Setting Aside Registrar’s Dismissal for Delay: Finlay v. Paassen (Ont.C.A.)

Today’s Ontario Court of Appeal decision in Finlay v. Paassen, 2010 ONCA 204, addresses the proper test for setting aside a registrar’s dismissal of an action for delay under Rule 48.14 (i.e. failing to set an action down for trial within two years after the filing of a statement of defence).

At the outset, the Court of Appeal rejected the appellant’s jurisdictional argument: namely, that the registrar’s failure to serve the status notice on him or his counsel deprived the registrar of jurisdiction to dismiss the action.

However, while the motion judge’s order was discretionary and was made as part of his duty to manage the trial list and thus attracted significant deference, it was nevertheless set aside in failing to balance all the material considerations, including the absence of prejudice to the respondents, and therefore reached an unjust result.

In his reasons, Justice Doherty overruled the Divisional Court decision in Amardi v. Terrazzo, Tile & Marble Trade School Inc., 2009 CanLII 25607 which had held that the registrar’s failure to serve the status notice meant that the registrar had no jurisdiction to dismiss the action, noting that:

“It seems to me that it harkens back to the distinction between nullities and irregularities that pervaded our Rules before 1985. It does not take account of our current rule 2.01, which eliminates the notion of a nullity and provides that any failure to comply with the rules is a mere irregularity that is capable of being cured). That case, of course, would be decided entirely differently under our current Rules.

[13] By characterizing the failure to serve a status notice as a jurisdictional error, Amardi effectively turns the registrar’s dismissal order into a nullity that must be set aside. This characterization runs contrary to the curative provision in rule 2.01: see Somerleigh v. Polhill (2006), 209 O.A.C. 10.

[14] Rule 2.01 reflects the general principle found in rule 1.04(1), which guides the interpretation of all the Rules: “These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.” Rule 1.04(1) and rule 2.01 are intended to do away with overly “technical” arguments about the effect of the Rules and orders made under them. Instead, these provisions aim to ensure that the Rules and procedural orders are construed in a way that advances the interests of justice, and ordinarily permits the parties to get to the real merits of their dispute.”

The Court of Appeal then cites its earlier decision in Marché d’Alimentation Denis Thériault Ltée. v. Giant Tiger Stores Ltd. (2007), 87 O.R. (3d) 660 at para. 12, which approved four factors to be considered on a motion to set aside an order dismissing an action for delay:

“The Master applied the four-pronged test described in Reid v. Dow Corning Corp. (2001) 11 C.P.C. (5th) 80 at para. 41 (Ont. S.C.J.), rev’d on other grounds 48 C.P.C. (5th) 93 ( Ont. Div. Ct.):

(1) Explanation of the Litigation Delay: The plaintiff must adequately explain the delay in the progress of the litigation from the institution of the action until the deadline for setting the action down for trial as set out in the status notice. She must satisfy the court that steps were being taken to advance the litigation toward trial, or if such steps were not taken to explain why…. If either the solicitor or the client made a deliberate decision not to advance the litigation toward trial then the motion to set aside the dismissal will fail.

(2) Inadvertence in Missing the Deadline: The plaintiff or her solicitor must lead satisfactory evidence to explain that they always intended to set the action down within the time limit set out in the status notice, or request a status hearing, but failed to do so through inadvertence. In other words the penultimate dismissal order was made as a result of inadvertence.

(3) The Motion is Brought Promptly: The plaintiff must demonstrate that she moved forthwith to set aside the dismissal order as soon as the order came to her attention.

(4) No Prejudice to the Defendant: The plaintiff must convince the court that the defendants have not demonstrated any significant prejudice in presenting their case at trial as a result of the plaintiff’s delay or as a result of steps taken following the dismissal of the action.”

The plaintiff’s failure to bring the motion promptly, the main ground relied upon by the motion judge, was considered too “rigid”. Instead, the Court of Appeal favoured a “contextual” approach in which the court weighs all relevant considerations to determine the result that is just:

[29] The motion judge’s failure to adopt the approach advocated by Goudge J.A. [in Goudge J.A. in Scaini v. Prochnicki (2007), 85 O.R. (3d) 179] justifies this court interfering with his order and weighing all of the relevant considerations ourselves. After performing this exercise, it is my view that the just result is to set aside the registrar’s order and to reinstate the action. My conclusion is based on the following considerations, which take account of the four factors in Marché:

· Up to the time of the service of the Status Notice, the action had proceeded without any unreasonable delay;

· At least initially, Finlay’s law firm cannot be faulted for not responding to the Status Notice because they were not served with it;

· As the motion judge found, and contrary to what occurred in Marché, Finlay’s law firm did not deliberately decide not to move the litigation forward. The failure to do so was attributable to a slip-up, or at worst to sloppiness, in the law office during and after the time the lawyer in charge of the file left;

· The two-year delay in moving against the registrar’s order was obviously undesirable, especially as Finlay’s law firm had been alerted to the need to take some action. However, the two-year period is not so long that by itself it warranted denying relief. Moreover, the two-year delay has to be assessed in the context of the timeframe preceding it – a timeframe in which the law suit proceeded reasonably promptly;

· The respondents do not point to any specific prejudice they would incur if the registrar’s order was set aside. As Finlay points out, the respondents’ lawyer maintained an open file on this litigation until at least December 2008 when he withdrew his offers to settle. Yet in their affidavit material the respondents can muster only the bald assertion that it will be “extremely difficult” to locate witnesses and that because of the delay witnesses memories will be “hampered”. Without more, this assertion does not amount to a showing of prejudice. I agree with Finlay that it is likely respondents’ counsel obtained witness statements immediately after the accident. Furthermore, I expect that if one of those witnesses was no longer available or the memory of that witness could not be refreshed by the witness’ statement, the respondents’ affidavit evidence on the motion would have said so. The absence of such evidence is telling. See Chiarelli v. Wiens (2000), 46 O.R. (3d) 780 (C.A.); and

· Any hardship visited on the respondents from setting aside the registrar’s order is lessened because they are already defending the action brought by Finlay’s former wife.

[30] Cumulatively, these considerations outweigh the two-year delay in bringing the motion and justify setting aside the registrar’s order. In my view, it is in the interests of justice to do so.”

In obiter, Justice Doherty admonishes motion judges to avoid pointing an accusatory finger at counsel:

[31] Finally, although not necessary to my decision, I wish to comment on two other considerations relied on by the motion judge to deny Finlay relief. The motion judge rested his decision principally on the two-year delay in moving against the registrar’s order, but he also referred to the possibility of a negligence claim against Finlay’s law firm and the “expiration of the limitation period”. Neither consideration, in my view, is germane: 

[32] A judge who refuses to set aside a dismissal order will naturally be concerned that the effect of the refusal will be to deprive an innocent party of its day in court. To protect the claim of the innocent party, the judge will often raise the possibility of a negligence action against the party’s own lawyer. Although perhaps understandable, I do not find this helpful. Speculation about whether a party has a lawsuit against its own lawyer, or the potential success of that lawsuit, should not inform the court’s analysis of whether the registrar’s dismissal order ought to be set aside.

[33] In my view, 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….”

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