COURT FILE NO.: CV-18-596781
DATE: 2022 01 19
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: WHITESTONE GATE DEVELOPMENT INC., Plaintiff
- and -
PERPETUAL SUCCESSION FOR EAST TORONTO CHINESE BAPTIST CHURCH, Defendant
BEFORE: Associate Justice Todd Robinson
APPEARING: H. Ash, counsel for the defendant (moving party)
L. Collins and M. Kaawich, representatives of the plaintiff (responding party)
HEARD: October 18, 2021 (by videoconference)
REASONS FOR DECISION
[1] Perpetual Succession For East Toronto Chinese Baptist Church (the “Church”) seeks to have this action by Whitestone Gate Development Inc. (“Whitestone”) dismissed for delay. I have already granted an order declaring as expired both Whitestone’s lien and the lien of the apparently related corporation, G.C. International Inc. (“GC Intl”), which was sheltering. I also ordered that the registrations of both claims for lien and Whitestone’s certificate of action be vacated from title to the property, and that Whitestone’s action be dismissed insofar as enforcement of Whitestone’s lien. Whether the balance of Whitestone’s action, namely its non-lien contract claim, should also be dismissed remains to be determined.
[2] Although a close call, I am giving Whitestone a final opportunity to take appropriate steps to advance its claim. Whitestone’s contract claim will be allowed to continue, albeit on a strict timetable and with a substantial indemnity costs award.
Analysis
[3] Despite an adjournment for Whitestone to seek the advice or assistance of a lawyer and to prepare itself to oppose the Church’s dismissal relief, Whitestone did not retain counsel. It also filed no responding materials (although did upload various emails and documents to CaseLines that were not properly served or filed and sought to tender a brief affidavit, improperly edited after being sworn, stating essentially that Whitestone could not afford a lawyer). On an unopposed basis, I granted leave for Whitestone to be represented by its principal and employee solely for the purpose of this motion.
[4] The Church’s motion was formally brought under ss. 45 and 46 of the Construction Act, RSO 1990, c C.30, as it read on June 29, 2018 – i.e., the now-former Construction Lien Act (the “CLA”). Both liens predate the July 1, 2018 amendments to the CLA, so the provisions of that version of act apply by operation of s. 87.3 of the current Construction Act.
[5] Section 46 deals with expiry of a perfected lien, which was the provision under which I granted the prior relief dealing with Whitestone’s lien. It expressly provides that, if a perfected lien has expired, the court “shall make an order dismissing the action to enforce that lien”. Although the Church argued that I should dismiss the entire action, s. 46 only provides for mandatory dismissal of the action to enforce the lien, which in my view is distinct from dismissing the action in which enforcement of the lien is pursued. Where an action only seeks to enforce the statutory lien remedy, the entire action may properly be dismissed. Here, however, Whitestone’s action does not only pursue its lien, but also pursues damages for breach of contract. That breach of contract claim was properly joined in Whitestone’s lien action under s. 55(1) of the CLA. Since it is a separate cause of action from enforcement of the lien, in my view, it is not captured by the mandatory dismissal outlined in s. 46.
[6] The Church argues that Whitestone’s action should nevertheless be dismissed for delay. In support of that relief, the Church cites the principles discussed in Szpakowsky v. Tenenbaum, 2017 ONSC 18 (Master), which is a case decided in a non-lien action under Rule 24 of the Rules of Civil Procedure, RRO 1990, Reg 194. The Church did not move under Rule 24, but submits that the same principles are appropriate to consider in deciding whether to dismiss the action under s. 46 of the CLA.
[7] I agree that I may consider dismissal for delay, but do not agree that it is relief available under s. 46. That section deals specifically with what the court should do when a perfected lien is found to have expired. The only dismissal remedy addressed in s. 46 is dismissal of the action to enforce the lien. The language used does not, in my view, support dismissal on grounds of a plaintiff’s delay in advancing litigation. Delay is more appropriately the subject matter of s. 47, which permits a court, upon motion, to dismiss an action on “any proper ground and subject to any terms and conditions that the court considers appropriate in the circumstances.” Since the Church submits that delay is a proper ground upon which to dismiss the action in its entirety, that would be the appropriate provision.
[8] In Szpakowsky, supra, at para. 19, Master Graham (as he was then titled) discussed seven principles from case law on dismissal for delay, on which the Church relies. They are summarized as follows:
(a) To dismiss an action for delay, the court must be satisfied that the plaintiff’s default has been intentional and contumelious, or that there has been inordinate and inexcusable delay for which the plaintiff (of the plaintiff’s lawyers) are responsible resulting in a substantial risk that a fair trial will not be possible;
(b) A dismissal on the basis of intentional and contumelious delay is warranted in cases in which the delay is caused by the intentional conduct of the plaintiff (or the plaintiff’s lawyers) that demonstrates a disdain or disrespect for the court process;
(c) The plaintiff is responsible for moving the action along;
(d) Any delay in the prosecution of an action requires an explanation, and the onus rests with the plaintiff both to show that the delay was not intentional and to rebut the presumption of prejudice from any unexplained delay. Absent an explanation for the delay, the court may presume that the delay was intentional;
(e) “Inexcusable” delay requires a determination of the reasons for the delay and an assessment of whether those reasons afford an adequate explanation for the delay. Explanations that are “reasonable and cogent” or “sensible and persuasive” may be sufficient to support at least that dismissal is inappropriate;
(f) An inordinate delay after the cause of action arose or after the passage of a limitation period gives rise to a presumption of prejudice, in which case the defendant need not lead actual evidence of prejudice and the action will be dismissed for delay unless the plaintiff rebuts the presumption; and
(g) Courts may dismiss actions for delay even when the relevant rules do not mandate it. A court has inherent jurisdiction to control its own process, which includes the discretionary power to dismiss an action for delay, flowing from the inherent power of the court to prevent an abuse of its own process.
[9] The Church argues that each of these factors favours dismissing Whitestone’s action for delay. It submits that Whitestone has done nothing to advance this action since issuing the statement of claim in April 2018, including failing to take steps following my prior order removing its lawyers from the record in September 2019 and again following the dismissal relief at issue being adjourned on August 4, 2021. The Church submits that since no responding materials have been filed, there is no explanation for delay and nothing to rebut the presumption of prejudice arising from the limitation period for Whitestone’s claim having expired. The Church further submits that the failure to file responding materials when provided an opportunity to do so demonstrates intentional disdain or disrespect for the court process.
[10] The Church is correct in many of its submissions. Whitestone has not filed any responding materials that address the reasons for delay or that seek to rebut any presumption of prejudice. Since the Church delivered its defence in June 2018, no further steps have been taken by Whitestone to advance this litigation. Notably, despite the clear terms of my prior removal order, which included the consequences of not appointing new counsel or seeking leave to be represented by a non-lawyer, Whitestone did nothing. It is unclear if Whitestone would have taken any steps if the Church had not served its materials for this motion.
[11] I am not satisfied that the fact of Whitestone failing to move this action forward and failing to file responding materials itself demonstrates disdain or disrespect for the court process. However absent any evidence from Whitestone, the record certainly supports that it has not been taking pursuit of its claim seriously.
[12] During oral submissions, Whitestone’s position was that the money it lost on this job by the Church’s non-payment has caused it serious financial difficulties. Whitestone further submits that there have been impacts from the COVID-19 pandemic, and it could not afford to retain a new lawyer. There is no cogent evidence before me supporting any of Whitestone’s submissions. Pandemic-related impacts also does not explain the nine months of inactivity before pandemic lockdowns started.
[13] Dismissal orders are discretionary. Whitestone has failed to take steps that a reasonable plaintiff should take, particularly given the significant quantum of Whitestone’s claim. However, having heard the submissions from Whitestone’s representatives, it is clear to me that they are unfamiliar with legal processes and Whitestone’s obligations as a plaintiff. Even without evidence, I accept that the COVID-19 pandemic has impacted the construction industry and may have impacted finding a lawyer, but it does not afford a complete excuse. I am also mindful that I have been given nothing more than a submission that they were and are looking for a lawyer. There is no evidence of those searches.
[14] I have struggled in deciding what is fair and just in the particular circumstances of this case. On the one hand, Whitestone has completely ignored its obligations as a plaintiff in a substantial claim against the Church. On the other hand, although the Church has no evidentiary obligation to lead evidence of actual prejudice in these circumstances, there is nevertheless no evidence of any actual prejudice from permitting Whitestone’s contract claim to proceed to a determination on its merits. I note that the Rules of Civil Procedure contemplate an outside deadline for non-lien actions to be ready for trial within five years, which is relevant since only the breach of contract claim remains.
[15] Ultimately, this is a case where it would be unjust to grant the ultimate remedy of dismissal without first providing Whitestone a final opportunity to proactively advance its claim. A strict timetable and an adverse costs award are an appropriate means by which to express my disapproval of Whitestone’s approach to this point, which balances the impact of delay on the Church with the unfairness of procedurally dismissing a potentially meritorious (and not insignificant) claim in circumstances where Whitestone has not had and clearly needs the assistance of a lawyer.
[16] I am accordingly permitting Whitestone’s breach of contract claim to continue in this action, which will proceed as a non-lien action governed by the Rules of Civil Procedure as previously ordered. Whitestone’s next steps will be governed by a strict timetable, fixed in my disposition below. If Whitestone genuinely intends to pursue its claim, then it will need to take immediate and prompt steps to do so. It should not assume that the court will extend any further indulgences.
Costs
[17] Although, in the course of this motion, I ordered that the action continue as a non-lien action governed by the Rules of Civil Procedure, the motion was brought in Whitestone’s lien action, which was governed by the CLA. Costs are thereby governed by s. 86 of the CLA.
[18] I have recently discussed the costs principles applicable in lien actions in my decision in Brian Stucco Construction Inc. v. Nili-Ardakani, 2021 ONSC 8541 at paras. 5-10. Section 86 provides the court with broad discretion to award costs against a party or, in particular circumstances, a person who represented that party, including on a substantial indemnity basis. In a lien action, whether the conduct of a party has been consistent with the summary nature of lien proceedings is always relevant in assessing costs.
[19] The overriding principle in determining costs is reasonableness, with a view to balancing compensation of the successful party with the goal of fostering access to justice as applied to the factual matrix of the particular case. Costs ordinarily follow the event and are generally awarded on a partial indemnity basis payable within 30 days, but discretion may be exercised in exceptional circumstances to depart from those “norms”. Ultimately, the quantum of costs awarded should reflect an amount the court considers to be fair and reasonable within the factual matrix of the particular case rather than any exact measure of the actual costs to the successful litigant.
[20] The Church seeks its substantial indemnity costs of the action and the motion the total amount of $22,148.55, including disbursements and HST. It submits that neither Whitestone nor GC Intl took any steps to pursue enforcement of their liens, and that Whitestone has done nothing to advance this action even after I gave it a “second chance” when adjourning the dismissal relief. The Church seeks an order that both Whitestone and GC Intl be liable for its costs, with those costs payable within 30 days, failing which the action be automatically stayed or subject to dismissal.
[21] In response, Whitestone’s representatives made submissions on its financial circumstances and its concerns about being able to pay, requesting that I show leniency in both my costs award and the time within which Whitestone is required to pay any costs. As its representative submitted, Whitestone will be “strapped” if it has to pay costs and retain a lawyer.
[22] Despite costs of the motion remaining an open issue, a representative of GC Intl did not attend the hearing. However, at the hearing on August 4, 2021, Whitestone’s prior representative confirmed he was both a director of Whitestone and GC Intl. Although he did not attend this hearing, there is clearly some connection between the two corporations. I have thereby considered Whitestone’s submissions as being applicable to both Whitestone and GC Intl.
[23] In my view, this is an appropriate case for substantial indemnity costs, although since I am permitting the action to proceed I am not awarding any costs of the action to date. I also agree with the Church that Whitestone and GC Intl should be jointly and severally liable for costs. I give no effect to Whitestone’s request for leniency. It has already been granted significant leniency by its action being allowed to continue.
[24] The motion was evidently necessary. Despite both liens having clearly expired, Whitestone and GC Intl maintained their opposition to the motion, including the relief declaring the liens expired. The lien remedy under the CLA is a special remedy afforded to those who supply services and materials to construction projects. In my view, when relied upon, it is a remedy that must be taken seriously and pursued in earnest. Whitestone and GC Intl have tied up title to the Church’s lands since March 2018, with aggregate liens totalling approximately $820,000. Other than Whitestone issuing and serving a claim, nothing was done to enforce those perfected liens within the mandatory two-year period in s. 37 of the CLA to set Whitestone’s action down for trial or obtain an order for trial. The scheme of the CLA is designed to expedite resolution of lien actions. The failure to abide by that statutory framework and, as a result, to unnecessarily tie up title to lands is not conduct that should be condoned by the court.
[25] The indulgence I have granted to Whitestone in this case is also significant. Costs of this motion may well have been avoided entirely if Whitestone had advanced its action. In my view, a partial indemnity award in favour of the Church in these circumstances would be unjust.
[26] The hours claimed and fees charged by the Church’s counsel for this motion are quite reasonable and well within the reasonable expectations of a party in these circumstances. I see no need or basis to discount them, other than to remove the claim for fees of prior counsel that will be costs of the action.
[27] I accordingly fix substantial indemnity costs in the amount of $14,130.22, including disbursements and HST, payable within 30 days. I agree with the Church’s submission that it is appropriate to add a term that the action be automatically stayed if costs are not paid, which should make clear to Whitestone the seriousness of its obligation to move this action forward.
Disposition
[28] I accordingly order as follows:
(a) The balance of the Church’s motion not already disposed of at the hearing on August 4, 2021 is dismissed, such that Whitestone’s breach of contract claim shall be permitted to proceed.
(b) Whitestone and GC Intl shall be jointly and severally liable to pay to the Church its costs of this motion on a substantial indemnity basis in the amount of $14,130.22, including disbursements and HST, payable within thirty (30) days.
(c) If the costs ordered in subparagraph (b) above are not paid within thirty (30) days, then this action shall be automatically stayed pending further order of the court, but without staying operation of Rule 48.14(1) of the Rules of Civil Procedure. For greater certainty, the automatic stay does not relief Whitestone from its obligation to ensure that the action be set down for trial or terminated by any means by the fifth anniversary of the commencement of the action, failing which the registrar shall dismiss the action for delay.
(d) Unless otherwise agreed by the parties, Whitestone shall adhere to the following timetable:
(i) Whitestone shall comply with my removal order dated September 16, 2019 by either appointing a new lawyer of record or obtaining and serving an order granting it leave to be represented by a person other than a lawyer within thirty (30) days of this order.
(ii) Whitestone shall serve a quantification of its claim, including a breakdown of the total base contract price, the value of base contract work completed, approved extras, unapproved extras, and payments received, within sixty (60) days of this order.
(iii) Whitestone shall serve its affidavit of documents within ninety (90) days of this order.
(e) The foregoing orders are without prejudice to a future motion by the Church to dismiss this action on any proper ground, including a further motion to dismiss for delay at a later date.
(f) This order is effective without further formality.
[29] If a formal order is required, then a draft order may be submitted by email to my Assistant Trial Coordinator for my review and signature. I hereby dispense with the requirement for approval as to form and content by Whitestone or GC Intl, but their representatives should be provided with a copy of any draft order.
ASSOCIATE JUSTICE TODD ROBINSON
DATE: January 19, 2022