July 30, 2013

In a recent decision by the Ontario Court of Appeal, the court turned its attention to a frequently encountered issue in civil litigation: under what circumstances should an action be dismissed  for delay by the court following a status hearing?  The appellant (plaintiff) appealed a lower court order dismissing the action for delay after a status hearing.  The underlying action arose out of two real estate transactions in 2003 and 2005 relating to a 100 acre farm property.  In his action, the plaintiff alleged breach of contract and breach of fiduciary duties.

For a variety of reasons, the action seemed to languish (the plaintiff maintained he was not entirely to blame).  As such, counsel for the one of the respondents/defendants requested that a status notice be issued by the court; a status notice was issued on April 5, 2011.

The procedure underlying a status notice (Rule 48.14) allows the court to control the pace of litigation and to ensure that disputes are resolved in a time efficient manner.  Rule 48.14(1) reads in part: “Unless the court order otherwise, if an action in which a defence has been filed has not been placed on a trial list or terminated by any means within two years after the first defence is filed, the registrar shall serve on the parties a status notice that the action will be dismissed for delay unless, within 90 days after service of the notice, the action is set down for trail or terminated…”  The rule also allows any party to request the registrar to arrange a status hearing where a status notice has been served.  A status hearing can be in writing or in person.  If a hearing is conducted in writing, the parties are required to file a timetable signed by all the parties, as well as a draft order establishing the timetable (Rule 48.14(10)).

At a status hearing in person, counsel must attend; the attendance of the parties is optional (Rule 48.14(12)).  At the status hearing, the plaintiff must demonstrate why the action should not be dismissed for delay (48.14(13)). Placing the onus on the plaintiff is fair, as the court has long held that the responsibility to move the action along lies chiefly with the plaintiff.

The Court of Appeal held that when exercising its discretion to dismiss an action for delay, a court must balance the plaintiff’s right to be heard against the defendant’s interest in having the matter resolved in a timely manner.  The applicable test 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 (i.e. the prejudice could not be cured by an award of costs).

In the case at hand, the plaintiff was held responsible for the delay in the action and the appeal was dismissed. The court agreed with the decision of the status hearing judge that the plaintiff should not be excused from the delay and the associated prejudice because of the behavior of the defendants.  Even the death of a party did not sway the court that the action should be kept alive.  As the court noted: “It was incumbent on the appellant to conduct his action in a proactive manner”.

Happy “proactive” litigating.