COURT FILE NOS.: CV-10-4060 and CV-10-4061
DATE: 2021 02 05
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
TERI WALDERMAN
Julian Binavince, for the Plaintiff jbinavince@levyzavet.com
Plaintiff
- and -
INVESTIA SERVICES FINANCIERS INC., INVESTIA FINANCIALSERVICES INC., ASL DIRECT INC., ASG FINANCIAL CORP., PANFINANCIAL GROUP SERVICES, PANFINANCIAL INVESTMENTS INC., PANFINANCIAL INVESTMENTS MANAGEMENT LTD., PANFIN WEALTH MANAGEMENT GROUP INC., PANFINANCIAL GROUP SERVICES INC., PANFINANCIAL GROUP SERVICES INC., PANFINANCIAL INVESTMENTS GROUP INC., PANFINANCIAL INVESTMENTS SERVICES INC., PANFINANCIAL SERVICES INC., PANFINANCIAL INC., PANFINANCIAL SERVICES CORP., PANFINANCIAL INSURANCE AGENCIES LIMITED, PANFIN EQUICAP LTD., GORDON BERGER, TREVOR RABIE, AARON COHEN, ERAN OSTFELD and LILY OSTFELD
Judy Hamilton, for the Defendants jh@friedmans.ca
Defendants
HEARD: February 3 and 4, 2021
REASONS FOR JUDGMENT
Chown J.
[1] There are two closely-related actions before me, CV-10-4060 and CV-10-4061. This endorsement applies to both actions. I refer to the plaintiff as Ms. Walderman, in the singular, but I recognize that Ms. Smith is also a plaintiff in CV-10-4060.
[2] This matter has a complex history but has been simplified now that Mr. Rabie is the only remaining defendant in both actions.
[3] The actions were both commenced in November 2010. A status hearing was eventually held on August 28, 2017 in front of Justice Petersen. At that time there were more parties involved. Mr. Rabie did not participate in the status hearing. On his behalf, Ms. Hamilton indicated he would not oppose the relief the plaintiff was seeking if no costs were claimed against him. This was confirmed on behalf of Ms. Walderman by Mr. Binavince.
[4] Justice Petersen reserved her decision on the status hearing, and on November 15, 2017 she released her decision (2017 ONSC 6802) dismissing the actions.
[5] Ms. Walderman appealed. The appeal hearing was scheduled for May 30, 2018. On the day before the appeal hearing, all the then-remaining parties other than Mr. Rabie reached a settlement. As part of the settlement, the settling defendants consented to the order under appeal being set aside. The appeal proceeded as between Ms. Walderman and Mr. Rabie only. The Court of Appeal allowed the appeal (2018 ONCA 505), stating: “The appeal is allowed, the order is set aside and the parties are ordered to set and attend a status hearing to establish a litigation timetable.”
[6] That was two years and eight months ago. However, it is only now that the status hearing the Court of Appeal ordered is being reached. That is what is before me in the current hearing.
What has Happened Since the Appeal
[7] After the near-death experience for her lawsuit, one might have thought that Ms. Walderman would immediately arrange the status hearing ordered by the Court of Appeal. Indeed, the intervention of this court to set a timetable should not have been required. What should have happened in June of 2018 was an immediate exchange of correspondence between counsel to set a timetable which could then have been approved on consent at a brief status hearing.
[8] Between May 30, 2018 and March 4, 2019, the first return date for this motion / status hearing, the settlement with the then-remaining defendants, other than Mr. Rabie, was concluded. The evidence on why this took so long is thin.
[9] The affidavit of Ms. Burby, then an articling student in Mr. Binavince’s office, states based on information and belief from Mr. Binavince that “between May 2018 and November 2018” there were settlement discussions “which culminated in Walderman discontinuing the within action as against the Settling Defendants.” However, based on the opening line of the Court of Appeal’s decision and the evidence in the record before me, it appears the settlement was reached the night before the appeal hearing. Certainly, some arrangement was reached that allowed the settling parties to consent to setting aside the order under appeal. This casts doubt on the suggestion that settlement discussions continued until November 2018.
[10] In contrast, the record contains several emails which suggest there were no or limited discussions between May and November of 2018. One email dated August 20, 2018 from counsel for one of the former defendants to Mr. Binavince says, “when will the final form of Releases be signed and delivered? The completion of this settlement is taking a very long time.”
[11] Mr. Binavince argues that the evidence of Ms. Burby is unchallenged, that it is reasonable that there would be negotiations over the details of the settlement, and that the explanation for the delay during this time period is that Ms. Walderman was resolving the matter with the other defendants. I do not doubt that releases had to be prepared and exchanged and funds may have had to be exchanged, but the six-month delay is not adequately explained. Further, there was no reason why the status hearing the Court of Appeal had ordered was not arranged.
[12] After May of 2018, there was no substantive communication with Ms. Hamilton until December 31, 2018 when Mr. Binavince asked for Mr. Rabie’s statement of defence (!) within 14 days.
[13] I emphasize that, until that point, more than eight years after the commencement of the litigation, Mr. Rabie’s statements of defence had not been delivered. There is a long history to it, including: (a) a noting of default and 2011 default judgment against Mr. Rabie; (b) a 2012 attempt to have the default judgment set aside; (c) a 2012 consent, later disputed, to an order that part of the default judgment which overrode any discharge from bankruptcy would be set aside; (d) a delayed and complex dispute to settle the order which dismissed the attempt to overturn the default judgment, finally resolved in 2017; (e) bankruptcy on the part of Mr. Rabie in 2013; (f) an order lifting the stay of proceedings resulting from the bankruptcy; (g) a 2017 status hearing; and (h) a 2018 appeal from the status hearing.
[14] Mr. Rabie argues that he was not able to deliver a defence until after the order setting aside part of the default judgment was settled in 2017. Mr. Binavince notes that in her endorsement settling the order, Justice Donohue states that either party could have moved to settle the order. Regardless, Mr. Rabie did not deliver his statements of defence in this matter until February 20, 2019.
[15] Ms. Hamilton argues that it was not necessary for the matter to languish awaiting the status hearing. Ms. Walderman could have provided her affidavit of documents and could have attempted to develop a discovery plan, schedule delivery of productions and schedule discoveries.
[16] In response, Mr. Binavince points to an email exchange in which he said on January 8, 2019:
With respect to your position on the status hearing, you will note that the Court of Appeal order requires that the parties attend at a status hearing "to establish a litigation timetable". My client's affidavit of documents is ready to be served, so I will not require more than 14 days after the close of pleadings to deliver my client's AOD. I suggest that the drop dead date to deliver AODs be 30 days after the close of pleadings and examinations be 60 days after delivery of the AODs.
[17] Ms. Hamilton responded on January 9, 2019:
I disagree with your statements attempting to explain yet another delay on the part of your client. Even further, there is clearly non-compensable prejudice due to the unavailability of documents. I think your client provided sworn evidence as to those issues which favours my client in that regard.
In any event, we do not need to argue over the show cause issue, a judge will make that determination.
[18] Mr. Binavince argues that the proper inference from the response and failure to propose an alternate timetable is that the defendant wished to argue at the status hearing that the action should be dismissed. That is a reasonable interpretation, but again, a phone call between counsel about advancing this case towards a merit-based resolution would have helped. Certainly, it would have clarified Mr. Rabie’s position and committed him to a position.
[19] The originally scheduled date for this motion / status hearing was March 19, 2019. It was adjourned on consent to September 25, 2019. The long delay was necessary due to the unavailability of long motions dates in Brampton. The fact that Ms. Hamilton wanted a long motion date does suggest that she intended to address more than simply setting a litigation timetable as the Court of Appeal had required. It suggests she intended to argue the action should be dismissed at the status hearing. This supports Mr. Binavince’s interpretation of Ms. Hamilton’s January 9, 2019 email.
[20] Mr. Rabie delivered a September 16, 2019 responding affidavit in advance of the September 25, 2019 motion / status hearing date. In this affidavit, he said: “To the date of the swearing of this affidavit, 9 months after saying it was ready, and almost 9 years after the action was commenced, the plaintiff has still not served an affidavit of documents. She has not served a discovery plan or scheduled examinations for discovery.”
[21] Ms. Hamilton describes this as “baiting” Ms. Walderman to serve her affidavit of documents, serve a discovery plan or schedule examinations, and notes that despite this, now a year and four months later, none of this has occurred. However, I find this to be inconsistent with the position previously taken by Mr. Rabie. Ms. Walderman cannot be faulted for the delay entailed by Mr. Rabie’s insistence on a long motion. If Mr. Rabie wanted to get on with things, he could have had Ms. Hamilton phone Mr. Binavince and suggest they set up a timetable. “Baiting” Ms. Walderman to serve her affidavit of documents and get on with the action, in a comment buried at paragraph 71 of an affidavit, served just before the hearing date and many months after Mr. Binavince’s effort to get the action on the rails, was not an effective way to advance the action.
[22] What I have, then, is Ms. Hamilton implying that her client would have cooperated with timetabling the matter if only the affidavit of documents and a discovery plan had been served, and Mr. Binavince saying he and his client thought, based on Ms. Hamilton’s response to his email proposing a schedule, that Mr. Rabie was insisting on the status hearing proceeding before a timetable could be set. Thus, the matter sat in a stalemate for about two years. During this time, from what I can see, neither counsel picked up the phone and called the other to see if they could work out a way forward.
[23] There was another adjournment of this hearing, to March 23, 2020, because Ms. Hamilton had a significant unrelated issue arise. Mr. Binavince (reasonably) agreed.
[24] A third adjournment was necessitated by the suspension of in-person operations of the court on March 17, 2020 due to the pandemic.
The Nature of the Current Hearing
[25] Ms. Hamilton on behalf of Mr. Rabie argues that this is a status hearing and as such Ms. Walderman must show cause why the action should not be dismissed for delay. She argues I should dismiss the action because there has been a “complete failure to meet the burden of proof on the status hearing.” Mr. Rabie’s factum says, “It is in the interests of Justice that the delays from the commencement of the Actions against Rabie be given de novo consideration and be considered along with the prejudice he has suffered due to those delays.”
[26] Mr. Binavince on behalf of Ms. Walderman argues this is a “status hearing to establish a litigation timetable” ordered by the Court of Appeal, and it is not within my jurisdiction to do anything other than set a timetable. He argues based on the wording of the Court of Appeal’s endorsement I do not have jurisdiction to consider the matter de novo. He further argues that this should be treated as a continuation of the previous status hearing with directions having been given by the Court of Appeal. He also says there is an issue estoppel in that the Court of Appeal has already decided the issue and it is an abuse of process to hold a further hearing on whether Ms. Walderman must show cause why the action should not be dismissed. Finally, Mr. Binavince argues that there is a remedy available to Mr. Rabie, a motion to dismiss for delay, should he wish to argue that the action should be dismissed. However, in his submission today’s hearing is not the place for this argument as Mr. Rabie has not brought such a motion.
[27] Ms. Hamilton says this is a status hearing. She says that given the delay since the appeal, Mr. Rabie is entitled to be heard on the matter of the delay, and that Ms. Walderman must show cause why the action should not be dismissed.
The Court of Appeal’s Decision
[28] I will return now to the Court of Appeal’s decision, which is very brief. In part, the decision says:
[3] The status motion in August before Justice Petersen was unopposed by Mr. Rabie. That position had been taken in February on the original return date and was never changed including at or after the July 2017 appearance before Justice Donohue.
[4] As Justice Petersen misapprehended the status of the action as against Mr. Rabie and that the order for a litigation timetable was unopposed by him for the fiduciary duty claim, it would not be fair or appropriate for Mr. Rabie to now resile from that position. [Emphasis added.]
[29] The question now is whether, at this hearing, two years and eight months after the appeal hearing, it remains unfair or inappropriate to require Ms. Walderman to show cause why the action should not be dismissed for delay, or whether I should even entertain the idea, given what the Court of Appeal contemplated in its order which, to repeat, was “a status hearing to establish a litigation timetable.”
[30] It is safe to assume that the Court of Appeal did not anticipate it would take two years and eight months for the parties “to set and attend a status hearing to establish a litigation timetable.”
Delay was Addressed
[31] In Stokker v. Storoschuk, 2018 ONCA 2 at para 9, the Court of Appeal said: “Where delay has been addressed in a prior court order, or consented to, it is any subsequent delay that requires explanation.” The Court of Appeal repeated this rule in D'Souza v. Brunel International Inc. (ITECC Consulting), 2019 ONCA 339 at para. 8.
[32] Here, the Court of Appeal’s decision was based significantly on the fact that Mr. Rabie had not opposed the status hearing. Although the Court of Appeal‘s reasons in this matter do not address the question of delay or prejudice, the decision under appeal did. (I will review the argument on prejudice later in these reasons.) The delay “has been addressed” in the Court of Appeal’s order. Therefore, it is only the subsequent delay that requires explanation. That is, it is only the delay since the appeal that requires explanation.
Ignoring a Lifeline
[33] However, the Court of Appeal in Stokker went on to say in para. 14:
Before concluding, we want to make clear that although the focus is on subsequent delay during a motion to restore an action to the trial list after a r. 48.14(4) order has been made, if there has been material delay in meeting the timetable, it is appropriate to consider the entire history of delay in the action when deciding whether to reinstate. That history of delay and the difficulties it has caused is relevant when considering whether the defendant will experience non-compensable prejudice if the action is restored to the trial list.
[34] This is consistent with the Court of Appeal’s prior decision in 1196158 Ontario Inc. v. 6274013 Canada Limited, 2012 ONCA 544, where Justice Sharpe held at para. 25:
I completely disagree with the contention that the plaintiff was somehow absolved for all prior delay by the order made at the January 2010 status hearing. That order, made despite over three years of delay, was properly described by the September 2011 status hearing judge as a "lifeline" that allowed the plaintiff to proceed on the basis of the timetable ordered. The plaintiff ignored the lifeline it had been given and failed to respect the timetable that had been set. Without repentance, there can be no absolution. The plaintiff did not emerge from the January 2010 status hearing with a clean slate and it was open to the status hearing judge to consider the entire history of delay.
[35] Applying these two decisions in the circumstances of this case is not straightforward. The Court of Appeal gave a “lifeline” to Ms. Walderman but did not set a timetable. Strictly speaking, there has been no breach of a timetable. Is it fair to say that “the plaintiff ignored the lifeline” she had been given?
[36] I said above that the explanation that Ms. Walderman and other defendants were engaged in “settlement discussions” between May and November of 2018 is not an adequate explanation for that six-month delay, especially since during this time Mr. Rabie and Ms. Walderman could have proceeded with the next steps in their litigation in parallel to the efforts to finalize the settlement details. However, the delay between January 2019 and now is adequately explained by Mr. Rabie’s failure to deliver his statements of defence and then the long wait for this hearing.
Prejudice
[37] Ms. Hamilton raised concerns about prejudice to Mr. Rabie which arises from the delay, but she points primarily to matters which arose before the first status hearing and the hearing at the Court of Appeal. For example, she raises the fact that it is now too late for Mr. Rabie to advance crossclaims. That may be, but Mr. Rabie cannot claim prejudice arising from his own choices. His failure to advance crossclaims long ago is not due to the delay in this proceeding.
[38] Another example of prejudice claimed by Mr. Rabie is the loss of documents. In his affidavit of September 16, 2019, Mr. Rabie says:
I did not perform administrative functions as a sales agent so I do not have possession or control of any of the relevant documents. They would be in the hands of Pan Financial and ASL Direct. Pan Financial and ASL Direct are no longer in business.
[39] The Court of Appeal would have been aware of this. In her reasons from the status hearing which was the subject of the appeal, Justice Petersen said:
Ms. Walderman has taken no steps whatsoever to advance the litigation against the Responding Defendants since the close of pleadings in 2012. She did not request any information from them, did not prepare or request affidavits of documents, did not produce any documents or request production of any documents from them, and did not conduct (nor even seek to schedule) examinations for discovery. She took no steps that could have alleviated the prejudice to the Responding Defendants that inherently results from lengthy delay.
[40] The Court of Appeal was obviously also aware of the explanation or lack of explanation for the delay at that point.
[41] Ms. Hamilton also noted that as part of the settlement with the co-defendant, Ms. Walderman did not require any terms that the settling defendants produce documents. To the extent that this prejudices Mr. Rabie, this was not an element the Court of Appeal could have or did consider. That is, it is prejudice that arguably arises since the appeal. However, there is no evidence that Mr. Rabie has attempted to obtain documents from the settling defendants or details about documents he thinks might assist his defence. Mr. Rabie has remedies available to obtain documents and information from the now-non-parties which he has not pursued.
Disposition
[42] In all the circumstances, I am not going to dismiss these actions a second time. It was a close call because Ms. Walderman did not embrace the opportunity the Court of Appeal gave her to get her case as against Mr. Rabie on the rails. However, she did not breach any order or specific timeline. The delay from May 30, 2018 to early 2019 was unnecessary but not severe. Mr. Rabie’s failure to deliver his statement of defence years ago and the fact that it took him over seven weeks to deliver it once it was demanded “undercuts” his position, to repeat the term used by Justice Rosenberg in Aguas v. Rivard Estate, 2011 ONCA 494 at para. 19.
[43] Mr. Rabie did not take a position at the first status hearing. If he had sustained serious prejudice at that point, he should have attended at the status hearing and argued for a dismissal. Further, the decision of the Court of Appeal in effect addressed the delay and prejudice up to that point.
Timetable
[44] The parties shall observe the following timetable.
• Delivery of affidavits of documents within 30 days of February 4, 2021 (the date of my endorsement).
• Examinations for Discovery - on or before April 30, 2021
• Undertakings to be answered within 45 days of being given
• Trial record to be delivered by September 1, 2021
[45] This timetable may not be adjusted by the consent of the parties but only by a further court order obtained upon appearance in front of a judge on a short motions date. I do not mean to say this shall be an in-person hearing. A video hearing is acceptable, but I do not want the parties to file a basket motion without having to provide an explanation to the court. Further, in the event such a motion is necessary, the parties shall ensure that the judge hearing the motion is provided with a copy of my reasons, Justice Petersen’s reasons, and the endorsement of the Court of Appeal.
Costs
[46] There shall be no costs to either party for this motion / status hearing.
Justice R. Chown
Released: February 5, 2021
COURT FILE NOS.: CV-10-4060 and CV-10-4061
DATE: 2021 02 05
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
TERI WALDERMAN
Plaintiff
– and –
INVESTIA SERVICES FINANCIERS INC., INVESTIA FINANCIALSERVICES INC., ASL DIRECT INC., ASG FINANCIAL CORP., PANFINANCIAL GROUP SERVICES, PANFINANCIAL INVESTMENTS INC., PANFINANCIAL INVESTMENTS MANAGEMENT LTD., PANFIN WEALTH MANAGEMENT GROUP INC., PANFINANCIAL GROUP SERVICES INC., PANFINANCIAL GROUP SERVICES INC., PANFINANCIAL INVESTMENTS GROUP INC., PANFINANCIAL INVESTMENTS SERVICES INC., PANFINANCIAL SERVICES INC., PANFINANCIAL INC., PANFINANCIAL SERVICES CORP., PANFINANCIAL INSURANCE AGENCIES LIMITED, PANFIN EQUICAP LTD., GORDON BERGER, TREVOR RABIE, AARON COHEN, ERAN OSTFELD and LILY OSTFELD
Defendants
REASONS FOR JUDGMENT
Chown J.
Released: February 5, 2021