Cowan v. General Filters et al.
[Indexed as: Cowan v. General Filters Inc.]
Ontario Reports
Ontario Superior Court of Justice
Reid J.
November 13, 2020
153 O.R. (3d) 749 | 2020 ONSC 6921
Case Summary
Civil procedure — Dismissal for delay — Setting aside — Plaintiffs commencing action in 2011 against several defendants arising from leaking oil tank filter discovered in 2009 — Action administratively dismissed in error in 2015 and dismissal set aside on consent — Action administratively dismissed again in 2019 — Plaintiffs successfully moving to have dismissal set aside — Issue was prejudice to defendant who employed the technician who inspected and passed the filter before its failure — Defendants had been put on early notice of claim and there was no issue of destruction of evidence — Prejudice resulting from revival of action after dismissal was minimal — Litigation fairness required trial on the merits.
The plaintiffs discovered a leaking filter in their residential oil tank in August 2009. They alleged that the tank had been inspected by a technician in November 2006, with the technician reporting no defects and certifying that the tank and filters appeared to be in good condition. In August 2011, they commenced an action against various defendants, including the company that employed the technician. That employer had ceased operations in December 2007. The employer's owner could not identify the technician who completed the inspection report, but he assumed it was one of three people. One had since died and the owner had no contact information for the other two. As a result of a court error, the action was administratively dismissed in March 2015, but that dismissal was set aside on consent. A timetable was established in January 2018 for the balance of the action. Pursuant to the timetable, the oil filter was tested and affidavits of documents were exchanged. Testing revealed that the leak was due to perforations in the top of the filter's steel shell canister. The perforations occurred as a result of corrosion from an accumulation of water and sludge. The manufacturer's instructions were that the filter should be replaced annually, but it appeared to have been in service for more than a year prior to the failure. The plaintiffs alleged that the employer knew or ought to have known that the filter was susceptible to corrosion and failed to advise them accordingly. In March 2019, the local Registrar administratively dismissed the action for not having been set down for trial within five years of its commencement. The plaintiffs moved to set aside the administrative dismissal.
Held, the motion should be granted.
Litigation fairness required that the matter proceed to trial on the merits. The defendants conceded that the litigation delay had been explained, the deadline was missed by inadvertence and prompt steps were taken to bring the motion. The only issue remaining was that of prejudice. The employer submitted that the technician who performed the inspection was a key witness as only he could speak to the issue of advice given to the plaintiffs. It submitted that the death of one potential witness and the unknown location of two others constituted prejudice. However, the defendants were put on notice of the claim at an early stage and could be presumed to have investigated as appropriate, well before the action was dismissed in 2019. The filter was available for testing, the inspection report was available, and photographs and other records regarding the filter had been preserved. There was no indication of any evidence having been lost or destroyed. Although it was reasonable to assume that the memory of witnesses generally faded over time, the inspection was performed over 14 years ago and over 12 years before the administrative dismissal, so any memory erosion would hardly have been increased by the period since the administrative dismissal. The prejudice to the employer was not the prejudice inherent in facing the action in the first place, but prejudice in reviving the action after it had been dismissed. Such prejudice, if any, was minimal.
Other cases referred to
Finlay v. Van Paassen (2010), 101 O.R. (3d) 390, [2010] O.J. No. 1097, 2010 ONCA 204, 266 O.A.C. 239, 318 D.L.R. (4th) 686, 188 A.C.W.S. (3d) 675; H.B. Fuller Co. v. Rogers (c.o.b. Rogers Law Office), [2015] O.J. No. 1260, 2015 ONCA 173, 250 A.C.W.S. (3d) 591, 330 O.A.C. 378, 386 D.L.R. (4th) 262; K. Laboratories v. Highland Export Inc., [2010] O.J. No. 3116, 2010 ONSC 4032, 191 A.C.W.S. (3d) 255 (S.C.J.)
Rules and regulations referred to
Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 37.14, (1), 48.14
MOTION to set aside an administrative dismissal of an action.
B.A. Pickard, for plaintiffs.
B. Smith, for defendant Oil Tech Plus Ltd.
D. Powrie, for defendant Lippert & Wright Fuels Ltd., also known as Dave Lippert Fuels Ltd.
1REID J.: — The plaintiffs (the "Cowans") brought a motion to set aside the administrative dismissal of the action by the local Registrar.
2The motion was pursuant to rules 37.14 and 48.14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
3The issue, more particularly set out below, was whether the defendant Oil Tech Plus Ltd. ("Oil Tech") would suffer prejudice if the dismissal was set aside.
4The defendant, Lippert & Wright Fuels Ltd., also known as Dave Lippert Fuels Ltd. ("Lippert & Wright") supported the position of Oil Tech. The Dominion of Canada General Insurance Company did not participate in the motion.
5The action was dismissed on consent against the defendant General Filters Inc. and Canadian General Filters Limited. The third party claim against Dana Canada Inc. was also dismissed on consent. The action had previously been dismissed against K & S Climate Control.
Background
6The Cowans' claim is for damages arising from a spill of fuel oil inside their home, which was discovered on or about August 22, 2009. The spill emanated from an oil filter. Negligence is alleged against the defendants.
7The action was commenced on August 22, 2011 and amended on October 2, 2012. The third-party claim was issued June 1, 2012. As a result of a court error, the action was administratively dismissed on March 24, 2015. On consent, that dismissal was set aside. A timetable was established on January 24, 2018 for the balance of the action. Pursuant to the timetable, the testing of the oil filter was performed and affidavits of documents were exchanged. Examinations for discovery were to occur by June 30, 2018, and the matter was to be set down for trial by January 30, 2019. Those last two steps did not occur.
8On March 27, 2019, the action was administratively dismissed by the local Registrar. It had not been set down for trial within five years of the commencement of the action.
9When plaintiffs' counsel learned of the dismissal, this motion was brought.
Legal Framework
10The principles applicable in motions to set aside a registrar's dismissal have been articulated in many decisions by this court and the Ontario Court of Appeal. Master MacLeod (as he then was) summarized the state of the law in K. Laboratories v. Highland Export Inc., [2010] O.J. No. 3116, 2010 ONSC 4032 (S.C.J.), at para. 4:
a. An order dismissing an action for delay made by the Registrar is an order of the court. A party having notice of the order must treat it as valid and move promptly to set it aside. Technical deficiencies do not render the order a nullity.
b. The objective of the court reviewing the Registrar's order is not to punish a party for technical non compliance with the rules but to determine whether or not it is just to set aside the dismissal order under all of the circumstances.
c. The court should consider the four Reid factors which may be summarized as:
i. explanation of the litigation delay which led to the dismissal notice and order in the first place;
ii. inadvertence in missing the deadline set out in the notice;
iii. promptly moving to set aside the order once it comes to the attention of the moving party; and,
iv. prejudice or lack of prejudice to the defendant.
d. All of these factors will be important but prejudice will be the key consideration. Prejudice to the defendant may be presumed particularly if time has passed since the order was granted and a limitation period has passed. In the latter case, the defendant need not prove prejudice and the onus is on the plaintiff to rebut the presumption.
e. Prejudice to the defendant is not the prejudice inherent in facing the action in the first place but prejudice in reviving the action after it has been dismissed. This could be prejudice caused by delay in the conduct of the action that would itself support dismissal under Rule 24 or it could be prejudice that has arisen post dismissal because of reliance on the finality of the order.
f. In conducting the analysis as to whether or not it is just to relieve against the consequences of the registrar's order, the court should be mindful that the party who commences litigation bears the primary responsibility under our rules for the progress of the action. Thus the burden is on the plaintiff to explain delay.
g. In weighing the relevant factors, the court should not engage in speculation concerning rights of action against a lawyer or former lawyer and should focus on the rights of the parties rather than on the conduct of counsel.
(Footnotes omitted)
11An additional principle to be applied is that the matter must be viewed contextually, such that the order made is just in all the circumstances, balancing the interests of the parties. That approach was mandated by the Ontario Court of Appeal in Scaini v. Prochnicki (2007), 85 O.R. (3d) 179, [2007] O.J. No. 299, 2007 ONCA 63, at paras. 23 and 24:
In my view, a contextual approach to this question is to be preferred to a rigid test requiring an appellant to satisfy each one of a fixed set of criteria. The latter approach is not mandated by the jurisprudence. On the other hand, the applicable rules clearly point to the former. In particular, the motion to set aside the registrar's order dismissing the action for delay engages rule 37.14(1)(c) and (2). The latter invites the court to make the order that is just in the circumstances. A fixed formula like that applied by the motion judge is simply too inflexible to allow the court in each case to reach the just result contemplated by the rules.
That is not to say that there are no criteria to guide the court. Indeed I view the criteria used by the motion judge as likely to be of central importance in most cases. While there may be other relevant factors in any particular case, these will be the main ones. The key point is that the court consider and weigh all relevant factors to determine the order that is just in the circumstances of the particular case.
Analysis
12There are two over-arching and competing policies that apply when considering a motion of this kind. The first is that matters should proceed to their conclusion on the merits, and the second is that litigation should be resolved in a timely and efficient manner, in order to maintain public confidence in the administration of justice. Those two policies were articulated by the Ontario Court of Appeal in H.B. Fuller Co. v. Rogers (c.o.b. Rogers Law Office), [2015] O.J. No. 1260, 2015 ONCA 173, at para. 25. A decision to set aside the registrar's dismissal must resolve the matter one way or the other, based on an application of the principles set out above.
13Oil Tech and Lippert & Wright concede that the first three Reid factors have been satisfactorily answered by the Cowans: the litigation delay has been explained, the deadline was missed by inadvertence and prompt steps were taken to bring this motion, making it compliant with rule 37.14(1). In view of that concession, it is unnecessary for me to review the facts relating to those issues.
14That leaves the issue of prejudice. As to non-compensable prejudice as a factor for consideration, the Ontario Court of Appeal opined in Finlay v. Van Paassen (2010), 101 O.R. (3d) 390, [2010] O.J. No. 1097, 2010 ONCA 204, at para. 28 that prejudice "invariably is a key consideration on a motion to set aside a dismissal order".
Factual Matrix
15To put the prejudice issue into context, it is necessary to review the factual basis of the Cowans' claim.
16The claim alleges that damages arose from an oil spill through a leaking filter attached to their residential oil tank. The problem was discovered on or about August 21, 2009. The Cowans allege that a technician employed by Oil Tech inspected the tank on November 6, 2006 at the request of Lippert & Wright. Oil Tech ceased operations in December 2007, and its owner, Darren Ensell, is unable to confirm that a representative of Oil Tech performed the inspection, but he acknowledges that Oil Tech retained subcontractors to complete inspections at the request of Lippert & Wright around November 2006.
17Testing of the filter in question in April 2018 by the Cowans' expert revealed that the leak was due to perforations in the top of the filter's steel shell cannister. The perforations occurred as a result of corrosion from an accumulation of water and sludge at the top of the filter. The filter was manufactured in March 2001. The manufacturer's instructions were that the filter should be replaced annually. It appeared to have been in service for more than one year prior to the failure.
18Since there were no apparent manufacturing defects, the claims against General Filters Inc. and Canadian General Filters Limited and the third party claim against Dana Canada Inc. have been dismissed.
19The claims against Oil Tech and Lippert & Wright are based mainly on contact between the technician and the Cowans on November 6, 2006 at which time it is alleged by the Cowans that on inspection, the technician reported no defects or problems and certified the oil tank and filters to be in good condition. That conclusion is based, in part, on a report form completed at the time by the technician, a copy of which was produced by Oil Tech. The Cowans further allege that Oil Tech knew or ought to have known that the filter was susceptible to corrosion and failed to advise the Cowans accordingly.
20Mr. Ensell cannot identify the technician who completed the inspection report although he assumes it was one of three people. One of those died over two years ago and he has no contact information for the other two.
Presumed or Actual Prejudice
21The limitation period appears to have expired shortly after the action was commenced. It had long-since expired by March 27, 2019 when the action was administratively dismissed. As such, there was no prejudice to the defendants on that basis arising from the dismissal.
22Oil Tech submits that the technician who performed the November 6, 2006 inspection is a key witness. Only he can speak to the issue of advice given to the Cowans. It submits that the death of one potential witness and the unknown location of two others constitutes prejudice. However, the defendants were put on notice of the claim at an early stage and can be presumed to have investigated as appropriate, well before the action was dismissed on March 27, 2019. The filter in question was available for destructive testing. The inspection report is available. Photographs and other records regarding the filter have been preserved. There is no indication of any evidence having been lost or destroyed over time.
23Although it is reasonable to assume that, in general, the memory of witnesses erodes through the passage of time, I note that the inspection was performed 14 years ago, and over 12 years before the administrative dismissal. As such, any memory erosion would hardly have been increased by the period since the administrative dismissal.
24Oil Tech submits that the prejudice it has suffered is so significant that it would be unable to obtain a fair trial if the matter is permitted to proceed. I disagree. To the contrary, in my view, Oil Tech would receive a dramatic benefit from the dismissal, in that it would not have to defend the action on its merits. There will be no significant change in the ability of Oil Tech to defend the matter at trial if the dismissal is set aside, and thus no prejudice.
25Put another way, the key determinative in this matter is whether there was prejudice caused by the administrative dismissal which I find to be minimal if any. As noted above in K. Laboratories, prejudice to the defendant is not the prejudice inherent in facing the action in the first place but prejudice in reviving the action after it has been dismissed.
26Viewing the matter contextually, I am satisfied that litigation fairness requires that the administrative dismissal be set aside and the matter proceed to trial on the merits.
Conclusion
27For the foregoing reasons, the plaintiffs' motion is granted and the Registrar's Order of March 27, 2019 is set aside.
Costs
28As I indicated at the conclusion of submissions, I will allow the parties to make brief written submissions as to costs. I encourage the parties to resolve the issue of costs consensually. If they are unable to do so, I will receive submissions according to the following timetable:
-- The Cowans are to serve Oil Tech and Lippert & Wright with written costs submissions not exceeding five pages in length and their bill of costs on or before November 27, 2020.
-- Oil Tech and Lippert & Wright are to serve the Cowans with written costs submissions not exceeding five pages in length and their bills of costs on or before December 11, 2020.
-- The Cowans are to serve Oil Tech and Lippert & Wright with any responding submissions on or before December 18, 2020.
29All submissions are to be filed with the court no later than December 21, 2020. If submissions are not received by that date, or any agreed extension, the matter of costs will be deemed settled.
Motion granted.