Ontario Court of Appeal: Substantive Justice Outweighs Finality
April 4, 2016
In a number of recent decisions by the Ontario Court of Appeal, Ontario’s top Court has highlighted the court’s predisposition to have cases resolved on their merits rather than dismissed on procedural grounds.
The latest decision of Labelle v. Canada (Border Services Agency) (“Labelle“) is consistent with the Court of Appeal’s liberal interpretation of the Reid factors over the past few years. In this case, by applying the mandated contextual approach, the Court of Appeal allowed the appeal of the motion judge’s Order declining to set aside the Registrar’s Order, which administratively dismissed the action for delay.
In Labelle, one of the appellants slipped and fell in January 2008 at the border crossing in Fort Frances, Ontario. The appellants put the respondent, Canada Border Services Agency (“CBSA”), on notice of the claim in April 2008 and the Statement of Claim was issued in December 2009. The Claim was served on all respondents, including Abitibi Consolidated Inc. (“Abitibi”) and International Bridge Company (“International”), in March 2010. By May 2010, the action was defended and CBSA cross-claimed against Abitibi.
In April 2009, Abitibi and International entered into protection under the Companies’ Creditors Arrangement Act (“CCAA”). As a result, the appellants’ claims against them were stayed.
The appellants made little effort to advance the action beyond the close of pleadings because her counsel was uncertain how to proceed in light of the above noted CCAA proceedings. The action languished until a Status Notice was generated by the Court in March 2012. Appellants’ counsel inadvertently omitted to request a status hearing which prompted the Registrar to administratively dismiss the action. In July 2012, appellants’ counsel promptly obtained the respondents’ agreement to restore the action but failed to bring a motion to reinstate the action for approximately two years. By this time, the motion to set aside the Registrar’s dismissal Order was opposed.
On March 25, 2015, the motion judge declined to reinstate the action. The lower Court found the respondents had suffered actual prejudice because: (1) CBSA lost its crossclaim when the action was administratively dismissed and CBSA was out of time to pursue third party claims against Abitibi and International; (2) CBSA was unable to defend itself because certain maintenance records were not available; and (3) the respondents were entitled to finality in the proceedings.
On appeal, the Court of Appeal unanimously allowed the appeal holding that the motions judge erroneously assessed the issue of prejudice for the following reasons:
(1) the motion judge did not appreciate that only prejudice occasioned by the appellants’ delay in the proceeding is relevant. In this case, any actual prejudice pre-dated the litigation. The CCAA proceeding preceded the issuance of the Statement of Claim and therefore could not constitute prejudice relevant to the motion; and
(2) a defendant cannot create prejudice by failing to preserve and take appropriate steps to collect relevant evidence to alleviate any such prejudice. CBSA took no steps to preserve evidence despite timely notice of the litigation. CBSA also took no steps to pursue its claims against Abitibi and International in the CCAA proceedings.
As a result, the lower Court’s analysis of prejudice, being the key Reid factor, was fundamentally flawed and the appeal was allowed permitting the appellants to pursue the action to trial on the merits.
Labelle v. Canada (Border Services Agency), 2016 ONCA 187
 MDM Plastic Limited v. Vincor International., 2015 ONCA 28, H.B. Fuller Company v. Rogers (Rogers Law Office) 2015 ONCA 173, Carioca’s Import & Export Inc. v. Canadian Pacific Railway Limited, 2015 ONCA 592