Canada: Actions Have Consequences: Why Procedural Conduct Matters

In Demshe Forge, the Court of Appeal for Ontario denied a motion for an extension of time to file a notice of motion for leave to appeal based on the moving party's long history of procedural misconduct and its resulting impact on the responding parties.¹

Facts

The relevant timeline of facts are as follows:

• On May 10, 2011, the moving party issued a statement of claim alleging breach of an oral contract with one of the respondents, Robert Muddiman;
• On May 16, 2011, the responding parties served a notice of intent to defend and a demand for particulars. They did not receive any response;
• On May 21, 2013, the court sent out a notice of impending administrative dismissal;
• On August 16, 2013, the moving party filed a trial record to set the matter down for trial. They did not notify the responding party, nor did they include the responding parties' notice of intent to defend or demand for particulars;
• On June 16, 2015, the moving party appeared in court without notice to the responding parties and obtained an order noting the responding parties in default;
• On May 18, 2016, it brought a motion, without notice, for judgment and obtained default judgment against the responding parties; and
• On February 12, 2020, Mr. Muddiman's wife became aware of the default judgment and demand for payment when she received a letter directly from the moving party's counsel.²

The Divisional Court found that through the above procedures, the moving party's counsel "misled the court" and "manipulated the court's process."

An additional complication for the respondents was that Mr. Muddiman died suddenly on November 14, 2019. Because the respondents were unaware of what had transpired until February 12, 2020, Mr. Muddiman's evidence was never preserved.³

Dismissal for Delay

By April 14, 2020, as the executor of her late husband's estate, Ms. Muddiman brought a motion to set aside the default judgment and have the action dismissed for delay. The motion judge granted the motion to set aside but declined to dismiss the action for delay. The respondents appealed to the Divisional Court.⁴

The Divisional Court granted the appeal. It held that there were no means of adequately repairing the prejudice caused by the delay or the evidence lost with Mr. Muddiman's death. The case was based on an oral contract, and without Mr. Muddiman's evidence, "it would be difficult if not impossible to refute" the moving party's claim.⁵

The moving party then intended to appeal the Divisional Court decision but, due to the inadvertence of counsel, missed the deadline for filing for leave to appeal by eight days. The moving party brought a motion before the Ontario Court of Appeal asking for an extension of time to file a notice of motion for leave to appeal.

The Court of Appeal Denies the Motion

The court held that the test on a motion to extend time is well-settled. The overarching principle is whether the "justice of the case" requires that an extension be given, taking into account all relevant considerations, including:

a) whether the moving party formed a bona fideintention to appeal within the relevant time period;

b) the length of, and explanation for, the delay in filing;

c) any prejudice to the responding parties caused, perpetuated, or exacerbated by the delay; and

d) the merits of the proposed appeal.⁶

The court found that the moving party satisfied the first and second conditions.

The court also agreed with the moving party that there was no prejudice to the responding parties caused by the brief period of delay. Although the respondents argued that prejudice should not be limited to that which is caused by the delay, but also "perpetuated or exacerbated" by the delay, the court rejected this argument. It held that prejudice within the meaning of the third consideration is "typically confined to prejudice caused, perpetuated, or exacerbated by the delay in the filing of the notice of motion itself."⁷

On the fourth condition, the court found that the moving party's proposed appeal lacked merit. The court agreed that the motion judge had erred in law by declining to dismiss the action for delay. The court found the Divisional Court had correctly identified this error and reached a "patently correct" decision. The court even went as far as determining that leave to appeal from the decision of the Divisional Court would not be granted because there was no error in the Divisional Court decision which required correction. Furthermore, the questions which would be addressed are not matters of public importance.⁸

The court held that lack of merit alone can be a sufficient basis on which to deny the extension of time, particularly when the moving party seeks an extension to file a notice of leave to appeal rather than an extension of time to file a notice of appeal.⁹

Finally, the court found that the justice of the case also demanded that the motion be dismissed.¹⁰ The court did not provide much analysis on this factor but took into account the responding parties' evidence given at the prejudice stage, including that:

a) 11 years had passed since the claim was issued, and the pleadings remained open;

b) the critical witness to the purported oral contract, Mr. Muddiman, had died, and a fair trial was no longer possible; and

c) the continuing emotional and financial toll of the litigation on Ms. Muddiman.¹¹

The court held that "Any adjudication on the merits of this proceeding could only be unfair to the responding parties. The integrity of the civil justice process demands that this proceeding end now."¹²

Takeaway

Although the Court of Appeal for Ontario often exercises its discretion to extend deadlines missed due to the inadvertence of counsel, the conduct of counsel and the moving party can also be a significant factor in whether the court will grant the motion "on the justice of the case." Demshe Forge re-iterates the understanding that when seeking the discretion of the court, the moving party should take care in its procedural conduct to not "blatantly disregard" the Rules of Civil Procedure and the Law Society of Ontario's Rules of Professional Conduct.

Footnotes

1. Paras 2-3.

2. Paras 4-16.

3. Para 14.

4. Para 16.

5. Para 18.

6. Para 21.

7. Paras 27-29.

8. Paras 30-33.

9. Para 34.

10. Para 35.

11. Paras 28-29.

12. Para 37.