Executive Summary: Key Legal and Evidentiary Issues

• The defendants moved to strike the action from the trial list, arguing the plaintiffs were in default under a 2019 consent timetabling order when they served a trial record in May 2024.
   
• By consent, the court treated the matter as both a motion and a status hearing, requiring the plaintiffs to show cause why the action should not be dismissed for delay.
   
• Applying Stokker v. Storoschuk, the court held that a new timetable agreed to in June 2021, though never made into an order, addressed the earlier delay and shifted the focus to the period afterward.
   
• Twenty-eight months of apparent inactivity between January 2022 and May 2024 made the adequacy of the plaintiffs’ explanation a close call.
   
• Evidence that potential witnesses had died, left, or might not remember events did not persuade the court that the defendants had suffered non-compensable prejudice.
   
• Defendants’ own inaction weakened their complaints about delay, and their lack of urgency undercut their claim of actual prejudice.
   

Facts of the case

VS International Inc., Vijay Sahgal and Tarlika Sehgal entered into franchise and sub-lease agreements to operate a Second Cup franchise at a plaza on Fletcher’s Creek Boulevard in Brampton. They sued The Second Cup Ltd. (the franchisor), Fletchers Creek Village Partnership (the plaza landlord), Northwest Atlantic (Canada) Brokerage Inc. (the listing broker) and Ira Bond (the listing agent), alleging that the defendants falsely represented that other units in the plaza were being rented to tenants that would drive traffic to the franchise. The Second Cup also filed a counterclaim.

After the claim was issued on September 3, 2014, the action moved slowly. The statement of claim was amended in March 2017, and a consent timetabling order issued on August 7, 2019 required the action to be set down for trial by November 30, 2020. Because of the pandemic, it became impossible for the parties to comply with that order. In May and June 2021, the plaintiffs proposed a new timetable with a set-down date of May 20, 2023, and the defendants suggested wording changes without disputing the dates, but no order was ever taken out. Discoveries ended with the examination of The Second Cup in January 2022, and Bond was never examined. According to the defendants, they heard nothing from the plaintiffs after that until receiving a notice of change of lawyer and a trial record dated May 13, 2024, a point the plaintiffs did not refute.

The Second Cup served a motion to strike the action from the trial list on February 12, 2025. At the March 25, 2026 hearing, the parties consented to the court treating the matter as both a motion and a status hearing, and the hearing was adjourned so the defendants could submit further evidence of prejudice. A joint hearing proceeded on May 12, 2026.

Policy and legislative provisions at issue

The decision does not quote or analyze the franchise or sub-lease agreements; the dispute turned on procedural rules. Rule 48.01 allows a party “who is not in default under these rules or an order of the court and who is ready for trial” to set an action down for trial. According to the defendants, the plaintiffs were in default under the 2019 timetabling order and were required to convene a status hearing and/or obtain a new timetabling order.

At a status hearing, r. 48.14(7) requires the plaintiff to show cause why the action should not be dismissed for delay. Under Faris v. Eftimovski, 2013 ONCA 360, that means demonstrating an acceptable explanation for the delay and showing that the defendant would suffer no non-compensable prejudice if the action proceeds. Ultimately, the court must balance the plaintiff’s interest in a hearing on the merits against the defendant’s interest in a timely resolution.

Reasoning and analysis

Relying on Langenecker v. Sauvé, 2011 ONCA 803, the defendants argued that delay should be measured from the start of the proceeding. The court instead applied Stokker v. Storoschuk, 2018 ONCA 2, under which delay addressed by a prior court order or consent leaves only the subsequent delay requiring explanation. Both the 2017 amendment and the 2019 consent order addressed earlier delay. Turning to the 2021 discussions, the court found that the May and June 2021 exchange also amounted to an agreement within the Stokker principle: the parties agreed to the dates, nobody suggested irremediable prejudice had occurred, and they operated under the new timetable even though it was never formalized. Plaintiffs’ counsel had followed up several times to obtain the defendants’ comments, while there was no evidence anyone followed up with plaintiffs’ counsel to obtain the order. The analysis therefore focused on the period after June 2021.

On explanation, the six months from June 2021 to January 2022 were governed by counsel’s availability and were reasonable. For the 28 months between January 2022 and May 2024, however, the record contained no evidence of any activity, and nothing explained why the plaintiffs’ undertakings were not answered until after March 2026. The defendants pointed to the absence of an affidavit from the plaintiffs’ former lawyer, citing Ferreira v. Cardenas, 2014 ONSC 7119, but the court doubted former counsel would have the best knowledge of a period in which counsel exchanged no communication at all.

Calling the issue a close call, the court was nonetheless satisfied the explanation was adequate, drawing on six factors. Courts lean toward deciding cases on their merits rather than terminating rights on procedural grounds. Measured against cases dismissed at status hearings, the focus period was not long. In American Environmental Container v. Kennedy, 2022 ONSC 1353, the Divisional Court held it was wrong to fixate unduly on a 30-month period of unexplained delay instead of considering the full context. The plaintiffs had consistently intended to pursue the case, sitting for examinations in 2019 and 2021, hiring a new lawyer in 2024, filing a trial record and answering their undertakings. Between June 2021 and May 2024 the defendants took no steps either, which made their current indignation at the delay unpersuasive. Finally, the plaintiffs were now ready for trial. The court acknowledged these factors do not explain the 28 months but held that they inform the analysis.

Turning to prejudice, the court accepted that inordinate delay generates a presumption of prejudice, but the relevant prejudice is to the ability to defend caused by the plaintiff’s delay, not the mere passage of time. The Second Cup relied on an affidavit from Janice Ceita dated April 30, 2026, stating that its assets were sold on April 26, 2021, and identifying 13 former employees whose names appear more than once in its productions. Of those, two who were contacted indicated they may not remember much, and Wayne Vanderhorst, vice president of franchise development at the relevant time, died on March 20, 2024. Because no specific information these witnesses could have provided was identified, the court declined to infer that they held relevant evidence.

The landlord relied on an affidavit from Domenic Gesualdi dated April 27, 2026, noting that the alleged representations date back to 2006 and 2007. His 50% partner, Pat Pillitteri, died in July 2017, but that death predated the court-ordered timeline and a realistic earliest possible trial date, and Mr. Sehgal stated he had no direct dealings with him. Dennis Owen, who was responsible for rent and finances including rent relief requests the plaintiffs say were improperly denied, died in November 2024; Mr. Sehgal acknowledged that Owen collected rent cheques but denied any communications with him about rent relief. Former senior property manager Jack Balkhiyan left in 2016 and may be difficult to locate, yet the affidavit did not describe what he could offer or state that efforts to find him had failed.

No evidence showed that anyone interviewed these individuals at the outset of the action. In the court’s view, the trial judge would be better placed to assess the value of any lost evidence, and the record gave no specific or adequate basis to think a just result on the merits could not be achieved. Little in the record showed the defendants had displayed any urgency to bring the case to trial, which, under Aguas v. Rivard Estate, 2011 ONCA 494, undercuts a claim of actual prejudice. On that record, the plaintiffs established that the defendants had not suffered non-compensable prejudice.

Ruling and overall outcome

The plaintiffs prevailed: the action was not dismissed, and the parties must now organize pre-trial and trial dates. No monetary amount was ordered. Costs were left to the parties, and failing agreement, each side must deliver written submissions of no more than three pages plus any offers to settle or dockets, with the plaintiffs’ submissions due by October 22, 2026, and the defendants’ by November 10, 2026. As a result, no exact costs figure can be determined from this decision.

Revisions made

The fifth bullet previously said the defendants failed to identify specific lost evidence, which the court found for the Second Cup witnesses and Balkhiyan but not for Pillitteri (rejected because his death predated the timeline) or Owen (where Mr. Sehgal denied relevant communications); it now states the outcome without overgeneralizing. The sixth bullet previously linked the defendants’ inaction to prejudice, but the court tied inaction to their indignation at the delay (para. 26e) and lack of urgency to prejudice (para. 37); both are now attributed correctly. The pandemic sentence now tracks the court’s wording that compliance with the order became impossible. The statement that the defendants heard nothing from January 2022 to May 2024 was presented as fact; it is now attributed to the defendants, with the court’s note that the plaintiffs did not refute it. “More significantly” was removed as unsupported emphasis, and minor wording was aligned more closely with the decision (default argument “and/or,” names appearing “more than once,” the Ferreira point, the trial judge’s assessment, and “organize” pre-trial and trial dates).

Source-level inconsistencies (not corrected in the article)

The style of cause spells the plaintiff “Vijay Sahgal,” while the body uses “Sehgal.” Paragraph 16 dates the consent timetabling order to April 2019, but the timeline says August 7, 2019, and the “four years and 11 months” figure matches August. Paragraph 16 also calls the 2017 amendment a consent order, whereas the timeline says the motion proceeded “apparently unopposed.” The timetabling judge’s name appears as both “Richetti” and “Ricchetti,” and Mr. Vanderhorst’s title is written as “Vice President of Franchise Develop [sic].”