COURT FILE NO.: 632/03

DATE: 20041101

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

O’DRISCOLL, MATLOW & JENNINGS, JJ.

B E T W E E N:

DEMAN CONSTRUCTION CORP.

Anna M. Esposito and Maria Tassou, for the Plaintiff (Respondent in the Appeal)

Plaintiff (Respondent in the Appeal)

• and -

1429036 ONTARIO INC., AAA MOVE MASTER LTD., RICK BENIPERSAUD, ROMSPEN INVESTMENT CORPORATION, AS TRUSTEE and 1531685 ONTARIO INC.

Leo Klug, for the Defendants (Appellants), 1429036 Ontario Inc., AAA Move Master Ltd. and Rick Benipersaud

Defendants (Appellants)

HEARD: May 11, 2004

MATLOW, J. ( Dissenting)

[1] With respect, I am unable to agree with the disposition of the majority. I would extend the time for bringing this appeal and allow the appeal of the moving parties from the order below by varying paragraph 2 to provide that the default judgment of the Registrar dated September 27, 2002, but not the noting in default be set aside as against the appellants. I would also set aside paragraph 3 of the order and invite counsel to make further submissions with respect to the costs of the motion below and of this appeal and, for that purpose, reserve judgment. What follows are my reasons.

[2] The default judgment, which is for $ 2,536,789.14, was signed by the Registrar pursuant to rule 19.04 (1) (a) of the Rules of Civil Procedure. The amount of the judgment was made up of $2,332,738.43 for claim plus $204,050.71 for costs. It was signed by the Registrar after the appellants were noted in default pursuant to a requisition submitted on behalf of the respondent which rested on the assertion that the respondent’s claim was for “a debt or liquidated demand in money”. It was on this assumption that the Registrar purported to exercise his jurisdiction conferred by the rule to sign the judgment. If the respondent’s claim had been for unliquidated damages, the Registrar would have had no jurisdiction to sign the default judgment. That jurisdiction is and can be conferred only on section 96 judges by virtue of their constitutional powers.

[3] Contrary to the apparent view of the Registrar, the motions judge and the majority, my examination of the statement of claim in this case has persuaded me that the respondent’s claim was not for “a debt or liquidated demand in money” but, rather, for unliquidated damages. It is the way that a claim is set out solely in a statement of claim that determines whether it is a claim for a liquidated sum or for unliquidated damages. (See Schill & Beninger Plumbing & Heating Ltd. v. Rozon (2001), 6 C.P.C. (5th) 80 (Ont. C.A.) The Registrar must be able to determine solely from his examination of the pleading whether or not he has jurisdiction to sign a default judgment.

[4] The reasons of the majority, particularly at paragraph 42, reveal a reliance entirely on documentation extraneous to the statement of claim to support their holding that the plaintiff’s claim was for a liquidated sum. As indicated above, this approach runs contrary to the explicit wording of rule 19.04(1) which makes specific reference to a “claim” for a liquidated sum and is contrary to the holding of the Court of Appeal in Schill.

[5] The essential details of the respondent’s claim are set out in paragraphs 7 to 11, inclusive, of the statement of claim. In those paragraphs the respondent alleges that it entered into an agreement with the appellants, or one of them, by which it “agreed to act as the general contractor for the construction of a funeral home…. at a contract price of $1,177,000.00 inclusive of GST”. Subsequently, “there were changes to the Contract work which increased the Contract price to $2,332,738.43 inclusive of GST”. The respondent then alleges that it rendered invoices from time to time but has not received any payment from any of the appellants.

[6] It is not alleged in the statement of claim that the amount by which the contract price was increased by reason of the changes to the contract work was agreed to by the appellants or could be ascertained by calculation or fixed by any scale of charges or other positive data. Rather, the essence of the pleading is only that the original contract price was increased and that invoices were rendered.

[7] Accordingly, it is my respectful view that the Registrar was required to refuse to sign default judgment and the respondent was required to seek judgment by moving for judgment before a judge on affidavit evidence pursuant to rule 19.05(1).

[8] The reasons of the majority reveal that they have come to a different conclusion on the authority of the judgment of the Court of Appeal in Nippon Express Canada v. Provan, (September 18, 2003) [2003] O.J. No. 3578 relying on the following passage in paragraph 2 of the reasons for judgment in that case;

We have no such doubt in this case (that the default judgment was for a liquidated sum). The amount of $143,462.06 was supported by a detailed schedule of invoices.

[9] The majority concluded that the reference to “a detailed schedule of invoices” in Nippon was the equivalent of the invoices rendered by the respondent to the appellants in this case and was sufficient to characterize the respondent’s entire claim as one for a liquidated sum. However, with respect, it is my view that a careful review of the facts in Nippon show that Nippon must be distinguished and that the conclusion of the majority which rested on their interpretation of Nippon was reached in error.

[10] In Nippon, the defendant, a trusted employee of the plaintiff, rendered false invoices in the name of his sole proprietorship to the plaintiff for services that were never provided and the plaintiff, believing that the invoices were proper, paid the amounts sought to the defendant. When the defendant’s fraudulent conduct was discovered, the plaintiff commenced action against the defendant for the amount obtained by the defendant through his fraudulent scheme. That amount was precisely the total of the amounts set out in the fraudulent invoices rendered by the defendant. The defendant did not defend the action as required and default judgment was signed against him. On the subsequent motion by the defendant for an order setting aside the default judgment on the ground that it was not for a liquidated sum, the motions judge held that it was for a liquidated sum because it “was supported by a detailed schedule of invoices” and she refused to set aside the default judgment. The decision of the judge was subsequently upheld by the Court of Appeal.

[11] It is evident that the amount claimed in Nippon was the total of the amounts set out in the fraudulent invoices because that was the amount actually obtained by the defendant’s fraud. The amount claimed could be ascertained by calculation and could not reasonably have been any other amount. It is, therefore, not surprising that both the motions judge and the Court of Appeal held that the default judgment was for a liquidated sum.

[12] In Nippon, the invoices were rendered by the defendant in order to advance his fraudulent scheme. In this case, the invoices were rendered by the respondent, the plaintiff, as parts of its billing process.

[13] In contrast with Nippon, there is nothing in the statement of claim in this case, which explains how the amounts claimed for changes to the contract were determined. Presumably the respondent could have chosen any amounts that it wished. The fact that the respondent set out the amounts it had unilaterally determined in a series of invoices could not have changed the character of the total sum from unliquidated to liquidated.

[14] The significance of the invoices in Nippon was, accordingly, much different from the significance of the invoices in the case at bar and they ought not, in my view, to be regarded as equivalents.

[15] Therefore, because default judgment was signed by the Registrar without jurisdiction, the appellants are entitled, as a matter of right, to have it set aside. The default judgment is a nullity and this court is obliged to set it aside, even outside the time allowed for moving against it, to record the court’s recognition that it was signed without jurisdiction. The appellants are not required in such circumstances to adduce evidence of a good defence on the merits.

[16] Nevertheless, the appellants are not, in my view, entitled to have the noting in default set aside. The motions judge held, at paragraph 17 of his reasons, that the appellants “do not have an arguable case on the merits” and I agree with the majority that this holding ought not to be disturbed. It follows that the noting in default pursuant to both rule 19.02 and pursuant to section 54 (3) of the Construction Lien Act must not be disturbed and the respondent should be left to pursue its remedy in accordance with the manner prescribed by the Act and the Rules.

MATLOW, J.

Released: