2011 ONSC 3758, 2011 ONSC 3758

CITATION : 1001411 Ontario Limited v. Toronto Economic Development Corporation et al., 2011 ONSC 3758 COURT FILE NO.: CV-10-400338 DATE: 20010617 SUPERIOR COURT OF JUSTICE - ONTARIO RE: 1001411 ONTARIO LIMITED CARRYING ON BUSINESS CINESPACE STUDIOS MANAGEMENT, Applicant AND: CITY OF TORONTO ECONOMIC DEVELOPMENT CORPORATION, THE CORPORATION OF THE CITY OF TORONTO, TORONTO WATERFRONT STUDIOS INC., PT STUDIOS INC., CASTLEPOINT STUDIO PARTNERS LIMITED, CASTLEPOINT STUDIO PARTNERS 2 LIMITED, EDITH MYERS, COMWEB CORPORATION.

COMWEB STUDIO HOLDINGS INC., RETURN ON INNOVATION CAPITAL LTD., THE ROSE CORPORATION, ROSE FILM STUDIOS INC., ROSE FILM STUDIOS II INC., 2104910 ONTARIO INC., KENNETH FERGUSON AND GE CANADA EQUIPMENT FINANCING G.P. Respondents BEFORE: Penny J. COUNSEL: Michael L. Shell and Patrick Greco , Counsel, for the Applicant Barnet H. Kussner , Counsel for the Respondent, City of Toronto Economic Development Corporation Darrel A. Smith , Counsel for the Respondent, City of Toronto John N. Birch , Counsel for the Respondents PT Studios Inc., The Rose Corporation, Rose Film Studios Inc. and Rose Film Studios II Inc.

HEARD: June 7, 2011 ENDORSEMENT [ 1 ] This is a motion for an order striking out this application for delay. There is a second motion, in the alternative, to strike out significant portions of the applicant’s supporting affidavit. The second motion was not heard due to time constraints. The parties agreed that I should release my reasons on the first motion before rescheduling the second. [ 2 ] This application pertains to the validity of By-law No. 441-2009 of the City of Toronto, which was enacted by City council on April 6, 2009.

The applicant seeks an order quashing the By-law for illegality and other ancillary relief. [ 3 ] The motion to dismiss for delay, brought by the City of Toronto Economic Development Corporation (Tedco), is brought under Rule 21.01(1)(

a) which provides that a party may move before a judge “for the determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shortened the trial or result in a substantial saving of costs.” [ 4 ] Under section 214(4) of the City of Toronto Act, 2006 , S.O. 2006, c.11, Sch.

A, an application to quash a by-law enacted by the City “shall be made within one year after the passing of the by-law.” [ 5 ] In this case, the application to quash the By-law was issued on April 1, 2010, 360 days after the By-law was passed. [ 6 ] The application had an initial return date of July 2, 2010. The application was unilaterally adjourned by the applicant to September 9, 2010. It was further unilaterally adjourned to November 25, 2010. On November 25, 2010, the application was further adjourned to a date to be spoken to.

The supporting affidavit for the application was not sworn until December 22, 2010. None of the respondents were served with the notice of application or the application record until the December 2010 to February 2011 time period. An attendance in Motions Scheduling Court on March 1, 2011 produced a timetable for the hearing of this motion, which proceeded before me on June 7, 2011, and of the application. [ 7 ] There are two principal grounds for the motion.

First, under Rule 38.08(2), Tedco argues that the application should be deemed to have been abandoned by virtue of the applicant's failure to serve the respondents before, or to appear on, any of the three original return dates for the application.

[ 8 ] Second, under Rules 14.08 and 1.04(2), it should be inferred that there is a “reasonable” time within which an application must be served after it has been issued. Tedco argues that an application should be deemed to be subject, at most, to the same six-month deadline for service as a statement of claim in an action.

Since the applicant did not serve its application within a reasonable time or, in any event, within six months, the application should be dismissed. [ 9 ] The applicant has raised a preliminary objection to the motion on the basis that Rule 21.01(1)(a), by its terms, applies only to motions brought with respect to pleadings in actions before trial and does not, therefore, apply to notices of application. The applicant relies on the decision of Isaac J. in Zavitz Technology Inc. v. 146732 Canada Inc. , [1991] CarswellOnt 423 , as confirmed by the Court of Appeal in McLeod v.

Castlepoint Development Corp. , [1997] CarswellOnt 174 at para. 47 , where Moldaver J.A. said, relying on Zavitz , that: “Rule 21.01(1)(

a) refers to pleadings in an action . It has nothing to do with applications instituted under Rule 14.” [ 10 ] Tedco argues that Rule 21.01(1)(

a) does apply to a notice of application, relying on Rule 14.09 and the decisions of Nordheimer J. in Martin v. Ontario , [2004] CarswellOnt 6385 at para. 8 and T. Ducharme J. in Fraser v. Canada (Attorney General) , [2005] CarswellOnt 7457 at paras. 46-47 , (where T. Ducharme J. approved of Norheimer J.’s approach). [ 11 ] Rule 14.09 provides that an originating process that that is not a pleading may be struck out or amended in the same manner as a pleading. In Martin, Nordheimer J. said: I see no reason to give Rule 14.09 any

interpretation other than what its plain and ordinary wording would suggest… I am reinforced in this conclusion by the general interpretative provision found in Rule 1.04 that the rules are to be liberally construed. Rule 14.09 refers expressly to striking out an originating process. A notice of application is one such process. Consequently, the rule clearly empowers the court to strike out a notice of application in the same manner as it could strike out a pleading.

Rules 21.01 and 25.11 are, by virtue of Rule 14.09 and by analogy, applicable to a notice of application. [ 12 ] While I would be inclined to follow Nordheimer J.'s approach to this issue, it is unnecessary to for me to resolve this possible legal conflict in the circumstances of this case. I say this because, even if I were to take the

interpretation of Rule 21.01(1)(

a) most favourable to Tedco, for the reasons outlined below, I cannot agree with the substance of Tedco's two arguments.

Deemed Abandonment [ 13 ] Rule 38.06(3) provides for minimum notice for service of an application - the notice of application shall be served at least 10 days before the date of the hearing of the application. [ 14 ] Rule 38.08(2) provides that an applicant who fails to appear at a hearing shall be deemed to have abandoned the application unless the court orders otherwise. [ 15 ] Tedco argues that under rule 38.08(2), this application should be deemed to have been abandoned by virtue of the applicant's failure to serve its materials at least 10 days prior to the July 2, September 9 and November 25, 2010 return dates and its “failure to appear” on those dates.

Tedco further argues that the applicant should not be permitted to circumvent the deemed abandonment of its application under rule 38.08(2). To allow the application to proceed in these circumstances, it says, would be to allow the applicant to re-issue an abandoned application which is now statute barred.

It also amounts to an unwarranted invitation to applicants to “lie the bushes” and delay bringing an application forward until they believe a more opportune time has arrived for doing so. [ 16 ] I do not think the record supports the conclusion that the applicant “failed to appear” at the hearing of its application on July 2, September 9 or November 25, 2010 in the sense necessary to be deemed to have abandoned its application. [ 17 ] There is no evidence that the applicant “failed to appear.” Tedco submitted that the application was “struck from the list” on some or all of these prior return dates but there is no evidence of that either.

Rather, the evidence supports the conclusion that the applicant was not ready to proceed on those earlier return dates and, through correspondence with the court office, to avoid having the judges sitting on those return dates read the notice of application unnecessarily and otherwise to avoid unnecessarily wasting court time, the matter was adjourned to new dates cleared with the motions office in advance. [ 18 ] Accordingly, in my view, there was no deemed abandonment of the application under Rule 38.06(2) on July 2, September 9 or November 25, 2010.

Failure to Serve Within “A Reasonable Period of Time” [ 19 ] The application record, containing the notice of application, was served on the City on December 23, 2010, almost 9 months after it was issued. The application record was subsequently served on Tedco on February 4, 2011, more than 10 months following the issuance of the notice of application. [ 20 ] Tedco points out that under Rule 14.08, in an action the statement of claim must be served within six months of issuance.

The purpose, it argues, for this limitation is to provide certainty and finality to parties who have not been served and who may have no means of knowing that a proceeding has even been commenced against them. [ 21 ] There is no corresponding provision in the Rules stipulating a maximum time by which a notice of application must be served. This is because, Tedco argues, by its very nature an application is intended to be a

summary proceeding. The Rules do not contemplate that an applicant would sit on an application for more than six months following issuance of its notice of application without serving the respondents or even informing the respondents that an application had been commenced.

[ 22 ] Tedco, therefore, urges me to infer, under Rule 1.04(2) (proceeding by analogy), that there must be a “reasonable period of time” within which an application must be served after it has been issued. It would be absurd, it says, if a statement of claim is subject to a six-month deadline for service following issuance but a

summary proceeding such as an application is left completely open-ended. On this basis, Tedco argues that a notice of application should be deemed to be subject to a requirement that it be served within a reasonable period of time and that a reasonable period of time cannot be more than the six-month deadline for service of a statement of claim in an action. [ 23 ] In Zavitz, supra, Issac J. said: “From this recitation of the Rules certain facts emerge clearly. First, that actions and applications are distinct methods for initiating the civil dispute resolution process.

Secondly, the circumstances in which each method may be used are clearly defined by the Rules. Thirdly, that the conduct of the proceedings they initiate are governed by different procedural rules. Finally, there is no Rule which provides that the procedural provisions governing the commencement and conduct of proceedings commenced by one method apply with necessary modifications to the commencement and conduct of proceedings commenced by the other.” [ 24 ] The Rules (Rule 38.06(3)) expressly stipulate that service of a notice of application must take place at least 10 days before the hearing of the application.

There is no provision of a maximum time within which the notice of application must be served comparable to Rule 14.08. [ 25 ] Rule 1.04(1) provides that the Rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits . [ 26 ] In my view, it would be inappropriate to utilize the “gap” provision of Rule 1.04(2) to impose so complete, final and drastic a consequence as dismissal for delay.

Limitation periods, precisely because they are so final, complete and drastic in consequence, must be clear, unambiguous and publicly available. A common law gloss on the Rules requiring service of an application “within a reasonable period of time but no more than six months” would not have the requisite clarity, lack of ambiguity or public awareness.

While I have considerable sympathy for the respondents, given the leisurely pace at which the applicant appears to have chosen to proceed with this application, I am not prepared to impose a limitation analogous to rule 14.08(2) where the Rules Committee has chosen otherwise. [ 27 ] This motion was argued on the narrow point of law. If the conduct of the applicant has caused prejudice to the respondents, they will be at liberty to advance equitable defences such as latches, etc.

However, I am not prepared to re-write the Rules to impose a limitation on the maximum time during which an application must be served or to order that, on the basis of that newly invented limit, the application in this case must be dismissed for delay. [ 28 ] For these reasons, Tedco’s motion is dismissed. Costs [ 29 ] Any party seeking costs may do so by way of brief (not to exceed two typed pages) written submissions together with a Bill of Costs, to be filed within two weeks of the release of these reasons.

Any party wishing to respond to a request for costs may do so by way of brief (as defined above) written submissions, to be filed within 10 days thereafter. Penny J. Date: June 17, 2011