Court File and Parties

Court File No.: CV-18-1747-0000 Date: 2024 05 08 Ontario Superior Court of Justice

Between: The Estate of Angela Sebanc, Plaintiff

And: Peter Sebanc and Mary Sebanc, Defendants

Counsel: L. Campbell, for the Plaintiff Q. Giordano, for the Defendants

Heard: April 15th, 2024

Endorsement Justice Bloom

I. Introduction

[1] There are three motions before me. The Defendants move for an order dismissing the action for delay and discharging a certificate of pending litigation. The Plaintiff moves for an order compelling the Defendants to serve an affidavit of documents within 30 days, compelling the Defendants to attend for examination for discovery within 60 days, and striking their Statement of Defense, if they fail to do either. Finally, the Defendants move for an order for security for costs.

II. Facts

[2] Since the facts are common to all three motions, I now set them out.

[3] Angela and Felix Sebanc were the parents of 5 children, including Victor and Peter Sebanc. Mary is Peter’s wife.

[4] Angela died on February 26, 2017. Felix had predeceased her. Victor is Angela’s executor.

[5] On April 30, 2018 the Statement of Claim was issued. It seeks, inter alia, an accounting from Peter in respect of the administration of assets of Angela during her life and in respect of administration of assets of her estate, a declaration that her estate has an interest in 1101 Old Perry Rd., Mississauga by reason of a resulting or constructive trust, and damages by reason of misappropriation of assets belonging to Angela or her estate.

[6] On June 19, 2018 Justice Price of this court confirmed a Certificate of Pending Litigation in respect of the Old Perry property; leave to issue the certificate had been given by Justice Seppi on April 26, 2018.

[7] On May 31, 2019 the parties attended a mediation, but it was unsuccessful in settling the case.

[8] Between May of 2019 and October of 2020 the Plaintiff retained a forensic accountant and requested accounting documents from the Defendants and financial institutions.

[9] From March of 2020 to September of 2020 the courts were shut down or slowed because of the Covid-19 pandemic.

[10] On July 29, 2020 the Plaintiff sought by letter to the Defendants’ lawyer information regarding transactions alleged to be related to the claim and requested a Statement of Defense.

[11] The Statement of Defense was served on October 8, 2020.

[12] On February 19, 2021 the Plaintiff requested from the Defendants by letter an Affidavit of Documents and dates for examinations for discovery.

[13] On July 22, 2021 the Plaintiff made a demand respecting the same two matters.

[14] The Plaintiff on August 23, 2021 followed up on the July 22, 2021 request; there was no answer from the Defendants.

[15] On September 30, 2021 the Defendants served a Notice of Intention to Act in Person.

[16] On November 5, 2021 the Defendants were e-mailed by the Plaintiff a copy of Notices of Examination for examinations for discovery, returnable on November 25, 2021. As a result of their non-attendance, the Plaintiff obtained a Certificate of Non-Attendance.

[17] Between October of 2021 and May of 2022 as a result of maternity leaves in the office of the lawyers for the Plaintiff, the examinations for discovery were not rescheduled until 2022.

[18] Faxes to reschedule the examinations for discovery for December 22, 2022 were sent by the Plaintiff. The examinations were cancelled because of errors in the notice given to the Defendants.

[19] The examinations were rescheduled for January 3, 2023. The Defendants were given e-mail notice of the new date on December 21, 2022; and were personally served with Notices of Examination on that date. Nevertheless, they did not attend for examination and a Certificate of Non-Attendance was obtained.

[20] In June of 2023 the Plaintiff served motion materials for summary judgment, and in the alternative requiring that the Defendants to deliver an Affidavit of Documents and attend for examination for discovery.

[21] Between June of 2023 and the hearing before me, there were various steps culminating in my hearing of the three motions at bar. The Defendants’ motion to dismiss was served on August 23, 2023.

III. Correction of Parties and Style of Cause

[22] Pursuant to Rule 9.03(2) and (6) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, I order that the proceeding be continued with the Plaintiff being “Victor Sebanc in his capacity as Executor of the Estate of Angela Sebanc”, and that the style of cause be amended accordingly. The Plaintiff sought that amendment, after I drew the issue of the error to the attention of the parties. The Defendants submissions on the point were simply to subsume the existence of the error in their arguments on the three motions; they made no arguments of prejudice to them based simply on the issue of correction of the error.

[23] In any event, I make the order under Rule 9.03(2) and (6), since it is just do so in light of the absence of prejudice to the Defendants, and in light of the policy reflected in and application of Rules 1.04(1) and 2.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

IV. Analysis

[24] I shall now address seriatim the motion by the Defendants to dismiss and to discharge the CPL, the motion by the Plaintiffs, and the motion for security for costs.

A. The Motion to Dismiss for Delay and to Discharge the CPL

[25] The motion by the Defendants to dismiss for delay was brought under Rule 24.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 which provides:

24.01 (1) A defendant who is not in default under these rules or an order of the court may move to have an action dismissed for delay where the plaintiff has failed,

(a) to serve the statement of claim on all the defendants within the prescribed time;

(b) to have noted in default any defendant who has failed to deliver a statement of defence, within thirty days after the default;

(c) to set the action down for trial within six months after the close of pleadings; or

(d) Revoked: R.R.O. 1990. Reg. 194, r. 24.01 (2) .

(e) to move for leave to restore to a trial list an action that has been struck off the trial list, within thirty days after the action was struck off. R.R.O. 1990, Reg. 194, r. 24.01 ; R.R.O. 1990, Reg. 194, r. 24.01 (2) ; O. Reg. 770/92, s. 7; O. Reg. 533/95, s. 4 (1).

(2) The court shall, subject to subrule 24.02(2), dismiss an action for delay if either of the circumstances described in paragraphs 1 and 2 of subrule 48.14(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 applies to the action, unless the plaintiff demonstrates that dismissal of the action would be unjust. O. Reg. 259/14, s. 6.

[26] The learned authors of Paul M. Perell and John W. Morden, The Law of Civil Procedure in Ontario 4th edition (Toronto: LexisNexis Canada Inc. 2020) at pages 708 to 716 discuss the principles which govern the motion to dismiss for delay before me:

(A) JURISDICTION TO DISMISS THE PLAINTIFF’S ACTION FOR DELAY

¶6.70 Under rule 24.01, a defendant who is not in default under the rules or under a court order may make a motion to have the plaintiff’s action dismissed for delay. 159 … If the defendant is in default, but the default is not serious, then he or she is not precluded from moving to have an action dismissed for delay, 161 and the court may rely on its inherent jurisdiction to dismiss or stay an action for delay. 162

(E) THE COURT’S DISCRETION TO DISMISS FOR DELAY

¶6.81 If the defendant does make a motion to have an action dismissed because of the plaintiff’s delay, it is a matter of judicial discretion whether the action will be dismissed. Ontario courts have adopted the approach used in the English case Allen v. Sir Alfred McAlpine and Sons Ltd., 172 which approach demonstrates the court’s reluctance to dismiss an action without a hearing on the merits. Under the restrictive approach used in the Allen judgement, for an action to be dismissed for delay, the plaintiff’s delay must: (a) be shown to have been intentional and contumelious; or (b) inexcusable and prejudicial to the defendant’s right to have a fair trial of the action. 173 For the delay to be intentional and contumelious, the plaintiff must have deliberately contravened a peremptory order of the court. 174 Where the delay is not contumelious, the party moving for dismissal must show that: (a) the delay was inordinate or unreasonable; (b) the delay was inexcusable; and (c) the delay would give rise to a substantial risk that a fair trial of the issues in the litigation would not be possible. 175

… To determine if the delay is inordinate, the court will measure the duration from the commencement of the action to the motion to dismiss, keeping in mind that some cases move slower than others because of the issues, the parties and the nature of the claim. 177 There is a high threshold to be overcome for the defendant seeking the dismissal of a case under rule 24.01. 178

¶6.82 In exercising its discretion to dismiss the action, the court will consider the duration of the delay, the explanation for it, whether the defendant consented to any portion of the delay, the nature of the issues raised by the case, the nature of the evidence and the extent to which it relies on human memory or documents, and whether the defendant’s right to a fair trial has been prejudiced by the delay. 179 …

As noted below, once inordinate and inexcusable delay is found, there is a presumption of prejudice. 181

¶6.83 In cases involving dismissal for delay, the court must carefully balance respect and enforcement of the rules of procedure that aim to resolve disputes in a timely and efficient manner and the policy that civil actions should, if possible, be decided on the merits. 182

(F) PREJUDICE AND THE PRESUMPTION OF PREJUDICE FROM DELAY

¶6.84 Actual prejudice or the absence of any prejudice to the defendant are important factors in determining whether to dismiss an action; however, where a party fails to prosecute an action in a timely way and offers no satisfactory explanation for the delay, the court may dismiss the action even if there is no proof of actual prejudice to the defendant. 183

¶6.85 In the context of a motion to dismiss for delay, examples of actual prejudice suffered by a defendant are the death of an important witness, the inability to locate a witness, the inability of a witness to recall important facts or the loss of important evidence, including documents. 184…

¶6.86… The longer the delay, the stronger the inference of prejudice given the tendencies of memories to fade, and witnesses to become unavailable, and the tendency of documents and exhibits to go missing. 187 Although the presumption of prejudice increases with the length of the delay, inordinate delay does not also always establish the element of prejudice, and it may be necessary for the moving party seeking a dismissal to show actual prejudice. 188…

¶6.87 The presumption of prejudice may be displaced by the plaintiff showing that the determination of the issues has not been adversely impacted by the delay;…

(G) RESPONSIBILITY FOR THE DELAY

¶6.88 … The party who commences the proceeding bears primary responsibility for its progress. 193 The defendant is not obliged “to spur the action along”; however, a defendant cannot rely on delay that he or she has caused. 194

[27] The Defendants argue that I should dismiss the action for delay. They point to the periods from June 1, 2019 to July 29, 2020, from October 9, 2020 to November 5, 2021, and from November 26, 2021 to December 21, 2022 as particularly important in creating delay. They allege also prejudice to their fair trial rights from loss of evidence.

[28] The Plaintiff opposes the motion based on the default of the Defendants in serving an affidavit of documents and attending for examination for discovery. The Plaintiff also relies on the nature of the claim as being, in substance, based on a fraudulent stripping by the Defendants of assets of the estate of Angela Sebanc. The Plaintiff contends that the Defendants ought not to be able to avoid a trial on the merits where their own dishonesty has created the need for the action; and that the Defendants have, or have had, documents which support the claim and can be compelled on discovery.

[29] I find that the Defendants have been in default in serving an affidavit of documents and being examined for discovery. Those points are not dispute. Moreover, Justice Price found in confirming the Certificate of Pending Litigation on June 19, 2018 that there was substance to the allegations that the Defendants had dishonestly stripped assets from the estate, using inter alia control over those assets.

[30] I accept that the Plaintiff could have moved more expeditiously. However, I am satisfied that, based on the legislation and principles set out above, the Defendants have not proven their case that a dismissal of the action is warranted for delay either under the Rules or in the exercise of my inherent jurisdiction. The delay was not intentional or contumelious. Moreover, the delay was not unreasonable or inexcusable having regard to the defaults of the Defendants in their documentary and oral discovery obligations. Those defaults alone would have barred use of Rule 24.01. The seriousness of the allegations in the claim, the defaults in documentary and oral discovery obligations by the Defendants, and the absence of any proven serious prejudice to the Defendants’ fair trial rights are central to my reasoning under the Rules and in respect of the use of my inherent jurisdiction.

[31] Out of an abundance of caution to forestall a dismissal under Rule 48.14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, I order that the action at bar is to proceed in accordance with the timetable I will set out below.

[32] The only basis alleged for the motion to discharge the Certificate of Pending Litigation on the Old Perry Property was s. 103(6)(a)(iii) of the Courts of Justice Act which provides:

Order discharging certificate

(6) The court may make an order discharging a certificate,

(a) where the party at whose instance it was issued,

(iii) does not prosecute the proceeding with reasonable diligence;

and the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just. R.S.O. 1990, c. C.43, s. 103 (6) .

[33] I apply the reasoning that I have set out in relation to the motion to dismiss for delay to this motion, and dismiss it. I am not satisfied that the Defendants have discharged their onus to prove that the Plaintiff has not prosecuted the proceeding with reasonable diligence.

B. The Motion to Compel Delivery of an Affidavit of Documents from and Examination for Discovery of the Defendants

[34] As noted above and as a corollary to my disposition of the motion to dismiss for delay, I am ordering the following timetable for the action:

1. the Defendants are to deliver an affidavit of documents within 30 days;
2. examinations for discovery are to be completed within 60 days;
3. motions arising from discovery are to be brought within 90 days;
4. the action is to be set down for trial within 150 days.

C. The Motion by the Defendants for Security for Costs

[35] The Defendants move for security for costs under Rule 56.01(1)(d) and (e) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 which provide:

56.01 (1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,

(d) the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent;

(e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent;

As noted at paragraph 10.203 in The Law of Civil Procedure in Ontario, supra “the overarching principle is whether in all the circumstances the order is in the interests of justice and even [if] the requirements of the rule have been met, the court has discretion to refuse to make the order.”

[36] In the case at bar the serious allegations made and found to have substance by Justice Price require that the matter proceed to trial without security for costs. Accordingly, I dismiss the motion by the Defendants for that relief.

V. Costs

[37] I will receive written submissions as to costs of no more than 4 pages, excluding a bill of costs. The Plaintiff is to serve and file his submissions within 14 days. The Defendants are to serve and file their submissions within 14 days of service of the Plaintiff’s submissions. There shall be no reply.

Bloom, J. Released: May 8, 2024