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Action Dismissed for Delay, Upheld by Court of Appeal

The Court of Appeal recently upheld a motion judge’s decision to dismiss an action due to “inordinate and inexcusable delay.” Eleven years had passed between the initiation of the lawsuit and the motion to dismiss. During that time, key witnesses had died. At the hearing, the plaintiffs were unable to provide reasonable explanations for the excessive delay in proceeding with the action. The motion judge found that given the inordinate delay and the likelihood that a prejudice would result from such a delay, the action warranted dismissal. 

Facts

The main action arose from two agreements entered into between the plaintiffs and defendants in June 1996. The agreements governed the repayment of a shareholder loan made by the plaintiffs to a numbered corporation (the “Company”). According to the plaintiffs’ statement of claim, the defendant misused power of attorney granted to him by the plaintiffs by selling common shares in the Company to another party. The plaintiffs’ action rested in misrepresentation, unconscionability and undue influence. By 2015, the action had yet to be resolved. The defendants brought a cross-motion to have the action dismissed for delay.

When determining whether to dismiss an action for delay, courts will look at the length of and reasons for the delay, and whether the delay will cause prejudice to the moving party in that a fair trial of the issues will not be possible. At the motion hearing, the judge found that the delay of 11 years—measured from the initiation of the action to the cross-motion to dismiss for delay—was inordinate. On appeal, the plaintiff argued that the delay was partly the result of the fact that this was a dispute between family members, which should be properly resolved outside of the court system. The plaintiff further argued that the delay was partly caused by the defendants and that, in any event, the delay was excused by the defendants given their conduct. The defendants produced court documents, attempted to schedule a motion, engaged in settlement discussions, and agreed to mediation.

The Court of Appeal dismissed these arguments by adopting an approach that focused on the “global context” of the delay. This approach focuses on the overall length of the delay rather than on individual instances. Agreeing with the motion judge’s ruling, the Court of Appeal found that the plaintiffs’ explanations were not “sensible and persuasive.” Citing Wallace v Crate’s Marine Sales Ltd., 2014 ONCA, the Court of Appeal found that the plaintiff is responsible for moving an action along, and therefore the fact that some of the delay was caused by the defendants was not determinative. More importantly, the Court of Appeal found that there was a substantial risk of prejudice. The plaintiffs sued for, among other things, misrepresentation, conspiracy, undue influence and unconscionability. The courts’ ability to rule on claims resting in these causes of action rest largely on witness testimonies. Given that the passage of eleven years, the Court of Appeal found the motion judge’s ruling to be reasonable in concluding that there was a substantial risk of prejudice, especially given that several important witnesses had died.

Our Thoughts

The Ontario Superior Court of Justice has the power to dismiss an action under rule 24.01 of the Rules of Civil Procedure or pursuant to its inherent jurisdiction to prevent abuse of process. While courts are generally weary of dismissing actions prior to hearing the merits of the case, the need to do so is ever prevalent when there is a substantial risk of prejudice resulting from the delay. Not only does this undermine the administration of justice, but it creates a situation wherein plaintiffs may have an incentive to delay trials. In the interest of lightening the already over-burdened court system, courts remain vigilant enforcing statutory time limits.
 
The above article is for general information purposes only and does not constitute legal advice. If you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere.