Royal Bank of Canada took too long in pursuing a legal action, a court has ruled — dismissing the bank’s action against a customer, and the estate of her dead husband, over the repayment of outstanding credit facilities.
In a March 20 decision, the Ontario Superior Court of Justice denied a motion brought by the bank seeking to revive its case against a customer over an unpaid debt of approximately $50,000.
According to the court’s decision, the bank initiated legal action back in 2018 against Wendy Palma, and the estate of her deceased husband, over an outstanding debt. The defendant in the case countersued, seeking damages of $400,000 for the bank’s alleged “misconduct” in its dealings with the couple.
Among other things, she alleged that after her husband was diagnosed with cancer in 2016, she sought advice from the bank about his insurance coverage — and said she was told that his disability insurance would cover the outstanding debt when he dies, and that they could cancel his mortgage life insurance.
She alleged that, after her husband passed away in early 2017, “she encountered difficulties with the bank after she submitted the insurance claim … and that she has suffered damages due to the bank’s alleged misconduct.”
In its defence, the bank denied her allegations and maintained that the outstanding debts remained due.
Ultimately, however, the case never went to trial and neither side’s allegations were tested in court. Instead, the court has now dismissed the case for excessive delay.
In its decision, the court noted that while Palma was responsible for certain delays in the case that took place up until a motions hearing in early 2023, since then, the bank has been the primary culprit.
“In my view, it is clear from the evidence after July 2023 that the bank switched gears and was focused only on settlement. The bank took no steps whatsoever after July 2023 to advance the litigation,” the court said, adding that RBC didn’t attempt to comply with court orders to bring the case to trial by March 31, 2024.
“The primary onus was on the bank, as plaintiff, to move the action forward. Instead of doing so, the bank took its eye off the litigation ball and the ball dropped,” the court said. “The result is that this is now a 7+-year-old simplified procedure action that has not progressed past the exchange of productions.”
While the court found that there was no actual prejudice to the defendant caused by the delay, it also noted that the court must promote “timely” dispute resolution, and that the passage of time makes it harder to defend a legal action.
“It is important for disputes to be heard on their merits. But it is also vital that the public have confidence that justice will be administered timely and efficiently. On balance of these two principles, the scale heavily tips against reinstatement of this action,” the court concluded, in dismissing the bank’s motion.