COURT OF APPEAL FOR ONTARIO
WEILER, BLAIR and ROULEAU JJ.A.
BETWEEN:
RODNEY HILL
Plaintiff (Respondent)
and
DANNY FORBES
Defendant (Appellant)
W. Peter Murray for the appellant
Graydon Sheppard for the respondent
Heard: June 11, 2007
On appeal from the order of Justice A. Whitten of the Superior Court of Justice, dated December 6, 2006.
R.A. BLAIR J.A.:
Overview
1Mr. Forbes seeks to set aside the order of Justice Whitten dated December 6, 2006 dismissing his motion to set aside a default judgment issued in this action on July 24, 2006 and permitting him to serve and file a statement of defence and counterclaim.
2On his behalf Mr. Murray made essentially two submissions. First, he contended that the motion judge erred in failing to hold that the appellant’s delay in responding to service of the statement of claim was adequately explained. Secondly, he argues that the motion judge erred in failing to hold that a triable defence on the issue of duress had been made out.
3I do not agree, and for the reasons that follow would dismiss the appeal.
Applicable Principles
4There is no dispute as to the applicable principles. In exercising his or her discretion pursuant to Rule 19.08 to set aside a default judgment, the motion judge should consider (a) whether the motion was brought without delay after learning of the default; (b) whether the circumstances giving rise to the default were adequately explained; and, (c) whether there is an arguable defence on the merits: Morgan v. Toronto (Municipality) Police Services Board (2003), 34 C.P.C. (5th) 46 (Ont. C.A.), at para. 19. A motion judge is entitled to considerable deference in the exercise of that discretion, and a decision of this nature will not be set aside unless there has been some error in law or principle, or a palpable and overriding error of fact, or unless the decision is so clearly wrong as to amount to an injustice: see, for example, Sinnadurai v. Laredo Construction Inc. (2005), 20 C.P.C. (6th) 234 (Ont. C.A.).
Facts
5The appellant is in the business of selling and moving houses. In December 2004 he agreed to sell a house to the respondent’s common-law spouse, Nancy Tewisha, and to move it to a site on the Six Nations Reserve for a total price of $47,000. The monies were paid in advance. After some delays, the house was moved to the Reserve at the end of September, 2005. At that time the respondent and Ms. Tewisha rejected the home – there was a provision in the Purchase Agreement entitling them to do so on certain grounds – and demanded the return of their monies. The appellant alleges that the respondent refused to allow him to take his heavy moving equipment off the property unless he first agreed to repay the purchase monies and other expenses and to enter into the “Collection Agreement” on which this action is based.
6The Collection Agreement was entered into on October 5, 2005. It called for a first repayment of $10,000 and thirteen subsequent payments of $3,000 over the ensuing 3 ½ months, with a final payment of $1,000 on January 12, 2006 – a total of $50,000. The payments were not made.
7Mr. Hill commenced this action and served the statement of claim on Mr. Forbes on May 1, 2006. There was no response. The appellant was noted in default on June 5, 2006. He saw a solicitor on June 14 and gave him a retainer cheque for $2,000 but the cheque bounced. Still having heard nothing, the plaintiff obtained default judgment on July 24, 2006.
8The appellant moved to set aside the default judgment on October 10, 2006.
Delay
9On the issues of delay and the explanation for the delay, the motion judge considered the appellant’s position and rejected his arguments that his delayed reaction was attributable either to the Caledonia blockade situation or to an inability to retain counsel sooner. There was ample support in the record for that conclusion and I can see no basis for interfering with it. Although his retainer cheque was returned NSF, the appellant’s banking records show that he had deposited funds within days of the cheque having been returned NSF in an amount more than adequate to cover the amount. Further, he was operating with at least some form of overdraft protection if he made the request for that protection. He made no such request. His answers on cross-examination made it clear that the Caledonia blockade in no way interfered with his ability to respond to the proceedings.
Economic Duress
10The appellant next submitted that he raised a triable defence of economic duress in relation to the “Collection Agreement”. The motion judge rejected this submission, stating:
According to the defendant this was under duress. The circumstances he raises would not amount to “duress” certainly not in either criminal law or civil law. The time elapsed of 5 days would undermine if not eclipse the possibility of duress as the parties had plenty of time to contemplate their situation. A bold assertion of “duress” in these circumstances is not a defence.
11The appellant filed an affidavit on the motion. In that affidavit he did not deal specifically with the matter of duress, except to the extent that he swore the allegations contained in his draft proposed statement of defence and counterclaim were true. In paragraph 13 of that document he alleges that the Collection Agreement “was signed under duress for the reasons set out above and is without legal force”. Mr. Murray stated that the factual underpinnings for that plea were the allegations that the Defendant barricaded the moving equipment of the Seller (para. 10) and that “[t]he plaintiff knew that the Seller was contracted to move another home at 98 Valleyview Drive, Ancaster, the following week, and needed its equipment to do so” (para. 11).
12I am not persuaded that a triable defence of economic duress is made out on those facts. In Stott v. Merit Investment Corporation, 1988 CarswellOnt 887 (Ont. C.A.) Finlayson J.A. said, at para 48:
The term “economic duress” as used in recent cases, particularly in England, is no more than a recognition that in our modern life the individual is subject to societal pressures which can be every bit as effective, if improperly used, as those flowing from threats of physical abuse. It is an expansion in kind but not class of practices that the law already recognizes as unacceptable such as those resulting from undue influence or from persons in authority. But not all pressure, economic or otherwise, is recognized as constituting duress. It must be a pressure which the law does not regard as legitimate and it must be applied to such a degree as to amount to “a coercion of the will”, to use an expression found in English authorities, or it must place the party to whom the pressure is directed in a position where he has no “realistic alternative” but to submit to it, to adopt the suggestion of Professor Waddams (S.M. Waddams, The Law of Contract (2nd ed., 1984), at p. 376 et seq.). Duress has the effect of vitiating consent and an agreement obtained through duress is voidable at the instance of the part subjected to the duress unless by another agreement or through conduct, either express or implied, he affirms the impugned contract at a time when he is no longer the victim of duress [underlining added].
13In Stott, however, the fact of economic pressure – even pressure that could not be recognized in law as legitimate – was not sufficient in itself to establish the defence of duress, because the plaintiff had other practical alternatives.
14Here, the fact that the respondent is said to have barricaded the appellant’s equipment, knowing that he needed it for a job the next week, is not sufficient to give rise to a triable issue. More is needed. The appellant does not say that he sought advice, or considered – much less brought – legal proceedings to recover his equipment. He says he contacted the police, who would do nothing. But this is not a matter for the police; it is a civil matter that could have been resolved by a motion for the interim recovery of his property. The fact that five days had expired before the Collection Agreement was signed, as the motion judge noted, is also significant. There is no basis for saying any pressure the appellant may have felt was of such a nature as to deprive him of “his freedom of exercising his will”: Stott, supra, at para 49, citing Pao On v. Lau Yiu, [1980] A.C. 614 (P.C.). Finally, the appellant did not raise any concerns about the agreement for over a year following its signature. He simply ignored it and made none of the payments contemplated.
Other Matters
15The appellant also alleged in his proposed statement of defence and counterclaim that “reasons for refusal” set out in the Collection Agreement were untrue and that the real reason the respondent and Ms. Tewisha rejected the home was because they discovered they could not convert it into a two-storey building.
16Mr. Murray did not raise this issue in argument, but the court asked Mr. Sheppard to respond to it, having regard to the triable defence requirement. In the end, the point does not assist the appellant. The reasons for rejection of the house are relevant to the initial Purchase Agreement but not to the Collection Agreement unless it could be said that there was no consideration whatsoever for the latter. Such an allegation is not made out on the facts. Motive has little, if anything, to do with consideration.
Disposition
17For the foregoing reasons, the appeal is dismissed with costs payable to the respondent and fixed in the amount of $4,500 inclusive of fees, disbursements and GST.
“R.A. Blair J.A.”
“I agree K.M. Weiler J.A.”
“I agree Paul Rouleau J.A.”
