Court declines to dismiss action for undue delay but requires security for costs
Background
The underlying action for copyright infringement in Comartin v. Marsh was commenced in November 2020. The action stalled after the exchange of affidavits of document in March 2021. In January 2022, the Chief Justice issued an Order designating the action a specially managed proceeding and requiring the parties to confer and provide a proposed timetable. On January 27, 2022, the Case Management Judge issued an Order setting out the agreed-upon deadlines.
The parties did not undertake any of the steps outlined in the January 27, 2022 Order.
In April 2023, the Court Registry requested a status update from the plaintiffs and, when no response was received, the Case Management Judge issued a Direction requiring the plaintiffs to requisition a pre-trial conference and provide a status update.
At a case management conference on June 13, 2023, the defendants advised of their intention to bring the motion seeking the dismissal of the action for delay or, alternatively, security for costs.
Dismissal for delay
The parties agreed that the legal test for a motion for dismissal for delay is laid out in Canada v. Aqua-Gem Investments Ltd. and confirmed in Sweet Productions Inc. v. Licensing LP International SÀRL:
- There has been undue delay;
- The delay is inexcusable; and
- The defendants are likely to be seriously prejudiced by the delay.
The Court has a wide discretion in determining the appropriate remedy upon a finding for undue delay; the dismissal of the action is not the presumptive remedy.
There has been undue delay
The delay in this case, measured from the commencement of the proceeding, was approximately 38 months.
The Court had made the action a specially managed proceeding and initiated two status reviews. Furthermore, the Court had previously issued an Order setting timelines for next steps, which neither party acted upon.
The Court found that this delay was undue.
The delay is inexcusable
The Court acknowledged that the plaintiff had faced very personal hardships during the delay period and had been self-represented for a portion of it. However, the plaintiff’s personal challenges occurred during the period she was represented by counsel and so did not form the foundation of excusable delay.
Furthermore, the Court noted that the plaintiffs bear the obligation to move the litigation forward and this onus should not be shifted to the defendants (although this does not mean the defendants do not have corresponding obligations).
The Court found the delay was not excusable.
The defendants are likely to be seriously prejudiced by the delay
The defendants argued that “they suffered business prejudice and reputational harm as a result of the unresolved allegations of infringement raised in the action.” The defendants had filed three affidavits, each affiant affirming that they had suffered some prejudice because of the ongoing litigation.
The Court concluded that the defendants had met their burden of showing they were likely to be seriously prejudiced by the delay.
Sanctions
The Court then examined whether a remedy less drastic than dismissal could be considered. The Court noted that case management had already proven unsuccessful in that case and, although the plaintiffs’ appointment of new counsel provided some measure of comfort to the Court, this was not sufficient.
The Court also highlighted that all parties (including the defendants) had failed to comply with the Court’s January 27, 2022 Order outlining the timelines, which the parties had agreed to and were bound by. For that reason, the Court was unable to conclude the action should be dismissed on the defendants’ motion.
The Court therefore considered the defendants’ motion for security for costs.
Security for costs
The Court decided not to analyze the request for security for costs through the lens of Rule 416. Rather, the Court found guidance in Rules 3 and 55 and “order[ed] security for costs as a measure to ensure the Plaintiffs move this matter forward to hearing in the most expeditious and just matter.”
Although the defendants had attached to their motion record a Bill of Costs totalling $29,931, the Court ordered security for costs in the amount of $10,000, the first $5,000 payable within 14 days following the date of the Order and the second $5,000 payable following the first round of examinations for discovery. If the plaintiffs failed to post the security, the action would be dismissed.
Conclusion
The Federal Court dismissed the motion for dismissal for delay but ordered security for costs in the amount of $10,000.
A copy of the decision can be found here.
