DATE: 2021/05/11
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: DEMETER, Plaintiff
AND:
HAMDANI and SIMPSON WIGLE LLP, Defendants
BEFORE: MASTER RONNA M. BROTT
COUNSEL: S. Zeitz, for the Plaintiff
Email: szeitz@lzwlaw.com
S. Martin and J. Round, for the Defendants
Emails: smartin@torkinmanes.com : jround@torkinmanes.com and
R. McLean for the plaintiff Travers (in related action)
Email:
ENDORSEMENT
[1] This is a motion brought by the plaintiff Dawn Demeter (“the plaintiff”) to set aside or vary the consent Order of Master Jolley dated July 4, 2018 and to grant the relief sought by the defendants in their Amended Notice of Motion dated June 28, 2018, wherein they sought to consolidate three related actions.
Underlying facts
[2] Dawn Demeter (“Demeter”) and Janine Travers (“Travers”) entered into a business venture to purchase, renovate and re-sell a property in Burlington.
The three actions
[3] The first action (CV-16-566407) is a mortgage enforcement action commenced on December 20, 2016 by Leonard Sedun (“Sedun”) against Demeter and Travers. Sedun had provided mortgage financing to fund their business venture.
[4] Demeter commenced the within action, CV-17-569412, (“the second action”), on February 10, 2017, alleging that her lawyers, Hamdani and Simpson Wigle LLP (“the defendants”) were negligent in providing legal advice from July 2013 to September 2013 with respect to the business venture in that only she had to mortgage her home causing her to assume a significantly greater risk than Travers.
[5] In the third action, CV-17-582822, commenced on September 15, 2017, Demeter claims against Travers, for contribution and indemnity, and against Sedun, alleging that he and Travers induced her into entering the business venture.
Chronology
[6] A Statement of Defence in the second action was delivered on April 21, 2017. Pleadings closed in or about May 2017.
[7] On July 27, 2017 Demeter’s counsel, Mr. Zigler, wrote to her to advise her that for health reasons he was taking a break from his practice and that he could not continue to represent her. In August 2017 Demeter advised Mr. Zigler that someone would pick up her file from his office and on September 9, 2017 she suggested to Mr. Zigler that someone else from his firm take over. In later September/October 2017 Demeter picked up her files. Mr. Zigler never removed himself as solicitor of record.
[8] In November 2017 and again in February 2018 counsel for the defendants wrote to Mr. Zigler seeking to establish a discovery plan. In February 2018 the defendants served their Affidavits of Documents. In March 2018 defence counsel requested Mr. Zigler’s position on consolidating the second and third actions and on March 28, 2018 the defendants advised of their instructions to bring a consolidation motion. They received no responses to their inquiries.
[9] The consolidation motion was served on May 24, 2018 on Mr. Zigler as well as on counsel for the defendants Travers and Sedun in the third action. On June 5, 2018 the defendants learned for the first time from counsel for Sedun of Mr. Sedun’s first action. The defendants accordingly amended their Notice of Motion on June 5, 2018 to include all three actions. On July 3, 2018 counsel for the defendants wrote to two lawyers at Mr. Zigler’s firm advising them of Mr. Zigler’s failure to respond; of the information obtained from counsel for Mr. Sedun that Mr. Zigler was no longer at their firm; and advising of their motion ”for an order consolidating three actions and to implement a Discovery Plan”. The motion was returnable July 4, 2018.
[10] Counsel for all parties (including Mr. Zigler) first discussed the motion on the morning of the hearing at the courthouse. All agreed that the issue of the multiplicity of proceedings had to be addressed. Counsel agreed that the three proceedings ought to be reconstituted chronologically based on their dates of issuance. The consent Order of Master Jolley ordered consolidation of all three actions, struck Demeter’s claims in the second and third actions, and granted Demeter leave to advance those claims by way of a counterclaim, a crossclaim and a Third Party Claim within the first action within thirty (30) days [by August 3, 2018].
[11] Mr. Zigler did not report the results of the motion to his client nor did he, within thirty (30) days, reconstitute the pleadings. Demeter failed to amend the pleading within thirty days.
[12] In May 2019 Demeter contacted Mr. Zigler’s former firm to inquire of her files’ status and then learned that her two actions had been struck. Counsel for the defendants heard nothing from Demeter or her lawyer until September 2019 when they were contacted by LawPro counsel seeking to rectify the plaintiff’s failure to reconstitute the pleadings in accordance with Master Jolley’s order.
The Law
[13] Rule 59.06 provides the court with the statutory authority to set aside, amend and/or vary an order. The purpose of the rule is to provide a mechanism for setting aside and varying court orders in appropriate circumstances.
[14] Historically, courts would only set aside consent orders upon grounds of common mistake, misrepresentation or fraud. More recently courts have exercised their discretion more broadly. In Cookish v Paul Lee Associates Professional Corp., 2013 ONCA 278 per R.A. Blair at para 56, the Court of Appeal stated that “courts are cautious about setting aside consent orders, of course, but will where it is necessary in the interests of justice to do so”.
[15] In Clatney v Quinn Thiele Mineault Grodzki LLP, 2016 ONCA 377) the court stated that given the purpose of Rule 59.06, a court is not limited to setting aside an order in instances of fraud or facts arising or discovered after the order has been made, rather it can be done when necessary in the interests of justice. An individual seeking to set aside an order is required to show “circumstances which warrant deviation from the fundamental principle that a final [order], unless appealed, marks the end of the litigation line.”
[16] In the Clatney case the Court of Appeal in considering an appeal of the appellants’ motion to set aside a consent order, stated:
Rule 2.01 reflects the general principle outlined in r. 1.04(1), that the rules “shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.” As this court explained in Finlay v Van Paassen, 2010 ONCA 204, 101 O.R. (3d) 390 (Ont. C.A.), at para. 14:
Rule 1.04 and rule 2.01 are intended to do away with overly “technical” arguments about the effect of the Rules and orders made under them. Instead, these provisions aim to ensure that the Rules and procedural orders are construed in a way that advances the interests of justice, and ordinarily permits the parties to get to the real merits of their dispute.
[17] Under Rule 59.06 the burden is on the responding party to prove on a balance of probabilities that they will suffer prejudice that cannot be compensated by costs.
[18] In Clarke v Pattison [1999] O.J. 374 at para 3 the court stated that “the defendant must show that he will be prejudiced as opposed to speculating that there could be prejudice on general grounds which may have led to problems because of the delay”.
[19] After serving the Jolley Order on Mr. Zigler on July 5, 2018 there was no communication between the parties or their lawyers. The plaintiff alleges that she failed to comply with the timeline because she was not aware of it until May 2019, having lost communication with her lawyer from October 2017 to May 2019. Courts have affirmed the principle that the court is “concerned primarily with the rights of litigants, rather than with the conduct of solicitors.” (St. Denis v TD Insurance Home & Auto Liberty Insurance Co. of Canada 2005 CanLII 37593 (ON SC), [2005] O.J. No.4441 at para 33.).
[20] While our courts are primarily concerned with the rights of the litigants, our profession values civility and understanding. Had Demeter been aware of the necessity to reconstitute the pleadings immediately after the July 2018 order she could have retained a lawyer to do so within the time ordered. Perhaps the new lawyer may have requested additional time and he/she could have easily requested a telephone case conference to obtain the extension. Given Mr. Zigler’s ill-health and the plaintiff’s predicament it would have been highly unlikely that any court would have denied the extension request.
[21] The defendants submit that the plaintiff has framed this motion as a motion to set aside or vary the order of Master Jolly under rule 59.06, but really what the plaintiff is seeking is an extension of the time limits prescribed in the Order, pursuant to Rule 3.02. Under rule 3.02, the onus is on the plaintiff to prove there is no prejudice to the defendants.
[22] The moving party chose to bring the motion under rule 59.06 and not pursuant to rule 3.02. The moving party is not seeking to extend the time within the confines of the relief sought. Rather, Demeter is seeking to set aside/amend the Jolley order to permit the three actions to be consolidated. It is this court’s task to determine, pursuant to rule 59.06 if the defendants have or have not discharged their burden of demonstrating prejudice that cannot be compensated for by costs. On that basis it is unnecessary for me to determine if the motion should have been brought under rule 3.02.
[23] The defendants argue that they will suffer prejudice as they have lost their right to claim over because of Demeter’s failure to reconstitute the claims within the thirty days. They submit that the limitation period has now expired and that there was nothing they could have done to avoid the prejudice. They assert that prejudice exists by the very fact that the limitations defence will be a live issue in any proceeding. Even if not statute-barred, the defendants argue that Travers would, at a minimum, be entitled to assert a limitations defence. It is the defendants’ submission that it “creates uncertainty and risk that would not otherwise exist, impacting on all aspects of a claim-over from strategy to settlement determinations”.
[24] The defendants do not confirm that they were intending to claim over against Travers – only that they were ‘concerned’ and wanted to wait to see how the case would unfold. It was the defendants’ own decision not to commence third party proceedings against Travers during the one and a half years they had defended the claim. The evidence does not establish definitively that they would have brought the claim. The defendants have put forward only a bald assertion of prejudice.
[25] The defendants further submit that the plaintiff’s delay is also a contributing factor to their allegation of prejudice. Despite the action being commenced in 2017, the plaintiff has still not even delivered an Affidavit of Documents.
[26] The defendants did not bring any motions to dismiss the claim for delay so to now argue delay at this stage is inappropriate. The defendants have put forward no evidence on their submission of litigation delay. Further, on this motion there is no evidence from the defendants that to permit the amendments to the order would deprive them of a fair trial.
[27] One of the primary factors in assessing whether it is in the interests of justice to set aside a final order is the prejudice that will flow to each of the parties. At para 25 of Clarke v Pattison, supra, in explaining the balancing of the issue of prejudice, the court stated:
is not that of a pair of scales with equal weight in each hand, but rather is the prejudice established by the defendant in any case on the facts and circumstances of that case of a sufficient magnitude that it means that the defendant cannot be fairly dealt with in going on further in the case (with an end view to a trial) when compared with the prejudice that the plaintiff would suffer.
[28] The relief sought by the defendant on July 4, 2018 was for consolidation. The defendants were not seeking a dismissal of the plaintiff’s claims. All parties were in agreement that it was critical to deal with the multiplicity of the proceedings and it was with that core issue in mind that the Order was consented to. They did not intend to remove Demeter’s substantive rights.
[29] The order striking the plaintiff’s claims ought not to have been made in the first instance. While the parties consented to the July 4, 2018 order requiring Demeter to amend her pleading in the first action to include a counterclaim and/or crossclaim and/or third party claim within thirty (30) days it was clearly the parties’ intention at that time to address the issue of consolidation in the most practical, efficient manner – in accordance with rule 1.04 and 2.01.
[30] In weighing prejudice to the parties, it is clear that the prejudice to Demeter in not being able to continue her actions outweighs the prejudice to the defendants to defend the claim. It is accordingly in the interests of justice to depart from the finality of the order.
[31] The court has discretion to set aside or vary an Order when necessary in the interests of justice. Setting aside Master Jolley’s Order to grant the relief that the defendants were seeking in the first place takes into account the intention of all parties to have a court make a fair determination of the substantive issues in dispute. Applying a contextual analysis, to permit the setting aside/variance of the order is the most just determination in the circumstances.
Order and Costs
[32] The order of Master Jolley dated July 4, 2018 is hereby set aside. The initial relief sought by way of Amended Notice of Motion dated June 5, 2018 is granted and Actions CV-16-566407, CV-17-569412 and CV-17-582822 are hereby consolidated.
[33] The parties shall agree within thirty (30) days on a timetable with respect to the exchange of pleadings and affidavits of documents, examinations for discovery, undertakings, timing of any interlocutory motions/summary judgment motions and other steps in these proceedings. Should the parties be unable to agree on such a timetable, they may request a telephone case conference after the thirty days and I shall assist in this regard.
[34] The parties agreed in advance that there shall be no costs.
MASTER RONNA M. BROTT
Date: May 11, 2021