COURT OF APPEAL FOR ONTARIO

CITATION: Gaur v. Datta, 2015 ONCA 151

DATE: 20150312

DOCKET: C59142

Rouleau, van Rensburg and Pardu JJ.A.

BETWEEN

Pradeep
    Gaur, Apt Flow Technologies Inc.

and 2081706 Ontario Inc.

Plaintiffs (Appellants)

and

Dipti
    Datta,
Utpal Datta, Inge Datta

and M&I Power
    Technology Inc.

Defendants (
Respondents
)

J. David Keith and Evan Moore, for the appellants

Constance Olsheski, for the respondents

Heard: February 6, 2015

On appeal from the order of Justice Michael G. Emery of
    the Superior Court of Justice, dated June 26, 2014.

van Rensburg J.A.:

[1]

This is an appeal from an order dismissing an action against the
    respondents under rule 21.01(1)(b) of the
Rules of Civil Procedure
.
    For the reasons that follow I would allow the appeal. In my view, the motion
    judge erred in dismissing the action against the respondents. I would permit the
    appellants to proceed with their action against the respondents, claiming both defamation
    and intentional interference with economic relations, with leave to amend their
    pleadings as set out below.

A.

Background

[2]

The appellants  Pradeep Gaur and two companies of which he is a
    principal  are defendants to an action in the Superior Court commenced by
    M&I Power Technology Inc. (M&I Power) in 2012 (the First Action).
    That action, alleging breach of contract and breach of fiduciary duty, was
    commenced after the termination of Pradeep Gaurs employment with M&I Power.

[3]

In 2013, the appellants commenced Action No. CV-13-1230-00 in the
    Superior Court against Dipti Datta and the respondents (the Second Action).
    The respondent M&I Power is the plaintiff in the First Action. The
    respondents Utpal Datta and Inge Datta are current directors of M&I Power. Dipti
    Datta (who did not move to dismiss the action, and is therefore not a
    respondent to this appeal) is a former director and officer of M&I Power.

[4]

In the Second Action the appellants claim damages for defamation and
    intentional interference with economic relations. Central to the action are
    three emails. The first two (dated July 5, 2012 and July 11, 2012) were
    authored by Dipti Datta. The third (dated March 22, 2013) was authored by Utpal
    Datta. It is the motion judges dismissal of the Second Action against the
    respondents under rule 21.01(1)(b) that forms the subject of this appeal.

[5]

The motion judge correctly identified the legal principles applicable to
    a motion to strike under rule 21.01(1)(b). No evidence is admissible, and the
    facts pleaded are assumed to be true unless patently ridiculous or incapable of
    proof:
Lysko v. Braley
, [2006] O.J. No. 1137 (C.A.), 79 O.R. (3d) 721,
    at para. 3;
McCreight v. Canada
,

2013 ONCA 483, 116 O.R. (3d)
    42, at para. 29. In determining whether a cause of action is disclosed, particulars
    can be considered as part of the pleading. In assessing the substantive
    adequacy of the claims, the court is entitled to review the documents referred
    to in the pleadings:
McCreight
, at para. 32.

[6]

The appellants contend that the motion judge erred by dismissing the claim
    against the respondents after making findings of fact. They assert that the
    amended statement of claim, when read with the particulars and the emails (which
    are incorporated by reference in the pleadings), discloses proper claims
    against the respondents sounding in defamation and intentional interference
    with economic relations.

[7]

I consider the appellants submissions regarding each cause of action in
    turn.

B.

The defamation claims

[8]

The tort of defamation requires the plaintiff to prove three elements: (1)
    the defendant made a defamatory statement, in the sense that the impugned words
    would tend to lower the plaintiffs reputation in the eyes of a reasonable
    person; (2) the words in fact refer to the plaintiff; and (3) the words were
    communicated to at least one person other than the plaintiff:
Guergis v.
    Novak
, 2013 ONCA 449, 116 O.R. (3d) 280, at para. 39;
Grant v. Torstar
    Corp.
, 2009 SCC 61, [2009] 3 S.C.R. 640, at para. 28; see also
Lysko
,
    at para. 91.

[9]

In
Lysko
, at para. 90, this court noted that publication by
    the defendant is an essential element of a defamation action and any person who
    participates in the publication of the defamatory expression in furtherance of
    a common design will be liable to the plaintiff. As Raymond E. Brown stated in
The Law of Defamation in Canada,
loose-leaf (2012-Rel. 3),

2nd
    ed. (Scarborough: Carswell, 1999), at pp. 7-30  7-31:

The defamatory material may be published indirectly through the
    action of some intermediary for whose publication a defendant may be held to
    share responsibility. This may be because the defendant authorized, incited or
    encouraged another to publish itA defendant may be responsible for the acts of
    others by encouraging, instructing or authorizing them to publish defamatory
    information, or providing them with information intending or knowing that it
    will be published.

[10]

Pleadings
    in defamation cases are more important than in any other class of action, and
    require a concise statement of the material facts:
Lysko
,

at
    para. 91.

[11]

In
    this case, the alleged defamation occurred in the three emails referred to
    above: two authored by Dipti Datta and a third by Utpal Datta. The amended
    statement of claim pleads the following:

·

all of the defendants (including the respondents) falsely and
    maliciously published the words set out in the paragraph (defined as the
    Defamatory Words) (para. 7);

·

the Defamatory Words were published by email correspondence to
    certain named third parties (para. 8). It is acknowledged that this pleading
    refers to the two emails authored by Dipti Datta;

·

Utpal Datta published additional Defamatory Words in a third
    email and sent the email to certain named third parties, associated with
    potential clients of the plaintiffs (paras. 8a and 8b);

·

the meaning of the Defamatory Words (para. 10);

·

the defendants published the Defamatory Words knowing they were
    false or with careless disregard for their truth (para. 11); and

·

the plaintiff (presumably, Pradeep Gaur) has been injured and
    suffered damages for which the defendants are liable (paras. 12-14).

[12]

Paragraph
    15 of the amended statement of claim asserts that the respondents acted in
    concert with Dipti Datta to publish the Defamatory Words, and that Utpal Datta
    published some of the Defamatory Words directly. Paragraph 17 pleads, in the alternative,
    that Dipti Datta, when he published the Defamatory Words, was acting as Utpal
    and Inge Dattas agent. Paragraph 18 pleads, in the further alternative, that
    Dipti Datta acted on behalf of M&I Power when he published the Defamatory Words.

[13]

Although
    these paragraphs appear in the pleading under the heading Intentional
    Interference with Economic Relations, the respondents acknowledge that,
    reading the amended claim broadly, the pleadings of agency and acting in
    concert also apply to the defamation claims.

(1)

Dipti Dattas Emails

[14]

The
    respondents accept that the pleading is sufficient to disclose a defamation
    claim against Dipti Datta. The principal issue is whether the action regarding Dipti
    Dattas emails can proceed against the respondents. This depends on whether the
    pleading is sufficient with respect to their participation, authorization or
    otherwise, to make them liable for the publication of the emails.

[15]

The
    allegations that the respondents acted in concert with Dipti Datta and that he
    was their agent, are bald. These are conclusions of law, not supported by
    material facts:
Williams v. Canon Canada Inc.
, 2011 ONSC 6571, [2011]
    O.J. No. 5049, at paras. 217-220, affd 2012 ONSC 4692, [2012] O.J. No. 3120
    (Div. Ct.);
Durling v. Sunrise Propane Energy Group Inc
., 2012 ONSC
    4196, [2012] O.J. No. 3408, at para. 75.

[16]

However,
    this is not the end of the analysis. One must turn to the particulars to see
    whether material facts have been pleaded. The respondents counsel made a
    number of demands for particulars over the course of several months, which
    included increasingly more pointed requests for particulars as to how the
    respondents acted in concert. Eventually, in particulars provided on July 26,
    2013, the appellants stated as follows:

Dipti Datta wrote the words in an email in or around July 2012.
    In addition, Utpal Datta told a contractor (Ilia) that Mr. Gaur was
    incompetent. Mr. Utpal Datta, at an M&I Power Technology Inc. meeting with
    Inge Datta present, told Mr. Gaur that should he leave the company, they would
    do what they could to blacklist him in the industry. Utpal Datta and Inge Datta
    requested the involvement of Dipti Datta who uttered the Defamatory Words.
    Utpal Datta also provided Dipti Datta with the contact information of business
    associates in order that Dipti Datta might contact them to undermine Mr. Gaurs
    reputation.

The threats to litigate were made by Dipti Datta in or around
    July 2012 via email to Triton Synergies. M&I Power and Utpal Datta provided
    the information to Dipti Datta in order that he act on behalf of them in respect
    to Mr. Gaur.

[17]

These
    particulars provide additional material facts relevant to the respondents
    participation in the publication of the Dipti Datta emails: Utpal Datta, at an
    M&I Power meeting with Inge Datta present, told Pradeep Gaur that should he
    leave the company, they would do what they could to blacklist him in the
    industry; Utpal and Inge Datta requested the involvement of Dipti Datta, who
    uttered the Defamatory Words; Utpal Datta provided Dipti Datta with the contact
    information of business associates in order that Dipti Datta might contact them
    to undermine Pradeep Gaurs reputation; and M&I Power and Utpal Datta
    provided Dipti Datta information in order for him to threaten litigation in an email
    to Triton Synergies on their behalf.

[18]

Further,
    paragraphs 8a and 8b of the amended claim plead that Utpal Datta sent his own,
    similarly defamatory email and that the consistency in words used in the emails
    indicate[s] a concerted and collective effort by the defendants. I disagree
    with the motion judges observation that the third email, written by Utpal
    Datta, must be considered in isolation from the emails written by Dipti Datta. Reading
    the pleading generously, the inclusion of consistent Defamatory Words in Utpal
    Dattas email is a material fact supporting the allegation that the respondents
    acted in concert with respect to the Dipti Datta emails.

[19]

The
    motion judge was entitled to review the emails to determine whether what was
    pleaded (as enhanced by the particulars) was patently ridiculous or incapable
    of proof. Instead, he appears to have examined the emails as evidence,
    weighing the inferences that could be drawn from their contents and then
    concluding there was no allegation or fact to support the pleadings that the
    respondents acted in concert with Dipti Datta (para. 29) and that the
    respondents could not be held accountable for the Defamatory Words in the Dipti
    Datta emails (para. 32).

[20]

In
    my view, the allegations in the particulars, which are based on the words
    contained in the emails, are capable of an interpretation that the respondents
    acted in concert with Dipti Datta. The facts pleaded are neither patently ridiculous
    nor incapable of proof. This of course does not mean that they will necessarily
    be proven, only that on a Rule 21 motion sufficient material facts have been
    pleaded to support an action in defamation against the respondents in relation
    to the Dipti Datta emails.

(2)

Utpal Dattas Email

[21]

The
    appellants allege that Utpal Datta sent a similarly defamatory email on March
    22, 2013. The motion judge concluded that since only Utpal Datta sent the
    email, it gives rise to no claim against Inge Datta or M&I Power. He also concluded
    that the amended statement of claim did not contain sufficient material facts
    to support this pleading. He dismissed the claim, but without prejudice to its
    being asserted against Utpal Datta by way of counterclaim in the First Action. I
    disagree with the motion judge. In my view, the pleading is sufficient.

[22]

Paragraphs
    8a and 8b of the amended statement of claim plead all of the necessary elements
    of the tort of defamation. The paragraphs plead the words that are alleged to
    have been defamatory, their publication in an email by Utpal Datta, and specifically
    identify two recipients of the email. It is alleged that the consistent use of
    the Defamatory Words indicates a concerted and collective effort by the
    respondents. With respect to the claim against M&I Power and Inge Datta, the
    pleading is sufficient, when considered in the context of the entire pleading
    as well as the particulars provided.

C.

the intentional interference with economic relations claim

[23]

The
    motion judges reasons suggest he struck the appellants claim against the
    respondents for intentional interference with economic relations under rule
    21.01(1)(b), and that he did so for two reasons. First, the amended statement
    of claim failed to disclose material facts addressing the torts requisite
    elements. Second, as with the defamation claims, the pleading disclosed
    insufficient material facts to assert a claim premised on concerted action
    between the respondents and Dipti Datta.

[24]

For
    the reasons already discussed, I do not agree with the second conclusion. I
    turn to consider whether all of the required elements of the tort have been
    pleaded.

[25]

In
A.I. Enterprises Ltd. v. Bram Enterprises Ltd
., 2014 SCC 12, [2014] 1
    S.C.R. 177, a recent decision of the Supreme Court of Canada, Cromwell J. clarified
    the elements of unlawful interference with economic relations, which he
    indicated is also referred to as intentional interference with economic
    relations: at para. 2. The tort requires the defendant to have committed an actionable
    wrong against a third party that intentionally caused the plaintiff economic
    harm. Conduct is unlawful if it is actionable by the third party, or would be
    actionable if the third party had suffered a resulting loss:
A.I.
    Enterprises Ltd
., at para. 5.

[26]

The
    amended statement of claim asserts the following with respect to the tort of
    intentional interference with economic relations. It alleges that, by
    undermining Pradeep Gaurs professional reputation, the defendants sought to, and
    did, interfere with the plaintiffs ability to maintain existing contracts,
    secure additional contracts and develop business opportunities (para. 20). The
    claim also alleges that this interference was unlawful and induced a breach of
    contract (para. 21). Finally, the claim alleges that the defendants conduct
    aggravated the damages caused to the plaintiffs by, among other things, sending
    the plaintiffs third party business associates threats to send quasi legal
    letters to potential customers implicating the third party business associates
    and threatening legal action (para. 22d), and attempting to induce potential
    third-party business associates of the plaintiffs to either break their
    contracts with the plaintiff or not enter into contracts with the plaintiff
    (para. 22e).

[27]

This
    pleading alone does not address each of the essential elements of the tort of intentional
    interference with economic relations. In particular, there is no allegation
    that would amount to unlawful means. The reference to third parties here is
    confusing and there is no clear allegation of an actionable wrong against any
    third party.

[28]

However,
    the appellants urge the court to consider, together with the amended statement
    of claim, the particulars and what is stated in the July 5, 2012 email.

[29]

With
    respect to the unlawful means element, the particulars assert that the
    respondents, through Dipti Datta, offered to pay Triton (a third party) a
    portion of an acknowledged debt owed by M&I Power if Triton would cease
    doing business with Pradeep Gaur. The appellants contend that, when considered with
    reference to the July 5, 2012 email, the allegation is that Dipti Datta (on
    behalf of himself and the respondents) threatened that Triton would not receive
    payment of a debt owed by M&I Power unless it provided its full
    cooperation in the respondents campaign against Pradeep Gaur by ending its
    business relationship with Gaur. In
A.I. Enterprises Inc.
, at para.
    80, Cromwell J. acknowledges that threatening to breach a contract with a third
    party can satisfy the unlawful means element of the tort of intentional
    interference with economic relations.

[30]

Regarding
    the intention element, the amended statement of claim only alleges that the
    respondents, by undermining Pradeep Gaurs reputation, sought to interfere with
    the appellants ability to maintain existing contracts, secure additional
    contracts and develop business opportunities (para. 20). This allegation is not
    explicitly pleaded as the respondents reason for inducing third parties to
    either break or not enter into contracts with the appellants (para. 22e). However,
    on a generous reading of the pleading together with the particulars and the
    July 5, 2012 email, it appears that the appellants are alleging that the
    respondents threats to withhold monies from Triton was targeted at inflicting
    economic harm on the appellants, as the condition for receiving payment was for
    Triton to cease its business relationship with Gaur.

[31]

Regarding
    the requirement that the unlawful means caused the plaintiffs economic harm,
    the particulars assert that the appellants have lost $1.5 million as a result
    of third party business associates  who pursued contracts on their behalf and provided
    them access to contract opportunities  discontinuing their relationship with
    the appellants. The particulars also attribute $32 million in losses to the
    withdrawal of third parties from proposed contracts and joint venture
    opportunities. Although Triton is not explicitly named in these particulars,
    given the similarity between the relationship between the appellants and Triton
    and the intermediary relationship described, on a generous reading this element
    of the tort is disclosed.

[32]

In
    my view, when the particulars and the July 5 email are considered, intentional
    interference with economic relations is raised in this action against the
    respondents. The appellants allege an actionable wrong by the respondents (a
    threat to continue an ongoing breach of contract) against a third party (Triton
    Synergies) that was aimed at causing, and did in fact cause, the appellants
    economic harm:
A.I. Enterprises Inc.
, at paras. 5, 23. These
    allegations are neither incapable of proof nor patently ridiculous. Taking them
    as true, and adopting a broad and generous reading of the pleading together
    with the particulars and the July 5, 2012 email, it is not plain and obvious
    that the pleading discloses no reasonable cause of action for intentional
    interference with economic relations:
Hunt v. T & N plc.
, [1990] 2
    S.C.R. 959, [1990] S.C.J. No. 93, at paras. 33, 36;
Knight v. Imperial
    Tobacco Canada Ltd
., 2011 SCC 42, [2011] 3 S.C.R. 45, at para. 17. Accordingly,
    I would set aside the motion judges order under rule 21.01(1)(b) striking the
    appellants claim for intentional interference with economic relations, subject
    to what I say below respecting the need to amend the pleading.

D.

Alternative Bases for Relief

[33]

The
    motion judge indicated that, while it was unnecessary to address the other
    bases for the relief sought by the respondents under rules 25.11, 25.06(1) and
    21.01(3)(d), he would have struck certain paragraphs of the amended statement
    of claim as frivolous, vexatious or an abuse of process.

[34]

The
    motion judge referred to authority that in the absence of material fact, an
    action can be dismissed as frivolous, vexatious or an abuse of process of the
    court: see, for example,
George v. Harris
, [2000] O.J. No. 1762
    (S.C.), at para. 20. Given his finding that the pleading was bald and lacked
    sufficient material facts to establish concerted action between the respondents
    and Dipti Datta, the motion judge would have struck any claims for defamation
    and intentional interference with economic relations premised on such allegations
    as frivolous, vexatious or an abuse of process.

[35]

As
    already explained, I disagree with this characterization. Accordingly, I also
    disagree with the conclusion that the pleadings should be struck on this
    alternative basis.

E.

leave to amend

[36]

While
    not strictly necessary for the survival of the action in defamation against the
    respondents at the pleadings stage, I would grant the appellants leave to amend
    the amended statement of claim to incorporate the material facts set out in the
    particulars in relation to agency and acting in concert.

[37]

With
    respect to the elements of intentional interference with economic relations, as
    I have indicated, the pleading is deficient, but the particulars provide the
    necessary elements of the cause of action. It is therefore necessary for the
    appellants to amend the claim for intentional interference with economic
    relations so that the various facts contained in the particulars are brought
    into the pleading and the elements of the tort are clearly set out. An amended
    pleading shall be delivered within 30 days, and the respondents shall have 30
    days thereafter to deliver their statement of defence.

F.

conclusion

[38]

For
    these reasons I would allow the appeal, set aside the order dismissing the
    action against the respondents, and grant leave to amend the amended statement
    of claim.

[39]

Since
    the appellants were successful in the appeal, I would set aside the motion
    judges order for costs and award the appellants costs of the motion in the sum
    of $10,000, as well as costs of the appeal in the further sum of $10,000, with
    both amounts inclusive of disbursements and applicable taxes.

Released: (KMvR) MARCH 12, 2015

K.
    van Rensburg J.A.

I
    agree Paul Rouleau J.A.

I
    agree G. Pardu J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: H.B. Fuller Company v. Rogers (Rogers Law Office),
    2015 ONCA 173

DATE: 20150316

DOCKET: C59444

Weiler, Epstein and Brown JJ.A.

BETWEEN

H.B. Fuller Company and H.B. Fuller Construction
    Products Inc.

Plaintiffs (Appellants)

and

David Rogers, c.o.b. as Rogers Law Office and
Computer
    Packages Inc.

Defendants (
Respondent
)

Deborah Templer, for the appellants

Paula Bremner, for the respondent

Heard: February 12, 2015

On appeal from the order of Justice Frederick L. Myers of
    the Superior Court of Justice, dated September 9, 2014.

Weiler
    J.A.:

A.

overview

[1]

This is another appeal respecting the circumstances in which an action
    that has been dismissed for delay may be reinstated pursuant to rule 37.14 of
    the
Rules of Civil Procedure,
R.R.O. 1990, Reg. 194.
[1]
This case arose from the application of the former rule 48.14, which required that
    an action be set down for trial within two years after the filing of the first
    statement of defence.
[2]
Because the appellants, H.B. Fuller Company and H.B. Fuller Construction
    Products Inc.,

had not set the action
    down within the required time limit, the registrar sent a status notice to the
    solicitors acting for the appellants.
[3]
The status notice gave the appellants 90 days to set the action down for trial,
    obtain an order from a judge or master at a status hearing relieving them from this
    requirement, or otherwise conclude the action, for example, by settlement.
    Failing this, the action would be dismissed for delay.

[2]

The solicitors acting for the appellants did not receive the status
    notice. Although the proper address for service was clearly indicated on the
    statement of claim, the registrar apparently sent the notice to the wrong
    address. The subsequent order from the registrar dismissing the action for
    delay was also sent to the wrong address.

[3]

Approximately three months after becoming aware of the order of dismissal,
    the appellants brought a motion to set aside the registrars order and
    reinstate the action. The motion judge dismissed the motion on the basis that
    the appellants had failed to adequately explain the overall delay in pursuing
    their action and had also failed to discharge the onus on them of proving a lack
    of prejudice to the respondent, Computer Packages Inc. (CPI). The appellants
    appeal this decision.

[4]

For the reasons that follow, I would allow the appeal. The motion judge
    erred in two respects. First, he did not give sufficient weight to the
    non-receipt of the registrars status notice and the opportunities the
    appellants lost as a result. Second, he erred in the manner in which he assessed
    prejudice to the respondent. Having regard to the errors of the motion judge, I
    would set aside the dismissal order pertaining to CPI and reinstate the action.

B.

chronology of the litigation

[5]

The appellants sued CPI, a supplier of patent and trademark management
    systems to companies and law firms, for damages in negligence and breach of
    contract. In their statement of claim, the appellants alleged CPI failed to
    monitor the dates when patent maintenance fees for certain of the appellants' patents
    became payable. They further alleged CPI negligently relied on and failed to
    verify the incorrect representations of Rogers, a Toronto-based patent lawyer against
    whom the appellants also brought a claim for damages in negligence. As against
    Rogers, the appellants alleged that he failed to reinstate certain patents and
    failed to pay the applicable maintenance fees, with the result that the
    Canadian Intellectual Property Office considered three patents abandoned.

[6]

Although the appellants state they discovered the existence of their
    claim in October 2009, they did not commence their action until October 2011,
    one day before the two year limitation period expired. Rogers requested a
    number of extensions of time to file a statement of defence, which he finally did
    on December 21, 2012, more than 14 months after service of the statement of
    claim. The appellants state they initiated discussions regarding discovery, including
    proposed discovery dates for Rogers, in April 2013. On May 17, 2013, counsel
    for Rogers wrote to counsel for CPI and the appellants advising that the
    parties were not yet in a position to agree to a discovery plan as CPI had not
    yet filed its statement of defence.

[7]

CPI states that, pursuant to August 2012 discussions and a January 8,
    2013, email, the appellants did not specifically require CPI to file a defence.
    Instead the appellants focussed their attention on their claim against Rogers.

[8]

Rogers died on July 17, 2013. On July 22, 2013, CPI served and filed its
    statement of defence.

[9]

On November 8, 2013, the registrar issued a status notice. According to
    the affidavit filed by the appellants solicitors, the notice was inexplicably
    mailed to a post office box that had been vacated by the law firm in 2004 and
    not to the firms address for service shown on the statement of claim.

[10]

On
    February 24, 2014, the registrar dismissed the action for delay, as it had not
    been set down for trial or otherwise concluded within the time prescribed by
    rule 48.14. The appellants counsel did not receive the order.

[11]

The
    appellants solicitors affidavit further states that it was only when he was
    attempting to settle the action with Rogers counsel on March 3, 2014, that he
    was advised that the action had been dismissed for administrative delay.

[12]

Instead
    of contacting CPI immediately and seeking its consent to set aside the order of
    the registrar, counsel for the appellants took the position that the registrar
    had no jurisdiction to dismiss the action for delay because the status notice
    had not been served in accordance with the rules. This was an error of law. The
    failure to properly serve a status notice is an irregularity and does not oust
    the registrars jurisdiction to dismiss the action:
Finlay v. Van Paasen
,

2010 ONCA 204, 101 O.R. (3d) 390, at para. 15. This error of law on the
    part of the appellants solicitors does not excuse their delay.

[13]

Meanwhile,
    the appellants solicitors continued settlement discussions with Rogers
    insurer, LawPro.

[14]

On
    May 13, 2014, CPI notified the appellants by email that it would not be seeking
    costs for the dismissed action. On May 22, 2014, the appellants emailed CPI,
    indicating that they would be bringing a motion to set aside the registrars
    order and seeking consent to have the action reinstated. This consent was
    refused. On May 29, 2014, the appellants set out their position that the
    registrar lacked jurisdiction and again sought to obtain CPIs consent to
    reinstate the action. Again CPI refused.

[15]

On
    June 9, 2014, about three months after they became aware that the action had
    been dismissed for delay, the appellants brought their motion requesting that
    the registrars order be set aside.

C.

The motion judges reasons

[16]

Citing
Finlay,
the motion judge rejected the appellants argument that the
    registrar lacked jurisdiction to dismiss the action. He observed that the fact
    the notice of status hearing went astray was a factor that weighed strongly in favour
    of reinstating the case, and that
Finlay
was on all fours with this
    case.

[17]

The
    motion judge then adverted to the contextual balancing of four factors required
    when determining whether an action should be reinstated. He observed that the
    action moved fairly quickly, if grudgingly. He held, however, that the
    appellants did not meet their burden to explain the delay. He found the delay
    was attributable to the appellants indulgences to the respondent and their
    desire to settle the action with Rogers. Even after finding out their action
    was dismissed, the plaintiffs approach was to favour its settlement approach
    with Rogers/LawPro ahead of moving to reinstate with alacrity. In addition, he
    held that the appellants had not met their burden of showing that Rogers death
    in 2013 did not cause any prejudice to CPI. He added that the appellants had
    not shown that the case was a documents case or that Rogers evidence was not
    needed.

[18]

The
    crux of the motion judges reasoning is as follows:

The trial never could have been held in the time between the
    commencement of the action in October 2011 until Mr. Rogers death in July
    2013. But discoveries could have been held or Mr. Rogers evidence otherwise
    preserved.  The plaintiff bears the outcome of its indulgences and settlement efforts.
    The action did not have to go into abeyance to discuss settlement. See
Faris
at paragraph 50.

The plaintiff brought this action in the wrong court, with no
    factum or book of authorities. It treats this action as a sideshow focusing
    instead on settlement with Rogers.  Even there, it has yet to obtain an Order
    to Continue over a year after Mr. Roger[s] death. The plaintiff cannot meet
    its burden to explain its delay and prove no prejudice either strictly or
    contextually.

D.

STANDARD OF REVIEW

[19]

The
    decision of a motion judge made pursuant to rule 37.14 is discretionary and is
    entitled to deference on appeal:
Finlay
, at para. 6. The decision may
    be set aside if the motion judge proceeded on an erroneous legal principle or
    made a palpable and overriding error with respect to the facts:
1196158
    Ontario Inc. v. 6274013 Canada Ltd.
, 2012 ONCA 544, 353 D.L.R. (4th) 129, at
    para. 16. Reversing a lower courts discretionary decision is also appropriate
    where the lower court gives no or insufficient weight to relevant
    considerations:
Penner v. Niagara Regional Police Services Board
, 2013
    SCC 19, [2013] 2 S.C.R. 125, at para. 27.

E.

analysis

[20]

When
    hearing a motion to set aside a registrars order dismissing an action for
    delay, a judge must consider and weigh the following four well-known factors: the
    length of the litigation delay and whether the plaintiff has provided an
    adequate explanation for it; whether the failure to meet the mandated time
    limits was due to inadvertence; whether the motion to set aside the dismissal
    order was brought promptly; and whether the delay has prejudiced the defendant:
Habib v. Mucaj
, 2012 ONCA 880, 31 C.P.C. (7th) 1, at para. 5;
Hamilton
    (City) v. Svedas Koyanagi Architects Inc.
, 2010 ONCA 887, 328 D.L.R. (4th)
    540, at para. 22.

[21]

Requiring
    a party moving to set aside the order dismissing its action for delay to
    satisfy each of the four factors is too rigid an approach. That approach,
    derived from
Reid v. Dow Corning Corp.
(2001), 11 C.P.C. (5th) 80 (Ont.
    S.C.), at para. 41, revd on other grounds (2002), 48 C.P.C. (5th) 93 (Ont.
    Div. Ct.), was overruled in
Scaini v. Prochnicki
, 2007 ONCA 63, 85
    O.R. (3d) 179. See
Marché DAlimentation Denis Theriault Ltee v. Giant
    Tiger Stores Limited
, 2007 ONCA 695, 286 D.L.R. (4th) 487
,
at
    para. 20. Instead, the judge must adopt an overall contextual approach and, as
    well, take factors unique to the case into consideration. The factors are not
    an end in themselves. Rule 37.14(2) requires that a judge arrive at a just
    result in the particular circumstances of the case:
Scaini
,

at
    paras. 23-24.

[22]

Some
    of the later authorities from this court have applied a two-part test that is
    conjunctive, requiring a plaintiff both to provide an acceptable explanation
    for the delay and to show that the defendant would suffer no non-compensable
    prejudice if the action were allowed to proceed: see e.g.
Kara v. Arnold
,
    2014 ONCA 871,

[2014] O.J. No. 5818, at para. 8. This test emerged in
    the context of the similar consideration of whether an action should be
    dismissed for delay following a status hearing under the old rule 48.14(13).

[23]

As
    Blair J.A. stated on behalf of the court in
Kara
,

at para.13:

[L]ittle is to be gained by debating whether there is a bright
    line between the contextual approach [enunciated in
Scaini
]

and
    the approach enunciated in later authorities such as
Faris
and
1196158
    Ontario Inc. v. 6274013 Canada Ltd.

Neither the four-factor approach nor the two-part test
    provides an exhaustive list of considerations. Regardless of which is followed,
    all of the circumstances of the case must be considered in order to arrive at a
    just result: see e.g.
Hamilton (City)
, at paras. 22-23;
Marché
,
    at para. 20;
Finlay
, at paras. 27-30;
Kara
, at paras. 13-15. Furthermore,
    it is not only the plaintiffs conduct that must be considered. While the
    plaintiff bears primary responsibility for the conduct of the action, the
    defendants conduct in the litigation is a relevant circumstance: see
Aguas
    v. Rivard Estate
, 2011 ONCA 494, 107 O.R. (3d) 142, at paras. 18-19, 21.

[24]

In
    his reasons, the motion judge adverted to both the four-factor contextual
    approach and
Faris v. Eftimonski,
2013 ONCA 360, 363 D.L.R. (4th) 111,
    which employs the two-part test
.
The parties to this appeal agree that
    the issue is whether he applied the relevant factors correctly.

[25]

The
    factors that guide the courts choice between ending the plaintiffs action
    before trial and forcing the opposite party to defend the case despite the
    delay require a judge to resolve the tension between two underlying policies.
    The first is that civil actions should be decided on their merits. The second
    is that civil actions should be resolved in a timely and efficient manner in
    order to maintain public confidence in the administration of justice:
Kara,
at para. 9;
Hamilton (City)
,

at paras. 20-21;
Marché
,
    at para. 25.

[26]

When
    reviewing a registrars dismissal for delay under the former rule 48.14, the
    weight of authority from this court has leaned towards the first policy
    consideration. As Laskin J.A. stated in
Hamilton (City),
at para. 20,
    quoting with approval the motion judges comment, [T]he courts bias is in
    favour of deciding matters on their merits rather than terminating rights on
    procedural grounds.

While failure to enforce the rules may undermine
    public confidence in the capacity of the justice system to process disputes
    fairly and efficiently, as Sharpe J.A. observed in
119
, at para. 19, nonetheless:

[P]rocedural rules are the servants of justice not its master
    We should strive to avoid a purely formalistic and mechanical application of
    time lines that would penalize parties for technical non-compliance and
    frustrate the fundamental goal of resolving disputes on their merits. [T]he Rules
    and procedural orders are construed in a way that advances the interests of
    justice, and ordinarily permits the parties to get to the real merits of their
    dispute. [
119
, at para. 19. Citations omitted.]

[27]

The
    courts preference for deciding matters on their merits is all the more
    pronounced where delay results from an error committed by counsel. As the court
    stated in
Habib,
at para. 7, [O]n a motion to set aside a dismissal
    order, the court should be concerned primarily with the rights of the litigants,
    not with the conduct of their counsel. In
Marché
, Sharpe J.A. stated,
    at para. 28, The law will not ordinarily allow an innocent client to suffer
    the irrevocable loss of the right to proceed by reason of the inadvertence of
    his or her solicitor (citations omitted).

[28]

In
    determining whether to reinstate an action that has been dismissed for delay,
    keeping in mind the above observations, the court must consider the rights of
    all the litigants. This necessarily requires consideration not only of the plaintiffs
    right to have its action decided on its merits, but also consideration of whether
    the defendant has suffered non-compensable prejudice as a result of the delay,
    whether or not a fair trial is still possible, and even if it is, whether it is
    just that the principle of finality and the defendants reliance on the
    security of its position should nonetheless prevail. See e.g.
119
, and
Wellwood v. Ontario Provincial Police
, 2010 ONCA 386, 319 D.L.R. (4th) 412.

[29]

With
    this jurisprudence in mind, I turn now to its application in this case.

1. Explanation for delay

[30]

The
    appellants submit that the motion judge erred in the manner in which he
    assessed the explanation for delay in moving the action forward. In particular,
    they say he placed insufficient weight on the registrars failure to serve the
    status notice on the appellants. The appellants rely on
Finlay
, at
    para. 16, in which Laskin J.A. held that the registrars failure to serve a
    status notice on the plaintiffs counsel was an important consideration in
    deciding whether to set aside the dismissal order and that, so long as
    plaintiffs counsel had moved promptly after learning of the dismissal order,
    the interests of justice would demand that the order be set aside.

[31]

Although
    the motion judge referred to
Finlay
and noted it was on all fours
    with this case, his view was that the appellants did not move promptly enough
    to set aside the order dismissing the action. He placed little weight on the
    fact that the status notice had not been properly served, commenting that [t]he
    fact that the Status Notice went astray, at best, leads to the outcome that the
    plaintiff should have faced a Status Hearing at which it would have faced the
    burden of the
Faris
Test.

[32]

The
    motion judges analysis ignores the fact the appellants did move to set aside
    the order reasonably quickly  just over three months after the action was
    dismissed for delay. It also ignores the fact that their delay in moving to set
    aside the order was due, in part, to the appellants solicitors mistaken view
    that the registrar lacked jurisdiction to dismiss the action. While this
    erroneous legal interpretation does not excuse the delay, that the delay
    proceeded from the inadvertence of the appellants solicitors is a factor that
    must be considered.

[33]

More
    importantly, the motion judge also failed to consider that, because the status
    notice went to the wrong address, the appellants lost the opportunity to
    prevent their action being dismissed for delay. In the particular circumstances
    of this case, this was a key factor that had to be considered in assessing
    whether it was just to set aside the order of dismissal.

[34]

Had
    the appellants received the notice to dismiss for delay, they might have been spurred
    to settle the case within the 90-day period afterwards, thereby terminating the
    action as contemplated by rule 48.14(4)(b).

[35]

Alternatively,
    the appellants could have requested that the registrar arrange a status hearing
    to show cause why the action should not be dismissed. As explained in Todd
    Archibald, Gordon Killeen & James C. Morton,
Ontario Superior Court
    Practice
, 2015 ed. (Markham, Ont.: LexisNexis, 2014), at p. 1422:

[T]he purpose of a status hearing is to find out why the case
    in question has not been set down for trial within the two-year period
    prescribed by the Rules and to ensure that an order is made to facilitate steps
    to move the case forward. It may be that in unusual and clear cases, where
    there is actual prejudice to D, and a history of flagrant breaches by P of
    various court orders, that the drastic order of dismissing an action at the
    status hearing may be appropriate.  Such an order would be unusual.
[4]

[36]

As
    this excerpt makes clear, a status hearing would have provided the appellants
    with a real opportunity to get the action back on track and avoid having it
    dismissed for delay. Because the motion judge did not consider the
    opportunities the appellants lost as a result of not receiving the status
    notice, he gave insufficient weight to this fact in considering whether it was
    just in the circumstances to uphold the order of dismissal.

2. Prejudice

[37]

I
    turn now to the manner in which the motion judge assessed prejudice. Recently,
    in
MDM Plastics Ltd. v. Vincor International Inc.
, 2015 ONCA 28,

[2015]
    O.J. No. 265, at para. 25, van Rensburg J.A. explained how prejudice must be
    considered:

The prejudice that the motion judge or master must consider is
    to the defendants ability to defend the action that would [arise] from steps
    taken following dismissal, or which would result from restoration of the action
    following the registrars dismissal. [Citations omitted.]

[38]

A
    presumption of prejudice can arise from the passage of time, such as the expiry
    of a limitation period or, as here, the death of a witness. However, the plaintiff
    will not necessarily fail to rebut this presumption simply because he or she
    does not adduce affirmative evidence:

Rather, in evaluating the strength of the presumption of
    prejudice the master or motion judge, must consider all of the circumstances, including
    the defendants conduct in the litigation. [
MDM
,

at para. 32.
    citations omitted.]

[39]

In
    considering whether the appellants had rebutted the presumption of prejudice
    arising from Rogers death, the motion judge failed to consider evidence
    respecting the respondents conduct. Instead, he simply applied the holding in
Faris
without considering the significant factual differences between the
    defendants conduct in that case and the situation here. In so doing, the
    motion judge committed an error that taints his analysis of prejudice.

[40]

In
Faris
, as in this case, a party died during a period of indulgence
    granted by the plaintiff, namely, an extension of time given to one of the respondents
    to file a statement of defence. However, the chronology of the parties actions
    in
Faris
is significant. In that case, after the partys death, the respondent
    filed a notice of intent to defend and also requested that the action against it
    be dismissed without costs. The appellants lawyer did not respond to this
    request, so the respondent sent two further letters, again asking that it be
    let out of the action. The appellants lawyer finally responded, almost a year
    after the first request, at which time he acknowledged receipt of the several
    letters sent throughout the previous year and indicated that he would get
    instructions before the end of the month. He did not do so, and instead only provided
    an answer to the respondents request after the status notice was issued a
    further year later. In these circumstances the court held, at para. 50, that it
    was incumbent on the appellant to conduct his action in a proactive manner and that
    it was not unfair to ascribe the prejudice caused by a partys death to the
    appellant.

[41]

In
    this case, upon Rogers death, CPI filed its statement of defence. Then it did nothing
    from July 2013 to May 2014. It did not seek to have the action against it
    dismissed pursuant to Rule 24. During all this time, neither CPI nor LawPro
    raised the failure of the appellants to obtain an order for continuance. CPI
    was content to let the appellants focus on Rogers/LawPro, as any settlement
    they might reach with him potentially reduced its liability. Assuming serious
    negotiations with LawPro were taking place, forcing CPI to incur the cost of
    filing a statement of defence earlier and pushing ahead with discovery would
    not have been in keeping with one of the requirements of rule 1.04, namely, to
    secure the least expensive determination of a civil proceeding. In my view, a just
    resolution should take into consideration not only the plaintiffs obligation
    to proceed expeditiously, but also the cost to the parties of doing so in the
    circumstances.

[42]

Although
    it is incumbent upon a plaintiff to conduct its action in a proactive manner,
    it is unfair in the circumstances of this case to ignore CPIs passivity. As
    Rosenberg J.A. stated for a majority of this court in
Aguas
, at para.
    19, while the appellant, as plaintiff, bore responsibility for moving the
    action along  respondents' counsel's lack of display of any sense of urgency
    undercuts the claim of actual prejudice. In the circumstances, the motion
    judges reliance on
Faris
without considering the significant factual
    differences between that case and this, and his failure to consider the actions
    of the respondent, led him to err in his assessment of prejudice.

[43]

A
    second error on the part of the motion judge with respect to his assessment of
    prejudice is the fact that he did not advert to a significant piece of
    evidence, namely the appellants solicitors affidavit that he was unaware of
    any prejudice to the respondent in setting aside the order. In concluding the
    appellants had not met their burden of rebutting the presumption of prejudice, it
    was open to the motion judge to reject the affidavit evidence as being a bald and
    unsupported statement: see
Faklan
(c.o.b.
Faklan Health Services)
    v. Niewiadomski,
2014 ONCA 697, [2014] O.J. No. 4792, at paras. 2-3.
    However, he was not entitled to simply ignore that evidence: see e.g.
ODowda
    v. Halpenny
, 2015 ONCA 22, [2015] O.J. No. 214, at para. 10.

[44]

Finally,
    the motion judge did not link the question of prejudice to whether a fair trial
    was still possible and made no finding in that regard.

[45]

Having
    regard to these errors, it becomes  necessary  to reweigh the evidence
    respecting prejudice. CPI does not plead specific non-compensable prejudice or
    the inability to defend the action as a result of Rogers death. The prejudice
    from Rogers death was not increased by the failure of the appellants to set
    the action down within the time limits mandated by the rules. Following Rogers
    death, settlement negotiations continued. One obvious reason for the protracted
    nature of the negotiations is that the calculation of damages would depend on
    whether the appellants were successful in having their patents reinstated. According
    to CPI, the appellants were successful in having one of the patents reinstated
    and were in the process of resolution with respect to another. Nothing occurred
    between the issuance of the status notice and the motion to set aside the
    dismissal order that increased the prejudice to CPI. Nor was the delay in
    moving to set aside the registrars order once it came to the appellants
    attention so great that the principle of finality and CPIs reliance on the
    security of its position must prevail. A fair trial is still possible in these
    circumstances.

3. Conclusion

[46]

While
    the discretionary decision of a lower court is entitled to deference, the
    errors I have identified rise to a level that warrants appellate intervention. Considering
    all the circumstances of this case, I would hold that the appellants have
    explained the delay in their conduct of the litigation and that the delay in
    moving to set aside the dismissal order is not so great as to yield to CPIs
    reliance on the security of its position. I also conclude that the appellants
    have rebutted the presumption of non-compensable prejudice and it is still
    possible to have a fair trial.

F.

disposition and costs

[47]

Accordingly,
    I would set aside the motion judges order dismissing the action and in its
    place I would order that the action be reinstated.

[48]

I
    would order that costs of the appeal be to the appellants and would fix those
    costs at $15,000 inclusive of the costs of the motion below, disbursements and
    all applicable taxes.

Released: (GE) March 16,
    2015

K.M.
    Weiler J.A.

I
    agree Gloria Epstein J.A.

I
    agree David Brown J.A.

APPENDIX A

Rules of Civil Procedure
, R.R.O. 1990, Reg. 194

Rule 1.04

INTERPRETATION

General
    Principle

1.04  (1)  These rules shall be liberally construed to secure the just,
    most expeditious and least expensive determination of every civil proceeding on
    its merits. R.R.O. 1990, Reg. 194, r. 1.04 (1).

Rule 37.14

SETTING ASIDE,
    VARYING OR AMENDING ORDERS

Motion to Set
    Aside or Vary

37.14  (1)  A party or other person who,

(a) is affected by an order obtained on motion without
    notice;

(b) fails to appear on a motion through accident, mistake
    or insufficient notice; or

(c) is affected by an order of a registrar,

may move to set aside or vary the order, by a
    notice of motion that is served forthwith after the order comes to the persons
    attention and names the first available hearing date that is at least three
    days after service of the notice of motion. R.R.O. 1990, Reg. 194, r. 37.14
    (1); O. Reg. 132/04, s. 9.

(2)  On a motion under subrule (1), the court
    may set aside or vary the order on such terms as are just. R.R.O. 1990, Reg.
    194, r. 37.14 (2).

...

Rule 48.14 (Revoked by
    O. Reg. 170/14, ss. 10, 26(1))

ACTION
    NOT ON TRIAL LIST

Definition

48.14  (0.1)  In this rule,

defence means,

(a) a
    statement of defence,

(b) a notice
    of intent to defend, and

(c) a notice
    of motion in response to an action, other than a motion challenging the courts
    jurisdiction. O. Reg. 394/09, s. 20 (1).

Status Notice

(1)  Unless the court orders otherwise, if an action in which a defence
    has been filed has not been placed on a trial list or terminated by any means
    within two years after the first defence is filed, the registrar shall serve on
    the parties a status notice in Form 48C.1 that the action will be dismissed for
    delay unless, within 90 days after service of the notice, the action is set
    down for trial or terminated, or documents are filed in accordance with subrule
    (10). O. Reg. 438/08, s. 46; O. Reg. 394/09, s. 20 (2, 3); O. Reg. 186/10, s.
    3.

(2)  Unless the court orders otherwise, if an action that was placed on
    a trial list and was subsequently struck off is not restored to a trial list
    within 180 days after being struck off, the registrar shall serve on the
    parties a status notice in Form 48C.2 that the action will be dismissed for
    delay unless, within 90 days after service of the notice, the action is
    restored to a trial list or terminated, or documents are filed in accordance
    with subrule (10). O. Reg. 438/08, s. 46.

Notice to Client

(3)  A lawyer who receives a status notice shall forthwith give a copy
    of the notice to his or her client. O. Reg. 438/08, s. 46.

Dismissal by
    Registrar

(4)  The registrar shall dismiss the action for delay, with costs, 90
    days after service of the status notice, unless,

(a) the action
    has been set down for trial or restored to a trial list, as the case may be;

(b) the action
    has been terminated by any means;

(c) documents
    have been filed in accordance with subrule (10); or

(d) the judge
    or case management master presiding at a status hearing has ordered otherwise.
    O. Reg. 438/08, s. 46.

(5)  If an action is not set down for trial, restored to a trial list
    or terminated by any means within the time specified in an order made at a
    status hearing, the registrar shall dismiss the action for delay, with costs.
    O. Reg. 438/08, s. 46.

Dismissal Order
    to be Served

(6)  The registrar shall serve an order made under subrule (4) or (5)
    (Form 48D) on the parties. O. Reg. 438/08, s. 46.

Dismissal Order
    to Client

(7)  A lawyer who is served with an order dismissing the action for
    delay shall forthwith give a copy of the order to his or her client. O. Reg.
    438/08, s. 46.

Status Hearing

(8)  Where a status notice has been served, any party may request that
    the registrar arrange a status hearing, in which case the registrar shall mail
    to the parties a notice of the status hearing, and the hearing shall be held
    before a judge or case management master. O. Reg. 438/08, s. 46.

Notice to Client

(9)  A lawyer who receives a notice of status hearing shall forthwith
    give a copy of the notice to his or her client. O. Reg. 438/08, s. 46.

When Hearing in
    Writing

(10)  Unless the presiding judge or case management master orders
    otherwise, the status hearing shall be held in writing and without the
    attendance of the parties if a party files the following documents at least
    seven days before the date of the status hearing:

1. A
    timetable, signed by all the parties, containing the information set out in
    subrule (11).

2. A draft
    order establishing the timetable. O. Reg. 438/08, s. 46.

Timetable

(11)  The timetable shall,

(a) identify
    the steps to be completed before the action may be set down for trial or
    restored to a trial list;

(b) show the
    date or dates by which the steps will be completed; and

(c) show a
    date, which shall be no more than 12 months after the date of the status
    hearing, before which the action shall be set down for trial or restored to a
    trial list. O. Reg. 438/08, s. 46.

Status Hearing
    in Person

(12)  In the case of a status hearing that is not to be held in writing,
    the lawyers of record shall attend, and the parties may attend, the status
    hearing. O. Reg. 438/08, s. 46.

Disposition at
    Status Hearing

(13)  At the status hearing, the plaintiff shall show cause why the
    action should not be dismissed for delay and,

(a) if the
    presiding judge or case management master is satisfied that the action should
    proceed, the judge or case management master may,

(i) set time
    periods for the completion of the remaining steps necessary to have the action
    placed on or restored to a trial list and order that it be placed on or
    restored to a trial list within a specified time,

(ii) adjourn
    the status hearing to a specified date on such terms as are just, or

(iii) if the
    action is an action to which Rule 77 may apply under rule 77.02, assign the
    action for case management under that Rule, subject to the direction of the
    regional senior judge,

(iv) make such
    other order as is just; or

(b) if the
    presiding judge or case management master is not satisfied that the action
    should proceed, the judge or case management master may dismiss the action for
    delay. O. Reg. 438/08, s. 46.

Plaintiff under
    Disability

(14)  Unless the court orders otherwise, where the plaintiff is under a
    disability, an action may be dismissed for delay under this rule only if the
    defendant gives notice to the Childrens Lawyer or, if the Public Guardian and
    Trustee is litigation guardian of the plaintiff, to the Public Guardian and
    Trustee. O. Reg. 438/08, s. 46.

Effect
    of Dismissal

(15)  Rules 24.03 to 24.05 (effect of dismissal for delay) apply to an
    action dismissed for delay under subrule (4), (5) or (13). O. Reg. 438/08, s.
    46; O. Reg. 394/09, s. 20 (4).

Setting Aside
    Dismissal

(16)  An order under this rule dismissing an action may be set aside
    under rule 37.14. O. Reg. 438/08, s. 46.

Rule 48.14 (Current)

DISMISSAL OF
    ACTION FOR DELAY

48.14  (1)  Unless the court orders otherwise, the registrar shall
    dismiss an action for delay in either of the following circumstances, subject
    to subrules (4) to (8):

1. The action
    has not been set down for trial or terminated by any means by the later of the
    fifth anniversary of the commencement of the action and January 1, 2017.

2. The action
    was struck off a trial list and has not been restored to a trial list or
    otherwise terminated by any means by the later of the second anniversary of
    being struck off and January 1, 2017. O. Reg. 170/14, s. 10.

Order to be
    Served

(2)  The registrar shall serve an order made under subrule (1) (Form
    48D) on the parties. O. Reg. 170/14, s. 10.

Order to Client

(3)  A lawyer who is served with an order made under subrule (1) shall
    promptly give a copy of the order to his or her client. O. Reg. 170/14, s. 10.

Timetable

(4)  Subrule (1) does not apply if, at least 30 days before the expiry
    of the applicable period referred to in that subrule, a party files the
    following documents:

1. A
    timetable, signed by all the parties, that,

i. identifies
    the steps to be completed before the action may be set down for trial or
    restored to a trial list, as the case may be,

ii. shows the
    date or dates by which the steps will be completed, and

iii. shows a
    date, which shall be no more than two years after the day the applicable period
    referred to in subrule (1) expires, before which the action shall be set down
    for trial or restored to a trial list.

2. A draft
    order establishing the timetable. O. Reg. 170/14, s. 10.

Status Hearing

(5)  If the parties do not consent to a timetable under subrule (4),
    any party may, before the expiry of the applicable period referred to in
    subrule (1), bring a motion for a status hearing. O. Reg. 170/14, s. 10.

(6)  For the purposes of subrule (5), the hearing of the motion shall
    be convened as a status hearing. O. Reg. 170/14, s. 10.

(7)  At a status hearing, the plaintiff shall show cause why the action
    should not be dismissed for delay, and the court may,

(a) dismiss
    the action for delay; or

(b) if the
    court is satisfied that the action should proceed,

(i) set
    deadlines for the completion of the remaining steps necessary to have the
    action set down for trial or restored to a trial list, as the case may be, and
    order that it be set down for trial or restored to a trial list within a
    specified time,

(ii) adjourn
    the status hearing on such terms as are just,

(iii) if Rule
    77 may apply to the action, assign the action for case management under that
    Rule, subject to the direction of the regional senior judge, or

(iv) make such
    other order as is just. O. Reg. 170/14, s. 10.

Party Under
    Disability

(8)  Subrule (1) does not apply if, at the time the registrar would
    otherwise be required under that subrule to dismiss an action for delay, the
    plaintiff is under a disability. O. Reg. 170/14, s. 10.

Effect
    of Dismissal

(9)  Rules 24.03 to 24.05 (effect of dismissal for delay) apply to an
    action dismissed under subrule (1). O. Reg. 170/14, s. 10.

Setting Aside

(10)  The dismissal of an action under subrule (1) may be set aside
    under rule 37.14. O. Reg. 170/14, s. 10.

Transition

(11)  Subject to subrule (12), every status notice served under this
    rule, as it read immediately before January 1, 2015, ceases to have effect on
    that date, if the action was not dismissed before that date. O. Reg. 170/14, s.
    10.

(12)  If a status hearing in relation to a status notice was scheduled
    but not held before January 1, 2015, this rule, as it read immediately before
    that date, continues to apply to the matter. O. Reg. 170/14, s. 10.

(13)  Every notice that an action will be dismissed as abandoned that
    was given by the registrar under rule 48.15, as it read immediately before
    January 1, 2015, ceases to have effect on that date, if the action was not
    dismissed before that date. O. Reg. 170/14, s. 10.

[1]
The Rules cited in this judgment are set out in Appendix A, following these
    reasons.

[2]
On January 1, 2015, O. Reg 170/14, s. 10, came into force and substituted a new
    rule 48.14, notably changing the timeline for a dismissal for delay to five
    years from the commencement of the action.

[3]
The status notice states in part, According to the records in the court
    office: (a) more than two years have passed since a defence in this action was
    filed. The first defence in this action was filed on December 21, 2012, and
    the status notice was issued on November 8, 2013. It therefore appears that the
    status notice was sent before the two year period after filing the first
    defence had expired and was therefore premature. No party has raised this and
    the motion judge did not consider it. There may be other facts of which the
    court is unaware and therefore I will decide the case as if the status notice
    had been properly issued.

[4]
The authors acknowledge, as well, that where the plaintiff is not able to
    provide a satisfactory explanation for the delay, it is still open to the judge
    to dismiss the action even in the absence of proof of actual prejudice to the
    defendant.


COURT OF APPEAL FOR ONTARIO

CITATION: Han v. Li, 2015 ONCA 193

DATE: 20150323

DOCKET: C59579

Sharpe, Pepall and van Rensburg JJ.A.

BETWEEN

Wenchen Han, Ying Han, 2304338 Ontario Inc. and
    2293689 Ontario Inc.

Plaintiffs (Respondents)

and

Li Li
    also known as Lily Li, Yousif Y. Nissan,
Teresa Hsin
,

1856257
    Ontario Inc., 2302344 Ontario Inc., Jasbir S. Gill,

Jaswinder
    Gill, Wen Wu, Gang Wu, Liangxin International Ltd.,

Relaxology
    Wellness Centre Corp., and 2258180 Ontario Inc.

Defendants (Appellant)

Allan S. Blott Q.C., for the appellant

Keith Landy, for the respondents

Heard: March 23, 2015

On appeal from the order of Justice Andra Pollak of the Superior
    Court of Justice, dated October 23, 2014.

APPEAL BOOK ENDORSEMENT

[1]

We are not persuaded that the motion judge erred in refusing to set
    aside the default judgment. The motion judge identified and applied the correct
    test and found that the appellant had failed on all three elements, and
    concluded that it was not in the interest of justice to set aside the default
    judgment.

[2]

Appeal dismissed. Costs to the respondents fixed at $14, 591.05,
    inclusive of disbursements and taxes.


COURT OF APPEAL FOR ONTARIO

CITATION:
Hodutu v. Bulger, 2015 ONCA 160

DATE: 20150311

DOCKET: C59287

Lauwers, Hourigan and Pardu JJ.A.

BETWEEN

Mary Hodutu

Plaintiff (Appellant)

and

Dr. Joseph Bulger, Dr. Bohdan Kryshtalskyj, Dr.
    Karl Lederman, Dr. Jolanta Maj, Dr. John Kennedy, Dr. Jack Zosky, Dr. Andy
    Wong, Dr. Giovanni Delevadova, Dr. Paul Hu, Dr. Carmen Petrikowski, Dr. David
    Rawson and Dr. Victor Moncarz

Defendants (Respondents)

Marko Djukic, for the appellant

Esther Nwator, for the respondents

Heard and released orally:  March 3, 2015

On appeal from the order of Justice Graeme Mew of the Superior
    Court of Justice, dated March 5, 2014.

ENDORSEMENT

[1]

This is an appeal from the order of Mew J. granting the respondents
    motion to strike the appellants statement of claim on the basis that the
    applicable limitation period had expired.

[2]

The respondents are dental surgeons who provided services to the
    appellant from 1998 to June 2006.

[3]

The appellant claimed that dental implants inserted by the respondents
    caused her pain and infections. She says in her statement of claim that her
    pain ceased when the implants were removed in June 2006. The appellant
    commenced an action against the respondents on February 5, 2013, alleging
    professional negligence and medical malpractice.

[4]

The respondents brought a motion to strike the appellants statement of
    claim asserting, among other things, that the claim was statute barred by the
Limitations
    Act, 2002
, S.O. 2002, c. 24, Sched. B.

[5]

The motion judge found that the applicable limitation period is,
    depending on the application of the transition provision in s. 24 of the
Limitations
    Act, 2002
, either one or two years from the date the appellant knew or
    ought to have known that she had a claim.

[6]

He noted that there is a rebuttable presumption under the
Limitations
    Act, 2002
that the limitation period starts to run when the impugned acts
    or omissions occur.  In these circumstances, this would be the day or days that
    she received the dental services.  In respect of those claims subject to the
    previous legislation, if her claim was discovered before January 1, 2004, she
    would be out of time and if it was not discovered by that date, the presumption
    in the new Act would apply.

[7]

The motion judge further found that there was no evidence to support the
    commencement of the limitation period from a date later than the date that she
    received the services she now impugns.  In fact, the appellant wrote to one of
    the respondents on August 24, 2006 informing him that his work was faulty and
    requesting compensation. The appellants claim was struck without leave to
    amend because the motion judge determined that it was commenced nearly five
    years after the latest presumptive expiry of the limitation period.

[8]

The appellant submits that the motion judge failed to properly consider
    the issues of discoverability and fraudulent concealment. Further, she submits
    that he erred in not granting her leave to amend her statement of claim.

[9]

We would not give effect to any of these grounds of appeal.

[10]

The
    appellants argument that she did not discover her claim in June 2006 is
    contradicted by her own pleadings which state that her pain ceased when the
    implants were removed in June 2006, and by the August 2006 letter to one of the
    respondents.

[11]

There
    is also no evidence to support the appellants allegation of fraudulent
    concealment and this issue was not raised before the motion judge.

[12]

Finally,
    there was no basis to grant leave to amend the statement of claim because the
    claim was statute barred.

[13]

The
    appeal is dismissed.

[14]

Costs
    in the amount of $5,000, all inclusive are payable by the appellant to the
    respondents.

P.
    Lauwers J.A.

C.W.
    Hourigan J.A.

G.
    Pardu J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Intact Insurance Company v. Kisel, 2015 ONCA 205

DATE: 20150326

DOCKET: C59338 and C59339

Laskin, Simmons and Watt JJ.A.

BETWEEN

Intact Insurance Company

Defendant (Appellant)

and

Yaroslava Kisel

Plaintiff (Respondent)

AND BETWEEN

Intact Insurance Company

Defendant (Appellant)

and

Rade Bijelic

Plaintiff (Respondent)

John A. Campion and Thomas Hanrahan, for the appellant

Alon Rooz, for the respondents

Heard: February 3, 2015

On appeal from the order of Justice Paul M. Perell of the
    Superior Court of Justice, dated August 18, 2014.

Laskin
    J.A.:

[1]

Intact Insurance appeals the refusal of the motion judge to set aside a
    noting of default and a default judgment of approximately $68,000 obtained
    against it by the respondents, Rade Bijelic and Yaroslava Kisel. I would allow
    the appeal. It is not in the interests of justice to maintain either the noting
    of default or the default judgment.

A.

Background

(i)

The underlying dispute

[2]

Bijelic and Kisel sued Intact, their own insurer, for its alleged
    failure to comply with a hold harmless agreement signed by the parties
    following a dispute over the payment of statutory accident benefits.

[3]

Bijelic and Kisel, both elderly, were injured in a car accident in
    December 2009. Each applied for statutory accident benefits from Intact, and
    most of those benefits were paid. Intact, however, claimed that two of their health
    service providers  Osler Rehabilitation Centre and Assessment Direct  had
    submitted invoices for excessive amounts. Intact maintained that the number and
    frequency of visits by Bijelic and Kisel to these service providers could not be
    justified.

[4]

Intact settled its dispute with Bijelic and Kisel in two stages: first
    by a partial settlement on February 5, 2013, and then by a full settlement on
    February 11, 2013. Under the partial settlement, Intact agreed to settle all
    accident benefit claims save for outstanding accounts of approximately $60,000
    and $67,000, submitted to Intact by the two service providers on behalf of
    Bijelic and Kisel, respectively.

[5]

Under the full settlement, Bijelic and Kisel agreed to release Intact
    from any further claims, and Intact agreed to hold harmless and indemnify both
    Bijelic and Kisel from any claims brought by the two service providers for the outstanding
    accounts. The wording of the hold harmless agreements, which is handwritten, is
    central to this appeal. The agreement for Kisel states:

OFFER TO SETTLE ANY OTHER TERMS (specify)

Intact agrees to hold Yaroslava Kisel harmless and indemnify
    her from any claims brought by Assessment Direct from Osler Rehabilitation
    Centre, only in relation to the exceptions listed in the partial release,
    signed February 5, 2013.

The applicant agrees to cooperate fully with Intact and attend
    an examination under oath forthwith if a claim is commenced as against Ms.
    Kisel.

The agreement for Bijelic is similar.

(ii)

The litigation

[6]

Both Osler Rehabilitation and Assessment Direct sent demand letters to Bijelic
    and Kisel for payment of their outstanding accounts. On receipt of the demand
    letters, Bijelic and Kisel asked Intact to act under the hold harmless
    agreements. Intact took the position that the hold harmless agreements had not
    been triggered because neither Osler Rehabilitation nor Assessment Direct had
    started an action for payment of its outstanding accounts.

[7]

Nonetheless, though neither service provider had sued, Bijelic and Kisel
    started these actions  which have led to this appeal  alleging Intact had
    breached the hold harmless agreements. Their counsel advised Intact that he
    expected strict compliance with the rules of practice for delivering a
    statement of defence.

[8]

Intact delivered a notice of intent to defend in each action, but did
    not deliver statements of defence. In this court, Mr. Campion for Intact
    candidly acknowledged that his client ought to have done so. When Intact did
    not deliver a defence, each plaintiff moved promptly to obtain a default
    judgment, in one case, and a noting of default, in the other. The relevant
    dates are as follows:

(a) Kisel action

·

May 13, 2013: Kisel serves statement of claim

·

May 30: Intact serves notice of intent to defend

·

June 12: statement of defence due

·

June 20: Kisel notes Intact in default and obtains default
    judgment for $67,717, plus costs

(b) Bijelic action

·

August 7, 2013: Bijelic serves statement of claim

·

August 27: statement of defence due

·

September 10: Bijelic notes Intact in default. Bijelic attempts
    to obtain default judgment, but the registrar refuses to sign the order

·

September 18: Intact serves notice of intent to defend

(iii)

The motion judges ruling

[9]

Intact moved to set aside the default judgment and noting of default.
    The motion judge heard both motions together, and gave thorough reasons for dismissing
    the motions. He referred to a number of cases setting out the factors a judge
    must consider when determining whether to set aside a default judgment. As I
    will discuss below, the test for setting aside a default judgment and the test
    for setting aside a noting of default differ. Given my conclusion, however,
    that the motion judge ought to have set aside both defaults, his failure to
    distinguish between the two makes no appreciable difference to the result in
    this case.

[10]

In
    dismissing Intacts motions, the motion judge accepted that Intact had moved
    promptly; that it had at least an arguable defence; and that setting aside the
    defaults would not adversely affect the overall integrity of the administration
    of justice. Nonetheless, he refused to set aside the defaults for two reasons.
    First, he did not accept that Intact had a reasonable excuse or explanation for
    its default. In his words, Intacts explanation for its default has more
    impudence than excuse. Second, in his view Bijelic and Kisel would be far more
    prejudiced by granting Intact an indulgence than would Intact be prejudiced by a
    refusal to set aside the defaults. The motion judge therefore concluded that it
    would not be just to relieve Intact of the consequences of its defaults.

[11]

The
    motion judge also ordered that Bijelic could move, without notice, for a
    default judgment against Intact. From the motion record, it appears that he did
    so on September 24, 2014, obtaining a default judgment of $61,306.98, plus
    costs. This later judgment was not referred to by the parties.

B.

Discussion

[12]

Rules
    19.03(1) and 19.08(1) provide the basis for setting aside a noting of default
    and a default judgment, respectively. Both rules give the court discretion to
    set aside the default on such terms as are just. This court has held that the
    tests to be met under these rules are not identical. See
Metropolitan
    Toronto Condominium Corp. No. 706 v. Bardmore Developments Ltd.
(1991), 3
    O.R. (3d) 278 (Ont. C.A.), at pp. 284-85.

[13]

When exercising its discretion to set aside a noting of default,
    a court should assess the context and factual situation of the case:
Bardmore
,
    at p. 285. It should particularly consider such factors as the behaviour of the
    plaintiff and the defendant; the length of the defendants delay; the reasons
    for the delay; and the complexity and value of the claim. These factors are not
    exhaustive. See
Nobosoft Corp. v. No Borders
    Inc.
, 2007 ONCA 444, 225 O.A.C. 36,
    at para. 3;
Flintoff v. von Anhalt
, 2010 ONCA 786,
[2010] O.J.
    No. 4963,
at para. 7. Some decisions have also
    considered whether setting aside the noting of default would prejudice a party
    relying on it: see e.g.
Enbridge Gas Distribution Inc. v. 135 Marlee
    Holdings Inc.
,
[2005] O.J. No. 4327
,
    at para. 8. Only in extreme circumstances, however, should the court require a
    defendant who has been noted in default to demonstrate an arguable defence on
    the merits:
Bardmore
, at p. 285.

[14]

On a motion to set aside a default judgment, on the other hand,
the court considers five major factors, one of which is
    whether the defendant has an arguable defence on the merits. The five factors
    are:

(a)

whether the motion was brought
    promptly after the defendant learned of the default judgment;

(b)

whether the defendant has a
    plausible excuse or explanation for the  default;

(c)

whether the defendant has an
    arguable defence on the merits;

(d)

the potential prejudice to the defendant
    should the motion be dismissed, and the potential prejudice to the plaintiff
    should the motion be allowed; and

(e)

the effect of any order the court
    might make on the overall integrity of the administration of justice.

Again, these factors are not rigid rules. The court
    has to decide whether, in the particular circumstances of the case, it is just
    to relieve a defendant from the consequences of default:
Mountain View Farms
    Ltd. v. McQueen
, 2014 ONCA 194, 372 D.L.R. (4th) 526, at paras. 48-50.

[15]

The
    motion judge applied the test for setting aside a default judgment. As he found
    that Intact had an arguable defence on the merits, his application of that test
    alone did not affect the outcome of his decision. He refused to set aside both
    defaults because he found that Intact had not adequately explained its delay
    and that Kisel and Bijelic would be prejudiced if he granted the motions. These
    were relevant considerations both on the motion to set aside the noting of
    default and on the motion to set aside the default judgment.

[16]

Nonetheless,
    in my opinion the motion judge erred in relying on these two grounds for
    refusing to set aside the defaults. In my opinion, Intact had a reasonable
    explanation for its defaults and neither Bijelic nor Kisel would have been
    prejudiced by allowing Intact to defend each action.

(i)

Intacts explanation

[17]

In
    finding that Intact had not offered a reasonable explanation for its defaults,
    the motion judge stopped short of interpreting the hold harmless agreements.
    The parties had differed on their interpretation: Bijelic and Kisel maintained
    that the hold harmless agreements were triggered once the two service providers
    served demand letters; Intact maintained that the hold harmless agreements
    would only be triggered when the service providers started an action. The
    motion judge thought that Intact had the better interpretation, but concluded
    it was neither necessary nor appropriate to decide the point.

[18]

Yet
    the proper interpretation of the hold harmless agreement was fundamental to
    Intacts submission that it had a reasonable explanation for not defending the
    actions. Intacts simple position was that on a proper interpretation of the
    hold harmless agreements, Bijelics and Kisels causes of action against Intact
    had not accrued because when they sued Intact, neither service provider had yet
    sued them.

[19]

In
    this court, both sides filed lengthy written submissions on the interpretation
    of the hold harmless agreements. It is unnecessary to review these submissions.
    On the plain wording of these agreements, they do not come into effect until
    either Osler Rehabilitation or Assessment Direct sues either Bijelic or Kisel.
    They do not come into effect on a mere demand for payment. The hold harmless
    agreements provide an indemnity from any claims brought by the two service
    providers, not from any demands for payments. Claims and demands are different.
    A claim means an action, not a demand letter.

[20]

This
    interpretation is supported by two other provisions of the parties settlement
    documents. First, the other handwritten clause in the hold harmless agreement:
    The applicant agrees to cooperate fully with Intact and attend an examination
    under oath forthwith if a claim is commenced as against Ms. Kisel. A claim is
    commenced when an action is started. Until one is started, Kisel would have no
    obligation to attend an examination.

[21]

The
    second provision supporting this interpretation is included in the terms of the
    full and final release, which Bijelic and Kisel signed with the benefit of
    legal advice: Bijelic and Kisel HEREBY RELEASE AND FOREVER DISCHARGE [Intact]
    from any and all actions, causes of actions, Mediations, Arbitrations, claims
    and demands for Statutory Accident Benefits.  In other words, the release
    distinguishes between claims and demands. The letters from the service
    providers were demands for payment; they were not claims.

[22]

For
    these reasons, neither Bijelic nor Kisel had a cause of action against Intact
    when each chose to sue the insurer in 2013. Thus, though Intact ought to have
    delivered a statement of defence in each action, it had a reasonable
    explanation or excuse for not doing so. On this ground alone, I would set aside
    the noting of default and the default judgment.

[23]

During
    oral argument we were told that both Osler Rehabilitation and Assessment Direct
    have now sued for payment of their outstanding accounts. In other words, they
    have made claims. In accordance with the hold harmless agreements, Intact has
    agreed to defend these actions.

(ii)

Prejudice

[24]

The
    motion judge found that Bijelic and Kisel would be more prejudiced from setting
    aside the defaults than Intact would be by maintaining them. That finding is unreasonable.
    Setting aside the defaults would cause no prejudice to either Kisel or Bijelic.
    Neither can be inoculated against a claim by the service providers. Short of
    paying the entire amount of the outstanding accounts of Osler Rehabilitation
    and Assessment Direct, Intact could not prevent either service provider from
    suing Bijelic and Kisel. And Intact was entitled to resist paying the full
    amounts on the ground that the accounts were allegedly unjustified.

[25]

Intact,
    on the other hand, is prejudiced by not setting aside the defaults because it
    becomes liable for outstanding accounts it disputes and may well have no
    obligation to pay.

[26]

Moreover,
    this is not a case like many brought under rules 19.03 and 19.08, in which a
    plaintiff gives a defendant a considerable indulgence before taking default
    proceedings. Here, Bijelic and Kisel moved very quickly  each noted Intact in default
    within 45 days of the delivery of the statement of claim. Although they were
    entitled to do so, and Intact had fair warning that they might do so, the
    shortness of the period between the delivery of the statement of claim and the
    noting of default is a consideration on the question of prejudice.

[27]

Even
    if I am incorrect in my interpretation of the hold harmless agreements, on the
    ground of prejudice alone I would set aside the defaults.

C.

Conclusion

[28]

I
    would set aside the noting of default and the later default judgment in the
    Bijelic action, and the default judgment in the Kisel action. If either
    plaintiff wishes to continue with his or her action, then Intact must deliver a
    statement of defence within 30 days of the release of these reasons, failing
    which each default will be reinstated.

[29]

I
    would order no costs of the motions. Intact is entitled to its costs of this
    appeal, which I would fix in the amount of $5,000, inclusive of disbursements
    and applicable taxes.

Released: March 26, 2015 JL

John
    Laskin J.A.

I
    agree Janet Simmons J.A.

I
    agree David Watt J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Lingard v.
    Milne-McIsaac, 2015 ONCA 213

DATE: 20150331

DOCKET: C59414

Lauwers, Hourigan and Pardu JJ.A.

BETWEEN

Timothy Nicholas Lingard

Plaintiff (Appellant)

and

Jesse Dalton Milne-McIsaac and Shawn W. McIsaac

Defendants

Mireille Dahab and Niyousha Ghomashchi, for the
    appellant

Jasvinder K. Singh, for the respondent Wawanesa
    Insurance Company

Heard: March 6, 2015

On appeal from the order of Justice Peter Douglas of the Superior
    Court of Justice, dated January 14, 2014.

By the Court:

[1]

We are of the view that the appeal must be allowed.

[2]

The appellant was injured when his vehicle was rear-ended by another car
    on October 28, 2008. The Motor Vehicle Accident Report (MVA Report) prepared
    by police at the scene of the accident identified Shawn McIsaac as the owner of
    the other vehicle (the McIsaac vehicle) and his son, Jesse Milne-McIsaac, as
    the driver. The MVA Report listed Security National Insurance Company as the
    insurer for Mr. McIsaac.

[3]

On June 29, 2010, the appellant met with a doctor who determined
    he needed back surgery. The surgery occurred on July 23, 2010. The appellant
    issued a statement of claim on September 24, 2010 seeking damages from Mr. McIsaac
    and Mr. Milne-McIsaac.

[4]

The appellant received an email from Mr. McIsaac on January 25, 2011
    stating that Mr. Milne-McIsaac owned the McIsaac vehicle at the time of the
    accident and was likely insured by State Farm Insurance Company. Security
    National confirmed that Mr. McIsaacs policy had been cancelled before the
    accident, but a Ministry of Transportation search revealed he still owned the
    vehicle at that time.

[5]

Since the McIsaac vehicle was uninsured, on February 16, 2012, the
    appellant brought a motion for leave to amend his statement of claim to claim
    uninsured motorist coverage from his insurer, the respondent Wawanesa Insurance
    Company (Wawanesa).

[6]

The motion judge framed the issue before him as whether the appellant
    had acted with due diligence in discovering the factual basis of his claim
    against Wawanesa. The motion judge found that the appellant should have taken
    additional steps such as making inquiries with the insurer listed in the MVA
    Report. He found that the evidence of due diligence fell short of the standard
    set out in
Wakelin v. Gourley
(2005), 76 O.R. (3d) 272 (S.C.), and
    dismissed the motion for leave to add Wawanesa as a party.

[7]

In our view, decisions after
Wakelin v. Gourley
have clarified
    the principle of due diligence in discovering claims.

[8]

In
Toneguzzo v. Corner
, (2009), 75 C.P.C. (6th) 165 (Ont. Div.
    Ct.), the plaintiff relied on the identity of the vehicles owner set out in
    the police report. The individual identified as the owner delivered a statement
    of defence. The identified owners insurer provided the plaintiff with a
    certificate of insurance that identified Lakes Leasing Corporation as a lessor.
    The Divisional Court held, at para. 17, that receipt of this document did not
    trigger an obligation for the plaintiff to conduct further inquiries into the
    vehicles ownership. The courts in
Bremer v. Foisy
(2009), 82 C.P.C.
    (6th) 133 (Ont. S.C.), and
Burtch v. Barnes Estate

(2006), 80
    O.R. (3d) 365 (C.A.),

reached similar conclusions.

[9]

In
Velasco v. North York Chevrolet Oldsmobile Ltd.
, 2011 ONCA
    522,
106 O.R.
    (3d) 332
, the plaintiff relied on the identification of the other
    vehicles owner set out in the motor vehicle accident report. The plaintiffs
    counsel later received a 732-page Crown brief, which contained a page revealing
    that the real owner was a car dealership. Although counsel had possession of
    this information, the identity of the real owner did not come to counsels
    attention until two years later during preparation for discovery. The plaintiff
    then issued a statement of claim against the car dealership. This court concluded,
    at para. 9, that the plaintiffs counsel had acted with reasonable diligence
    in continuing to rely on the identification of the owner set out in the police
    report until information to the contrary actually came to their attention; it
    was not until then that the limitation period began to run.

[10]

Most
    recently, in
Patterson (Litigation guardian of) v. Ontario (Minister of
    Transportation)
, 2014 ONCA 487, 97 E.T.R. (3d) 171, this court held, at
    para. 5, that while it may not be wise for plaintiffs counsel to rely on
    police accident reports for vehicle ownership information, there is no
    iron-clad rule that failure to conduct an ownership search is fatal on the
    issue of discoverability, in the light of the decision of this court in
Velasco
.
The court went on to note, at para. 6, that the motion judge properly took into
    account all the circumstances relevant to the issue of discoverability in a
    manner consistent with the approach in
Velasco
. We consider that this
    reasoning applies, with necessary modifications, to the existence of insurance.

[11]

The
    motion judge erred in imposing a standard of reasonable diligence that was
    significantly higher than that in
Velasco
,
Toneguzzo
,
Bremer
and
Burtch
. By relying on the statement in the MVA Report that the
    McIsaac vehicle defendant was insured, until receiving actual notice that it
    was not, the appellant acted reasonably. It was reasonable for the appellant to
    assume that the police officer who completed the MVA Report asked Mr. Milne-McIsaac
    for proof of insurance. There was no reason for the appellant to treat
    insurance coverage as a live issue until the appellant became aware of a
    potential coverage issue when he received Mr. McIsaacs email on January 25,
    2011. The fact that the McIsaac vehicle was uninsured was not confirmed until
    February 3, 2011. The limitation period in respect of Wawanesa therefore began
    on January 25, 2011, or alternatively, on February 3, 2011. The appellant
    brought his motion well within this limitation period.

[12]

Wawanesa
    does not, and could not, claim prejudice in having to provide uninsured vehicle
    coverage to the appellant, which is precisely what he purchased from Wawanesa
    with his insurance premium:. See
Abarca v. Vargas
,

2015 ONCA 4, 380 D.L.R. (4th)
    120, at para. 42. Wawanesa has been fully engaged as the appellants statutory
    accident benefits provider since the accident occurred, as acknowledged by
    counsel: See
Tomescu v. Sarhan
,
2013 ONSC 1358,
115 O.R.
    (3d) 396
, at para. 28.

[13]

The
    appeal is allowed, with costs to the appellant in the amount of $9,000,
    all-inclusive. The costs order in the court below of $5,000 plus HST is
    reversed, and the respondent shall pay the same amount to the appellant.

Released:  March 31, 2015 PL                    P.
    Lauwers J.A.

C.W.
    Hourigan J.A.

G.
    Pardu J.A.