



COURT OF APPEAL FOR ONTARIO

CITATION: Labelle v. Canada (Border Services Agency), 2016
    ONCA 187

DATE: 20160307

DOCKET: C60307

Laskin, Pardu and Roberts JJ.A.

BETWEEN

Suzan Labelle and Dennis Labelle

Plaintiffs (Appellants)

and

Canada Border Services Agency, Attorney
    General of Canada
, Abitibi Consolidated Inc., and International Bridge
    Company

Defendants (
Respondents)

William G. Scott, for the appellants

Helene Robertson, for the respondents

Heard: November 23, 2015

On appeal from the order of Justice H.M. Pierce of the Superior
    Court of Justice, dated March 25, 2015, with reasons reported at 2015 ONSC 1943.

L.B. Roberts J.A.:

Overview

[1]

The appellants appeal from the dismissal of their motion under the
    former r. 48.14 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194,
    to set aside the registrars order, which dismissed the appellants action for
    delay.
[1]
The appellants ask to set aside both the motion judges order and the
    registrars dismissal order, and to reinstate the action.

[2]

The appellants commenced their action against the defendants in April
    2008. Appellants counsel received a status notice in March 2012. Although appellants
    counsel instructed staff to do so, they failed through inadvertence to request
    a status hearing from the court. The registrar dismissed the appellants action
    in June 2012. Appellants counsel promptly obtained the respondents position
    that they would not oppose the motion to set aside the dismissal order.

[3]

More than two years went by before appellants counsel brought a motion
    to set aside the registrars dismissal order. By that time, the respondents
    opposed the motion. The motion judge refused to set aside the dismissal order, finding
    that the respondents were significantly prejudiced by the appellants delay.

[4]

The appellants submit that the motion judge erred in her assessment of
    prejudice to the respondents because any prejudice pre-dated any delay in these
    proceedings or resulted from the respondents own inaction.

[5]

I agree that the motion judge erred in her assessment of prejudice,
    which was at the heart of her decision to dismiss the appellants motion. Accordingly,
    I would allow the appeal.

Procedural History

[6]

The appellants claims arise from the alleged slip and fall of the
    appellant, Suzan Labelle, in January 2008, at the border crossing plaza in Fort
    Frances, Ontario.

[7]

Notice of the appellants claim was given to Canada Border Services
    Agency (CBSA) in April 2008. The statement of claim was issued in December
    2009 and served on all defendants in March 2010. By May 2010, the respondents
    had delivered a statement of defence and crossclaim against Abitibi
    Consolidated Inc. (Abitibi).

[8]

Following service of the appellants statement of claim, Abitibi and
    International Bridge Company (International Bridge) advised that they were
    both subject to an order made in Quebec under the
Companies Creditors
    Arrangement Act,

R.S.C., 1985, c. C-36 (CCAA),

effective April 2009, and that the appellants claims
    against them were automatically stayed. The appellants subsequently settled
    their claims against Abitibi and International Bridge in December 2014.

[9]

There was little progress on the file after pleadings were closed. In
    October 2011, appellants counsel sought to schedule examinations for
    discovery. Respondents counsel asserted that they required a discovery plan
    before scheduling examinations. No plan was sent and the examinations never
    took place.

[10]

The
    file languished until March 2012 when the court issued a status notice. Appellants
    counsel received the status notice and instructed staff to have the matter
    placed on the status hearing list. Unfortunately, although the date was
    diarized, through inadvertence staff did not notify the court of the
    appellants request for a status hearing. On June 27, 2012, unbeknownst to the
    appellants or their counsel, the registrar dismissed the action for delay.

[11]

Upon
    receipt of the notice on June 29, 2012 that the action had been dismissed for
    delay, appellants counsel sprang into a flurry of activity, seeking the
    respondents consent to set aside the dismissal, proposing a timetable, and
    sending Ms. Labelles medical records to the respondents. On July 27, 2012
    respondents counsel advised appellants counsel in writing that the
    respondents took no position on the case being reinstated.

[12]

However,
    no steps to bring the motion were taken until June 2014 when a notice of motion
    was served but then withdrawn, and the motion was not argued until March 2015. By
    then, the respondents opposed the reinstatement of the action.

Reasons Below

[13]

The
    motion judge dismissed the appellants motion on March 25, 2015. As is clear
    from a reading of her reasons, while noting the appellants litigation delay, as
    well as their delay in bringing the motion, the main reason for the motion
    judges refusal to set aside the registrars dismissal order was her finding of
    significant prejudice caused to the respondents by the appellants delay in
    taking steps to advance these proceedings.

[14]

The
    motion judge began by setting out the well-known test governing motions to set
    aside a registrars order, noting the contextual approach required to be
    applied in considering all relevant circumstances as described in
Scaini v.
    Prochnicki
, 2007 ONCA 63, 85 O.R. (3d) 179, at paras. 23-25.

[15]

Among
    the various factors that she considered, the motion judge analyzed the
    circumstances of this case according to the four oft-cited criteria from
Reid
    v. Dow Corning Corp.
(2001), 11 C.P.C. (5th) 80, at para. 41 (Ont. S.C.J.),
    revd on other grounds, (2002), 48 C.P.C. (5th) 93 (Ont. Div.Ct.): explanation
    of the litigation delay; inadvertence in missing the deadline set out in the
    status notice; promptly moving to set aside the registrars dismissal order; and
    no substantial prejudice to the respondents because of the delay. She correctly
    observed that it was not mandatory that the appellants satisfy all four factors:
Scaini
, at para. 23.

[16]

As
    to the fourth criterion of prejudice to the respondents, the motion judge stated:

Prejudice is often key to deciding
    whether to set aside the Registrars dismissal order. The onus is on the
    plaintiff to show that the defendant is not prejudiced by an extension of time
    to set the matter down for trial. However, where the defendant alleges
    prejudice, there is an evidentiary obligation to provide some details. See:
Chiarelli
    v. Wiens
, (2000) 46 O.R. (3d) 780 (C.A.), para. 14. The Court of Appeal
    also noted that the defendant cannot
create
prejudice by failing to
    take steps to defend the case, such as interviewing witnesses or conducting
    surveillance: para. 15. [Emphasis in original.]

[17]

The
    motion judge listed the appellants reasons for the litigation delay and their
    failure to promptly move to set aside the dismissal order. These reasons
    included appellants counsels financial and operational issues, along with the
    wind-up of his firm, as well as the CCAA proceedings involving Abitibi and
    International Bridge. The motion judge concluded that the litigation delay and
    delay in promptly bringing the motion to set aside the registrars dismissal
    order resulted primarily because appellants counsel did not know what to do
    about the [CCAA] order in Quebec and because of its effect on the appellants
    claims against Abitibi and International Bridge.

[18]

The
    respondents conceded and the motion judge accepted that the appellants had
    demonstrated inadvertence.

[19]

After
    balancing all of the relevant factors, as she was required to do, the motion
    judge determined that in the circumstances, [t]he key issue in this case [was]
    whether there [was] prejudice to the [respondents].

[20]

With
    this in mind, the motion judge concluded that the motion ought to be dismissed
    because the appellants delay caused significant prejudice to the respondents,
    as follows:

i.        The respondents
    crossclaim against Abitibi disappeared when the action was dismissed for delay
    and the respondents were beyond time to make a third party claim against
    Abitibi and International Bridge. As owner, Abitibi was responsible for the maintenance
    of the premises where Ms. Labelle fell. The respondents had therefore lost the
    benefit of s. 6 of the
Customs Act
, R.S.C., 1985, c. 1 (2nd Supp.),
    because Abitibi was no longer a party to the proceedings.

ii.       The respondents had
    lost the ability to defend themselves because evidence concerning the
    maintenance of the building was no longer available. Abitibi was unable to
    locate any maintenance records or maintenance employees from the time of Ms.
    Labelles fall. The appellants claims were not insured because of the size of
    Abitibis deductible of $500,000; Abitibis insurer carried out no investigation
    of Ms. Labelles claim and no relevant reports remain in the insurers file.

iii.      The respondents were
    entitled to finality in the proceedings.

Analysis

(i)

What is the standard of review?

[21]

The
    decision of a motion judge made pursuant to r. 37.14 is discretionary, and
    entitled to deference on appeal. That decision, however, may be set aside if
    the motion judge proceeded on an erroneous legal principle, made a palpable and
    overriding error as to the facts, or gave no or insufficient weight to relevant
    factors:
H.B. Fuller Company v. Rogers (Rogers Law Office)
, 2015 ONCA
    173, 330 O.A.C. 378, at para. 19.

(ii)

Did the motion judge err in finding that the appellants delay caused
    substantial prejudice to the respondents?

[22]

In
    my view, the motion judge erred in finding that the appellants delay caused
    substantial prejudice to the respondents. This finding was central to her
    decision not to grant the appellants motion.

(a)

The assessment of prejudice

[23]

In
    starting this analysis, it is important to recall the general principle that
    only prejudice to the respondents caused by the appellants delay in these
    proceedings is a relevant factor in determining whether the registrars
    dismissal order should be set aside:
Habib v. Tunaj
, 2012 ONCA 880, at
    para. 5. Prejudice to the defence that exists regardless of the appellants
    delay is not relevant:
Chiarelli
, at para. 16. Further, as noted by
    this court in
Chiarelli
, at para. 15, [T]he defence cannot create
    prejudice by its failure to do something that it reasonably could have or ought
    to have done, such as interviewing witnesses, conducting surveillance, or
    otherwise preserving relevant evidence.

[24]

The
    motion judges findings of prejudice to the respondents, however, did not arise
    from the appellants delay but from factors either pre-dating any delay or stemming
    from the respondents failure to take appropriate steps to alleviate the
    prejudice that they now assert.

[25]

First,
    the respondents inability without leave to pursue crossclaims or third party
    claims against Abitibi and International Bridge arose from those parties insolvencies
    and not from the appellants delay. Abitibi and International Bridge were under
    CCAA protection by April 2009, prior to the issuance of the appellants
    statement of claim in December 2009. By the time the respondents served their
    statement of defence and crossclaim against Abitibi in May 2010, their
    crossclaim under s. 6 of the
Customs Act
was already automatically
    stayed by the CCAA proceedings.

[26]

Second,
    the respondents failed to take any steps to preserve or pursue any claims that
    they may have had against Abitibi or International Bridge in the CCAA
    proceedings. While the CCAA order required any claims to be filed by November
    13, 2009, prior to the service of the appellants statement of claim, it also
    provided for the discretionary consideration of any claims filed after that
    deadline and up to the date of the implementation of the plan of arrangement on
    December 9, 2010. After that deadline, leave to pursue a claim could be sought
    from the Superior Court of Quebec, however the process was costly and the
    likelihood of any recovery from Abitibi or International Bridge was doubtful.

[27]

Third,
    the unavailability of evidence related to maintenance of the premises in issue
    was not a product of the appellants delay but arose because of the insolvency
    of Abitibi and International Bridge and the failure of the respondents to
    preserve such evidence once they became aware that Abitibi and International
    Bridge were under a CCAA order.

[28]

The
    respondents were made aware of Ms. Labelles claim as early as April 2008,
    prior to the April 2009 effective date of the CCAA protective order. However,
    there is no evidence that they took any steps to investigate Ms. Labelles
    claim or preserve relevant evidence until after the effective date of the CCAA
    order.

(b)

The effect of the error

[29]

The
    motion judges error concerning prejudice went to the heart of her decision to
    refuse to set aside the registrars dismissal order. It played an essential
    part in the reasoning process that led to her dismissal of the appellants
    motion.

[30]

The
    motion judges focus on prejudice to the respondents is consistent with the
    approach suggested by this court in
Scaini
, at para. 25: It may be
    that in a particular case, one factor on which the appellant comes up short is
    of such importance that, taken together with the other factors, the appellant
    must fail. What is important is that the analysis be contextual to permit the
    court to make the order that is just.

[31]

The
    importance in the contextual analysis of the factor of prejudice to a
    defendants ability to defend the action was summarized most recently by this
    court in
MDM Plastics Limited v. Vincor International Inc.
, 2015 ONCA
    28, 124 O.R. (3d) 420, at para. 24:

The issue of prejudice invariably
    is a key consideration on a motion to set aside a dismissal order:
Finlay
    v. Van Paassen
, 2010 ONCA 204, 101 O.R. (3d) 390, at para. 28. While an
    action may be dismissed even in the absence of prejudice (see
1196158
    Ontario Inc. v. 6274013 Canada Ltd.
, 2012 ONCA 544, 112 O.R. (3d) 67, at
    para. 32), in most cases, the question of prejudice figures largely in
    determining whether to set aside a dismissal for delay.

[32]

However,
    the motion judges error that the appellants delay caused prejudice to the
    respondents was fundamental to her decision. Without the finding of prejudice
    to the respondents, a contextual analysis results in the conclusion that the
    order be set aside.

[33]

The
    factor of delay by itself was not sufficient in the circumstances of this case
    to deny the appellants request to reinstate their action. Certainly, if
    appellants counsel had promptly followed through on the proposed motion to set
    aside the registrars dismissal order, the motion would likely have been
    granted at that time.

[34]

Moreover,
    there is no evidence that the appellants delay was the product of a deliberate
    decision not to take any steps in these proceedings. According to the motion
    judges findings in the present case, the main reason for the delay was because
    of appellants counsel not knowing what to do about the CCAA status of Abitibi
    and International Bridge. Given that Abitibi and International Bridge were
    defendants to these proceedings, the delay related to sorting out their status
    and the effect of their insolvency on the appellants claim was not wholly
    unrelated to this action.

[35]

As
    such, this case is distinguishable from the circumstances of
Marché
    dAlimentation Denis Thériault Ltée v. Giant Tiger Stores Ltd.
, 2007 ONCA
    695, 87 O.R. (3d) 660, where the plaintiffs solicitors had deliberately put
    the file in abeyance because there was no money in the file.

[36]

Moreover,
    the inadvertent failure of appellants counsel to request a status hearing
    favours the reinstatement of the appellants action. The appellants should not suffer
    the irrevocable loss of the right to proceed by reason of the inadvertence of [their]
    solicitor:
Marché
, at para. 28;
Finlay
, at para. 33.

[37]

The
    motion judge properly considered the significant public interest in the
    finality of the proceedings:
Habib
, at para. 10;
Marché
, at
    para. 25. As Sharpe J.A. noted in
Marché
, at para. 38, [E]ven when
    the party relying on the order could still defend itself despite the delay  at
    some point the interest in finality must trump the opposite partys plea for an
    indulgence.

[38]

However,
    the present case is not an instance where finality must trump the preference of
    having the action heard on its merits. The respondents suffered no prejudice
    from the delay and did not rely on the finality of the dismissal order. While
    the appellants have the responsibility of moving the action along, the
    respondents lack of display of any sense of urgency undercuts the claim of
    prejudice:
H.B. Fuller Company
, at para. 42.

[39]

First,
    the fact that the respondents indicated that they would not oppose the
    appellants setting aside of the dismissal order suggests that there was no
    actual prejudice to their ability to defend the action at that point as a
    result of the delay or the dismissal.

[40]

Further,
    respondents counsel never indicated that their position had changed until
    receipt of the appellants notice of motion. Although the appellants should
    have brought their motion more promptly, the lack of any warning by the
    respondents that their position had changed also belies any presumption of
    prejudice to them or their reliance on the dismissal of the action.

[41]

There
    is no suggestion that the motion judge viewed the litigation delay as a
    sufficient basis in itself for refusing to set aside the dismissal order. Inadvertence
    in missing the deadline was conceded. In the absence of any actual or presumed
    prejudice to the respondents or their reliance on the dismissal order as final,
    the justice of the case requires that the dismissal order be set aside and the
    action reinstated.

[42]

That
    being said, the appellants are being granted an indulgence. They must complete
    the outstanding steps in this action and then set it down for trial without
    further delay.

Disposition

[43]

Accordingly,
    I would allow the appeal and reinstate the appellants action.

[44]

The
    appellants ask that the costs ordered by the motion judge be set aside. As they
    have been granted an indulgence, they seek no costs of their motion to set
    aside the registrars dismissal order or appeal.

[45]

As
    a result, the motion judges costs order is set aside and there shall be no
    order as to costs with respect to the appellants motion to set aside the
    registrars dismissal order and the appeal.

Released: March 7, 2016

L.B. Roberts
    J.A.

I agree John
    Laskin J.A.

I agree G. Pardu
    J.A.





[1]
The former r. 48.14 required that an action be set down for trial within two
    years after the filing of the first statement of defence. On January 1, 2015,
    O. Reg. 170/14, s. 10, came into force and substituted a new rule 48.14,
    notably changing the timeline for a dismissal for delay to five years from the
    commencement of the action.


