Canada: Carioca's Import & Export Inc. v. Canadian Pacific Railway Limited: Restoring An Action To The Trial List Despite Deference Owed To Motion Judge's Refusal

The Ontario Court of Appeal has emphasized that a motion judge's decision on whether to restore an action to the trial list is entitled to deference. But in its September 2, 2015 decision in Carioca's Import & Export Inc. v. Canadian Pacific Railway Limited, the Court held that even though a motion judge had correctly stated the test as to whether an action should be restored to the trial list, he made errors in principle applying it. This allowed the Court of Appeal to re-weigh the evidence and ultimately allow the action to proceed to trial. The decision could prove to be a valuable framework for future appeals of decisions deciding whether to restore an action to the trial list.

The Legal Framework and the Motion Judge's Decision

It was agreed by all concerned that, to restore an action to the trial list, a plaintiff must show, on the balance of probabilities, "that there was a reasonable explanation for the delay; and that if the action were allowed to proceed, the defendant (the respondent) would suffer no non-compensable prejudice" (para. 3).

The motion judge held that the plaintiff failed to meet either branch of this test, holding that the delay – several years since first being put on the trial list, including being struck and restored on one previous occasion, as well as a very lengthy delay in answering undertakings – was mostly, if not entirely, attributable to the plaintiff. The motion judge also found that the defendant would be prejudiced by the restoration of the action to the trial list, as a witness's memory would have faded, nearly ten years after the events underlying the dispute.

The Standard of Review

For a unanimous Court of Appeal, Justice van Rensburg held, "[a] decision on a rule 48.11 motion is discretionary and entitled to deference by this court. It may therefore only be set aside if made on an erroneous legal principle or infected by a palpable and overriding error of fact" (para. 4).

The Appeal

Notwithstanding this standard, Justice van Rensburg allowed the appeal. She summarized:

[5] Although the motion judge set out the correct test, his analysis reveals errors in legal principle in applying both parts of the test. He decided the delay issue based on an allocation of blame for delay rather than whether there was a reasonable explanation for it. He decided the prejudice issue by a mechanical application of a presumption based on the passage of time, rather than considering prejudice as a question of fact in the particular circumstances of this case.

In Justice van Rensburg's view, the motion judge ignored the factual circumstances of this case, which must always be analyzed in deciding whether to restore an action to the trial list. His failure to do so amounted to an error in principle. In particular, Justice van Rensburg noted that the motion judge merely assumed a witness's memory would render him less reliable in the absence of any evidence to that effect. She further held that the motion judge erred in principle in ignoring the defendant's expressing concern about delay only at a very late hour, and the great deal of evidence that indicated that the action was ready for trial (including the completion of oral discoveries and transcripts being prepared).

Disposition

Rather than return the matter to the Superior Court, the Court of Appeal is to re-weigh the evidence upon allowing an appeal in these circumstances. (This is not surprising, given that this will always be occurring in the midst of an action at least somewhat delayed.) In this case, Justice van Rensburg held that there was a reasonable explanation of the delay – while, to some extent, the plaintiff should have moved the action along more quickly, it was always attempting to move it along, and was delayed at least in part by the defendant (a well-resourced corporation) insisting upon very specific answers to undertakings that the plaintiff (a small business) could not answer on its own. In any event, the action was now ready for trial. Moreover, Justice van Rensburg held that the fact that witnesses' memories fade over time is insufficient to establish prejudice in this respect. She also was skeptical that the witness whose memory was said to have faded in this case would prove crucial given that it took the defendant over seven years to contact him.

In the result, therefore, the appeal was allowed and the action was restored to the trial list.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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