Canada: Ontario Court Of Appeal Clarifies Test For When Action May Be Restored To The Trial List

In its unanimous decision in Carioca's Import & Export Inc. v. Canadian Pacific Railway Ltd., the Ontario Court of Appeal overturned the motion judge's decision, which denied the Plaintiff's attempt to restore an action to the trial list under Rule 48.11 of the Rules of Civil Procedure. The Court reaffirmed that the two-part test for determining whether to restore an action to the trial list was, first, whether the moving party provided a reasonable explanation for the delay in bringing the case to trial, and second, whether the moving party demonstrated that the opposing party would suffer no non-compensable prejudice should the action be restored to the trial list.

The Court held that the motion judge misapplied this test, and then set out how the test should have been applied in respect of the facts of this case. With respect to the explanation for delay, the Court held that the analysis should not be about a narrow view in allocating blame for the delay, but a determination of whether the delay was reasonable, having regard to "the overall conduct of the litigation", specifically "the overall progress of the action before it was listed for trial, the circumstances of how the action came to be struck from the trial list, and the conduct of all the parties" and the local practices and procedures. With respect to non-compensable prejudice, the Court said that the analysis was to consider the actual evidence of prejudice and that the mere passage of time does not create a presumption of prejudice.

Background

In August 2006, a fire spread from land owned by the respondent, Canadian Pacific Railway Ltd. ("CPR"), to land owned by the applicant, Carioca's Import & Export ("Carioca"). Carioca alleged in the proceedings in issue that the fire spread due to CPR's negligence and claimed against CPR for the alleged damage that it caused.

After the action was commenced, the parties exchanged relevant documents, and examinations for discovery were held, in connection with which Carioca gave numerous undertakings (which are answers to questions given on discovery). In June 2009, Carioca set the action down for trial, and in November of that year, Carioca attempted to obtain pre-trial and trial dates on consent with CPR. CPR refused to consent to the dates on the basis that Carioca had failed to satisfy its undertakings. As a result, the Court office struck the action from the trial list for a first time (it would be struck a second time later).

In January 2010, CPR began pressing Carioca for answers to outstanding undertakings, and by late 2010, most of them were answered. Nevertheless, some remained outstanding.

In January 2012, by unopposed motion by Carioca, the action was restored to the trial list and CPR and Carioca agreed to, and obtained, pre-trial and trial dates for September and November of 2013, respectively. Concurrent with this agreement, CPR requested that Carioca respond to the three outstanding undertakings. Carioca attempted, but was unable to acquire all of the necessary documents to satisfy the undertakings. In July 2013, both parties realized that the expert reports that Carioca and CPR were preparing, and which were to be based in part on tax documents that Carioca undertook to provide, would not be completed by the trial date. As such, Carioca and CPR agreed that the trial dates would have to be adjourned. In order to set new dates, the parties attended at "to be spoken to" court in October 2013. However, the presiding judge found the matter was "not ready" for trial and struck it from the trial list.

In December 2013, Carioca acquired, and provided to CPR, the remaining outstanding tax documents, save for Carioca's tax return for 2012. Carioca agreed to provide CPR with the 2012 return once Carioca received it. In April 2014, Carioca brought a motion to restore the action to the trial list, but CPR objected. As a result, in May 2014, Carioca brought a new motion to restore the action to the trial list, which was heard (and dismissed) by the motions judge in August 2014.

The Decision of the Motions Judge

In order to restore the case to the trial list under Rule 48.11, Carioca had to provide a reasonable explanation for the delay in bringing its action to trial as well as show that CPR would suffer no non-compensable prejudice should the action be restored. The motions judge held that Carioca failed to satisfy both parts of this test.

On the issue of reasonable explanation for delay, the motions judge focused on which party was to blame for the delay at each stage of the litigation. He concluded that most if not all of the blame was attributable to Carioca and that given this, Carioca failed to satisfy the first branch of the test.

Concerning non-compensable prejudice, the motions judge held that the case would "probably, in large part" be decided upon oral evidence, and that, given the amount of time that had passed, the recollections of the events by CPR's witnesses would have faded. As such, CPR would be prejudiced if the case was restored to the trial list, and this prejudice was not compensable.

The Court of Appeal Decision

Carioca appealed the motions judge's decision on the grounds that: it had provided a reasonable explanation for the delay; CPR did not suffer non-compensable prejudice; and the motions judge's errors were errors in law capable of being overturned by an appellate Court. Justice van Rensburg, writing for the Court, held that the motions judge had identified the correct test for restoring an action to the trial list, but that his analysis revealed errors in legal principle in applying the test.

1. Reasonable Explanation for Delay

The Court held that when assessing whether a party provided a reasonable explanation for delay, the analysis required that the motions judge consider, not the allocation of blame for the delay, but whether there was a reasonable explanation for it. This required an examination of "the overall conduct of the litigation, in the context of local practices". As such, the context of the action and any other relevant factors that were specific to the case had to be considered, and some of those relevant factors included:

[55]. the overall progress of the action before it was listed for trial, the circumstances of how the action came to be struck from the trial list, and the conduct of all the parties.

Accordingly, the Court held that the motions judge erred by focusing on blame for the delay, rather than on an analysis of whether the explanations for the delay were reasonable or acceptable (the Court considered the terms to be interchangeable in this context):

[46] A motion to restore an action to the trial list is not a "blame game", where counsel should be required or encouraged to take a defensive stance and justify their conduct of the litigation on a month-by-month basis. Rather, in assessing whether a plaintiff's explanation for delay is reasonable, a motion judge should consider the overall conduct of the litigation, in the context of local practices, which can vary quite widely between jurisdictions. Practices for scheduling pre-trial conferences and trials differ throughout the province, because they must meet the needs of particular regions and courthouses. These practices can affect the expectations of the parties, their counsel and the courts as to timing.

The Court also held that the motions judge erred by focusing almost exclusively on the conduct of Carioca rather than "the overall dynamics of the litigation". This narrow focus, according to the Court's decision, resulted in the motions judge's failure to recognize:

  • the progress of the action - at the time the motion was heard, the case was ready to proceed to trial since all of Carioca's undertakings had been satisfied;
  • the circumstances surrounding how the action was struck from the list - the action was struck in October 2013 while the parties were attending court to set new dates for the trial and pre-trial. It was not struck at the request of CPR; and
  • the conduct of the parties - Carioca brought the motion to restore the action to the trial list reasonably promptly after the action had been struck from the trial list, and CPR failed to indicate any serious concerns about the pace of the litigation until it opposed the motion to restore the action to the trial list in April 2014.

Had the motions judge properly applied the test, the Court held that, the motions judge would have considered these factors and concluded that Carioca provided an acceptable explanation for the delay.

2. Non-Compensable Prejudice

The Court held that the issue of non-compensable prejudice is a factual question, and that the mere passage of time is not in of itself an insurmountable hurdle in determining prejudice. The plaintiff bears the onus of demonstrating that the defendant would suffer no non-compensable prejudice if the action were allowed to proceed, although the court is entitled to also consider the conduct of the defendant in light of assertions of prejudice.

The Court held that the motions judge erred in focusing on the passage of time that may impair the memory of one of CPR's witnesses. The Court held that it was not sufficient to speculate that a case may depend in part on oral evidence, and to assume that witnesses' memories generally fade over time in order to satisfy the prejudice prong of the test. There must be actual proof of lost evidence, lost memory or unavailability of oral evidence to establish non-compensable prejudice.

Conclusion

In sum, the Court held that the motions judge's decision revealed errors in legal principles in applying both parts of the relevant test, thereby allowing the Court to reassess the evidence and conclude that Carioca had in fact provided both an acceptable explanation for the delay, and had shown that CPR would not suffer non-compensable prejudice if the action were restored to the trial list.

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