COURT FILE NO.: CV-15-540011
DATE: December 1, 2021
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Roslyn Houser, Peter Friedenthal, Ropean Holdings Inc., First Service Consulting Inc. and Roslyn Houser Professional Corporation v. TD Waterhouse Canada Inc. and Benjamin Lee;
BEFORE: ASSOCIATE JUSTICE C. WIEBE
COUNSEL: Heather Fisher for the defendants; Sean Dewart for the plaintiffs;
HEARD: November 26, 2021.
REASONS FOR DECISION
[1] The defendants brought a motion returnable November 26, 2021 seeking an order dismissing the action for delay under either Rule 48.14 or 24.01. At the same time, the plaintiff brought a cross-motion seeking an order extending the deadline to set this action down for trial to December 31, 2021. In argument, Mr. Dewart amended the claimed relief in the cross-motion to an order requiring the parties to have the mandatory mediation in ninety (90) days and requiring that the action be set down for trial on or before April 15, 2022.
[2] Having read the written material and heard submissions, I orally dismissed the motion and granted the revised relief in the cross-motion making sure counsel understood that the ninety days for the mandatory mediation began to run from November 26, 2021. Here are my reasons for this decision.
Rule 48.14
[3] This action commenced on November 6, 2015. It concerns alleged damages suffered by the plaintiffs on account of the improper investment advice given to them by the defendant, Benjamin Lee, an employee of the defendant, TD Waterhouse Canada Inc, concerning investment products called rate reset preferred shares in the period 2007 to 2015. The plaintiffs allege they incurred losses in excess of $5 million.
[4] The five-year period under Rule 48.14 expired on November 6, 2020. Ontario Regulation 73/20 under the Emergency Management and Civil Protection Act, issued March 20, 2020, suspended all limitation periods and time periods within which steps must be taken in a proceeding in Ontario. This regulation was eventually revoked. However, the suspension under the regulation caused the time period for setting actions down for trial under Rule 48.14 in this case to be extended to May 5, 2021. The defendants brought their motion in April 2021 with an original return date of April 26, 2021. The Registrar had not dismissed the action at that time. That continues to be case. Therefore, without a dismissal order, I accepted the plaintiffs’ argument that the motion and cross-motion are in effect a status hearing under Rule 48.14(5), (6) and (7).
[5] The defendants argued that there is no such suspension under Regulation 73/20 concerning Rule 48.14 as that rule imposes consequences for not taking a step as opposed to requiring a step. I did not accept that argument. Rule 48.14 does require that a step take place within a limitation period, namely the step of setting an action down for trial.
[6] The defendants argued that I should exercise my discretion under Regulation 73/20 section 7.1 (2) to not impose the suspension in this case due to the plaintiffs’ alleged untimely compliance with and non-compliance with discovery undertakings. As to the issue of non-compliance with undertakings, this was not a motion for undertakings and refusals. Therefore, I was not in the position to rule as to whether the undertakings have or have not been complied with. As to the timeliness of compliance, I did not accept that there has been untimely compliance. More on this later in these reasons.
[7] It is well established that for the plaintiffs to avoid having the action dismissed at a status hearing, they have the onus of proving two things: (1) that there is an acceptable explanation for the delay; and (2) that, if the action is allowed to proceed, the defendants will not suffer non-compensable prejudice; see Faris v. Eftimovski, 2013 ONCA 360 at paragraph 32. Have the plaintiffs proven these two things?
[8] Concerning the explanation for the delay, I started by indicating that this action was five years and five months old when the defendants brought their motion in April 2021. The pleadings were done in late 2015 and early 2016. The plaintiffs delivered their affidavit of documents and productions on August 16, 2016. The defendants delivered their productions on November 25, 2016. Mr. Lee was discovered on February 22, 2017; Roselyn Houser was discovered on May 17 and May 23, 2017; Peter Friedenthal was discovered on May 26, 2017. The plaintiffs gave 24 undertakings, 13 under advisements and 10 refusals.
[9] What then took time was the process of having these undertakings, under advisements and refusals dealt with. Mr. Lee took 13 months to answer his undertakings on April 5, 2018. The plaintiffs took longer to answer theirs.
[10] In his affidavit, Mr. Lissaman, counsel of record for the plaintiffs, reviewed the history of the plaintiffs’ efforts to comply with their undertakings. I will not review that history in detail, but I will address highlights. First, some of the undertakings required the obtaining of expert evidence, such as the quantification of the plaintiffs’ damages. Mr. Lissaman advised that it took time to retain and instruct damage and liability experts, and then to get all relevant documents to them, some of which had to come from the defendants. Many candidates were conflicted out. The plaintiffs finally retained experts in May 2019 and served expert reports in September and December 2020. Second, Mr. Lissaman showed that retrieving documents to comply with the undertakings took time. For instance, Mr. Friedenthal had to retrieve records from his Swiss bank, which did not come until June 2019. Mr. Lissaman kept counsel for the defendants apprised of these efforts. Third, Mr. Lissaman stated that he himself was hampered by the COVID-19 pandemic in 2020 and his personal responsibilities to care for his parents, an explanation that is not disputed by the defendants.
[11] Mr. Lissaman delivered answers to undertakings that did not require expert evidence on February 8, 2019. After receiving complaints about the alleged inadequacies of the answers, Mr. Lissaman delivered further documents on December 23, 2020. Some of these two set of productions included records of the plaintiffs’ investments with RBC, which is a core complaint of the defendants. In February 2021 Mr. Lissaman advised the defendants that his clients would now be answering questions they had previously taken under advisement or refused. Those answers were delivered on April 6, 2021. After this, Mr. Lissaman stated that only two refusals remained, and he gave satisfactory explanations for these continuing refusals.
[12] The complaint from the defendants was that these efforts to comply with undertakings and refusals by the plaintiffs were deficient. I was not positioned to determine that issue. This was not a motion for undertakings and refusals. Suffice it to say here that the plaintiffs take the position that they fully complied with their undertakings by the end of December 2020 and with the refusals that they were prepared to answer by April 6, 2021. The defendants have not brought any motion requiring further compliance by the plaintiffs.
[13] The defendants also complained that the answers given took too long. I disagreed. The explanation given by Mr. Lissaman is satisfactory. It took time to retrieve documents and hire and instruct experts, and the COVID-19 pandemic has been a major interruption in 2020 and 2021.
[14] The greatest factor in my decision, however, was the following one. As indicated in Mr. Lissaman’s affidavit, with their delivery of documents in December 2020, the plaintiffs wanted to have the mandatory mediation to allow them to set this action down for trial. On December 23, 2020 Mr. Lissaman sent an email proposing a mandatory mediation. There was no dismissal order and the within motion had not been brought. It was the defendants who refused to move the action forward. Back on August 26, 2019 Mr. Sheikh sent a curious letter stating that the defendants would not be taking any further steps alleging they had been prejudiced. The defendants refused to move forward to a mandatory mediation. Therefore, I found that it was the defendants who in the end delayed this action to the point where Rule 48.14 was in issue.
[15] Concerning the issue of prejudice, the defendants made one core allegation, namely that the plaintiffs’ alleged delay and non-responsiveness concerning their undertakings have potentially caused documents concerning the plaintiffs’ investments with other investment firms to be destroyed. The motion records of the defendants contain affidavits of Fara Gurriera, Mr. Sheikh’s administrative assistant, wherein she swears as to searches she and others at the firm did of the internet concerning document retention policies of ScotiaMcLeod, RBC Dominion Securities and Gluskin Sheff, three of the plaintiffs’ other firms. Apparently, one of these firms, Gluskin Sheff, keeps documents for no more than seven years. Mr. Fisher argued that the same policy applies to the others although the evidence in this regard was unclear. From this, Ms. Fisher argued that the plaintiffs’ documents with these firms, which the defendants argue are crucial to their defence, may have been destroyed by the plaintiffs’ conduct.
[16] I did not accept this argument, First, as indicated above, it is open question whether the plaintiffs failed to comply with their production obligations. They allege that they have complied. Second, if they have not complied, the alleged evidence of document destruction is speculative. I was advised that the plaintiffs have given releases to the defendants whereby they can approach these firms for these documents. There is no evidence that they have in fact approached these firms and have been told by them that these documents do not exist due to their document retention policies. I found that there was insufficient evidence that the relevant third-party investment documentation, if still outstanding, could not be retrieved by the defendants, either by request or by motion. Third, as I pointed out to Ms. Fisher, if the document retention policies of these firms are indeed seven years, these third-party documents were in jeopardy from the outset of this action as the relevant period in question is between 2007 and 2015. As a result, the defendants should have moved expeditiously at the outset to impose a discovery plan with a preservation order. By not doing so, they contributed significantly to any prejudice they may have suffered in this regard. For all these reasons, I did not accept the argument about prejudice.
[17] The defendants also referred to being prejudiced in not being able “to address and take a position on appropriate trading mitigation strategies.” As explained to me by Mr. Fisher, this complaint related to the above noted third party investment documentation. The defendants say they need this documentation to determine whether the plaintiffs have properly mitigated their damages. As a result, I concluded for the same reasons that this is insufficient evidence of prejudice.
[18] Therefore, I found that the motion to dismiss under Rule 48.14 must fail and that the action must proceed.
[19] I found as well that the plaintiffs’ cross-motion was in effect a request for a timetable order under Rule 48.14(7)(b). Ms. Dewart’s amended request in the cross-motion for an order requiring the parties to have the mandatory mediation in ninety (90) days from November 26, 2021 and requiring that the action be set down for trial on or before April 15, 2022, all seemed reasonable. I ordered that timetable.
Rule 24.01(2)
[20] The defendants also argued that I should dismiss the action under Rule 24.01(1)(b), the rule that allows a defendant to move for a dismissal order if the plaintiff does not set the action down for trial within six months after the close of pleadings. Under this rule the defendant must prove either that the plaintiff is responsible for delay that is intentional and contumelious, or that the plaintiff has caused delay that is inordinate and inexcusable and gives rise to a substantial risk that a fair trial may not be possible; see Langenecker v. Sauvé, 2011 ONCA 803 at paragraph 5.
[21] The first test clearly does not apply. Under this test, the defendant must prove that the plaintiffs either abandoned this action at any point or acted in a way that amounted to an abuse of process. There was no evidence on this motion that that happened at any time.
[22] The second test is the more relevant one. Having gone through the analysis I did on the Rule 48.14 point, I also had no difficulty rejecting this argument as well. The delay in this case is not inordinate. Five years and five months from the statement of claim to the commencement of this motion is not long for a case of this nature concerning damages of the size being claimed and involving complicated issues of investment strategies where experts will be called.
[23] Any delay I found was excusable. As stated earlier, it took the plaintiffs an understandable amount of time to comply with their undertakings. This compliance involved retrieving documents from foreign sources. It involved retaining and instructing experts. There was the COVID-19 pandemic and the interruptions that created.
[24] As to whether there is a substantial risk of an unfair trial as a result of any delay, I found that there is no such risk. The major complaint of the defendants that relevant third-party investment documentation is lost is not corroborated. I reiterate my analysis under the Rule 48.14 point in this regard. The allegation is speculative. There is insufficient evidence that these documents cannot be retrieved by the defendants, either by request or by motion.
[25] I, therefore, dismiss the defendants’ motion on this ground as well.
Conclusion
[26] I, therefore, dismissed the defendants’ motion and granted the plaintiffs’ cross-motion by ordering that the parties have their mandatory mediation within 90 days of November 26, 2021, and that this action be set down for trial on or before April 15, 2022.
[27] As to costs, Mr. Dewart filed a costs’ outline for the plaintiffs showing actual costs of these motions in the total amount of $26,570.87 and partial indemnity costs of $15,950.52. Ms. Fisher filed a costs’ outline for the defendants showing actual costs of these motions in the total amount of $50,503.49, substantial indemnity costs of $45,705.46, and partial indemnity costs of $31,311.35.
[28] The plaintiffs were successful on both motions and deserve costs. Mr. Dewart advised in argument that the plaintiffs should get partial indemnity costs as claimed. Given the result and the reasonable expectation of the defendants as reflected in their costs outlines, I had no trouble awarding that amount, $15,950.52, to be paid in 60 days.
DATE: December 1, 2021 _____________________________
ASSOCIATE JUSTICE C. WIEBE