Court File and Parties
COURT FILE NO.: 12-37462 DATE: 2020-02-20 ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
Marino Rakovac, 1255717 Ontario Ltd., 1255707 Ontario Ltd. and 1290976 Ontario Ltd. Plaintiffs
- and -
The Corporation of the City of Hamilton Defendant
COUNSEL: Cliff Lloyd, for the Plaintiffs Grant Brailsford, for the Defendant
HEARD: February 6, 2020 at Hamilton
REASONS FOR DECISION
THE HONOURABLE JUSTICE L. C. SHEARD
[1] The plaintiffs move to set aside the registrar’s order of February 19, 2019 dismissing the plaintiffs’ action for delay (the “Dismissal Order”). The plaintiffs’ notice of action was issued on October 5, 2012 and their statement of claim filed on November 2, 2012.
[2] As drafted, the claim is for damages and compensation of $5,000,000. The claim relates to the plaintiffs’ stated intention to develop certain lands (the “Lands”) dating back to 1997 and the plaintiffs’ dealings with the defendant (the “City”), concerning the Lands from and after 1989. In their motion materials and in oral argument, the plaintiffs state that they seek to re-draft their claim and to limit their claim to damages for breach of an agreement they assert was made with the City in 2005.
[3] The plaintiffs acknowledge that some of the claims raised in their statement of claim relate to the City’s incomplete expropriation of the Lands and that such claims are not within the jurisdiction of this court but must be brought before the Land Planning Appeals Tribunal (“LPAT”).
[4] The plaintiffs’ delay in pursuing their claim is a central issue on this motion. The plaintiffs seek to blame the City for the plaintiffs’ alleged inability to pursue their claim. In his Affidavit sworn November 17, 2019 filed on behalf of the plaintiffs, Marino Rakovac (“Rakovac”), a personal plaintiff and a director and officer of the three plaintiff corporations, alleges that the City has deliberately suppressed documentation that is vital to the plaintiffs’ case and is “purposely thwarting justice by intentionally supressing information”. Rakovac goes on to accuse counsel for the City of dishonesty and false assertions.
[5] I do not accept those allegations. They are not supported by the evidence put forth on this motion and, to an extent, are contradicted in the same Affidavit, in which Rakovac states that in May 2016, the City Records and Information Management Clerk assisted him to find Report 05-012.
[6] On this motion, the plaintiffs assert that Appendix “F” to Report 05-012 constitutes the agreement they had with the City (the “Alleged 2005 Agreement”), the breach of which would be the core of their proposed re-drafted claim against the City.
[7] The City disputes the plaintiffs’ allegations. The City submits that the plaintiffs have failed to meet the requisite test to set aside the Dismissal Order and ask that the plaintiffs’ motion be dismissed.
Overview
[8] The plaintiffs rely on the Rakovac’s Affidavits sworn November 4 and 17, 2019 and January 15, 2020 (the “2020 Affidavit”) and the Affidavit of Pawan Sharma, sworn November 12, 2019. The City relies on the Affidavit of Maria Orgera sworn December 6, 2019 together with the Order of Lococo J. made May 22, 2018 requiring the parties to exchange further and better affidavit of documents (“AOD”).
[9] Based on the material before me on the motion, I understand the following background facts:
i) in 1997 the plaintiffs bought the Lands, then used for an auto-wrecking business, with the intention of developing the Lands for multi-residential use;
ii) the proposed development required an amendment to the City’s Official Plan as well as clean-up and soil remediation of the Lands;
iii) when the plaintiffs purchased the Lands, there were substantial realty tax arrears, penalties and interest owing on the Lands;
iv) in and after January 1998, the plaintiffs corresponded with and met with various City staff members respecting the development of the Lands;
v) the plaintiffs claim that they purchased the Lands “based upon assurances” of City staff that the re-zoning and development would be “timely and favourably supported, subject to compliance with the City’s plan” to re-zone the Lands from industrial/commercial to medium-density residential apartments;
vi) the statement of claim sets out a history of the plaintiffs’ alleged dealings with various City staff members from 1998 to 2010;
vii) in its statement of defence dated October 29, 2013, the City asserts, among other defences, that the plaintiffs’ claims are statute-barred.
[10] The evidence on the motion disclosed the following chronology of events related to this litigation:
2012 October 5 Notice of Action.
2012 November 2 Statement of Claim.
2013 October 29 Statement of Defence.
2015 January 21 Plaintiffs execute affidavit of documents.
2016 April Plaintiffs deliver a draft discovery plan.
2016 May 9 City staff provides plaintiffs with Report 05-012, including Appendix “F” thereto, which, the plaintiffs allege, constitutes the Alleged 2005 Agreement.
2016 May 25 City executes affidavit of documents.
2016 July 5 Plaintiffs commence an examination for discovery of a representative of the City. Examination is terminated at 11:24 a.m. because plaintiffs’ counsel is unwell.
2017 December 6 Counsel for the City advises plaintiffs’ counsel that it has been more than five years from the notice of action and that the plaintiffs’ claim is at risk of being dismissed.
2017 November Plaintiffs move for a further and better AOD from the City.
2018 May 14 City moves for a further and better AOD from the plaintiffs.
2018 May 22 Motions are heard. Lococo J. orders each party to deliver a further and better AOD within 45 days.
2018 July 5 City delivers its further and better AOD as per the Lococo Order.
2019 February 19 Dismissal Order is issued.
2019 March Plaintiffs’ lawyer learns of the Dismissal Order.
2019 November Plaintiffs bring this motion to set aside the Dismissal Order.
Issues
i. Whether the court should exercise its discretion to set aside the Dismissal Order ii. If the Dismissal Order is set aside, whether a timetable should be imposed
Legal Principles
[11] Rule 37.14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 authorizes the court to set aside a registrar’s order on such terms as are just.
[12] In exercising its discretion on a motion brought to dismiss an action for delay, a court must “balance the plaintiff’s interest in having a hearing on the merits with the defendant’s interest in having the matter resolved in an expedient and time-efficient manner.” Faris v. Eftimovski, 2013 ONCA 360, 363 D.L.R. (4th) 111, at para. 24.
[13] The criteria relevant to the court’s consideration of a motion to set aside a registrar’s dismissal are known as the four Reid factors: Jadid v. Toronto Transit Commission, 2016 ONCA 936, 2016 CarswellOnt 19661, at para. 9, citing Reid v. Dow Corning Corp. [2001] O. J. No. 2365, 11 C.P.C. (5th) 80 (S.C.), at para 41, rev’d on other grounds [2002] O.J. No. 3414, 48 C.P.C. (5th) 93 (Div. Ct.)](https://www.canlii.org/en/on/onscdc/doc/2002/2002canlii41040/2002canlii41040.html).
(1) Explanation of the litigation delay: The plaintiff must adequately explain the delay in the progress of the litigation from the institution of the action until the deadline for setting the action down for trial. The plaintiff must show that steps were taken to advance the litigation toward trial, or if such steps were not taken, to explain why;
(2) Inadvertence in Missing the Deadline: The plaintiff must lead satisfactory evidence to explain that they always intended to set the action down for trial within the time limits, but failed to do so through inadvertence, and, as a result, the dismissal order was made;
(3) Motion to be brought Promptly: The plaintiff must demonstrate that it moved to set aside the dismissal order as soon as it came to the plaintiff’s attention; and
(4) No Prejudice to the Defendant: The plaintiff must convince the court that the defendants have not demonstrated any significant prejudice in presenting their case at trial as a result of the plaintiff’s delay or as a result of steps taken following the dismissal of the action.
[14] None of the Reid factors has automatic priority over any other. As stated in Jadid, at para. 12:
The Reid test provides a structured approach to reconciling the principle that civil actions should be decided on their merits, with the principle that the public interest is served by enforcing procedural rules that promote the timely and efficient resolution of disputes (1196158 Ontario Inc. v. 62474013 Canada Ltd., 2012 ONCA 544, 112 O.R. (3d) 67, at para. 18).
Explanation of the Litigation Delay
[15] The onus is on the plaintiffs to demonstrate an acceptable explanation for delay in prosecuting their action. DK Manufacturing Group Ltd. v. MDF Mechanical Limited, 2019 ONSC 6853, 2019 CarswellOnt 19404, at para. 6.
[16] The affidavits filed by the plaintiffs on this motion fail to offer any acceptable explanation for
a. the plaintiffs’ delay in prosecuting their claim between 2012 and 2016, at which time, affidavits of documents were exchanged;
b. the plaintiffs’ failure to complete their examination for discovery of the City after the examination commenced on July 5, 2016 was abruptly terminated by reason of the ill health of the plaintiffs’ (then) lawyer;
c. the delay between July 2016 and November 2017, when the plaintiffs brought a motion for a further and better AOD from the City;
In the 2020 Affidavit, the plaintiffs do refer to their efforts to bring “the matter” before a mediator of the OMB Negotiations Board, which, they state, was not agreed to by the City. It is unclear as to what “matter” the plaintiffs refer. If the reference is to the plaintiffs’ choice to pursue an alternate avenue of legal recourse for the claims raised in this action, that conduct is consistent with a finding that the plaintiffs were choosing not to pursue this action. In any event, the plaintiffs’ unilateral choice to look to another forum for relief does not offer an acceptable explanation for their failure to pursue this action;
d. the plaintiffs’ failure to deliver a further and better AOD as they were ordered to do on May 22, 2018 by Lococo J.
I have considered the plaintiffs’ evidence on this point, which lacks proof that they complied with the order of Lococo J. I find as a fact, that the plaintiffs did not deliver a further and better AOD.
[17] In the 2020 Affidavit, the plaintiffs seek to blame the City for their delay. However, at paragraph 24, Rakovac asserts that the plaintiffs have the “major documents relevant to making” their case that he “uncovered from City archives and other sources.”
[18] The other “major documents” identified by Rakovac are listed in Exhibit “U” of the 2020 Affidavit. These date from 1989 to 2013. Given the age of these documents and Rakovac’s statement that he uncovered them from City archives without disclosing the dates on which he obtained them, does not assist the plaintiffs to explain their delay in prosecuting their claim. Rather, that these documents date back over 20 years supports an inference that the plaintiffs have not been prosecuting their claim with reasonable diligence.
[19] Even if I were to accept the plaintiffs’ assertions that the City did not comply with its disclosure obligations, which is not made out on the evidence before me, the plaintiffs do not offer any explanation for failing to pursue production of the documentation and information they were seeking. Likewise, the plaintiffs’ failure to deliver a further and better AOD, despite being ordered to do so, is a clear example of the plaintiffs’ inaction in prosecuting their claim.
[20] In argument on the motion, counsel for the plaintiffs submitted that the plaintiffs’ proposed re-drafted statement of claim would be based on the Alleged 2005 Agreement, which was obtained by the plaintiffs from the City in May 2016.
[21] In oral submissions, counsel for the plaintiffs acknowledged that there is no signed agreement per se, and that Appendix “F” to Report 05-012 found at Exhibit “F” to the 2020 Affidavit comprises the plaintiffs’ evidence regarding the alleged agreement upon which the plaintiffs seek to sue.
[22] The applicable entry at Appendix “F” to Report 05-012 reads, in part: “negotiation with new owner to W.O. taxes. Council approval December 15, 2004.” Under the heading “Purchasers Required Actions” it reads, in part, “Scrap to be removed from site. Multi-townhouse development planned depending on city getting a zoning changed. Remediation costs estimated at $1.1 million. The property has been in limbo since 99 re-zoning change since new owners took possession.”
[23] At Appendix “F” under the heading “Result” it reads, in part: “Deal pays all of the outstanding taxes in arrears since the early 80s. Scrap Yard is being cleaned up. If zoning gets changed then the soil will be remediated with the assistance of the Brownfield ERASE program and --- residential development will take place.”
[24] Rakovac acknowledges that the plaintiffs had received a copy of the Alleged 2005 Agreement in May 2016, prior to the plaintiffs’ commencement of the examination of a City representative on July 5, 2016. What is not adequately explained by the plaintiffs is why, in the seven years since the action was commenced, the plaintiffs have been unable to proceed with their claim, that they now say is limited to damages for breach of the Alleged 2005 Agreement.
[25] The plaintiffs accuse the City of withholding documents even though they had this key document in their hands since May 2016. The plaintiffs offer no acceptable explanation for why they never sought to complete their examination of the City, even after they had received the City’s further and better AOD. Without determining if there is validity to the plaintiffs’ allegation that the City has not disclosed all relevant documents, the plaintiffs have not shown that they have availed themselves of the available legal recourse. Merely complaining about lack of production without taking meaningful steps to address it - such as conducting an examination for discovery - is not an acceptable explanation for the plaintiffs’ failure to move forward with their claim.
[26] In fact, the plaintiffs’ evidence suggests that there may be a different reason for the plaintiffs’ inaction on this claim. At paragraph 29 of the 2020 Affidavit, Rakovac states that the plaintiffs recently discovered that the LPAT has jurisdiction over their claim for damages related to the contemplated expropriation and “may or may not have jurisdiction over the detrimental reliance/contractual issue as outlined in the claim against the City.”
[27] This “recent” discovery of the proper forum within which to pursue their claims undermines the plaintiffs’ arguments that the City is to blame for the delay. The plaintiffs’ claim was issued over seven years ago and the time for determining proper forum and the nature and substance of their claims is long past. Neither the City nor any defendant should have to wait patiently for seven years until the plaintiff determines the nature of its claim. If it is that the plaintiffs’ claim is to be re-drafted based on the Alleged 2005 Agreement, the plaintiffs have little excuse for failing to pursue that claim, given that they have had that document since May 2016.
[28] Taken as a whole, the plaintiffs’ evidence fails to offer an acceptable explanation for the delay and, in fact, calls into question the legitimacy of much of the plaintiffs’ claim. Therefore, I conclude that the plaintiffs have not satisfied the first Reid factor.
Inadvertence in Missing the Deadline
[29] The uncontradicted evidence of the City is that, 13 months before the Dismissal Order, counsel for the City alerted plaintiffs’ counsel to the impending deadline and the risk of an administrative dismissal. The plaintiffs do not explicitly assert that the five-year deadline was missed through inadvertence; they imply that the fault lies, in part, with their lawyer, Ron E. Folkes (“Folkes”).
[30] At paragraph 5 of his November 4, 2019 Affidavit, Rakovac states that Folkes “has suffered from repeated and serious health issues, which have impacted his ability to function effectively and diligently as I would have preferred. As a result, we have recently retained Mr. Cliff Lloyd as a corporate counsel, with a limited retainer to assist Mr. Folkes in this matter.” This is the extent of the plaintiffs’ evidence that might be seen to address the second Reid factor.
[31] The plaintiffs did not put forth an affidavit from Folkes. As Mr. Lloyd appeared for the plaintiffs on this motion, there was no issue of Folkes appearing on his own affidavit. The absence of evidence from Folkes is problematic: he has acted for the plaintiffs on this action for a number of years and would be in a position to explain the litigation delay and, of course, why the deadline was missed. Instead, the plaintiffs put forth an affidavit from Pawan Sharma, who identifies himself as an associate lawyer employed by Folkes Legal Professional Corporation. The Sharma Affidavit makes no mention of Folkes’ illness and does not address the litigation delay or how the deadline came to be missed or, in fact, any events that pre-dated the Dismissal Order. Rather, the Sharma Affidavit speaks to events that post-date the Dismissal Order, evidence that is relevant only to the third Reid Factor. As will be seen below, the City does not rely on the third Reid factor.
[32] In oral submissions, Mr. Lloyd advised the court that he had assumed carriage of this matter from Folkes, and that Folkes was unwilling to swear an affidavit. Mr. Lloyd stated that he was further hampered in his ability to address the issues on this motion because the Folkes’ law firm had imposed a solicitor’s lien over the plaintiffs’ litigation file.
[33] First, those submissions are not evidence. Second, they are inconsistent with the sworn evidence of Rakovac on this motion that Mr. Lloyd is on a limited retainer to assist Folkes. Third, on the original motion record, Folkes Legal Professional Corporation is shown as the lawyers for the plaintiffs, and, presumably, had carriage of the motion at that time and some input into the evidence to be put forth. Finally, Mr. Lloyd’s submissions do not explain why the Sharma Affidavit does not mention Folkes’ illness or offer any explanation for the plaintiffs’ delays in pursuing their claim prior to 2019.
[34] In the result, I conclude that the plaintiffs have not established that the deadline was missed through inadvertence and have failed to satisfy the second Reid factor.
Motion to be Brought Promptly
[35] The City does not rely on the third Reid factor and for the purposes of this motion, I will assume that the plaintiffs have satisfied the third Reid factor.
Prejudice to the Defendant
[36] Under this fourth Reid factor, it must be established that any prejudice to the defendants has been caused by the delay; prejudice that exists regardless of the plaintiffs’ delay is not relevant.
[37] The evidence of delay attributable to the plaintiffs is set out above and need not be repeated.
[38] The plaintiffs bear the onus of showing that there is no noncompensable prejudice to the defendants, if their action is allowed to proceed to trial. There is no requirement that the City adduce evidence of actual prejudice. Prejudice can be inferred by the passage of time. Jadid, at para. 16, citing with approval from 1196158 Ontario Inc. v. 62474013 Canada Ltd., 2012 ONCA 544, 112 O.R. (3) 67, at para. 32.
[39] As stated by the Court of Appeal in Langenecker v. Sauve, 2011 ONCA 803, 286 O.A.C. 268, at para. 11:
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.
[40] The plaintiffs respond to the inference in Langenecker that their delay will cause prejudice, by asserting that, when re-drafted, their claim will be limited to damages for breach of the Alleged 2005 Agreement and that theirs will be primarily a “documents case” with little or no need to rely on live witnesses. Notwithstanding the plaintiffs’ assertions that they will re-draft their claim, on this motion, the plaintiffs did not produce a copy of their proposed “re-drafted” statement of claim.
[41] Throughout his affidavits, Rakovac makes allegations against or about numerous City staff members and officials. That is one reason why it is difficult to accept the plaintiffs’ contention that this is primarily a “documents” case.
[42] A second reason is that, while the plaintiffs’ may view their case to be a “documents” case, the “documents” date back decades and include various City Reports and Recommendations, which will require explanation and interpretation. Even if the authors of those reports or those who might have had some involvement in the events of the time could be found and are still able to give evidence, it is reasonable to infer that their memories will have faded or failed, to the prejudice of the City.
[43] The City has been defending the plaintiffs’ claim based on the pleadings as drafted. Not only have the plaintiffs not prosecuted the claim they brought in 2012, but they now seek to re-draft their claim, and to rely on documents that date back to 1989. It is impossible to imagine how the City will not be prejudiced by the plaintiffs’ delay.
[44] The court must consider all the circumstances of the case when evaluating the strength of the presumption of prejudice. DK Manufacturing Group Ltd., at para. 29. In the circumstances here, I conclude that the presumption of prejudice to the City is very strong.
[45] I find that the plaintiffs have failed to convince the court that the City has not demonstrated any significant prejudice in presenting its case at trial, as a result of the plaintiffs’ delay in prosecuting their claim and, more fundamentally, in identifying and pleading the claim they ask the City to meet.
Disposition
[46] For the reasons set out above and having weighed all relevant considerations, I determine that the just result in the circumstances of this case is to dismiss the plaintiffs’ motion.
[47] In light of the aforesaid, I find it unnecessary to consider the second issue.
Costs
[48] The City is presumptively entitled to its costs of this motion and of the action. If the parties cannot agree on costs, then the City may make written submissions as to costs within 14 days of the release of these reasons. The plaintiffs shall have 7 days after receipt of the City’s costs submissions to deliver their responding submissions.
[49] The parties’ costs submissions are not to exceed three pages, together with a costs outline, and copies of any applicable offers to settle.
[50] The costs submissions are to be forwarded to me at my chambers at the Sopinka Court House. If no submissions are received within the timelines set out above, the parties will be deemed to have settled the issue of costs as between themselves.