Court File and Parties
CITATION: 366012 Ontario Inc. v. Boudreau et al. 2022 ONSC 2527 COURT FILE NO.: CV-15-66799 DATE: 2022/04/26 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: 366012 Ontario Inc., carrying on business as Sandy Hill Childcare Centre, Plaintiff - and - Susan Boudreau, Estate of Gertrude Moriarty et al., Defendants
BEFORE: Mr. Justice Pierre E. Roger
COUNSEL: Suzanna Sviergula, for the Plaintiff Calvin Hancock and Paige Miltenburg, for the Defendants
HEARD: March 15 and April 22, 2022
Reasons for Decision
[1] This is a status hearing motion, brought under rule 48.14 (15) of the Rules of Civil Procedure. At a status hearing, the plaintiff must show cause why the action should not be dismissed for delay.
Background facts
[2] This is an action for alleged misappropriation of funds, brought primarily against two of the plaintiff’s former employees, Gertrude Moriarty (the plaintiff’s bookkeeper for many years) and Susan Boudreau (the plaintiff’s founder, executive director, and president until 2015), for events going back between 1997 and 2015, along with claims for misrepresentation, conversion, and other torts. Four other defendants are also part of this action, but their involvement is less, and the evidence indicates that they have limited knowledge of relevant overall facts; although, they would have knowledge relevant to payments allegedly made to them. The defendant, Deborah Vlad, is the daughter of Gertrude Moriarty, and allegedly received payments from the plaintiff. The defendant, Elliott Vlad, is the son of Deborah Vlad, and allegedly received payments from the plaintiff. The defendant, Stephane Boudreau, is the son of Susan Boudreau, and allegedly received payments from the plaintiff. Finally, the defendant, Marianne Bucur, was a friend of Gertrude Moriarty, and allegedly received payments from the plaintiff. It is alleged that shortly after the resignation of Ms. Boudreau, the new director appointed a new bookkeeper who discovered serious irregularities in the financial transactions and payments of the plaintiff.
[3] The action was issued on December 8, 2015. The statement of defence is dated January 29, 2016.
[4] In 2016, the parties’ agreed on December examination for discovery dates. Importantly, by email dated November 11, 2016, the defendants’ lawyer advised the plaintiff’s lawyer that Ms. Moriarty was not in good health and was frail. Nonetheless, she explained that Ms. Moriarty wanted to proceed with her examination orally and she was expected to be produced on December 8. Ms. Moriarty was about 88 years old at the time. Unfortunately, examinations were not held as relevant documents were still being sought by the plaintiff (at the suggestion of the defendants) from a third party, the city of Ottawa, and it appears that neither party wanted to examine the other without these documents. January 2017 examination dates were therefore put on hold by the parties’ lawyers.
[5] In early 2017, the plaintiff’s lawyer was unable to proceed with examinations due to a serious health diagnosis that he received. Examinations dates were tentatively held for both the months of August and November 2017, both subject to the schedule of the defendants’ lawyer. The August dates were cancelled due to the defendants’ lawyer having another commitment and the November dates did not proceed because the plaintiff’s lawyer went on a medical leave. The plaintiff’s file was then transferred to a new lawyer within the same firm. New examination dates were sought for early 2018, but the defendants’ lawyer had a five-week trial at the beginning of the year. In March 2018, the plaintiff served its affidavit of documents together with Schedule A productions. Examinations were tentatively booked for that month; they did not proceed. They were rebooked for October, subject to the schedule of the defendants’ lawyer. The October dates did not proceed because the defendants’ lawyer’s schedule did not clear up. The plaintiff’s lawyer wrote to the defendants’ lawyer on October 9, 2018, asking if the October dates were proceeding and was informed that the calendar of the defendant’s counsel had not cleared up. The evidence indicates that the defendants’ lawyer occasionally double booked in the hope that her schedule would clear; it rarely did in this matter. The defendants’ lawyer then suggested dates in January 2019.
[6] In 2019, there was an issue with a potential conflict of interest, because a member of the plaintiff’s board was to become an articling student at the defendants’ firm. Appropriate measures were discussed, and this issue was resolved. Tentative examination dates were set for June. Then the defendant, Gertrude Moriarty, died on June 25 at the age of 90. The plaintiff’s lawyer left private practice and a new lawyer (the third) assumed carriage of the file. He obtained an order to continue, and in or around October of 2019, new examination dates were agreed upon for February 2020.
[7] In January 2020, the defendants’ lawyer advised that she had a seven-week trial starting the following week, another instance of her being double booked, so the examinations in February could not proceed. In January 2020, the plaintiff’s lawyer requested a case conference. In February 2020, the assistant of the defendants’ lawyer suggested possible dates from April to July 2020, then the COVID-19 pandemic began.
[8] The case conference did not occur until March 19, 2021, when a timetable was ordered.
[9] The order made at the case conference required examinations for discovery to be completed by June 30, 2021, and the action was to be set down for trial by December 31, 2021. I point out that although the initial five-year period to set the action down for trial would have expired in December 2020, that date was extended by legislation because of the pandemic to June 8, 2021.
[10] The plaintiff once again changed lawyers in the spring of 2021.
[11] In May 2021, the plaintiff’s lawyer contacted the defendants’ lawyer about examination dates, and they learned that the defendants’ lawyer was leaving her firm. The defendants’ new lawyer contacted the plaintiff’s lawyer on June 2, 2021. On June 29, 2021, the defendants provided their affidavit of documents and productions. Issues were then raised about the health of the defendant, Susan Boudreau. Scheduling examinations during the summer was prevented by various people’s vacation schedule, and the plaintiff’s lawyer had a trial scheduled in September 2021. On September 30, 2021, the plaintiff’s lawyer wrote to the defendants’ lawyer to discuss examination dates, and a new timetable. On November 3, 2021, the defendants’ lawyer advised that his clients would not consent to a new timetable.
Issues
[12] The issue on this motion is whether the plaintiff has met its onus of explaining the delay and of establishing that the defendants will not suffer any non-compensable prejudice if the action is allowed to proceed.
Analysis
[13] To start, a procedural gap in the Rules of Civil Procedure must be addressed as there is no clear method for the plaintiff who finds themself passed the five-year set down date of June 8, 2021, because they had the set down date extended to December 31, 2021. Subrule 48.14(5) permits a party to request a status hearing prior to the expiry of the five-year deadline to set the action down for trial. As indicated above, the five-year period under Rule 48.14 would have expired on December 8, 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. While this regulation was eventually revoked, the suspension under the regulation caused the time for this action to be set down for trial under rule 48.14 to be extended to June 8, 2021. Prior to that date, at a March 19, 2021, case conference, the set down date was extended to December 31, 2021, such that even before that latter date, the plaintiff was past the expiry of the five-year deadline.
[14] For the following reasons, I find that, although this action is already past its five-year deadline, reliance on rule 48.14 and a status hearing are still the appropriate avenues by which to obtain the relief sought by the plaintiff.
[15] In Yang v. The Christian World Korea Inc., 2019 ONSC 6131, at paras. 4-10, the court faced a similar problem. It concluded that reliance could be placed on subrule 2.01(1)(a) to waive non-compliance by the plaintiffs with the strict wording of subrule 48.14(5) and proceed with a status hearing because that was the correct relief for the plaintiffs. This rule provides that a failure to comply with these rules is an irregularity and does not render a proceeding or step taken in a proceeding, a nullity. It provides that the court may grant all necessary amendments on such terms as are just, to secure the just determination of the real matters in dispute. Moreover, subrule 1.04(1) requires the court to liberally construe the rules. Subrule 1.04(2) states that where a matter is not provided for in the rules, the practice shall be determined by analogy to them, and the order of Associate Justice Fortier, dated March 19, 2021, states that the order setting the timetable can be varied.
[16] Dealing next with the topic of this motion, the test pursuant to subrule 48.14(7) is two-fold. The plaintiff bears the onus of demonstrating that (i) there is an acceptable explanation for the delay; and (ii) that if the action is allowed to proceed, the defendant would suffer no non-compensable prejudice because of the plaintiff’s delay: see Khan v. Sun Life Assurance Co of Canada, 2011 ONCA 650 at para 1; see also Faris v. Eftimovski, 2013 ONCA 360, at paras 32-33.
[17] There is no question that the plaintiff, having started the action, bears primary responsibility to move the action along. The inquiry is focused on the plaintiff’s conduct as the plaintiff bears primary responsibility for advancing the action, and generally suffers the consequences of slow progress. While the defendant cannot wait in the weeds hoping to gain a tactical advantage by obstructing the progress, the defendant is not responsible for advancing the action and the onus is on the plaintiff: see for example 1196158 Ontario Inc v. 6274013 Canada Ltd., 2012 ONCA 544, at para 28 and Prescott v. Barbon, 2018 ONCA 504 at para 30.
[18] However, an acceptable explanation is not necessarily a perfect explanation. An adequate explanation could be sufficient, remembering however that in Kara v. Arnold, 2014 ONCA 871, the Ontario Court of Appeal recognized that: “the longer the delay, the more cogent the explanation must be.”
[19] It is clear from the evidence that the action struggled to get to examinations for discovery. It could not proceed as early as the initially scheduled dates of November 2016, but this was understandable in the circumstances considering that both sides did not wish to examine the other without the City’s documents.
[20] Over the course of the litigation, both parties sought to reschedule and adjourn examinations for discovery on multiple occasions and for multiple reasons, and both parties acquiesced to requests to reschedule and adjourn discovery. The plaintiff nonetheless had the onus to move the action along, particularly considering that the two primary defendants were not young and that one of them had health concerns, which fact had been brought to the attention of the plaintiff’s lawyer in November 2016.
[21] Many of the early delays in the progression of the action by the plaintiff were caused by the serious medical issues experienced by their lawyer and his time off from the practice of law, and by the resulting transitions of the file between counsel. For example, in January 2017, the plaintiff’s lawyer advised that he was unavailable for health reasons and assigned the matter to a new lawyer. He was back-and-forth for some time, and that explains some of the delays. Another example is the dates set for January 2019, which did not proceed because of the plaintiff’s counsel health issues. The defendants point to the number of days of delays that they attribute to the plaintiff, but this total number of days cannot be assessed in a vacuum, it must be considered in light of the circumstances, and in light of the plaintiff’s explanations.
[22] The defendants were responsible for some delay in the progression of the action and the scheduling of examinations for discovery, including cancellations by the defendants’ lawyer due to frequent apparent double-booking of examinations for discovery with existing trials and hearings. For example, the defendant’s lawyer was busy in the spring of 2017, was not available in August 2017, and the November 2017 dates that had tentatively been set aside did not proceed because the defendants’ lawyer was not available. In 2018, dates had originally been set aside, tentatively for October 2018, but these dates were lost because the defendant’s lawyer was no longer available. In 2019, dates had originally been suggested for June 2019, but these became unavailable to the defendant’s lawyer; that is also when one of their clients passed away on June 29, 2019, which caused delay as well. In October 2019, the plaintiff’s lawyer inquired about dates that had been scheduled for later in October 2019 and was informed that the defendants’ lawyer was no longer available. Dates were then set for January 2020, which were later cancelled by the defendants’ lawyer because of earlier commitments. This prompted the plaintiff to request a case conference for a new timetable; the set down date was then December 8, 2020.
[23] Although the defendants’ lawyer is the one who frequently initiated contact with the plaintiff’s lawyer to set dates for discovery, the plaintiff’s lawyer usually agreed to the suggested dates and these were later cancelled, often because of the defendants’ lawyer unavailability. Other occasions of cancellation were sufficiently explained by the plaintiff.
[24] Some delays in the progression of the action were the fault of neither party, specifically the length of time required to obtain a case conference from the court because of the impact of the COVID-19 pandemic on court operations. A case conference was requested early but was only held on March 19, 2021. The pandemic impacted all of us differently and all lawyers reacted differently. It put everything on hold for some time, and then the plaintiff waited for the case conference to impose a new schedule. The plaintiff could have been more proactive, particularly at this time, but, in the circumstances, I nonetheless find their explanations sufficiently reasonable.
[25] During the spring of 2021, the defendants’ counsel left her firm, and this matter was reassigned to the current lawyers, also with her firm. Summer vacations became an issue during the summer 2021, and when the plaintiff sought dates to proceed with discovery, the defendants advised in November 2021, that the other primary defendants, Susan Boudreau, had health issues, and that the plaintiff would be required to bring a status hearing.
[26] Although this is a close call, when I consider the evidence, I am satisfied that the plaintiff has met its onus of providing a sufficiently cogent explanation for the delay. The explanations provided by the plaintiff are not perfect, but a perfect explanation is not required.
[27] With regards to prejudice, there must be no actual prejudice to the defendants’ ability to defend this action resulting from the plaintiff’s alleged delay. Prejudice arising from the sheer passage of time is insufficient: see Yang v. The Christian World Korea Inc., 2019 ONSC 6131 at para. 37; see also Faris v. Eftimovski, 2013 ONCA 360, at paras. 49-50.
[28] Although I appreciate that these are historical allegations, that one of the primary defendants passed in June 2019, that Ms. Boudreau has memory problems, and that credibility will be an important consideration, considering the delay at large, and assessing each period of delay, I find that any prejudice that arises from this does not result from the plaintiff’s alleged delay, because the plaintiff reasonably tried to move the matter along as per the explanations outlined above and in the evidence. Additionally, on March 19, 2021, an order was made at a case conference extending the time to set this action down for trial to December 31, 2021, and this was prevented at least in part by the defendants.
[29] Considering all the evidence, applying the two-part test outlined above, I find that the plaintiff has met its onus, including of showing that there is no non-compensable prejudice caused by the delay, and that what is fair and just in the circumstances is to allow this action to continue, but on a strict timetable.
[30] There shall be no costs for this motion, despite the plaintiff being successful, because the plaintiff nonetheless bears some responsibility for this motion being brought.
[31] The following is therefore ordered: a. This action shall be permitted to continue. b. The plaintiff and defendants shall deliver any supplementary affidavit of documents by no later than May 20, 2022. c. Examinations for discovery shall be immediately scheduled and shall be completed by no later than July 22, 2022. d. Answers to undertakings and positions on matters taken under advisement from the examinations for discovery shall be provided within 45 days of the undertaking being given or matter being taken under advisement. e. Any mandatory mediation shall be completed by October 14, 2022. f. The action shall be set down for trial by no later than December 31, 2022. g. And, the timetable set out above may be varied by mutual consent of the parties, in writing, only if this is absolutely necessary as this order should not be considered to be a suggestion, provided that the new set down deadline shall only be amended by court order. h. There shall be no costs for this motion.
Mr. Justice Pierre E. Roger Released: April 26, 2022