Court File and Parties

Court File No.: CV-14-501229 Motion Heard: 20190709 Superior Court of Justice - Ontario

Re: Pointone Graphics Inc., Plaintiff And: Metro Logistics Inc., Defendant

Before: Master Jolley

Counsel: David Shiller, Counsel for the Moving Party Plaintiff James Manson, Counsel for the Responding Party Defendant

Heard: 9 July 2019

Reasons for Decision

[1] On this motion for a status hearing, the plaintiff seeks the imposition of a timetable and an extension of the 1 April 2019 deadline to set the matter down for trial. The plaintiff’s notice of motion is dated 27 March 2019 and was originally to be heard on 3 April 2019. It was adjourned to 4 June 2019 and then again to today’s date to be argued.

[2] Pursuant to Rule 48.14(7) of the Rules of Civil Procedure, at a status hearing, the court may dismiss the action for delay or, if it is satisfied that the action should proceed, (i) set deadlines for the completion of the remaining steps necessary to have the action set down for trial and order that it be set down for trial within a specified time, (ii) adjourn the status hearing on such terms as are just or (iii) make such other order as is just.

[3] The plaintiff must show cause why the action should not be dismissed for delay by providing an acceptable explanation for the delay and demonstrating that, if the action is allowed to proceed, the defendant will not suffer any non-compensable prejudice. These motions require the court to balance the principle that cases should, if possible, be decided on their merits and procedural rules interpreted accordingly against the principle that those procedural rules that aim to resolve disputes in a timely and efficient manner can only achieve their goal if they are respected and enforced. (1196158 Ontario Inc. v. 6274013 Canada Ltd. 2012 ONCA 544 at paragraphs 18 and 20).

[4] I am satisfied that the plaintiff has met both tests. While the matter has not proceeded to examinations for discovery and is not ready to be set down for trial, it has had plenty of face time in court. While the defendant argues that the plaintiff took no steps to move the matter forward, this is not borne out by the evidence. On 20 November 2014 plaintiff’s then counsel forwarded a proposed discovery plan to defendant’s counsel for approval. He followed up on 27 January 2015 with revised dates due to the intervening two month period.

[5] On 17 April 2015 defence counsel advised that he would be sending records to the plaintiff for review on a without prejudice basis. The plaintiff’s confirming email stated: “I confirm that your client has assembled soft copy of records which you believe will assist in determining what paper may be missing, if any, and that you are providing us with a copy of the same shortly on a without prejudice basis for our review. Look forward to receipt of the records. In the circumstances, as discussed, we will not pursue discoveries pending our review of your clients documents.”

[6] The plaintiff had already prepared and sworn its affidavit of documents but did not serve it pending the outcome of these settlement discussions. It is clear that both parties agreed to focus their efforts on an attempt to settle, a laudable use of time and resources. As Master Glustein, as he then was, stated in Apotex v. Relle 2012 ONSC 3291 at paragraph 50, “parties should be encouraged to participate in settlement discussions without having to incur the costs associated with preparing affidavits of documents and participating in examinations for discovery, which may make settlement much more difficult.” The Master found that the frequent settlement discussions that had occurred in that case provided a reasonable explanation for litigation delay, holding that the plaintiff was not required to vigorously pursue the action during that timeframe.

[7] The defendant provided plaintiff’s counsel with the documents shortly thereafter along with an excel spreadsheet (the “Metro Report”). The evidence suggests that the plaintiff completed its review of the Metro Report by the end of July 2015 but did not take further steps in the action from August 2015 to February 2016. No explanation is provided. Thereafter, between February and August 2016 the parties resumed their settlement discussions.

[8] In a call that took place between counsel on 11 August 2016, plaintiff’s counsel expressed concern over the legitimacy of some of the documents in the Metro Report and it became apparent and the plaintiff now believed its claim to be larger than it had previously understood based on the alleged forged documents. Given this turn of events, counsel did not discuss settlement during the call, as they had intended. The day after the call, on 12 August 2016, plaintiff’s counsel wrote enclosing his client’s earlier sworn affidavit of documents, requesting the defendant’s sworn affidavit of documents, advising that he had instructions to undertake examinations for discovery by the end of 2016 and seeking available dates from defence counsel. However, between the August 11 call at 12:27 and the August 12 letter, defence counsel purported to accept an earlier offer to settle that the plaintiff had not withdrawn after the call. From 12 August 2016 to 1 February 2017 the parties dealt with the defendant’s motion to enforce the settlement, which was ultimately dismissed.

[9] There was little to no activity between February 2017 and July 2017. In July 2017 the plaintiff moved to amend its reply and the defendant served a request to admit, to which the plaintiff did not respond. The defendant made a settlement offer in October 2017. When it was not accepted, it advised in November 2017 that it intended to bring a motion for partial summary judgment based on the deemed admissions made as a result of the plaintiff’s failure to respond to the request to admit. On 6 February 2018 a timetable was set for that motion and on 9 February 2018, after some months of a failing relationship, plaintiff’s then counsel removed itself from the record. The plaintiff retained new counsel in March 2018.

[10] The defendant’s partial summary judgment motion prompted plaintiff’s new counsel to bring its own preliminary motion to withdraw the deemed admissions. That motion was brought in July 2018, heard in September 2018, a decision released in October 2018, costs submissions made in December 2018 and a decision on costs released in March 2019. After release of the substantive decision, the defendant withdrew its partial summary judgment motion but attended in court in November 2018 to successfully argue for costs thrown away.

[11] While no doubt it could have taken steps to move the action along between August 2015 and February 2016 and again between February 2017 and June or July 2017, when it amended its reply, I am satisfied that, overall, the plaintiff has provided a reasonable explanation for the delay. It is not required to justify its conduct on a month to month basis (Carioca’s Import & Export v. Canadian Pacific Railway 2015 ONCA 592 at paragraph 46) in order to reasonably explain the delay.

[12] The issue of prejudice was considered by Master Abrams in her decision on the plaintiff’s motion to withdraw its admissions. There in 2018 the defendant argued that granting the plaintiff’s motion would set the 2014 case back to square one and it would suffer prejudice as a result. The Master held that this was not non-compensable prejudice. As she stated: “The progress of this 2014 action was halted when the parties engaged in settlement discussions in 2017 and a motion was brought, unsuccessfully, to enforce what was thought to have been a settlement. To permit the withdrawal of the deemed admissions would be to restore the action to its July 2017 status.” On this motion, there is evidence that the plaintiff has preserved all of its documents and its witnesses are available. The record discloses that the defendant has served its key documents in the Metro Report. Defendant’s counsel has confirmed that the Metro Report contains essentially its entire case with respect to this claim.

[13] I further note that there has not been any timetable step that has been missed to date. Nor is this a case where the plaintiff’s file remained in the filing cabinet, only to be pulled out when the five year deadline approached. Here, time was spent on motions and in settlement discussion, and their fallout, rather than the traditional steps required to get an action ready to be set down for trial.

[14] Counsel for the plaintiff proposed a timetable that compressed all litigation steps into three months. I find this timetable to be unrealistic, to have been suggested only because of the set down date deadline that it faced and to be unfair to the defendant if put in place. Subject to my comments below, I set the following timetable for the continuation of this action:

(a) Defendant to deliver its affidavit of documents and productions and the plaintiff to deliver its productions, if it has not already done so, by 31 July 2019. This will not involve much cost on the part of the defendant as counsel advised on this motion that its affidavit of documents has already been prepared. (b) Examinations for discovery to be completed by 31 October 2019. (c) All undertakings from the examinations for discovery to be answered by 31 December 2019. (d) Any motions on refusals to be scheduled by 31 December 2019. (e) Mediation to take place by 31 January 2020. (f) The action to be set down by 28 February 2020.

[15] Unfortunately, this is not the end of the matter. The plaintiff has failed to pay two substantial costs orders against it. On 6 November 2018 Justice Nakatsuru ordered the plaintiff to pay costs thrown away on the defendant’s withdrawn motion for partial summary judgment in the amount of $37,344.62 within 30 days. Those costs have now been outstanding for seven months. On 13 March 2019 Master Abrams ordered the plaintiff to pay costs of $17,692.35 in respect of its motion to withdraw its admissions, by 30 April 2019, more than two months ago.

[16] There is no explanation before me as to why those costs have not been paid. This is simply not acceptable. I have discretion on this motion under both Rule 48.14(7)(a) and Rule 60.12 of the Rules of Civil Procedure to dismiss the plaintiff’s action as a result of these breaches of two court orders. While I am not prepared to dismiss the action at this stage, I am also not prepared to exercise my discretion to grant the plaintiff an outright indulgence in the face of these serious breaches. The plaintiff shall pay those costs in full by 31 July 2019.

[17] If the plaintiff fails to pay the costs that it has owed for many months now by 31 July 2019, the defendant may attend before me without notice to the plaintiff and seek an order dismissing the action.

[18] The plaintiff seeks its costs of the motion in the amount of $9,180 on the basis that the defendant should not have opposed the motion. But for the outstanding costs orders, I might have been inclined to agree. However, the defendant was well within its rights to suggest that the court should exercise its discretion to dismiss the action of a plaintiff that has failed to pay almost $55,000 due by court orders, the bulk of which was due more than seven months ago. In the circumstances of this case, I make no order as to costs.

Master Jolley Date: 10 July 2019