Date: 20041021
Docket: T-1140-02
Citation: 2004 FC 1456
Vancouver, British Columbia, this 21st day of October 2004
Present: The Honourable Madam Justice Heneghan
ADMIRALTY ACTION IN REM
BETWEEN:
INTERTECH MARINE LIMITED, a body corporate
Plaintiff
- and -
RICARDO MENÉNDEZ, MARIA MENÉNDEZ,
THE OWNERS AND ALL OTHERS INTERESTED IN
THE YACHT "NÁUTICA" and the Yacht "NÁUTICA"
Defendants
REASONS FOR ORDER AND ORDER
INTRODUCTION
[1] Upon Notice of Motion dated September 16, 2004, the Defendants seek an order pursuant to Rule 167 of the Federal Court Rules, 1998, SOR/1998-106, dismissing this action or alternatively an order pursuant to Rule 416(1), requiring the Plaintiff to post security for costs.
BACKGROUND
[2] The Plaintiff's action in rem was commenced upon the issuance of a statement of claim on July 19, 2002. A warrant of arrest was issued on the same day and according to the affidavit of service of Daniel Roy, the statement of claim, warrant of arrest and affidavit to lead warrant were served upon the Defendant Yacht "Náutica" on July 31, 2002.
[3] On August 30, 2002, a defence and counterclaim were served and filed on behalf of the Defendants.
[4] On May 12, 2003, former counsel for the Plaintiff filed a motion, seeking an order pursuant to Rule 125 of the Rules, for leave to withdraw as solicitor of record. It appears from the material filed on this motion that the Plaintiff was not paying the amounts for fees and disbursements. On June 5, 2003, Justice O'Keefe issued an order allowing the former counsel to withdraw as solicitor of record.
[5] On August 27, 2003, a notice of status review was issued by the Chief Justice, directing the parties to show cause why the action should not be dismissed. Following review of their submissions, Justice Noël issued an order on October 7, 2003 allowing the action to continue as a specially managed proceeding and directing the Plaintiff to file a notice of change of solicitors within five days of receipt of his order.
[6] On November 19, 2003, the Chief Justice appointed a case management judge.
[7] On January 23, 2004, a direction was issued, directing the Plaintiff to comply with the terms of the order of October 7, 2003 respecting the filing of a notice of change of solicitors.
[8] On February 11, 2004, an order was issued, directing the Plaintiff to show cause by March 5, 2004 why this action should not be dismissed in light of the Plaintiff's failure to comply with the order of October 7, 2003 and the direction of January 23, 2004 concerning the filing of a notice of change of solicitors.
[9] On March 5, 2004, a notice of change of solicitors was filed by Mr. Eugene Tan. Mr. Tan also filed written submissions in response to the order of February 11, 2004. Submissions were received from counsel for the Defendants on March 11, 2004.
[10] Subsequently, a case management conference was held at Halifax, Nova Scotia on April 14, 2004. The Plaintiff, through counsel, indicated its intention to prosecute this action and a schedule for completion of pre-trial steps was discussed. On April 15, 2004, a case management record was filed and provided, in part as follows:
I direct that the oral discovery examinations are to be completed by July 9, 2004. Following completion of the discovery examinations, counsel for the Plaintiff will serve and file a Request for a Pre-trial Conference in accordance with Rule 258, by July 23, 2004.
The Defendants, through counsel, will serve and file their Pre-Trial Conference Memorandum by August 6, 2004.
The Pre-trial Conference will take place at Halifax, Nova Scotia on Tuesday, September 7, 2004 at 2:00 p.m. Counsel are directed to Rule 260 which requires the parties or their authorized representatives to participate in the Pre-Trial Conference, unless the Court otherwise orders.
If the parties wish to raise other matters dealing with this proceeding, they may proceed by way of Notice of Motion, in accordance with the Rules.
[11] The Defendants submitted a pre-trial conference record on August 20, 2004. The Plaintiff did not submit a pre-trial conference record. On September 2, 2004, a direction was issued and provides in part as follows:
I am in receipt of two Requests for Directions in this file. The first is dated August 23, 2004 and relates to the Defendants' Pre-Trial Memorandum dated August 20, 2004 that was submitted for filing after the date set out in the Case Management Record dated April 15, 2004 and without proof of service on the Plaintiff.
The second Request for Directions, dated August 24, 2004, relates to the Defendants' Motion in writing dated August 15, 2004, seeking an Order dismissing the action or alternatively, an Order for security for costs. The Defendants have indicated that it is prepared to deal with the Motion at the Pre-Trial Conference scheduled for September 7, 2004 in Halifax.
I note that it appears that neither the Plaintiff nor the Defendants have complied with the steps set out in the Case Management Record of April 15, 2004 and that there was no communication with the Court about this non-compliance prior to the materials recently filed by the Defendants.
...
The Defendants' motion in writing is supported only by the affidavit of their counsel. This is not appropriate and I refer counsel to the Federal Court Rules, 1998, Rule 82.
The Defendants' motion raises a serious issue, that is dismissal of the Plaintiff's action. It is not appropriate to deal with this matter without personal appearance by the parties.
I direct the Defendants to perfect its notice of motion, with a proper affidavit preferably from one of the Defendants.
The Notice of Motion, together with the supporting affidavit and written submissions, will be served and filed by September 17, 2004. The Plaintiff shall serve and file any responding material in accordance with the time limits set out in the Federal Court Rules, 1998. ...
[12] On September 16, 2004, the Defendants filed their motion record, supported by the affidavit of Mr. Ricardo Menéndez, one of the Defendants. In his affidavit, Mr. Menéndez deposes that he is advised and believes that the Plaintiff has not pursued this action, has not produced its affidavit of documents and has not complied with the steps outlined in the case management conference record. As well, he deposes that he is advised and does believe that there are a number of judgments registered against the Plaintiff in Nova Scotia, as outlined below:
1. A Certificate of Judgment from the Director of Labour Standards, pursuant to the Labour Standards Code, R.S.N.S. 1989, c. 246 in the amount of $1,132.32;
2. an assessment from the Workers' Compensation Board of Nova Scotia in the amount of $21,551.58;
3. a judgment from the Supreme Court of Nova Scotia in an action between Citi-Capital Limited v. Intertech Marine Limited and Branco Mizerit, cause number S.H. No. 201081 in the amount of $54,339.49; and
4. an order for default judgment issued by the Supreme Court of Nova Scotia in an action between Thomas W. Springer and 3070687 Nova Scotia Limited as Plaintiff and Intertech Marine Limited as Defendant, cause number S.H. 201332 in the amount of $266,784.78 together with interest in the amount of $12,717.96 and costs in the amount of $1,011.50.
[13] The Plaintiff filed a responding motion record, consisting of written representations. No affidavit was filed on behalf of the Plaintiff.
[14] The Defendants seek an order dismissing the action, primarily on the grounds that the Plaintiff has failed to prosecute this action and has failed to comply with orders and directions concerning the conduct of this proceeding. As well, the Defendants argue that the Plaintiff has frustrated their ability to respond to the matters in issue by its failure to provide an affidavit of documents which has contributed to a delay in undertaking discovery examinations, as part of the pre-trial process.
[15] The Defendants also submit that the present motion is analogous to a notice of status review and in addition to the three-part test for dismissal for delay, as addressed in Multibond Inc. v. Duracoat Powder Manufacturing Inc. (1999), 177 F.T.R. 226 (T.D.) and Bell v. Bell Estate (2000), 187 F.T.R. 64 (T.D.), the Court has an inherent authority to dismiss the action when its orders and directions have been ignored.
[16] Alternatively, the Defendants seek an order for security for costs, on the basis of the judgments currently registered against the Plaintiff. They argue that there is no evidence that these judgments have been satisfied or that the Plaintiff has sufficient assets to satisfy an award of costs against it. In this regard the Defendants rely on the decision of Prothonotary Hargrave in Early Recovered Resources Inc. v. Gulf Log Salvage Co-Operative Assn. (2001), 205 F.T.R. 127 (T.D.).
[17] For its part, the Plaintiff argues that the Defendants have failed to establish the three-part test for dismissal for delay, in particular that they have suffered prejudice in their defence to the action.
[18] The Plaintiff submits that the action should continue, possibly with conditions such as security for costs to be posted on an incremental basis.
DISCUSSION
[19] In Multibond Inc., supra, the Court described the applicable test in the following terms:
In considering a motion to dismiss an action for want of prosecution under the previous Federal Court Rules, the Court consistently applied the following test: whether there has been an inordinate delay, whether that delay was inexcusable, and whether the defendant is likely to be seriously prejudiced by the delay. [See, for example, Patex Snowmobiles Ltd. v. Bombardier Ltd. (1991), 37 C.P.R. (3d) 467 (F.C.T.D.), aff'd (1993), 48 C.P.R. (3d) 555 (F.C.A.)]. Following the enactment of the new Rules, Gibson J. held in Ruggles v. Fording Coal Ltd., [1998] F.C.J. 1172 (T.D.) that those three criteria continued to apply to a motion to dismiss an action for undue delay under rule 167.
[20] In the present case, there has been a history of delay. The action was commenced in 2002 and was subject to a notice of status review because more than 310 days had passed since the issuance of the statement of claim and no requisition for a pre-trial conference had been filed. The order of October 7, 2003 allowed the action to continue as a specially managed proceeding but nothing has happened since that time to further prosecute the action. Notwithstanding the agreement of counsel for the Plaintiff in April 2004 to a schedule for the production of documents, completion of discovery and participation in a pre-trial conference, none of these events has occurred.
[21] This history of inactivity raises serious questions about the Plaintiff's intentions in the prosecution of this action. No satisfactory reasons have been provided to explain the lack of activity. Since the issuance of the notice of status review the apparent disregard by the Plaintiff to the various orders and directions, made to date, is a matter of concern. I refer to a recent decision of the Federal Court of Appeal in Sokolowska v. Canada, [2004] F.C.J. No. 1570, where the Court said the following at paragraph 11:
Failure to comply with Orders or Directions from this Court and with the Rules of procedure as well as omission to provide a good justification for the delays and an action plan to speedily move the appeal forward justifies a dismissal of the appeal. There is a limit to taxing scarce and limited judicial resources. I must say that I am very tempted to dismiss it. However, I will give the appellant one last chance but under strict conditions which will ensure compliance with the Federal Court Rules, 1998 and a diligent prosecution of the appeal.
[22] In the circumstances and guided by the recent decision of the Federal Court of Appeal in Sokolowska, supra, I will grant the Plaintiff a further opportunity to continue its action, but on conditions.
[23] First, the Plaintiff is to provide its affidavit of documents within thirty days of this Order. It must also submit a proposed schedule to the Case Management Judge for completion of pre-trial steps, including discovery, within ten days of the date of this Order. If the Plaintiff wishes to waive discovery, it may do so and live with the consequences. However, it appears that the Defendants wish to undertake such examinations and accordingly, the Plaintiff is to discuss the scheduling of such examination with counsel for the Defendants and provide the information about the timing of such examination. The schedule will also address the scheduling of a pre-trial conference.
[24] Failure by the Plaintiff to comply with these provisions will put it at risk of submitting to a further status review.
[25] I note that the Plaintiff has twice been required to justify the continued survival of this action, the first pursuant to a notice of status review in 2003 and the second, pursuant to the Order of February 11, 2004. Failure to comply with the terms of the Order to be issued now may lead to peremptory dismissal of this action.
[26] I turn now to the motion of security for costs. Rule 416(1)(b) sets out the circumstances in which such an order may be made when the plaintiff is a corporation with insufficient assets to satisfy an award of costs, as follows:
| 416. (1) Where, on the motion of a defendant, it appears to the Court that
...
(b) the plaintiff is a corporation, an unincorporated association or a nominal plaintiff and there is reason to believe that the plaintiff would have insufficient assets in Canada available to pay the costs of the defendant if ordered to do so,
...
the Court may order the plaintiff to give security for the defendant's costs.
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416. (1) Lorsque, par suite d'une requête du défendeur, il paraît évident à la Cour que l'une des situations visées aux alinéas a) à h) existe, elle peut ordonner au demandeur de fournir le cautionnement pour les dépens qui pourraient être adjugés au défendeur :
...
b) le demandeur est une personne morale ou une association sans personnalité morale ou n'est demandeur que de nom et il y a lieu de croire qu'il ne détient pas au Canada des actifs suffisants pour payer les dépens advenant qu'il lui soit ordonné de le faire;
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[27] I am not satisfied that the Defendants have met this test. The affidavit of Mr. Menéndez states that there are a number of outstanding unsatisfied judgments against the Plaintiff but there is no evidence about the assets, or lack thereof. The mere existence of judgments is not enough to justify an order for security for costs, in the absence of evidence about the assets of the Plaintiff. Accordingly, the motion for security for costs is dismissed, without prejudice to the rights of the Defendants to seek such an order in the future, upon the tendering of more complete evidence.
ORDER
The motion to dismiss the action is dismissed. The Plaintiff is to file its affidavit of documents within thirty days of this Order. It is to submit to the Case Management Judge a schedule for completion of pre-trial steps including discovery and the scheduling of a Pre-trial Conference, within ten days of the date of this Order.
The motion for security for costs is dismissed without prejudice.
(Sgd.) "E. Heneghan"
J.F.C.
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1140-02
STYLE OF CAUSE: Intertech Marine Limited v. Ricardo Menéndez et al
PLACE OF HEARING: Halifax, Nova Scotia
DATE OF HEARING: October 14, 2004
REASONS FOR ORDER AND ORDER: Heneghan J.
DATED: October 21, 2004
APPEARANCES:
Eugene Tan FOR PLAINTIFF
Ritchie Wheeler FOR DEFENDANTS
SOLICITORS OF RECORD:
Cooper & McDonald FOR PLAINTIFF
Halifax, Nova Scotia
Cole Harbour Legal Services FOR DEFENDANTS
Dartmouth, Nova Scotia
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