SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Mohan Graphics Inc. cob as the Mohan Group v. Sherwin-Williams Canada Inc.;
BEFORE: ASSOCIATE JUSTICE C. WIEBE
COUNSEL: Cynthia L. Spry and Zachary Pringle for Sherwin-Williams Canada Inc. (“SWC”);
David Silver for Mohan Graphics Inc. cob as the Mohan Group (“Mohan”);
HEARD: November 23, 2022.
REASONS FOR DECISION
1SWC brought this motion for a status hearing and an order dismissing this action for delay pursuant to Rule 48.14(7)(a). In its amended notice of motion, SWC adds a motion for a dismissal order under Rule 24.01.
2Having read the motion material and heard the arguments, on November 23, 2022 I dismissed the motion seeking a dismissal of this action for delay, and imposed the following schedule:
the plaintiff must deliver its without prejudice (for mediation only) damages brief on or before December 23, 2022,
the mandatory mediation in this matter must take place on or before March 31, 2023,
this action must be set down for trial on or before April 28, 2023;
the parties can amend this schedule on consent with the exception of the set down deadline which can be amended only by court order.
3Having heard submissions on costs of the motion, I reserved that decision. These are my reasons for dismissing the dismissal motion and my ruling on costs.
4Mohan was retained by SWC in 2004 to provide advertising, design and consulting services to SWC for a set monthly fee. This fee was changed by agreement a few times, but did not change after 2011. Mohan alleges that in 2013 it started doing work outside the scope of the contract. After a two month notice, SWC terminated this contract without cause on May 1, 2016. Mohan commenced this action on November 10, 2016 claiming damages for breach of contract. In particular, Mohan sues for compensation for an alleged 12 month notice period it says it was entitled to. Mohan also sues for quantum meruit recovery for the extra work it alleges it did. SWC denies these claims.
Status hearing
5On a status hearing like this, the plaintiff has the onus of showing two things: (a) an adequate explanation for the litigation delay; and (b) that the defendant will not suffer any significant prejudice impairing its ability to have a fair trial should the action be allowed to continue; see Cobalt Capital CA Textile Investments, L.P. v. Pantziris, 2017 ONSC 4664 (SCJ) at paragraphs 1 and 30, and H.B. Fuller Company v. Rogers (Rogers Law Office), 2015 ONCA 173 (CA) at paragraph 22. There is also a need to consider these issues in a contextual approach weighing all the circumstances in order to reach a just result; see Pantziris, op. cit., paragraph 1.
6Contextual factors that bear on this decision include the following: the conduct of the defendant in resisting the progress of the action or in simply being passive in the face of the plaintiff’s delay (see Carioca's Import & Export Inc. v. Canadian Pacific Railway Limited, 2015 ONCA 592 at paragraph 53); the court must be concerned primarily about the conduct of the litigants and not the conduct of their counsel, except where the conduct of counsel is deliberate (see Carioca's Import & Export Inc. v. Canadian Pacific Railway Limited, 2015 ONCA 592 at paragraph 33).
Delay
7Concerning delay, there were four periods of alleged delay by the plaintiff that the defendant complained of:
the five month period between the delivery of the statement of defence on December 20, 2016 and the delivery of the plaintiff’s reply on May 9, 2017;
the seven month period between the delivery of the plaintiff’s reply and the delivery of the plaintiff’s affidavit of documents on December 8, 2017;
the three year delay from the conclusion of examinations for discovery on January 31, 2019 to the plaintiff’s delivery of the notice of change of lawyers and email request for a mandatory mediation on January 31, 2022;
the over six month delay between the plaintiff’s request for a mediation to the delivery of its answers to undertakings on August 12, 2022.
8In this motion, the defendant aptly explained the delay in the first two periods by pointing to the conduct of the defendant. While the plaintiff did delay the delivery of its reply and affidavit of documents, the defendant in effect nullified the consequence of this delay by significantly delaying the delivery of its own affidavits of documents. It took the defendant fifteen months from the delivery of its statement of defence to deliver its affidavit of documents on March 12, 2018. There was then a supplementary affidavit of documents from the defendant delivered on May 24, 2018. These dates were all after the plaintiff’s affidavit of documents was delivered. No discoveries could take place without these affidavits of documents and productions. Therefore, I found that the defendant resisted the progress of the action by this conduct.
9The defendant also delayed the timing of the examinations for discovery. Examinations for discovery were originally scheduled to take place on September 25 and 26, 2018. They were cancelled at the request of the defendant. The parties eventually agreed to hold the discoveries on January 29 and 31, 2019. I advised counsel that the conduct of the defendant prior to the examinations for discovery rendered any delay of the plaintiff in that period of no consequence, as at minimum there was concurrent delay, if not singular delay by the defendant.
10The period of delay from January 31, 2019 (the conclusion of discoveries) to January 31, 2022 (the plaintiff’s request for mandatory mediation) is troubling. This is a significant period of time, namely thirty-six months. However, I was satisfied with the plaintiff’s explanation for delay in this period. The plaintiff’s motion material contains affidavits from Cameron Smith, the assistant to Scott Rosen (the plaintiff’s former lawyer), Bryan Fromstein (the plaintiff’s present lawyer) and Patrick Mohan (the principal of the plaintiff). This evidence satisfied me that this thirty-six month delay was due to issues concerning the plaintiff’s former lawyer, Mr. Rosen, and not the plaintiff itself.
11The following are the significant events of 2019: Mr. Rosen’s former legal partnership fell apart; Mr. Rosen went through a divorce wherein he acted for himself; Mr. Rosen, most importantly, suffered a heart attack that caused him to cut back on work significantly for several months.
12The following are the significant events of 2020: Mr. Rosen started looking for an associate in February, 2020; Mr. Rosen contracted Covid-19; the Covid-19 pandemic hit causing Mr. Rosen to work remotely for a period of time; Mr. Rosen hired an associate in August, 2020; Mr. Rosen was murdered on December 18, 2020.
13The following are the significant events of 2021: Mr. Rosen’s murder caused a huge disruption; estate matters had to be resolved; all of the files had to be moved to new lawyers; the office space had to be closed down; the plaintiff was notified of the murder in September, 2021 and signed a retainer with Mr. Fromstein on January 26, 2021.
14None of this events in 2019, 2020 and 2021 showed that plaintiff’s counsel at any time acted to delay the litigation deliberately. This file fell between the cracks during a turbulent period.
15Mr. Spry urged me to consider the conduct of the plaintiff during this time. I did. I did not find it indicative of a party that had abandoned this case. Mr. Mohan gave Mr. Rosen documents concerning his discovery undertakings on April 2, 2019. Mr. Smith showed in this affidavit that on June 3, 2019, August 13, 2019, February 19, 2020, June 17, 2020, August 17, 2020 and November 23, 2020 Mr. Mohan followed up with Mr. Rosen by phone to find out the status of this action. Ms. Spry argued that the space between these calls was evidence of a party who was not interested in moving this case forward. I do not draw that inference. Mr. Mohan stated in his affidavit that he trusted Mr. Rosen to move his case forward. There was considerable discussion about the nine months between Mr. Mohan’s November 23, 2020 contact with Mr. Rosen and Mr. Smith’s contact with Mr. Mohan on September 9, 2021 informing him of Mr. Rosen’s murder. Mr. Smith said that this lag after the murder was due to his oversight. During this time, Mr. Mohan did not call Mr. Rosen at all. Again, I did not draw an adverse inference against the plaintiff from this evidence. Mr. Mohan trusted Mr. Rosen.
16As a result, I found that this three year delay was adequately explained by the plaintiff. It was the result of issues concerning Mr. Rosen, and in particular his health and eventual murder. This delay cannot be blamed on the plaintiff itself.
17The alleged delay from January 31, 2022 (the plaintiff’s request for a mediation) to August 12, 2022 (the delivery of the plaintiff’s answers to undertakings) is of no consequence given the conduct of the defendant. On February 7, 2022 the defendant rejected the plaintiff’s efforts to have a mandatory mediation and have this case set down by the pandemic extended Rule 48.14 deadline of May 10, 2023 (five years and six months after the commencement of this action). The defendant brought this motion instead. In short, the defendant again resisted the progress of this action. As I pointed out to Ms. Spry, the defendant could have chosen to demand a speedy delivery of the plaintiff’s answers to undertakings and could have scheduled a mediation all within the three months before the May 10, 2023 deadline. The defendant chose not to do so, but instead chose this motion.
18Therefore, I found that the plaintiff has adequately explained the delay of this litigation.
Prejudice
19Concerning the issue of prejudice, Ms. Spry argued that there was actual prejudice to the defendant caused by these delay events. First, she argued that the plaintiff has now conceded that it does not have time sheets showing the time it spent prior to 2013 doing the extra work it says support’s the plaintiff’s quantum meruit claim. I fail to see how this evidence shows a “prejudice” to the defendant, as these time sheets are what the plaintiff needs to prove its case. The onus will be on the plaintiff to prove the quantum meruit claim, not the defendant. Furthermore, even if this does show prejudice, which in my view it does not, there is no evidence that this absence of documents arose from the litigation delay. There is no evidence as to whether these time sheets ever existed, or, if they did exist, when they were lost.
20Second, Ms. Spry argued that there was now a key witness for the defendant that no longer is with SWC. That person is named Ahin Bose. This is the person that terminated the plaintiff’s contract. In his supplementary affidavit Mr. Mohan included a LinkedIn profile for this person along with those of witnesses the plaintiff intends to call. Mr. Bose’s profile appears to be current, and it suggests that this person can be contacted by the defendant with ease. As to whether getting evidence from Mr. Bose will be more difficult now that he is no longer with SWC, this is just speculation at this point. In any event, Ms. Spry confirmed that Mr. Bose left SWC in April, 2018, namely before the major delay events in this case. Therefore, getting evidence from Mr. Bose would have been a problem for the defendant regardless of the delay.
21Ms. Spry argued that there was a presumed prejudice to the defendant from the delays in this litigation due to the presumed fading memories of witnesses. In response I rely on the apt comments of Justice Heeney in 2189126 Ontario Limited v. Toronto-Dominion Bank, 2017 ONSC 6943 (SCJ) at paragraph 19. This was a motion to set aside a registrar’s dismissal order which the judge granted. Concerning the issue of presumed prejudice, His Honour stated that “the Rules Committee was presumably aware memories fade with time, yet concluded that 5 years from commencement of the action until it is set down for trial is an acceptable period of delay.”
22During the Covid-19 pandemic the Ontario legislature extended that five year period by six months under the Reopening Ontario (A Flexible Response to COVID-19) Act, 2020, S.O. 2020, c. 17. Justice Heeney’s comments, in my view, apply to this extension as well. As such, when the defendant in this case decided to bring this motion in February, 2022, there could be no presumed prejudice, as that date was well within the five year and six month period from the commencement of this action.
23In the end, I found that a fair trial in this case is still possible. The defendant had timely notice of the claim; relevant documents have been produced; examinations for discovery are done; and now undertakings are answered. Mr. Mohan showed that the witnesses he intends to call are still probably available and capable of giving evidence. The defendant did not provide any evidence that its witnesses are also not available to give evidence.
24As a result, I dismissed the motion for dismissal pursuant to Rule 48.14(7)(a).
Rule 24.01
25The test under Rule 24.01 is similar to the one concerning a status hearing. Ticchiarelli v. Ticchiarelli, 2017 ONCA 1 (CA) the Court of Appeal stated that, “an order dismissing an action for delay will be justified where the delay is inordinate, inexcusable, and prejudicial to the defendants in that it gives rise to a substantial risk that a fair trial of the issues will not be possible.” For the reasons stated above, I dismissed this motion as well.
Costs
26Concerning costs, the parties filed costs outlines. Mr. Silver stated that the plaintiff wanted $29,800.47 in substantial indemnity costs as shown on the plaintiff’s costs outline. He argued that on June 21, 2022, a few weeks after the case conference with me on June 3, 2022 that scheduled this motion and before the plaintiff had worked on this motion, the plaintiff made an offer to settle whereby the dismissal motion was dismissed without costs, and whereby there would be a set down deadline that allowed for a mandatory mediation. This offer was not accepted. He argued that this should sway the court to award the plaintiff substantial indemnity costs.
27Mr. Pringle argued that there should be no order as to costs, as the motion when brought was reasonable. He argued as well that this order was an indulgence to the plaintiff.
28I disagree with Mr. Pringle. Given the above noted comments of Justice Heeney in Toronto-Dominion Bank about the presumed prejudice principle and the five year period, given the lack of evidence of actual prejudice to the defendant arising from delay, given the lack of any effort by the defendant to understand the reasons for the delay and work with the plaintiff’s new lawyer to meet the May 10, 2022 deadline (despite knowing of Mr. Rosen’s murder) and given the reasonable offer to settle by the plaintiff before the plaintiff’s work on the motion was done, I find that the defendant’s motion and conduct were unreasonable. Therefore, costs are merited.
29Mr. Silver referred me to a decision of Justice Sweeney in JPW Niagara Limited v. Sullivan, ONSC 6762 (SCJ) wherein, according to Mr. Silver, the judge, having set aside a registrar’s dismissal order, apparently stated in paragraph 10 that there should be no deviation in these motions from the general rule that successful parties should get costs. Costs were awarded to the plaintiff. Mr. Silver did not include this decision in his filed authorities, and I could not locate it online. However, I agree with that proposition particularly where the defendant has not acted reasonably and the motion was not a close call, such as this one.
30The defendant’s costs outline shows costs of $25,959.38. Therefore, a costs order in this range is something the defendant could reasonably have anticipated in the event of its lack of success on the motion. I award the plaintiff $25,000 in costs to be paid in thirty days.
DATE: November 24, 2022 ______________________________
ASSOCIATE JUSTICE C. WIEBE