Court File and Parties

COURT FILE NO.: CV-14-00497218 MOTION HEARD: 20231004 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Stainless Steel Products, Plaintiff AND: Lie He, Li Zhang and Yue Ling He, Defendants

BEFORE: Associate Justice B. McAfee

COUNSEL: L. Iantosca, Counsel, for the Moving Party, the Plaintiff M. Magonet, Counsel, for the Responding Parties, the Defendants

HEARD: October 4, 2023

Reasons for Decision

[1] This is a motion brought by the plaintiff Stainless Steel Products (SSP) for an order setting aside the registrar’s order dismissing the action for delay dated November 12, 2019. The defendants, Lie He, Li Zhang and Yue Ling He (collectively the defendants) oppose the motion.

[2] For the reasons that follow, the motion is granted.

[3] The within action arises from a proceeding in the state of Ohio, wherein on January 27, 2012, SSP obtained default judgment in the amount of USD $833,271.56 against the defendant Lie He and a company owned by Lie He, Jiangmen Yuesheng Metal Products Co Ltd (the judgment). Three days prior to the judgment a property owned in Ontario by the defendant Lie He and his wife, the defendant Li Zhang, was transferred to their daughter, the defendant Yue Ling He (the transfer).

[4] The within action was commenced on January 27, 2014. SSP seeks payment in an amount in Canadian dollars sufficient to purchase USD $833,271.56, and a declaration that the transfer is void as a fraudulent conveyance.

The Test

[5] The court will apply a contextual approach and consider all relevant factors in determining whether it is just to set aside the dismissal order in the circumstances of the particular case (Marché d’Alimentation Denis Thériault Ltée. v. Giant Tiger Stores Ltd., 2007 ONCA 695 (Ont. C.A.) at paras. 12, 20-21; MDM Plastics Ltd. v. Vincor International Inc., 2015 ONCA 28 at paras. 11-12; Prescott v Barbon, 2018 ONCA 504 (Ont. C.A.) at paras. 13-15; Grillo Barristers P.C. v. Kagan Law Firm P.C., 2022 ONCA 303 at paras. 5-10; Muscaj v. Urszula, 2018 ONSC 5427 (Ont. S.C.J.) at paras. 43-47).

[6] In Prescott, Justice Pepall states as follows with respect to the contextual approach for applying the relevant factors:

[14] The legal test for setting aside a registrar’s order dismissing an action for delay was originally described by Master Dash in Reid and adopted by this court in Scaini v. Prochnicki, 2007 ONCA 63, 85 O.R. (3d) 179:

(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?

[15] This is not a rigid, one-size fits all test. Rather, a contextual approach is required: Scaini, at paras. 23-25. Prior to Scaini, a plaintiff had to satisfy each of the four elements. Thereafter, courts were to consider and weigh all relevant factors to determine the order that is just. See also Marché d’Alimentation Denis Thériault Ltée. v. Giant Tiger Stores Ltd., 2007 ONCA 695, 87 O.R. (3d) 660. In Hamilton (City) v. Svedas Koyanagi Architects Inc., 2010 ONCA 887, 104 O.R. (3d) 689, at para. 23, Laskin J.A. observed that the overriding objective is to achieve a result that balances the interests of the parties and takes account of the public’s interest in the timely resolution of disputes. The four Reid factors provide a structured approach to achieving this result.

[7] In determining whether the order of the Registrar ought to be set aside, I am mindful of the provisions of rule 1.04(1) of the Rules of Civil Procedure:

1.04(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

[8] I am also mindful of the importance of finality of litigation (Marché at paras. 37-38).

Explanation of the litigation delay

[9] On or about September 15, 2014, the defendants delivered a statement of defence.

[10] On or about October 21, 2014, a motion was brought by SSP’s then lawyer of record for an order removing themselves from the record, which was granted. SSP then retained new counsel.

[11] On or about January 30, 2015, a motion was brought by the defendants for security for costs. SSP consented to an order that SSP pay into their lawyer’s trust account the sum of $20,000.00 on or before February 17, 2015 (order of Justice Archibald dated January 30, 2015).

[12] On or about April 2, 2015, a motion was brought by the defendants for an order dismissing the action for failure of SSP to comply with the order of Justice Archibald dated January 30, 2015. Justice Dow varied the order of Justice Archibald and granted an extension of time until April 30, 2015, to post the remaining balance of the security for costs of $9,611.46.

[13] On or about June 4, 2015, the defendants brought another motion. On consent, an order was made that the $20,000.00 received by SSP’s lawyers be held in trust as security for the costs of the defendants.

[14] In or about August 2015, cross-examinations took place in relation to a pending motion and cross-motion for summary judgment.

[15] In or about the fall of 2015, SSP’s motion for summary judgment and in the alternative for a certificate of pending litigation (CPL), and the defendants’ cross-motion for summary judgment were heard. On November 3, 2015, Justice Glustein dismissed the motions for summary judgment and granted leave to SSP to issue a CPL.

[16] On or about February 29, 2016, the defendants brought a motion for increased security for costs. SSP was ordered to post additional security for costs in tranches. On May 27, 2016, SSP paid into court the sum of $48,000.00, comprised of $20,000.00 previously held in trust and the further sum of $28,000.00. On November 29, 2016, SSP paid the further sum of $28,000.00 into court. To the extent that the defendants argue that SSP is in breach of the order for failure to pay the final tranche into court, the final tranche was to be paid into court prior to the pre-trial and no pre-trial has been scheduled.

[17] In or about September 2016, affidavits of documents were exchanged.

[18] SSP was then examined for discovery. On or about February 15, 2017, the defendants confirmed that they have obtained the transcript of SSP’s examination for discovery and requested answers to undertakings.

[19] On or about October 10, 2017, the defendants amended their statement of defence on consent.

[20] On June 25, 2018, the parties attended a mandatory mediation.

[21] On or about March 26, 2019, SSP brought a motion for a timetable. Master Short granted the motion on consent, ordering a set down date of September 3, 2019. The only other remaining steps ordered were that the defendants provide written answers to discovery questions on or before May 31, 2019, and SSP file any motions for refusals/insufficient answers on written discovery questions on or before June 28, 2019.

[22] On or about July 31, 2019, SSP’s then lawyer of record was removed from the record by order of Associate Justice Abrams.

[23] On November 12, 2019, the action was dismissed for delay.

[24] I am satisfied that any litigation delay has been satisfactorily explained. The action was progressing. Pleadings were exchanged and amended. Cross-examinations took place and motions were brought. SSP posted security for costs in the amount of $76,000.00. Affidavits of documents were exchanged. SSP was examined for discovery. Mediation took place. The evidence of SSP’s principal, J. Meskill (Meskill) is that during the period after the order of Associate Justice Abrams he was dealing with a difficult divorce in Ohio, which included him moving out of the matrimonial home to live in a different city. The divorce proceedings in Ohio took up much of Meskill’s time including attending to his own mental health needs, the needs of his family and the operation of his business. His evidence is that he did not receive a copy of the Abrams order. I am satisfied that this element of the test has been met in these circumstances.

Inadvertence in missing the deadline

[25] As set out in Meskill’s affidavit, it has always been his intention to pursue this matter. There is no evidence that SSP’s failure to set the action down for trial by the deadline was intentional. I am satisfied that this element of the test has been met.

Motion brought promptly

[26] It is SSP’s position that SSP was unaware of the dismissal order for approximately 18 months. On May 19, 2021, Meskill appeared before me on the defendants’ motion to vacate the CPL. Meskill’s evidence is that he only became aware of the defendants’ motion after making several telephone calls to the court office during the COVID-19 pandemic to ascertain the status of the proceeding. On the May 19, 2021 attendance, Meskill represented that he was not aware that the action had been dismissed. On July 26, 2021, there was a further attendance on the defendants’ motion to vacate. SSP made efforts to retain a new lawyer and retained current counsel in or about late August 2021. The within motion was served in or about November 2021. Counsel confirm that there is no issue concerning delay following November 2021, when the within motion was served.

[27] The defendants argue that SSP would have received the dismissal order prior to May 19, 2021. According to the affidavit of service of S. Waterman, assistant to defendants’ counsel sworn November 20, 2019, Ms. Waterman emailed and mailed the dismissal order to various addresses.

[28] Meskill’s affidavit states that he did not receive any further documentation or correspondence from the Ontario courts from the spring of 2019 onward as a result of moving out of the matrimonial home, but it does not specifically confirm the date SSP learned of the dismissal order.

[29] In these circumstances, I cannot be satisfied of the date when SSP learned of the dismissal order or that the motion was brought promptly. However, I am of the view, having regard to all of the circumstances of this matter and applying a contextual approach, that the dismissal order ought to be set aside.

Prejudice

[30] To the extent that there is a presumption of prejudice, the presumption has been rebutted. Affidavits of documents were exchanged. Examinations for discovery took place. The defendants have obtained a transcript of their examination for discovery of the plaintiff. Each side brought a motion for summary judgment in which cross-examinations took place.

[31] In oral submissions, the defendants submit that they do not have documents 6A, 6B and 6C referred to at pages 31-34 of the transcript from the proceedings in Ohio of March 11, 2011. The defendants submit that because they do not have these documents, there is actual prejudice. However, there is no specific evidence that these documents are not otherwise available and no specific evidence of how a fair trial might not be possible if these documents are not available. I am not satisfied of actual prejudice.

Other factors

[32] To the extent that the defendants take issue with service in the Ohio proceedings of an order and of the default judgment and raise a limitation period defence, these are not relevant factors for consideration on this motion (Longo v. Cheng, 2020 ONSC 7924 (Ont. S.C.J.) at para. 21).

[33] For these reasons, in all the circumstances of this matter, I am satisfied that it is in the interests of justice that I exercise my discretion to set aside the dismissal order.

New Set Down Date Deadline

[34] On the motion, SSP’s counsel confirmed that if the motion was granted, he would be in a position to set the action down for trial within 30 days. Counsel for the defendants confirmed that if the motion was granted, he takes no issue with the 30 day deadline.

Costs

[35] SSP was successful on the motion. SSP does not seek costs of the motion and submits that if SSP is successful, no costs ought to be payable to the defendants. Regardless of the outcome of the motion, the defendants seek costs on a partial indemnity basis in the all-inclusive amount of $37,835.22.

[36] Although the defendants were not successful, there is authority that supports, in certain cases, an unsuccessful defendants’ entitlement to costs of this type of motion.

[37] I am satisfied that the defendants are entitled to costs of this motion. SSP is being granted an indulgence. However, I am also satisfied that the amount sought is too high and that an order other than payment within 30 days is more just in all of the circumstances. In my view a fair and reasonable amount that SSP could expect to pay for costs of this motion is the all-inclusive amount of $10,000.00 payable by SSP to the defendants in the cause.

Summary of Order

[38] Order to go as follows:

1. The order of the registrar dismissing the action for delay dated November 12, 2019, is set aside;
2. The new deadline to set the action down for trial shall be 30 days from today’s date; and
3. Costs of the motion are fixed in the all-inclusive amount of $10,000.00 payable by SSP to the defendants in the cause.

Associate Justice B. McAfee Date: January 8, 2024