COURT FILE NO.: CV-12-464488
MOTION HEARD: 2019 02 06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Bank of Montreal
v.
Newman & Sversky LLP
BEFORE: MASTER R. A. MUIR
COUNSEL: Alfred J. Esterbauer, counsel to the lawyers for the plaintiff Sandra E. Dawe for the defendant
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 April 17, 2018 dismissing this action for delay. This motion was originally brought as a motion for a status hearing pursuant to Rule 48.14(5). However, the registrar made the April 17, 2018 dismissal order while this motion was pending. The defendant is opposed.
BACKGROUND
[2] The plaintiff provided credit facilities to a vehicle and equipment leasing business known as Carnival National Leasing Limited ("Carnival"). The defendant was Carnival's external auditor. The plaintiff's claim against the defendant is based on negligence and negligent misrepresentation. The plaintiff alleges that the defendant failed to accurately present Carnival's financial position. The plaintiff alleges that the defendant failed to meet the standard of care required of a professional accountant when conducting an audit. The plaintiff relied on the defendant to its detriment. The plaintiff seeks $5,000,000.00 in damages. The defendant denies the plaintiff's allegations.
APPLICABLE LAW
[3] In my view, the test on a motion to set aside an administrative dismissal order is the applicable test on this motion. This court has made an order dismissing this action for delay. The order remains in place, despite the circumstances under which it was made. Although there may be subtle differences in the test on a status hearing as opposed to a motion to set aside a dismissal order, the fundamental exercise is the same. There must be a weighing of all relevant factors in order to reach a just result. See Kara v. Arnold, 2014 ONCA 871 at paragraph 13.
[4] The test on a motion to set aside an administrative dismissal order 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. The onus is on the plaintiff. 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 finality of the dismissal order.
[5] In MDM Plastics Ltd. v. Vincor International Inc., 2015 ONCA 28, the Court of Appeal held that in most cases the issue of prejudice is the key consideration and 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 its case dismissed. See MDM at paragraph 26.
[6] 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 its claim on the 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.
[7] These are the factors and principles I have considered and applied in determining the issues on this motion. Despite Ms. Dawe's very able argument and the presence of a period 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
[8] There was no delay with this action at the early stages. The statement of claim was issued on September 28, 2012. A statement of defence was delivered in early 2013. The plaintiff's unsworn affidavit of documents comprised of more than 1,200 productions was served in June 2013. The defendant's affidavit of documents was served in July 2013, also disclosing more than 1,200 documents.
[9] Lengthy examinations for discovery took place over six days in December 2013. The plaintiff gave numerous undertakings. It took a considerable period of time for the plaintiff to answer those undertakings apparently due to the complexity of this action, the nature of the undertakings and the receivership of Carnival. The plaintiff eventually answered its undertakings in July and August 2015.
[10] The defendant also gave undertakings at discovery. Importantly, it needed a similar period of time to answer its undertakings. It did so by September 2015.
[11] Twenty months is a long period of time for a plaintiff to answer its undertakings. However, this delay does not appear unreasonable in the circumstances of this relatively complex action and given the time taken by the defendant to answer its undertakings.
[12] Follow-up examinations then took place in November 2015. Additional undertakings were given on the follow-up examinations. The defendant answered its undertakings from the follow-up examinations in July 2016.
[13] There was some delay by the plaintiff at this point. Between March 2016 and October 2016 there was periodic communication between the plaintiff's lawyer and the defendant's lawyer, mostly initiated by Ms. Dawe. Despite those occasional communications, however, there was no visible effort made by the plaintiff to advance the litigation at that time.
[14] It appears that much of this delay was a result an internal shift of responsibility for this matter within the plaintiff's operations in early 2016. It appears that the plaintiff also undertook a full internal review of the substance of the claim at that time.
[15] Unfortunately, it appears that little was done to communicate with the defendant during this time period. There was no communication between the plaintiff's lawyer and the defendant's lawyer between October 2016 and the service of this motion in November 2017. The plaintiff's outstanding undertakings were not answered until the evening before this motion was argued, more than three years after the follow-up examinations.
[16] I do not accept this explanation for delay as being adequate for an organization as sophisticated as the plaintiff. This is not a situation where the plaintiff is largely in the hands of his or her lawyer as with a personal injury matter, for example. This plaintiff is a frequent litigator with many thousands of employees. It obviously chose to prioritize other matters over this one. The answers to approximately 20 undertakings delivered on the evening of February 5, 2019 do not appear to be particularly voluminous or complex. If the plaintiff was having difficulty answering undertakings within a reasonable period of time it should have assigned the necessary resources and personnel to address that situation. The plaintiff's affidavit evidence suggesting a "scarcity of resources" is simply not an acceptable explanation for this plaintiff within the context of this proceeding.
[17] In my view, there was no delay with this action from the issuance of the statement of claim to the completion of the follow-up examinations. However, the plaintiff's delay from early 2016 to the fall of 2017 has not been adequately explained.
INADVERTENCE
[18] It is my view that the five year set down deadline was missed due to inadvertence. The plaintiff's lawyer has given evidence that the deadline was not diarized. The plaintiff's account manager has given evidence that it was always the plaintiff's intention to pursue this claim. The plaintiff's witnesses were not cross-examined. The actions of the plaintiff and its lawyer in November 2017 support this conclusion. The motion for a status hearing was brought less than two months after the five year deadline and as soon as the plaintiff's lawyer realized the date had passed. This supports a finding of an intention to proceed with the claim. In my view, the failure to meet the deadline was inadvertent.
MOTION BROUGHT PROMPTLY
[19] This motion was also brought promptly. As stated above, the motion was brought before the dismissal order was made and only two months after the five year deadline. Although, it has taken a considerable period of time to have this motion heard, it appears that this was not a result of any unilateral delay on the part of the plaintiff.
PREJUDICE
[20] Importantly, there is simply no evidence of prejudice to the defendant. There has been voluminous production by both sides. Extensive oral discovery has taken place. Evidence has been preserved and witnesses are available. The trial of this action will primarily involve an examination of Carnival's financial documents and expert evidence. Documents are available and have been produced. The defendant has not provided any evidence of actual prejudice. Fading memories is not a significant concern given the documentary nature of this claim. The plaintiff has rebutted any presumption of prejudice. The defendant will not be significantly prejudiced in its ability to defend itself at trial. 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. Prejudice is the key consideration and the plaintiff has met this part of the test.
FINALITY
[21] I do not view the principle of finality as particularly persuasive on the facts of this motion. While there was unexplained delay between early 2016 and the fall of 2017, this action remained extant for that entire period of time. This is not a situation where a defendant has obtained a measure security in its legal position on the basis of a dismissal order. Moreover, the motion for a status hearing was brought soon after the five year deadline had passed.
[22] This is also not a situation of extended delay where a plaintiff has received prior extensions of time. There is no evidence from the defendant itself of any reliance on the plaintiff's delay or reliance on the expiry of the five year set down deadline.
[23] In my view, the authorities relied on by the defendant are not applicable to the circumstances of this motion. In 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544, the plaintiff had done nothing for 18 months after being given a "lifeline" at a prior status hearing. See 1196158 Ontario Inc. at paragraph 25. Southwestern Sales Corporation Limited v. Spurr Bros. Ltd., 2016 ONCA 590 involved construction lien actions and a related construction lien breach of trust action. The defendants had posted security for the claims advanced by the plaintiff. See Southwestern Sales Corporation Limited at paragraphs 21 and 22. I would also note that lien actions under what was then the Construction Lien Act, RSO 1990, c. C.30 are subject to strict statutory time limits, including a two year set down deadline that the court has no power to relieve against. Finally, Marché D’Alimentation Denis Thériault Lteé v. Giant Tiger Stores Ltd., 2007 ONCA 695 involved a situation where the motion to set aside the dismissal order was brought five years after order was made. See Marché at paragraph 40. The facts before me on this motion, as set out above, are very different.
CONCLUSION
[24] The plaintiff has failed to adequately explain the delay with this action between early 2016 and the fall of 2017. The plaintiff's lawyer should have done a better job communicating with the defendant's lawyer during that time. However, much was accomplished in advancing this claim between September 2012 and November 2015. The plaintiff has also 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.
[25] When deciding motions of this nature, the court must apply a contextual analysis and consider all relevant factors. It is not necessary for a plaintiff to satisfy all of those factors. The court must assess the factors from a contextual perspective and then take a step back and determine what order would do justice in all of the circumstances.
[26] 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
[27] I therefore order as follows:
(a) the order of the registrar of April 17, 2018 is hereby set aside;
(b) the parties shall confer and attempt to agree on a timetable for the remaining steps in this action;
(c) if the parties are unable to resolve the issue of the costs of this motion, including costs thrown away, they shall provide the court with brief written submissions by March 15, 2019; and,
(d) all submissions may be sent directly to me by email.
Master R.A. Muir
DATE: 2019 02 07