Discretion in dismissing an action for failure to comply with a cost order

Duffin v. NBY Enterprises Inc., 2010 ONCA 765 deals with whether a motion judge exercised her discretion unreasonably when she dismissed the plaintiffs’ action because they were two days late in paying the costs component of an earlier court order. The Court considered the matter and concluded the justice of the case required an extension of time to comply with the order. The Court held:

[14] First, a court should always be reluctant to dismiss a claim on grounds unrelated to its merits. To do so is contrary to the general principle – found in rule 1.04(1) – that animates all of our Rules of Civil Procedure: “These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.”

[15] Second, on these kinds of motions, a court must consider the key issue of the prejudice to the parties that will result from its order. Here, the defendants suffer no prejudice whatsoever if Lococo J.’s order is varied to relieve against the plaintiffs’ non-compliance. On the other hand, the plaintiffs will suffer great prejudice if the order is not varied: their action will be dismissed without a hearing on the merits.

[16] Third, the court should consider the underlying purpose of the order that was breached. Lococo J.’s order was essentially a scheduling order, intended to ensure that there would be no further adjournments and to compensate the defendants for their costs thrown away because of the previous adjournments. All of the conditions of Lococo J.’s order were met over a month before the return date of the motion. Therefore, the motion could have proceeded without further delay.