Ontario Court of Appeal decision on Setting Aside a Registrar’s Dismissal Order

The recent Court of Appeal for Ontario decision in Habib v. Mucaj, 2012 ONCA 880 provides a helpful overview of the legal test for setting aside a Registrar’s dismissal order:

[5]          There are four well established factors to consider when deciding to set aside an order to dismiss an action: (i) explanation of the litigation delay – a deliberate decision not to advance the litigation will usually be fatal; (ii) inadvertence in missing the deadline – the intention always was to set the action down within the time limit; (iii) the motion is brought promptly – as soon as possible after the order came to the party’s attention; and (iv) no prejudice to the defendant – the prejudice must be significant and arise out of the delay: Reid v. Dow Corning Corp. (2001), 11 C.P.C. (5th) 80 (Ont. Div. Crt.).

[6]          No one factor is necessarily decisive of the issue.  Rather, a “contextual” approach is required where the court weighs all relevant considerations to determine the result that is just.  Here, the Master specifically referenced the proper test and engaged in the weighing exercise.  He found that, after the weighing exercise, the just result was to set aside the dismissal order.  The Master’s order was discretionary and was made as part of his duty to manage the trial list.  The decision, therefore, attracts significant deference from a reviewing court: Finlay v. Paassen, 2010 ONCA 204.

[7]          Furthermore, on a motion to set aside a dismissal order, the court should be concerned primarily with the rights of the litigants, not with the conduct of their counsel.  However, where the lawyer’s conduct is not inadvertent but deliberate, this may be different: Marché d’Alimentation Denis Thériault Ltée. v. Giant Tiger Stores Ltd. (2007), 87 O.R. (3d) 660 (O.C.A.), at para. 28.  Here, the plaintiff lawyers’ conduct was found by the Master not to be deliberate.  Simply because the appeal judge’s view is that the conduct was “negligent” or “bordering on negligent”, does not mean the Master was not entitled to find the conduct not to be deliberate or not intentional.

With respect to the standard of review of a Master’s order, the Court of Appeal notes:

[8]          In assessing the Master’s findings of fact under the Reid factors, the appeal judge was required to decide whether the findings were unreasonable or unsupported by the evidence.  He was not entitled to replace one reasonable inference for another, merely because he disagreed with the decision under review.

[9]          The inference drawn by the Master – that the delay was mere sloppiness or inadvertence – is a reasonable one based on the evidence.  The fact that the inference of the appeal judge – that the delay was caused by negligence – is also reasonable does not amount to reversible error on the part of the Master.  The Master’s decision was entitled to significant deference and the appeal judge was in error in failing to accord it.

[10]       Finally, the Master’s reasons reflect an understanding of the “significant public interest in finality of proceedings” factor, which he properly considered along with the Reid factors, and not as a stand-alone one.  The Master recognized that the dismissal of the action more than two years following the expiry of the limitation period gave rise to a presumption of prejudice.  However, he found that the plaintiff had rebutted the presumption and that the defendants failed to show any actual prejudice to them.  The Master noted that the key independent witness was still available and had a clear recollection of the accident.  As well he observed that documentary evidence in the form of clinical notes, medical records, and the plaintiff’s family physician’s notes were also available.  Given this, the significant public interest factor alone is not a reason to interfere with the Master’s decision.

[11]       In the end, the Master considered and balanced all the appropriate factors.  His conclusion based on the evidence was reasonable and there is no basis to interfere with it.

My recent experience in opposing a similar motion to set aside the Registrar’s order of dismissal of the plaintiff’s action suggests that the general trend in Master’s court appears to be to grant such motions, but usually on terms; including imposing a strict case timetable and potentially refusing to award the plaintiff costs on the motion.

Since no favourable outcome is ever assured, the moving party’s motion materials must address each of the Reid factors, including leading some evidence to rebut the presumption of prejudice. Failure to notify one’s client of the Registrar’s dismissal order based on the sanguine hope that the action will be revived may result in a professional negligence action. The failure to contact LawPro counsel well in advance may also result in voiding the insurer’s duty to defend under the applicable E&O coverage.

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