the years, I discussed advancing Upscale’s Claim with Upscale’s former lawyers over the phone, which was our main method of communication.” It then states that its phone records are no longer available and its prior lawyer will not release their file, so that any file notes and correspondence demonstrating the plaintiff’s requests to move the matter forward cannot be produced. This is insufficient. The plaintiff should, at a minimum, have been able to state that it had discussions about examinations for discovery, that it assembled documents, that it from time to time requested an update of the status of the litigation or that it insisted on a meeting as the file had not proceeded in four years. None of that is before me. There is no reasonable explanation for the delay for the period March 2013 to August 2016.
[11] The principal of the plaintiff deposed that he moved from Toronto to California in or about August 2016 and trusted his lawyers to advance the plaintiff’s claim and defend the counterclaim “even though the distance between us increased”.
[12] There is no evidence that the distance was any impediment to the matter moving forward. Plaintiff’s counsel did not move the matter forward and there is no evidence that the plaintiff followed up or what it discussed. There is no reasonable explanation for the delay from August 2016 to the date the action was dismissed in October 2017.
[13] The plaintiff notes that the defendant similarly took no steps to move the action or the counterclaim along. As the court has made clear, a plaintiff cannot rely on the opposite party to advance its litigation. It has responsibility for ensuring its action proceeds and is granted a significant period of time to do so before the action is administratively dismissed.
[14] The plaintiff has not provided a reasonable explanation for the delay.
Inadvertence in missing the deadline
[15] There is no indication that the deadline was missed inadvertently, i.e. that its action had proceeded in the normal course through discoveries and was ready for trial and, by oversight, the date to set it down for trial was simply missed.
[16] The plaintiff only deposes that it was never its desire or intention that the claim be dismissed or that it would forfeit its ability to pursue the damages it suffered. As noted, it has offered no evidence that it discussed moving the matter forward or next steps to pursue these damages. There is nothing that would demonstrate that the plaintiff was not prepared to abandon the claim if the counterclaim also came to an end.
[17] There is no evidence before me that the deadline was missed inadvertently.
Motion to Set Aside the Dismissal Brought Promptly
[18] The plaintiff’s lawyers refused to take any steps to set aside the dismissal unless their outstanding account in the range of $5,000 was brought current and they were given a further retainer, which the plaintiff found to be excessive. As a result, in March 2018 plaintiff’s counsel obtained the order removing themselves as counsel of record.
[19] As it was apparent that the plaintiff and its lawyers could not agree on how to proceed, it was always open to the plaintiff to retain new counsel to advance its case and to bring a motion to set aside the dismissal order. It need not have waited until the removal order was obtained in March 2018 to change counsel. However, there is some evidence that the plaintiff was trying to come to terms with its lawyer during this time.
[20] It ultimately retained new counsel on 4 May 2018. The record discloses that within a few weeks new counsel had reached out to the defendant’s counsel to discuss the action and followed a number of times with defence counsel to obtain his position on this motion to set aside the dismissal order.
[21] While it may have been more expeditious to retain new counsel as soon as it learned of the dismissal, I cannot fault the plaintiff for spending some time trying to work out the situation with its then lawyer.
[22] The plaintiff’s present counsel followed up with the defendant until at least mid July 2018 in an attempt to come to a resolution. When there was no response, he served this notice of motion on August 28 returnable October 23. The motion was then adjourned on consent to give the parties further time to attempt to come to a resolution. The motion was made returnable on 10 December 2018 with, unfortunately insufficient time booked, and was ultimately heard on 29 March 2019.
[23] I am satisfied in all the circumstances that the plaintiff moved promptly to set aside the dismissal order.
Prejudice to the defendant should the dismissal order be set aside
[24] The plaintiff’s affidavit material does not speak to prejudice at all. The plaintiff argued before me that the defendant has not shown prejudice. However, it is the plaintiff that has the onus of demonstrating that the defendant will not suffer prejudice if the action is restored. There is no onus on the defendant until that hurdle is met.
[25] The defendant argues that it will be prejudiced as it will now be required to defend an action brought by a shell corporation. This is not prejudice that was caused by the delay. Further, the defendant always has the right to seek security for costs as it does in this motion under Rule 56.09 or bring a motion for security for costs under Rule 56.01.
[26] It is only the existence of the counterclaim being pursued by the defendant that militates against a finding of prejudice. Neither party can argue that memories fade or documents do not exist in this case when these very same issues raised in the claim are now being pursued in the defence to the counterclaim.
[27] I also note that the defendants received the consent of the plaintiff to an order extending the time to set down its counterclaim for trial until 31 December 2019.
[28] Normally, in a case like this, finality is a compelling consideration. Upon receipt of a dismissal order, a defendant is entitled to rest on the assurance that the judicial system has disposed of the claim once and for all (Marché D’Alimentation Denis Thériault Ltée v. Giant Tiger Stores Limited, 2007 ONCA 695 at paragraphs 37-40). On these facts, the lis between the parties will not be finally disposed of if the action is not restored. It will continue through the prosecution of the counterclaim.
[29] I do note that the defendant only seemed interested in pursuing its counterclaim after the plaintiff’s claim was dismissed. To date, it has not delivered an affidavit of documents or conducted examinations for discovery on its counterclaim, which was commenced 6 ½ years ago. While the defendant was within its technical rights to elect to continue the counterclaim after the main action was dismissed, on these facts, where the defendant has not pursued that claim with any diligence either for at least four years, it smacks of unfairness that the counterclaim arising from the same facts would alone proceed to trial.
[30] Particularly in light of the late-continuing counterclaim, I find there is no prejudice to the defendant should the dismissal order be set aside.
Contextual Approach
[31] As noted by the Court of Appeal in Scaini v. Prochnicki, 2007 ONCA 63, while the Reid factors are of central importance, “a contextual approach to this question is to be preferred to a rigid test requiring an appellant to satisfy each of a fixed set of criteria … What is important is that the analysis be contextual to permit the court to make the order that is just.”
[32] The contextual approach, particularly the fact that the defendant is now proceeding with its counterclaim and that counterclaim and defence to counterclaim raises the very same issues raised in the claim, favours setting aside the dismissal order. The fact that the defendant also required an extension to set its matter down and the plaintiff consented to that extension weighs in favour of the plaintiff’s request that the administrative dismissal order be set aside.
Conclusion on the Motion to Set Aside the Dismissal Order
[33] There has been egregious delay without reasonable explanation. There is no evidence that the deadline was missed through inadvertence. On the remaining Reid factors, I find that the plaintiff moved promptly to set aside the dismissal and also find that there is no prejudice to the defendant should the dismissal order be set aside.
[34] To ensure a timely progression, I order the parties to comply with the following timetable:
(a) both parties shall deliver their affidavits of documents by 30 June 2019;
(b) examinations for discovery shall be completed by 30 September 2019. Counsel shall confer upon the release of this order to set those dates;
(c) mediation shall take place by 31 October 2019. Again, counsel shall confer upon the release of this order and secure a date for mediation now for October;
(d) the action shall be set down for trial by 31 December 2019, which I understand is the set down date for the counterclaim. If that information is incorrect, the set down date for this action shall be the same as the set down date for the counterclaim; and
(e) the defendant may bring its motion for security for costs at any time and the plaintiff shall cooperate in setting a date. The motion shall not interfere with the timetable dates, above.
B. Defendant’s Motion for Security for Costs Pursuant to Rule 56.09
[35] The defendant seeks an order requiring the plaintiff to post security for costs, not under Rule 56.01 but under Rule 56.09 where the court has discretion to impose terms when granting relief.
[36] As the court noted in Sydlo Inc. v. Mixing Equipment Co. (No.3) (1986), 18 C.P.C. (2d) 73, in this circumstance, the court is not hearing a motion for security for costs, but deciding what terms to impose as a condition of granting relief to the plaintiff. The criteria for such an order under Rule 56.09 are different than under Rule 56.01.
[37] In cases where security for costs has been ordered under Rule 56.09, it has not been ordered because the plaintiff fell within a category of Rule 56.01. It was ordered because there was conduct on the part of the plaintiff that warranted the term. I note, for instance, C.O. Capital Growth Inc. v. Miller, 2018 ONSC 7, where such an order was contemplated in light of the plaintiffs’ participation in a Ponzi scheme in which they knew or ought reasonably to have known, perpetrated a fraud on investors. Further there was evidence in that case that the plaintiffs had improperly used some of the funds raised and had also misled the Ontario Securities Commission in its investigation into the whereabouts of the funds.
[38] On the facts of this case, there is no such conduct worthy of sanction on the part of this plaintiff, whose only fault was letting its action languish. I decline to exercise my jurisdiction to order that the plaintiff post security for costs as a term of the order setting aside the dismissal order. This is without prejudice to the defendant moving under Rule 56.01 for security for costs.
Costs
[39] It was reasonable for the defendant to oppose the motion, given the plaintiff’s complete failure to advance the matter beyond the pleadings stage in the last four years. But for the existence of the counterclaim and the fact that the defendant recently obtained its own order, on consent of the plaintiff, to extend the date to set the counterclaim down, for trial it is likely that I would not have set aside the dismissal.
[40] The defendant is entitled to its costs of responding to this motion which I fix in the amount of $4,637.76 payable within 30 days of this order.