Canada: Ontario Court Of Appeal Clarifies Test To Be Applied At Rule 48.14 Status Hearings

In Kara v. Arnold, 2014 ONCA 871, the Ontario Court of Appeal seized an opportunity to revisit its recent jurisprudence regarding status hearings and to clarify the interrelation between its recent status hearing decisions (i.e., 1196158 Ontario Inc.1 and Faris2) and the line of jurisprudential authority stemming from motions to set aside registrar's dismissals for delay (i.e. Scaini 3)which call for an overarching "contextual approach" to determine what outcome is just in the circumstances.

In short, the Court upheld its recent jurisprudence and the two-part conjunctive test set forth in 1196158 Ontario Inc. and Faris, while acknowledging context is inherently built into the two-part test itself. The burden to move an action forward with reasonable diligence remains on the plaintiff who must still provide both an adequate explanation for delay and demonstrate that the defendant will suffer no non-compensable prejudice.

Background: Justice Gray's Status Hearing Decision

The underlying action was commenced in February, 2000. By December 9, 2010, only the examination of a single plaintiff had taken place. From December 9, 2010 onward, there was no communication from the plaintiffs until the Ontario Superior Court of Justice delivered a Status Notice to the parties.

The plaintiffs requested a status hearing and the remaining defendant insisted that the status hearing proceed on a contested basis, requiring the plaintiffs to justify the continuation of the action.

The status hearing requested by the plaintiffs was ultimately heard on April 22, 2014. Justice Gray dismissed the action for delay, holding that the plaintiffs' multiple explanations were not adequate in light of the 11 years that had passed since the remaining defendant had filed his Statement of Defence.4 In coming to this decision, Gray J. relied on the two-part conjunctive test set forth in 1196158 Ontario Inc. and Faris which provides that, in order to avoid dismissal for delay at a status hearing, the plaintiff must show that:

(a)   There is an acceptable explanation for the delay; and

(b)   The defendant would suffer no non-compensable prejudice.5

The plaintiffs appealed this ruling to the Ontario Court of Appeal arguing, among other things, that Gray J. had failed to apply the "contextual" approach enunciated by Goudge J.A. in Scaini and referenced by Sharpe J.A. in Marché.6

The Court of Appeal's Decision: Rule 48.14 Has Teeth

In Kara, Blair J.A., on behalf of the Court, reaffirmed the Court's commitment to holding plaintiffs to their duty to move their actions along in an expeditious manner. Blair J.A. recognized that the two-part conjunctive test should not be applied in a purely formalistic and technical manner, but stated that "rule 48.14 was designed to have some teeth."7

Blair J.A. relied heavily on the comments of Sharpe J.A. in 1196158 Ontario Inc. and cited with approval the following comments made by Sharpe J.A. to reinforce the importance of Rule 48.14 for the purpose of promoting timely justice:

[The] cases quite properly reflect and reinforce the strong public interest in promoting the timely resolution of disputes.  "The notion that justice delayed is justice denied reaches back to the mists of time . . . . For centuries, those working with our legal system have recognized that unnecessary delay strikes against its core values and have done everything within their power to combat it"[...]  Excusing significant delay "risks undermining public confidence in the administration of justice": Marché, at para. 32.  The timelines the rules impose are relatively generous and there is a heavy price to be paid when they are not respected.

The civil justice regime should deliver timely justice to both plaintiffs and defendants. ... Unless the basic ground rules of litigation – including time requirements – are enforced in a principled way, counsel cannot provide reliable advice and clients cannot plan their affairs in an orderly manner.

If flexibility is permitted to descend into toleration of laxness, fairness itself will be frustrated.  ... [E]ven if there is no actual prejudice, allowing stale claims to proceed will often be unfair to the litigants.  Disputes are more likely to be resolved fairly if they are resolved in a timely fashion and, accordingly, the enforcement of timelines helps achieve the ultimate goal of fair resolution of disputes.8

Blair J.A. confronted the plaintiffs' suggestion that Gray J. erred by failing to apply the "contextual approach" set forth in Scaini and effectively held that the context surrounding an action and the plaintiffs' conduct in pursuing it are inevitably considered in the course of evaluating the adequacy of the plaintiff's explanation for the delay. According to Blair J.A.:

... little is to be gained by debating whether there is a bright line between the "contextual approach" and the approach enunciated in later authorities such as Faris and 1196158 Ontario Inc. v. 6274013 Canada Ltd.  It seems to be evident that, in considering the reasonableness of any explanation for the delay in question, a status hearing judge will almost invariably engage in a weighing of all relevant factors in order to reach a just result.9

The Court of Appeal did not see the authorities (i.e Scaini, 1196158 Ontario Inc., and Faris) as being inconsistent with one another and reiterated that the courts have been addressing the need for timely compliance with the rules in this context for many years, with the more recent authorities simply underlining this need. As far as the Court is concerned, there is no overarching contextual approach that is to be applied as context is inherent in the two-part conjunctive analysis itself.

The Court also accepted a principle enunciated by Gray J. in his decision that "the longer the delay, the more cogent the [plaintiffs'] explanation must be," and explained that the proposition was simply a common sense observation.10

The Court ultimately upheld Gray J.'s decision to dismiss the action for delay. The Court was satisfied that Gray J. had considered the plaintiffs' explanations for the delay and had made a reasonable determination in finding they were inadequate to explain the delay at issue.

Potential Significance: Set Down or Speak Up

The Court of Appeal appears to have put to rest an issue the Superior Court and Divisional Court have been debating: whether or not a Scaini type "contextual approach" is to be applied to status hearings after the two-part conjunctive test is carried out. The Court has seemingly confirmed that any context is necessarily inherent in the analysis of the first stage of the two-part conjunctive test set forth in Faris and 1196158 Ontario Inc. and that there is no use in trying to delineate or apply a separate contextual approach.

With the two-part conjunctive test affirmed and impending changes to Rule 48.14—which, in general terms, call for the automatic dismissal of claims that have not been set down for trial by the later of five years after the commencement of the action or January 1, 2017—plaintiffs can be expected to have to provide cogent and compelling explanations as to why their action could not be set down within five years. In a lot of cases, this five year window will mean cases will be up for administrative dismissal or status hearings later than usual (i.e., as compared to the current timeline of two years from the filing of the first defence) and plaintiffs will have to be extra vigilant in ensuring there is a reasonable explanation for their failure to set their matter down for trial.

Decisions like Kara, 1196158 Ontario Inc., and Faris make clear that timeliness is and will, for the foreseeable future, remain a significant concern for the courts. General excuses to explain specific delays within an action (such as the re-scheduling of examinations for discovery or tactical decisions) will likely not be considered acceptable for the purposes of explaining away overall delay in setting a matter down for trial.

With such a jurisprudential background, we can expect to see more defendants insisting that the plaintiff put forth evidence to justify any delay and to meet the burden imposed at status hearings, rather than consenting to timetables to keep an otherwise languishing file alive.

Conclusion

If the commitment of the Ontario courts to clear stale-dated actions from their dockets and off the minds of defendants living under the spectre of litigation was not clear before, it is now. Plaintiffs must prosecute their actions with reasonable diligence or be prepared to explain their failure to do so in a compelling manner. Kara serves to clarify to litigants that the two-part conjunctive test is and will remain the applicable test and that context appears to be inherently encapsulated in the test itself.

 Footnotes

1. 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544.

2. Faris v. Eftimovski, 2013 ONCA 360.

3. Scaini v. Prochnicki, 2007 ONCA 63.

4. Kara v. Arnold, 2014 ONSC 2647 at paras 24-25.

5. 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544 at para. 32; Faris v. Eftimovski, 2013 ONCA 360 at para. 32.

6. Marché D'Alimentation Denis Thériault Ltée v. Giant Tiger Stores Limited, 2007 ONCA 695 at para 20.

7. Kara v. Arnold, 2014 ONCA 871 at para 10.

8. 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544 at paras 39, 41-42.

9. Kara v. Arnold, 2014 ONCA 871 at para 13.

10. Kara v. Arnold, 2014 ONCA 871 at para 17.

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