COURT FILE NO.: CV-13-474209
DATE: 20210331
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
GRILLO BARRISTERS P.C.
Plaintiff/Defendant by Counterclaim (Respondent)
– and –
KAGAN LAW FIRM P.C., DARIA KAGAN, and NATASHA BAKSH
Defendants/Plaintiffs by Counterclaim (Appellants)
Sydney Hodge, for the Respondent, Grillo Barristers P.C.
Chris Kinnear-Hunter and Andrew Parley, for the Appellants, Kagan Law Firm P.C., Daria Kagan and Natasha Baksh
HEARD: November 24, 2020
pinto j.
reasons for decision
Overview
[1] The appellants, Kagan Law Firm P.C., Daria Kagan, and Natasha Baksh (collectively “the defendants”) appeal the decision of Master Josefo dated September 19, 2019, in which the Master set aside the Registrar’s dismissal of a civil action for delay, and reinstated the action.
[2] The respondent in this matter is Grillo Barristers P.C., a personal injury law firm, whose principal is Salvatore Grillo. The Kagan firm is another personal injury law firm, where the defendant Daria Kagan is a lawyer. Natasha Baksh was a law clerk at the Kagan Firm when this action was commenced.
[3] Ms. Kagan and Ms. Baksh worked briefly at Grillo between October 2012 and February 2013. In early February 2013, Ms. Kagan resigned from Grillo. Subsequently, approximately 40 personal injury clients terminated their retainers with Grillo and retained the Kagan Firm.
[4] Grillo commenced a civil action on February 14, 2013, alleging that the defendants wrongfully solicited Grillo’s clients. Five years later, on February 22, 2018, the Registrar dismissed Grillo’s action for delay under r. 48.14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Grillo brought a motion to reinstate the action on April 3, 2018, and Master Josefo set aside the Registrar’s administrative dismissal on September 19, 2019.
[5] The defendants now appeal the Master’s decision, submitting that the Master erred in law and that the Registrar’s dismissal should be upheld.
[6] For the reasons that follow, I grant the appeal.
Standard of Review and Legal Test
[7] Rule 48.14(1) provides that the Registrar shall dismiss any action that is not set down for trial within five years, subject to subrules (4) and (8).
[8] In Prescott v. Barbon, 2018 ONCA 504, 141 O.R. (3d) 616, the Court of Appeal set out the standard of review of a Superior Court judge sitting on appeal of a Master’s decision in respect of an administrative dismissal:
[11] The decision of a Master granting or refusing to set aside an administrative dismissal is discretionary. It is entitled to deference and may be set aside only if made on an erroneous legal principle or infected by palpable and overriding error of fact: 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544, 112 O.R. (3d) 67; and Chrisjohn v. Riley Estate, 2015 ONCA 713, 341 O.A.C. 70. It is not for an appellate court judge to reweigh the evidence and substitute another discretionary decision for that of the Master. Applying Zeitoun v. Economical Insurance Group (2009), 2009 ONCA 415, 96 O.R. (3d) 639, Cronk J.A. stated in Wellwood v. Ontario Provincial Police, 2010 ONCA 386, 102 O.R. (3d) 555, at para. 28, that it is settled law that an appeal from a Master’s decision is not a rehearing.
Rather, on questions of fact and mixed fact and law, deference applies and the role of the reviewing court is limited. An appellate court cannot substitute its interpretation of the facts or reweigh the evidence simply because it takes a different view of the evidence from that of the master. On questions of law, the correctness standard applies: see Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401.
[12] [omitted]
Applicable Legal Test
[13] Under r. 37.14(2), the court has discretion to set aside or vary a dismissal order on such terms as are just. Specifically, r. 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.
[14] The legal test for setting aside a registrar’s order dismissing an action for delay was originally described by Master Dash in Reid and adopted by this court in Scaini v. Prochnicki, 2007 ONCA 63, 85 O.R. (3d) 179:
(i) Have the plaintiffs provided a satisfactory explanation for the litigation delay?
(ii) Have the plaintiffs led satisfactory evidence to explain that they always intended to prosecute this action within the time limit set out in the rules or a court order but failed to do so through inadvertence?
(iii) Have the plaintiffs demonstrated that they moved forthwith to set aside the dismissal order as soon as the order came to their attention, and
(iv) 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 plaintiffs’ delay or as a result of steps taken following the dismissal of the action?
[15] This is not a rigid, one-size fits all test. Rather, a contextual approach is required: Scaini, at paras. 23-25. Prior to Scaini, a plaintiff had to satisfy each of the four elements. Thereafter, courts were to consider and weigh all relevant factors to determine the order that is just. See also Marché d’Alimentation Denis Thériault Ltée. v. Giant Tiger Stores Ltd., 2007 ONCA 695, 87 O.R. (3d) 660. In Hamilton (City) v. Svedas Koyanagi Architects Inc., 2010 ONCA 887, 104 O.R. (3d) 689, at para. 23, Laskin J. A. observed that the overriding objective is to achieve a result that balances the interests of the parties and takes account of the public’s interest in the timely resolution of disputes. The four Reid factors provide a structured approach to achieving this result.
The Master’s Decision
[9] On the reinstatement motion, the Master reviewed the facts and timeline over the five years, from the commencement of the action to its administrative dismissal. The Master implicitly divided the timeline into three periods:
February 14, 2013, when the action was commenced, to August 20, 2015, when Grillo’s first lawyer delivered a Draft Discovery plan to the defendants. During this period of two and a half years, the Master found that the matter was proceeding along, taking into account a reasonable four month time-out for paternity leave for the plaintiff’s counsel, and for when settlement opportunities were being explored (para. 33). The Master considered that during this period, the matter was “still advancing, albeit not rapidly” (para. 38).
August 20, 2015 to November 9, 2017, a period of two and a quarter years, during which Grillo “slumbered”. The Master found that Grillo became a “sojourner”, meaning that “he effectively abdicated his role as plaintiff”, choosing to sojourn, rather than litigate (para. 35).
November 9, 2017, when Grillo’s third lawyer, Mr. Matushansky, advised that the plaintiff’s Reply would be amended, to February 22, 2018, the date of the Registrar’s dismissal. During this period of three to four months, the Master found that Grillo, through his counsel, reverted to being a litigant and sought to advance his case (para. 39).
[10] I will refer to each period as the First, Second and Third Period, and to them collectively as the Three Periods.
[11] The Master appreciated that his was a discretionary decision. He recognized the evolution in the law since Reid, in that the plaintiff does not have to satisfy all four factors. He referenced a 2015 Court of Appeal decision, Carioca’s Import & Export Inc. v. Pacific Railway Limited, 2015 ONCA 592, 128 O.R. (3d) 143, involving an appeal of a Master’s decision not to restore a matter to the trial list. The Court in Carioca’s held that it
...must strike a balance between the need for efficiency and the need for flexibility, such that cases can be tried on the merits where there is a reasonable explanation for non-compliance with the rules.
[12] The Master held that “so long as counsel (and the parties) act reasonably overall in the conduct and context of the particular case, the preference is that cases be decided on their merits” (para. 51).
[13] In a key passage, the Master stated the following:
[53] In my view, while Grillo is by no means a perfect litigant, on the evidence I cannot find that he has acted in an unreasonable way, at least not throughout the litigation. As Justice Quinn discussed in the Elltoft decision cited above, a party may become, for a period of time, a sojourner. Yet in my view, so long as he or she reverts to being a litigant before too long, I find that the party has not forever forfeited his or her rights to proceed to a decision on the merits of his or her claim. In this case, in particular, the delay was relatively short, and the evidence demonstrates that Grillo, through his counsel, did revert to being a litigant, and to seeking to advance his case. Notably, he also acquiesced to the repeated request of the defendants, to amend his reply and remove the contentious pleading.
[14] The Master summarized his conclusions with respect to the Reid factors as follows:
[69] Returning to the questions which emerge from the Reid decision, my conclusions are as follows:
• I find that there is an explanation for the relatively limited period of litigation delay, when Grillo became, for a period of time, a sojourner before he reverted to again being a litigant. The period of delay is not unforgivable. Considering the tension between addressing matters on their merits, while not countenancing delay, in this case I find the delay not undue or unreasonable, albeit still regrettable. Costs can be an effective sanction, however.
• There was no true inadvertence on the part of Grillo, or any of his counsel, for the limited period of delay. As I have written above, he dithered for a while, and he dithered for a while, and he stalled the process with his own lawyers. Yet as was also observed in the Iacolucci decision, defendants in this matter also never protested the delay nor even raised the issue until after-the-fact, when it tactically suited them.
• This motion was brought in about six weeks’ time from the dismissal. In my view, again, it was brought promptly.
• I find that the plaintiff has through the subsequent delivery of an Affidavit of Documents and the production of documents, as well as through its submissions, demonstrated that while there may be some prejudice to the defendants, such is not significant in the context of this matter where the key witnesses, after all, will likely be the main protagonists, along with some others.
[15] Overall, the Master found that upholding the dismissal would be more unfair to the plaintiff, and that the action could still proceed to a decision on its merits.
Summary of Parties’ positions on the Appeal
[16] The defendants submit that the Master erred in law in the following ways:
(a) by failing to consider whether Grillo had established a reasonable explanation for his delay and instead assessing the length of delay;
(b) by failing to consider the entire period of Grillo’s delay;
(c) by failing to consider whether Grillo always intended to set the action down for trial;
(d) by failing to consider Grillo’s misleading evidence as a relevant factor;
(e) by placing the burden of demonstrating significant prejudice on the defendants; and
(f) by failing to properly consider the prejudice to the defendants, including by failing to consider the principle of finality.
[17] The defendants argue that if the Master’s decision is allowed to stand, it would significantly undermine the intent and effectiveness of the five year administrative dismissal rule.
[18] The plaintiff disagrees and responds that the Master made no legal errors and that his decision should be allowed to stand for the following reasons:
a) there was no evidence before the Master that the plaintiff made a deliberate decision not to advance the litigation towards trial;
b) the dismissal arose as a result of the plaintiff’s solicitor’s reliance upon his conversation with opposing counsel that the defendants would agree to a timetable in the months leading up to the dismissal;
c) there was no evidence before the Master of any significant prejudice to the defendants’ ability to have a fair trial; and
d) the defendants never raised any issues regarding the pace of the litigation and took no steps to prosecute their own counterclaim.
Analysis
[19] I am mindful that this appeal is not a rehearing, and that I should not reweigh the evidence and substitute another discretionary decision for that of the Master. However, I find that the Master made significant and compounding legal errors, and palpable and overriding errors of mixed fact and law. This resulted in the Master reaching erroneous conclusions regarding three of the four Reid factors, and making an overall incorrect decision to reinstate the action.
First Reid Factor
[20] On the first Reid factor, the Master was required to examine whether the plaintiff provided a satisfactory explanation for the litigation delay.
[21] Instead of focusing on the explanation for any delay during the entire five years, the Master took an “all or nothing” approach to delay, equating it with litigation not advancing at all. This caused the Master to implicitly divide the five years into Three Periods. It was only when the litigation was not advancing at all that the Master considered there to be litigation delay. This is a legal error. As stated by the Court of Appeal in DK Manufacturing Group Ltd. v. MDF Mechanical Limited, 2019 ONSC 6853, 2 C.C.L.I. (6th) 203, at para. 18, citing Madore v. Metropolitan Toronto Condominium Corp., 2015 ONSC 4750, at para. 26, “While the explanation need not cover every single minute of delay, it must still explain most of the delay and certainly all periods of material delay.”
[22] The Master’s erroneous approach to delay resulted in him giving a pass to the plaintiff for the First Period of two and a half years, where litigation was advancing, albeit very slowly; and for the Third Period, where there was three months of delay.
[23] The Master stated at para. 32 that, “I find that the delay arose after August 20, 2015, when Mr. Borg-Olivier delivered a draft Discovery plan” (emphasis added), and at para. 33 that “Until August 20, 2015 I find that the matter was proceeding along, taking into account a reasonable time-out for paternity leave for counsel, and for when settlement opportunities were being explored.” I find that the Master’s approach resulted in his looking for delay incorrectly, and with respect to a more limited time frame than required by the first Reid factor. Relatedly and for reasons explained below, I disagree with the Master that the First Period or the Third Period did not involve delay, or that the plaintiff provided a satisfactory explanation for it.
[24] The Master’s next error was his characterization of the delay associated with the Second Period, the two and a quarter years when the plaintiff slumbered, as “relatively short” (paras. 53, 55), “relatively limited” or “not undue or unreasonable” (para. 69). The Master went even further and found that “the period of delay is not unforgiveable” (para. 69). An unsatisfactory explanation for delay should be weighed against the plaintiff in the overall discretionary decision of whether to reinstate. However, by asking whether the delay was unforgivable, the Master permitted unsatisfactorily explained delay that he found to be forgivable, to become acceptable. Accordingly, in addition to the fact that the Master took too narrow a view of when the delay occurred, he also committed a legal error by asking the wrong question - is the delay unforgivable? – rather than the right question – is the explanation for delay satisfactory?
[25] In any event, if I am putting too much stock into the Master’s “not unforgivable” comment, I find that the Master made a palpable and overriding error in reaching the conclusion that the two and a quarter years delay was relatively short or limited. I cannot see how, in any litigation universe, a delay of such an extended period can be considered relatively short or limited. In Muscaj v. Urszula, 2018 ONSC 5427, the court described a 17-month period of inactivity as a “yawning gap”, and dismissed a reinstatement motion. As a further measure of comparison, I note that the limitation period for commencing most actions in Ontario is two years under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. The delay of two and a quarter years in the Second Period, as found by the Master, is much longer.
[26] Remaining on the first Reid factor, I turn now to the First Period, the first two and a half years of the action, from February 14, 2013 to August 20, 2015, and the question of whether the explanation for delay in this period was satisfactory.
[27] The action by Grillo against the defendants commenced on February 14, 2013. The defendants filed a lengthy Demand for Particulars on March 12, 2013, which was not answered until September 16, 2013, a period of six months. The defendants filed a Defence and Counterclaim on or about February 13, 2014, a further period of six months. Grillo filed its original Reply and Defence to Counterclaim on March 12, 2014. Stopping there, I observe that it took 13 months from the commencement of the action to the point of the plaintiff’s first Reply. It appears that the Master accepted the plaintiff’s delay as satisfactory.
[28] At para. 2(f) of his original Reply, Grillo pleaded the following:
In fact, when it became apparent that Kagan had settled a number of files for less than their true value, Grillo required that Kagan consult with him prior to settling any of her files in order that he could provide his input and advice.
[29] The Master found that, earlier in 2014, the defendants’ counsel raised concerns with Grillo’s counsel about para. 2(f) in respect of it raising potential issues of solicitor-client privilege and adding more complexity to the case.
[30] For the first three years of the action and until February 22, 2016, when a Notice of Change of Lawyer was filed, Mr. Borg-Olivier acted for Grillo. However, Mr. Grillo deposed that his retainer with Mr. Borg-Olivier ended in October 2015.
[31] There is no reference in the Master’s decision as to what transpired from March 2014 to May 2014, a period of three months before Mr. Borg-Olivier commenced a parental leave.
[32] Mr. Borg-Olivier took a parental leave from June 2014 to September 2014, a period of four months.
[33] A phone call took place between Mr. Parley, counsel for the defendants, and Mr. Borg-Olivier on December 8, 2014. The period between Mr. Borg-Olivier’s return from parental leave and this phone call is three months.
[34] Mr. Borg-Olivier initiated an email exchange with Mr. Parley on May 26, 2015 by suggesting that the parties prepare a discovery plan. Mr. Parley responded on the same date, “You may recall that I raised some of the discovery issues that arose out of your pleading in Kagan last year. At the time, I think you said that you would consider these questions and get back to me as to whether you were going to amend your pleading. Let me know if you want to have a call to discuss.” Mr. Borg-Olivier responded, agreeing to a call. The period between counsels’ December 8, 2014 phone call and the May 26, 2015 email exchange is almost six months. I note that, in Mr. Grillo’s affidavit in support of reinstatement, he states that between December 2014 and March 2015, the parities engaged in settlement discussions.
[35] Another email exchange between counsel occurred on August 20, 2015, when Mr. Borg-Olivier provided a draft discovery plan. In response, Mr. Parley reiterated his concern regarding para. 2(f) of the Reply, asking if Grillo would be prepared to amend the pleading. The period between the two email exchanges, May 26 to August 20, 2015, is around three months. The period between the end of settlement discussions in March and August 20, 2015 is six months. I acknowledge that Mr. Grillo deposes that, between May and October 2015, Grillo’s relationship with Mr. Borg-Olivier broke down.
[36] I find, taking a closer look at what transpired during the first two and a half years of the litigation, that the first year or so involved the exchange of pleadings culminating in the plaintiff filing his original Reply. The next year and a half, by my calculation, involved six months (i.e. three months preceding and three months following Mr. Borg-Olivier’s parental leave), plus another six months (between the end of settlement discussions and Mr. Borg-Olivier’s draft discovery plan) during which almost nothing happened, except the May 26, 2015 email exchange. This means that there is an entire year of delay in the First Period of two and a half years, for which the Master did not seek an explanation.
[37] I consider the Master’s failure to examine, in more than a perfunctory way, the delay in the First Period to be a legal error. In the alternative, I find that the Master’s implicit conclusion that the explanation for the delay in the First Period was satisfactory, to be so unreasonable so as to constitute an overwhelming and palpable error.
[38] As for the Third Period, the Master appears to have ignored or excused a critical three month delay by the plaintiff, just weeks before the Registrar’s dismissal. On November 9, 2017, Grillo’s lawyer finally advised defendants’ counsel that the Reply would be amended to remove the allegation of improvident settlement. Yet, the amended Reply was not served until February 6, 2018.
[39] Ultimately, the Master did not directly answer the first Reid question. The Master wrote “I find that there is an explanation for the relatively limited period of litigation delay, when Grillo became, for a period of time, a sojourner before he reverted to again being a litigant” (para. 69).
[40] I agree with the defendants that the Master erred by failing to ask whether Grillo’s explanation for his delay was satisfactory. Instead, the Master asked whether the length of delay was satisfactory and thereto, only with respect to the Second Period, because the Master defined delay as the litigation not advancing at all.
[41] In summary, with respect to the first Reid factor, whether there was a satisfactory explanation for the litigation delay, I find that the Master erred by doing the following:
a) equating delay with the litigation not advancing at all;
b) concluding that there was only delay in the Second Period, and ignoring any delay in the First Period and Third Period;
c) asking whether the delay in the Second Period was “not unforgivable” rather than asking whether the explanation for it was satisfactory;
d) failing to require an explanation for the one-year delay in the First Period, and ignoring or excusing a critical three-month period of delay in the Third Period; and
e) concluding that the length of delay in the Second Period of two and a quarter years was “relatively short”, “relatively limited”, “not unforgivable”, and “not undue or unreasonable”.
[42] The first four are legal errors, the fifth is a finding of mixed fact and law that constitutes a palpable and overriding error.
Plaintiff’s lawyers
[43] Before I turn to the other Reid factors, it is important to understand the succession of the plaintiff’s lawyers.
[44] As noted earlier, Grillo’s first lawyer was Mr. Borg-Olivier, from the start of the action in February 2013 to October 2015. Grillo’s second lawyer, Glenn Cohen, was retained in the Fall of 2015 but did not serve a Notice of Change of Lawyer on the defendants until February 22, 2016, a delay of six months. Apparently, Mr. Cohen advised Grillo that he was too busy to take on the case immediately.
[45] Grillo did not meet Mr. Cohen until May 2016. Thereafter, as the Master found, Grillo “dithered” (para. 10). In an August 6, 2016 email, Mr. Cohen reported that he had heard nothing from Grillo since May 2016, a period of three months. Then, in an October 6, 2016 letter to Grillo, Mr. Cohen warned Grillo to pay attention to the case or face administrative dismissal on the fifth anniversary of its commencement. According to the Master, Grillo ended its relationship with Mr. Cohen soon after the October 2016 letter.
[46] It is not until April 2017, six months after the end of Mr. Cohen’s retainer, that Grillo retained his third lawyer, Mr. Farb and his associate Mr. Matushansky. This would have been a few months into the fifth year of the litigation, and less than a year before the administrative dismissal.
[47] Grillo retained his fourth lawyer, Wagner Sidlofsky LLP, post-dismissal, on March 23, 2018.
[48] Ms. Hodge of Koskie Minsky LLP was counsel on the motion before the Master, and for the respondent in this appeal.
Second Reid Factor
[49] I find that the Master erred by failing to answer the second question in the Reid test, which is as follows:
Have the plaintiffs led satisfactory evidence to explain that they always intended to prosecute this action within the time limit set out in the rules or a court order but failed to do so through inadvertence?
[50] At para. 69 of his decision, the Master provided the following answer:
[69] There was no true inadvertence on the part of Grillo, or any of his counsel, for the limited period of delay. As I have written above, he dithered for a while, and he stalled the process with his own lawyers. Yet as was also observed in the Iacolucci decision, defendants in this matter also never protested the delay nor even raised the issue until after-the-fact, when it tactically suited them.
[51] I take from the Master’s words “no true inadvertence” that, whatever Grillo and his lawyers did, was not through inadvertence. This means that if Grillo did not demonstrate that he always intended to prosecute the action, the second Reid factor must be answered in the negative. The Master must have implicitly determined that, even though Grillo dithered, stalled and slumbered, that he always intended to prosecute the action. The Master’s determination on this point is evident from his comments at para. 36 of his decision:
[36] Of course, in that case the plaintiff sojourned for quite some long time, also essentially abandoning his action without communication. Those are not the same facts as in this matter. In this matter, again, Grillo indeed became, for a period of time, a sojourner. Yet he never went silent or vanished. Rather, his several lawyers continued to communicate with counsel for defendants even if nothing substantive was happening with the case for various reasons. [Emphasis added.]
[52] I find that the Master’s error here was to equate “prosecuting the action” with not being silent or vanishing. Yet, they are not the same thing. I understand “prosecuting the action” to mean “moving it forward”, so the correct question to be asked is, did Grillo always intend to move this action forward? I find that, by the Master’s own assessment, the answer is no. The Master declared that Grillo stopped being a litigant during the Second Period and slumbered for two and a quarter years (para. 38). I fail to see how one can equate no longer being a litigant and slumbering for such a long time, with having an intention to move the action forward.
[53] Interestingly, at a later point in his judgment, the Master writes, “In this matter, again, the case, while not moving forward for two and a quarter years, never went dormant” (para. 58). A synonym of dormant is slumbering, so there is a contradiction in the Master’s reasoning. Be that as it may, I find the Master’s error here was to lower the bar on what it means to “prosecute an action” to the point that the test becomes meaningless. The Master’s ruling, if allowed to stand, could have serious consequences for the civil litigation bar and court system. Just about any plaintiff activity, no matter how insignificant, would satisfy the “not going silent” test. The Master’s approach in this case to “prosecuting the action” cannot, in my view, be the law.
[54] The Master’s decision also veered into legal error by considering Grillo’s intentions at the very end of the five year period to pursue the action, as evidence of Grillo always intending to prosecute the action. After referring to the supposed acceptability of a plaintiff becoming a sojourner for a period of time, the Master stated, “Yet in my view, so long as he or she reverts to being a litigant before too long, I find that the party has not forever forfeited his or her rights to proceed to a decision on the merits of his or her claim” (para. 63). The legal test does not involve a last minute save just before the administrative dismissal, but rather a focus on whether the plaintiff has always intended to prosecute the action. It would set a very bad precedent for actions to be reinstated where a plaintiff has done very little to advance its case, only to have woken up at the last minute, just as the five-year deadline loomed.
[55] The Master’s other error was to place the onus on the defendants to complain about Grillo’s delay and the impending dismissal of the action. Rather, it was incumbent on Grillo to demonstrate that he always had an intention to prosecute the case. In addition to para. 69 above, where the Master makes reference to Iacolucci v. TD Waterhouse Canada Inc., 2018 ONSC 1027 (Div. Ct.), discussed below, the Master’s decision contains the following comments:
Yet, in his email of November 13, 2017, Mr. Parley again did not raise any issue of prejudice, time limits, or in any way suggest that a timetable extension may be problematic or would not be granted (para. 20).
Again, there is not even an allusion to prejudice or time-limits in this correspondence [referencing Mr. Parley’s December 11, 2017 email] (para. 24).
Yet the relatively slow pace was not objected to by the defendants. Nor did counsel for defendants express concern about the delay in proceeding. (para. 38)
Yet, when one reviews the latter part of the timeline (from early 2018) set out above, the impression I have is that counsel for the defendants was content to become far less responsive, in a far less timely way, to communications from counsel for plaintiff. As an example, the defendants had the new version of the reply from February 6, 2018. If there were concerns about it, in my view it should not have taken until only after the administrative dismissal on February 22, 2018 for counsel to respond. If there were genuine concerns about the reply, a motion could have been scheduled on consent to address those concerns. To take the position that the matter was moot, because the clock ran out when defendants I find purposely “ragged the puck”, was in my view “hard-ball” (para. 40).
The subsequent delay in responding by Mr. Parley and the stretching out of the timeline until it expired is I find, in the context of this matter, problematic. Such in my view resembles a strategic response to use the pending fifth year anniversary to gain a highly tactical advantage for the defendants when, until then, the issue of prejudice was not raised, no concerns in that regard had been even whispered, and the plaintiff was once again attempting to continue with his case (para. 44).
…the lack of objection by the defendant until it tactically suited them to object (para. 70).
[56] It was not an error for the Master to consider the defendants’ conduct; it was an error for the Master to place the burden on the defendants to complain of the delay, to warn of the impending dismissal, or to move the action to trial.
[57] In Cornell v. Tuck, 2018 ONSC 7085, at paras. 75 to 77, the court discussed how a Master or reviewing court should consider the defendant’s conduct on a reinstatement motion:
[75] There are two final points to consider on the factor of the explanation for the delay. First, the conduct of the Defendant is a consideration. This is referred to by the Ontario Court of Appeal in Carioca’s, at paras. 53-55, as follows:
[53] While this court has stated frequently that the plaintiff bears the primary responsibility for moving a case forward, it has also acknowledged that the conduct of a defendant is a factor, especially where a plaintiff encounters some resistance when trying to move the action along: 1196158 Ontario Inc., at para. 29. The 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 of litigation strategy. The 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.
[Paragraphs 54 and 55 have been omitted for brevity]
[76] In Prescott, at para. 30, the Court of Appeal reemphasized that there is “no burden on the defendant to explain the delay or to move the action to trial” and “the primary responsibility for the progress of an action lies with the plaintiff”. The Defendant in that case could not be faulted for failing to file a notice of intent to defend or a statement of defence in the period leading up to the dismissal.
[77] The Defendant’s conduct is relevant at three stages of the test to set aside a motion for dismissal:
(a) The Defendant’s conduct is relevant on the whole of the case as part of the contextual approach: see H.B. Fuller, at para. 23; Carioca’s, at para. 55; Richardson v. Cuddy, 2017 ONSC 3186.
(b) The Defendant’s conduct may on some occasions be relevant in assessing the first Reid factor: Prescott, at para. 30; Kupets, at para. 4. This is especially so where a plaintiff encounters some resistance when trying to move the action along: Carioca’s, at para. 53. However, the Plaintiff bears the primary responsibility for the progress of the action.
(c) In the analysis of prejudice, the fourth Reid factor, a Defendant’s passivity or a “lack of display of any sense of urgency” in the litigation may undermine their claim of prejudice. This can include post-dismissal conduct, uncooperative conduct in moving the case forward, or failure to take steps to pursue or preserve claims during the proceedings prior to the dismissal: see Aguas v. Rivard Estate, 2011 ONCA 494, 107 O.R. (3d) 142, at paras. 18-21; Armstrong, at para. 26; Labelle v. Canada (Border Services Agency), 2016 ONCA 187, 346 O.A.C. 155, at paras. 23-28; Iacolucci et al v. TD Waterhouse Canada Inc. et al, 2018 ONSC 1027 (Div. Ct.), at paras. 78-83; Kupets, at para. 4; MDM Plastics Ltd. v. Vincor International Inc., 2015 ONCA 28, 124 O.R. (3d) 420, at paras. 32-39.
[58] Given the court’s direction in Cornell v. Tuck, I will discuss the defendants’ conduct under the fourth Reid factor dealing with prejudice.
[59] In my view, the Master’s error, in placing the burden on the defendants to complain of the delay, contributed to his error of not answering, or not answering properly, the question about whether Grillo always had an intention to prosecute the action. Having found that the defendants did not complain sufficiently about the delay, or warn Grillo about the impending dismissal, the Master did not properly focus on Grillo’s intention to prosecute the action over the five years.
[60] In summary, with respect to the second Reid factor, the Master erred in the following ways:
a) by failing to determine whether Grillo always intended to prosecute the action, and instead focusing on whether Grillo went silent or vanished;
b) by considering Grillo’s intentions at the very end of the five year period as evidence of Grillo always intending to prosecute the action; and
c) by placing the onus on the defendants to complain about Grillo’s delay and the impending dismissal of the action, rather than on Grillo to demonstrate that he always had an intention to prosecute.
Third Reid Factor
[61] The Master answered the third question, regarding whether Grillo demonstrated that he moved forthwith to set aside the dismissal order, in the affirmative. The Master found that the motion to reinstate was brought within about six weeks from the Registrar’s dismissal. I take no issue with the Master’s conclusion on this point.
Fourth Reid Factor
[62] I find that the Master erred in his consideration of the fourth Reid factor when he held that despite the plaintiff’s delay, there was no significant prejudice to the defendants in presenting their case at trial.
[63] The Master erred by reversing the burden of proving prejudice, deciding this factor largely on what he saw as the defendants’ failure to demonstrate significant prejudice. At para. 67, the Master stated the following:
My view, when considering the entirety of the affidavit of Ms. Kagan, is that significant prejudice is not shown in the context of the passage of five years, as well as in the context of this case, generally.
[64] Earlier in these reasons, I also referred to several points in the Master’s decision where he placed the onus on the defendants to complain about the delay, and warn Grillo about the pending dismissal. This error continues in the Master’s discussion of prejudice.
[65] One of the reasons why the Master believed that prejudice to the defendants was ameliorated, was that post-dismissal, on April 25, 2019, Grillo delivered an Affidavit of Documents, which the Master found “well addresses and rebuts at least some of the concerns earlier expressed” by the defendants about prejudice (para. 64). The Master reached this conclusion despite the defendants’ claim that the Affidavit of Documents was woefully incomplete and did not contain client retainer letters, amongst other items which would be necessary for the plaintiff to prove his case.
[66] I am doubtful that an Affidavit of Documents filed 14 months after a five-year administrative dismissal should be considered as evidence ameliorating the prejudice claimed by the defendants. However, even accepting the Affidavit of Documents as filed, I have difficulty understanding how it ameliorates the main prejudice complained of by the defendants, namely the unavailability of relevant clients and their viva voce evidence.
[67] Ms. Kagan, the defendants’ main affiant, deposed that, in regards to the disputed clients between the two firms, the vast majority of the retainers were made orally, and given the passage of years, the reliability of evidence from the clients would be undermined. Moreover, Ms. Kagan claimed that she is no longer in communication with these clients as their claims were resolved. The challenges to trial fairness posed by deteriorating witness testimony are recognized in the case law: see 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544, 112 O.R. (3d) 67, at para. 42; Tarion v. Dunhill Development, 2019 ONSC 6074, at paras. 25-27.
[68] The Master did not place the onus on Grillo to demonstrate that the defendants are wrong about the importance of viva voce client evidence to the case, or require Grillo to show that the relevant clients are still available for trial. Yet, the Master concluded the following, with respect to the fourth Reid factor on prejudice:
I find that the plaintiff has through the subsequent delivery of an Affidavit of Documents and the production of documents, as well as through its submissions, demonstrated that while there may be some prejudice to the defendants, such is not significant in the context of this matter where the key witnesses, after all, will likely be the main protagonists, along with some others.
[69] I find the Master’s conclusion contains both legal, and palpable and overriding errors of fact. First, the Affidavit of Documents, based on its description in the Master’s decision, is unlikely to address the oral retainer issue, one of the key issues at trial. Second, no documents have, in fact, been produced in the action. The Master’s factual finding in this regard amounts to a palpable and overriding error. Finally, given that the “main protagonists” (which I take to mean the parties themselves) are likely to have opposing positions at trial, it was incumbent on the Master to explain who the “some others” are and how, at this late stage, their evidence could be secured. While Grillo, in his affidavit, deposes that the potential witnesses were Ms. Kagan’s clients after they left Grillo, and that the defendants would be in the best position to contact them, there is no property in a witness; these clients were also Grillo’s clients before they were Ms. Kagan’s, and the onus at the reinstatement motion was squarely on Grillo, not on the defendants, to address the prejudicial impact of delay.
[70] Moving on to other aspects of the Master’s analysis of prejudice, the Master distinguished the case at bar from those in which an administrative dismissal was upheld: see Prescott; Deverett Professional Corp. v. Canpages Inc., 2013 ONSC 6954; and Unlimited Motors Inc. v. Automobili Lamborghini Spa, 2019 ONSC 1423. I generally agree with the Master’s reading of the caselaw, however, I strongly disagree with the Master’s finding (paras. 56, 58) that, unlike Prescott, the Grillo case never went dormant. As discussed earlier, this is flatly contradicted by the Master’s own finding that Grillo slumbered for two and a quarter years.
[71] I also find the Master’s statement that “various counsel for Grillo were responsive to and regularly communicating with Mr. Parley” (para. 58), to have no basis in fact and to constitute a palpable and overriding error. On the Master’s own facts, Grillo’s first two lawyers were not communicating with opposing counsel for long stretches of time. Between the end of settlement discussions in March 2015 and November 2017, a period of over 30 months or two and a half years, there were three, or at best five, email and/or telephone exchanges.
[72] The Master contrasted the Grillo case with Iacolucci, a case in which the delay was much greater, but where the action was still reinstated. The Master observed that, in Iacolucci, counsel for the defendant had successfully stymied the matter from advancing by insisting on third party documentation being produced, and by refusing to proceed to discoveries until such production was made. I find no basis for the Master’s next comment that “That is not altogether too far different from the defendants in this within matter, whenever moving forward was suggested by plaintiff, returning to the same complaint about paragraph 2(f) in the Reply, and requesting that a decision be made on that point before the case could be advanced.” In this case, the defendants never received any substantive response from Grillo’s first two lawyers, Mr. Borg-Olivier and Mr. Cohen, about amending the Reply, and the third lawyer, Mr. Matushansky only agreed on November 9, 2017 that the Reply would be amended to remove the allegation of improvident settlement. Of course, that was not actually done until almost three months later on February 6, 2018, just two weeks before the Registrar’s dismissal.
[73] I also note that Mr. Grillo deposed that Mr. Borg-Olivier never advised him of paragraph 2(f) issue in the Reply, or sought his instructions whether to remove the paragraph at issue. Taking Mr. Grillo’s answer at face value, it cannot then be the case that the defendants’ request to remove the paragraph was the cause of Grillo’s delay.
[74] I respectfully disagree with the Master that this case is at all comparable to Iacolucci. Despite repeated reminders from the defendants to amend the Reply to remove the challenging “improvident settlement” issue, Grillo failed to respond for three and a half years and then finally agreed to make the amendment, albeit delaying actually doing so. On my reading of the Master’s decision, at no point did Grillo ever suggest “moving on” only to be met with resistance from the defendants.
[75] In summary, on the fourth Reid factor of prejudice, the Master erred in finding that there was no significant prejudice to the defendants in presenting their case at trial. The Master arrived at this conclusion by improperly doing the following:
a) reversing the burden of proving prejudice and placing it on the defendants;
b) giving undue importance to an Affidavit of Documents delivered by Grillo 14 months after the administrative dismissal; and
c) suggesting that the defendants’ request to amend para. 2(f) in the Reply prevented Grillo from moving the action forward.
[76] Ultimately, these errors caused the Master to lose sight of the real difficulty faced by the defendants in presenting their case many years later at trial, i.e. the fact that their case would depend on former clients’ viva voce evidence about the client retainer.
The overall decision
[77] The Master was required to make an overall discretionary decision guided by the Reid factors. By the Master’s own findings, Grillo’s delay was not occasioned by inadvertence. Was this a case where the defendants expressed resistance when Grillo wanted to move this case along? The Master’s decision hints at that, but there is no basis for this finding. The most prominent aspect of this case is that, after the first 13 months, when first Grillo’s original Reply was filed, Grillo did almost nothing for the next three and half years. Then, just four months before the dismissal deadline, Grillo agreed to amend his Reply, but did not actually do so until two weeks before the dismissal.
[78] When explaining the overall context of his decision, the Master cited the “lack of objection by the defendant until it tactically suited them to object.” I find that the Master erred in shifting the onus to the defendants to complain of the delay, warn Grillo of the impending deadline and ameliorate the prejudice occasioned by Grillo’s delay. This is reason enough to set aside the Master’s decision.
[79] However, the Master’s foundational error was to approach the concept of delay as the litigation not advancing at all. This “all or nothing” approach to delay skewed the Master’s analysis. The Master erred by failing to ask whether Grillo’s explanation for his delay was satisfactory; instead asking whether the length of delay was “unforgiveable” and thereto, only with respect to the Second Period.
[80] Despite finding that Grillo slumbered for two and a quarter years, the Master accepted some sporadic emails as evidence of Grillo not going silent or vanishing, as if that were the legal test. The Master unacceptably lowered the bar on what it means to “prosecute the action” and considered a last-minute awakening by Grillo as evidence of it always intending to prosecute the action.
[81] On the issue of prejudice, the Master failed to focus on the fact that the real difficulty the defendants faced in presenting their case many years later at a trial, was that they were dependent on former clients’ viva voce evidence.
[82] The big picture is that the plaintiff, a law firm no less, did not move his action beyond the pleading stage in five years. This is after being clearly warned by his own lawyer of the impending dismissal. The defendants’ conduct in not moving their counterclaim forward does not, in my view, change matters.
[83] I conclude that the Master’s errors, both legal and of a palpable and overriding nature, require that his decision be set aside and that I should weigh the factors myself: see Prescott, at para. 40. For the reasons above, I find that Grillo did not provide a satisfactory explanation for at least one year of delay in the First Period, two and a quarter years in the Second Period and three months of delay in the Third Period. Cumulatively, I find no satisfactory explanation for these three and a half years of delay over the five year period. I find that Grillo did not demonstrate that he always intended on prosecuting the action, an observation raised by his own lawyer, Mr. Cohen. Finally, Grillo did not convince me that the defendants will not face significant prejudice in presenting their case at trial as a result of Grillo’s delay. That Grillo sought to set aside the Registrar’s dismissal reasonably promptly, does not override the other factors or disturb my overall conclusion that this case is one of very significant and inexcusable delay, and one that should not be reinstated. The Master’s decision is set aside and the Registrar’s dismissal of the action is upheld.
Costs
[84] The defendants are entitled to costs. If the parties cannot agree on costs, the defendants may make written submissions as to costs within 15 days of the release of these Reasons. Grillo has 10 days after receipt of the defendants’ submissions to respond. Such written submissions shall not exceed five (5) double-spaced pages, exclusive of Costs Outlines, Bills of Costs, Offers to Settle and authorities and are to be hyperlinked or forwarded to me via my judicial assistant. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.
Pinto J.
Released: March 31, 2021
COURT FILE NO.: CV-13-474209
DATE: 20210326
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
GRILLO BARRISTERS P.C.
Plaintiff/Defendant by Counterclaim (Respondent)
– and –
KAGAN LAW FIRM P.C., DARIA KAGAN, and NATASHA BAKSH
Defendants/Plaintiffs by Counterclaim (Appellants)
REASONS FOR DECISION
Pinto J.
Released: March 31, 2021