



COURT OF APPEAL FOR ONTARIO

CITATION: Southwestern Sales Corporation Limited v. Spurr
    Bros. Ltd., 2016 ONCA 590

DATE:

20160726

DOCKET: C61458

Hoy A.C.J.O., Brown and Huscroft JJ.A.

BETWEEN

Southwestern Sales Corporation Limited

Plaintiff (Appellant)

and

Spurr Bros. Ltd., Spurr (Contracting) Inc.,
    Donald Kelly Spurr, Mary Spurr and John Randall Koop

Defendants (Respondents)

James Cooke, for the appellant

Gino Morga, for the respondents

Heard: July 18, 2016

On appeal from the order of Justice Pamela L. Hebner of
    the Superior Court of Justice dated November 9, 2015, with reasons reported at
    2015 ONSC 6908.

Brown J.A.:

Overview

[1]

The appellant, Southwestern Sales Corporation Limited, appeals the dismissal
    of its motion to set aside the order made at a status hearing dismissing seven
    actions it brought under the
Construction Lien Act
, R.S.O. 1990, c. C.30
     six lien actions and one breach of trust action.

[2]

The thorough reasons of the motion judge give a detailed chronology
    of the litigation, so reference need only be made to several key points. The
    appellant supplies aggregate building materials in the Windsor area. In
    December 2000, the appellant registered six claims for lien against properties
    owned by the respondents. To obtain an order vacating the claims for lien, the
    respondents paid into court approximately $330,000. In January 2001, the
    appellant commenced six lien actions on its lien claims. In January 2003, the
    appellant filed its trial record. However, it then commenced the breach of trust
    action. Periods of activity were followed by long periods of inactivity. Status
    hearings were scheduled, only to be adjourned by the appellant or to have the
    appellant fail to meet the deadlines set. The trial was set for September 2009,
    but did not proceed. In 2012, the actions were struck from the trial list. More
    status hearings were scheduled, only to be adjourned at the appellants request.
    Throughout, the appellant was represented by counsel.

[3]

Eventually a status hearing was scheduled for October 6, 2014, peremptory
    to the appellant. No one appeared for the appellant; the actions were dismissed
    by Master Pope. It transpired that counsel for the appellant had surrendered
    his licence to the Law Society of Upper Canada about two months before the
    October 2014 status hearing.

[4]

The respondents then secured payment of the monies out of court.
    When the respondents sought to garnish the appellants bank account to satisfy
    unpaid cost orders, that galvanized the appellant and it sprang into action. It
    retained new counsel, and there is no dispute new counsel moved expeditiously to
    set aside the dismissal order of Master Pope. The motion judge dismissed the
    appellants motion.

[5]

The appellant advances three grounds of appeal, submitting the
    motion judge: (i) applied the wrong test; (ii) erred in failing to accept the
    appellants explanation for its delay; and (iii) erred in finding the
    respondents had suffered prejudice.

Standard of Review

[6]

A decision to dismiss an action for delay at a status hearing is
    discretionary and entitled to deference on appeal unless the decision was made
    on an erroneous legal principle or is infected by a palpable and overriding
    error of fact:
1196158 Ontario Inc. v. 6274013 Canada Ltd
., 2012 ONCA
    544, 112 O.R. (3d) 67, at para. 16.

First
    ground of appeal: The motion judge applied the wrong legal test

[7]

The appellant submits the motion judge applied the wrong legal test for
    a motion to set aside a dismissal order made at a status hearing pursuant to rule
    48.14(7) of the
Rules of Civil Procedure
and this error warrants the
    intervention of this court. According to the appellant, instead of applying the
    two-part test described in
Faris v. Eftimovski
, 2013 ONCA 360, 206
    O.A.C. 264, at para. 32 (the 
Faris
test),
[1]
the motion judge wrongly
    applied the four-part test in
Reid v. Dow Corning Corp.
(2001), 11
    C.P.C. (5th) 80, [2001] O.J. No. 2365 (S.C. [Master]), at para. 41 (the 
Reid
test)
[2]
used when considering a motion to set aside a registrars dismissal of an
    action under rule 48.14(1).

[8]

I do not agree. Although the motion judge did not purport to rely on
    the
Faris
test line of cases, in my view, her reasons disclose her
    analysis focused on and applied the correct legal principles.

[9]

The timeliness of adjudication is one measure of the health of a
    justice system. In respect of the criminal justice system, the Supreme Court of
    Canada has stressed the need to change a culture of delay and complacency
    towards it:
R. v. Jordan
, 2016 SCC 27, at para. 29. The same can be
    said of the Ontario civil justice system.

[10]

The
Rules of Civil Procedure
contain general
    and specific provisions to create a culture of timely civil justice. At the
    general level, rule 1.04(1) requires courts to construe the rules to secure
    the just, most expeditious and least expensive determination of every civil
    proceeding on its merits. At the specific level, rule 48.14 establishes a
    presumptive timeframe for the listing of a civil action for trial which, if not
    met, requires the plaintiff to show cause why the action should not be
    dismissed. Rule 48.14 provides the court with a tool by which to assume an
    active role in controlling the pace of litigation:
Faris
, at para. 29;
1196158 Ontario
, at para. 34.

[11]

The presumptive time period for listing a civil
    action for trial contained in rule 48.14(1) reminds plaintiffs of their
    obligation to move their actions forward expeditiously to their resolution or
    final determination on the merits and cautions that they bear the consequences
    of conducting their actions in a dilatory manner:
Faris
, at para. 33.

[12]

The
Faris
and
Reid
tests describe
    what a dilatory plaintiff must demonstrate to a court to restore a dismissed
    action: the
Reid
test deals with administrative dismissal orders made by
    registrars; the
Faris
test concerns dismissal orders made at status
    hearings.

[13]

Under the
Faris
test, a plaintiff seeking
    to set aside a dismissal order made at a status hearing must demonstrate two
    things: (i) there was an acceptable explanation for its delay and (ii) if the
    action were allowed to proceed, the defendant will suffer no non-compensable
    prejudice. The analysis of the motion judge addressed both these matters; she
    did not fail to apply the proper legal principles.

Second
    ground of appeal: The appellant explained its delay

[14]

At the hearing, the appellant focused its
    submissions on how the motion judge treated its explanation for the 13-year delay.
    The explanation proffered by the appellant was that it was misled by its
    counsel, Mr. Istl, about the progress of the action and was not told that a
    status hearing was scheduled for October, 2014. The appellant submits the
    motion judge erred in concluding it had not provided a reasonable explanation
    for its delay.

[15]

I do not accept this submission.

[16]

The motion judge undertook her analysis in the
    context of actions brought by a commercial plaintiff under the
Construction
    Lien Act
. I agree with her description of the characteristics of construction
    lien claims set out at para. 19 of her reasons:

A lien claim can be an onerous thing for a defendant.  A
    defendant is faced with the prospect of either having its land tied up as a
    result of the registration of a claim for lien or, alternatively, having to
    finance sometimes substantial payments into court in order to free up title to
    the land.  Similarly, a breach of trust claim can also be an onerous thing
    for defendants.  They are faced with the possibility of being personally
    responsible for a corporate debt.  For these reasons, it seems to me that
    a lengthy delay in a claim for lien case (and a breach of trust case)
    constitutes prejudice to the defendants of the kind described above.  If
    the lien claimant wants to take advantage of the provisions of the

Construction Lien Act

and tie up title to a defendants
    property, it ought to proceed expeditiously to have its claim determined. 
    Similarly, if a lien claimant wants to take advantage of the trust provisions
    of the

Construction Lien Act

it ought to be prepared to proceed
    expeditiously to have its claim determined.  A lien claimant ought not to
    be entitled to sit back and allow years to pass while the defendants property
    (or, as in this case, the defendants money) is held hostage.

[17]

At the time of the status hearing, the former
    two year period for listing an action for trial was in force. This court has
    described that time period as a relatively generous one, providing ample
    time to complete remaining steps following the filing of the first statement
    of defence:
1196158 Ontario
, at paras. 36 and 39. Yet, the appellants
    delay far exceeded the presumptive time period in rule 48.14. After more than
    13 years, the appellants actions had not gone to trial, yet the respondents
    funds remained tied up in court. As Blair J.A. noted in
Kara v. Arnold
,
    2014 ONCA 871, 328 O.A.C. 382, at para. 17, it is a common sense observation
    that the longer the delay, the more cogent the explanation must be.

[18]

The appellant did not file cogent evidence on its
    motion to set aside. The brief affidavits from the appellants controller consisted,
    in large part, of three assertions: (i) the appellant did not know about the
    status hearing; (ii) its former counsel represented the respondents were
    delaying the actions or the matter was progressing or it would soon settle; and
    (iii) it did not know its counsel had surrendered his licence.

[19]

The motion judge considered the appellants
    affidavits, but found they did not amount to an adequate explanation for the
    delay because they raised more questions than they answered. She stated, at
    para. 12:

The plaintiffs evidence is that Mr. Istl did not keep it
    informed as to the progress of the action.  Mr. Istl did not advise the
    plaintiff that he was failing to move the matter along.  Mr. Istl misled
    the plaintiff as to the status of its action.  I have no doubt that all of
    this is true.  What the plaintiff did not address in its evidence is how
    often the plaintiff contacted Mr. Istl to inquire as to the progress of the
    action. When years had passed without any substantive steps being taken towards
    a resolution, why did the plaintiff not investigate and demand that steps be
    taken?  Why did the plaintiff not retain another counsel to move the
    action forward?  There was no evidence offered to answer these questions.

[20]

The appellant submits that it was an error for
    the motion judge to accept the appellant had been misled by its lawyer about
    the status of the actions, but then conclude the appellant had failed to
    provide an adequate explanation for the delay.

[21]

I disagree. The appellant is a commercial entity.
    In 2001, it commenced construction lien actions that resulted in the
    respondents paying a substantial sum of money into court. As the party that
    commenced the actions, the appellant bore primary responsibility for their
    progress. Retaining a lawyer to represent it in the actions did not lessen that
    obligation.

[22]

As part of its obligation to move its construction
    lien actions along, the appellant was required to take reasonable steps to
    supervise its counsels work to ensure there would be an expeditious
    determination of the actions on their merits. On a motion to set aside a dismissal
    order, one would expect a commercial plaintiff like the appellant to file
    concrete evidence describing the steps it had taken to supervise its counsels
    handling of its actions. The appellant did not do so. Given the absence of such
    evidence, it is understandable the motion judge was not prepared to accept that
    the assertions of the appellants controller amounted to an acceptable explanation
    for a 13-year delay.

[23]

Accordingly, I agree with the motion judges
    conclusion that the appellant failed to provide an acceptable explanation for
    its delay.

Third
    ground of appeal: Prejudice to the respondents

[24]

The
Faris
test is a conjunctive one 
    the appellant must meet both of its elements. Since I agree with the conclusion
    of the motion judge that the appellant failed to demonstrate an acceptable
    explanation for its delay, it is not necessary to deal with the issue of
    prejudice.

Disposition

[25]

For the reasons set out above, I agree with the
    motion judges decision to dismiss the appellants motion seeking to set aside
    the order dismissing its actions. I would dismiss the appeal and award the
    respondents their costs of the appeal fixed at $13,500, inclusive of HST and
    disbursements, as agreed by the parties at the hearing of the appeal.

Released: AH (July 26, 2016)

David
    Brown J.A.

I
    agree Alexandra Hoy A.C.J.O.

I
    agree Grant Huscroft J.A.





[1]

As applied in
Khan v. Sun Life Assurance Co. of Canada
,
    2011 ONCA 650, 1 C.C.L.I. (5th) 183, at para. 1; and
1196158 Ontario Inc
.,
    at para. 32.



[2]

As applied in
March
é
DAlimentation Denis Th
é
riault Lt
é
e v. Giant Tiger Stores Ltd
., 2007 ONCA
    695,87 O.R. (3d) 660, at para. 12;
MDM Plastics Ltd. v. Vincor International
    Inc.
, 2015 ONCA 28, 124 O.R. (3d) 420, at para. 11.


