Court File and Parties

COURT FILE NO.: CV-22-1918-00ES DATE: 20230406 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: PENALTA GROUP LTD., Plaintiff AND: ALL STORAGE BUILDING SYSTEMS INC., BERT BALAS, AMERICAN BUILDINGS COMPANY, B.G.B & ASSOCIATES LTD., BRUCE GRAY, M ARCHITECTURE INC., STEPHEN MAK and TERRIS PROJECT MANAGEMENT INC., Defendants

BEFORE: J. Speyer J.

COUNSEL: Greg Robson, for the Plaintiff Kris Hutton, for the Defendant, American Buildings Company Mark Coleman, for the Defendant, B.G.B. & Associates Ltd. and Bruce Gray Danielle Muise, for the Defendants, M Architecture Inc. and Stephen Mak Jamie Sanderson, for the Defendant, Terris Project Management Inc.

HEARD: February 24, 2023

Endorsement

[1] This action is long in the tooth. Its history was described in detail by Healey J. in her endorsement of December 22, 2021, and I will not repeat it. The action was dismissed for delay by Order of the Registrar dated August 29, 2019, because the action was not set down for trial within five years of its commencement. The plaintiff moved to set aside the Order dismissing the action for delay. On December 22, 2021, Healey J. set aside the dismissal Order and set a timetable for next steps in the litigation. The plaintiff was ordered to provide answers to remaining undertakings by January 31, 2022, serve expert reports by April 15, 2022, and file the trial record by April 15, 2022. The plaintiff did not comply with Healey J.’s order.

[2] The plaintiff moves for an Order extending the date the plaintiff’s expert reports are to be served, other than reports responding to any served by the other parties, to June 30, 2023, and an Order extending the date the plaintiff is to set the action down for trial to November 3, 2022, the date on which the trial record was filed.

[3] The only party that opposes the motion is the defendant American Buildings Company (“ABC”). ABC submits that

“[i]t was “pre-emptory” upon Penalta to follow every term of the Order of Healey J. or the Registrar’s Dismissal Order would be immediately reinstated by this Honourable Court resulting in Penalta’s action being dismissed once again pursuant to this Honourable Court’s inherent “plenary power” to protect its process from being obstructed or abused or by operation of Rule 2.1.01 or 2.1.02 of the Rules of Civil Procedure”.

[4] The Order of Healey J. does not bear the interpretation urged by ABC. It says nothing about an automatic reinstatement of the dismissal order if Penalta did not comply with the timetable. It says nothing that would deprive the parties of their ability to move for an extension of the dates set by Healey J.

[5] These reasons explain why I grant the plaintiff the relief sought, though not to the extent sought.

[6] Penalta was represented by counsel appointed by LAWPRO at the motion to set aside the administrative dismissal. Notwithstanding the history of this action, Healey J. concluded that Penalta had demonstrated that it always intended to move the matter forward and would have set the matter down within the five-year period but for the mistake of its counsel. Healey J. concluded that it is in the interests of justice that this claim be tried on its merits, and that permitting the action to proceed would not cause the defendants to suffer any non-compensable prejudice. To move the action forward, Healey J. imposed a timetable for next steps. It was anticipated by Healey J. that Penalta would retain new counsel if the dismissal order was set aside. New counsel did not have the opportunity to provide input into the judicially mandated timetable.

[7] On January 13, 2022, the plaintiff retained new counsel. New counsel has worked diligently to advance the litigation. One of the plaintiff’s expert reports, an economic loss opinion authored by Gary Phelps, was provided to the parties on April 13, 2022. New counsel provided another expert, Mr. Hartog, who was providing a liability opinion, with approximately 3,900 pages of evidence to review that was not provided to him by previous counsel. When it became apparent to plaintiff’s new counsel that Mr. Hartog required more time to complete his report, counsel wrote to counsel for the defendants and asked for their consent to amend the timetable established by the Order of Healey J. The plaintiff sought to extend the time to serve Mr. Hartog’s report by 35 days. Counsel for ABC responded that his client would not consent to that extension.

[8] Immediately after ABC refused to consent to the extension, and before the deadlines set by Healey J. expired, the plaintiff took steps to secure a date to hear the present motion. Staff for the plaintiff’s counsel requested a court date on April 13, 2022, and the motion record was served on the parties on April 14, 2022. It took over ten months for the motion to be heard after the notice of motion was filed. That delay is not the fault of the plaintiff. The motion was returnable on April 28, 2022 and was adjourned on consent of all parties to June 30, 2022, to allow ABC to complete cross-examination and to draft and file its responding materials. The motion was not heard on June 30, 2022, and for reasons related to the unavailability of motion dates, the motion could not be heard until February 24, 2023. The February 2023 hearing date was set in June 2022.

[9] In the interim, Mr. Hartog delivered his report, and it was served on July 14, 2022. Mr. Hartog recommended that an additional expert be retained to determine the cause of the construction delays. That report has yet to be completed and the plaintiff therefore seeks that the deadline for filing its expert reports be extended to June 30, 2023.

[10] New counsel did not serve and file the trial record by the deadline imposed by Healey J. for two reasons. Two of the defendants, who did not respond to the statement of claim, needed to be noted in default, and previous counsel had not taken steps to do this. New counsel’s staff attempted to file a requisition to note those defendants in default on April 12, 2022 but did not have copies of the necessary affidavits and needed to obtain these from the court. Delays followed because the court file had been archived and needed to be retrieved, which took a couple months. Further delay occurred because the requisition needed to be re-filed, which was done through the online portal on August 15, 2022.

[11] New counsel could also not certify that the plaintiff was ready for trial before the present motion was heard, given that an important expert opinion remained outstanding.

[12] After the defendants were noted in default and the Hartog report was received, the plaintiff’s new counsel filed the trial record on November 3, 2022. Although the present motion was outstanding, counsel wanted to avoid further delay because the motion would not be heard until February 2023.

[13] Penalta has provided an explanation for its delay in filing Mr. Hartog’s report. The explanation is that the expert required more time, but not much time, to review extensive materials provided to the expert by new counsel. New counsel was not counsel of record for Penalta at the motion hearing before Healey J., and therefore did not have input into the timetable that was set. When retained, new counsel diligently checked the expert’s ability to meet the court-ordered deadline, advised opposing counsel that a short delay was anticipated, and sought their consent to amend the timetable accordingly. This is not a case where counsel allowed the deadline to pass without taking steps to comply with the deadline.

[14] ABC also points to the fact that no judicial pre-trial conference has been scheduled yet, contrary to the Order of Healey J. that required Penalta to obtain from the court the earliest date for a pre-trial after the action was set down for trial. ABC submits that this demonstrates Penalta’s disregard for the Order of Healey J. Penalta responds that it would not have been reasonable to schedule a judicial pre-trial while this motion was outstanding, given ABC’s position on the motion which includes seeking an order dismissing the action. I agree.

[15] There is no evidence that ABC was or will be prejudiced by the late service of Mr. Herzog’s report or the trial record.

[16] In its factum, ABC initially opposed this motion on the basis that Penalta did not file a Supplementary Notice of Motion seeking leave to continue this motion after serving the Trial Record, but abandoned this argument in oral submissions. The Notice of Motion sought such further relief as the court may deem just. It is just that Penalta be granted leave to continue this motion after serving the trial record. The motion was commenced before the trial record was served. The relief sought in the motion included an extension of time in which to serve the trial record. However, because the motion was pending for a long time as a result of difficulty in securing a date for the hearing of the motion, the plaintiff decided to file the trial record, so as to not further delay this proceeding. It would be unjust to penalize the plaintiff for taking this step, and the purpose of Rule 48.01(1) of the Rules of Civil Procedure will not be frustrated by granting leave to the plaintiff to continue this motion. Leave is granted to the plaintiff to continue this motion after serving the Trial Record.

Conclusion

[17] It is ordered that the date the plaintiff is to set the action down for trial is extended to November 3, 2022, the date on which the trial record was filed.

[18] It is further ordered that the date the plaintiff’s expert reports are to be served, other than reports responding to any served by the other parties, be extended. I will not order the date for the filing of the plaintiff’s expert reports be extended to June 30, 2023. The Notice of Motion seeks an extension for the filing of Mr. Hertog’s report. The evidence filed in support of the motion cogently explains why that report could not be served within the time set by Healey J. and the time for serving Mr. Hertog’s report is extended to July 30, 2022.

[19] However, the evidence filed in support of the motion does not provide a sufficient basis on which to further extend the time for serving the plaintiff’s expert reports. The evidence provided is only that Mr. Hertog suggested that a further expert report as to the reasons for construction delays on the project be obtained, and that counsel for the plaintiff sent a letter to all counsel on October 28, 2022, in which he advised that the plaintiff “may be securing a further expert opinion on the reasons for construction delays on the project.” There is no evidence that an expert has been retained, or how long it would take for an expert to prepare a report. In the absence of such evidence, there is no basis on which to further extend the deadlines for the serving of the plaintiff’s expert reports.

[20] If the parties are unable to agree as to costs, I will receive submissions in writing, not to exceed three pages in addition to any bill of costs. Any written submissions are to be sent to my assistant at Joanna.Skalko@ontario.ca by the plaintiff by April 21, 2023, and by the defendants by April 28, 2023. If no submissions are received by then, it will be assumed that the parties have reached an agreement on costs.

The Honourable Madam Justice J. Speyer Date: April 6, 2023