COURT FILE NO.: 54472/13
DATE: 2020-10-01
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: JPW Niagara Limited, Plaintiff
A N D:
Sullivan Mahoney Lawyers, Victor Muratori and Rocco Vacca, Defendants
BEFORE: The Honourable Mr. Justice P. R. Sweeny
COUNSEL: Adam J. Huff, for the Plaintiff
William S. O’Hara, for the Defendants
HEARD: September 14, 2020 by video conference
E N D O R S E M E N T
[1] This is a motion to set aside an order dismissing the action for delay, issued by the court registrar on June 5, 2018.
Background
[2] In this action, the plaintiff, JPW Niagara Limited (“Niagara”), alleges negligence against its former lawyers. The plaintiff claims, inter alia, that the defendants were negligent in drafting a shareholders’ agreement in relation to a golf club investment venture. The claim was issued on June 3, 2013. The statement of defence was delivered on September 3, 2013.
[3] On October 22, 2014, the plaintiff issued a second claim alleging oppression against various parties that invested in the golf course (the “Shareholder Action”). The parties agreed that the actions would be tried together, or consecutively, to avoid inconsistent findings of fact.
[4] In March 2016, the defendants in both actions served their motions for summary judgment.
[5] In March 2017, I was appointed as case management judge pursuant to r. 37.15 (1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to hear motions in the proceedings. Since my appointment, there have been several case management conferences calls.
[6] The case management conference calls primarily addressed scheduling the motions for summary judgment. However, the issue of extending the time to set the actions down for trial was raised in two conference calls. Procedural orders extending the time to set the actions down for trial were prepared but never finalized. They were never issued and entered.
[7] As the time for the summary judgment motions hearing approached, the plaintiff advised counsel that John Wiens, the individual providing instructions to counsel for the plaintiff in this action, intended to issue a new proceeding in the name of 1814029 Ontario Inc. (“1814029”). The proposed defendants in the new proceeding included the defendants in this action and the defendants in the Shareholder Action. It was also suggested that counsel for some of the defendants in the Shareholder Action would also be named.
[8] The summary judgment motions did not proceed as scheduled. On May 8, 2018, the defendants in this action abandoned their motion for summary judgment.
[9] On June 5, 2018, the court registrar issued an order dismissing this action for delay, as the action was not listed for trial within five years. On June 29, counsel for the plaintiff (not Mr. Huff) wrote to counsel in both actions and enclosed the dismissal order. He referred to the orders made to extend the time for setting down the action which were not issued. He asked if counsel for the defendants in this action would consent to him bringing a motion to set aside the dismissal. Counsel for the defendants replied that he had instructions to consent to the order setting aside the registrar’s dismissal of the action. He indicated counsel could execute consent to the order on his behalf.
[10] The plaintiff’s counsel did not take any further steps to have the dismissal order set aside. It is his evidence that he believed the order could be addressed in the case management conference with me.
[11] A new proceeding was commenced on July 18, 2018. That proceeding was dismissed by me because the applicant in that proceeding had not obtained leave to commence a derivative action. A second new proceeding was then commenced by notice of application seeking to commence a derivative action on behalf of 1814029 and seeking leave to file a statement of defence and crossclaim and defence to counterclaim on behalf of 1814029 in the Shareholder Action.
[12] On August 13, 2018, the defendants in this action moved for an order that they not be responsible for costs in relation to the summary judgment motion abandoned on May 8. In that notice of motion, the defendants asserted that the decision not to proceed with the motion for summary judgment arose as a result of the commencement of the new action. The notice of motion specifically stated:
[T]he defendants elected to abandon the motion for summary judgment in favour of a trial to have all of the allegations against them in this action and in the threatened new action dealt with at the same time.
[13] The defendants were content to have this action proceed with the new action. The new action was dismissed by me. The application for leave to issue a derivative action and file pleadings on behalf of 1814029 was heard by me on September 26, 2019 (and dismissed on October 18, 2019).
[14] The Shareholder Action was dismissed for delay by the registrar on October 2, 2019.
[15] Counsel for the plaintiff requested a case conference to address the potential dismissal of actions for delay. A case conference call was held with me on October 8. The defendants in the Shareholder Action consented to set aside the dismissal. The defendants in this action indicated that they were withdrawing their consent to set aside the dismissal that was given in July 2018.
[16] This motion was brought in December 2019 and was heard by me on September 14, 2020. Some delay in hearing this motion was due to the COVID-19 pandemic.
The Legal Test
[17] The test for setting aside a registrar’s order dismissing an action for delay was recently set out by the Court of Appeal in Prescott v. Barbon, 2018 ONCA 504, 141 O.R. (3d) 616, at para 14. The test requires me to consider four factors, referred to as the Reid factors. They are as follows:
Have the plaintiffs provided a satisfactory explanation for the litigation delay?
Have the plaintiffs led satisfactory evidence to explain that they always intended to prosecute this action within the time limits set out in the rules or court order but failed to do so through inadvertence?
Have the plaintiffs demonstrated that they moved forthwith to set aside the dismissal order or as soon as the order came to their attention?
Have the plaintiffs convinced the court that the defendants have not demonstrated any significant prejudice in presenting their case at trial as a result of the plaintiff delay or as a result of steps taken following the dismissal of the action?
[18] I am to take a contextual approach weighing all relevant considerations to determine the result that is just in the circumstances of this particular case.
Analysis
Explanation for Delay
[19] This action and the Shareholder Action were proceeding in tandem. Motions for summary judgment were brought in both actions. The energy of the parties was focused on the motion for summary judgment. When a new proceeding was threatened, the motion for summary judgment were no longer pursued. In fact, the defendants in this action specifically decided not to pursue the motion for summary judgment as they wanted the issues in this action determined at the same time as the issues in the new action. This explains why nothing occurred on this action after the motion for summary judgment was abandoned until October 2019. The new action was being challenged.
[20] In the context of the motion for summary judgment, there were extensive cross-examinations. In addition, expert reports were exchanged. A great deal of legal work has gone into this action together with the Shareholder Action.
[21] In taking a contextual approach, it is necessary to consider that this action was case managed. Case management can lead to some informality. In the normal course, consent orders are granted in accordance with the request of parties to move matters forward. The focus is on having the issues determined on the merits. For the most part, the parties cooperate in setting timetables. In this case, the procedural orders were prepared and then not issued or entered. The fault for this lies on all parties. There is also the reality that, as the case management judge, the parties are limited by my schedule to some extent.
[22] I am satisfied that there is an adequate explanation for the delay the proceedings.
Inadvertence in Missing the Deadline
[23] The uncontradicted evidence of the plaintiff is that it intended to prosecute this action. This is not a case where the lawyer simply makes a bald statement. As I have noted, procedural orders which would have extended the time to set the action down for trial were drafted. Unfortunately, these were not issued and entered. The registrar’s order was issued as a result of the failure to have those procedural orders registered. That is clearly inadvertence.
Motion is to be brought promptly
[24] I view this requirement as designed to ensure that defendants are not misled or lulled into a false sense of security that the that the matter is over. The point is that the plaintiff needs to let the defendants know that steps are being taken to set aside the dismissal.
[25] After the registrar’s order was received, the plaintiff’s counsel immediately requested the defendants’ consent to set aside the order. That consent was forthcoming.
[26] In this case, the defendants were labouring under no false impression as to what was happening. The parties were acting as though the action was ongoing notwithstanding no order had been obtained setting aside the registrar’s dismissal. In my view, the delay in seeking to obtain an order based on the consent is distinct from the requirement that the motion be brought promptly.
[27] Plaintiff’s counsel has deposed that he thought he could get the consent order on a case conference call with me. In my view, this was a reasonable approach to take. Given there was consent, the order would have been granted by me if asked. The order would have been set aside on consent. This is part of the context of case management.
[28] I am satisfied that to the extent the motion needs to be brought promptly, steps were taken promptly to address the issue. The delay in actually taking the steps to get the order to set aside the dismissal was sloppiness. However, in my view, it does not militate against setting aside the dismissal.
Absence of Prejudice
[29] The defendants will not suffer any significant prejudice if this order is set aside. The defendants were prepared to have this action delayed until the new proposed action was ready to proceed to trial. This was in May 2018. The defendants in this action were prepared for this matter to be placed on the long trial list for October 2019, as outlined in a letter from counsel for the shareholder defendants on February 19, 2019. That letter even acknowledges that there may not be availability for the action to be heard at that time.
[30] The fact that some witnesses have difficulty recalling things was present at the time of the cross-examinations. There is no reason to believe that the problems with memory prejudice the defendants in the defence of the action - that is the prejudice with which we are concerned.
[31] I also observed that, as stated in Aguas v. Rivard Estate, 2011 ONCA 494, 107 O.R. (3d) 142, at paras 18-21, a defendants’ passivity or “lack of display of any sense of urgency” in the litigation may undermine the claim to prejudice. That comment is apposite in this case. The defendants are not responsible for moving the action forward, but they did participate in the proceedings and did not raise any real concerns about the progress.
Conclusion
[32] In my view, considering all four factors contextually, it is appropriate and just in this case that an order be made setting aside the registrar’s dismissal. Accordingly, the registrar’s order dated June 5, 2018 is set aside.
[33] This action needs to proceed to trial. This matter is to be placed on the long trial sittings commencing March 2021. With respect to the outstanding motions, counsel are to contact the trial coordinator at St. Catharines to request a conference call with me to arrange for hearing of any outstanding motions.
[34] With respect to the issue of costs, I have received a bill of costs from the plaintiff and a cost outline from the defendants. If the parties are unable to agree upon costs, I will accept further written submissions limited to two pages. The plaintiff has until October 5, the defendants to October 9. If no further submissions are received by October 6, the issue of costs will be deemed settled.
Sweeny J.
DATE: October 1, 2020