Court of Appeal Decision of the Week

What Comes First: the Egg or the Counterclaim?

Case: Van Aert v. Sweda Farms Ltd. (Best Choice Eggs), 2018 ONCA 831 (CanLII)

Keywords: Eggs; Dismissal for Delay; Rules of Civil Procedure, RRO 1990, Reg 194

Synopsis:

The Appellant, Sweda Farms Ltd., produces, grades, and sells eggs. The Respondents are egg suppliers. In 2008, after their business relationship ends, the Respondents are egged on to bring an action for the price of eggs supplied. The Appellant counterclaims.

A trial is scheduled. The Appellant’s previous counsel seeks an adjournment on terms, including consenting to a $164,560.92 judgment (with an Order that this judgment be stayed pending disposition of a future motion). The Appellant is required to pay the amount into Court on or before October 15, 2013. It does not. Further, the Appellant brings no motion and makes no steps to advance the counterclaim.

Five years later, the Appellant’s new counsel comes to court in search of a new Order allowing it to proceed with the counterclaim (if it pays the judgment funds into Court). The Appellant’s President asserts previous counsel acted without instructions and did not provide information relating to the judgment. The Motion Judge declines this request. The Court of Appeal confirms the result.

Importance:

What Rules of Civil Procedure, RRO 1990, Reg 194 govern a party’s belated attempt to comply with an Order and proceed with a 5-year-old claim? The Court of Appeal noted the Motion Judge’s conclusion that the Rules are entirely silent on requests to “belatedly comply with an order”. (See para. 6).

Reasoning by analogy, the Motion Judge dismissed the action pursuant to Rule 48 (i.e. dismissal for delay) and characterized the Appellant’s request as follows: “…the appellant is asking for an indulgence – to be relieved of the consequences of failing to comply with the court order five years earlier requiring it to pay funds into court.” (See para. 6).

The Appellant appealed on the basis that the Motion Judge applied the wrong legal test. The Court of Appeal disagreed. What was the test? The Motion Judge determined the onus was on the Appellant to establish two things:

  • an acceptable explanation for the delay; and
  • proof that the Respondents would suffer no non-compensable prejudice if the counterclaim was allowed to proceed. (See para. 7).

Citing Langenecker v. Sauvé, 2011 ONCA 803 (CanLII), at para. 15 and Faris v. Eftimovski, 2013 ONCA 360 (CanLII), at para. 22, the Court of Appeal determined a Motion Judge’s decision to make/not make a discretionary determination and on what basis are entitled to deference. (See para. 12).

With respect to the Motion Judge’s conclusions about prejudice, the Court of Appeal specifically noted there was “…no onus on the respondents to lead evidence to demonstrate actual prejudice: Chrisjohn v. Riley Estate, 2015 ONCA 713 (CanLII), 391 D.L.R. (4th) 695, at para. 40.” Further, the Court observed that “…to say that the prejudice identified is compensable by an award of costs…” would be “no answer” in these circumstances. (See paras. 13-14). For the Court of Appeal, the Appellant’s attempt to “…broaden a claim that would otherwise have been tried five years earlier” would result in actual prejudice. (See para. 13). No word from the Court of Appeal on whether anyone felt the yolk was on them, herein.

Counsel for the Appellant: Varoujan Arman and Jessica Wuthmann (Blaney McMurtry LLP, Toronto)

Counsel for the Respondents: Philip Morrissey and Isha Wadhwa (Phillip B. Morrissey, Professional Corporation, London)

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Posted: Wednesday, October 24, 2018