



COURT OF APPEAL FOR ONTARIO

CITATION: Faris v. Eftimovski, 2013
    ONCA 360

DATE: 20130604

DOCKET: C55205

Blair, Rouleau and Tulloch JJ.A.

BETWEEN

Robert Faris

Plaintiff (Appellant)

and

Chris
    Eftimovski, CLE 72330 Limited, The Estate of Wally Magee, Horst
    Rosner, Carriage South Simcoe Real Estate Services Ltd., Exit
    Realty (or Exit Realty Advance), Re/Max Rouge River Realty
    Ltd., Anthony John Laskowsky (first named in these proceedings as
    Anthony Laskowsky, Jr.) in his own capacity and as Litigation Administrator
    representing the interest of the Estate of Anthony Edward
    Laskowsky (first named in these proceedings as Anthony Laskowsky,
    now deceased)

Defendants (Respondents)

Alfred J. Esterbauer and Demetrios Yiokaris, for the
    appellant

Kelly A. Charlebois, for the respondent, Re/Max Rouge
    River Realty Ltd. and agent for Chris Eftimovski and CLE 72330 Limited

Todd Robinson, for the respondent, Wally Magee

Heard: November 21, 2012

On appeal from the order of Justice Susan E. Healey of
    the Superior Court of Justice, dated April 11, 2012 with reasons reported at
    2012 ONSC 1126.

Tulloch J.A.:

A.

INTRODUCTION

[1]

This appeal concerns a frequently encountered issue in civil
    litigation:  under what circumstances should an action be dismissed by the
    court following a status hearing?

[2]

The appellant appeals from the order of Justice Healey dismissing his
    action for delay after a status hearing held at the Superior Court of Justice
    in Barrie on February 2, 2012 (the Barrie Action). In addition, he seeks
    leave to appeal the costs fixed by the status hearing judge on April 11, 2012.

B.

Background

(1)

Facts giving rise to
    the appellants claim

[3]

The appellant commenced this action in 2007 alleging damages arising
    from two real estate transactions that occurred in 2003 and 2005, both relating
    to the same property. The property is a 100 acre farm property which was owned
    by the appellant. At the time, the respondent Walter Magee (Magee) was a real
    estate agent, employed by Advanced Realty Inc., c.o.b. as Exit Realty
    Advanced.  The respondent, Horst Rosner (Rosner) was also a real estate
    agent, and was employed by the real estate brokerage firm, Carriage South
    Simcoe.

[4]

In 2001, the appellant listed the property for sale jointly and
    exclusively with Exit Realty and Carriage South Simcoe, and both Magee and
    Rosner were co-listing agents.

[5]

The key events in the lawsuit include a sale of the property in 2003,
    which did not close (the 2003 deal), a February 24
th
, 2003 offer,
    prepared by Magee, relating to the 2003 Deal (the 2003 offer), and the
    eventual sale of the property in 2005 to the respondent CLE 72330 Ontario Ltd.
    (CLE), whose principal is Chris Eftimovski (Eftimovski).

[6]

In his statement of claim, the appellant alleges breach of contract and
    breach of fiduciary duties on the part of Magee and Rosner in their representation
    of the appellant as real estate agents in the listing, marketing and selling of
    the property. Re/Max is alleged to be vicariously liable for Magee in relation
    to the 2005 transaction only, as Magee was not associated with Re/Max at the
    time of the 2003 transaction. The Laskowsky respondents are solicitors alleged
    to have been retained by the appellant in relation to the 2005 transaction. The
    claims against them involve allegations of professional negligence and an
    accounting of the proceeds of the sale.

[7]

The genesis of the various actions was a charge that the appellant
    placed on his property on October 23, 2001, in favour of Three Seasons Homes
    Limited (Three Seasons). This charge became the source of conflict between the
    appellant and the respondents and eventually gave rise to this action and
    another action in London (the London Action).

[8]

The London Action was commenced in February 2007 as a claim by
    Eftimovski and his company, CLE, against the appellant for breach of contract
    and declaration that any and all amounts awarded to either of Eftimovski and
/or CLE may be set off against a mortgage between CLE as mortgagor
    and the appellant as mortgagee registered against the property. The appellant
    was noted in default in the London Action in June 2007. In August 2010, the
    appellant successfully brought a motion to have the default judgment in the
    London Action set aside. Subsequently, the appellant filed a statement of
    defence and counterclaimed against Eftimovski and CLE. There was no evidence placed
    before this court as to the current status of the London Action.

(2)

The Evolution of the
    Barrie Action

[9]

Subsequent to the commencement of the London Action, the appellant
    commenced the Barrie Action in December 2007 against nine named defendants. The
    chronology of events was aptly set out by the status hearing judge in her
    reasons and, for convenience, I reproduce it below:

The action was commenced on December 12, 2007 by way of notice
    of action, and the claim issued on or about January 11, 2008.

Within the six month time period permitted for service of that
    pleading, the plaintiff had served only four of the nine defendants.

On the last day on which service could be effected without an
    order extending the time for service, the plaintiffs lawyer wrote to the firm
    of Miller Thomson, who represented Magee in a 2005 action with respect to the
    2003 transaction, to ask that they accept service on Magees behalf.  Miller
    Thomson declined as they were not in a position to accept service on his
    behalf.

In separate correspondence delivered in June and July, 2008,
    McLarens Canada, the independent adjuster appointed by Re/Max and Carriage
    Souths insurer, confirmed that they had been given an open indulgence by the
    plaintiffs solicitor in order for them to carry out their investigation of the
    matter.

On December 9, 2008 the plaintiff obtained an order extending
    the time for service of the claim.  With only five days left to serve Magee
    under the extension order, the plaintiff obtained an order for substituted
    service on Magee, which order was obtained on February 10, 2009.

On February 19, 2009 the plaintiffs lawyer follows up with
    McLarens and requested that a statement of defence be delivered by the end of
    the month.  On that same date, McLarens delivered correspondence indicating
    that their investigation had been completed and requesting that the time frame
    for filing the statement of defence for Carriage South be extended to the end
    of March 2009.

On April 12, 2009 the defendant Anthony Laskowsky died.

On May 6, 2009 Miller Thomson served its notice of intent to
    defend, and requested that the action be dismissed against Re/Max without
    costs. Having had no response from the plaintiffs lawyer, follow up
    correspondence was sent on August 20 and November 24, 2009, making the same
    request to have Re/Max let out of the action.  The plaintiffs lawyer finally
    responded on April 12, 2010, at which time he acknowledged receipt of the
    several letters sent throughout the previous year and indicated that he would
    get instructions on or before the end of the month.  He did not provide an answer
    to Re/Maxs request until after the status hearing notice had been issued [in
    2011].

On July 4, 2010 the defendant Wally Magee died.

On July 23, 2010 the plaintiff obtained an order to continue
    against Laskowskys estate.

In November 2010 the plaintiffs counsel suggested mediation. 
    In his correspondence the plaintiffs lawyer acknowledges that there are
    evidentiary difficulties because of the intervening deaths of Magee and
    Laskowsky.  At the time that this request was made the pleadings had not been finalized,
    no affidavits of documents had been exchanged nor had any examinations taken
    place.

At some point a Demand for Particulars had been made by
    Carriage South, although the date on which that document was served was not in
    evidence.

In January 2011 counsel for the defendant Laskowsky requested
    that a Status Notice be issued, and such Notice was issued on April 5, 2011.

A status hearing was set for June 29, 2011.  Between the time
    that the status notice was issued and the first attendance at the status hearing,
    the plaintiff took no steps to move this action forward.

On the day before the
    hearing
, the plaintiff filed an affidavit and the hearing was
    adjourned to permit the defendants to file responding materials.  In that
    affidavit the plaintiff deposed that 
the
    defendant Carriage South Simcoe Realty Limited has been pressing us for
    particulars of my claims against them and we have just completed a formal
    response to their demand for particulars
.

The status hearing was ultimately adjourned to February 2,
    2012.  At the time of the hearing, pleadings had not been finalized, no
    documentary productions had been exchanged and no examinations for discovery
    had taken place. [Emphasis added.]

[10]

As
    noted by the status hearing judge, two of the respondents, Anthony Laskowsky
    and Wally Magee, passed away before either of them could be examined for
    discovery in relation to this action.

(3)

Decision of the
    status hearing judge below

[11]

In
    her decision, the status hearing judge set out the two-part conjunctive test to
    determine whether the appellants action should be dismissed for delay. She
    quoted from
Savundranayagam v. Sun Life Assurance Co. of Canada
(2008), 67 C.C.L.I. (4th) 241 (Ont. Div. Ct.):

[T]he onus is on the plaintiff to show why the action should
    not be dismissed for delay at the status hearing.



the plaintiff must explain the delay so as to satisfy the court
    that the action should proceed; and

the plaintiff must satisfy the court that there would be no
    prejudice to the defendants.

[12]

The
    status hearing judge set out a detailed and thorough chronology of key events
    and found that, from the affidavit evidence before her, there were many
    unexplained delays in the proceeding. She rejected the appellants arguments
    that the respondents conduct in any way prejudiced the manner in which the
    appellant prosecuted the action. She found that the appellant did not seek statements
    of defence, affidavits of documents or dates for examinations of the respondents.

[13]

The
    status hearing judge noted that her findings on delay were sufficient by
    themselves to warrant dismissal of the appellants action. Nonetheless, she
    went on to consider whether the respondents were prejudiced by the delay in
    prosecuting the action. She found that the deaths of two parties who were also
    material fact witnesses would result in severe non-compensable prejudice to the
    respondents if the action were allowed to continue. The status hearing judge
    rejected the appellants argument that such prejudice would be attenuated
    because of evidence captured from the examination of Magee in another
    proceeding involving the 2003 action. In any event, no evidence had been
    captured or otherwise preserved from Laskowsky in relation to either action.

[14]

Accordingly,
    the status hearing judge dismissed the appellants action for delay.

(4)

The position of the
    appellant

[15]

Since
    the record at the status hearing was comprised mainly of documentary evidence,
    the appellant urges this court to review the status hearing judges decision on
    a less deferential standard of review.

[16]

The
    appellant argues that the respondents should be held to account for their fair
    share of the delay and prejudice that has plagued this action since its
    inception in 2007. In particular, the appellant points to the London Action and
    the default judgment that was taken out against the appellant. The appellants
    position is that the default judgment obtained in the London Action created a
    situation where this action could not proceed because of issues relating to
    issue estoppel or abuse of process.

[17]

The
    appellant further argues that the test applied to dismiss an action for delay
    at a status hearing under rule 48.14(13) should be the same as that applied
    under the rule governing a motion brought by a defendant to have a plaintiffs
    action dismissed for delay pursuant to rule 24.01(1).

[18]

In
    addition, the appellant argues that the status hearing judge erred by referring
    to and applying the finality principle, set out by this courts decision in
Marché
    DAlimentation Denis Thériault Ltée v. Giant Tiger Stores Ltd
.
,
    2007 ONCA 695, 87 O.R. (3d) 660.

(5)

The position of the
    respondents

[19]

The
    respondents state that the correctness standard of review applies to the case
    at bar. Therefore, absent a clear error in law or a palpable overriding error
    of fact, the status hearing judges decision is entitled to significant
    deference.

[20]

The
    respondents submit that the appeal should be dismissed as the appellant largely
    seeks to re-argue the case that was before the status hearing judge. In
    essence, the respondents argue that the status hearing judges decision should
    be upheld because the appellant did nothing to advance this action, initiated
    in 2007, until the status hearing three and a half years later.

[21]

The
    status hearing was set for June of 2011 but was adjourned the day before the
    hearing to grant the respondents time to respond to an affidavit filed
    last-minute by the appellant. At the status hearing in February of 2012, the
    respondents submit, the action was properly dismissed for delay.

C.

ANALYSIS

(1)

Standard of review

[22]

At
    a status hearing, the decision to dismiss an action for delay is discretionary.
    Accordingly, on appeal, the decision attracts deference but may be set aside if
    it discloses palpable and overriding errors of fact or is made on the basis of
    an erroneous legal principle:
1196158 Ontario Inc. v. 6274013 Canada Ltd
.,
    2012 ONCA 544, 112 O.R. (3d) 67, at para. 16.  I cannot accept the appellants
    submission that this court owes less deference to the decision of this
    particular status hearing judge.

(2)

Dismissal of actions
    for delay under the
Rules of Civil Procedure


[23]

The
Rules of Civil Procedure

provide for many different procedural
    mechanisms to dispose of an action without a trial. Of these, rules 24.01 and
    48.14(13) enable a court to dismiss an action for delay.

[24]

Rule
    1.04 governs the interpretation of the rules. Rule 1.04(1) states that the
    rules shall be liberally construed to secure the just, most expeditious and
    least expensive determination of every civil proceeding on its merits. On a
    plain reading of this rule, the competing concerns within the context of a
    disposition without trial are obvious. Namely, when exercising its discretion
    under rules 24.01 or 48.14(13) to dismiss an action for delay, a court must
    balance the plaintiffs interest in having a hearing on the merits and the
    defendants interest in having the matter resolved in an expedient and
    time-efficient manner.

[25]

This
    court has made it clear that the tests to be applied under rules 24.01 and
    48.14(13) are distinct from one another:
Bolohan v. Hull
, 2012 ONCA
    121, 99 C.C.E.L. (3d) 307, at para. 12.

[26]

The
    appellant, however, made submissions in his factum to the contrary. As such, I
    believe it is prudent to say a brief word about the applicable tests.

(3)

Rules 24.01 and
    48.14(13)

[27]

Rule
    24.01 provides:

(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;

[Revoked.]

(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.

[28]

Therefore,
    rule 24.01 enables
a defendant
who has complied with the rules to take
    a deliberate procedural step to dismiss an action where the plaintiff has been
    delinquent in an enumerated manner. In
Langenecker v. Sauvé
, 2011 ONCA
    803, 286 O.A.C. 268, Doherty J.A. described the two types of cases resolved by
    the exercise of a motion judges discretion under rule 24.01:

The first type of case  refers to those cases in which the
    delay is caused by the intentional conduct of the plaintiff or his counsel that
    demonstrates a disdain or disrespect for the courts process. In dismissing
    cases which fall within this category, the court effectively declares that a
    continuation of the action in the face of the plaintiff's conduct would
    constitute an abuse of the court's process. These cases, thankfully rare,
    feature at least one, and usually several violations of court orders.



The second type of case that will justify an order dismissing
    for delay has three characteristics. The delay must be 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.

[29]

Rule
    48, on the other hand, provides a number of mechanisms to enable
the court
to control the pace of litigation. This is an important function and supports
    the desirable objective of resolving legal disputes in a time-efficient manner.
    One part of this mechanism is the registrars ability to serve a status notice
    to prompt action by a delinquent plaintiff under either rule 48.14(1) or rule
    48.14(2).

[30]

After
    the relevant status notice is served, rule 48.14(8) enables a party to request
    that the registrar arrange a status hearing. The disposition of a status hearing
    is governed by rule 48.14(13).

[31]

Rule
    48.14(13) provides that:

(13)  At the status hearing, the plaintiff shall show
    cause why the action should not be dismissed for delay and,

(a) if the presiding judge or case management master is
    satisfied that the action should proceed, the judge or case management master
    may,

(i) set time periods for the completion of the remaining steps
    necessary to have the action placed on or restored to a trial list and order
    that it be placed on or restored to a trial list within a specified time,

(ii) adjourn the status hearing to a specified date on such
    terms as are just, or

(iii) if the action is an action to which Rule 77 may apply
    under rule 77.02, assign the action for case management under that Rule,
    subject to the direction of the regional senior judge,

(iv) make such other order as is just; or

(b) if the presiding judge or case management master is not
    satisfied that the action should proceed, the judge or case management master
    may dismiss the action for delay. [Emphasis added.]

[32]

The
    plain wording of rule 48.14(13) makes clear that the onus is on the plaintiff
    to demonstrate why the action should not be dismissed for delay. The test, as
    stated by the status hearing judge in the case at bar, requires the plaintiff
    to demonstrate that there was an acceptable explanation for the delay and
    establish that, if the action were allowed to proceed, the defendant would
    suffer no non-compensable prejudice:
Khan v. Sun Life Assurance
, 2011
    ONCA 650, at para. 1.

[33]

Since
    the purpose of Rule 48 is to enable the court to control the pace of litigation
    and ensure that disputes are resolved in a time-effective manner, imposing the
    onus on the plaintiff to show cause why the action should not be dismissed for
    delay is fair. This court has held that the responsibility to move the action
    along lies chiefly with the plaintiff. Accordingly, the plaintiff also bears
    the consequences of conducting its action in a dilatory manner: see
Wellwood
    v. Ontario Provincial Police
, 2010 ONCA 386, 102 O.R. (3d) 555, at para.
    48.

[34]

In
    my view, rules 24.01 and 48.14(13) each offer distinct means that may lead to
    the same end; the dismissal of the plaintiffs action for delay.

[35]

In
    the case of a motion to dismiss for delay brought by
the defendant
,
    the defendant must not be in default under the rules and the plaintiff must be
    delinquent by having failed to: serve the statement of claim on all defendants
    within the prescribed time; note in default any defendant who has failed to
    deliver a statement of defence within thirty days after the default; set the
    action down for trial within six months after the close of pleadings; or move
    for leave to restore an action to the trial list within thirty days after the
    action was struck off.

[36]

These
    are short timelines. As P.M. Perell & J.W. Morden describe in
The Law
    of Civil Procedure in Ontario
, 1st ed. (Markham: LexisNexis Canada, 2010),
    at p. 418, motions to dismiss for delay are rarely brought by defendants
    despite the fact that many actions do not advance within the time standards
    prescribed by rule 24.01. The authors explain that this is because judges and
    masters are reluctant to deny a plaintiff his or her day in court at a point
    that might be quite early in the proceedings.

[37]

Accordingly,
    a high threshold has been established to dismiss an action for delay under rule
    24.01. The test has developed from a line of jurisprudence originating with the
    English case of
Allen v. Sir Alfred McAlpine & Sons Ltd
.
,
    [1968] 2 Q.B. 229 (C.A.). On a rule 24.01 motion, an action should not be dismissed
    unless: (a) the delay is intentional and contumelious; or (b) the plaintiff or
    his or her lawyers are responsible for the inexcusable delay that gives rise to
    a substantial risk that a fair trial might not now be possible: see
Woodheath
    Developments Ltd. v. Goldman
(2001), 56 O.R. (3d) 658 (Master), affd.
    (2003) 66 O.R. (3d) 731 (Div. Ct.), leave to appeal refused (2004) 44 C.P.C.
    (5th) 101 (C.A.).

[38]

In
Armstrong v. McCall
(2006), 213 O.A.C. 229, at para. 11, this court
    explicitly adopted the test in
Woodheath
to be applied on a rule 24.01
    motion.

[39]

In
    the case of a status hearing, however, an opportunity for the court to consider
    dismissing an action for delay will not arise for a considerable period of time
    after the proceedings have been imitated. Rules 48.14(1) and 48.14(2), which
    trigger the requirement that the registrar issue a status notice, contemplate
    delinquency by plaintiffs which exceeds that under rule 24.01.

[40]

Rules
    48.14(1) and 48.14(2) provide that where a defended action has not been placed on
    a trial list
within two years after the first defence is filed
or
    restored to the trial list
within 180 days of being struck out
, the
    registrar shall serve a status notice on the parties indicating that the action
    will be dismissed for delay unless it is set down for trial within 90 days
    after service of the notice.

[41]

The
    onus placed on the plaintiff under rule 48.14(13), therefore, is mandated not
    only by the plain wording of the rule but also by the greater severity of the
    plaintiffs delinquency in pursuing its claim. In other words, at this
    juncture, the emphasis on the objectives expressed in rule 1.04(1) to secure
    the just, most expeditious and least expensive determination of every civil
    proceeding on its merits  must necessarily shift towards ensuring that
    disputes be resolved expeditiously and in a time-efficient manner.

[42]

Therefore,
    I conclude that the status hearing judge in the case at bar was correct to
    place the onus on the appellant and to apply a test similar in principle to one
    recently confirmed by this court in
1196158 Ontario Inc
. At para. 32
    of
1196158
, the court held that a plaintiff bears the burden of
    demonstrating that there is an acceptable explanation for the delay in the
    litigation
and
that, if the action was allowed to proceed, the defendant
    would suffer no non-compensable prejudice.

(4)

Assessment of delay
    and prejudice in the action

[43]

The
    status hearing judge rejected the appellants argument that he should be
    excused from the delay and the associated prejudice arising from a failure to
    diligently pursue the claim because of the behaviour of the respondents. I
    agree with her assessment.

[44]

To
    recap, two of the respondents, Eftimovski and CLE, initiated parallel
    proceedings in London and subsequently obtained default judgment against the appellant.
    The appellant argues that issues relating to
res judicata
arose as a
    result of the default judgment and created procedural hurdles associated with
    setting it aside. Accordingly, he should not be held responsible for this
    delay.

[45]

Second,
    Laskowskys death occurred during a period of indulgence granted to Re/Max and
    Carriage South in order for them to complete their internal investigations of
    the allegations made in the claim. Accordingly, the appellant argues that he
    should not be held responsible for the obvious prejudice that flows from the
    lack of evidence from Laskowsky.

[46]

I
    reject these arguments. The status hearing judges assessment must be
    considered in light of the general rule that the party who commences the
    proceeding bears primary responsibility for its progress:
Wellwood
,
    at para. 48.

[47]

I
    acknowledge that it may be frustrating to a party when its adversary initiates
    a proceeding in another jurisdiction. However, I am unmoved by the facts of the
    case before me. Eftimovski and CLE issued their action against the appellant on
    February 13, 2007. They obtained default judgment in June 2007. The appellant
    did not initiate his action until December 12, 2007 nor did he defend or
    otherwise deal with the Eftimovski and CLE action until August 2010.

[48]

With
    respect, the fact that default judgment was obtained six months before the
    appellant initiated his action in another jurisdiction serves only to highlight
    the dilatory conduct of the appellant in this action. It raises more questions
    about why the appellant felt it was necessary to initiate the Barrie Action in
    the first place. Therefore, I am not convinced that the status hearing judge
    somehow wrongfully held the appellant responsible for the delay in the action.

[49]

With
    respect to the appellants failure to examine Laskowsky for discovery during
    the period of indulgence granted to Re/Max and Carriage South, it is noteworthy
    that Laskowsky himself did not request a period of indulgence from the
    appellant. Accordingly, Laskowsky was free to be examined for discovery by the
    appellant between the issuance of the action in December 2007 and Laskowskys
    death in April 2009.

[50]

It
    was incumbent on the appellant to conduct his action in a proactive manner.
    Accordingly, in my view, it is not unfair to ascribe the prejudice caused by
    Laskowskys death to the appellant.

[51]

I
    conclude that the status hearing judge did not err in her assessment of delay
    and prejudice to the appellant. Therefore, I would not give effect to this
    ground of appeal.

(5)

The applicability of
    the finality principle

[52]

As
    I read her reasons, I do not take the status hearing judge as having applied
    the finality principle articulated by this court in
Marché DAlimentation
    Denis Thériault Ltée
. Rather, it appears that she was merely paraphrasing
    this courts pronouncement of the policy rationale that status hearings provide
    the court with a mechanism to prevent abuse of its processes and dilatory
    behaviour on the part of plaintiffs. Status hearings serve an important
    function in ensuring that disputes are resolved efficiently.

D.

DISPOSITION

[53]

In
    my view, the decision of the status hearing judge was thorough and demonstrated
    a keen understanding of the factual matrix surrounding the conduct of this
    action. Therefore, I would dismiss the appeal.

[54]

I
    would not interfere with the costs order fixed by the motion judge. On the
    appeal, costs are fixed at $10,500 to the respondents, inclusive of all
    applicable taxes and disbursements.

Released:

PR                                         M. Tulloch
    J.A.

JUN -4 2013                           I agree R.A. Blair

I agree
    Paul Rouleau J.A.


