Court File and Parties
COURT FILE NO.: CV-17-129578 DATE: 20190617 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Xin Jun Wang, 2460830 Ontario Inc., Zhiyang Zhang, 9394974 Canada Inc., and Harris Gate Richmond Hill Inc. Plaintiff
– and –
Jenny Wu, also known as Jun Wu, also known as Jenny Jun Wu, Sammy Hui, also known as Wing Fu Hui, also known as Sammy Wing Fu Hui, Lili Bai, Re/Max Realtron Realty Inc., Re/Max Realtron United Realty Inc., Homelife New World Realty Inc., Yi Zhou and Yi Zhou Law Firm Defendants
COUNSEL:
James H. Chow, for the Plaintiffs Zach Flemming-Giannotti, for the Defendant, Jenny Wu Scott Gfeller, for the Defendant, Sammy Hui Joseph Juda, for the Defendant, Re/Max Realtron Realty Inc. David Heffernan, for the Defendants, Lili Bai and Re/Max Realtron United Realty Inc. Victoria Anteby, for the Defendant, Homelife New World Realty Inc. Adam C. Pantel, for the Defendants, Yi Zhou and Yi Zhou Law Firm
HEARD: June 6, 2019
REASONS FOR DECISION
CHARNEY J.:
[1] Each of the defendants in this case have brought a motion to dismiss the action for delay pursuant to Rule 24.01(1) of the Rules of Civil Procedure.
[2] The plaintiffs’ amended Statement of Claim was issued on January 25, 2017 and served on the defendants in February, 2017. The claim relates to an aborted real estate transaction, and claims $3 million damages.
[3] The defendants’ Statements of Defence and cross-claims were served on the following dates:
(a) Sammy Hui – May 5, 2017 (b) Lili Bai and Re/Max Realtron United Realty Inc. – May 8, 2017 (c) Re/Max Realtron Realty Inc. – May 8, 2017 (d) Yi Zhou and Yi Zhou Law Firm – June 28, 2017 (e) Jenny Wu – July 21, 2017 (f) Homelife New World Realty Inc. – November 14, 2017
[4] On December 1, 2017, James Chow, counsel for the plaintiffs, sent a Request to Admit to the lawyers for the defendants Jenny Wu, Re/Max Realtron Realty Inc., and Homelife New World Realty Inc. (Homelife).
[5] That was the last time that any of the defendants ever heard from the plaintiffs or their counsel, until the defendants brought this motion on February 7, 2019.
[6] The Response to Request to Admit was delivered to the plaintiffs counsel on December 21, 2017.
[7] Adam Pantel, counsel for the defendants Yi Zhou and Yi Zhou Law Firm, wrote to Mr. Chow on April 12, 2017, November 28, 2017 and January 3, 2018 regarding the progress of the action. Mr. Chow did not respond to any of these letters.
[8] On July 12, 2018, Mr. Pantel wrote again to Mr. Chow, stating: “The plaintiffs have taken absolutely no steps to move this matter forward. Do you remain retained by the plaintiffs? What are their intentions?”
[9] Mr. Chow did not reply.
[10] On September 17, 2018, Mr. Pantel wrote again to Mr. Chow asking to be advised whether his clients intended to proceed with the case or abandon the action:
Some 15 months have passed since delivery of my client’s statement of defence to this action. I have written to you on several occasions since then, asking whether you remain retained and if so, what your clients’ intentions were, given the complete lack of effort to move this action forward. You have never responded to me.
Would you please advise as to your clients’ intentions…
If I do not receive a response, I will be seeking instructions to move to dismiss the action for delay, and will of course rely upon my communications to you which have gone unanswered.
[11] Mr. Chow did not reply.
[12] On November 14, 2018, Mr. Pantel wrote again to Mr. Chow, complaining that all of his correspondence to Mr. Chow in connection with this action had been ignored, and indicating that he had instructions to dismiss the action for delay, and seeking confirmation of the plaintiffs’ residence in Ontario, as well as Mr. Chow’s availability for motion dates in the new year.
[13] Mr. Chow did not reply until this motion was scheduled for June 6, 2019. On May 30, 2019, Mr. Chow emailed counsel for the several defendants proposing a timetable for the exchange of affidavits of documents and other steps in the action.
Analysis
[14] Rule 24.01(1)(c) of the Rules of Civil Procedure provides:
24.01 (1) 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,
(c) to set the action down for trial within six months after the close of pleadings
[15] The applicable test on a motion for dismissal for delay under Rule 24.01 is set out in the Court of Appeal’s decision in Langenecker v. Sauvé, 2011 ONCA 803. The Court of Appeal explained that there are two situations in which a court should dismiss a claim for delay: (i) the delay is caused by the intentional conduct of the plaintiff or its counsel that demonstrates a disdain or disrespect for the court process; or (ii) the delay must be inordinate, inexcusable and such that it gives rise to a substantial risk that a fair trial of the issues in litigation will not be possible because of the delay.
[16] The factors to be considered were summarized by Master Graham in Szpakowsky v. Tenenbaum, 2017 ONSC 18, at para. 19 (citations omitted):
(1) To dismiss an action for delay, the court must be satisfied that the plaintiff's default has been intentional and contumelious, or that there has been inordinate and inexcusable delay for which the plaintiff or his lawyers are responsible resulting in a substantial risk that a fair trial will not be possible.
(2) A dismissal on the basis of intentional and contumelious delay would be warranted in cases "in which the delay is caused by the intentional conduct of the plaintiff or his counsel that demonstrates a disdain or disrespect for the court process."
(3) The plaintiff is responsible for moving the action along.
(4) Any delay in the prosecution of an action requires an explanation. The onus rests with the plaintiff to show that the delay was not intentional. In the absence of an explanation from the plaintiff for the delay, it is to be presumed that the delay was intentional.
The onus is on the plaintiff to rebut the presumption of prejudice arising from the unexplained delay by showing that documents have been preserved, and that the issues in dispute do not require the recollection of witnesses, or that necessary witnesses are available with detailed recollection of events.
(5) The requirement that the delay be "inexcusable" requires a determination of the reasons for the delay and an assessment of whether those reasons afford an adequate explanation for the delay. . . [E]xplanations that are "reasonable and cogent" or "sensible and persuasive" will excuse the delay at least to the extent that an order dismissing the action would be inappropriate.
In assessing the explanations offered, the court will consider not only the credibility of those explanations and the explanations offered for individual parts of the delay, but also the overall delay and the effect of the explanations considered as a whole.
(6) An inordinate delay after the cause of action arose or after the passage of a limitation period gives rise to a presumption of prejudice in which case the defendant need not lead actual evidence of prejudice and the action will be dismissed for delay unless the plaintiff rebuts the presumption. The plaintiff's onus is to persuade the court with convincing evidence that there is no substantial risk that a fair trial is not possible.
(7) Courts may dismiss actions for delay even when the relevant rules do not mandate it. A court has inherent jurisdiction to control its own process, which includes the discretionary power to dismiss an action for delay. The power of a superior court to dismiss an action for delay is not limited to that conferred by any specific Rules of Civil Procedure, but also flows from the inherent power of the court to prevent an abuse of its own process.
[17] Some of the factors listed above will apply to both categories of delay cases identified by the court in Langenecker, other factors will apply to only one.
[18] Most motions for dismissal for delay fall into the second category of cases discussed in Langenecker, which requires the defendant to meet three factors: the delay must be inordinate, inexcusable and such that it gives rise to a substantial risk that a fair trial of the issues in litigation will not be possible because of the delay.
[19] The defendants do not rely on this second category of delay. The delay in this case, less than two years since the close of pleadings, cannot yet be described as “inordinate”, and there was no evidence that the delay will give rise to a substantial risk that a fair trial will not be possible.
[20] In the present case, the defendants rely on the first category of delay described in Langenecker: the delay is caused by the intentional conduct of the plaintiff or its counsel that demonstrates a disdain or disrespect for the court process. In Langenecker, the court stated, at para. 6:
The first type of case described by Lord Diplock refers to those cases in which the delay is caused by the intentional conduct of the plaintiff or his counsel that demonstrates a disdain or disrespect for the court process. In dismissing cases which fall within this category, the court effectively declares that a continuation of the action in the face of the plaintiff’s conduct would constitute an abuse of the court’s process. These cases, thankfully rare, feature at least one, and usually serial violations of court orders.
[21] The defendants argue that the plaintiffs have done nothing to advance their action since serving the Request to Admit on December 1, 2017, and have failed to respond to any of their correspondence over the last two years. This failure is both intentional, and demonstrates disdain for the court process.
[22] The plaintiffs raise two arguments in response.
[23] Firstly, the plaintiffs submit that a motion under Rule 24.01 is only available to a defendant “who is not in default under these rules”. In this case, the plaintiffs argue, all of the defendants (except Homelife) are in default because they have not delivered affidavits of documents. The plaintiffs rely on the Court of Appeal decision in Susin v. Harper, Haney and White, [1992] O.J. No. 1349, where the Court stated:
By reason of its failure to deliver an affidavit of documents the defendant was in default under the rules, within the contemplation of rule 24.01, when it served its notice of motion to have this action dismissed for delay. It was not open to the motions court judge to overlook or excuse…the failure to meet this condition precedent to the making of such a motion. Accordingly the order dismissing the action for delay cannot stand and must be set aside.
[24] Counsel for the defendants points out that when Susin was decided, Rule 30.03 of the Rules of Civil Procedure provided that every party to an action “shall, within ten days after the close of pleadings, serve on every other party an affidavit of documents.” The defendants’ failure to deliver the affidavit of documents put them in default of the rules as they stood in 1992.
[25] The rules relating to affidavits of documents were, however, amended in 2010, and now provide that where a party intends to obtain evidence by discovery of documents the parties will be required by Rule 29.1 to agree to a discovery plan before the earlier of 60 days after the close of pleadings (or such longer period as agreed) and attempting to obtain evidence. The parties are required to consult in preparing the discovery plan. The ten-day deadline referenced in Susin is no longer part of Rule 30.03.
[26] Given the amendments to the rules, the defendants are not in default under the rules. The defendants have written to counsel for the plaintiff to enquire about his clients’ intention to move the case forward, and have been met with silence. The plaintiffs have done absolutely nothing to commence consultation about a discovery plan, and there is no basis for the plaintiff to contend that the defendants are in default under the rules.
[27] The second argument raised by the plaintiffs’ counsel relates to his explanation for the delay. In an affidavit sworn by Mr. Chow’s legal assistant on June 3, 2019, the following explanation is provided for the plaintiffs’ counsel’s failure to move this case along or reply to the defendants’ correspondence:
James H. Chow…received correspondence and a Response to Request to Admit from the lawyer for the defendant Jenny Wu. The letter from Jenny Wu’s lawyer stated, “We have not been able to communicate with Ms. Wu. It may be that she is out of the country. As a result, we may serve a revised Response to Request to Admit in the New Year.”…I am informed by Mr. Chow and verily believe that the answers in the Response to Request to Admit are inconsistent with the pleadings of the defendant Homelife New World Realty Inc. I am informed by Mr. Chow and verily believe that he has been awaiting a communication from Jenny Wu’s lawyer so that the plaintiff can determine whether or not to continue the action against the defendant Homelife New World Realty Inc.
[28] This explanation strains credulity.
[29] The Request to Admit requested the defendants Jenny Wu and Re/Max Realtron Realty Inc. to admit four facts. Mr. Chow received the Response to Request to Admit on December 21, 2017. The Response to Request to Admit simply stated that the defendants, Jenny Wu and Re/Max Realtron Realty Inc.: “Refuses to admit the truth of facts numbers 1 through 4”.
[30] While the accompanying letter hinted that a revised response might be provided in “the New Year” (ie. early in 2018), this hardly explains why Mr. Chow did not respond to any of Mr. Pantel’s correspondence over the next 18 months, or why Mr. Chow never followed up with Jenny Wu’s lawyer to find out if a revised response should be expected. If Mr. Chow wanted to determine whether or not to continue the action against Homelife, he should have written to the parties soon after the beginning of 2018 to state his position and explain why he wanted the information. It makes no sense to suggest that he simply waited incommunicado for 18 months in the hope that the defendant would change their position and provide a revised response. This explanation is neither reasonable nor cogent.
[31] That said, the question still arises whether the court should exercise its discretion to dismiss this claim for delay. In Langenecker the Court stated, at para. 3:
An order dismissing an action for delay is obviously a severe remedy. The plaintiff is denied an adjudication on the merits of his or her claim. Equally obviously, however, an order dismissing an action for delay is sometimes the only order that can adequately protect the integrity of the civil justice process and prevent an adjudication on the merits that is unfair to a defendant.
[32] While the plaintiffs’ counsel’s pitiful explanation for his inaction makes such an order tempting in this case, I am mindful of the Court of Appeal’s statement that dismissal for delay in the first category of cases in Langenecker “feature at least one, and usually serial violations of court orders” (para. 6). The phrase “a disdain or disrespect for the court process”, sometimes referred to as “contumelious” delay, generally requires the violation of a court order or the failure to comply with a court imposed timetable or deadline. While the plaintiffs’ conduct is intentional, and demonstrates a disdain or disrespect for the Rules of Civil Procedure and counsel for the defendants, it does not qualify as a violation of a court order.
[33] In the absence of “intentional and contumelious” default, the plaintiff should be given the opportunity to remedy his default (Langenecker, at para. 5, quoting Lord Diplock in Allen v. Sir Alfred McAlpine & Sons, Ltd., [1968] 1 All E.R. 543 at 556).
Conclusion
[34] Accordingly, the defendants’ motions must be dismissed, without prejudice to them bringing a similar motion if the appropriate conditions apply.
[35] This motion was made necessary by the plaintiffs’ failure to move this action along or to reply to the correspondence from defendant’s counsel. The plaintiffs’ counsel could have avoided this motion by simply responding to the defendant’s letter of November 14, 2018. He has provided no explanation for his failure to do so. As such, this is a proper case in which to exercise my discretion under Rule 57.01(2) and award costs against the successful party.
[36] While the plaintiffs will be given an opportunity to remedy their default, the moving parties are entitled to their costs for this motion.
[37] Counsel for the defendants Yi Zhou and Yi Zhou Law Firm took on the primary responsibility for this motion, and requests $3,500 if the defendant is not successful on the motion and the action is permitted to proceed. Counsel for the other defendants who joined in on the motion seek between $1,500 and $3,000 for their participation in the motion.
[38] All of the defendants are entitled to their costs for this motion. The defendants Yi Zhou and Yi Zhou Law Firm will be awarded $3,500 costs. The other defendants: i) Homelife New World Realty Inc., ii) Re/Max Realtron Realty Inc., iii) Jenny Wu, iv) Lili Bai and Re/Max Realtron United Realty Inc., and v) Sammy Hui will each be awarded $1,500, for a total costs award of $11,000. Costs are payable by the plaintiffs within 30 days on a joint and several basis.
[39] Counsel for the plaintiffs took the position that rather than dismissing the action, the court should order a timetable such as the one proposed in his May 30, 2019 email to the defendants. Given the focus of this motion, I am not prepared to impose a timetable for all steps in the litigation. However, the plaintiffs should be required to take the first step to move this action along after two years of inaction. Accordingly, this Court orders the plaintiffs to deliver its affidavit of documents within 30 days of the release of this decision. Any of the defendants who have not already delivered an affidavit of documents must deliver their affidavit of documents 30 days thereafter.