Though the weather suggests otherwise, spring has finally sprung in Ontario. As many condo corporations begin their seasonal cleaning and maintenance routines, our courts are likewise gearing up for significant housekeeping.
Recent changes to the Rules of Civil Procedure will automatically sweep away pending lawsuits brought in the Ontario Superior Court that are not moved forward in a timely way. Condominium corporations, their directors and managers should take note.
Effective January 1, 2015, Rule 48.14(1) requires Superior Court registrars to automatically dismiss actions (which are distinct from “applications”) in certain circumstances, as follows:
1. Actions commenced in Superior Court on or after January 1, 2012 will be automatically dismissed without notice to parties or their lawyers five years after the action was commenced, unless the court orders otherwise.
2. Actions struck off a trial list after January 1, 2015, and not restored within 2 years will be automatically dismissed on that second anniversary without notice to parties or their counsel, unless the court orders otherwise.
When dismissing these cases, registrars will serve a dismissal order on all parties. Any lawyer served with such an order must promptly give a copy to his or her client. The court’s old practice of mailing notices prior to the dismissal date is over. Parties and their lawyers are now responsible to ensure their cases are not dismissed. Lawyers who fail to warn their clients about imminent dismissals have a potential liability problem, as do condo boards or managers who fail to heed any warnings they may receive from their lawyers. Of course, automatic dismissals can potentially be set aside by bringing a motion quickly after the fact, but a positive outcome is never assured and there is a substantial risk that the court will refuse to overturn an automatic dismissal.
Automatic dismissals can be avoided if all parties file a timetable and draft order at least 30 days before the applicable dismissal deadline. The timetable and draft order must be agreed by the parties and list the dates by which any outstanding steps necessary to set the case down for trial will be completed and name a deadline by which the action will be set down or restored to the trial list (which can be no later than two years after the original dismissal deadline). Where the parties do not agree on a timetable, a party must bring a motion before the deadline for status hearing where the court will determine whether or how an action should move forward.
The following transition provisions are of special interest to parties involved in older lawsuits.
A. Any action commenced before January 1, 2012 that has not been dismissed or scheduled for a status hearing by January 1, 2015 will automatically be dismissed without notice on January 1, 2017.
B. Any action struck off a trial list before January 1, 2015 that has not been restored to the list by January 1, 2017 will be dismissed without notice on that date.
C. Notices of pending dismissal (or “status notices”) issued under the old rules prior to January 1, 2015 are of no effect unless a status hearing has already been scheduled or the action has already been dismissed.
From this, it appears that New Year’s day in 2017 will mark a quick and painless end to a large number of old actions. Condominium corporations that are parties to ancient lawsuits that have gone nowhere in many years can soon kiss them goodbye without paying a dime.
For those who prefer not to wait until 2017, it is also possible for defendants to actively seek dismissal of actions in Superior Court where the plaintiff fails to move the case forward in a timely way prior to the automatic dismissal deadlines, but such orders are rarely given and are typically not worth bringing as a result. In most instances, it makes more sense to allow dormant lawsuits to die on the vine rather than to actively seek a dismissal order. The value of the claim, the nature of the case, the speed at which it is moving forward and the way it looks on status certificates must all be considered. The prospect of waking a sleeping giant is another consideration.
Importantly, the automatic dismissal provisions described above apply to actions (and not applications) in Superior Court that have not already been disposed of by way of a judgment or dismissal order. In addition, these provisions do not apply to actions in the Small Claims Court, which has its own rules with a different automatic dismissal regime.
As part of their spring cleaning, condominium corporations should take inventory of all the pending legal proceedings brought by or against them. In addition to making sure that all litigation is properly disclosed in paragraph 19 of status certificates, it is wise to check whether any steps must be taken to avoid automatic dismissal of cases being usefully prosecuted by the corporation. Knowing the automatic dismissal deadlines for cases against the corporation (or cases brought by the corporation but no longer considered useful) is also helpful. Dormant cases can be disclosed on status certificates in such a way to comfort prospective purchasers that the case presents little financial risk and is expected to be automatically dismissed in the foreseeable future.
Talk to your lawyers about how to disclose pending lawsuits on your status certificates and whether moving them along or seeking an early dismissal makes sense, or whether it is best to sit back and wait for the court’s housekeeping process to automatically dismiss those old cases. For cases being handled by the corporation’s insurer, get information as to the particulars, progress and next steps in the case so that your condo lawyer can assist you in disclosing the case status accurately.