Executive Summary: Key Legal and Evidentiary Issues

• Core dispute concerns recovery of approximately $50,000 on two credit facilities versus a defence and counterclaim exceeding $400,000 based on alleged misrepresentations about insurance coverage.
• Central factual issue is whether bank personnel advised Mr. Cormier that disability insurance would extinguish the indebtedness on his death and that mortgage life insurance was unnecessary and could be cancelled.
• Procedurally, the motion turns on whether the Bank provided a satisfactory explanation for significant post-2023 delay, largely attributed to settlement discussions, in a Simplified Procedure (Rule 76) action.
• Application of the Piedrahita v. Costin test required assessment of explanation for delay, alleged inadvertence, promptness in bringing the motion, and the existence (or absence) of actual litigation prejudice to the defendants.
• The Court found the Bank effectively abandoned the “litigation track” for about 17 months, did not comply with a prior timetable order, and failed to substantiate claims of inadvertence or continuous intent to prosecute.
• Balancing the lack of proven actual prejudice against the public interest in timely, efficient resolution of disputes, the Court refused to reinstate the action and left the Registrar’s dismissal order in place, with no costs on the motion.

Background and parties

Royal Bank of Canada (RBC) commenced an action in April 2018 against Wendy Palma and the Estate of her late husband, Brian Cormier. The Bank sought to recover approximately $50,000 plus interest said to be owing under two credit facilities that Mr. Cormier had with RBC. The action was brought under Ontario’s Simplified Procedure Rule (Rule 76) because of the relatively modest quantum in issue.
Ms. Palma defended the claim and advanced a substantial counterclaim exceeding $400,000. Her position was that the Bank’s conduct and representations surrounding insurance coverage led her and Mr. Cormier to believe the indebtedness would be covered upon his death, and that she suffered losses when the Bank did not treat the debt as extinguished after she submitted an insurance claim.

Factual context and alleged insurance advice

The factual narrative begins in October 2016, when Mr. Cormier was diagnosed with cancer. After the diagnosis, he allegedly sought advice from the Bank regarding his insurance coverage. According to Ms. Palma, bank personnel told Mr. Cormier that his disability insurance would cover the outstanding indebtedness in the event of his passing and that he could safely cancel his mortgage life insurance because it was duplicative and unnecessary.
Mr. Cormier died in March 2017. Following his death, Ms. Palma says she experienced difficulties with the Bank when she submitted an insurance claim that she expected would satisfy the indebtedness. She claims the Bank’s actions and omissions in handling the matter caused her significant damages, which form the basis of her counterclaim.
The Bank denied making the alleged representations and emphasized that it is not itself an insurance provider. It maintained that, while some coverage existed under applicable insurance policies, there remained outstanding amounts on the credit facilities that had not been paid out by insurance and were therefore recoverable from Ms. Palma and the estate.

Pleadings, discovery steps and early delays

Ms. Palma delivered her statement of defence in November 2018, together with her detailed allegations regarding the insurance advice and the Bank’s post-death conduct. A year later, in March 2019, the Bank delivered its defence to the counterclaim.
After pleadings closed, the Bank requested inspection of specific documents in July 2019, including original line of credit statements and an email allegedly sent by the Bank in October 2016. Ms. Palma subsequently changed counsel and served her affidavit of documents in December 2019, indicating she could not locate the electronic version of the key email requested. The Bank produced its own documents in October 2020, and the proceeding was transferred to Ottawa.
The next phase of the litigation was marked by scheduling issues and changes of counsel for Ms. Palma. The Bank attempted to arrange examinations for discovery but encountered difficulties related to Ms. Palma’s shifting legal representation and lack of cooperation. To break the impasse, the Bank brought a motion under Rule 48.14 for a timetable order and potential consequences if Ms. Palma did not cooperate. At the same time, Ms. Palma’s counsel sought to be removed from the record.

The Somji timetable order and consequences for delay

Both motions were heard in March 2023 by Justice Somji. Her endorsement is central to the later delay analysis. The Bank expressed concern that the action might be struck for delay and sought a timetable that would compel Ms. Palma’s participation in discovery, failing which her defence and counterclaim could be struck.
Justice Somji granted counsel’s removal motion, recognizing the breakdown in the solicitor-client relationship, and imposed a comprehensive timetable. The key features were: the action was not to be dismissed for delay before March 31, 2024; Ms. Palma was required to attend examinations on a date chosen by the Bank’s counsel, but no later than May 31, 2023; and her defence and counterclaim were to be struck if she failed to attend or otherwise comply. Costs just under $5,000 were awarded against Ms. Palma on a substantial indemnity basis, reflecting a judicial finding that her “continued delay in advancing the action” had been a significant problem to that point.
Despite these strict directions, examinations for discovery never actually took place. The Bank did not bring a motion to strike Ms. Palma’s defence and counterclaim for non-attendance, nor did it set the action down for trial by the March 31, 2024 deadline.

Settlement efforts and the critical 17-month period of inactivity

Following the Somji order, further attempts were made to schedule Ms. Palma’s examination in the spring of 2023. A Notice of Examination set a date in early May 2023, but Ms. Palma requested adjournments to prepare and to formulate a settlement proposal. The Bank consented to rescheduling and granted further leeway when she retained yet another lawyer.
By July 2023, the parties were exchanging emails about possible resolution, and Ms. Palma produced additional documents in November 2023. The Bank’s evidence on the motion, largely through an affidavit from a law firm assistant, asserted that the parties had been “going back and forth with settlement offers” and that the matter was close to resolution when the Registrar’s dismissal order issued in January 2025.
However, when Associate Justice Perron scrutinized the record, it revealed a significant evidentiary gap. Aside from some redacted emails between July and October 2023 and an offer from Ms. Palma in March 2024, there were no written communications documenting ongoing, substantive settlement discussions from late 2023 through to January 2025. Counsel for the Bank acknowledged in submissions that there was “a lack of momentum” in settlement and no communications of substance between May 2024 and January 2025. During this 17-month window, the Bank took no procedural steps to move the matter forward—no discovery, no motion to strike, no attempt to comply with the timetable, and no effort to set the action down for trial.

The Registrar’s dismissal and the Bank’s motion to set it aside

On January 22, 2025, the Registrar made an order dismissing the action for delay. Two days later, Bank’s counsel wrote to Ms. Palma’s counsel noting that the parties had been “previously engaged in settlement negotiations” and asserting that a settlement was close. In the same communication, however, the Bank suggested that it might be more efficient to finalize settlement than to move to set aside the dismissal and asked whether Ms. Palma would consent to vacating the Registrar’s order.
Further settlement discussions followed, but points of disagreement remained. On January 30, 2025, Bank’s counsel again asked if Ms. Palma would consent to vacating the dismissal order and indicated that unresolved settlement issues might take time to work through. When consent was not forthcoming, the Bank served motion materials around February 20, 2025, seeking to have the dismissal set aside.
The motion came before Associate Justice Perron in June 2025 but was adjourned to permit the Bank to file reply evidence responding to Ms. Palma’s then-recent responding materials. In its short reply affidavit, an in-house litigation associate asserted that, despite settlement discussions, it was always RBC’s instruction to proceed with the litigation and to obtain an amended timetable through to trial. At the same time, the affidavit candidly acknowledged that, after a July 2023 settlement letter from Ms. Palma, the Bank’s focus shifted to settlement rather than to bringing a motion to strike or taking other active litigation steps.

Legal framework: the Piedrahita test and related principles

The parties agreed the applicable test for setting aside a Registrar’s dismissal was the four-part framework from the Ontario Court of Appeal’s decision in Piedrahita v. Costin. The court must consider: whether the plaintiff has a satisfactory explanation for the litigation delay; whether there is satisfactory evidence that the plaintiff always intended to prosecute the action but failed to do so through inadvertence; whether the motion was brought forthwith after learning of the dismissal; and whether the plaintiff has shown the defendant will not suffer significant prejudice in presenting their case at trial as a result of the delay or post-dismissal steps.
This test is not applied mechanically. The court must weigh all factors to reach a just result, balancing the parties’ interests and the public interest in timely dispute resolution. Subsequent authorities emphasize that even if a plaintiff moves promptly to set aside an order and no concrete prejudice is shown, a weak explanation for delay may still justify leaving the dismissal in place.

Assessment of explanation for delay and alleged inadvertence

Associate Justice Perron distinguished two phases of delay. Up to March 2023, she accepted that while progress had been slow, the Bank had given a broadly satisfactory explanation and had demonstrated an intention to prosecute the action, particularly in light of Justice Somji’s earlier finding that Ms. Palma had been primarily responsible for delay and had warranted a substantial indemnity costs sanction.
After March 2023, however, the picture changed. The evidence showed that once the Bank pivoted to settlement discussions, it ceased taking any concrete steps to advance the litigation. Despite prior concerns about delay and the benefit of a timetable that protected the action from dismissal until March 2024, the Bank did not complete discovery, did not attempt to comply with the timetable, and did not set the matter down by the deadline. Instead, it “switched gears” and focused only on settlement, leaving the file dormant for 17 months.
The Bank attempted to characterize the resulting delay as inadvertence—pointing to an assertion that a motion to vary the timetable order was not brought through a failure to diarize the file properly. The Court found this evidence thin and unpersuasive. Bare, conclusory references to inadvertence in counsel’s affidavit were insufficient to establish that the delay was accidental rather than a deliberate, if optimistic, choice to prioritize settlement at the expense of ongoing procedural steps. On the record, Associate Justice Perron was not willing to conclude that the delay had been caused by true inadvertence.

Promptness of the motion and analysis of prejudice

On the third Piedrahita factor, the Bank fared better. It brought its motion within about a month of learning of the Registrar’s dismissal, and Ms. Palma did not argue that the motion itself was untimely. The Court therefore treated this factor as satisfied and not contentious.
The fourth factor concerned prejudice. The Bank’s evidence claimed that relevant documents had been preserved and that it was not aware of any unavailable witnesses. Ms. Palma, in a sur-reply affidavit that the Court accepted despite procedural irregularities, described significant financial and emotional hardship linked to the protracted litigation and the Bank’s approach. She also referenced personal tragedies and a difficult relationship that had affected her ability to engage fully in the process.
Associate Justice Perron distinguished between general hardship or stress and prejudice that affects a party’s ability to present a defence. She recognized that certain elements, such as the death of Mr. Cormier and the inability to locate a particular email, pre-dated much of the delay and therefore could not be attributed to the Bank’s inaction. She also noted that Ms. Palma herself had taken few steps to move her own counterclaim forward, which undercut her position on prejudice. On balance, the Court concluded that there was no proven actual prejudice arising specifically from the post-2023 delay that would impair Ms. Palma’s ability to defend.

Emphasis on timeliness, Rule 76 and the public interest

Even in the absence of demonstrated actual prejudice, the Court highlighted that “the absence of actual prejudice does not automatically or inevitably trump the values of timeliness and efficiency.” This case was, and remains, a Rule 76 Simplified Procedure action, where the design is to move lower-value disputes to resolution promptly and cost-effectively.
By the time of the motion, the action was on the verge of its eight-year anniversary, yet had not progressed beyond exchange of productions. If reinstated, the parties would still need to complete examinations, answer undertakings, conduct mediation, and then schedule pre-trial and trial. The Court realistically projected that trial would not occur until several more years into the future, pushing the lifespan of a simplified procedure case into double digits. This, the Court held, defeated the objectives of Rule 76 and undermined broader confidence that civil justice will be administered efficiently.
The Court acknowledged Ms. Palma’s passivity after July 2023, but stressed that primary responsibility for advancing the case lay with the plaintiff. The Bank had previously obtained judicial assistance and procedural protection against dismissal; it then “took its eye off the litigation ball,” focusing on settlement to the exclusion of its litigation obligations.

Outcome and implications, including the successful party and monetary result

Weighing all four Piedrahita factors and the overarching policy considerations, Associate Justice Perron concluded that the Bank had not provided an acceptable explanation for 17 months of inaction and had failed to establish that its delay was due to inadvertence. While the motion was brought promptly and no actual litigation prejudice had been proven, those points could not overcome the seriousness and length of the delay in a simplified procedure case.
Accordingly, the Court dismissed RBC’s motion to set aside the Registrar’s dismissal for delay and ordered that the Registrar’s dismissal order stand. Because neither party filed a costs outline in advance of the hearing, the Court directed that there would be no costs of the motion. As a result, the successful parties in this decision are Ms. Palma and the Estate of Brian Cormier, whose position that the action should remain dismissed prevailed, and no monetary damages or costs were awarded in their favour—the total amount granted or ordered is effectively $0, with the dispute remaining disposed of procedurally rather than by a quantified monetary award.