COURT FILE NO.: CV-18-591322

DATE: 2019 11 26

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: D.K. MANUFACTURING GROUP LTD. and S.G. INVESTMENTS GROUP LTD., Plaintiffs

- and -

MDF MECHANICAL LIMITED, THE ALARM FACTORY INC. and T.I.F. MECHANICAL LTD., Defendants

BEFORE: Master Todd Robinson

COUNSEL: J. Prosser, for the plaintiffs

K. Newton, for the defendant, T.I.F. Mechanical Ltd.

HEARD: August 26, 2019

REASONS FOR DECISION

[1] The plaintiffs, D.K. Manufacturing Group Ltd. (“DK”) and S.G. Investment Group Ltd. (“SG”), move for a status hearing pursuant to Rule 48.14(5) of the Rules of Civil Procedure, seeking a timetable for remaining steps in this action. The motion is opposed by the defendant, T.I.F. Mechanical Ltd. (“TIF”). The action was previously dismissed as against The Alarm Factory Inc. (“Alarm Factory”). The remaining defendant, MDF Mechanical Limited (“MDF”), has been noted in default, but was served with the plaintiffs’ motion materials. No one attended on behalf of MDF.

[2] The underlying action is a subrogated claim advanced by the plaintiffs’ multi-peril insurer, Co-operators General Insurance Company (“Cooperators”) in the names of its insured, DK and SG. The plaintiffs’ claim is for damages arising from allegedly negligent installation, inspection and maintenance of a fire suppression sprinkler system at DK’s warehouse and distribution facility, which is in a building leased from SG. A fire occurred in the building on December 17, 2012. Although the sprinkler system successfully extinguished the fire, it is alleged to have malfunctioned and continued to spray water, causing substantial damage to the building and destroying DK’s inventory. The aggregated claims advanced by DK and SG are for $3.2 million in respect of the water damage.

[3] Essentially no procedural steps have been taken in this action in the five years since its commencement. Much of the plaintiffs’ written and oral argument on the motion addresses the extent to which this action relates to a coverage and duty of good faith dispute between Cooperators and its insured, DK and SG, arising from the same loss. Those disputes are the subject matter of two actions: one commenced by DK against Cooperators in court file no. CV-13-494432, and another commenced by DK and SG against Cooperators, Alarm Factory, and the adjusting firm engaged by DK and SG, National Fire Adjustment Co. Inc. (“NFA”), in court file no. CV-14-517805. Those two actions have since been consolidated into one action under court file no. CV-14-517805 (the “Related Action”), by order of Justice Kristjanson dated March 31, 2017.

[4] Those two related proceedings, now the Related Action, arose from a dispute between Cooperators and its insured regarding proper adjusting of the fire loss. Cooperators and NFA (on behalf of DK and SG) were unable to agree on the adjusted value of the loss, which resulted in Cooperators invoking an appraisal process in accordance with the insurance policies and the Insurance Act, RSO 1990, c. I.8. An umpire reached decisions on the appraised amounts of loss under each policy, and Cooperators paid those amounts. Neither DK nor SG were satisfied with the decisions reached in the appraisal process, so they commenced the two proceedings against Cooperators, NFA and Alarm Factory. As against Cooperators, DK and SG sought relief under the policies and alleged that Cooperators breached its duty of good faith to DK and SG. As against NFA, DK and SG sue for negligence and breaches of NFA’s duties to them. As against Alarm Factory, against which the Related Action has been dismissed, DK and SG alleged negligence and breaches of a monitoring agreement.

[5] I have carefully reviewed the evidence filed and considered the arguments of both the plaintiffs and TIF, including arguments regarding the extent to which the Related Action bears on assessing the status of this action. For the reasons that follow, I have determined that, based on the evidence placed before the court on this motion, the plaintiffs have failed to satisfy their onus of showing cause why this action should not be dismissed for delay. I accordingly order that the action be dismissed, with costs.

Analysis

Test on a Status Hearing

[6] The parties are in agreement that test to be applied is the two-part conjunctive test set out in cases such as Faris v. Eftimovski, 2013 ONCA 360, namely that the plaintiffs have the onus of demonstrating an acceptable explanation for delay in prosecuting the action and that, if the action is allowed to continue, there is no non-compensable prejudice to the defendants. Justice Raikes has recently summarized the applicable law on a status hearing motion in 1682558 Ontario Limited v. Salman, 2019 ONSC 4120 at paras. 4-6. Those are the principles I have applied.

Explanation for Delay

[7] I accept the plaintiffs’ submission that showing an “acceptable explanation for delay” does not necessarily mean that there has to be a “good” explanation. Case law supports that an “adequate” or “passable” explanation will be sufficient, and that the determination turns on the facts of each case: 3 Dogs Real Estate Corp. v. XCG Consultants Ltd., 2014 ONSC 2251 at para. 38. I also accept that, in deciding whether the plaintiffs’ explanation for delay is reasonable, I must consider the overall conduct of the litigation in the context of local practices: Carioca’s Import & Export Inc. v. Canadian Pacific Railway, 2015 ONCA 592 at para. 46.

[8] Based on the evidence filed, any my review of the case history, very few steps have been taken in this proceeding. They are summarized as follows:

(a) July 2014: The action is commenced in Guelph.

(b) November 2014: TIF delivers its statement of defence and crossclaim, together with a jury notice.

(c) May 2015: Alarm Factory delivers its statement of defence and crossclaim.

(d) August 2016: Correspondence is exchanged regarding the outcome of a summary judgment motion in the Related Action (discussed below).

(e) February 2017: A telephone call takes place between TIF’s counsel and plaintiffs’ counsel, from which TIF’s counsel understood the parties were in a position to proceed with examinations for discovery.

(f) June 2017: MDF is noted in default.

(g) September 2017: A consent order is issued by Justice Lemon dismissing the action and crossclaims as against The Alarm Factory Inc., without costs.

(h) November 2017: A consent motion is brought to transfer this action from Guelph to Toronto. Justice Stinson grants the order.

(i) March 2018: TIF’s counsel emails plaintiffs’ counsel requesting a copy of the origin and cause report pleaded in the statement of claim, as well as confirmation of the damages being sought. There is no evidence of any response.

(j) Early May 2019: TIF’s counsel writes a letter again requesting the origin and cause report pleaded in the statement of claim. There is no evidence of any response.

(k) Late May 2019: In advance of the deadline to file a consent timetable pursuant to Rule 48.14(4), plaintiffs’ counsel sends a proposed timetable for next steps in this action to counsel for MDF and TIF. It contemplates an extended timetable, with no steps until October 31, 2019 and thereafter staggered steps to a proposed new set down deadline of March 31, 2021. TIF’s counsel also writes another letter requesting the origin and cause report pleaded in the statement of claim.

(l) Early June 2019: Plaintiffs’ counsel provides the origin and cause report to TIF’s counsel following a further email request.

(m) Late June 2019: TIF’s counsel confirms that TIF will not consent to a timetable for next steps, and outlines its position (as taken on this motion) that this action should have been prosecuted following Justice Stinson’s decision in June 2016.

(n) July 2019: The plaintiffs serve this motion for a status hearing.

[9] In explaining the lack of progress in this action, the plaintiffs argue that this action is “inextricably linked” to the Related Action. I have considered the steps in that proceeding. Evidence filed, and my review of case histories, supports that the following steps have been taken in the Related Action (including its two constituent proceedings) during the time since this action was commenced:

(a) December 2014: The second action by DK and SG against Cooperators, NFA and Alarm Factory in court file no. CV-14-517805 was commenced. (The first action in court file no. CV-13-494432 by DK against Cooperators was commenced prior to issuance of the statement of claim in the subject subrogated action.)

(b) April 2016: Cooperators brings motions for summary judgment in each of court file nos. CV-13-494432 and CV-14-517805 asserting that, following the appraisal process, DK and SG were not entitled to any additional indemnification from Cooperators pursuant to the insurance policies in respect of the fire loss.

(c) June 2016: Justice Stinson releases his decision on the summary judgment motions, granting partial summary judgment on the basis of his finding that the policy claims of DK and SG had been resolved by the appraisal process, such that no further amounts were owing by Cooperators under the policies. Justice Stinson also held that the claims against Cooperators for alleged breach of its duty of good faith were not barred by the appraisal process nor by expiry of any limitations period. Those claims were permitted to proceed.

(d) October 2016: A case teleconference takes place with Justice Stinson, during which it is agreed that the two proceedings in court file nos. CV-13-494432 and CV-14-517805 should be consolidated. Transfer of this action from Guelph to Toronto is also discussed. Neither TIF nor MDF take part in this case teleconference. There is no evidence supporting that they were aware of the case teleconference.

(e) March 2017: Justice Kristjanson orders consolidation of court file nos. CV-13-494432 and CV-14-517805, with leave to amend the statement of claim.

(f) September 2017: As disclosed in the case history, but not in evidence, the action and all crossclaims as against Alarm Force in the Related Action is dismissed by the registrar on consent. (This dismissal is chronologically concurrent with the dismissal order against Alarm Force in this action.)

(g) July 2018: A second case conference takes place before Justice Stinson, during which various matters in the Related Action are addressed. It appears that this action is also discussed, although neither TIF nor MDF took part in the case conference. Justice Stinson’s endorsement indicates that counsel for DK and SG in the Related Action was to inform all counsel in this action of steps taken on the conference call, and make arrangements for this action to be put in abeyance. There is no evidence supporting that TIF or MDF were aware of the case conference. The tendered by TIF on this motion provides evidence that TIF’s counsel was not contacted as directed by Justice Stinson following the case conference.

(h) Fall 2018: Affidavits of documents are exchanged (as indicated in Justice Stinson’s endorsements from case conferences).

(i) November 2018: A mediation in the Related Action occurs, but is unsuccessful. There is some evidence supporting that the defendants in this action were invited to participate in the mediation, but ultimately did not.

(j) January 2019: A third case conference takes place before Justice Stinson. Among other matters discussed is possible consolidation of this action with the Related Action. Justice Stinson’s endorsement states, “The handling of the subrogated action is being left to counsel, including whether there should be a consolidation or hearing together.” Neither TIF nor MDF took part in that case conference. There is no evidence suggesting the proposed consolidation of this action with the Related Action was discussed with TIF or MDF, or that they were aware of the case conference.

[10] TIF concedes that there is an acceptable explanation for delay in this action up to June 2016, when Justice Stinson granted partial summary judgment in the Related Action dismissing the policy claims advanced by DK and SG. TIF agrees that the disposition of those policy and coverage issues directly bore on this subrogated action, and it was not unreasonable for Cooperators to obtain a determination that DK and SG had been fully indemnified under their policies before proceeding with this action. Accordingly, the relevant period for consideration is from June 2016 to July 2019, when this motion for a status hearing was brought.

[11] During that period, the plaintiffs do not argue there were any serious attempts to move this action forward. Other than the consent dismissal of the action against Alarm Factory (and dismissal of a third party claim, for which no evidence has been tendered regarding the dates of issuance or dismissal or the circumstances of disposition), there is no evidence of any substantive procedural steps being taken between June 2016 and July 2019. Based on the evidence filed, there has been limited correspondence in this action since July 2016. That correspondence is limited to correspondence regarding Justice Stinson’s summary judgment decision in August 2016, requests by TIF’s counsel for production of the pleaded origin and cause report between March 2018 and May 2019, the plaintiffs’ requests for TIF and MDF to attend mediation in October and November 2018, and correspondence regarding a timetable before this motion was brought.

[12] The plaintiffs advance two primary arguments in explaining delay in the progress of this action. First, they argue that there was an express and then implied (as argued by the plaintiffs) agreement by TIF to hold this action in abeyance pending determination of the Related Action. Second, they argue that this action is “inextricably linked” to the Related Action and that the steps taken in the Related Action during the relevant period constitute an acceptable explanation for delay in this action.

[13] I reject the plaintiffs’ first argument that there has been an ongoing agreement by TIF, either express or implied, to hold this action in abeyance. The only evidence of any express agreement is a letter from TIF’s counsel dated May 14, 2015. That responds to a letter from plaintiffs’ counsel dated May 13, 2015, requesting that this action be held in abeyance or put under a formal stay pending determination of the pre-consolidated action in CV-14-517805. In the letter from TIF’s counsel, the following is stated: “We will hold our file in abeyance and follow up again with your office in 90 days.”

[14] Plaintiffs’ counsel argues that I should interpret this statement as an agreement to an indefinite abeyance, with counsel indicating that a follow up would occur in 90 days. Conversely, TIF’s counsel argues that I should interpret the statement as confirming an agreement to a 90-day abeyance, and nothing more. In my view, it strains the language actually used to find an agreement to hold the action in indefinite abeyance. There is no further evidence corroborating express agreement to any ongoing abeyance of this action. I accordingly find that there was only express agreement to hold the action in abeyance for 90 days.

[15] Plaintiffs’ counsel urged me to nevertheless find an implied agreement to hold the action in indefinite abeyance, since the reasons for agreeing to the abeyance in the first place, namely avoiding overlap in issues and witnesses, continued. TIF’s counsel has conceded, as noted above, that the delay until Justice Stinson’s summary judgment decision is reasonable. After that time, though, TIF’s position is that the reasons for the initial abeyance ceased as a result of the coverage determinations. TIF’s counsel correctly points out that the letter from plaintiffs’ counsel refers only to the claim by DK and SG against Cooperators for further indemnity from the fire loss, and says nothing regarding the claims arising from alleged breaches of the duty of good faith. The plaintiffs nevertheless seek to have the court imply from TIF’s silence an agreement to hold this action in abeyance until all issues were resolved in the two constituent actions that were subsequently consolidated into the Related Action, including amendments to the statement of claim in the Related Action for which leave was granted at the time of consolidation.

[16] In my view, there is insufficient evidence in the record before me to find any course of conduct by TIF from which an implied agreement to abeyance may be inferred beyond the release of Justice Stinson’s decision, which finally determined the policy indemnity claims referenced in the letter from plaintiffs’ counsel dated May 13, 2015. To the contrary, the responding affidavit provides undisputed evidence of correspondence from TIF’s counsel following up on the disposition of the summary judgment motion in August 2016, a telephone call in February 2017 that is said to have led TIF’s counsel to believe the matter was ready for discoveries, and emails and letters from TIF’s counsel requesting production of the origin and cause report in March 2018, May 2019 and June 2019. These are inconsistent with a continuing agreement to hold the action in abeyance. They are also inconsistent with the characterization made by plaintiffs’ counsel in oral submissions that TIF was “sitting idly by”.

[17] I also reject the plaintiffs’ second argument. In my view, the evidence does not support that steps taken in the Related Action after Justice Stinson’s partial summary judgment decision are material to explaining delay in this action. Contrary to the plaintiffs staunchly argued position, it does not appear that any determinations that remain to be made in the Related Action will bear on determinations in this action. Plaintiffs’ counsel acknowledges that DK’s and SG’s claims against Cooperators in the Related Action are now limited to alleged breaches of the duty of good faith, and concedes that success of those arguments will not give rise to damages for which any defendant in this action would be liable. I was pointed to no legal issues remaining in the Related Action that reasonably need to be determined prior to a fair, proper or just disposition of this action. Accordingly, to the extent that the two constituent proceedings in the Related Action were “inextricably linked” to this action, they ceased to be following the disposition of the summary judgment motions.

[18] Since I do not view steps in the Related Action after June 2016 as being relevant to explaining delay in this action, I turn to the plaintiffs’ other evidence and arguments to assess the explanation for delay. While the explanation need not cover every single minute of delay, it must still explain most of the delay and certainly all periods of material delay: Madore v. Metropolitan Toronto Condominium Corp., 2015 ONSC 4750 at para. 26.

[19] The plaintiffs argue that, until September 2017, when the action against Alarm Factory was resolved, there were common parties and similar witnesses in both proceedings. Plaintiffs’ counsel concedes that this action could reasonably have proceeded after release of Alarm Factory (and presumably the third party or parties about which no evidence has been tendered) from the action, but argues that the explanation for the following 1.5 years of delay, although not ideal, is still sufficient to meet the plaintiffs’ onus. I do not accept either submission.

[20] The evidence tendered does not explain delay in the period between June 2016 and September 2017, when the action against Alarm Factory was dismissed. It is silent on the reasons for that dismissal, the duration of any negotiations, and any other details that may reasonably support a finding that the 15-month period of delay has been adequately explained. The fact that the action was dismissed against Alarm Factory some 15 months after Justice Stinson’s decision, without more, is not an adequate explanation of delay for that period.

[21] There is also no evidence of any overlapping witnesses in the record before me and I do not find that a reasonable inference to draw solely from the fact that Alarm Factory was a party in both this action and the Related Action until September 2017. Only the statement of claim in this action and the amended statement of claim in the Related Action were filed by the plaintiff in its motion record. TIF filed its own statement of defence and crossclaim in its responding record. Absent copies of all pleadings or specific evidence tendered by the plaintiffs, neither of which is before the court, I have no basis to conclude that there remained any factual or legal issues for determination or any necessary witnesses in common with the Related Action following Justice Stinson’s decision. I was pointed to nothing and find nothing in the motion materials to support such a conclusion.

[22] Also lacking in the plaintiffs’ materials is an explanation for the failure of plaintiff’s counsel to respond to the correspondence from TIF’s counsel sent between March 2018 and May 2019 requesting the origin and cause report. It was not produced until after the Rule 48.14(4) timetable was proposed and the request was made again twice. In my view, TIF’s evidence supports that it did not “sit idly by” and that TIF did make some efforts to move the action forward. The plaintiffs ignored TIF’s requests for production of a key document and have provided no explanation for doing so.

[23] Based on the evidence filed, it appears that the only reason the plaintiffs sought to move this action forward was because the Rule 48.14 deadline was pending. Ms. Outerbridge’s affidavit tendered in support of the plaintiffs expressly states, “My office was aware that the within action was approaching its fifth anniversary and sought to address it without the need for a motion.” I am not satisfied that, in the absence of the Rule 48.14 deadline, there would otherwise have been any intention to move this action forward.

[24] I agree with TIF that this case is similar to the case in Walderman v. CMC Markets Canada Inc., 2017 ONSC 6802. In that status hearing case, Justice Petersen found that the early years of delay had been explained, but dismissed the action for delay after holding, at. para. 27, that there were in excess of 3 years of unexplained delay, which were marked only by some settlement discussions with one defendant (not all defendants) and multiple adjournments of a summary judgment motion. The facts of this case are similar, in that an acceptable explanation for delay exists for 2 years (as conceded by TIF), but the explanation for the past 3 years (having found that steps in the Related Action are irrelevant) consists solely of an apparent settlement with Alarm Factory, for which no particulars are provided, and dismissal of the action as against it.

[25] For the foregoing reasons, I find that the plaintiffs have failed to satisfy their onus of showing an acceptable explanation for delay.

Prejudice

[26] Because the test is conjunctive, my determination that the plaintiffs’ have failed to meet their onus of providing an adequate explanation for delay is sufficient to order dismissal of this action. However, in case I am wrong in that determination, I have nevertheless considered prejudice.

[27] It is undisputed that the plaintiffs’ bear the onus of showing that there is no non-compensable prejudice to the defendants from allowing the action to proceed to trial. The plaintiffs primary argument is that there is no evidence of any actual prejudice accruing from any period since the action was commenced. The problem with the plaintiffs argument is that they have tendered no evidence at all on the issue of prejudice (or lack thereof). The plaintiffs’ factum simply asserts a bare argument that there is no non-compensable prejudice because the defendants “have been aware of the claim for many years and were free to conduct due diligence even while the litigation was held in abeyance.” As discussed below, in my view, it is significant that the plaintiffs have led no substantive evidence regarding preservation of evidence or availability of witnesses.

[28] There is a well-established presumption of prejudice set out in case law. In Langenecker v. Sauvé, 2011 ONCA 803, at para. 11, the Court of Appeal describes how that presumption arises as follows:

Prejudice is inherent in long delays. Memories fade and fail, witnesses become unavailable, and documents and other potential exhibits are lost. The longer the delay, the stronger the inference of prejudice to the defence case flowing from that delay.

[29] Case law has held that a plaintiff is not required to adduce affirmative evidence to rebut the presumption of prejudice that arises from the passage of time in prosecuting an action or from the expiry of a limitation period, but rather the court must consider all of the circumstances in evaluating the strength of the presumption of prejudice: 1682558 Ontario Limited, supra at para. 6(b).

[30] In my view, a presumption of prejudice clearly arises on the facts of this case. There has been a significant lapse in time between TIF’s installation work and the motion being brought. The origin and cause report in evidence includes an inspection certificate from TIF dated in February 2009. Accordingly, TIF’s installation work was performed sometime prior to 2009. The loss at issue occurred in 2012. This action was commenced in 2014. The limitations period expired several months after the claim was issued. Five years later, no documentary or oral discoveries have taken place. I agree with TIF’s submission that this is not a documents case, and that inspection of the sprinkler system and witness memories of events such pre-loss installation, inspection and maintenance of the sprinkler system will be significant at the trial of this action. An inference of prejudice is reasonably drawn from five years passing with no substantive procedural steps occurring, the limitations period having now long-since expired, and both documentary and oral discoveries still remaining outstanding. In my view, that inference is strengthened by the fact that TIF’s installation work will be both the subject of trial evidence and the basis of any determination of negligence by TIF, and the work occurred well over 10 years before this motion was brought.

[31] TIF’s position in the litigation is that it did not provide any consulting or fire monitoring services, but rather was subcontracted solely to install the sprinkler system designed by a non-party. There is no evidence before the court suggesting that TIF had any on-site presence or attendance after 2009. TIF argues that it is the plaintiffs, not the defendants, who have access to the site and knowledge regarding the extent to which both investigations were performed and evidence has been preserved regarding the purportedly negligent installation of the sprinkler system. I agree.

[32] An investigation into the origin and cause of the fire was conducted, with report completed in May 2013. The report concludes that “there is a significant absence of paperwork and/or the system was not maintained and installed as per design standards and requirements of NFPA 25.” It further indicates that a number of required electrical connections were not made during installation at various points in the sprinkler system, and suggests that at least some components of the sprinkler system were retained. Attachment 1 to the report are a series of 54 photographs from the investigation, including photographs of various components of the sprinkler system.

[33] In my view, the report is significant in the litigation, since it outlines various issues that may have resulted in the fire, and includes reference to particular evidence that could support the allegations of negligence regarding TIF’s installation of the sprinkler system. It is also specifically cited at paragraph 12 of the statement of claim, which states as follows:

12. The Plaintiff commissioned an “Origin and Cause” report to investigate the type and nature of the fire loss. It was determined that while the fire was minimal in nature the fire alarm and fire suppression system had run for more than 10 hours at full pressure and deposited an excessive amount of water at the Property.

[34] Despite the significance of the report, it was not tendered into evidence on this motion by the plaintiffs. Rather, it was tendered by TIF. As noted above, TIF was finally provided the report in June 2019. On the record before the court, that was the first time TIF was provided with any specific evidence supporting the negligence claim against it.

[35] There is no evidence before the court that TIF had contemporaneous notice of the incident, or conducted (or had any opportunity to conduct) an investigation of the alleged sprinkler malfunction in the aftermath of the fire or during the origin and cause investigation. It is DK, SG, and Cooperators, not TIF, who are in a position to confirm what investigation occurred, who the witnesses were to the incident and investigation, whether or not witness statements have been taken, what physical evidence was preserved and how such evidence has been preserved, and what other investigation results remain available and in what form. DK and SG are also the parties best positioned to confirm what sprinkler system inspections and maintenance were performed between installation of the sprinkler system and the fire loss, as well as what records remain.

[36] Plaintiffs’ counsel argues that, since this action is subrogated by Cooperators, it is actually the insured and not Cooperators who have the relevant evidence, since Cooperators is adverse in interest to the plaintiffs in the Related Action. Plaintiffs’ counsel also argues it is a relevant consideration that productions have been exchanged in the Related Action. I do not agree that the distinction between insured and insurer assists the plaintiffs’ position. Also, the extent of any relevant documentary production in the Related Action was not placed before the court on this motion. There is nothing in Justice Stinson’s endorsements speaking to relevance of any documentary discovery that has occurred. Without knowing what relevant documents have already been produced in the Related Action, the mere fact of affidavits of documents being exchanged does not assist the plaintiffs.

[37] Particularly given that TIF’s installation work occurred prior to 2009, if the plaintiffs seriously intended to satisfy their onus of demonstrating that there is no non-compensable prejudice, they ought reasonably to have tendered evidence supporting continued availability of relevant witnesses who participated in inspection and maintenance of the sprinkler system and the fire investigation, and supporting continued existence of relevant documents. There is no evidence on preservation of the sprinkler system, its components, inspection records, maintenance records, design plans, or any other relevant documents. In my view, I cannot properly find that there is no non-compensable prejudice to the defendants in the absence of such evidence.

[38] It may be that the plaintiffs or Cooperators have preserved sufficient components, reports, records and other documents, and that the availability of material witnesses is a non-issue, but the plaintiffs elected not to tender any such evidence on this motion. Plaintiffs’ counsel conceded in argument that a reply affidavit could have been prepared. Nevertheless, after receiving and reviewing the responding materials, the plaintiffs did not prepare and serve any supplementary materials, nor did the plaintiffs seek an adjournment to do so.

[39] Plaintiffs’ counsel submits that it is significant that TIF has tendered no evidence of prejudice. I agree there is no evidence of actual prejudice from TIF. TIF relies on the presumption of prejudice and fading memories of witnesses. However, the primary onus of showing that there is no non-compensable prejudice is on a plaintiff, not a defendant. While the extent of a defendant’s evidence (or lack thereof) is a consideration, it does not displace the evidentiary onus resting with a plaintiff. Particularly in circumstances such as this case, where the plaintiffs have failed to tender any evidence at all on the issue of prejudice, accepting the plaintiffs’ argument regarding the weight to be placed on the lack of evidence of actual prejudice from TIF would, in my view, amount to placing a greater evidentiary onus on TIF than on the plaintiffs, contrary to established case law.

[40] In the circumstances of this action, the complete absence of any evidence from the plaintiffs on what witnesses and other evidence remain available in respect of a loss occurring in December 2012 is, in my view, significant. That information is squarely and solely within knowledge of the named plaintiffs, not TIF. Since documentary discoveries have been completed in the Related Action, and a summary judgment motion was brought and argued, the plaintiffs and Cooperators ought reasonably to know what physical evidence and witnesses remain available.

[41] Despite there being no actual evidence from either party on prejudice, I accept TIF’s argument that a presumption of prejudice has arisen and, taking into account all the circumstances, I find that a strong presumption of prejudice is properly inferred in this case. In the absence of evidence from the plaintiff on availability of witnesses and relevant documents or other evidence, I find that the plaintiffs have failed to satisfy their onus of demonstrating that there will be no non-compensable prejudice to the defendants from this action proceeding.

Disposition

[42] For the foregoing reasons, and based on the evidence as filed, I find that the plaintiffs have failed to show cause why the action should not be dismissed for delay. I accordingly order that this action be dismissed, with costs.

Quality of Evidence

[43] Although not itself a factor in my disposition of the plaintiffs’ motion, the nature and sufficiency of evidence filed by the plaintiffs on this motion was less than ideal. A brief 6-page affidavit of a lawyer from the law firm representing the plaintiffs was the only affidavit evidence tendered by the plaintiffs. It formed part of a motion record that failed to include all pleadings, relevant correspondence with opposing counsel (much of what is referenced in these reasons was included in TIF’s responding record), or relevant documents such as the origin and cause report (also included in TIF’s responding record). As noted in these reasons, no evidence speaking to prejudice was tendered.

[44] Motions for status hearings should not be treated in a perfunctory manner. Both plaintiffs and their counsel should not approach these motions expecting the court to “rubber stamp” a timetable without having due regard to the explanation for delay and issues of prejudice. Although made in the context of a motion to set aside a registrar’s dismissal, the comments of Master Muir in Dunn v. Best Built Doors Inc., 2011 ONSC 3843 at paras. 31-33, are instructive and should also be given consideration in status hearing motions such as this one. The evidentiary requirements on a set aside motion are not dissimilar to those on a status hearing motion. Master Muir held in that case as follows:

[31] In my view, the nature and sufficiency of the evidence filed by the plaintiff in support of this motion is an appropriate factor for the court to consider as part of its decision making process. The evidence filed by the plaintiff on this motion is less than ideal. Motions of this nature should not to be treated in a perfunctory manner. Plaintiffs and their counsel should not assume that dismissal orders will be automatically set aside. Orders of the registrar are orders of the court and they deserve to be respected. The consequences of failing to set aside a registrar’s dismissal order are very serious indeed. A plaintiff may be denied her right to have her claim adjudicated on its merits. These motions should be brought and argued in a fashion commensurate with that level of seriousness.

[32] The nature and extent of the evidence required on these motions will vary from case to case. However, it is my view that the following general principles should be considered by any party bringing a motion to set aside a dismissal order:

• the evidence should include an affidavit directly from the plaintiff or its representative;

• the plaintiff’s affidavit should, at a minimum, contain evidence with respect to whether or not it was always his or her intention to proceed with the action and what instructions were provided to counsel in that regard;

• the evidence should include an affidavit from the lawyer who was responsible for the action and, if applicable, any former lawyers who may have had responsibility for the action in the past;

• direct evidence from counsel with carriage is to be preferred to evidence provided by an assistant or a clerk on an information and belief basis;

• counsel responsible for the progress of the action should avoid arguing the motion – rather, the motion should be argued by another lawyer from the same office or, if necessary, by other counsel appointed by the responsible lawyer or his or her insurer;

• counsel should be fully aware of the principles and factors applicable to such motions before preparing the supporting evidence;

• at the very least, the supporting evidence should be carefully organized and should clearly and specifically address the applicable Reid factors, along with any other relevant factors;

• statements made by deponents of affidavits should, wherever possible, be supported by documentary evidence;

• the evidence should include a complete chronology of all steps taken to advance the litigation;

• the evidence should identify the important witnesses and indicate whether or not they remain available to give evidence or whether their evidence has otherwise been preserved; and,

• the evidence should indicate whether or not important documentary and physical evidence has been preserved.

[33] Most of this is simple common sense and none of it should come as a surprise to the profession. See Domenic Bellacicco’s article, “Administrative Dismissal: Take it Seriously and Ask for (Our) Help”, LAWPRO Magazine, 8:1, (July, 2009) for a clear and concise summary of the perils associated with these motions.

Costs

[45] The plaintiffs sought no costs in any event of the motion. TIF has filed a bill of costs. If the plaintiffs and TIF cannot agree as to costs of the motion and the action themselves, then TIF shall deliver written costs submissions by December 9, 2019. The plaintiffs shall deliver responding submissions by December 23, 2019. There shall be no reply or oral costs submissions unless I direct otherwise. Costs submissions shall not exceed four pages, excluding any offers to settle or case law. They may be submitted directly to me by email.

MASTER TODD ROBINSON

DATE: November 26, 2019