Date: 19980205
Docket: T-729-88
BETWEEN:
HARRY R. FRIEDRICH, HOME TECHNICS LTD.
TECHNICAL CERAMICS INDUSTRIES INC.
HAMILTON PROFILE EXTRUDERS INC.
FRIEDRICH INDUSTRIES INC., ASSEM-LAB INC.
I.T. ELECTRONIC CERAMICS INC.
F & T TOOLING INC., HIGH-TEC TRUCK LEASING LTD.
OMEMEE DRIVER SERVICE LTD.
and FRIEDRICH TECHNOLOGIES INC.
Plaintiffs
- and -
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
Defendant
REASONS FOR ORDER
REED, J.:
[1] The plaintiffs bring a motion under Rule 330(b) of the Federal Court Rules to set aside a judgment of the Associate Chief Justice, dated November 14, 1996. That judgment dismissed the plaintiffs' action. The judgment was issued after a notice had been sent by the Court, to the plaintiffs' then counsel on March 8, 1996, stating that since there had been no activity on the file since October 15, 1990, the Court would dismiss the action unless a motion for directions was filed with the court within 60 days. The notice was properly served and no motion for directions was made.
[2] The plaintiffs' then solicitor has filed an affidavit stating that while the March 8, 1996 notice was received in his office, a part time receptionist and clerk must have misfiled the notice because it was never brought to his attention. He states that neither he nor his client knew of the notice. It is argued that the November 14, 1996 judgment should be set aside because of this lack of notice. Rule 330(b) provides:
| The Court may rescind |
| ... |
| (b) any order that was made in the absence of a party who had failed to appear through accident or mistake or by reason of insufficient notice of the application; |
[3] Counsel for the plaintiffs cites Malowitz v. The Minister of National Revenue (1991), 91 D.T.C. 937 (T.C.C.), Cité de Pont Viau v. Gauthier Mfg. Ltd., [1978] 2 S.C.R. 516 and Construction Gilles Paquette Ltée v. Les Enterprises Végo Ltée, [1997] 2 S.C.R. 299. These are relied upon for the proposition that a party should not be deprived of his rights on account of an error of counsel when it is possible to rectify the consequences of the error without injustice to the opposing party.
[4] Counsel for the defendant argues that the judgment should not be set aside because the plaintiffs have not demonstrated that during the period of delay they had a serious interest in prosecuting the action. In addition, the defendant asserts that she would be prejudiced, if the action was now allowed to proceed.
[5] As I understand counsel for the plaintiffs' argument, it is that the Court should focus only on the fact that the judgment dismissing the plaintiffs' action was issued without notice to them. It is argued that, in that context, it is not appropriate to consider arguments more properly made by the defendant on a motion to dismiss the claim for want of prosecution. I am not persuaded that this is so. It would not be sensible to allow the defendant to make her arguments only within the context of a motion to dismiss for want of prosecution, brought after the action had been reinstated. In addition, counsel for the defendant states that the submissions she proposes to make are those that would have been made, had the plaintiffs responded to the Court's March 8, 1996 notice, and filed a motion for directions. In my view, the submissions that would have been made, if such had occurred, are relevant to the present application.
[6] It is necessary, then, to described the relevant facts. Mr. Friedrich is the President of Roselight Inc. operating under the name and style of Schubert Advanced Lighting Technologies. He is both a personal plaintiff and the principal investor in the corporate plaintiffs.
[7] In June 1986, Mr. Friedrich retained the law firm of Melvyn L. Solmon, Barristers, now known as Solmon Rothbar Goodman, to commence an action on his personal behalf and on behalf of the corporate plaintiffs against the defendant. The plaintiffs claimed damages resulting from the improper and malicious issuance of a Notice of Assessment, a Notice of Reassessment and Third Party Demands by agents of the defendant and the subsequent improper and malicious conduct by those agents, namely by officials of the Department of National Revenue.
[8] The statement of claim was issued on April 19, 1988, and served upon the defendant on April 25, 1988. The defendant brought a motion, returnable September 26, 1988, for an order striking out the statement of claim on the ground that it disclosed no reasonable cause of action. On September 21, 1988, that motion was adjourned on consent, sine die. This was the last step taken in this action.
[9] The alleged tortious actions of the defendant's employees relate to tax assessments for the 1977 taxation year. On June 10, 1982, the defendant issued Mr. Friedrich a Notice of Assessment with respect to taxes owing for the 1977 taxation year. This assessment was done by way of a comparative net worth evaluation. In July of 1982, third party demands and garnishees were issued. Mr. Friedrich claims these actions were done in an arbitrary, capricious and unreasonable manner. He alleges that confidential information was disclosed to business associates. He claims that the result of the defendant's employees' actions was financial ruin for him and the corporate plaintiffs. The 1982 assessment was vacated in February of 1983. Notices of Assessment were subsequently issued against some of Mr. Friedrich's corporations for non-payment of withholding taxes. Mr. Friedrich claims these actions were malicious and vindictive. The amounts owing proved to be uncollectible and the tax debts were written off by the defendant in 1988. The defendant's documents pertaining to the relevant tax assessments and collection efforts were subsequently sent to bulk storage at the Sudbury Taxation Centre and were eventually destroyed.
[10] Mr. Friedrich has also lost documents relevant to the events in question. The Revenue Canada collection officers who are cited in the plaintiffs' statement of claim, as having been responsible for the actions that took place, are both now retired. One retired on August 9, 1986, the other on September 24, 1992. The exact location of the residence of one of them is not known.
[11] Mr. Friedrich states that he was unable to pursue his action during the 1988 -1996 period because of impecuniosity brought about by Revenue Canada's actions. A review of the evidence concerning his financial situation does not substantiate that assertion. Mr. Friedrich produced a letter dated July 29, 1994, that he asserts was obtained from a Mr. Barkin advising him, at that time, about the continued existence of the T-729-88 action and the viability of proceeding with it. This letter, and the conversations recounted with counsel, in my view, are not sufficient to demonstrate a continuing serious intention to pursue the litigation.
[12] The jurisprudence cited by counsel for the defendant, as relevant to the present proceeding, is: Mandal v. 575419 Ontario Ltd. (1994), 23 C.P.C. (3d) 172 (O.C.J.), Knight and Cullen v. Buckley (1991), 6 O.R. (3d) 339 (Ont. C.A.) and Sinnett v. Sullivan (1991), 49 C.P.C. (2d) 122 (O.C.J.). Those decisions deal with situations in which actions were dismissed for failure to list the action for trial pursuant to status hearing orders under the Ontario Rules of Civil Procedure. In those cases, it was held that two factors that are relevant in deciding whether or not a dismissal judgment should be set aside are: (1) whether the plaintiffs could satisfactorily explain the delay (in not listing the case for trial); and (2) whether the defendant could show that prejudice existed as a result of the delay. The headnote of the Mandal case reads, in part:
| ...while a court should not penalize a client for the fault of its solicitor , the plaintiffs did not produce any evidence to show that they, themselves, had actively demonstrated a strong interest in the prosecution of the action. |
[13] The above cited jurisprudence mirrors the tests that are usually applied under Rule 440 of the Federal Court Rules, pursuant to which actions can be dismissed for want of prosecution: (1) has there been inordinate delay; (2) is the delay excusable; and (3) is the defendant likely to be seriously prejudiced by the delay. A discussion is found in Sgayias, Federal Court Practice, 1998, at 437.
[14] In the present case, the delay was indeed inordinate. I have not been persuaded that a reasonable explanation was given for that delay. The passage of time has resulted in prejudice for the defendant with respect to her ability to properly defend
the action. For the reasons given the motion to set aside the decision of November 14, 1996 will be dismissed.
"B. Reed"
Judge
Toronto, Ontario
February 5, 1998
FEDERAL COURT OF CANADA
Date: 19980205
Docket: T-729-88
BETWEEN:
HARRY R. FRIEDRICH, HOME TECHNICS LTD.
TECHNICAL CERAMICS INDUSTRIES INC.
HAMILTON PROFILE EXTRUDERS INC.
FRIEDRICH INDUSTRIES INC., ASSEM-LAB INC.
I.T. ELECTRONIC CERAMICS INC.
F & T TOOLING INC., HIGH-TEC TRUCK LEASING LTD.
OMEMEE DRIVER SERVICE LTD.
and FRIEDRICH TECHNOLOGIES INC.
Plaintiffs
- and -
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
Defendant
REASONS FOR ORDER
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
DOCKET: T-729-88
| STYLE OF CAUSE: HARRY R. FRIEDRICH, HOME TECHNICS |
| LTD., TECHNICAL CERAMICS INDUSTRIES INC., HAMILTON PROFILE EXTRUDERS INC. FRIEDRICH INDUSTRIES INC., ASSEM-LAB INC., I.T. ELECTRONIC CERAMICS INC. |
F & T TOOLING INC., HIGH-TEC TRUCK
LEASING LTD.,
OMEMEE DRIVER SERVICE LTD.
and FRIEDRICH TECHNOLOGIES INC.
- and -
| HER MAJESTY THE QUEEN IN RIGHT OF CANADA |
DATE OF HEARING: FEBRUARY 2, 1998
PLACE OF HEARING: TORONTO, ONTARIO
REASONS FOR ORDER BY: REED, J.
DATED: FEBRUARY 5, 1998
APPEARANCES: Mr. William Innes
Ms. H. Moorthy
For the Plaintiffs
Ms. Celia Rasbach
For the Defendant
SOLICITORS OF RECORD: Mr. William Innes
Genest Murray DesBrisay Lamek
130 Adelaide Street West, Suite 700
Toronto, Ontario
M5H 4C1
For the Plaintiffs
Mr. George Thomson
Deputy Attorney General
of Canada
For the Defendant