COURT FILE NO.: CV-13-3804-SR

DATE: 2020 11 17

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CWH Distribution Services Inc., Plaintiff

AND:

Imperial Chilled Juice Inc., Anthony Pomeroy, Lee Q. Shim and Chris Shim, Defendants

BEFORE: Doi J.

COUNSEL: Sydney Hodge, for the Plaintiff

Derrick M. Fulton and K.B. Ng, for the Defendants

HEARD: August 12, 2020. Additional written submissions received on September 10 and 24, 2020.

ENDORSEMENT

Overview

[1] The Plaintiff seeks: a) to set aside the Registrar’s order made under Rule 48.14(1)(1.) to dismiss this action for delay; and b) leave to maintain the action under ss. 7(2) of the Business Names Act, R.S.O. 1990, c. B.17 (“BNA”).

[2] For the reasons that follow, I find that the dismissal order should be set aside and that leave to maintain the action should be granted. I am satisfied that an adequate explanation has been given for the delay, which essentially arose due to the inadvertence of the Plaintiff’s former lawyer, and that restoring the action will not prejudice the Defendants’ ability to have a fair trial. I also find that the Plaintiff’s earlier failure to register a business name, which stayed the action pursuant to ss. 7(1) of the BNA, was inadvertent, did not deceive or mislead the public, and was rectified when the Plaintiff registered the business name.

Background

[3] The background to this case is largely undisputed.

a. The Claim

[4] This is a simplified action to recover damages for unpaid invoices and a breach of trust. The Plaintiff, CWH Distribution Services Inc. (“CWH”), operates a trucking and freight shipping business. The corporate Defendant, Imperial Chilled Juice Inc. (“Imperial”) operates as a juice and soya milk packaging company, and the individual Defendants served as its officers and directors. CWH’s claim arises from freight shipping work that it performed for Imperial in connection with freight and load broker agreements between them.

[5] CWH retained the law firm of Thompson MacColl & Stacy LLP (“TMS”) to act on its behalf in this matter. A lawyer formerly at TMS took carriage of CWH’s claim until he left the firm in or around November 2018. At all material times, CWH relied on him to progress its claim in timely fashion.

[6] On July 18, 2013, CWH sent Imperial a demand letter. After Imperial refused to pay the claim, CWH brought this action on August 30, 2013 to recover the unpaid debts.

b. Request to Inspect

[7] On September 12, 2013, the Defendants served a notice of intent to defend and a request to inspect records supporting CWH’s claim. On September 23, 2013, CWH advised the Defendants that it would provide responsive records, but required time to compile the information due to the length of their business relationship spanning several years. CWH proceeded to compile the records for the Defendants, although its efforts were delayed by several factors, including:

a. in early October 2013, two of CWS’s front office staff were away, which left the company short-staffed and unable to address the voluminous production matter;

b. in late October 2013, the President of CWH, Dermot Holwell, asked the company’s IT and Administration Manager to help search for the requested back-up documents to the outstanding invoices from CWH’s archives. In early November 2013, the manager advised that it would take additional time to find the documents because they had been removed from the archives and improperly refiled; and

c. from December 2013 until mid-April 2014, Mr. Holwell was away in Newfoundland caring for his ailing father who passed away on March 29, 2014. Upon his return to CWH, Mr. Holwell finished the search for documents with the manager. On May 26, 2014, CWH provided the records to its lawyer for his review.

[8] On October 17, 2013, the Defendants’ lawyer, K.B. Ng, wrote to CWH’s lawyer to advise of a limitations defence. Later that day, Mr. Ng sent a second letter to confirm CWH’s agreement to waive the delivery of a defence until the Defendants had a response to their request to inspect.

[9] On June 13, 2014, CWH’s lawyer advised Mr. Ng that he had received responsive records to the request to inspect and was awaiting confirmation that they were complete. On June 18, 2014, Mr. Ng asked for an itemized list and full page count of the materials. As the records contained about 2,100 pages of content, CWH’s lawyer declined to prepare an itemized list.

[10] On June 19, 2014, CWH’s lawyer served its records. Mr. Ng confirmed receipt of the materials the next day.

c. Close of Pleadings and Business Name Issue

[11] On June 27, 2014, Mr. Ng wrote to CWH’s lawyer to advise, among other things, that CWH had failed to register the business name of “CW Henderson Distribution,” as listed on its invoices. As such, Mr. Ng advised that CWH was in breach of ss. 2(1) of the BNA. Asserting that the action was improperly constituted, Mr. Ng stated that the Defendants would not deliver a statement of defence until CWH rectified the deficiencies.

[12] Despite their position regarding the BNA, the Defendants delivered a statement of defence on July 4, 2014. Later that day, Mr. Ng wrote to confirm the Defendants’ position on the business name issue, as set out in his June 27, 2014 letter.

[13] Thereafter, CWH formally registered CW Henderson Distribution as a business name on August 18, 2014. In his unchallenged affidavit, Mr. Holwell stated that he previously was unaware that the business name was unregistered, which was due to an innocent oversight. Mr. Holwell denied any intention to mislead anyone.

[14] The business that became CWH was started by Charles William Henderson in 1911. Over time, CWH used several business names, including CW Henderson, CW Henderson Distribution, Henderson Cartage, and Henderson Distribution. The business eventually migrated to its current activity and was provincially incorporated on June 25, 1985.

[15] The invoices at issue in this action, which CWH claims have not been paid, were issued to Imperial by CWH using the CW Henderson Distribution business name. Upon registering the business name on August 18, 2014, CWH brought itself into compliance with the BNA. Thereafter, CWH arranged for this clarification to be printed on its invoices: “CW Henderson Distribution is a registered business name of CWH Distribution Services Inc.”

[16] CWH and Imperial started a business relationship in December 2002. Over the course of that relationship, CWH invoiced Imperial using the CW Henderson Distribution name and its business address. During their dealings, the Defendants variously and interchangeably referred to CWH as “CWH,” “Henderson,” “Henderson Distribution,” and “CW Henderson” in business records and on issued cheques.

[17] There is no evidence that members of the public were misled by CWH’s failure to register the business name.

[18] In the fall of 2014, CWH’s lawyer considered the Defendants’ position that CWH needed leave of the court to maintain the action. After he grew overwhelmed with other work, he enlisted the assistance of another lawyer at TMS to help prepare materials for a leave motion to maintain the action. Upon further reflection, he formed a view in late May or early June 2015 that seeking leave at the outset of trial instead of bringing a motion before trial would be more cost-effective. He then arranged for CWH’s affidavit of documents to be prepared.

[19] On September 1, 2015, CWH’s lawyer sent a draft affidavit of documents to Mr. Holwell for review. Mr. Holwell approved the draft on September 28, 2015, understanding that it would be served on the Defendants to advance the litigation. But CWH’s lawyer did not deliver the affidavit of documents or inform his client that it was not served. As such, Mr. Holwell was unaware that the affidavit of documents had not been served until Koskie Minsky LLP (“KM”) advised him of this after the law firm was retained in August 2019 to take carriage of this motion.

[20] In early March 2016, CWH’s lawyer began to prepare a draft discovery plan.

[21] By letter dated May 6, 2016, CWH’s lawyer wrote to Mr. Ng to share his proposal for further conducting the action. He advised that CWH’s business name had been registered, proposed that the leave motion to maintain the action be heard at the outset of trial, and suggested a timetable for the remaining litigation steps. Although copied on this letter, Mr. Holwell did not receive any subsequent correspondence until after June 7, 2019, when TMS staff advised him that CWH’s action had been administratively dismissed for delay.

[22] In his responding letter dated May 13, 2016 Mr. Ng advised that the Defendants did not agree with CWH’s proposal to advance the case, as they took the position that CWH required leave of the court to proceed with the action. At the time, CWH’s lawyer incorrectly thought that he had forwarded Mr. Ng’s letter to his client for instructions. He later found no correspondence to confirm this. However, believing that he was awaiting his client’s instructions, CWH’s lawyer took no further steps in this matter.

d. Inadvertence in Not Setting the Action Down for Trial

[23] Prior to the Spring of 2016, Mr. Holwell regularly followed up with CWH’s lawyer to inquire about the status of the litigation and gave instructions for the case to advance expeditiously.

[24] After May 6, 2016, Mr. Holwell did not hear from CWH’s lawyer.

[25] In August 2016, the legal assistant to CWH’s lawyer departed the TMS firm. Due to inadvertence, a reminder was not created for the lawyer to follow up on this case.

[26] On March 17, 2017 and April 7, 2017, Mr. Holwell sent two emails asking CWH’s lawyer for a case update. The lawyer has no recollection of these communications.

[27] On March 17, 2017, Mr. Holwell received a notification that his email could not be delivered to the email address belonging to the lawyer’s former assistant. Apart from that one instance, Mr. Holwell was not notified of any delivery failures.

[28] Mr. Holwell was untroubled by the lack of response to his emails. TMS had acted for CWH successfully in two earlier matters. As a result, he came to trust TMS to safeguard CWH’s interests.

He also came to accept that litigation can be time-consuming. In turn, Mr. Holwell formed a belief that CWH’s lawyer would contact him once a development arose in the case.

[29] In November 2018, CWH’s lawyer left the TMS firm. Before doing so, he did not transfer carriage of this action to another lawyer because he inadvertently confused it with another matter that was no longer extant. Believing CWH’s action to be inactive, he did not inform Mr. Holwell of his departure from the firm. As a result, the action inadvertently was not set down for trial.

[30] From its unchallenged evidence on this motion, I accept that CWH maintained an intention, at all material times, to pursue this action to recover its claim for damages from the Defendants.

e. Motion to Set Aside the Registrar’s Order

[31] On May 28, 2019, the Registrar dismissed this action for delay.

[32] In early June 2019, the dismissal order came to TMS’ attention. Shortly thereafter, this matter was reported and investigated for professional indemnity purposes.

[33] Before the action was dismissed, Mr. Holwell was unaware of Rule 48.14(1)(1.) which requires an action to be set down for trial within five (5) years of its commencement, and unaware that CWH’s action was in jeopardy. He also was unaware that CWH’s former lawyer had left TMS, and that steps had not been taken to address CWH’s obligations to proceed with its action. When TMS advised that the action had been dismissed for delay, Mr. Holwell was dismayed that CWH’s interests had not been protected.

[34] On June 7, 2019, another TMS lawyer wrote to Mr. Ng to seek the Defendants’ consent for CWH’s motion to set aside the dismissal order. On June 26, 2019, Mr. Ng replied that he would not advise his clients to give their consent.

[35] By correspondence dated August 16, 2019 KM served the Defendants with notice of this motion for CWH. The parties agreed to return this as a long motion on August 12, 2020.

Analysis

a. Setting Aside the Dismissal for Delay

[36] CWH seeks an order under Rule 37.14(1)(c) to set aside the Registrar’s dismissal order issued on May 28, 2019. For the reasons that follow, I find that the order should be set aside to restore the action.

b. Whether the Registrar’s Order is a Nullity

[37] During submissions, a threshold matter arose as to whether the Registrar’s dismissal order was a nullity because CWH had failed to register its business name which breached ss. 2(1) of the BNA and triggered an automatic stay of the action under ss. 7(1) of the BNA until leave to maintain the proceeding was sought. As explained below, ss. 7(1) automatically stayed CWH’s action. However, in my view, the Registrar still had jurisdiction under Rule 48.14(1)(1.) to dismiss the action for delay.

[38] A statutory scheme should be interpreted in its grammatical and ordinary sense, and in harmony with the scheme of the act, the object of the statute, and the intention of the legislature: Re Rizzo and Rizzo Shoes Ltd., 1998 CanLII 837 (SCC), [1998] 1 SCR 27, at para. 21; Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, at para. 26. It should also be interpreted purposively, in keeping with the policy objectives of the statutory scheme as a whole: Ruth Sullivan, Statutory Interpretation, 3rd ed. (Toronto: Irwin Law, 2016), at p. 46.

[39] Subsection 2(1) and s. 7 of the BNA provide as follows:

Registering name

2 (1) No corporation shall carry on business or identify itself to the public under a name other than its corporate name unless the name is registered by that corporation.

Ability to sue

7(1) A person carrying on business in contravention of subsection 2(1), (2) or (3) or subsection 4(4) or (6) is not capable of maintaining a proceeding in a court in Ontario in connection with that business except with leave of the court.

Same

(2) The court shall grant leave if the person seeking to maintain the proceeding satisfies the court that,

(a) the failure to register was inadvertent;

(b) there is no evidence that the public has been deceived or misled; and

(c) at the time of the application to the court, the person is not in contravention of this Act or the regulations.

Contracts valid

(3) No contract is void or voidable by reason only that it was entered into by a person who was in contravention of this Act or the regulations at the time the contract was made.

[40] A plain reading of ss. 7(1) reveals that a person that carries on business with an unregistered name in breach of ss. 2(1) cannot maintain an action without leave of the court. This may imply that a business that earlier was in default but now is compliant (i.e., by having registered the impugned business name) may continue a proceeding unimpeded. However, ss. 7(2)(c) states that the court shall grant leave to maintain the proceeding if, in addition to other things, the entity is not in default of the legislation when it seeks leave. Reading ss. 2(1) with ss. 7(1) and (2), the provisions seem to contemplate a party in breach of ss. 2(1) being required to obtain leave of the court to maintain a proceeding that was, in effect, stayed by ss. 7(1) due to non-compliance. This suggests that an action by a plaintiff in default of ss. 2(1) is stayed by virtue of ss. 7(1) and may only be continued if the court grants leave to maintain the action under ss. 7(2): Bloomsbury & Butterfield Ltd. (c.o.b. Heritage Auctioneers) v. Economical Mutual Insurance Group (c.o.b. Langdon Insurance), 2011 ONSC 4889, at para 9; Excalibur Special Opportunities LP v. Schwartz Levitsky Feldman LLP, 2013 ONSC 3271 at para 38, leave to appeal refused, 2013 ONSC 4901 (Div Ct). However, as set out below, a review of decisions that considered ss. 7(1) of the BNA, or similar provisions under different statutes, discloses some ambiguity as to whether an action by a party in default of statutory requirements is automatically stayed until leave to maintain the action is granted.

[41] In Excalibur, Perell J. heard a motion for leave to maintain an action under ss. 28(2) of the

Limited Partnership Act, R.S.O. 1990, c. L.16 (“LPA”).[^1] In that case, the plaintiff failed to file a

required declaration. This implicated ss. 28(1) of the LPA, which provides that a partnership in default of its filing obligations is “not capable of maintaining a proceeding in a court of Ontario” except with leave of the court: Excalibur, at paras 22, 24 and 25. Notably, the language in s. 28 of the LPA is similar to s. 7 of the BNA and s. 18 of the Corporations Information Act, R.S.O. 1990,

c. C.39 (“CIA”).[^2] After reviewing relevant cases that considered the operation of similar statutory provisions, Perell J. concluded (at para. 45):

All this case law indicates that an action commenced while the plaintiff is non-compliant is

not a nullity but may be stayed and if stayed, then the stay may be lifted by the court

granting leave, in which case, the existing action moves ahead. [Emphasis added]

Perell J.’s conclusion on this point was adopted by C. Brown J. in PDP Importing v. Tiffany Gate Foods Inc., 2015 ONSC 576, at para. 27.

[42] In certain cases, the court ordered an action to be stayed under s. 7 of the BNA, s. 28 of the

LPA, or s. 18 of the CIA where the plaintiff was in default of applicable statutory obligations:

Canasian Sales Corp. v. Colson, 2013 ONSC 1505 at para 24; Quality Pallets v. Canadian Pacific Railway Co., 2012 ONSC 486 (Master) at paras 25-26; Lavin v. British Telecommunications PLC, [1995] O.J. No. 1763 (Master) at para 13; 32262 B.C. Ltd. (c.o.b. Sign-O-Lite) v. Baynes Holdings Inc., [1993] O.J. No. 2889 (Gen Div) at para 15. In Swiss Tech Incorporated v. 2316543 Ontario Limited, 2017 ONSC 6742 (Master) at para 45, the court declined to order a stay of the action after the plaintiff rectified its delinquent business name registration under the BNA. In Panther Film Services Inc. v. KRK Financing Inc., 2010 ONSC 709 (Master), aff’d 2010 ONSC 4225 at para 32, leave to appeal denied, 2010 ONSC 6155 (Div Ct), the court initially granted a consent order to stay the action until the plaintiff rectified its delinquent filings and brought a motion to lift the stay. Collectively, these cases seem to suggest that an automatic stay may not necessarily arise under ss. 7(1) of the BNA.

[43] However, in other cases, the court granted leave for plaintiffs to maintain actions that had been stayed by the aforementioned provisions so that those actions could continue as if they had never been interrupted: PDP Importing v. Tiffany Gate Foods Inc., 2014 ONSC 2644 (Master) at para 25; aff’d 2015 ONSC 576, at para. 35; Bloomsbury at para 25; Hurley Corp. v. Canadian IPG Corp., 2010 ONSC 681 at paras 6 and 34; Ramey (c.o.b Ramey’s Contracting) v. Winkleigh Co- operative Housing Corp., [2010] OJ No 3636 (SCJ) at para 90; Sports Medicine & Rehabilitation Clinics v. Kotick, [2008] OJ No 3617 (Master) at para 4; Tempus Investments v. Foxton, [1994] OJ No 2210 (Gen Div) at para 20.

[44] The statutory purpose of the BNA was described in Bazinet v. Kinross Gold Corp., [1999] OJ No 638 (Gen Div), a leading authority on the interpretation and application of this statute, in which Valin J. stated (at para 14):

The general purpose of the Act is to ensure that businesses are registered. The limitation placed on the ability of an unregistered business to maintain a proceeding seems to be in part disciplinary. There needs to be some consequence for failing to register a partnership. However, where the failure to register is inadvertent, and no harm flows from it, the disciplinary function of the Act becomes largely irrelevant. It would be unfair to bar actions in such circumstances.

More recent decisions of the court have adopted this policy rationale: PDP Importing, 2015 ONSC 576 at para 31; Excalibur at para 48; Ramey at para 86.

[45] In my view, requiring a corporation in default of its obligations to register a business name before seeking leave under ss. 7(2) of the BNA to maintain a proceeding is consistent with the underlying statutory purpose of ensuring that businesses are registered. By requiring a defaulting party to seek leave, the court may assess the leave criteria under ss.7(2)(a) to (c) (i.e., whether the failure to register was inadvertent, whether anyone was deceived or misled by the contravention, and whether the default has been rectified) and determine whether leave should be granted in light of these factors. This enables the court to ensure compliance with legislative requirements and deal with any prejudice arising from the non-compliance.

[46] Accordingly, having regard to the foregoing, I find that CWH’s action was automatically stayed under ss. 7(1) of the BNA due to its breach under ss. 2(1) of the BNA to register its business name under the statute. In my view, this interpretation is consistent with the ordinary grammatical meaning of these provisions and is consistent with the policy intent behind the statutory scheme.

[47] In light of the automatic stay under ss. 7(1) of the BNA, CWH submits that the Registrar arguably lacked jurisdiction under Rule 48.14(1)(1.) to dismiss its action for delay, such that the dismissal order was a nullity. In contrast, the Defendants submit that the dismissal order is not a nullity as the Registrar could dismiss the action for delay under Rule 48.14(1.) without any conflict with the automatic stay under ss. 7(1). Neither side cited any authority to support their positions.

[48] In my view, the Registrar’s authority under Rule 48.14(1)(1.) does not depend on whether an action is stayed or maintained under ss. 7(1) and (2) of the BNA, respectively. Rule 48.14(1)(1.) states:

Dismissal of action for delay

48.14 (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 fifth anniversary of the commencement of the action.[^3]

For convenience, ss. 7(1) and (2) of the BNA are reproduced as follows:

Ability to sue

7(1) A person carrying on business in contravention of subsection 2(1), (2) or (3) or subsection 4(4) or (6) is not capable of maintaining a proceeding in a court in Ontario in connection with that business except with leave of the court.

Same

(2) The court shall grant leave if the person seeking to maintain the proceeding satisfies the court that,

(a) the failure to register was inadvertent;

(b) there is no evidence that the public has been deceived or misled; and

(c) at the time of the application to the court, the person is not in contravention of this Act or the regulations

[49] In my view, Rule 48.14(1)(1.) and ss. 7(1) and (2) of the BNA may be read and applied in tandem without conflict. The application of one provision does not implicitly or explicitly preclude an application of the other to trigger a conflict: Lévis (City) v. Fraternité des policiers de Lévis Inc., 2007 SCC 14 at para 47. I do not see this as a situation in which the provision of a specialized act should override the provision of an act of general application due to a conflict: Sullivan, Statutory Interpretation at pp. 327-328. As the legislature is presumed to not intend contradictory enactments, courts presume legislative coherence and take a very restrictive approach to what constitutes a statutory conflict: Thibodeau v. Air Canada, 2014 SCC 67 at para 93.

[50] In this case, CWH could have sought leave to maintain the action under ss.7(2) and set the action down for trial within five years of its commencement to comply with Rule 48.14(1)(1.). Doing so would have allowed CWH to advance the action and avoid a dismissal, without conflict. A presumption of statutory overlap arises when two provisions may be applied without conflict to the same facts: Ruth Sullivan, Sullivan on the Construction of Statutes, 6th ed. (Markham: LexisNexis, 2014), at p. 338. On the facts of this case, I am satisfied that s. 7 of the BNA and Rule 48.14(1)(1.) both applied in this matter.

[51] This interpretation, which recognizes a registrar’s authority to dismiss an action that is subject to a stay under ss. 7(1) of the BNA, is consistent with the policy behind administratively dismissing an action for delay under Rule 48.14(1)(1.). Plaintiffs must comply with procedural

requirements under the Rules, including the requirement to set an action down for trial within five years from its commencement under Rule 48.14(1)(1.). This ensures that proceedings are advanced with diligence. A failure to do so will put the action at risk of being dismissed for delay.

[52] In my view, the general requirement under Rule 48.14(1)(1.) for an action to be set down for trial within five years applies in the context of a stay under ss. 7(1) of the BNA. Where ss. 7(1) applies to stay an action, the plaintiff may seek leave under ss. 7(2) to maintain its action and advance to trial once leave is granted. Should the plaintiff fail to obtain leave and not meet required timelines under the Rules, I see no reason why a consequential default should be treated differently from any other failure to meet prescribed deadlines for litigation.

[53] CWH’s argument, if accepted, would indefinitely relieve it of any obligation to advance this proceeding under the Rules because the action is stayed by ss. 7(1) of the BNA. Such an outcome would, in my view, be inconsistent with the important goal of the civil justice system to resolve proceedings in a timely and efficient manner: Rule 1.04(1); 1196158 Ontario Inc. v. 6274013 Canada Limited, 2012 ONCA 544 at para 17. It would also be contrary to the purpose behind Rule 48.14 of allowing the court to control the pace of litigation to ensure that disputes are resolved in a time-effective manner: Faris v. Eftimovski, 2013 ONCA 360 at para 33. To achieve timely and efficient outcomes in the interests of justice, procedural rules must be respected and enforced: 1196158 Ontario Inc. at para 18. There are consequences for conducting an action in a dilatory fashion: Wellwood v. Ontario Provincial Police, 2010 ONCA 386 at para 48.

[54] In my view, this case is distinguishable from the situation in 625041 Ontario Inc. v. Ford Motor Company of Canada, 2012 ONSC 2931, where the court had ordered a stay of proceedings under ss. 7(1) of the Arbitration Act, 1991, S.O. 1991, c. 17, to permit the parties to arbitrate their dispute instead of arguing the action in court. On those facts, I accept Goodman J.’s analysis in Ford that the court’s stay order effectively removed the registrar’s jurisdiction under Rule 48.14(1) to dismiss the action for delay: Ford, at paras. 30-31.[^4] In the face of an order by a judge to stay an action, I am persuaded that a registrar’s power under Rule 48.14(1)(1.) is displaced and cannot be

exercised in an unrestrained fashion. This is consistent with the language of Rule 48.14(1), which circumscribes a registrar’s power to dismiss an action for delay with the words, “[u]nless the court orders otherwise.”

[55] The issue of whether a dismissal order under the Rules is rendered a nullity by a statutory stay of proceedings also was considered in Micallef v. Dodig, 2009 CanLII 72091 (Div Ct), an appeal from a master’s decision that upheld a registrar’s order to dismiss an action for delay.[^5] The dismissal order was made while the action was stayed under ss. 69.3(1) of the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3 (“BIA”), which automatically prevents a creditor from bringing or continuing an action against a bankrupt debtor.[^6]

[56] In Micallef, Dambrot J. noted that a stay under s. 69.3(1) of the BIA may only be lifted by satisfying the stringent test under s. 69.4 of the BIA to grant a creditor relief against the statutory stay.[^7] In turn, Dambrot J. held that the registrar’s dismissal order was a nullity in the face of the stay under ss.69.3(1) due to the inconsistency of the dismissal order with the operation and purpose of the stay under the federal BIA scheme, which was paramount: Micallef, at para. 51. For instance, he noted that a plaintiff facing a stay under ss. 69.3(1) may not have grounds to set aside the stay to progress the action in accordance with the Rules, and may incur unnecessary expense and waste in a futile effort to preserve the action. Dambrot J. also noted that the court may find that a plaintiff

is unlikely to be materially prejudiced by a continuing stay under s. 69.3 in circumstances where it would be inequitable for the stay to be set aside, which would result in the dismissal order being preserved: Micallef at paras 56-57. As such, the dismissal order was found to be a nullity.

[57] This is not the situation here. As set out earlier, I see no conflict arising by allowing both

s. 7 of the BNA and Rule 48.14(1)(1.) to apply. More specifically, I find no basis to conclude that exercising the Rule 48.14(1)(1.) dismissal power is inconsistent with a stay under ss. 7(1).

[58] Accordingly, I find that the dismissal order is not a nullity.

c. Setting Aside the Registrar’s Dismissal Order

[59] I now turn to whether the Registrar’s dismissal order should be set aside.

[60] Under Rule 37.14(2), the court has the discretion to set aside or vary a dismissal order on such terms as are just. Specifically, Rules 37.14(1) and (2) provide:

37.14(1) A party or other person who,

(a) is affected by an order obtained on motion without notice;

(b) fails to appear on a motion through accident, mistake or insufficient notice; or

(c) is affected by an order of a registrar,

may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.

(2) On a motion under subrule (1), the court may set aside or vary the order on such terms as are just.

[61] The court’s discretion under Rule 37.14(1) to set aside a dismissal order is informed by Rule 1.04(1), which provide:

1.04(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits. [Emphasis added]

[62] The factors for the court to consider on a motion to set aside a registrar’s order to dismiss an action for delay were formulated by Master Dash in Reid v. Dow Corning Corp. (2011), 11 CPC (5th) 80 (ONSC) at para 41, as follows:

(1) the length of the litigation delay and whether or not a plaintiff has provided an adequate explanation for it;

(2) whether the failure to meet the mandated time limits was due to inadvertence;

(3) whether the motion to set aside the dismissal order was brought promptly; and

(4) whether the delay has prejudiced the defendant.

[63] The Court of Appeal adopted the four-part Reid test in Scaini v. Prochnicki, 2007 ONCA 63 at para 24, and in Prescott v. Barbon, 2018 ONCA 504 at paras 14-15.

[64] In applying the Reid factors, which are not exhaustive, a court must consider and weigh all relevant factors to arrive at an order that is just in the circumstances of the case. The overriding objective is to achieve a result that balances the parties’ interests and the public interest in having a timely resolution of disputes. In its analysis, the court is not to adopt a rigid or formulistic application of the Reid factors based on technical non-compliance, but rather, should favour a contextualized approach to arrive at a just result: H.B. Fuller Company v. Rogers (Rogers Law Office), 2015 ONCA 173 at para 21. In balancing the competing interests on a motion to set aside a dismissal, the effect of a plaintiff’s delay in prosecuting an action on the defendant’s ability to defend the action is of primary importance: MDM Plastics Limited v. Vincor International Inc., 2015 ONCA 28 at para 33, citing Aguas v. Rivard Estate, 2011 ONCA 494 at para 21.

[65] In reviewing a registrar’s dismissal for delay under Rule 48.14, the weight of authority favours the determination of civil actions on their merits. Courts should avoid a purely formalistic or mechanical application of time lines that would penalize parties for technical non-compliance and frustrate the fundamental goal of having a dispute determined on its merits: Fuller at para 26.

[66] Notably, a party’s rights should not be impaired due to inadvertence or mistakes on the part of its counsel: Finlay v. Van Passen, 2010 ONCA 204 at para 33. This was clearly expressed by the Court of Appeal in Fuller (at para 27):

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.” [Emphasis added, citations omitted].

[67] Applying these principles, I find that the Registrar’s order to dismiss the action for delay should be set aside.

1. Reasonable Explanation for Delay

[68] On a motion to restore an action for litigation delay, an explanation for the delay must be reasonable, acceptable or satisfactory: Kupets v. Bonavista Pools Limited, 2015 ONSC 7348 (Div. Ct.), at para. 18; Carioca’s Import & Export Inc. v. Canadian Pacific Railway Limited, 2015 ONCA 592, at para. 45. In considering the delay, the court should assess whether the plaintiff’s explanation for the delay is reasonable in light of the overall conduct of the action as a whole, without requiring the plaintiff to justify its carriage of the case at each incremental stage of the action: Carioca’s Import, at para. 46.

[69] From the evidence before me, and having regard to the litigation as a whole, I find that CWH’s explanation for the litigation delay is satisfactory. As set out earlier, I accept that the delay occasioned by CWH, which led to the dismissal order, was essentially attributable to a series of inadvertent oversights and errors by its former lawyer. As set out earlier, CWH has provided a fairly thorough explanation for the delay that arose in this proceeding, without any unexplained material periods of delay, from when CWH commenced the action on August 30, 2013 until the Registrar dismissed it on May 21, 2019.

[70] From its uncontested evidence, I am satisfied that CWH always maintained an intention to pursue its claim to trial, or a settlement, throughout the litigation. CWH responded to a request to inspect by producing a substantial number of responsive records in relatively diligent fashion,

promptly rectified its business name registration shortly after learning of the oversight, approved an affidavit of documents, and shared a proposed discovery plan to progress the litigation.

[71] In my view, CWH advanced the litigation without inordinate delay from the start of proceedings on August 30, 2013 until its business name was registered on August 18, 2014. The action then stalled as CWH’s lawyer became overwhelmed with his practice from the fall of 2014 to the spring of 2015. With help from another TMS lawyer, the progress on the action resumed, albeit rather gradually, as CWH’s materials for a leave motion to maintain the action were prepared. Then, after forming the view that CWH should seek leave at trial, CWH’s lawyer turned his attention to pre-trial discovery by preparing a draft affidavit of documents that Mr. Holwell approved by September 28, 2015 and a draft discovery plan, which he shared with Mr. Ng in his May 6, 2016 letter. Although progress came about in a somewhat slow and piecemeal fashion, I find that the action advanced meaningfully over this period.

[72] After Mr. Ng’s letter of May 13, 2016 which rejected CWH’s discovery plan, the action came to a standstill. Believing incorrectly that Mr. Ng’s letter had been sent to Mr. Holwell for instructions, CWH’s lawyer took no further steps to advance the litigation. Due to inadvertent errors and oversights by its lawyer, CWH’s action was not set down for trial and was dismissed for delay on May 21, 2019.

[73] Having regard to the action as a whole, I find that the overall litigation delay is roughly four (4) years, more or less. Although this delay is not insignificant, courts on other motions to restore actions have countenanced even longer delays of up to six (6) years or more in the course of setting aside dismissal orders: Cornell v. Tuck, 2018 ONSC 7085 at paras 79 and 127 [delay of between 5 ½ and 6 years and 1 month]; Chiarelli v. Weins, 2000 CanLII 3904 (ON CA) at paras 17 and 19 [delay of more than 6 years]; Micallef at paras 11 and 20 [delay of between 4 years and 5 years plus 10 months]. On a motion to set aside a dismissal for delay, the court is mainly concerned with the rights of the litigants: Finlay at para 33. An innocent client will ordinarily not lose the ability to proceed with litigation due to the inadvertence of counsel: Marché D’Alimentation Denis Theriault Ltée et al. v. Giant Tiger Stores Ltd., 2007 ONCA 695 at para 28.

[74] From the record, I am satisfied that Mr. Holwell came to trust and rely on CWH’s lawyer to advance the litigation for the company. CWH’s lawyer kept Mr. Holwell apprised of the action

right up until May 6, 2016, when he copied Mr. Holwell with his letter to the Defendants advising that CWH had rectified its business name registration, intended to seek leave at trial to maintain the action, and had a proposed a timetable for the balance of the action. From this, I accept that Mr. Holwell reasonably and understandably believed that the action was progressing as he had instructed and expected.

[75] Mr. Holwell sent two (2) emails to CWH’s lawyer on March 17, 2017 and April 7, 2017 to ask for updates on the case. On March 17, 2017 he was notified that his first email could not be delivered to the lawyer’s former assistant, who had left TMS. But I accept that Mr. Holwell was not concerned by the lack of response or the non-delivery notification given his understanding that CWH’s lawyer was advancing the action diligently, as instructed. Mr. Holwell’s trust in the lawyer was reinforced by the successful results that lawyers at TMS previously had obtained for CWH in other prior litigation.

[76] I am satisfied that CWH did not proceed to discoveries and set the action down for trial in timely fashion due to inadvertence by its former lawyer, as set out earlier. The Defendants did not cross-examine on CWH’s affidavits in support of this motion, and did not seriously challenge any of its evidence in their submissions.

[77] Once CWH learned of the dismissal order, it promptly took remedial steps. The matter was reported and investigated for professional indemnity purposes, and arrangements were made in short order to bring this motion to set aside the dismissal.

[78] This is not a case where litigation delay was from a deliberate decision to place the action into abeyance and not proceed to trial: e.g., Labelle v. Canada (Border Services Agency), 2016 ONCA 187 at para 35. I accept that CWH always intended to proceed to trial, or a resolution, and undertook efforts to progress its claim. Regrettably, a series of inadvertent errors and oversights by CWH’s former lawyer stalled the action, which led to its administrative dismissal for delay.

[79] In my view, the apparent decision by the Defendants to simply wait for CWH’s next move after Mr. Ng’s letter of May 13, 2016 is a relevant factor to consider in assessing the delay within the overall dynamics of this proceeding. Although a plaintiff bears the primary responsibility for moving a case forward, the conduct of a defendant is also relevant in assessing litigation delay under the first Reid factor, especially where the plaintiff encounters resistance when trying to move

the action along: Fuller, at para. 23; Kupets, at para 4; Carioca’s Import, at para. 53. In his letter, Mr. Ng asked for particulars of CWH’s remedial efforts to rectify its earlier failure to register its business name and objected to CWH’s discovery plan. But after receiving no reply, the Defendants were content to passively allow the action to stall without making any effort to follow-up with CWH for several years until the action was dismissed on May 21, 2019. In my view, the Defendants’ passive acquiescence reflected the sort of “conventional view of litigation strategy” that the Court of Appeal disapproved of in Carioca’s Import for not facilitating access to justice:

T he suggestion that it is normal and acceptable for a defendant, if not to actively delay, to

simply wait for the plaintiff to make the next move, may be based on a conventional view oof litigation strategy. T he objectives of timely and efficient access to justice, and effective

use of court resources require all parties to play their part in moving actions forward, and

for counsel to act in a way that facilitates rather than frustrates access to justice: Hryniak, at para. 32. For these reasons, although the burden of proof on the motion is on the plaintiff, the conduct of all parties in relation to the litigation is relevant in determining whether to restore an action to the trial list. [Emphasis added; ibid.]

[80] Earlier in the action, the Defendants seemed to take a similar “wait-and-see” approach by not following up after serving their statement of defence on July 4, 2014, which CWH’s lawyer later responded to on May 6, 2016. Although Mr. Ng’s reply letter of May 13, 2016 reserved comment on any prejudice that the Defendants suffered by reason of the delay, his letter did not explicitly mention any prejudice. I accept that Mr. Ng’s reply raised CWH’s need for leave to maintain the action, which was not unreasonable in light of ss. 7(1) of the BNA. However, given the Defendants’ unhurried approach to the litigation, and lack of any express complaints of delay- related prejudice until they opposed CWH’s motion to set aside the dismissal, I find that these circumstances favour granting the motion.

[81] Accordingly, I am satisfied that CWH has met the first arm of the Reid test by showing an adequate explanation for the litigation delay. I accept that CWH always intended to proceed with the action, that steps were taken to progress the case, that the delay in progressing the litigation was due to inadvertent errors and oversights by its former lawyer, and that the overall length and context of the delay should not bar the action from being restored.

2. Lawyer’s Inadvertence to Meet the Mandated Time Limits

[82] In considering the second arm of the Reid test, the court is primarily concerned with the rights of litigants and not the conduct of their counsel. On a motion to set aside a dismissal order, 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:” Finlay at para 33, citing Marché at para 28.

[83] As stated earlier, I am satisfied that CWH did not set this matter down for trial due to inadvertent errors and oversights by its legal counsel. After May 6, 2016, CWH’s lawyer did not update Mr. Holwell or seek instructions due to a miscommunication. Although CWH had standing instructions to advance the action, its lawyer inadvertently failed to serve its affidavit of documents or proceed to discoveries. He later mistook this matter for another that had concluded, and did not transfer carriage of the case to another lawyer before he left the TMS firm. Unbeknownst to CWH, its action stalled and was not set down for trial before it was dismissed for delay.

3. The Motion was Brought Promptly

[84] The Defendants concede that CWH promptly brought its motion to set aside the dismissal. Shortly after learning of the May 21, 2019 dismissal order, TMS wrote to Mr. Ng on June 7, 2019 to ask for the Defendants’ consent to set aside the order. Around this time, CWH’s former lawyer reported the matter to his professional indemnity insurer, who retained LawPRO counsel at KM to investigate. After the Defendants declined to give their consent, KM served its notice of motion on August 16, 2019. The parties then agreed to set this down as a long motion returnable on August 12, 2020. As such, I am satisfied that CWH promptly brought this motion.

4. Prejudice and Whether a Fair Trial is Possible

[85] As set out below, I find that CWH has demonstrated that its litigation delay has not caused significant actual prejudice to the Defendants’ ability to have a fair trial.

[86] Prejudice is a key factor to consider on a motion to set aside a dismissal order: Finlay, at para. 28. In considering prejudice under the fourth Reid factor, the court must address:

a. whether the plaintiff has satisfied its onus to show no significant actual prejudice to the defendant’s ability to defend the action as a result of the delay caused by the plaintiff; and

b. whether in light of the delay the principle of finality and the respondent’s reliance on the security of its position should nevertheless prevail.

Prescott at para 36; Fuller at para 28. The underlying issue is whether the defendant’s interest in finality should trump an indulgence to the plaintiff: Prescott at para 37.

[87] To assess whether a defendant would suffer non-compensable prejudice if the action is allowed to proceed, the court applies a contextual approach based on all of the circumstances in the case before it, including the defendant’s conduct: MDM Plastics at para 32. The issue of prejudice is a factual question based on the prejudice that impacts a defendant’s ability to defend the action due to litigation delay caused by the plaintiff, and not simply the sheer passage of time: Carioca’s Import at paras 49 and 57; MDM Plastics at paras 25 and 33. Prejudice that exists regardless of the plaintiff’s delay is not relevant: Labelle at para 23. Further, the defence cannot assert prejudice after failing to do something that it reasonably could or ought to have done, such as interviewing witnesses or otherwise preserving relevant evidence: Ibid; Chiarelli at para 15. This analysis apportions responsibility for the delay: Carioca’s Import at para 57.

[88] The Defendants claim prejudice by the passage of time, and specifically a lack of witnesses and records, which they submit would prevent them from having a fair trial in this case. But the Defendants had fairly early notice of CWH’s claim when its statement of claim was issued on August 30, 2013, which gave the Defendants a reasonable opportunity to find witnesses and documents to preserve evidence for its defence: Chiarelli at paras 15-16. Moreover, in response to their request to inspect, the Defendants received about 2,100 records from CWH on June 19, 2014. They later also received CWH’s unsworn affidavit of documents. Prior to the dismissal for delay, the Defendants never raised specific concerns of actual prejudice due to the pace of the litigation.

[89] I agree with CWH that it was incumbent on the Defendants to interview witnesses and preserve evidence, including relevant business records: Labelle at para 23. The Defendants’ failure to act diligently to preserve evidence cannot form the basis for asserting prejudice to defeat this

motion. To this end, Chris Shim candidly concedes in his affidavit for the Defendants that he still has not attended his lawyer’s office to review the “massive” collection of about 2,100 records that CWH produced in June 2014 (i.e., over 6 years ago), for reasons that are unexplained. As such, I accept that the Defendants did not undertake a sufficient review of CWH’s earlier productions within a reasonable period, which may well have hindered their ability to fully understand CWH’s claim and take steps to preserve evidence to defend the action. There is also no evidence of when the Defendants first began to search for and preserve relevant business records, or what those efforts entailed. For instance, Mr. Shim claims that Imperial’s accounting records from August 2008 now appear to be lost, likely because the Canada Revenue Agency only requires records to be kept for six (6) years, although it would seem that these records should have been available around August 30, 2013 when CWH commenced this action, and may well have been preserved by the Defendants exercising reasonable diligence. Mr. Shim also submits that the retention of Imperial’s accounting records may have been complicated by the fact that certain business assets were sold in September 2014, although the Defendants were clearly on notice by then of the need to retain relevant records. In the circumstances, I am not satisfied that the Defendants have adequately shown prejudice arising from CWH’s litigation delay.

[90] I give little weight to the Defendants’ submission regarding the unavailability of witnesses. All of the parties remain available to deal with the litigation, including Mr. Shim, a former director and vice-president at Imperial who served as the primary contact person in respect of all issues pertaining to Imperial’s day-to-day business operations and accounting activities. Although he no longer serves in that role, Mr. Shim is available to testify and support all of the Defendants. In fact, in his affidavit to support the Defendants’ position on this motion, Mr. Shim gave fairly detailed evidence of the background to this case.

[91] The Defendants also assert prejudice due to the unavailability of other witnesses. However, there is no evidence before the court that these other witnesses actually are unavailable, what they may or may not recall, why their unavailability is attributed to CWH’s delay, or how the Defendants would be prejudiced by not having these witnesses testify at trial. Moreover, there is no evidence of the Defendants’ efforts, if any, to contact these other witnesses for the purpose of interviewing them to preserve their evidence. In my view, the Defendants’ claim of prejudice on

these grounds in inadequately supported by the record. The Defendants cannot assert prejudice by failing to take diligent steps that they reasonably ought to have taken: Labelle at para 23.

[92] In any event, as this is a collections case based on shipping invoices, I am persuaded that the case likely will turn more on invoices and business records than the memories of individual witnesses. Without knowing about the importance of the Defendants’ purported missing evidence, or what efforts were taken to preserve it, I am unable to find on the record before the court that the Defendants would suffer material non-compensable prejudice to warrant upholding the dismissal order for delay.

[93] CWH’s delay arose after it produced substantial records in response to a request to inspect by the Defendants. CWH compiled and delivered these documents in an effort to produce all of its responsive records. Although some documents may potentially be missing, CWH delivered a comprehensive set of records on June 19, 2014 to enable the Defendants to carefully assess the claim and meaningfully prepare their defence in this proceeding. In the circumstances, and in the absence of compelling evidence to support the Defendants’ claim of prejudice, I am not persuaded that a fair trial is not possible.

[94] Instead of setting aside the dismissal order, the Defendants submit that CWH’s proper remedy is to seek recourse from its lawyer and/or his professional liability insurer. However, the courts have expressly rejected this position. On a motion to set aside a dismissal order, the issue of whether a party has a claim against its own lawyer, or the potential success of that claim, should not inform the court’s analysis of whether a dismissal for delay ought to be set aside: Finlay at para 32. As previously stated, the law will not ordinarily require an innocent client to suffer the irrevocable loss of the right to proceed due to inadvertence by his or her lawyer: Finlay at para 33; Marché at para 28; Fuller at para 27.

[95] On this motion, the Defendants have raised a limitations issue, which was pleaded in their statement of defence, on the grounds that all or some of CWH’s claim is statute-barred by the general two (2) year limitation period. A limitations defence may give rise to a presumption of prejudice. However, the Defendants did not fully develop this submission in their supporting record and arguments on this motion to allow for a proper consideration of this point. There is no evidence of specific invoices, payment advice, or the methods by which invoices were paid or

reconciled. As a result, I am unable to determine on the limited record before the court whether or not there is an effective limitations defence. This is an issue for another day.

B. Motion for Leave to Maintain the Proceeding

[96] As set out below, I find that leave should be granted for CWH to maintain this action pursuant to ss. 7(2) of the BNA.

[97] As the Registrar dismissed the action before CWH brought a leave motion to maintain the action, the Defendants submit that CWH is now somehow precluded from seeking leave because the action was dismissed. No authority was cited to support this proposition. Respectfully, I would not accept this submission. As explained earlier, I find that the Registrar’s dismissal order should be set aside under Rule 37.14. Once the dismissal order is set aside, the proceeding reverts to its prior state before its dismissal, namely as an action that was stayed under ss. 7(1) of the BNA. Should leave be granted under ss. 7(2) of the BNA, the existing action continues as if it had never been stayed: Excalibur at para 56. I am unaware of any legal basis to support the view that a dismissal order under Rule 48.14(1)(1.) can continue to impede an action even after the dismissal order is set aside, nor did the Defendants suggest any such authority. Accordingly, I find that CWH may now seek leave under ss. 7(2) to maintain its stayed action.

[98] For convenience, ss. 2(1) and 7 of the BNA, R.S.O. 1990, c. B.17, are reproduced:

Registering name

2 (1) No corporation shall carry on business or identify itself to the public under a name other than its corporate name unless the name is registered by that corporation.

Ability to sue

7 (1) A person carrying on business in contravention of subsection 2(1), (2) or (3) or subsection 4(4) or (6) is not capable of maintaining a proceeding in a court in Ontario in connection with that business except with leave of the court.

Same

(2) The court shall grant leave if the person seeking to maintain the proceeding satisfies the court that,

(a) the failure to register was inadvertent;

(b) there is no evidence that the public has been deceived or misled; and

(c) at the time of the application to the court, the person is not in contravention of this Act or the regulations.

Contracts valid

(3) No contract is void or voidable by reason only that it was entered into by a person who was in contravention of this Act or the regulations at the time the contract was made.

[99] Under ss. 2(1) of the BNA, a corporation cannot carry on business or identify itself to the public under a name other than its corporate name, unless the name is registered by the corporation. Pursuant to ss.7(1), a person carrying on business in contravention of ss. 2(1) is unable to maintain a proceeding in an Ontario court in connection with that business except with leave of the court. Leave shall be granted under ss.7(2) if the person seeking to maintain the proceeding satisfies the court that: a) the failure to register was inadvertent; b) there is no evidence that the public has been deceived or misled; and c) when applying for leave, the person is not in contravention of the BNA.

[100] In my view, CWH meets the requirements for granting leave to maintain this proceeding.

[101] On the first branch of the test, I am satisfied that CWH’s failure to previously register the “CW Henderson Distribution” name was inadvertent. CWH learned on June 27, 2014 that it had failed to register the business name when the Defendants raised the issue after reviewing CWH’s productions in response to a request to inspect. In unchallenged evidence, Mr. Holwell explained that CW Henderson Distribution was not previously registered due to an innocent mistake. Over the years, the company had used several similar but different business names, including CW Henderson Distribution, without realizing that this name had not been registered. Mr. Holwell confirmed that the failure to register was inadvertent. Upon realizing the oversight, CWH promptly registered the name on August 18, 2014 to bring itself into compliance. CWH also updated its invoice to clarify that CW Henderson Distribution is a registered business name of the company.

[102] With regard to the second branch, I am satisfied on the record that there is no evidence that the public was misled or deceived by the failure to register. Although the Defendants baldly asserted in written and oral submissions that they were deceived by the lack of registration, they led no affidavit evidence to suggest that they were confused, deceived or misled by the unregistered use of the CW Henderson Distribution business name. Similarly, there is no evidence that the Defendants did not know who operated CWH’s business. For about ten years, CWH and Imperial maintained a business relationship, and were well acquainted with each other. CWH’s company

address was printed on each invoice issued to Imperial. In the circumstances, I cannot accept that Imperial or the other Defendants did not know who they were dealing with. In my view, the Defendants clearly knew all along with whom it was conducting business.

[103] The broad purpose of the BNA is to ensure ethical and accountable business practices by ensuring that individuals and businesses can know who they are dealing with: Bazinet at para 16. The concept of the public being deceived or misled under ss. 7(2)(b) of the BNA refers to mischief that is more than simple ignorance as to who actually operates a business identified only by its business name, and requires deception between two different businesses: Sports Medicine & Rehabilitation Clinics v. Kotic, [2008] OJ No. 3617 (Master) at para 5; Swiss Tech Incorporated v. 2316543 Ontario Limited, 2017 ONSC 6742 at paras 43-44. Here, there is no evidence of any such confusion or deception. In particular, there is no evidence from the Defendants that they were deceived or misled in the course of carrying on business with CWH.

[104] Regarding the third branch of the test, CWH registered the impugned business name on August 18, 2014. Since then, CWH has not been in contravention of the BNA.

[105] Having regard to the tri-partite ss. 7(2) test, I am satisfied that CWH has satisfied the test for leave. As a result, I find that leave should be granted for CWH to maintain this action.

Outcome

[106] Accordingly, the motion is granted.

[107] If the parties are unable to agree on costs for the motion, CWH may deliver brief written costs submissions of no more than 3 pages (not including any costs outline, offer(s) to settle, or authorities) within 15 days, and the Defendants may deliver responding written costs submissions on the same terms within a further 15 days. No reply submissions shall be delivered without leave.

Doi J.

Date: November 17, 2020

COURT FILE NO.: CV-13-3804-SR

DATE: 2020 11 17

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CWH Distribution Services Inc., Plaintiff

AND:

Imperial Chilled Juice Inc., Anthony Pomeroy, Lee Q. Shim and Chris Shim, Defendants

BEFORE: DOI J.

COUNSEL: S. Hodge, for the Plaintiff

D.M. Fulton and K.B. Ng., for the Defendants

ENDORSEMENT

Doi J.

DATE: November 17, 2020

[^1]: Section 28 of the Limited Partnership Act provides: Ability to sue 28. (1) No extra-provincial limited partnership that has unpaid fees or penalties or in respect of which a declaration or power of attorney has not been filed as required by this Act and no member thereof is capable of maintaining a proceeding in a court in Ontario in respect of the business carried on by the extra-provincial limited partnership except with leave of the court. Idem (2) The court shall grant leave if the court is satisfied that, (a) the failure to pay the fees or penalties or file the declaration or power of attorney was inadvertent; (b) there is no evidence that the public has been deceived or misled; and (c) at the time of the application to the court, the extra-provincial limited partnership has no unpaid fees or penalties and has filed all declarations and powers of attorney required by this Act. Contracts valid (3) No contract is void or voidable by reason only that it was entered into by an extra-provincial limited partnership that was in contravention of this Act or the regulations at the time the contract was made

[^2]: Section 18 of the Corporations Information Act states: Ability to sue 18. (1) A corporation that is in default of a requirement under this Act to file a return or notice or that has unpaid fees or penalties is not capable of maintaining a proceeding in a court in Ontario in respect of the business carried on by the corporation except with leave of the court. Idem (2) The court shall grant leave if the court is satisfied that, (a) the failure to file the return or notice or pay the fees or penalties was inadvertent; (b) there is no evidence that the public has been deceived or misled; and (c) at the time of the application to the court, the corporation has filed all returns and notices required by this Act and has no unpaid fees or penalties. Contracts valid (3) No contract is void or voidable by reason only that it was entered into by a corporation that was in contravention of this Act or the regulations at the time the contract was made.

[^3]: Subrules 48.14 (4) to (8) have no application to this case.

[^4]: In Ford, Goodman J. went on to apply the Reid factors and found that the registrar’s dismissal order ought to be set aside: Ford, at paras. 32-49.

[^5]: The registrar’s order to dismiss the action was made under then-Rule 77.08(1).

[^6]: Subsection 69.3(1) of the BIA states: Stay of proceedings – bankruptcies 69.3 (1) Subject to subsections (1.1) and (2) and sections 69.4 and 69.5, on the bankruptcy of any debtor, no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy. [Emphasis added]

[^7]: Subsection 69.4(1) of the BIA states: Court may declare that stays, etc., cease 69.4 A creditor who is affected by the operation of sections 69 to 69.31 or any other person affected by the operation of section 69.31 may apply to the court for a declaration that those sections no longer operate in respect of that creditor or person, and the court may make such a declaration, subject to any qualifications that the court considers proper, if it is satisfied (a) that the creditor or person is likely to be materially prejudiced by the continued operation of those sections; or (b) that it is equitable on other grounds to make such a declaration