Brook Restoration Ltd. v. Metropolitan Toronto Condominium Corporation No. 677

COURT FILE NO.: CV-14-515828

MOTION HEARD: 20200305

REASONS RELEASED: 20200517

SUPERIOR COURT OF JUSTICE – ONTARIO

IN THE MATTER OF THE CONSTRUCTION LIEN ACT,

R.S.O. 1990, c. C.30, as amended

BETWEEN:

BROOK RESTORATION LTD.

Plaintiff

• and-

METROPOLITAN TORONTO CONDOMINIMUM CORPORATION NO. 677

Defendant

BEFORE: MASTER M.P. McGRAW

COUNSEL: B. Kuchar

Email: bkuchar@weirfoulds.com

-Counsel for the Plaintiff Brook Restoration Ltd.

A. Zweig

Email: arnold@azweiglaw.com

-Counsel for the Defendant Metropolitan Toronto Condominium Corporation No. 677

REASONS RELEASED: May 17, 2020

Reasons for Endorsement

I. Introduction

[1] The Plaintiff Brook Restoration Ltd. (“BRL”) brings a motion under Rule 48.14 (5) for a status hearing seeking an extension of the date to set this action down for trial and a timetable.

[2] After BRL brought this motion, the Registrar issued an Order Dismissing Action for Delay dated January 6, 2020 (the “Dismissal Order”). BRL submits that the Dismissal Order should be set aside as it was issued in error and that this motion should proceed as a status hearing.

[3] The Defendant Metropolitan Toronto Condominium Corporation No. 677 (the “Defendant” or “MTCC 677”) opposes all relief sought by BRL.

II. The Parties, the Project and History of The Proceedings

[4] BRL was the general contractor for a restoration project (the “Project”) at 86 Gerrard Street East in Toronto (the “Property”). The Defendant is the registered owner of the Property.

[5] On October 24, 2014, BRL registered a construction lien on title to the Property in the amount of $97,104.29 (the “Lien Claim”). On November 7, 2014, BRL perfected the Lien Claim by commencing this action by Statement of Claim under the Construction Lien Act (Ontario) and registering a Certificate of Action against title to the Property. In its Statement of Claim, BRL claims $243,890.12 which includes the Lien Claim and a previous lien claim of $146,785.43 registered against the Property on September 26, 2014 (collectively, the “Lien Claims”). The Defendant delivered its Statement of Defence and Counterclaim on December 16, 2014.

[6] On February 6, 2015, Defendant’s counsel cross-examined Geoff Grist, the principal of BRL, on the Lien Claims. Pursuant to the Order of Master Albert dated March 11, 2015, granted on consent, the Lien Claim was discharged, the Certificate of Action was vacated and this action was ordered to proceed under the Simplified Procedure (the “Discharge Order). The Discharge Order also released security posted by the Defendant for the Lien Claims under the Orders of Master Albert dated December 9, 2014 and Master Short dated January 22, 2015 (the “Security Orders”).

[7] On February 24, 2015, the Foundation for the Study of Objective Art (“FSO”), owner of the building adjacent to the Property, commenced an action against BRL and MTCC 677 claiming $55,000 for alleged damage to its building caused by work on the Project (the “Foundation Action”).

[8] On June 8, 2015, BRL, initially represented by WeirFoulds LLP (“Weir”), served a Notice of Change of Lawyer appointing Cassels Brock & Blackwell LLP (“Cassels”) as lawyers of record.

[9] On August 17, 2015, MTCC 677 commenced an action against BRL claiming damages of $300,000 for breach of contract, negligence and nuisance related to the Project (the “MTCC 677 Action”, together with the Foundation Action, the “Related Actions”). Counsel advises that this was a subrogated claim brought by the Defendant’s insurer.

[10] On November 30, 2015, Defendant’s counsel delivered the Defendant’s Affidavit of Documents to Cassels and requested that BRL deliver its Affidavit of Documents and provide dates for examinations for discovery. No response was received.

[11] On June 15, 2016, BRL served a Notice of Change of Lawyer appointing Loopstra Nixon LLP (“Loopstra”) as lawyers of record. Defendant’s counsel replied by email that day advising that a motion was scheduled for the following week to compel BRL to deliver its Affidavit of Documents. Loopstra advised that day that they had not received the file from Cassels and requested time to review the file, consult with BRL’s insurer and discuss a timetable. The motion was adjourned.

[12] FSO, BRL and MTCC 677 settled the Foundation Action which was dismissed by consent order dated July 13, 2016. Cassels was BRL’s counsel when the Foundation Action was settled.

[13] By letter dated August 29, 2016, copied to Mr. Grist, Loopstra delivered BRL’s Affidavit of Documents and productions. The Defendant delivered its productions, comprised of 359 documents, on October 24, 2016.

[14] MTCC 677 and BRL, represented by Loopstra, settled the MTCC 677 Action which was dismissed by consent order dated July 6, 2018.

[15] In March 2019, BRL transferred carriage of this action together with 12 other files to Weir, its original and current counsel. Weir served a Notice of Change of Lawyer dated March 8, 2019. In his affidavit sworn December 4, 2019 (the “Swartz Affidavit”), Michael R. Swartz of Weir states that around the time of the transfer, Mr. Grist advised him that all of the issues in this action had been resolved upon the dismissal of the MTCC 677 Action in July 2018. In an email exchange on May 28-29, 2019, Mr. Grist advised Weir to stop all work on this matter as it was settled a long time ago.

[16] On September 17, 2019, Weir obtained a status report which revealed that this action was still active. Weir advised Mr. Grist that the action was ongoing and had not been resolved by the settlements and dismissals of the Related Actions. By email message dated October 2, 2019, Weir made a settlement offer to Defendant’s counsel, which was rejected. Mr. Grift then instructed Weir to pursue this action.

[17] BRL served and filed its Simplified Procedure Motion Form on November 5, 2019, 2 days before the 5-year dismissal deadline under Rule 48.14(1). The court office confirmed that this motion was scheduled for December 16, 2019. The motion was adjourned on consent at the request of the Defendant to January 27, 2020 which was confirmed by the court office on December 11, 2019. On January 6, 2020, the Registrar issued the Dismissal Order.

[18] In bringing this motion, BRL proposed the following timetable: Affidavits of Documents to be exchanged by January 31, 2020; examinations for discovery completed by April 30, 2020; undertakings answered by June 30, 2020; mediation completed by September 30, 2020; action to be set down for trial by October 31, 2020. Weir was unaware that Affidavits of Documents had already been exchanged until the Defendant delivered its responding materials for this motion.

III. The Law and Analysis

Should The Dismissal Order Be Set Aside?

[19] It is not disputed that this motion was brought on November 5, 2019, 2 days before the fifth anniversary of the commencement of this action and 2 months before the Registrar issued the Dismissal Order. As Marrocco A.C.J.S.C. unequivocally stated in Daniella v. Grizzell, 2016 ONSC 7351:

“Absent consent, if a party brings a motion for an order continuing the action before the expiry of the applicable period, the Registrar shall not dismiss the action pursuant to Rule 48.14. If a motion has been brought within the applicable period, the Registrar shall not dismiss the matter until the motion is heard even if the matter is heard after the dismissal date prescribed by the Rule. For the sake of completeness, the dismissal of an action by the Registrar can be set aside under Rule 37.14.” (Daniella at para. 7)

[20] Therefore, I conclude that the Dismissal Order was issued in error and should be set aside under Rule 37.14. This motion shall proceed as a status hearing.

Status Hearings Generally

[21] Rule 48.14 states:

(1) Unless the court orders otherwise, the registrar shall dismiss an action for delay in either of the following circumstances, subject to subrules (4) to (8):

1. The action has not been set down for trial or terminated by any means by the later of the fifth anniversary of the commencement of the action and January 1, 2017.

(5) If the parties do not consent to a timetable under subrule (4), any party may, before the expiry of the applicable period referred to in subrule (1), bring a motion for a status hearing.

(6) For the purposes of subrule (5), the hearing of the motion shall be convened as a status hearing.

(7) At a status hearing, the plaintiff shall show cause why the action should not be dismissed for delay, and the court may,

(a) dismiss the action for delay; or

(b) if the court is satisfied that the action should proceed,

(i) set deadlines for the completion of the remaining steps necessary to have the action set down for trial or restored to a trial list, as the case may be, and order that it be set down for trial or restored to a trial list within a specified time,

(ii) adjourn the status hearing on such terms as are just,

(iii) if Rule 77 may apply to the action, assign the action for case management under that Rule, subject to the direction of the regional senior judge, or

(iv) make such other order as is just.

[22] To extend the deadline to set an action down for trial, the plaintiff must show cause why the action should not be dismissed for delay by proving: i.) there is an acceptable explanation for the delay; and ii.) that allowing the action to proceed would not cause the defendant to suffer non-compensable prejudice (Erland v. Ontario, 2019 ONCA 689 at para. 4; Faris v. Eftimovski, 2013 ONCA 360 at para. 32; 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544 at para. 32; Kara v. Arnold, 2014 ONCA 871 at para. 9; Carioca’s Import & Export Inc. v. Canadian Pacific Railway Limited, 2015 ONCA 592 at para. 43). The plaintiff must satisfy both elements of the test (Erland at para. 4).

[23] The plaintiff bears the onus to show cause why the action should not be dismissed for delay (Faris at para. 33). The focus of the court’s inquiry is on the conduct of the plaintiff who, as the party who commenced the proceeding, bears primary responsibility for its progress (Faris at para. 33; 1196158 Ontario Inc. at para. 29).

[24] Although the court must be guided by the two-part test, the determination as to whether to allow the action to proceed is discretionary and determining whether it would be unfair for the action to be dismissed requires a consideration of the circumstances and a balancing of the parties’ respective interests (Koepecke v. Webster, 2012 ONSC at para. 22; Carioca’s at para. 43). The court must apply a contextual approach weighing all of the relevant factors to determine the order which is just in the circumstances (Kara at paras. 12-14). However, Rule 48.14 was designed to have some “teeth” and plaintiffs must bear the consequences of conducting their actions in a dilatory manner (Kara at para. 10; Faris at para. 33; Southwestern Sales Corp. v. Spurr Bros. Ltd., 2016 ONCA 590 at para. 11).

[25] There are two competing principles within the context of a disposition without trial which arise from Rule 1.04(1): the public interest in timely justice and discouraging delay and permitting actions to be determined on their merits (Faris at para. 24). The Court of Appeal has explained this balancing as follows:

“ Dismissals for delay involve a careful balance between two competing values. On the one hand, the Rules of Civil Procedure need to be enforced in a way that ensures timely and efficient justice, in the interests of plaintiffs, defendants, and society in general. On the other hand, society in general, and the parties, have an interest in the resolution of disputes on their merits and in the availability of flexibility to avoid potentially draconian results, by providing the opportunity for parties to offer a reasonable explanation for delay when it takes them beyond established timelines.” (Kara at para. 9)

[26] The Court of Appeal has also provided the following guidance with respect to determining matters on their merits:

“Expeditious justice must be balanced with the public interest in having disputes determined on their merits. Where, despite the delay, the defendant would not be unfairly prejudiced should the matter proceed for resolution on the merits, according the plaintiff an indulgence is generally favoured.” (Marché d'Alimentation Denis Thériault Ltée. v. Giant Tiger Stores Ltd. (2007), 2007 ONCA 695, 87 O.R. (3d) 660 (O.C.A.) at para. 34).

[27] The Court of Appeal has also held that the general preference for determining matters on their merits is stronger where there is delay due to an error or inadvertence of counsel:

“The court's preference for deciding matters on their merits is all the more pronounced where delay results from an error committed by counsel. As the court stated in Habib, at para. 7, "[O]n a motion to set aside a dismissal order, the court should be concerned primarily with the rights of the litigants, not with the conduct of their counsel." In Marché, Sharpe J.A. stated, at para. 28, "The law will not ordinarily allow an innocent client to suffer the irrevocable loss of the right to proceed by reason of the inadvertence of his or her solicitor" (citations omitted). (H.B. Fuller Company et al. v. Rogers (Rogers Law Office), 2015 ONCA 173 at para. 27)

[28] For the reasons that follow, I am satisfied that BRL has shown cause that the deadline to set this action down for trial should be extended.

Is There An Acceptable Explanation For the Delay?

[29] An “acceptable” explanation does not mean that BRL must provide a “good” explanation, only an “adequate”, “passable” or “cogent” one (2046085 Ontario Inc. v. Raby, 2014 ONSC 774 at para. 6; Greenwald v. Ridgevale Inc., 2016 ONSC 3031 at para. 17; Yang v. The Christian World Korea Inc., 2019 ONSC 6131 at para. 38; Postmedia Network Inc. v. Meltwater Holding B.V., 2017 ONSC 6036 at paras. 13-15). In this context, the terms “acceptable”, “satisfactory” and “reasonable” are interchangeable (Carioca’s at para. 45). What the court determines to be an “acceptable” explanation is case dependent (Koepecke at para. 22). The longer the delay, the more robust the explanation which is required (Erland v. Ontario, 2019 ONSC 462 at para. 10; Postmedia at paras. 13-15). The progress of an action does not have to be ideal and the court is not to conduct a week by week or month by month analysis (Goldman v. Pace, 2017 ONSC 1797 at para. 5; Carioca’s at para. 46).

[30] Having considered the relevant factors and circumstances, I am satisfied that BRL has provided an acceptable, adequate explanation for the delay. While it would have been preferable had BRL filed affidavit evidence from Mr. Grist, the uncontroverted evidence of Weir as set out in the Swartz Affidavit, which includes evidence of Mr. Grist’s instructions, and the record as a whole are sufficient to satisfy BRL’s onus in the circumstances.

[31] The progress of this action has not been consistent. However, overall there has been some adequate progress which has, to a degree, moved the litigation forward. This was particularly true in the first 4 months when the Defendant and BRL obtained the Security Orders and the Discharge Order, respectively. The Discharge Order discharged the Lien Claims, vacated the Certificates of Action and importantly, permitted this action to proceed under the Simplified Procedure. This has streamlined and narrowed the litigation and eliminated the increased complexity associated with lien claims. Mr. Grist was also cross-examined regarding the Lien Claims which provided the Defendant with an opportunity to test BRL’s claims and appears to have influenced the parties’ agreement to continue this action under the Simplified Procedure.

[32] There was further progress after the Discharge Order was granted, including the exchange of Affidavits of Documents, the delivery of productions and the commencement and settlement of the Foundation Action. This occurred during a period when BRL changed counsel 2 times and the Defendant commenced the MTCC 677 Action against BRL. BRL’s efforts in settling the Foundation Action constitutes a reasonable explanation for the related delay during this period (Bank of Montreal v. Papadogambros, 2013 ONSC 1941 at para. 7; Apotex Inc. v. Relle, 2012 ONSC 3291 at para. 39).

[33] I disagree with the Defendant that BRL has not provided an acceptable explanation for the over 3-year delay between August 29, 2016 when the Defendant delivered its productions and when BRL brought this motion. While the delay after August 2016 is significant, the collective weight of Mr. Grist’s belief, the settlement of the MTCC 677 Action and the inadvertence of counsel is adequate and satisfactory when all circumstances are considered.

[34] The Defendant submits that without any evidence from Mr. Grist as to why he thought this action was settled, BRL’s explanation is not sufficient. The Defendant states that it did not give Mr. Grist the impression that this action was settled and there is no reasonable basis for him to believe that it was. The Defendant also asserts that Mr. Grist knew or should have known the status of this action and that it was not settled given that, for example, he was copied on the August 29, 2016 correspondence.

[35] The evidence before me confirms that on 2 occasions in 2019 Mr. Grist instructed Weir not to work on this matter based on his belief that it had been settled. This includes Mr. Grist’s email dated May 29, 2019 in which he directed Weir to stop all work because this action had been settled a long time ago. Mr. Swartz was not cross-examined on the Swartz Affidavit and the email is evidence from Mr. Grist of his belief. Mr. Grist formed his belief in the context of settling the Related Actions, both of which arise from the same Project and facts as this action. The MTCC 677 Action involves the same 2 parties. In the context of 3 related actions and 2 settlements handled by different counsel, I am satisfied on the record before me that Mr. Grist had an honest but mistaken belief that this action was settled which was reasonable in the circumstances and is an acceptable explanation for the associated delay. Having reviewed the evidence, I decline to conclude that Mr. Grist should have known the status of this action because he was copied on select correspondence.

[36] The record also reflects that the actions or inaction of counsel have contributed materially to the delay after August 2016. In particular, it is apparent that there was miscommunication and/or a lack of communication between Loopstra and Weir. After the file was transferred back to Weir in March 2019, Weir was unaware of the status of this action and did not know that Affidavits of Documents were exchanged in 2016 until the Defendant delivered its responding materials. Weir proceeded on the basis of what was in the files they received from Loopstra, their discussions with Loopstra and Mr. Grist’s instructions. As counsel acknowledges, Weir is responsible for the delay in obtaining a status report from May 29, 2019 until September 17, 2019. The failure of counsel to properly communicate when transferring the file and to confirm the status of the action caused confusion and ultimately contributed to the delay. As the focus is properly on the conduct of BRL, delay caused by its counsel’s inadvertence should not deprive BRL of its right to have this action tried on the merits. Further, there is no evidence that BRL intentionally did not pursue this action and I decline to draw this conclusion as the Defendant urges.

[37] In urging me to arrive at a different conclusion, the Defendant cites the motion decision in Erland where the court held that the plaintiff was represented by highly competent counsel who were aware of the steps required to bring the litigation to a conclusion (Erland at para. 29). The Defendant submits that BRL was similarly represented by highly competent counsel from well-respected firms who were aware, or ought to have been aware, of the steps required. However, Erland is distinguishable from the present case. In Erland, unlike here, there was no suggestion or evidence that the delay was caused by counsel’s conduct or inadvertence and the court dismissed previous counsel’s health issues as bald assertions given that counsel continued to bring motions and appear at case conferences.

[38] The Defendant also argues that the settlement of the Related Actions does not support BRL’s request for an extension. Specifically, the Defendant claims that the Related Actions have no connection to this action including the MTCC 677 Action which is a subrogated claim for $300,000. This ignores the overlap between this action and the MTCC 677 Action which involve the same parties and arise from the same Project and facts. In my view, BRL’s successful efforts to settle the Related Actions are an acceptable explanation for some of the associated delay in the circumstances (Papadogambros at para. 7; Apotex at para. 39). Settling the Related Actions has eliminated the need for 2 additional actions to be tried separately or together with this action which is consistent with the most cost effective, expeditious resolution of all of these proceedings under Rule 1.04(1). This demonstrates the benefit of taking the time to pursue settlement while avoiding litigation costs which may subsequently make settlement more challenging (Postmedia at para. 18). BRL also attempted to settle this action before bringing this motion.

Would the Defendant Suffer Non-Compensable Prejudice?

[39] BRL bears the onus of demonstrating that the Defendant would not suffer actual prejudice as a result of the overall delay if this action is permitted to proceed (1196158 Ontario Inc. at para. 32). The prejudice at issue is the Defendant’s ability to defend the action as a result of BRL’s delay, not due to the passage of time (Carioca’s at para. 57; H.B. Fuller at para. 37).

[40] I conclude that BRL has satisfied its onus that the Defendant would not suffer actual prejudice if an extension is granted. Affidavits of Documents have been exchanged and there is no evidence that any documents have been lost, destroyed or are not available. Mr. Grist, BRL’s key witness, is available to testify. In the Defendant’s responding affidavit, Andrew Chang, Secretary-Treasurer and Board Member of MTCC 677, states that he does not purport to remember everything that occurred on the Project 6 years ago and he does not know what others who worked on the Project can remember. Claims such as these that prejudice would result because of the passage of time and fading memories, without more, are insufficient. In this regard, I adopt the Court of Appeal’s reasoning in Carioca’s:

“ I do not accept that speculation that a case may depend in part on oral evidence, coupled with the assumption that witnesses' memories generally fade over time will, without more, prevent a plaintiff from satisfying the prejudice prong of the test. Counsel routinely address the reality of the passage of time in the litigation process by collecting and producing documents, undertaking oral examinations for discovery and taking witness statements. There are other methods under the rules to preserve evidence that may disappear or be lost before trial.” (Carioca’s at para. 76)

[41] The fact that the Defendant settled the MTCC 677 Action with BRL in July 2018 suggests that, given the overlap, the issues in this action have been considered more recently than the Defendant suggests. Further, as with most construction litigation generally, BRL’s claims depend heavily on documents which witnesses will be able to review to refresh their memories (Key Anlouis Investments Limited v. 800246 Ontario Inc., 2018 ONSC 5895 at para. 29).

Further Contextual Analysis and Balancing of Interests and Values

[42] Further contextual analysis and the balancing of the relevant interests and values also supports BRL’s request for an extension.

[43] BRL has provided a reasonable explanation for the delay and established that the Defendant would not suffer non-compensable prejudice. Some progress has been made including the conversion of this action to the Simplified Procedure and the settlement of the Related Actions. Together with the amount of the claim, the length of the delay, the steps taken and remaining, the delay due to counsel’s inadvertence and the prospects of moving this action to conclusion expeditiously, I conclude that a balancing favours BRL’s and the public’s interest in having this action tried on its merits. This case calls for flexibility, an indulgence and case management to facilitate an expeditious conclusion, not the draconian remedy of dismissing BRL’s claim.

[44] Having considered all of the factors and circumstances and applied a contextual approach, I conclude that the just result is for an extension to be granted so that this action can continue to completion on an aggressive timetable.

IV. Disposition and Costs

[45] I am satisfied that the following Order is just, fair and properly balances all of the relevant interests and values consistent with the most cost effective and expeditious disposition of this action under Rule 1.04(1):

i.) the Dismissal Order is set aside;

ii.) this action shall be permitted to proceed;

iii.) the parties shall adhere to the following timetable which may be amended by consent of the parties except that the set down date shall only be amended by further order of the court:

a.) July 31, 2020: completion of examinations for discovery;

b.) August 31, 2020: delivery of answers to undertakings;

c.) October 31, 2020: deadline for mediation;

e.) November 1, 2020: deadline to set this action down for trial.

[46] While this is an aggressive timetable, I am satisfied that it is achievable and given the amount of this claim, the history of these proceedings and the purpose of the Simplified Procedure, appropriate in the circumstances. The parties may schedule a telephone case conference with me if they wish to speak to the terms of this Order. I shall remain seized of this matter and will make myself available to provide case management going forward, if necessary.

[47] Given the suspension of regular court operations due to the COVID-19 pandemic, this Order is effective forthwith without the requirement for filing and entry. However, the parties may file a form of Order with me for review and approval by email through the Masters’ Administration Office if they wish to do so.

[48] If the parties cannot agree on the costs of this motion, they may file written costs submissions not to exceed 3 pages (excluding Costs Outlines) with me through the Masters’ Administration Office on a timetable to be agreed upon by counsel.

Released: May 17, 2020

Master M.P. McGraw