Focus On

Civil procedure - Par ties - Party types - Corporations. partnerships and sole proprietorships - Standing - Third party procedure - Striking out or setting aside  -

Thursday, August 11, 2016 @ 8:00 PM  


Appeal by the defendant from dismissal of his third party claim against the respondent on the basis of delay. The proceedings arose out of an oil spill that occurred in Muskoka in 1990. The main action was commenced in 2000. In 2001, the appellant commenced a third party claim against the respondent seeking contribution and indemnity. Pleadings closed in 2004 and no further steps were taken after the main action was struck from the trial list. The respondent was voluntarily dissolved in 2006. The main action and third party claim remained unresolved. In 2015, the respondent moved to dismiss the third party claim for delay. The appellant argued that the respondent, as a dissolved corporation, lacked capacity to bring a motion for the relief sought or to defend a third party claim. The motion judge found that the respondent had standing to bring the motion and defend the claim, and that the claim should be dismissed due to inordinate delay and related prejudice. The appellant appealed.

HELD: Appeal dismissed. The motion judge properly construed s. 242 of the Business Corporations Act as permitting the respondent to bring its motion to dismiss the third party claim. Under s. 242, a dissolved corporation could take certain actions without first being revived, such as taking steps to defend a proceeding against it. The motion to dismiss was akin to defending a proceeding rather than commencing a legal action or proceeding. With respect to the merits, the motion judge was not bound by a prior ruling that refused to dismiss the main action for delay. The fact that the plaintiffs had a reasonable explanation for the delay in the main action did not preclude a finding that the delay in the third party claim was inexcusable. The third party claim could have been set down for trial before the main action given the discrete issues involved. There was unchallenged evidence that the appellant did not advance the third party claim and failed to respond to communication from respondent’s counsel. The motion judge did not err or consider irrelevant factors in finding no evidence rebutting the presumption of prejudice.