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Civil Litigation - Pleadings - Closing. Kawaguchi v. Kawa Investments Inc.
In Kawaguchi v. Kawa Investments Inc. (Ont CA, 2021) the Court of Appeal considered when pleadings were closed, in the context of determining whether Notice of Discontinuance could still be served by the plaintiff:(1) Did the motion judge err in law by finding that the appellants were not entitled to discontinue the action against the respondents because the pleadings were closed within the meaning of r. 25.05?
[19] The first issue before the motion judge was whether the appellants were entitled to discontinue the action against the respondents. The issue turns on the interpretation of rr. 23.01(1) and 25.05, and in particular, whether pleadings in an action remain open as long as they are not complete in respect of any one of multiple defendants, or whether they can close in respect of each defendant separately.
[20] The two rules read as follows:23.01(1) A plaintiff may discontinue all or part of an action against any defendant,
(a) before the close of pleadings, by serving on all parties who have been served with the statement of claim a notice of discontinuance (Form 23A) and filing the notice with proof of service;
(b) after the close of pleadings, with leave of the court; or
(c) at any time, by filing the consent of all parties.
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25.05 Pleadings in an action are closed when,
(a) the plaintiff has delivered a reply to every defence in the action or the time for delivery of a reply has expired; and
(b) every defendant who is in default in delivering a defence in the action has been noted in default. [21] The motion judge focused on the singular noun “a reply” in subrule 25.05(a), inferring from the use of the singular that pleadings close against each defendant separately. He accepted the submission that, were it otherwise, a defendant who has defended a multi-defendant lawsuit would be precluded from moving the action forward, such as to discovery of documents, until the last defendant had defended and the time for reply had expired. With respect to the motion judge, this interpretation is incorrect and constitutes an error of law.
[22] The Rules tie the deadline for taking certain procedural steps to the defined state of the close of pleadings in only seven contexts: the first is determining when a plaintiff may discontinue an action (r. 23.01(1)); the second is determining when a party may amend its pleadings without leave or consent (r. 26.02(a)); the third is the time by which the parties shall agree to a discovery plan (r. 29.1.03(2)); the fourth is the time by which a party shall serve its affidavit of documents under the simplified procedure (r. 76.03(1)); the fifth is the time after which a party may set an action or a third party claim down for trial (rr. 48.01 and 29.08(1)); the sixth is the time when a defendant may move to dismiss for delay when the plaintiff has failed to set the action down for trial (r. 24.01); and the seventh is the latest time by which a party to an action may deliver a jury notice (r. 47.01).
[23] However, contrary to the policy justification suggested by the motion judge, there is no general requirement that pleadings must be closed for parties to proceed with the next steps in litigation. For example, under r. 31.04(1), either party may serve a notice of examination after the defendant has delivered a statement of defence and, unless the parties agree otherwise, has served an affidavit of documents. The pleadings may still be open at this stage, but the Rules permit the parties to move forward and initiate examinations.
[24] I see no ambiguity in the wording of r. 25.05. For pleadings to be closed, the rule requires that the plaintiff reply to every defence or that the time to reply has expired, and that every defendant who has not defended has been noted in default. The reference to “every” defence and “every” defendant in both parts of the rule makes it clear that in a multi-defendant action, in order for pleadings to be closed in that action, they must be closed against all defendants.
[25] I see no unfairness or disadvantage to a defendant in giving the rule its plain meaning. It is important to note that the timing of when pleadings are closed is not wholly within the discretion or power of the plaintiff. In the case where a plaintiff chooses not to reply to any defence, when the deadline for filing a reply has gone by, that timing requirement of the rule will have been satisfied. In addition, under r. 19.01, not only can the plaintiff note a defendant in default, but a defendant can also move to have another defendant noted in default. This would satisfy the second timing requirement of r. 25.05.
[26] I conclude that the motion judge erred in his interpretation of the requirements of the rule for delivering a notice of discontinuance. In this case, it is not disputed that when the appellants served the notice of discontinuance, although the time for delivering a reply had passed in respect of the respondents, the time for delivering a reply to the late-filed joint statement of defence and counterclaim of Lori Kawaguchi and Kawa had not yet passed. In addition, those defendants had not been noted in default. As a result, pleadings in the action were not closed and, under r. 23.01(1)(a), the appellants were entitled to serve a notice of discontinuance.
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