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Civil Litigation Dicta - Non-Compliance with Rules [RCP 2]. Boltyansky v. Joseph-Walker
In Boltyansky v. Joseph-Walker (Ont CA, 2024) the Divisional Court dismissed an appeal argument, here approving the trial judge's use of RCP 'non-compliance' rules [R2.01]:[18] We are also unpersuaded by the appellants’ submission that the motion judge exceeded her jurisdiction by granting summary judgment, given the respondents failure to serve the seven syndicated mortgage lenders who are not parties to the consolidated action. Even though she recognized that these mortgage lenders were necessary parties to the Mortgage Action and should have been added by the respondents as defendants, she was entitled to exercise discretion to invoke the curative provision in r. 2.01(1)(a). In our view, her approach was sensible and workable. And we find no merit in the submission that in making this decision, she failed to consider that the seven syndicated mortgage lenders may have supported the appellants’ case had they been parties to the proceeding. This is a speculative suggestion, and the failure to add them as parties did not prevent the appellants from presenting any evidence that these seven lenders may have been able to contribute. . Norman Towing (7344508 Canada Inc.) v. Riordan Leasing Inc.
In Norman Towing (7344508 Canada Inc.) v. Riordan Leasing Inc. (Ont CA, 2024) the Ontario Court of Appeal considered an action where the counterclaim was filed (but not initially issued pursuant to RCP 27.03, where it adds a new party) by the court. When the error was detected the counterclaim was past a limitation period so, finding no prejudice, the motion judge issued a nunc pro tunc order back-dating the issuance to the date of counterclaim filing.
Here the court reviewed law of nunc pro tunc, and the related law of rule non-compliance [R2.01]:[16] The appellant appeals from the nunc pro tunc order. He submits that as the limitation period had expired, it was not open to the motion judge to grant the nunc pro tunc order. He particularly relies on Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, [2015] 3 S.C.R. 801, Thistle v. Schumilas, 2020 ONCA 88, 442 D.L.R. (4th) 339, and Douglas v. Stan Fergusson Fuels Ltd., 2018 ONCA 192, 139 O.R. (3d) 721, in support of his position.
[17] The respondent takes the position that the motion judge made no error in granting the nunc pro tunc order. The respondent argues that the cases relied upon by the appellant are distinguishable as, unlike in this situation, leave of the court was required to commence the proceeding in each case. This case, the respondent argues, simply engaged a procedural irregularity. Among other cases, the respondent particularly relies on Patkaciunas v. Economical Mutual Insurance Company, 2021 ONSC 5945, 77 C.P.C. (8th) 421. There, the plaintiffs’ process server attended at court on June 25, 2019, the last day of the limitation period, and asked that a statement of claim be issued. The court clerk declined to do so as it was at the end of the working day. As a result, the claim was issued on June 26, 2019, after the limitation period had expired. The irregularity was not intentional, and the motion judge was critical of the court clerk. He concluded that the plaintiffs did not fail to commence a proceeding within the time limit and noted that the plaintiffs had done all that was necessary to commence a proceeding within the time prescribed by the applicable statute. The legislative purpose underlying the statutory limitation period was not undermined. The motion judge accordingly declared that the claim was issued on June 25, 2019. The motion judge did not view Green as establishing a “red line” that is applicable in all cases and found Thistle was of little aid as it involved a claim brought in the bankrupt’s name that did not belong to him.
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[19] The Limitations Act, 2002, S.O. 2002, c. 24, Sched. B (the “Limitations Act”), provides that a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which it was discovered: s. 4. Accordingly, commencement of the proceeding engages the calculation of the applicable time limit. In this case, the proceeding commenced would be the counterclaim adding the appellant as a party.
[20] Under r. 14.01 of the Rules, a proceeding is commenced by the issuing of an originating process. With some exceptions, an originating process is a statement of claim. One such exception is a statement of defence and counterclaim against a person not already a party to the main action.
[21] Specifically, r. 27.03 of the Rules states:Where a person who is not already a party to the main action is made a defendant to the counterclaim, the statement of defence and counterclaim,
(a) shall be issued,
(i) within the time prescribed by rule 18.01 for delivery of the statement of defence in the main action or at any time before the defendant is noted in default, or
(ii) subsequently with leave of the court. [22] Rule 2.01 provides that a failure to comply with the Rules is an irregularity and does not render a proceeding a nullity. Furthermore, it provides that a court may grant relief to secure the just determination of the real matters in dispute.
[23] Nunc pro tunc orders were addressed by the Supreme Court in Green. This was in the context of the leave requirement contained in s. 138.3 of the Securities Act, R.S.O. 1990, c. S.5. Under that section, leave of the court must be obtained to commence a statutory action. In each of the three cases under appeal in Green, leave to commence the statutory claim had not been obtained from the court within the applicable limitation period. The majority held that courts have inherent jurisdiction to issue orders nunc pro tunc for leave to proceed with an action where leave is sought prior to the expiration of the limitation period: at paras. 85, 93. The majority did not require that leave actually be granted prior to the expiry of a limitation period, only that it be sought: at paras. 92-93. However, the majority noted that a court should not exercise its inherent jurisdiction where this “would undermine the purpose of the limitation period or the legislation at issue”: at para. 93.
[24] The majority in Green described the purposes of limitation periods. At para. 57, Côté J. wrote that the Supreme Court has generally recognized these purposes as the certainty, evidentiary, and diligence rationales. She stated:Limitation periods serve “(1) to promote accuracy and certainty in the adjudication of claims; (2) to provide fairness to persons who might be required to defend against claims based on stale evidence; and (3) to prompt persons who might wish to commence claims to be diligent in pursuing them in a timely fashion”: P. M. Perell and J. W. Morden, The Law of Civil Procedure in Ontario (2nd ed. 2014), at p. 123. [25] The cases relied upon by the appellant, namely Thistle, Douglas, Sax v. Rick Aurora, 2019 ONSC 3573, and Carillion Canada Holdings Inc. et al. (Re), 2022 ONSC 66, 98 C.B.R. (6th) 138, all required leave of the court to proceed with an action. In essence, in each case, leave was required to bring the proposed action. As such, each case fell within the parameters of the dicta expressed in Green. Alternatively, they involved lack of capacity.
[26] In my view, the case under appeal is distinguishable from Green and the other cases raised by the appellant. This is because, unlike this case, in Green the Securities Act required leave to commence an action. The leave requirement served as a screening mechanism. It did not involve, as here, an administrative misstep.[2]
[27] Although a different context, Green does hold that leave need not be granted but just sought prior to the expiry of a limitation period. Even in that context, it follows that a nunc pro tunc order may be granted in the face of the expiry of a limitation period. Rule 2.01 contemplates a failure to comply with the Rules and that this amounts to an irregularity and does not render a proceeding a nullity. This makes sense as the law and justice should run in parallel, not in opposition. Reflective of that reality, r. 2.01 goes on to say that a court may grant relief to secure the just determination of the real matters in dispute.
[28] In the case under appeal, the lack of issuance was an irregularity. On June 18, 2021, when the statement of defence and counterclaim in this case was filed, as mentioned, it was not issued as required by r. 27.03. However, unquestionably, the appellant and his counsel were aware of the counterclaim well before the expiry of the limitation period. In April 2021, counsel for the appellant was advised that there would be a counterclaim and it was sent to him on May 31, 2021. The motion judge acknowledged the affidavit of service on the appellant and that the statement of defence and counterclaim were “left in the right place”. On June 21, 2021, the respondent again wrote asking whether service of the statement of defence and counterclaim would be accepted. A date for hearing of the motion for default judgment was given on October 13, 2021, and default judgment on the counterclaim was granted, all with no reference to its lack of issuance. In May 2022, counsel for the appellant sought dates for the hearing of the set aside motion. Although there is no evidence that the appellant’s counsel raised the fact that the counterclaim had only been filed and not issued, this issue was implicitly engaged at that time and well before the expiry of the limitation period on September 14, 2022.
[29] In these circumstances, it is clear that under r. 2.01, the motion judge could grant relief to secure the just determination of the real matters in dispute. It was therefore open to him to grant an order that treated the date of filing as the date of issuance. Having done so, the limitation period had not expired. Moreover, the certainty, evidentiary, and diligence purposes that animate the limitation period prescribed by the Limitations Act would not be undermined. . Rimon v. CBC Dragon Inc.
In Rimon v. CBC Dragon Inc. (Ont CA, 2024) the Court of Appeal considered (and dismissed) an appeal against an order striking defence pleadings in response to non-compliance with document discovery undertakings:[12] Applying the principles and factors set out in Falcon Lumber Limited v. 2480375 Ontario Inc. (GN Mouldings and Doors), 2020 ONCA 310, the motion judge found that the appellants had not provided any reasonable explanation for their non-compliance to date and there was no evidence that their failure to comply was inadvertent or based on a lack of understanding of their obligations. Given the relevance of the transaction records to the central issue of “what happened to the money”, he concluded that the appellants’ non-compliance was not “immaterial or minimal and clearly ha[d] an impact on the ability of the court to do justice in this particular case.” He observed that, given finite court resources, failure to comply with disclosure obligations impacts not only the just and expeditious determination of this case, but other pending matters.
[13] The motion judge concluded that striking the appellants’ statement of defence and counterclaim, without leave to amend, was an appropriate and proportionate remedy in the circumstances.
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[19] ... They further contend that striking a pleading is not a remedy available for the failure to answer undertakings, citing Newlove v. Moderco Inc., 2002 CanLII 34748 (Ont. S.C.).
[20] Given the history of the litigation, it was open to the motion judge to reject Mr. Chan’s evidence that he only belatedly realized that he could not answer some of the undertakings given. This explanation for the appellants’ non-compliance was entirely new and, as noted by the motion judge, stood “in complete contrast to the position [the appellants] [had] maintained throughout over the last period of approximately two years, to the effect that they understood exactly what was required and were working diligently on it, but simply required more time.” The motion judge further observed that the appellants had not, as one would have expected, “put forward any evidence of good faith efforts and due diligence to obtain, for example, documents from third parties such as banks or other financial institutions.”
[21] Newlove does not stand for the proposition that striking a pleading is never a remedy available for a failure to answer undertakings. Rules 30.08(1) and (2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 give the court wide discretion to impose remedies where a party fails to disclose or produce a document or serve an affidavit of documents as required by the Rules or by a court order. Rule 30.08(2) specifically contemplates an order to strike a pleading, and both Rules empower the court to make any order “as is just”. At para. 21 of Newlove, Wein J. held that dismissal of an action should be granted only exceptionally but that “the matter of the scope of the remedy is one within the discretion of the Court, to be determined in the context of the particular case.”
[22] Newlove concerned a motion at the outset of trial seeking to dismiss an action for the plaintiff's failure to comply with undertakings or in the alternative to preclude the plaintiff from relying on certain documents at trial. There was no prior court order. In this case, the appellants’ conduct includes not only a failure to answer undertakings but to comply with multiple court orders. Rule 60.12(b) explicitly provides that the court may strike out a party’s defence where a party fails to comply with an interlocutory order.
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[25] I cannot fault this reasoning. The Rules are intended to ensure that parties to civil suits disclose all relevant information in a timely manner at all stages of a proceeding. A party’s failure to comply with their disclosure obligations increases the costs of litigation and frustrates the opposing party’s ability to move the proceeding forward. The Falcon Lumber principles apply even more forcibly when a party fails to disclose records when repeatedly ordered by the court to do so within a specific deadline. In such a case, the defaulting party does not simply delay or prevent an adjudication on the merits but undermines the court’s authority.
[26] The motion judge applied the correct principles of law and evaluated the record before determining that the order sought by the respondents was just. As observed in Falcon Lumber, at para. 73, citing Starland Contracting Inc. v. 1581518 Ontario Ltd., 2009 CanLII 30449 (ON SCDC), 252 O.A.C. 19 (Div. Ct.), at para. 26:The authority to dismiss proceedings for repeated failure to comply with court orders and flagrant disregard for the court process is an essential management tool. A case management judge or master who has a continuous connection with an action, the parties and their counsel is well-positioned to monitor the conduct of the participants throughout the proceedings, and to determine whether anyone is deliberately stalling, showing bad faith or abusing the process of the court when deadlines are missed and defaults occur under procedural orders. [27] I agree that the appellants’ failure to comply with the successive orders of the court to disclose critical records and information, including a final “last chance” order, opened the door to the exceptional discretionary order made here.
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