Executive Summary: Key Legal and Evidentiary Issues

• Rule 48.14(1) of the Rules of Civil Procedure presumptively dismisses an action not set down for trial within five years of commencement, subject to a status hearing under subrule 48.14(5).
   
• Timely progress of the litigation was disrupted by significant staffing and health-related issues at the plaintiff's law firm between 2023 and 2025.
   
• Two subsidiary claims — concerning an adjoining property and certain tax filings — were resolved or abandoned before the motion, narrowing the dispute to the septic system.
   
• Defendants argued that the plaintiff had a tactical incentive to delay the litigation to exhaust the operational life of the septic system.
   
• Non-compensable prejudice to the defendants' ability to defend the claim was the central issue on the prejudice branch of the test.
   
• Courts generally favour resolving disputes on their merits where delay stems from circumstances affecting counsel rather than the litigant.
   

Facts of the case

Jin & Sun Ltd. purchased a campground property and business from Susan Deborah Barton and David Bruce Barton in 2018. The plaintiff alleged that the defendants breached representations and warranties concerning the septic and waste disposal system, an option to purchase an adjoining property, and certain tax filings to the Canada Revenue Agency. The statement of claim was issued on July 3, 2020, and the defendants delivered a statement of defence and counterclaim on November 23, 2020. The defendants later commenced third-party claims against BDO Canada LLP, Mathieu St-Denis, and Stephane Savage on November 2, 2021, and against the Ministry of the Environment, Conservation and Parks on October 28, 2022. The adjoining-property issue was resolved in January 2023, and the plaintiff amended its claim to remove that issue in February 2023. The plaintiff served its defence to the counterclaim on April 25, 2023, and the Ministry served its defence to the third-party claim the following day. The action then stalled from April 2023 until July 2025, a period the plaintiff attributed to disruption at its law firm, Cunningham Swan, including health issues affecting original counsel, his subsequent retirement, staffing shortages, and health difficulties experienced by the lawyer who took over the file. In May 2025, plaintiff's counsel served a notice of motion seeking a status hearing, an extension of time to set the action down for trial, and a litigation timetable. The defendants inspected the septic system in December 2025, before any remediation occurred, and the plaintiff abandoned its tax claim in January 2026, leaving the septic-system allegation as the only outstanding issue.

Policy and legislative provisions at issue

The motion turned on Rule 48.14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which governs dismissal of an action for delay. Subrule 48.14(1) provides that an action is presumptively dismissed by the registrar if not set down for trial by the fifth anniversary of its commencement, while subrule 48.14(5) allows a party to bring a motion for a status hearing before that period expires. At a status hearing, the plaintiff bears the onus of showing an acceptable explanation for the delay and that the defendants will suffer no non-compensable prejudice if the action proceeds. Accounting for a six-month suspension of court timelines due to the COVID-19 pandemic, the five-year anniversary of this action's commencement expired on September 13, 2025.

Reasoning and analysis

Justice Flaherty weighed the competing values of enforcing timely litigation against resolving disputes on their merits, noting that appellate authority has generally favoured merits-based resolution where delay stems from circumstances affecting counsel. On the adequacy of the explanation for delay, the court found that the disruption at Cunningham Swan was an important factor in the inactivity between 2023 and 2025, even though it did not account for every period of delay, and that the plaintiff should not lose its right to proceed because of circumstances affecting its counsel. The court acknowledged that the plaintiff may have been incentivized to delay the litigation before 2023, but held that a motion to restore an action to the trial list is not a blame game requiring counsel to justify its conduct on a month-by-month basis, and that the Cunningham Swan disruption remained a sufficient explanatory factor. The court also found that an earlier decision on the tax claim would have streamlined the litigation but was not an insurmountable obstacle to progress. On prejudice, the court accepted that the defendants had already investigated the claim, retained an engineer, pursued freedom-of-information requests, obtained the Ministry's file, gathered witness evidence, and inspected the septic system in December 2025 before remediation began. No evidence showed that documents or witnesses became unavailable because of the litigation delay itself, as opposed to the passage of time generally, and the court held that the relevant prejudice inquiry concerns prejudice flowing from the plaintiff's delay rather than the age of the underlying events. The court also declined to assess the merits of the plaintiff's claim, noting that whether the septic system was compliant remained in dispute and could not be resolved on the motion record.

Ruling and overall outcome

The court found that the plaintiff provided an adequate explanation for the delay and demonstrated that the defendants would suffer no non-compensable prejudice if the action proceeded to trial. The plaintiff's motion was granted, the dismissal order was set aside, and the time for setting the matter down for trial was extended by 12 months from the date of the decision. No monetary award was made; the parties were directed to attempt to agree on costs, failing which they may serve written submissions not exceeding three pages, with the plaintiff's submissions due within 14 days and the defendants' within 28 days of the reasons, and no reply submissions permitted without leave.