COURT FILE NO.: 07-CV-345668PD1
MOTION HEARD: 20200826
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Roman Mishukov, plaintiff/Moving Party
AND:
Leila Fatoullaeva, Canada Health Rehabilitation & Medical Supplies Inc., and Canada Health Rehab and Foot Care MedClinic Ltd., defendants, Responding Parties
BEFORE: Master Josefo
COUNSEL: Counsel for the Plaintiff/Moving Party: B. Salsberg,
Email: ben@bensalsberglaw.com
Counsel for the Defendants/Responding Parties: G. Clarke (Mr. Clarke is retained by defendants’ counsel R. Cucci; Mr. Clarke is thus counsel for this motion), Emails: patents.pending.gsclarke@gmail.com & cuccislaw@gmail.com
HEARD: August 26, 2020
DECIDED: August 27, 2020
REASONS FOR DECISION
Background: What this Motion is About:
[1] Pursuant to Rule 60.12, the plaintiff seeks to strike out the Statement of Defence of the defendants unless, in 30 days from today, defendants have complied with all terms of the Order of the Honourable Justice Dow made October 9, 2019. Those terms include payment by defendants of a costs award to plaintiff in the amount of $31,102.26, which I observe that Justice Dow last October 9, 2019 ordered be paid “forthwith”.
[2] In his decision, Justice Dow described the underpinning dispute as involving a failed partnership investment. It appears that the parties had at one time agreed to arbitrate their dispute and so dismissed the within action on certain terms set out in Minutes of Settlement made December 22, 2012. That agreement seemingly collapsed when, pursuant to the findings made by Justice Dow, defendants reneged. Ultimately, Justice Dow set aside the consent of the parties to the dismissal of the within action, thus reinstating it, and he ordered that the defendants pay plaintiff the costs as outlined above.
[3] This matter has been before me twice before, and I have written two prior endorsements. In my endorsement of June 24, 2020, I described the procedural history of how this matter came before me, noted that a tele-case-conference was held that day with Mr. Salsberg and Mr. Cucci, and confirmed a timetable since defendants asserted that they intended to seek leave from the Court of Appeal to extend time to appeal the decision of Justice Dow. My second endorsement, of July 28, 2020, reads in part as follows:
This is further to my Endorsement and Order of June 24, 2020. The background which underpins the scheduling of Plaintiff’s Rule 60.12 motion, on the alleged basis that Defendants failed to pay costs pursuant to an existing Order (the October 9, 2019 Order of Justice Dow), is therein described. On June 24, 2020, during the tele-case-conference then held, the following was agreed:
“…Ultimately, it was agreed that if the defendants wish to seek leave from the Court of Appeal to extend time to appeal [referring to an appeal of the above-referenced Order of Justice Dow], then they may do so. Yet it was also agreed that, as I noted the delays to date, a hard and fast timetable to that end was now required. It was agreed that the defendants would serve their Notice of Motion and their Motion Record seeking leave to appeal, and file these with the Court of Appeal, by July 27, 2020. This will be treated as a consent Order. No formal Order, however, need be taken out from this Endorsement. If that deadline is missed, then the plaintiff is at liberty to return this Rule 60.12 Motion. To schedule that, if necessary, counsel and I will have a CC on July 28, 2020, at 10:00 AM…”.
The deadline described above was missed by the defendants. Mr. Cucci sought to excuse this delay by claiming that he has not been able to reach his client, who he suspects is stuck in Cuba due to the Covid Pandemic. He asked for latitude, suggesting a subsequent “touch-base” call, or at least putting off the plaintiff’s Rule 60.12 motion until September….
I am certainly mindful of the need to avoid duplicative processes. If, for example, Mr. Cucci belatedly complies with his obligation to serve on counsel opposite and file a notice of motion and motion record with the Court of Appeal, and if the Court of Appeal grants an extension of time to defendants to pursue the appeal, then if this motion has not yet been heard, arguably it should be postponed. The difficulty with that, however, is that it all remains hypothetical. So far, Mr. Cucci has not taken the actual steps that should have been taken, and that he has had, overall, much time to take. Leaving aside the additional month since June 24th, Mr. Cucci has realistically had since last Fall to pursue the matter.
There have been given many excuses, reasons, and justifications for why the concrete steps of pursuing initially the appeal, and then the extension of time to appeal, has not happened. Yet, having previously given defendants additional time (which additional time Mr. Salzberg graciously agreed to, and he even offered the July 27th date as a longer deadline), I now must schedule this motion to be equally fair to plaintiff. After all, the plaintiff was the successful party before Justice Dow. The plaintiff deserves an opportunity to pursue its rights, just as defendants deserve an opportunity to resist. Yet a substantive hearing on the merits of the matter for both parties must take place. The motion is scheduled for August 26, 2020, at 10:00 AM. That date is peremptory to defendants.
[4] The motion was argued on August 26th (via Zoom). I had the two records, a factum, and book of authorities from the plaintiff, plus the affidavit of Mr. Cucci dated August 25, 2020. Mr. Salsberg made submissions for the plaintiff, Mr. Clarke submitted for the defendants, with Mr. Cucci providing additional comments. I have considered all that was submitted in writing and orally. Yet in these reasons I will not address every argument that counsel made. Rather, I will focus on what I find to be of importance.
ADDITIONAL FACTS LEADING TO THIS MOTION:
[5] Subsequent to the release of the reasons of Justice Dow on October 9, 2019, Mr. Cucci on November 8, 2019 served Mr. Salsberg with a notice of appeal. Mr. Salsberg took the position that the notice of appeal to the Court of Appeal was to the wrong court, because the decision for which an appeal was sought was not a final one, not dispositive of any substantive rights, nor dispositive of an issue. Rather, it only reinstated the underpinning action. Thus, any leave for appeal ought to have been directed, pursuant to Rule 62, to Divisional Court. Further, Mr. Salsberg asserted that Mr. Cucci was, by November 8, 2019, out of time to seek such leave to appeal. Mr. Salsberg also stated that he would bring a cross-motion asserting that position in response to any appeal brought.
[6] Mr. Salsberg did not know, however, that the notice of appeal with which he was served was never actually filed at the Court of Appeal. Pursuant to his affidavit, Mr. Cucci learned on December 18, 2019, “just as I was about to depart for Christmas holiday”, what he asserted was an error made by his retained process server. He did not then inform Mr. Salsberg of this problem. Nor did he do so later because he asserted that, “in January and February I had overwhelming health issues that impaired any ability to further investigate the problem…or to deal with it” [paragraph 9 and following of his affidavit]. Mr. Cucci subsequently alleged that the Covid pandemic beginning in January 2019 was another factor which led to his taking no steps to try to rectify the situation, or to inform Mr. Salsberg of the non-filing [paragraph 16 of his affidavit and following].
[7] Mr. Cucci described his non-action, and the reasons for it, further in part as follows [at paragraphs 19 and 21 of his affidavit]:
While I was stressed and aware of the need to deal with the Notice of Appeal that had not been accepted at the counter, I knew that as soon as I raised the issue, plaintiff’s counsel would press an immediate motion—given that he had already advised he was preparing a motion to quash back in December [2019] before I ever knew there had been a problem with the filing. …As of the full-on State of Emergency that came for Covid-19 in mid-March, I treated this legal matter and other legal matters as necessarily on hold, concurring with the legislation that froze even Limitation Periods and shut down the Courts. On files where I tried to do so I found that I could not advance Superior Court matters with everything suspended or cancelled even for pressing urgencies. I did not investigate whether the Court of Appeal was in a special or different situation but rather I treated myself as under a medical leave that came concurrently with Covid-19, though my health matters were independent—and intending to address this matter as soon as possible once the Courts re-opened.
[8] The record shows that Mr. Salsberg corresponded with Mr. Cucci several times to discuss both the appeal, and to seek Mr. Cucci’s approval of the formal Order to be taken out from the Reasons of Justice Dow. The draft Order was sent November 14, 2019 with no response. It was sent again November 25, 2019, with Mr. Salsberg reminding, in addition to noting the lack of response from Mr. Cucci to his other points, that:
we have also not received your approval as to form and content of the draft Order, the issuance of which is necessary for you to perfect your appeal
[9] Despite another follow-up by Mr. Salsberg on July 20, 2020, the draft Order has not been approved as to form and content. Nor has Mr. Cucci seemingly raised any specific concerns about it to justify not approving the draft Order.
[10] As set out in his email to Mr. Cucci of May 27, 2020, only then did Mr. Salsberg learn, when he contacted the Court of Appeal office, that no appeal was ever filed. In his letter to Mr. Cucci of June 8, 2020, he inter alia confirmed that, as there is no stay of the Order of Justice Dow, he will move to strike the Statement of Defence. That is what has led to this within motion.
DISCUSSION OF THE EVIDENCE:
[11] The evidence from the plaintiff is attached to affidavits from his secretary and consists of the pleadings, contemporaneous correspondence between counsel, the reasons for decision of Justice Dow, and my two prior endorsements. The evidence from the defendants is the above-referenced affidavit of Mr. Cucci, submitted mid-morning of the day before this long-scheduled motion.
[12] Regrettably, I found this affidavit unhelpful. It is ambiguous in parts and, in my view, does not satisfactorily explain or justify the various delays on the part of Mr. Cucci appealing, or seeking leave to appeal, the decision of Justice Dow. A few further examples in addition to the already quoted portions will explain why I have so concluded:
• At paragraph 2 (b), Mr. Cucci asserts that “inability to communicate with the client (elderly, vulnerable and who is believed to be still in Cuba due to Covid-19 travel restrictions) initially delayed the preparation of a supporting affidavit for the Court of Appeal motion…”.
• At paragraphs 7 and 8, Mr. Cucci references his July 28, 2020 letter to Mr. Salsberg, which letter is the one, presumably that, as discussed in my July 28, 2020 endorsement, he emailed to Mr. Salsberg 12 minutes prior to that scheduled tele-case-conference. In that letter he again refers to his inability to contact his (primary, presumably) client, the defendant Leila Fatoullaeva (“Leila”), as his “real problem” leading to his ongoing delay. Further in that letter, as excerpted at paragraph 8 of his affidavit, Mr. Cucci describes how he “believes” that Leila is still in Cuba, that he as a “last resort” was to contact other people, or “some other form of contact, possibly through the son or daughter…”.
• Yet during the hearing Mr. Cucci confirmed that the appeal was ready to go, and that he had sufficient general instructions to proceed even if he could not contact Leila.
• In any event, the July 28, 2020 letter is ambiguous: for example, that Leila is “possibly” in Cuba (yet this should be easy enough to verify). It also does beg the question that, if Mr. Cucci then believed it necessary to speak to her, why he did not contact her children. In my view, it is likely that her children, or at least one of them, would know where there (described at paragraph 2 (b) as “elderly, vulnerable”) parent is, and how to reach her.
• Also at paragraph 2 (b) of the affidavit, Mr. Cucci accuses Mr. Salsberg of calling him a “liar”, which is not at all my recollection of either tele-case-conference. Nor would I have countenanced such conduct from counsel. Rather, Mr. Salsberg had stated, reasonably enough in my view, that Leila would likely have no explanation for the delay in pursuing the appeal, while Mr. Cucci likely would have explanations for the delay. Yet one counsel calling counsel opposite a liar in a public court document I find unhelpful to my addressing the issues at hand.
• At paragraph 7, describing the alleged error in filing the notice of appeal, Mr. Cucci asserts that the process server was “apparently fired”, and that the process server “did not apparently report the matter even internally…”. Yet there is no underpinning set out pertaining to the basis of Mr. Cucci’s knowledge, information, or belief of these assertions, other than attached emails from the process server firm which are not of much assistance. Mr. Cucci further asserts that the process server “may have originally sent an email to an old email address I used to have…”. Again, the use of the words “apparently” and “may” render ambiguous the assertion that Mr. Cucci purports to make in this paragraph: that the fault for the non-filing, and his failure to discover and address it in a timely way, is with others.
• Mr. Cucci further asserts that his poor health justified his lack of action after he returned from the Christmas holiday. As described at paragraph 11 and following, he had an infection(s) that caused him to have to “get up several times during the night”, which left him with “something of a sleep disorder”. At paragraph 15 he also notes that he suffered from back pain, and he was diagnosed with diabetes and high blood pressure.
• Yet, it appears that for part of the time at least, he was trying to work on other files. As referenced above, at paragraph 21 of his affidavit, when describing how Covid closed matters down beginning in mid-March, he asserted that, “on files where I tried to do so I found that I could not advance Superior Court matters with everything suspended…”. Thus, if Mr. Cucci could attempt to pursue other files notwithstanding his claimed health conditions, why could he not have tried to pursue this file?
• While normal daily life carried on in Ontario until the middle of March 2020 before the Covid lock-downs began, at paragraph 16 Mr. Cucci asserts that Covid impacted him as early as January of this year. Noting that he was able to travel to a Costco in Richmond Hill, in which town he “shops and spends time”, he found himself not then wearing a mask when others were so doing. Yet I find it relevant that, despite all his earlier described ailments which purportedly prevented him from addressing this within matter, Mr. Cucci was still able to “shop and spend time” in Richmond Hill.
[13] None of this, neither his health conditions nor Covid, in my view, satisfactorily explains why Mr. Cucci could not have contacted the Court of Appeal office at any time in January, February, or even the first two weeks of March, given that he knew as of December 18, 2019 that the appeal had not been filed. Similarly, none of this explains why Mr. Cucci could not have made a phone call or sent an email or letter to Mr. Salsberg to inform him of this problem. At paragraph 18 of his affidavit, Mr. Cucci asserts that he strictly quarantined at home. Yet he could have reached out by telephone or by email. Doing so would not have been arduous or onerous, nor dangerous to his health.
[14] My overall conclusion is that Mr. Cucci for the defendants has long delayed this matter, notwithstanding my prior attempts to impress upon counsel that, as of our first tele-case-conference on June 24, 2020, the time for delay was over. Despite the additional time allotted, including from the second tele-case-conference on July 28th through to the hearing of this motion, that there still have been no steps taken at the Court of Appeal is surprising and unfortunate. The question then becomes, what is the appropriate remedy in the circumstances?
LEGAL ANALYSIS—APPLYING THE FACTS TO THE LAW:
[15] The recent Court of Appeal decision of Falcon Lumber Limited v. 2480375 Ontario Inc. (GN Mouldings and Doors), 2020 ONCA 310 (“Falcon”) addressed a Statement of Defence being struck out for failure to make proper production. The facts of that case are quite egregious: there were 30 dates for motions, case-conferences, and other attendances. While this case before me involves the failure to comply with an Order (mainly, non-payment of a costs award), one can by analogy glean useful take-aways from Falcon.
[16] The first point I take is that, “striking out a pleading under Rule 30.08(2)(b) is not restricted to ‘last resort’ situations, in the sense that it must be preceded by a party breaching a series of earlier orders that compelled better disclosure or production”…[Falcon, at paragraph 50]. The Appellate Court continues by noting that in some cases where the remedy is granted, “no prior order had been made”. Yet the Court also states that a party should have “a reasonable opportunity to cure its non-compliance before striking out its pleading”. For that last premise, one of the decisions cited to me by plaintiff, Koohestani v. Mahmood, 2015 ONCA 56, is referenced.
[17] As described at paragraphs 56-57 of Falcon, one must consider amongst other factors:
• proportionality,
• if the failure to comply is deliberate or inadvertent,
• if the failure is clear and unequivocal,
• if there is a reasonable explanation for the default,
• if there is a credible commitment to cure the default quickly,
• the nature of the default: material or less so.
[18] The decision of Signal Chemicals Ltd v. Singh (“Signal”), 2014 ONSC 5228 is also, I find, helpful. The analysis portion of the reasons, beginning at paragraph 14, make clear that while the court has the discretion to strike a defence as a sanction for failure to comply with a court order, such discretion must always be exercised on proper principles. Referring to Starland Contracting Inc. v. 1581518 Ontario Ltd (“Starland”) [2009] O.J. No. 2480, as was stated therein:
The Rules reflect a balance. The litigant does not have an untrammeled right to have his or her case heard. In order to be heard, a case must be processed in accordance with the Rules.
[19] The above quote continues to observe that one must not adhere to the Rules in a “slavish” fashion, especially as various Rules make clear that strict compliance can be waived when it is just to do so. Yet as Starland also held:
The difficult issue, in any particular case, is to determine when non-compliance reaches the point that it can no longer be excused. The Court, and society as a whole, have an interest in ensuring that the system remains viable. If the Rules can be ignored with impunity, they might as well not exist.
[20] While the merits of a matter can be considered, Falcon observes that, at least for failures of production, such would only play a limited role. In my view, a meritorious claim or defence is no excuse for serious breaches of court Orders. As was in essence observed in Starland, a party with a meritorious case (in his or her own eyes) does not get a ‘free pass’ from the obligations which all litigants have pursuant to the Rules.
[21] When applying all this to the present matter, again, I am struck by the ongoing failures of defendants or her counsel (not counsel for defendants on the motion). These include:
• failing to approve the Order, even when, if the defendants seriously intended to try to appeal, a formal Order is necessary,
• consistently failing to respond to and communicate with counsel opposite in a timely fashion, and,
• failing to rectify or remedy the default, despite long held knowledge of it, repeated warnings, and much time to do so.
[22] Referring to the above-listed factors from Falcon, I find the breach and failure to cure likely deliberate given the unconvincing explanations from Mr. Cucci pursuant to his affidavit. I further find the lack of any actual, concrete steps taken, even to date to pursue the appeal that defendants claim to intend to pursue, troubling. I agree with Mr. Salsberg: actions speak louder than words. Yet the defendants have so far only offered words, without concrete action.
[23] The failure I find is clear and unequivocal. The cost order is unambiguous. Moreover, Justice Dow ordered these paid “forthwith”. Of course, an appeal in time can stay such an order. Yet again, no appeal was taken then, nor has leave to appeal been sought now. More than ten months later, the plaintiff is still awaiting his costs and for the case to advance. Neither of which has, unfortunately, happened.
[24] This delay continues despite my having set out expectations, by way of orders, in my prior endorsements that any application for leave to appeal must proceed with alacrity. This is material considering that my prior orders, along with the Order of Justice Dow, all remain outstanding. The quantum owed to the plaintiff pursuant to the cost order is also fairly material. If the sum owed was only a few thousand dollars, striking the pleading would arguably be disproportionate, unless matters progressed to the point where the court had no other option. Yet in this case, the sum owed is at least fairly significant.
[24] As discussed in Signal, I will not immediately strike the Statement of Defence. Rather, as was done in Signal, I will impose a “last chance” order to afford the defendants one final opportunity to cure their breach. That is in any case essentially what Mr. Salsberg seeks, given he proposed that defendants have 30 days to comply with the Order of Justice Dow. Noteworthy, in Signal, the decision was released September 12, 2014 and the appellant had only until September 17, 2014 to comply on a “last chance” basis. Mr. Salsberg is thus being reasonable to suggest 30 days. I will modify the terms somewhat from what counsel for plaintiff has proposed, however, to allow defendants to pursue their appeal if they truly intend to do so, rather than just talk about doing so.
[25] Granting defendants a “last chance”, I thus order as follows:
a) The defendants have until September 28, 2020 to comply with the Order of Justice Dow.
b) The defendants have until September 28, 2020 to file their motion seeking leave to appeal the decision of Justice Dow at either the Court of Appeal or at Divisional Court, as they so choose (counsel for plaintiff may take whatever steps in response that he deems fit).
c) The decision of Justice Dow is not stayed. Thus, the defendants have until September 28, 2020 to obtain a stay of the decision of Justice Dow.
d) If the defendants have not obtained a stay of the decision of Justice Dow by September 28, 2020 and have not by then complied with the Order of Justice Dow, that will result in the Statement of Defence being struck out.
COSTS:
[26] Costs follow the event(s). In this case the plaintiff was successful in obtaining the relief sought. Accordingly, the plaintiff is entitled to costs. If the parties are unable to resolve this themselves, ATC Mr. D. Backes will schedule a tele-case-conference. If the parties wish to provide written submissions in addition to their Costs Outlines, such are to be no more than three pages, using normal font and spacing.
Master J. Josefo
Date: August 27, 2020