COURT FILE NO.: 481/07
DATE: 20071205
SUPERIOR COURT OF JUSTICE - ONTARIO
DIVISIONAL COURT
RE: Earth Energy Utility Corp. v. Maxwell et al
BEFORE: Kiteley J.
COUNSEL: Clifford Cole, solicitor for the Plaintiff/Appellant
Joseph D’Angelo, solicitor for the Alberta Defendants/Respondents
HEARD: November 20, 2007
E N D O R S E M E N T
[1] The plaintiff issued a statement of claim against 10 defendants. In 2006, Harris J. granted default judgment against 4 of them, all of whom are referred to as the “Alberta defendants”. In a decision dated September 12, 2007, Stayshyn J. granted their motion and set aside the default judgment. The plaintiff seeks leave to appeal the order of Stayshyn J.
[2] The plaintiff relies on rule 62.02(4)(b) and asserts that there is good reason to doubt the correctness of the order and that the proposed appeal involves matters of such importance that leave to appeal should be granted.
[3] The questions that the plaintiff would pursue in the appeal are as follows:
Did the motions judge fail to find that the Alberta defendants have an arguable defence and, if so, is this a ground to set aside his order?
Did the motions judge fail to give effect to the argument that the Alberta defendants failed to make full, frank and truthful disclosure, and produce relevant documents and if so, is that a basis to set aside his order?
Did the motions judge fail to give effect to the argument that the Alberta defendants, independently of their counsel, had an obligation to respond to the claim against them and if so, is that a basis to set aside his order?
With respect to the foregoing grounds, do the reasons of the motions judge satisfy the test in R. v. Sheppard. If not, is that a ground to set aside his order?
Good Reason to Doubt the Correctness of the Decision:
[4] The motions judge considered Chitel v. Rothbart[^1], Springer v. American Home Assurance Co.,[^2] and the principles articulated in [Peterbilt v. 1565627 Ontario Ltd.][^3] as applicable to this situation. The plaintiff agreed that the motions judge relied on correct principles. The plaintiff argued that the motions judge incorrectly applied those principles.
[5] The plaintiff argued that the motions judge failed to find that the Alberta defendants had an arguable defence; he failed to consider the false affidavits filed by the Alberta defendants and the relevant documents that they withheld; and he failed to hold the Alberta defendants responsible for their negligence in the conduct of the action (independent of the negligence of their then counsel).
[6] Before considering the challenges to the decision, I turn to the adequacy of the reasons for decision. Counsel referred to three criminal cases: [R. v. Burns][^4], [R. v. Barrett][^5], and [R. v. Sheppard][^6]. These cases deal with the adequacy of reasons in a trial where the assessment of credibility and the burden of proof were essential to the disposition. None of the cases refer to the adequacy of reasons on a motion to set aside a default judgment.
[7] As the Supreme Court held in Sheppard, I must take a functional approach. The motions judge was not expected to absorb and reiterate minute details or consider all of the affidavit evidence and transcript excerpts bearing on all of the criteria that he was to apply in arriving at his decision. In setting aside the default judgment, there were no “troublesome principles of unsettled law” nor was the motions judge required to “resolve confused and contradictory evidence on a key issue”. In a case such as this, the reasons must be sufficient for the limited purpose of setting aside a default judgment[^7].
[8] The reasons by the motions judge are 21 pages including 62 paragraphs. The summary of facts is found in paragraphs 2 – 52, followed by a review of the legal principles in paragraphs 53 – 57. In paragraphs 58 - 60, the motions judge applied the law to the facts and arrived at a decision.
[9] I return to the basis upon which the plaintiff asserted that there is good reason to doubt the correctness of the decision. To set aside the default judgment, the motions judge had to find that the default was unintentional and that a valid reason had been provided; that the motion was served forthwith after the judgment had come to the attention of the Alberta defendants; and that there was a valid defence. The motions judge applied those criteria. The motions judge did not expressly find that all three parts of the test had been established before exercising his broad discretion. But it is implicit from the text of the reasons that he did. The “pathway”[^8] through the extensive record to his decision is apparent. In any event, the reasonableness of the finding is the issue – not the insufficiency of the reasons[^9].
[10] The plaintiff also argued that the motions judge failed to take proper account of the obligation on the moving party to make full, fair and truthful disclosure. Nor did the motions judge consider the negligence of the Alberta defendants in failing to ensure that their statement of defence was properly before the court. I disagree. The motions judge referred to the facts and the law on both of these issues.
[11] The plaintiff desires a different outcome. That does not mean that there is good reason to doubt the correctness of the decision.
Matters of Such Importance that Leave to Appeal should be Granted:
[12] Counsel for the plaintiff argued that if leave to appeal is denied and the order remains in effect, there will be a new and unacceptable standard established for setting aside a default judgment: a defaulting party will be permitted to set aside a default judgment absent a finding of an arguable defence; swear false testimony and withhold relevant documents and act recklessly or negligently in taking steps to set aside the default judgment. Mr. Cole took the position that these are matters of procedural importance to the development of the law and the administration of justice.
[13] I agree with Mr. D’Angelo that the failure to grant leave will not lead to the establishment of a new and unacceptable standard for setting aside a default judgment. The findings made are relevant only to the dispute between the plaintiff and the Alberta defendants and are not matters of general importance. Mr. Cole rightly conceded that the motions judge had relied on the correct principles of law. Even if the motions judge had erred in the application of those principles, this appeal would not involve matters of such importance that leave to appeal should be granted.
Costs:
[14] Counsel agreed that $3000 was a reasonable amount for costs of this motion. The plaintiff has not been successful. But this is a case where the Alberta defendants ought not to recover their costs. As the reasons for decision by the motions judge indicate, they have been less than diligent in participating in these proceedings. The motions judge has relieved them of the serious consequences that had occurred. I have considerable latitude in awarding costs. In the circumstances of this case, it would be an injustice to require the plaintiff to pay costs of this motion to the Alberta defendants.
ORDER TO GO:
[15] The motion for leave to appeal is dismissed without costs.
Kiteley J.
DATE: December 2007
[^1]: (1987) 20 C.P.C. (2d) 46; [1987] O.J. No. 661 [^2]: [2005] O.J. No. 5787 (S.C.J.) [^3]: 2007 ONCA 333, [2007] O.J. No. 1685 (O.C.A.) [^4]: 1994 127 (SCC), [1994] 1 S.C.R. 656 [^5]: 1995 129 (SCC), [1995] 1 S.C.R. 752 [^6]: 2002 SCC 26, [2002] 1 S.C.R. 869 [^7]: FN 6 para 28 [^8]: FN 6 para 62 [^9]: FN 5 para 1