Inordinate Delays and Prejudice!

Published on: May 2024 | What's Trending

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I appreciate that the dismissal of a plaintiff’s claim for delay deprives a litigant of an adjudication of their dispute on the merits and that it should not be done lightly. To allow the plaintiff’s claim to proceed given these facts, I find, would offend the integrity of the civil justice system.

Muszynski J. – Divisions 9 + 10 Inc. v. McDonald Brothers et al

As a result of the pandemic, the Courts placed in abeyance the administrative dismissal of claims not set down for trial within 5 years of the issuance of the statement of claim.

I am happy to report that as of May 13th, 2024, administrative dismissals will be reinstated.

However, in the interim, many defendants have had to incur the costs of bringing a motion to dismiss for delay, with limited success. The Courts have been hesitant to dismiss actions because of access to justice concerns. Although this is an important foundation of justice, the decision in Divisions 9 + 10 Inc. v. McDonald Brothers et al provides a framework for balancing access to justice with the prejudice incurred by inordinate delay.

The facts are as follows:

  • The plaintiff alleges it is owed $133,554.90 in unpaid invoices;
  • The statement of claim was issued on May 30, 2016 and served shortly thereafter
  • The defendant McDonald Brothers served its statement of defence and counterclaim on August 22, 2016. McDonald Brothers alleges that nothing remains owing to the plaintiff and, further, the plaintiff owes it $11,922.05.
  • A case conference was held on November 27, 2017 at which time a litigation timetable was established setting down a schedule for exchange of documents, examinations for discovery and mediation. The timetable could be varied on the consent of the parties.
  • Document production and examinations for discovery took place in 2018. Mediation never proceeded.
  • On September 13, 2019, plaintiff’s counsel obtained an order removing them as solicitors of record for the plaintiff. The plaintiff had 30 days to appoint new counsel or obtain leave to have a non lawyer represent it. 
  • The case remained in abeyance, until McDonald Brothers served the subject motion to dismiss on the plaintiff on January 24, 2024.
  • On February 21, 2024, the plaintiff finally retained new counsel. The plaintiff served its responding motion record on February 22, 2024 – the date of the hearing of the motion.

The following was noted:

Rule 48.14(1) provides that, unless a court orders otherwise, the registrar shall dismiss an action for delay if the action has not been set down by the fifth anniversary of the commencement of the claim. The fifth anniversary of the commencement of the claim in this case was May 30, 2021. Due to the COVID-19 pandemic, procedural timelines were suspended between March 16 – September 13, 2020. After September 13, 2020, court staff were directed to refrain from administratively dismissing cases. That directive currently continues.

The motion was brought pursuant to Rule 24.01, which provides the basis for dismissal for delay and the parties argued the merits of the motion to dismiss for delay:

  1. Emphasis was placed on the fact that there was no explanation by the Plaintiff for why it took so long to retain counsel (counsel was retained a few days before the motion), when the motion had been served almost one month prior to the motion date.
  2. The plaintiff had neither set the action down for trial, nor had they appointed new counsel, pursuant to the Order, and the Order specifically states that non-compliance has a consequence of dismissal of the plaintiff’s claim. However, the Court declined to dismiss the action on this basis, but instead focused on the fact that the delay by the plaintiff resulted in delay that resulted in prejudice to the defendants. It was found that there was inordinate delay, given that the action was commenced in 2016, examinations for discovery in 2018 and then – nothing!
  3. Although representatives for the plaintiff were dealing with health issues, it was noted that notwithstanding these issues, the plaintiff’s representatives were still able to attend examinations for discovery and a case conference, and therefore, was not a viable explanation.
  4. In terms of retaining new counsel, the plaintiff could not show any efforts made to retain new counsel from the time former counsel removed themselves as solicitors of record until the motion date.
  5. Financial circumstances were also not found to be reasonable or cogent.

It is interesting to note that the plaintiff argued that the defendants should have moved the action forward. However, the Court referencing the decision in 1196158 Ontario Inc. v. 6274013 Canada Limited:

It is not reasonable to expect a defendant to incur the costs associated with prodding a plaintiff into pursuing a lawsuit against it.

Therefore, prejudice was presumed from the inordinate delay, even though the affidavits did not specifically outline what prejudice was caused. McDonald Brothers were successful in having the action dismissed for delay and they were also successful in obtaining costs for the action and the motion.

The case provides a great framework for the test required to demonstrate that delay in litigation does cause prejudice to the defending parties, and although deference should be provided to allow parties to have their day in court, it cannot be at the expense of the integrity of the court and the ability to properly defend an action.