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Appellate Litigation

Efficiency and finality in legal matters require respect for, and enforcement of, the agreed-upon rules including any set or procedural time limits. Yet at the same time, it is desirable to ensure the merits of each dispute are given their due. How much delay in a proceeding or transaction is considered “too much”? When is it time to pull the plug? These issues came before the ONCA recently in Samuels v. Jen Ling Mai, Hao Cheung Mark, Mark Holdings Inc. and CPM Realty Corporation.

The plaintiff in the case at hand had made an offer to purchase an apartment building in Toronto. The offer was accepted and then fleshed out in an executed Agreement of Purchase and Sale in September 2011 for 1.28 million dollars. The contract required that the plaintiff make a $50,000.00 deposit, which he did. The Agreement was conditional on financing. The plaintiff was unable to raise the necessary money and advised the vendor that the Agreement was at an end, requesting a return of his deposit. The vendor refused.

Lapses in Action

The plaintiff sued for the return of the deposit utilizing the Simplified Procedure of Rule 76 in December 2011. The vendor counterclaimed for damages in the amount of $100,000.00 for breach of contract. The plaintiff filed a Reply and Defence to counterclaim in October 2012. Nothing of substance happened to advance the action until the plaintiff requested a Status Hearing to avoid an administrative dismissal in February 2017.

The Master was lenient to the plaintiff. The action was to continue with a schedule for the next steps being agreed to by the two parties. Despite this second chance, the plaintiff inexplicably took no steps to advance the action or respect the timetable.

As a result, in January 2018,  the defendant brought a motion to dismiss the action for delay, or in the alternative, for summary judgment on the counterclaim. The motion did not proceed as scheduled in September 2018 due to not being listed. The plaintiff was once again given a lifeline but again moved slowly, if at all.

Finally, in February 2019, the plaintiff appeared in Civil Practice Court seeking a date for a motion to vary the timetable set by the Master in 2017 and for summary judgment. The defendant cross-motioned for a dismissal of the action for delay. The defendant was successful in having the action dismissed. No order was made respecting the counterclaim, and the defendant immediately delivered an election to proceed with the counterclaim. The result was that the defendant could proceed with its claim for damages, but the plaintiff’s claim for the deposit could not. The plaintiff appealed.

The Legal Hurdle

The hurdles the plaintiff had to overcome are known as the “Reid factors” based on the Ontario Superior Court of Justice (ONSC) decision in Reid v. Dow Corning Corp. which was referred to by the Ontario Court of Appeal (ONCA) in Prescott v. Barbon as follows:

(i)   Has the plaintiff provided a satisfactory explanation for the litigation delay?

(ii)   Has the plaintiff led satisfactory evidence to explain that they always intended to prosecute this action within the time limit set out in the rules or a court order but failed to do so through inadvertence?

(iii)  Has the plaintiff demonstrated that they moved forthwith to set aside the dismissal order as soon as the order came to their attention, and

(iv)   Has the plaintiff convinced the court that the defendants have not demonstrated any significant prejudice in presenting their case at trial as a result of the plaintiffs’ delay or as a result of steps taken following the dismissal of the action?

The Reid test does not require the plaintiff to satisfy each and every one of the four factors. A contextual approach is required, which would consider all relevant factors to determine what is just under the circumstances based on the ONCA decision in Marché D’Alimentation Denis Thériault Ltée v. Giant Tiger Stores Limited. In doing so, the motions judge is to strive to have all matters determined on their merits but at the same time recognize the societal need for the quick and efficient progress of civil disputes and the need to enforce procedural rules and time limits.

Linked Claims Should Have Both Been Allowed to Proceed

The ONCA agreed with the plaintiff that the result below was too rigid in its application of the Reid test and in requiring the plaintiff to prove all four factors. Given the need for a contextual approach, the motions judge failed to consider one critical factor, being the counterclaim. The ONCA found it to be a mirror image of the dismissed claim and based on the same factual matrix and legal issues. They were inextricably linked for success, and therefore, a dismissal of the original claim should have resulted in a dismissal of the counterclaim, and vice versa. Both claims were stale, due to the inactivity of both parties. Therefore it was in the interests of justice to allow both claims to proceed and the matter was referred back to the ONSC for trial.

This case demonstrates that parties on all sides of a dispute should be held to the same standard. In this case, allowing the counterclaim to proceed when both parties had failed to act at various points, was deemed unjust. This case also highlights the importance of taking action and following timelines to avoid having a matter dismissed for delay. Had there been no counterclaim in the case at hand, the plaintiff’s matter would likely have been dismissed.

At Milosevic & Associates, our team of Toronto corporate commercial lawyers regularly represent clients in complex commercial litigation matters including real estate purchase and sale matters. Over the years, our team of exceptional litigators has seen it all and has successfully fought for our clients’ rights. Our impressive track record speaks for itself.  Call us at 416-916-1387 or contact us online to schedule a consultation.