



COURT OF APPEAL FOR ONTARIO

CITATION: Canadian National Railway Company v. Kitchener
    (City), 2015 ONCA 131

DATE: 20150226

DOCKET: C59372

Rouleau, Watt and Pardu JJ.A.

BETWEEN

Canadian National Railway Company

Plaintiff (Appellant)

and

The
    Corporation of the City of Kitchener, Public Utilities

Commission of Kitchener
    and Hogg Fuel & Supply Limited

Defendants (Respondents)

Jeremy Devereux and Andrea Campbell, for the appellant

Karen Perron, for the respondent City of Kitchener

Michael Binetti and David N. Vaillancourt, for the
    respondent Hogg Fuel & Supply Limited

Heard: February 5, 2015

On appeal from the order of Justice Frederick L. Myers of
    the Superior Court of Justice, dated August 25, 2014, with reasons reported at
    2014 ONSC 4929.

ENDORSEMENT

[1]

Canadian National Railway Company (CNR) appeals from a decision
    dismissing this action for delay, pursuant to rule 24.01. It argues that
    although the motion judge applied the correct legal test, he erred in reaching
    the following conclusions:

1.

The delay after 2003 was inexcusable;

2.

There was a strong presumption of prejudice;

3.

CNR had not rebutted the presumption of prejudice.

[2]

CNR started this action in 1989. It alleges that from 1924 to 1958 the
    Public Utilities Commission of the City of Kitchener dumped coal tar on land now
    owned by the respondent Hogg Fuel & Supply Limited, and that some of this
    coal tar migrated onto CNRs land nearby. The respondents deny that coal tar
    was disposed of as alleged.

[3]

The lawsuit was prompted by Ministry of the Environment reports disclosing
    the presence of coal tar waste on CNRs property. The parties initially engaged
    in a process to explore remediation of the properties and jointly retained
    experts. In November 1994 CNR demanded statements of defence. The City and Hogg
    Fuel delivered their statements of defence in 1996 and 1997, respectively.

[4]

The City proposed and the other parties accepted that the evidence of five
    witnesses be taken and preserved by examination under oath under Rule 36, as the
    witnesses were elderly or infirm. The evidence was taken in 1997. CNR did not
    respond to a request by the City to examine a retired Public Utilities
    Commission foreman who had worked there from 1935 to 1968. He passed away in
    1999.

[5]

The parties initially showed some willingness to address the issues
    underlying the claims collaboratively. By letter of January 1997, one of the
    jointly retained experts advised the Ministry of the Environment that [i]t is
    the desire of the  parties to co-operatively demonstrate an initiative to
    remediate this area and defer the MOEE Control Order.

[6]

By 2001 the legal landscape had changed with the introduction of case
    management under the
Rules of Civil Procedure
. Counsel attended before
    Wilkins J. on November 21, 2003. By then the action was 14 years old. Justice
    Wilkins rejected counsels joint request to set a schedule for completion of
    examinations for discovery by June 2004, and assigned the case to case
    management. The case management master made multiple efforts to require the
    parties to adhere to a schedule for the completion of discoveries and proceeding
    to trial. Ultimately, Master Dash approved a schedule which required the parties
    to conduct examinations for discovery, to mediate the dispute on October 14,
    2004, and to appear in trial scheduling court on December 1, 2004.

[7]

The day before the trial scheduling court date, counsel for CNR wrote Master
    Dash to ask that the appearance be delayed so that numerous steps could be
    undertaken, including obtaining expert reports and transcripts of discoveries,
    answering outstanding discovery undertakings by February 15, 2005 and dealing
    with discovery motions. None of the steps advanced as a basis to adjourn the
    trial scheduling court were ultimately completed. CNRs final responses to
    undertakings on discovery were delivered on August 15, 2014, just before the
    motion to dismiss for delay was heard.

[8]

Very little happened after the adjournment of the trial scheduling court
    date. CNR and Hogg Fuel both changed lawyers. Hogg Fuels counsel advised CNR
    on February 12, 2010 to either get on with the action or abandon it.

[9]

To avoid dismissal of the action under Rule 48, which mandates automatic
    dismissal of actions that have not been set down for trial after an extended
    period of time, CNR set the matter down for trial on December 16, 2011. In the
    certification form requesting trial dates, CNR advised the court that its
    pleadings required amendment, that discoveries had not been completed, that all
    requests to admit had not been delivered and that documentary production was
    not complete.

Motion Judges Decision

[10]

Applying
    the test set out in
Langenecker v. Sauvé
, 2011 ONCA 803, the motion
    judge concluded that CNRs delay was inordinate, inexcusable and such that it
    gives rise to a substantial risk that a fair trial of the issues in the
    litigation will not be possible because of the delay.

[11]

The
    motion judge explained that while it was initially reasonable for the parties
    to pursue a collaborative approach, the delay after 2003 was not justified:

Thus, while I see the first 14 years of delay as excusable
    (although the first five of those weakly so) I can see no reasonable and
    cogent or sensible and persuasive reasons for the ongoing delays after 2003.
    CN and its counsel understood that the litigation had to move forward and yet
    they kept it on the backburner for another eight years.

[12]

The
    motion judge concluded that there was a strong presumption of prejudice, given that
    25 years had elapsed since the action was started. He applied the test set out
    in
Armstrong v. McCall
, [2006] O.J. No. 2055 (C.A.), at para. 11:

Where there is a presumption of prejudice, the defendant need
    not lead actual evidence of prejudice and the action will be dismissed for
    delay unless the plaintiff rebuts the presumption. The presumption of prejudice
    may be rebutted by evidence that all documentary evidence has been preserved
    and the issues in the lawsuit do not depend on the recollection of witnesses or
    that all necessary witnesses are available with detailed recollection of the
    events. If the presumption is rebutted then the action may still be dismissed
    if the defendant leads convincing evidence of actual prejudice.

[13]

The
    motion judge held that CNR had not met its onus to rebut the presumption of
    prejudice. He identified a number of witnesses who would have had relevant
    evidence but were no longer available. There was no longer any documentary
    evidence available on the key issue of who dumped coal tar and where. He concluded
    that a trial in these circumstances would not be a fair and just resolution of
    the dispute.

Standard of Review and Analysis

[14]

The
    motion judges decision should not be overturned unless he made a palpable and
    overriding error  that is to say, that he made unreasonable findings that were
    not supported by the evidence.

[15]

This
    action is 25 years old. It lay essentially dormant for lengthy periods, despite
    case management efforts directed at bringing the matter to trial.
    Notwithstanding the intermittent collaborative approach and the joint retainer
    of experts, it was open to the motion judge to conclude that the overall delay
    from 2003 was both inordinate and inexcusable. He clearly took into account the
    nature and complexity of the action.

[16]

A
    presumption of prejudice flows from lengthy delay. Memories fade, witnesses
    become unavailable and documents may be lost. As observed in
Clairmonte v.
    Canadian Imperial Bank of Commerce
, [1970] 3 O.R. 97 (C.A.), at p. 116,
    [w]hile the presumption will speak as a barely audible caution immediately
    after a limitation period has expired, it may command with increasing
    imperativeness on the passage of a substantial time, depending on the cause of
    action. Use of the presumption is particularly appropriate when dealing with a
    25 year old action relating to events in the period from 1924 to 1958. There is
    an inherent difficulty in proving that there is relevant evidence from long ago
    which no longer exists. Given the lengthy delay in this case, the motion judge
    did not err in finding that there was a presumption of prejudice. Further, he
    did not err in concluding that CNR had failed to rebut this presumption. He did
    not require CNR to meet the impossible standard of establishing that the
    evidence of every conceivable person who might have had any relevant
    observation had been preserved. Instead, he identified key individuals, such as
    the retired foreman for the Public Utilities Commission and a former employee
    of Hogg Fuel, who likely had some relevant information but whose evidence was
    no longer available. It was open to the motion judge to conclude on the record
    before him that CNR had not rebutted the presumption of prejudice flowing from
    the very long delay. Although, as noted by the appellant, some of the witnesses
    became unavailable during the period of excused delay, that is, before 2003,
    the record also shows that a number became unavailable during the period of
    unexcused delay, that is, after 2003.

[17]

Finally,
    the motion judge did not err by failing to distinguish between the claims
    against the two respondents. The source and location of the coal tar dumping
    was a common issue in the claims against both the City and Hogg Fuel.

[18]

As
    no palpable and overriding error has been shown, the appeal on the merits must
    be dismissed.

[19]

CNR
    also appeals from the disposition of costs by the motion judge. It argues that
    it should have been awarded costs thrown away from 2008 because the respondents
    did not bring their motion to dismiss for delay until 2014. Cost awards are
    entitled to deference. Given that the responsibility for advancing the action
    rested with CNR, we see no error in the motion judges award of costs.

[20]

Finally,
    CNR submits that the costs of the one-day motion awarded to the successful
    respondents, in the sums of $83,000 and $29,000, were excessive. Again, we see
    no basis to interfere with the motion judges cost awards.

[21]

For
    these reasons, the appeal is dismissed, with costs to the City fixed at
    $23,911.81 and to Hogg Fuel in the sum of $5,000, both all inclusive.

Paul
    Rouleau J.A.

David
    Watt J.A.

G.
    Pardu J.A.


