COURT FILE NO.: CV-13-473656
MOTION HEARD: 2019 01 28
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Toronto Standard Condominium Corporation No. 2058
v.
Cresford Developments Inc., 33 Charles Street East Inc., Jablonsky, Ast and Partners and P.F. Ast, D.T. Prohaska, P. Eng., Katz Drago & Company Inc., D.J. Campbell Construction Limited, ArchitectsAlliance and Peter R. Clewes, Construction Control Inc., Able Engineering Inc. and S.B. Little, Ziehl-Abegg Inc., Global Tardif Elevator Manufacturing Group Inc. and CNIM Canada Inc.
BEFORE: MASTER R. A. MUIR
COUNSEL: Alfred J. Esterbauer, counsel to the lawyers for the plaintiff Allan R. O’Brien for the defendants Cresford Developments Inc. and 33 Charles Street East Inc.,
Max Shapiro and Justin Manoryk for the defendant CNIM Canada Inc.
Christian Breukelman for the defendant D.J. Campbell Construction Limited
Ryland MacDonald for the defendants Jablonsky, Ast and Partners and P.F. Ast
Colleen Mackeigan, student-at-law, for the defendant Ziehl-Abegg Inc.
REASONS FOR DECISION
[1] The plaintiff brings this motion pursuant to Rule 37.14 of the Rules of Civil Procedure, RRO 1990, Reg. 194 (the “Rules”) for an order setting aside the order of the registrar dated March 7, 2018 dismissing this action for delay.
[2] The defendants Cresford Developments Inc. and 33 Charles Street East Inc. (collectively, the “Developer”), CNIM Canada Inc. (“CNIM”), D.J. Campbell Construction Limited (“Campbell”) and Jablonsky, Ast and Partners and P.F. Ast (“Jablonsky”) are opposed to the relief sought. The other remaining defendants are unopposed or take no position on the motion.
BACKGROUND
[3] The plaintiff is a residential condominium corporation. The building is located at 33 Charles Street East near its intersection with Yonge Street in the City of Toronto. The defendant 33 Charles Street East Inc. purchased the land and developed the property by building a 46 storey residential building on the site (the “Project”). The defendant Cresford Developments Inc. was responsible for marketing this Project and various other condominium projects.
[4] CNIM was responsible for the supply and installation of elevators for the Project. Campbell was the construction manager for the Project. Jablonsky was a consulting engineer on the Project.
[5] The Project was completed in the fall of 2009. The condominium corporation was declared on March 22, 2010. Soon after the completion of the Project, the plaintiff began raising concerns with the Developer in relation to various building deficiencies.
[6] For the purposes of this motion, the most important of those deficiencies were the plaintiff’s concerns about the operation of the Project’s elevators. The issues involving the elevators resulted in extensive discussions and communications between the plaintiff and the Developer, which included the involvement of legal counsel and investigations and reports from outside consultants. The Developer stated on several occasions that it was committed to ensuring that the long term performance of the elevators would meet industry standards. These discussions and communications began in 2010 and continued on a more or less regular basis through 2011, 2012 and into 2013.
[7] The plaintiff issued its notice of action on February 6, 2013. The statement of claim was filed on March 8, 2013. The statement of claim appears to have been served on the defendants by July 2013. The claim seeks damages in the amount of $5,000,000.00.
[8] At the same time, the plaintiff was continuing its discussions with the Developer with a view to resolving some or all of the deficiency claims. For this reason, the plaintiff’s lawyer advised the defendants that statements of defence were not required at that time and while discussions with the Developer were ongoing. None of the defendants objected to this proposal at the time.
[9] Ultimately, the plaintiff settled all of the deficiency claims other than the issues related to the elevators. This partial settlement was agreed to in July or August 2014. The settlement agreement contemplated that the plaintiff would prepare and issue an amended statement of claim limiting its pleading to the elevator issues and only including those defendants necessary to litigate those claims.
[10] On September 15, 2014, the plaintiff’s lawyer wrote to all defendants advising that all claims, other than those in relation to the elevators, had been settled. This correspondence included a consent along with a draft notice of motion and fresh as amended statement of claim.
[11] Not all defendants provided their consent. The plaintiff’s lawyer then served a notice of discontinuance against some defendants but it was not accepted for filing by the court. Ultimately, counsel for the plaintiff determined that a motion on notice would be necessary. That motion was ultimately heard by Master Dash on January 23, 2015. The amended statement of claim was issued by the court on January 28, 2015. The amended statement of claim was served on February 3, 2015. The plaintiff’s lawyer continued the waiver of defence as he remained hopeful of resolving the remaining issues.
[12] It appears that very little was done to advance the litigation between February and December 2015, other than the exchange of a few insignificant pieces of correspondence. The plaintiff’s supporting affidavits include statements that settlement discussions were ongoing during this time period but there is little evidence to support those statements.
[13] The plaintiff’s lawyer wrote to the lawyer for the Developer on December 18, 2015. That letter was not sent to the other defendants. The letter includes a settlement proposal and included a deadline of January 4, 2016, failing which the plaintiff would demand statements of defence and proceed with the action.
[14] The lawyer for the Developer responded to this letter on January 22, 2016. The Developer rejected the plaintiff’s settlement proposal and stated that it would not unilaterally resolve the elevator issues with the plaintiff. The other parties needed to be involved. The Developer also suggested that the amended statement of claim needed to be reviewed and consideration given to whether all current defendants were necessary parties.
[15] The lawyer for the plaintiff then wrote to all defendants on February 8, 2016 demanding that statements of defence be delivered within 60 days. In March 2016, the lawyer for the Developer wrote to the plaintiff’s lawyer once again raising the issue of the proper parties to the litigation and summarizing at some length the various outstanding issues. The Developer wanted to hear from the plaintiff about those matters before finalizing its defence.
[16] In the following six months statements of defence were served by Jablonsky, CNIM, the Developer and Campbell. The Developer issued and then discontinued a third party claim. The plaintiff’s claim was discontinued against the defendants Construction Control Inc., Able Engineering Inc. and S.B. Little.
[17] The lawyer with carriage of the action on behalf of the plaintiff left the plaintiff’s law firm in August 2016. In October 2016, the file was taken over by another lawyer at the firm who then spent several weeks getting up to speed and getting the file organized. As well, a further offer to settle was served by the plaintiff in October 2016.
[18] In January 2017, the plaintiff’s lawyer wrote to the lawyer for the Developer proposing a timetable for the remaining steps in the action. The lawyer for the Developer responded on February 13, 2017 advising that due to trial commitments he may not be available to attend examinations for discovery until September 2017.
[19] The defendant Ziehl-Abegg Inc. served its statement of defence in April 2017 and thereafter served a request to admit to which the plaintiff responded. Jablonsky served a request to admit in July 2017.
[20] Over the course of the summer and early fall of 2017, counsel engaged in various discussions with respect to examinations for discovery. Unfortunately, it does not appear that Campbell’s lawyer was part of those exchanges. Ultimately, it was agreed that examinations for discovery would take place on December 21, 2017 and notices of examination were served.
[21] At the same time, counsel for the plaintiff was working on the plaintiff’s affidavit of documents. A draft affidavit of documents was served on November 30, 2017 and a sworn version was served on December 19, 2017. The plaintiff’s affidavit of documents was served on the lawyer for Campbell, although it appears that Campbell was not advised of the upcoming discovery. Jablonsky is the only defendant to serve an affidavit of documents.
[22] The examinations for discovery did not proceed on December 21, 2017. Counsel for the Developer was not available. Apparently the plaintiff’s lawyer overlooked correspondence from the lawyer for the Developer advising that he was unavailable but suggesting that the examinations proceed in any event. A representative of the plaintiff was present but was apparently not prepared to be examined twice. The parities in attendance that day ultimately agreed to adjourn and reschedule the examinations.
[23] Unfortunately, the plaintiff’s lawyer did nothing in the following months to reschedule the examinations for discovery. This action was dismissed by the registrar for delay on March 7, 2018. The dismissal order did not come to the attention of the lawyer for the plaintiff until early April 2018.
[24] The plaintiff’s lawyer then reported this matter to her liability insurer. On May 2, 2018 counsel to the lawyer for the plaintiff wrote to the defendants seeking their consent to an order setting aside the dismissal. When that consent was not forthcoming this motion was served in early July 2018 with an initial return date of August 22, 2018. It was later agreed that the motion should be heard as a long motion. It was ultimately argued before me for a full day on January 28, 2019.
APPLICABLE LAW
[25] The parties are in general agreement with respect to the test to be applied on motions for an order setting aside an administrative dismissal order. That test is well known and is summarized in the Court of Appeal’s decision in H.B. Fuller Company v. Rogers (Rogers Law Office) 2015 ONCA 173 at paragraphs 20-28. While the court must consider all relevant factors, four factors are of central importance. The court must consider the explanation for the delay, whether the deadline was missed due to inadvertence, any delay in bringing the motion to set aside the dismissal order and prejudice to a defendant in presenting its case at trial or as a result of reliance on the dismissal order.
[26] The onus is on the plaintiff. There is no burden on a defendant to explain the delay or to move the action forward. A plaintiff must demonstrate that there is no significant actual prejudice to a defendant. The principle of finality is also important. At some point a defendant is entitled to rely on the security of its position which will, in some cases, trump the plaintiff’s right to a determination of the dispute on the merits. See Prescott v. Barbon, 2018 ONCA 504 at paragraphs 30 and 36.
[27] The Court of Appeal’s decision in MDM Plastics Ltd. v. Vincor International Inc., 2015 ONCA 28 is also important. That decision appears to add a measure of refinement to the test. The court held that in most cases, the issue of prejudice figures largely in determining whether to set aside a dismissal for delay. See MDM at paragraph 24. The Court of Appeal emphasized that judges and masters must balance any prejudice to a defendant against the prejudice to a plaintiff from having the case dismissed. See MDM at paragraph 26.
[28] Ultimately, the court must take a contextual approach and consider all of the circumstances of each particular case and make the order that is just. See MDM at paragraph 12. In doing so, the court must balance the right of a party to a determination of his or her claim on its merits with the important principle that actions should be resolved in a timely and efficient manner. However, the preference in our system of civil justice is for a determination of disputes on their merits. See Fuller at paragraphs 25-27.
[29] These are the factors and principles I have considered and applied in determining the issues on this motion. Despite the presence of some periods of unexplained delay by the plaintiff in its conduct of this action, it is my view that it is just in the circumstances of this action that the dismissal order be set aside.
LITIGATION DELAY
[30] In my view, the plaintiff has adequately explained the litigation delay.
[31] I see no unexplained delay at the initial stages of this action. The plaintiff engaged in extensive discussions with the Developer both before and after the statement of claim was issued. The statement of claim was served in a timely manner. The plaintiff extended a waiver of defence. No defendant objected at the time. Within 12 months of service of the statement of claim, the plaintiff had secured a settlement of all issues other than the elevator claims. The plaintiff could have done a better job communicating with all of the defendants during this time period but the fact remains that it was working to advance this claim by resolving many of the matters in dispute.
[32] In the fall of 2014, the plaintiff began work on the amended statement of claim. Procedural difficulties delayed the issuing of the amended claim but the plaintiff was working to accomplish that task. The claim was amended in January 2015 and immediately served on the defendants.
[33] There is no explanation for the delay between February and December 2015. However, in my view this period of delay is not inordinate or unduly lengthy in the circumstances. It must be emphasized that the delay analysis on a motion of this nature should not descend into a microscopic dissection of the actions of a plaintiff and its lawyer on a week by week or month by month basis. Rather, the judge or master hearing the motion should consider the overall conduct of the action. See Carioca’s Import & Export Inc. v. Canadian Pacific Railway Ltd., 2015 ONCA 592 at paragraph 46.
[34] In December 2015 the plaintiff’s lawyer made a settlement offer to the Developer. The offer was rejected in January 2016. Statements of defence were demanded in February 2016. Several statements of defence were served and a third party claim issued in the following six months. The claim was also discontinued against three of the defendants. The plaintiff’s lawyer left his firm in the summer of 2016. New counsel took steps to get up to speed. A timetable was proposed in early 2017. The plaintiff prepared and served its affidavit of documents. Discoveries were arranged for December 2017. A further brief period of delay occurs in early 2018 but again it is my view that such delay was not inordinate or lengthy in the circumstances of this action.
[35] This is not a claim that has been ignored and relegated to the back of a filing cabinet for months or years on end. The evidence shows, with two relatively brief exceptions, that the contrary is true. While the progress has not been ideal, the plaintiff and its lawyers have made regular efforts to advance this claim. Parts of the claim were settled. The claim was amended and unnecessary parties were let out. The plaintiff has served its affidavit of documents and examinations for discovery were scheduled. The plaintiff’s lawyer could and should have done a better job communicating with the defendants, especially with Campbell’s lawyer. However, as I have said in several other decisions on motions such as this, the explanation for the delay need not be perfect. It simply needs to be adequate. See for example Lee v. AIM Health Group Ltd., 2016 ONSC 341 (Master) at paragraph 17. In my view, the plaintiff’s explanation is adequate. It has met this element of the test.
MOTION BROUGHT PROMPTLY
[36] In my view, this motion was brought in a timely manner. The plaintiff’s lawyer learned of the dismissal order in early April 2018. The matter was reported to her insurer and the defendants were asked for their consent in early May 2018. The plaintiff’s motion record was served in early July 2018 with an initial return date of August 22, 2018. In my view, a period of three months to prepare and deliver a motion record is reasonable in the circumstances of this action, given the complexity of the claim and the requirement for outside counsel to review the entire history of this multi-party proceeding. There has been no unreasonable delay in bringing this motion.
INADVERTENCE
[37] I am also satisfied that the set down deadline was missed due to inadvertence. The plaintiff’s lawyer has given evidence that the set down deadline had not been diarized. The president of the plaintiff condominium corporation has deposed that it was always the intention of the plaintiff to pursue this claim.
[38] The application of common sense also leads to the conclusion that the failure of the plaintiff to meet the set down deadline must have been inadvertent. The plaintiff was not ignoring this action at the time. The evidence is simply not consistent with an intention to abandon the claim. The plaintiff’s lawyer had prepared and served an affidavit of documents a few months before the dismissal. The plaintiff’s representative and its lawyer were prepared to be examined for discovery and attended an examiner’s office for that purpose. Within a few weeks of the dismissal order the plaintiff signaled its intention to bring a motion to set aside the order and then served its motion record soon thereafter.
[39] The conduct of the plaintiff and its lawyers, when viewed as a whole, supports a finding of inadvertence. The progress of this action has certainly not been ideal but overall the evidence shows, for the most part, a genuine intention to advance this claim. The failure to meet the set down deadline, or to seek an extension of time, must have been inadvertent. No other explanation makes sense in the circumstances.
PREJUDICE
[40] I am also satisfied that the plaintiff has met its onus with respect to the key factor of prejudice. The prejudice to the plaintiff is obvious. If the dismissal order stands it will be denied an opportunity to have its claim determined on the merits. Nevertheless, a plaintiff must also satisfy the court that the defendants will not be prejudiced.
[41] Where a limitation period has passed, as it has here, a presumption of prejudice arises and the onus rests with the plaintiff to rebut that presumption. The strength of this presumptive prejudice increases with the passage of time. See Wellwood v. Ontario (Provincial Police), 2010 ONCA 386 at paragraph 60.
[42] A plaintiff can overcome the presumption of prejudice by leading evidence that all relevant documents have been preserved, that key witnesses are available or that certain aspects of the claim are not in issue. See Wellwood at paragraph 62.
[43] In my view, the plaintiff has done so. First, I do not view the presumptive prejudice as particularly strong in the circumstances of this action. The registrar’s dismissal order was made on the fifth anniversary of the commencement of the action in accordance with Rule 48.14(1). This is not a case where a plaintiff had already been given additional time through a prior extension order. This motion was brought within a few months of the dismissal order being made.
[44] Second, I agree with the plaintiff that the issues in this action will be mostly determined through an examination of relevant documents and expert evidence. This is a construction deficiency claim. The matters in issue revolve around the design and installation of elevators. This dispute arises from the construction of a large multi-storey and relatively complex residential building. The Project involved sophisticated parties, including expert design professionals. The documentary record will be thorough and substantial. This is not a case where eyewitness testimony will be central to the outcome of the action.
[45] The plaintiff has prepared and served its affidavit of documents. While some defendants suggested that the affidavit of documents is deficient and certain documents may be missing, I note that no concerns were raised prior to the scheduled examinations for discovery or before the dismissal order was made. The Developer, CNIM and Jablonsky were prepared to proceed with discoveries in December 2017 based on the state of production at that time. It was only in response to this motion that any of the defendants began to take issue with the scope of the plaintiff’s production.
[46] The evidence in relation to the Developer is important and supports the plaintiff’s position on this motion. The Developer was provided with early notice of this claim. It retained legal counsel and outside engineering consultants to respond to the plaintiff’s concerns, even before this action was commenced. It conducted its own investigations. It has been represented by very capable counsel throughout. The Developer’s witness on this motion confirmed on cross-examination that it has retained its complete file in relation to the Project. Certain employees are no longer employed by the Developer but the evidence does not suggest that those employees are no longer available. In fact, it appears that they all continue to work in Canada. The Developer was the key player on this Project and all of its evidence has been preserved.
[47] The defendant Jablonsky has retained its documents and served its affidavit of documents. Jablonsky argued that it has been prejudiced by the fact that this claim has been hanging over its head for many years without resolution. It submits that its professional reputation has been harmed and business has been lost. These are simply vague and general allegations. There is no compelling evidence of lost business. In any event, this is not the kind of prejudice that would affect the ability of Jablonsky to defend itself at trial.
[48] The defendant CNIM has wound up its business in Canada. Just one employee remains. However, the departure of former employees and the possible loss or destruction of documents appears to have taken place between 2011 and 2013, long before any alleged delay by the plaintiff in pursuing this claim. CNIM has also commenced its own action for payment in relation to the Project, which remains outstanding. The elevator issues form part of the Developer’s defence to that action.
[49] The defendant Campbell was dissolved in January 2015. In its responding evidence Campbell suggested that it may be prejudiced as a result of its dissolution. However, its dissolution took place after this action was started and after the statement of claim had been served on Campbell. Moreover, the dissolution took place before any unexplained delay on the part of the plaintiff. Campbell and its insurer knew this claim was extant at the time it was dissolved and could have taken steps to protect its interests and its ability to defend itself.
[50] Finally, with respect to all of the defendants, it is important to note that a defendant cannot create prejudice by failing to do something it reasonably could or ought to have done. The failure of a defendant to retain relevant documents and contact information for important witnesses, conduct necessary inspections of physical evidence or initiate timely claims for contribution and indemnity, with the full knowledge that a claim is pending, is not something that can be blamed on a plaintiff’s delay. See Chiarelli v. Weins, 2000 3904 (ON CA), [2000] OJ No. 296 (CA) at paragraph 15.
[51] Certain defendants raised the issue of maintenance and repair work to the elevators. They suggested that relevant physical evidence may be missing or destroyed. However, there is no evidence to suggest that any defendant was denied an opportunity to inspect the elevators. A defendant may also choose to plead the defence of spoliation if it believes important evidence has been lost or destroyed.
[52] I have therefore concluded that the plaintiff has met its onus with respect to prejudice. This element of the test has been satisfied.
FINALITY
[53] The defendants argued that the principle of finality is important and applicable given the circumstances of this motion. I certainly agree that finality may be an important consideration on a motion to set aside an administrative dismissal order. This is made clear by the decision of the Court of Appeal in Prescott cited above. However, there is simply no basis to conclude that the defendants in this action would have placed any reliance on the dismissal order and the security of their legal position. The plaintiff’s affidavit of documents was served in December 2017. The Developer, CNIM and Jablonsky agreed to examinations for discovery in December 2017. This action was dismissed in March 2018. By early May 2018 all defendants knew the plaintiff would be seeking an order setting aside the dismissal. There is simply no significant delay or lengthy period of inaction that would give rise to a sense of finality.
[54] In contrast, the plaintiff in Prescott waited for more than two years to bring a motion to set aside the dismissal order. See Prescott at paragraph 40. In other cases where the finality principle has been an important consideration, the delay in bringing a motion to set aside a dismissal order has been of a similar or greater length. See for example Wellwood at paragraph 15 (17 and 27 months) and Marché D’Alimentation Denis Thériault Lteé v. Giant Tiger Stores Ltd., 2007 ONCA 695 at paragraph 40 (60 months). The circumstances of this action are very different.
CONCLUSION
[55] The plaintiff has adequately explained most of the delay with this action. Certainly, the plaintiff’s lawyer should have done a better job communicating with the parties. However, the periods of unexplained delay are not lengthy or frequent. The plaintiff has demonstrated that the set down deadline was missed due to inadvertence and this motion was brought promptly. Importantly, the plaintiff has met its onus with respect to the key consideration of prejudice.
[56] When deciding motions of this nature, the court must apply a contextual analysis and consider all relevant factors. The court must assess those relevant factors and then take a step back and determine what order would do justice in all of the circumstances.
[57] For the reasons set out above, I have concluded that it is just in the circumstances of this action that the dismissal order be set aside.
ORDER
[58] I therefore order as follows:
(a) the order of the registrar of March 7, 2018 is hereby set aside;
(b) the parties shall confer and attempt to agree on a form of discovery plan and timetable;
(c) to the extent that this action has been settled against some of the remaining defendants, the plaintiff shall provide the court with an executed consent and draft order for my signature;
(d) if the parties are unable to resolve any issues in relation to the discovery plan and timetable or the issue of the costs of this motion, they shall provide the court with brief written submissions by March 8, 2019; and,
(e) all submissions may be sent directly to me by email.
[59] I wish to thank all counsel for their very helpful submissions and for the professional manner in which this motion was argued.
Master R.A. Muir
DATE: 2019 02 04