



COURT OF APPEAL FOR ONTARIO

CITATION: Van Aert v. Sweda Farms Ltd. (Best Choice Eggs),
    2018 ONCA 831

DATE: 20181017

DOCKET: C65207

Hourigan, Miller and Trotter JJ.A.

BETWEEN

Luke Van Aert and Sandra Van Aert, Sanlu Family
    Poultry Farms Limited, formerly Sanlu Holsteins Ltd., and 174421 Ontario Inc.

Plaintiffs (Respondents)

and

Sweda Farms Ltd., c.o.b. as Best Choice Eggs

Defendant (Appellant)

Varoujan Arman and Jessica Wuthmann, for the appellant

Philip Morrissey and Isha Wadhwa, for the respondents

Heard: October 4, 2018

On appeal from the order of Justice Helen A. Rady of the Superior
    Court of Justice, dated March 16, 2018, with reasons reported at 2018 ONSC 1545.

REASONS FOR DECISION


[1]

The appellant, Sweda Farms Ltd., is in the business of producing, grading
    and selling eggs. The respondents are egg suppliers. For a time, the parties did
    business with each other pursuant to supply agreements between them. That ended
    with each side claiming the other was in breach of the agreements. In 2008, the
    respondents brought an action for the price of eggs supplied, and the appellant
    counterclaimed for damages.

[2]

A trial was scheduled for September 9, 2013. The appellants previous
    counsel (not Mr. Arman and Ms. Wuthmann) sought an adjournment that morning.
    The adjournment was granted on terms that included the appellant consenting to
    judgment in the amount of $164,560.92, with an order that the judgment be
    stayed pending the disposition of a future motion to add the respondents as
    defendants to an existing action in Toronto. This sum included $34,830.03 in
    costs. The appellant was required to pay the amount of the judgment into court
    on or before October 15, 2013. According to the terms of the order, if the
    motion failed and the respondents were not added as defendants in the Toronto
    action, the stay would be lifted and the respondents would be entitled to
    realize on their judgment.

[3]

The appellant did not pay the funds into court. Neither did the appellant
    bring the motion to add the respondents as defendants to the Toronto action. The
    appellant did not take any further steps to advance the counterclaim. The
    respondents took some steps to collect on the judgment. These were largely
    unsuccessful. A representative of the appellant failed to appear on an
    examination in aid of execution in 2015.

[4]

On January 25, 2018, five years after the judgment was entered, the
    appellant returned to court seeking an order: (1) permitting it to proceed with
    the counterclaim once it paid the judgment funds into court, (2) permitting it to
    amend its counterclaim, and (3) fixing a timetable for the remaining steps in
    the litigation. In support of this motion, the appellants president swore an
    affidavit claiming that his former counsel acted without instructions and did
    not advise the appellant of the judgment. The president asserted that he only
    learned of the judgment in November 2014 when he sent an agent to review the
    court file in London.

[5]

The motion was dismissed.

[6]

The motion judge concluded that there was no rule governing a request to
    belatedly comply with an order. She reasoned that it most closely approximated
    a motion to set aside an order dismissing an action for delay pursuant to r. 48
    of the
Rules of Civil Procedure
. She reached this conclusion on the
    basis that, unlike a motion under r. 24.01, the appellant is asking for an
    indulgence  to be relieved of the consequences of failing to comply with the
    court order five years earlier requiring it to pay funds into court.

[7]

Accordingly, she placed the onus on the appellant to establish: (1) that
    there is an acceptable explanation for the litigation delay; and (2) the
    respondents would suffer no non-compensable prejudice if the action was permitted
    to proceed.

[8]

She concluded that there was no acceptable explanation for the delay of
    nearly two years between discovery of the judgment in November 2014 and
    reaching out to counsel for the respondents in October 2016. She rejected the
    argument that the appellant was frustrated in doing so by not receiving the
    full file from former counsel until October 2016. A search of the court file in
    London would have provided sufficient information to enable the appellant to
    contact counsel for the respondents to take steps to set aside the judgment.

[9]

With respect to prejudice, the motion judge concluded there was actual
    prejudice, given that the appellant seeks to renew an action, pursue increased
    damages and set a timetable for further steps that would involve increased
    costs for the respondents.

[10]

The
    appellant appeals on the basis that the motion judge applied the wrong legal
    test, and misapprehended the facts in the application of that test.

[11]

We
    disagree. The motion judge did not err in analogizing from the situation before
    her to r. 48. The appellant was in default of an order and was seeking an
    indulgence from the court. It was appropriate that the onus be on the appellant
    to provide an explanation for the delay.

[12]

As
    this court has held, deference is owed to the motion judge in her factual
    findings and weighing of the factors courts use to make the discretionary
    determination whether there is an adequate explanation for the delay: see
Langenecker
    v. Sauvé
, 2011 ONCA 803, 286 O.A.C. 268, at para. 15
; Faris v.
    Eftimovski
, 2013 ONCA 360, 363 D.L.R. (4th) 111, at para. 22. It was open
    to the motion judge, on the evidence before her, to conclude that the appellant
    knew of the judgment in 2014, particularly given the respondents attempts at
    enforcement beginning in 2014 and the affidavit evidence of the appellants own
    president. Nor did the motion judge err in concluding that the delay in the
    transfer of the file did not prevent the appellant from contacting the
    respondents to take steps to set aside the judgment.

[13]

Although
    that is sufficient to dispose of the appeal, we also note that the motion judge
    did not err in concluding that the respondents would suffer actual prejudice
    from the revival of the counterclaim.  The appellant attempted to broaden a
    claim that would otherwise have been tried five years earlier. It did not file
    any materials on the motion to establish that there would be no prejudice from
    this delay but simply asserted that the respondents did not lead evidence of
    actual prejudice. However, there is no onus on the respondents to lead evidence
    to demonstrate actual prejudice
:
Chrisjohn v. Riley Estate
,
    2015 ONCA 713, 391 D.L.R. (4th) 695, at para. 40. The motion judge was entitled
    to consider all of the circumstances of the case in determining whether there
    was a risk of prejudice in light of the passage of time:
H.B. Fuller Co. v.
    Rogers,
2015 ONCA 173, 386 D.L.R. (4th) 262, at para. 38, citing
MDM
    Plastics Ltd. v. Vincor International Inc.
, 2015 ONCA 28, 124 O.R. (3d)
    420, at para. 32. She did not err in finding that the appellants decision to
    broaden its claim gave rise to a risk of prejudice to the respondents that the
    appellant did not rebut.

[14]

It
    is no answer to say that the prejudice identified is compensable by an award of
    costs. The appellant had not paid the outstanding costs award pursuant to the
    September 2013 judgment, and this judgment remained largely unsatisfied. The
    motion judge rightly noted that there was some evidence the appellant had
    attempted to avoid the payment of costs in the Toronto action by transferring
    funds to a trust. Notably, the appellant did not respond to the motion one of
    its judgment creditors brought seeking a Mareva injunction in response to this
    transfer, a motion which the court granted on an interim basis.

[15]

The
    appeal is dismissed. The respondents are entitled to costs in the amount of
    $12,000 inclusive of disbursements and HST.

C.W. Hourigan J.A.

B.W. Miller J.A.

Gary T. Trotter J.A.


