COURT FILE NO.: CV-17-00073069-0000 DATE: 2023-06-26 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BONNECHERE EXCAVATING INC., Plaintiff AND: HIS MAJESTY THE KING IN RIGHT OF ONTARIO, Defendant

BEFORE: ASSOCIATE JUSTICE KAUFMAN

COUNSEL: Christopher J. Hunt, Counsel, for the Plaintiff Timothy Gindi, Counsel, for the Defendant

HEARD: June 13, 2023

Endorsement

[1] This is a status hearing under Rule 48.14 of the Rules of Civil Procedure, pertaining to an action initiated on June 23, 2017, which currently remains undefended.

[2] Pursuant to Rule 48.14, the Registrar is obligated to dismiss an action for delay if it has not been scheduled for trial or concluded by any means within five years of its commencement. However, this dismissal can be avoided if, at least 30 days prior to the fifth anniversary, a party submits a timetable endorsed by all parties, outlining the necessary steps to be completed before the action can be scheduled for trial, along with the respective deadlines for these steps.

[3] Despite the plaintiff’s attempt to establish a timetable, the defendant declined to provide consent. Consequently, in accordance with Rule 48.14(5), the plaintiff filed this motion for a status hearing.

Applicable Principles

[4] During a status hearing, the Court must strike a balance between the plaintiff’s interest in obtaining a hearing on the merits and the defendant’s interest in a prompt and efficient resolution of the matter. See Faris v Eftimovski, 2013 ONCA 360, at para 24. The Court must carefully consider two fundamental principles. The first principle emphasizes that civil actions should, whenever possible, be decided based on their merits. The second principle highlights that procedural rules, which aim to expedite and streamline the resolution of disputes, can only be effective if they are duly observed and enforced. See 1196158 Ontario Inc. v 6274013 Canada Ltd., 2012 ONCA 544, at paras 18 and 20.

[5] The burden of proof rests with the plaintiff to demonstrate why the action should not be dismissed for delay during the status hearing. In assessing this, the Court must apply the criteria outlined in Savundranayagam v. Sun Life Assurance Co. of Canada, 2007 CarswellOnt 6255 (Div.Ct.), namely:

(a) the plaintiff must explain the delay so as to satisfy the court that the action should proceed; and

(b) the plaintiff must satisfy the court that there would be no prejudice to the defendants.

[6] This test is conjunctive, requiring the plaintiff to meet both components. See Faris, supra note 4, at para 11. However, the court should refrain from applying these elements in a rigid and formalistic manner. Instead, it should adopt a contextualized approach, striving to achieve a resolution that balances the interests of the parties involved while also considering the public’s interest in the timely resolution of disputes. See Henderson v Kenora-Rainy River Districts Child & Family Services, 2022 ONCA 387, at para 10.

[7] Recent precedent from the Court of Appeal for Ontario establishes that a status hearing judge should consider the factors described by Master Dash in Reid v. Dow Corning Corp. (2001), 11 C.P.C. (5th) 80, (Ont. Master) and subsequently adopted in Scaini v. Prochnicki, 2007 ONCA 63, 85 O.R. (3d) 179. These factors should form part of the Court’s reasoning, with the assessment of prejudice continuing within the second part of the test. Henderson, supra note 8, at para 10. The Reid factors are as follows:

(i) Have the plaintiffs provided a satisfactory explanation for the litigation delay?

(ii) Have the plaintiffs led satisfactory evidence to explain that they always intended to prosecute this action within the time limit set out in the rules or a court order but failed to do so through inadvertence?

(iii) Have the plaintiffs demonstrated that they moved forthwith to set aside the dismissal order as soon as the order came to their attention, and

(iv) Have the plaintiffs convinced the court that the defendants have not demonstrated any significant prejudice in presenting their case at trial as a result of the plaintiffs’ delay or as a result of steps taken following the dismissal of the action?

ISSUES

[8] This status hearing raises the following issues:

(a) Has the plaintiff provided a satisfactory explanation for the delay; and

(b) Has the plaintiff satisfied the court that there would be no prejudice to the defendant if the action were allowed to proceed?

Factual Background

[9] This action pertains to a claim for damages arising from a construction project involving the plaintiff, Bonnechere Excavating Inc., and the Ministry of Transportation of Ontario (“MTO”). The contract in question was executed on April 7, 2015.

[10] The plaintiff asserts that the bid documents provided by the MTO were deficient, failing to adequately specify the road width required to maintain a roadway through the work area. Consequently, the plaintiff claims to have incurred additional costs amounting to $300,977.18 for the proper and safe detouring of traffic within the work area.

[11] The parties’ contract included a mechanism for resolving disputes. On August 19, 2015, the plaintiff submitted a notice of claim. On October 29, 2015, the MTO rejected the plaintiff’s claim, contending that, as per the contract’s terms, the contractor bore the responsibility of providing and maintaining a road through the work area throughout the project. On November 17, 2015, the plaintiff provided certain comments and requested the MTO to reconsider its decision. On October 26, 2016, the MTO confirmed its initial decision.

[12] On November 22, 2016, in accordance with the contract, the plaintiff delivered a notice expressing its intention to proceed with “formal non-binding Mediation.” A mediation session took place on November 8, 2017, but the parties were unable to reach a settlement.

[13] On June 12, 2017, the plaintiff’s counsel notified the MTO that the limitations period for commencing a legal proceeding was approaching. Counsel stated a reluctance to file a statement of claim at that stage but sought to safeguard the plaintiff’s interests by proposing a tolling agreement.

[14] Mr. Steve Logan, a claims engineer for the MTO, responded by expressing the Ministry’s willingness to enter into a tolling agreement, albeit after his return from vacation. However, the plaintiff chose to proceed with the issuance of a statement of claim on June 23, 2017, without serving it on the MTO.

[15] On November 15, 2017, the plaintiff made a request for the MTO’s involvement in binding arbitration. On December 4, 2017, prior to being served with the plaintiff’s claim, a representative from the MTO responded affirmatively, expressing the MTO’s willingness to engage in binding arbitration, provided that both parties could mutually agree on an arbitration agreement. The MTO provided the plaintiff with a draft arbitration agreement for its review and consideration.

[16] On December 13, 2017, the plaintiff amended its statement of claim, and served it on December 18, 2017 along with the original claim. Counsel for the plaintiff provided the MTO with a waiver of defence, pending agreement on the draft arbitration agreement. Counsel for the plaintiff informed the MTO that he would review the proposed arbitration agreement and provide his comments.

[17] On January 8, 2018, the MTO acknowledged receipt of the plaintiff’s statements of claim. The MTO informed the plaintiff that it had failed to serve a required notice in accordance with Section 7(1) of the Proceedings Against the Crown Act, R.S.O. 1990, c P.27, rendering the proceedings a nullity. Although the MTO had already agreed to proceed to binding arbitration in good faith, any final agreement on arbitration would “be contingent upon receipt of a Notice of Discontinuance […] by February 9, 2018.”

[18] The plaintiff never furnished the MTO with a revised arbitration agreement, and it did not discontinue the action. According to the MTO, the last communication between the parties regarding this dispute occurred through the MTO’s letter dated January 8, 2018. In his affidavit submitted for this status review, Kevin English, the MTO’s Manager of the Contracts Claims Office, affirms that there exists no record of the plaintiff or their counsel contacting the defendant regarding this matter between January 2018 and September 2022, encompassing a period of four years and eight months.

[19] In August 2022, the plaintiff’s counsel retired, and the responsibility for this matter was transferred to Mr. Hunt, a colleague from the same firm. In October 2022, Mr. Hunt corresponded with the MTO, expressing that the plaintiff remained open to the possibility of mediating or arbitrating this dispute. Subsequently, on November 23, 2022, the plaintiff served the motion materials pertaining to this motion on the MTO.

Exchange of emails in November 2018

[20] In an affidavit submitted for this status review, Mr. Imbesi, a lawyer from the law firm of Rasmussen Starr Ruddy LLP, attests that this dispute was pursued concurrently with another independent claim arising from the same project. As supporting evidence, Mr. Imbesi includes a collection of emails exchanged between the plaintiff’s counsel and the MTO from November 8-11, 2018.

[21] The plaintiff contends, in its factum, that this email exchange demonstrates that the parties discussed the potential resolution of both claims [emphasis added] and addressed the production of certain documents to facilitate a settlement meeting at a later date. However, I find this submission unpersuasive.

[22] The emails in question revolve around the plaintiff’s lawyer’s request to obtain, in advance of a proposed meeting, the MTO’s analysis of the plaintiff’s submissions. Mr. Logan responds by stating that the “marked up versions” of the plaintiff’s Daily Work Reports, which were expected to be the focus of discussion during the meeting, have been forwarded. The MTO declined to provide any further information.

[23] In an affidavit filed on behalf of the MTO, Mr. English affirms that this email exchange pertains to the plaintiff’s 2018 claim (Court File No. CV-18-00076037-0000) and that, based on his review of records, the subject matter of this action was never discussed.

[24] Having examined the pleadings in action CV-18-00076037-0000, I am not convinced, on the balance of probabilities, that the November 2018 exchange of emails pertains to this action. I conclude that they relate to the 2018 action.

[25] Firstly, the content of this email exchange relates to the subject matter of the 2018 action. That action concerns a request for additional compensation resulting from the MTO’s failure to provide certain “grading templates.” While the MTO acknowledges its failure to provide certain grading templates, it relies on the contractual provisions requiring the plaintiff to maintain Daily Work Reports containing detailed information on the work performed, names and categories of workers, and equipment and materials used or on standby. The plaintiff asserts that it adequately documented its costs through these Daily Work Reports (paragraph 16), while the MTO argues that the plaintiff failed to provide them in a timely manner, thereby affecting their ability to reconcile the claimed costs (paragraphs 12-14 and 23).

[26] Secondly, Mr. Imbesi’s affidavit does not explicitly state that the discussions between the parties in November 2018 concerned the present action. He mentions that the “parties had teleconferences into 2018.” In reference to the November 2018 email exchange, Mr. Imbesi indicates that the parties were discussing the production of certain documents in connection with a settlement meeting”.

[27] Lastly, the email exchange contains no reference to this action’s subject matter, namely the MTO’s alleged failure to adequately specify the required road width through the work area in their bid documents.

[28] The burden rests on the plaintiff to justify the delay. Based on the evidence presented, I find that, when Mr. Hunt assumed responsibility for this matter from his predecessor on September 23, 2022, the last communication between the parties regarding this action took place on January 8, 2018.

The plaintiff’s justification for the delay

[29] The plaintiff acknowledges the existence of periods of inactivity but seeks to justify the delay on four grounds: the parties’ agreement to arbitrate, the impact of the Covid-19 pandemic, the retirement of their previous counsel, and turnover of key personnel within the MTO, which may have hindered or delayed further action. However, I find these submissions unpersuasive.

No mutual intention to arbitrate after January 8, 2018

[30] On December 4, 2017, the MTO expressed its willingness to enter into an arbitration agreement, subject to the parties reaching a consensus on its terms. The MTO provided the plaintiff with a draft agreement and requested its input. At the time the MTO agreed to arbitrate, they had not been served with the plaintiff’s claim. After receiving service on December 18, 2017, the MTO informed the plaintiff that the claim was statute-barred due to failure to provide the required notice under the Proceedings Against the Crown Act. The MTO set a deadline of February 8, 2018, for the plaintiff to discontinue the action. Furthermore, the MTO explicitly stated that their willingness to arbitrate was contingent upon the plaintiff discontinuing the action. However, the plaintiff did not discontinue the action, and the parties never executed an arbitration agreement.

[31] The plaintiff failed to respond to the MTO’s letter dated January 8, 2018, which marked the last correspondence between the parties regarding arbitration. I reject the plaintiff’s assertion that the MTO reversed its position and sought administrative dismissal despite a prior agreement to arbitrate. On January 8, 2018, the MTO informed the plaintiff that it would only agree to arbitrate if the plaintiff discontinued the action, which never occurred.

Impact of Covid-19

[32] Mr. Imbesi asserts in his affidavit that, due to the Covid-19 pandemic, the plaintiff prioritized its focus on its business and employees, resulting in less attention being given to finalizing the procedural steps related to the action. I afford little weight to this submission.

[33] It is worth noting that the pandemic began in March 2020. Therefore, none of the delay between January 2018 and March 2020 (26 months) can be attributed to the pandemic.

[34] Furthermore, Mr. Imbesi’s statement regarding the plaintiff’s prioritization of business and employee matters is hearsay. According to Rule 39.01(4) of the Rules, affidavits for use in a motion may include statements based on the deponent’s information and belief if the source of the information and the grounds for the belief are specified. Mr. Imbesi does not identify the source of this information. If the plaintiff intended to rely on the impact of Covid-19 as an explanation for the delay, it should have submitted an affidavit from an employee with firsthand knowledge explaining how Covid-19 affected its ability to pursue this litigation. The evidence presented amounts to a bare statement.

[35] While the Court acknowledges that the Covid-19 pandemic had disruptive effects on businesses and the provision of legal services, it does not constitute a reasonable explanation for the delay between March 2020 and September 2022. I concur with Justice Shaw’s view that, “after the initial shock and adjustment to living and working during a worldwide pandemic, there is no reason why a letter could not have been sent to the defendant's counsel.” See Beshay v Labib, 2023 ONSC 2874, at para 37.

Effect of plaintiff’s counsel’s retirement and turnover in MTO staff

[36] In my assessment, neither the retirement of the plaintiff’s counsel nor any turnover in MTO staff caused any significant delay.

[37] The plaintiff’s counsel retired in August 2022, and Mr. Hunt assumed responsibility for the matter shortly thereafter. Mr. Hunt promptly provided a Notice of Change of Lawyer on September 23, 2022 and contacted the MTO on October 19, 2022. Subsequently, the MTO transferred the matter to new counsel at the Crown Law Office, and Mr. Gindi was assigned on November 23, 2022.

[38] The two-month delay between Mr. Hunt’s Notice of Change of Lawyer and Mr. Gindi assuming responsibility for the matter is a brief period, and I do not attribute this delay to the plaintiff.

Defendant’s Inaction

[39] The plaintiff asserts that throughout this period, the defendant took no steps to advance the litigation, and did not deliver a defence. I do not find merit in this submission.

[40] The primary responsibility for the progress of the action rests with the plaintiff. Consequently, the plaintiff bears the consequences of any delay arising from a lack of diligence. Defendants are not obligated to proactively advance the action or assist the plaintiff in moving the matter towards trial. See Papp Plastics & Distributing Ltd. v Unity Insurance Brokers (Windsor) Ltd., 2018 ONSC 5009, at para 57.

[41] When evaluating the reasonableness of the delay, the Court may consider the defendant’s actions that impede the progress of the proceeding or their requests for indulgences. In this case, the defendants did nothing to hinder the progress of the action. The MTO cannot be faulted for not delivering a defence when the plaintiff provided a waiver and never requested one.

Conclusion on Delay

[42] The Court determines that the plaintiff’s delay between January 8, 2018, and September 23, 2022, a period of four years and eight months, is excessive, and the explanation for the delay is unsatisfactory. The plaintiff did not provide any comments regarding the MTO’s draft arbitration agreement and failed to follow up after the MTO indicated that it would only agree to arbitrate if the plaintiff discontinued the action.

[43] Throughout the period between January 8, 2018, and September 23, 2022, the plaintiff never demanded a defence, served an affidavit of documents, or attempted to negotiate a discovery plan.

[44] The second Reid factor requires that the Court consider whether the plaintiff has presented satisfactory evidence to explain that it always intended to prosecute this action within the time limit prescribed by the rules or a court order but failed to do so due to inadvertence. There is no evidence indicating a continuous intention to pursue this claim, and there is nothing from which the Court can conclude that the delay was due to inadvertence.

[45] No affidavit has been filed by a representative of the plaintiff, and a continuous intention to prosecute the action throughout cannot be inferred from the evidence presented. On the contrary, the complete absence of any activity on this matter for four years and eight months, coupled with the plaintiff’s counsel’s statement that he had “no desire to issue a Statement of Claim at this stage” but wished to protect the plaintiff’s interests, suggests that the plaintiff did not intend to resolve this claim through a Superior Court action.

[46] When a plaintiff fails to provide a satisfactory explanation for the delay, it is within the discretion of the status hearing judge to dismiss the action, even without proof of actual prejudice to the defendant. See 1196158 Ontario Inc. v 6274013 Canada Limited, 2012 ONCA 544, at para 32. However, the Court of Appeal for Ontario has cautioned that status hearing judges should routinely assess the defendant’s prejudice to approach the matter contextually, and provide an adequate record for any potential appeal. Henderson, supra note 8, at para 21. Accordingly, I will now proceed to evaluate the potential prejudice that the MTO may suffer if the action is allowed to proceed.

Prejudice to the MTO

[47] The plaintiff contends that the MTO would not suffer any non-compensable prejudice if the action were to proceed. It argues that the MTO had timely notice of the claim, relevant records have been preserved, and there are no impediments to a fair trial.

[48] The MTO asserts that it would indeed suffer prejudice. Mr. Logan, the claims engineer responsible for handling this claim, passed away in September of 2021, more than four years after the plaintiff’s claim was initiated. Mr. English believes that the MTO will be disadvantaged in responding to the plaintiff’s claim due to the unavailability of Mr. Logan’s personal observations. In its factum, the MTO indicates that Tony Tuinstra, the claims manager involved in this file, has retired. However, Mr. English’s affidavit does not mention Mr. Tuinstra’s retirement.

[49] In my assessment, the passing away and the retirement of MTO employees with knowledge of the plaintiff’s claims does not present an insurmountable challenge in this case. I am not convinced that such a loss constitutes non-compensable prejudice. The adequacy of the MTO’s bid documents and the issue of whether the plaintiff is responsible for the claimed costs primarily involve contractual interpretation.

DISPOSITION

[50] While I determined that the MTO would not suffer non-compensable prejudice if the claim were to proceed, upon weighing the relevant factors, I conclude that the just order in the circumstances of this particular case is the dismissal of this action. The significant and inordinate delay in pursuing this action after the claim was initiated, the absence of a reasonable explanation for the delay, and the failure to demonstrate a continuing intention to prosecute the claim, lead me to this conclusion.

[51] Shortly after being served with the Statement of Claim, the MTO presented the plaintiff with a choice between litigation and arbitration. Instead of selecting either of these options, the plaintiff remained inactive until its counsel retired and new counsel assumed carriage of the case four years and eight months later.

[52] Neglecting to enforce rules undermines public confidence in the justice system’s ability to process disputes fairly and efficiently. In 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544, 112 O.R. (3d) 67 (C.A.), Sharpe J.A., in reference to an action that was also at the pleadings stage five years after initiation, stated that there comes a point where rules designed to ensure timely and efficient justice must be enforced; otherwise, they lose their meaning and jeopardize the objective they aim to achieve:

At some point, a party who has failed to respect the rules designed to ensure timely and efficient justice, loses the right to have its dispute decided on the merits. If that were not the case, the rules and timelines they imposed would cease to have any meaning and any hope of ensuring timely and efficient justice would be seriously jeopardized. Ibid at para 33.

[53] Accordingly, for the reasons mentioned above, this action is hereby dismissed for delay.

Costs

[54] The defendant has achieved complete success and is presumptively entitled to costs. The overarching goal in awarding costs “is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding.” See Boucher v Public Accountants Council for the Province of Ontario, (2004), 71. O.R. (3d) 291 (C.A.) at para 37.

[55] I have considered the parties’ respective costs outlines. Both parties have claimed similar costs on a partial indemnity basis: $10,826.74 (plaintiff) and $11,855.96 (defendant). When assessing what is fair and reasonable, the parties’ expectations regarding the quantum of costs awarded are relevant considerations.

[56] The similarity in the costs claimed by the parties suggests that both parties reasonably anticipated the possibility of an adverse costs award in the amount of $10,000. In my evaluation, this is a reasonable amount for a motion of this complexity.

[57] Costs are awarded to the MTO, fixed in the amount of $10,000, inclusive of disbursements and HST.

Alexandre Kaufman ASSOCIATE JUSTICE KAUFMAN Date: June 26, 2023

Notes

[1] In accordance with the Notice of the Chief Justice of the Superior Court dated September 21, 2022, matters commenced in the name of Her Majesty the Queen will continue in the name of His Majesty the King. [2] R.R.O. 1990, Reg. 194 [the Rules]. [3] Ibid r. 48.14(4). [4] See Faris v Eftimovski, 2013 ONCA 360 at para 24 [Faris]. [5] See 1196158 Ontario Inc. v 6274013 Canada Ltd., 2012 ONCA 544 at paras 18 and 20 [1196158 Ontario Inc.]. [6] 2007 CarswellOnt 6255 (Div.Ct.) [7] Faris, supra note 4 at para 11. [8] Henderson v Kenora-Rainy River Districts Child & Family Services, 2022 ONCA 387 at para 10 [Henderson]. [9] (2001), 11 C.P.C. (5th) 80, (Ont. Master) [Reid]. [10] 2007 ONCA 63, 85 O.R. (3d) 179 [Scaini]. [11] Henderson, supra note 8 at para 10. [12] R.S.O. 1990, c P.27. [13] See Beshay v Labib, 2023 ONSC 2874 at para 37 [Beshay]. [14] See Papp Plastics & Distributing Ltd. v Unity Insurance Brokers (Windsor) Ltd., 2018 ONSC 5009 at para 57 [Papp Plastics & Distributing Ltd.]. [15] See 1196158 Ontario Inc. v 6274013 Canada Limited, 2012 ONCA 544 at para 32 [1196158 Ontario Inc.]. [16] Henderson, supra note 8 at para 21. [17] 2012 ONCA 544, 112 O.R. (3d) 67 (C.A.). [18] Ibid at para 33. [19] See Boucher v Public Accountants Council for the Province of Ontario, (2004), 71. O.R. (3d) 291 (C.A.) at para 37 [Boucher].