DATE: 2022 06 06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: STERLING WATERHOUSE INC. v COHEN
BEFORE: McSweeney J.
COUNSEL: J.P. Mullen for the Plaintiff
J. Samac for the Defendant
HEARD: May 31st, 2022
E N D O R S E M E N T
[1] Defendant Rubin Cohen moves on a regular short motion list to dismiss this action commenced in 2016 for delay.
[2] Mr. Cohen is a retired accountant. From 2001 to 2016 he leased office space from the Plaintiff landlord, Sterling Waterhouse Inc.
[3] The parties had a dispute about the rent owing. The landlord issued its claim on November 10, 2016, alleging that Defendant owed over $100,000 in rent arrears accrued between 2014-2016.
[4] Mr. Cohen filed a defence promptly. Likewise Plaintiff’s reply was filed on January 11, 2017.
[5] Rule 24.01(1) provides that “a defendant who is not in default under these rules or an order of the court” may move to have an action dismissed for delay “where the plaintiff has failed, …(c) to set the action down for trial within six months after the close of pleadings.”
[6] The evidence establishes the Plaintiff took no steps to advance the action until just before the fifth anniversary of the issuance of its claim, at which time it brought the action to virtual assignment court. The Plaintiff sought to place the action on the trial list at that time.
[7] The Defendant retained counsel upon receipt of the assignment court notice, objected to the matter being set for trial, and then brought this motion to dismiss.
[8] At that time the motion to dismiss was scheduled, neither party had delivered any affidavit of documents. The Plaintiff did, however, serve an unsworn affidavit of documents in early May 2022, a few weeks before argument of the motion. I agree with Defendant counsel that given the Plaintiff’s inactivity in the litigation and the absence of any timetable agreed between the parties, its delivery of an unsworn affidavit is not equivalent to a sworn affidavit, nor is it evidence of a serious intention to move the action forward when delivered shortly before the return of the dismissal motion.
The position of the responding Plaintiff:
[9] The Plaintiff resists the relief sought on several bases: (1) that the Defendant does not have standing to move under Rule 24.01 because he is “in default” within the meaning of that rule; (2) the Plaintiff was inactive, but it has now served its affidavit of documents; and (3) if the Defendant had wanted to move the action ahead, he could have served his own affidavit of documents and proposed discovery dates.
[10] Plaintiff counsel referred to an Ontario Court of Appeal decision, Susin v Harper, which did not assist the Court, in arguing that the Defendant was in default. On this point I find that as the Defendant was neither noted in default nor in breach of any court order in the action, he is not precluded from bringing a motion to dismiss for delay.
[11] I therefore find that as a threshold matter, the Defendant is not precluded from moving to dismiss the action under rule 24.01(1)(c).
The applicable test for dismissal of the action:
[12] A succinct current statement of the applicable legal framework and common law test for dismissal of an action for delay is found in Daley J.’s decision Ever Fresh Fine Foods Inc. v Jamia Islamia Canada Ltd, 2021 ONSC 1278, aff’d 2022 ONCA 185. At paras 77-85, Daley J. summarized the leading Ontario jurisprudence: this need not be reproduced in this short motion endorsement.
[13] Briefly, per para 82 of Ever Fresh: an action warrants dismissal for delay where the delay is “inordinate, inexcusable and prejudicial to the defendant, in that it gives rise to a substantial risk that a fair trial of the issues will not be possible”.
[14] Although the moving party bears the ultimate burden on a rule 24.01 motion, where they have shown that the delay is inordinate, the Plaintiff then bears an evidentiary burden to (i) provide a reasonable explanation for the delay and (ii) rebut the presumption of prejudice arising from the delay (Ever Fresh, para 85).
[15] In this case the amount of the delay due to the Plaintiff’s inactivity in advancing the action from close of pleadings is over five years.
Plaintiff’s failure to explain delay:
[16] The Plaintiff filed only the evidence of its lawyer, Mr. Mullen’s, administrative assistant, Maureen McGahon, whose evidence was based on “my review of Mr. Mullen’s file in this proceeding, along with the pleadings, as well as from information provided to me from Mr. Mullen, which facts I believe to be true.” There is no evidence from any other source.
[17] Mr. Mullen appeared for the Plaintiff on the motion. He did not dispute the applicable legal test, but argued that Mr Cohen could have moved the action ahead if he wanted the action to move in a more timely manner.
[18] With respect to this argument, case law has established that a Plaintiff may not resist a motion to dismiss, where both parties were inactive, by pointing the finger at the defendant’s failure to advance the litigation. It is the Plaintiff’s primary responsibility to advance its own lawsuit: Ever Fresh, para 87, and para 88, quoting Wallace v Crate’s Marine Sales Ltd, 2014 ONCA 671 at para 18.
[19] In reviewing the affidavit filed by the Plaintiff, I am concerned that Mr. Mullen’s assistant references settlement discussions between the parties and includes a “without prejudice” settlement communication as Exhibit A to her affidavit, stating her belief that Mr. Mullen had settlement discussions with Defendant counsel in 2016, and giving settlement figures allegedly proposed by the Defendant in those discussions.
[20] The Court was not advised of any agreement between the parties to waive the settlement privilege attaching to such communications. Without such express evidence or agreement, I consider it improper to adduce such evidence on this motion and have not considered it in making my decision on the motion.
[21] In my view, however, even if such evidence were properly before me on this motion, establishing that unsuccessful settlement discussions took place prior to commencement of the litigation, the Plaintiff did not advance, and I do not find, a legal basis on which such evidence could assist the Plaintiff in explaining its five-year delay.
[22] With respect to the Plaintiff’s evidentiary burden on the first of the two issues referenced above, I find it has not provided a reasonable explanation for the delay. Although case law certainly references much longer periods of delay in rule 24.01 motions in other cases, in this action I conclude that the five-year period of complete inaction by the Plaintiff, with no explanation at all, is appropriately characterized as inordinate and inexcusable.
[23] Having found no reasonable explanation for the delay, I now consider the second evidentiary burden on the Plaintiff - the passage of five years raises presumptive prejudice, and I must consider whether the Plaintiff has rebutted the presumed prejudice arising from that delay.
Plaintiff’s failure to rebut presumptive prejudice:
[24] The Plaintiff argues that there is no actual prejudice because it is a document-driven action based on a commercial lease, meaning that fading memories are not an issue. It points out further that Mr Cohen’s statement of defence contains an acknowledgement of some arrears owing, albeit less than half of the amount claimed by the Plaintiff.
[25] Although the Court was not clear what relevance the second submission had to prejudice arising from delay, it may perhaps relate to the proposition which could be summarized as “Mr Cohen knew back in 2016 when he filed his defence that he owed something, so how can he be prejudiced by delay when he has known all along that he has to pay something?”
[26] I was not directed by Plaintiff counsel to any case law on this point, which may be somewhat novel. However, if Plaintiff’s submission is meant to negative an argument that the action has no merit, I would observe that the merit of the action is not in dispute one way or the other on this motion to dismiss.
[27] To the contrary, to the extent that the Defendant took a reasonable position in its pleading, in which he references that he was willing to pay $48,507.51, which offer was not accepted, the Plaintiff had a range of options under the Rules to realize on that acknowledgement, move for partial or summary judgment, etc. Yet the Plaintiff did nothing: no documents were exchanged, no timetable was proposed for resolution, by mediation or otherwise, and five years went by.
[28] During the passage of time over those five years. Mr. Cohen states at paragraph 10 of his affidavit that “[s]ince the action commenced, I have retired and closed my accounting practice.”
[29] Mr Cohen also describes the “extreme distress” of “the dark cloud of this litigation [that] has, at times, hung over my head and caused stress and anxiety to me and my family”.
[30] I accept this as evidence of prejudice arising from an unexplained half-decade of delay. This evidence was not challenged by any evidence from the Plaintiff. Mr Mullen advised the Court that he had been instructed to cross-examine Mr. Cohen on his affidavit filed on this motion. In doing so, however, Mr. Mullen’s letter to counsel did not offer dates on which he could conduct such examination of the Defendant until June 2022, after this motion was scheduled to be heard.
CONCLUSION:
[31] Applying the analysis set out in Ever Fresh cited earlier, I conclude that the moving party has met his onus of establishing unexplained inordinate delay, and the Plaintiff has met neither its onus to explain the delay, nor to negative either the presumptive or the actual prejudice to the Defendant as a result of the delay.
[32] The action is dismissed with costs.
[33] In reaching this conclusion, the Court must express its surprise that despite clear questions from the Court at the beginning of the motions day, and upon commencement of argument on the motion over an hour later, Plaintiff counsel declined to propose a timetable for the readying of the matter for trial.
COSTS:
[34] The moving party Defendant was wholly successful and is presumptively entitled to his costs of the motion and the action.
[35] At the conclusion of argument on this motion, the parties were invited to provide their cost outlines. Plaintiff counsel did not have a cost outline.
[36] Mr. Cohen’s cost outline, at a partial indemnity scale, totalled $16,860, of which disbursements account for $327 of that amount.
[37] Mr. Cohen was unrepresented from after the close of pleadings in 2017 until 2021, when he retained counsel after receiving an Assignment Court scheduling notice regarding the November 2021 attendance.
[38] Applying the relevant cost factors in the Rules and case law applicable to costs in civil matters, I find as follows:
[39] The hourly rates claimed by Defendant counsel were reasonable.
[40] I agree that the issue in the motion was important.
[41] I do not agree with the Defendant that the legal issues were complex. The matter was argued on a regular list and the whole gist of the matter was that there had been nothing done (ie. no time spent) on the file by either party for five years.
[42] I agree with counsel for the Plaintiff that the hours claimed by the moving party in its cost outline are excessive and disproportionate to the work performed.
[43] It is not reasonable for defendant to claim 42.53 lawyer hours and 73 articling student hours – a total of 3-4 solid weeks of legal work – as the time to prepare a brief record, succinct factum and short affidavit.
[44] Considering the parties’ submissions, the legal framework for costs in civil matters and the nature of this motion and action, I conclude that a fair and just cost award for costs of the motion and the action, is fixed at $10,000 inclusive of fees, disbursements and HST.
ORDER:
[45] Motion to dismiss action granted.
[46] Costs payable to Defendant by Plaintiff fixed at $10,000.00 (TEN THOUSAND DOLLARS).
[47] Order to issue accordingly.
McSweeney J.
DATE: June 6, 2022
COURT FILE NO.: CV-16-4964-00
DATE: 2022 06 06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: STERLING WATERHOUSE INC. v COHEN
COUNSEL: J.P. Mullen for the Plaintiff
J. Samac for the Defendant
ENDORSEMENT
McSweeney J.
DATE: June 6, 2022