Court File and Parties

Court File No.: 73/09

Released: 20091013

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Re: Antranik Khatachadourian (Plaintiff/Respondent) v. Mohan Roopchand and Maria Roopchand (Defendants/Appellants)

Before: Karakatsanis J.

Counsel: L. Susman, for the Plaintiff/ Respondent

R. G. Chapman, for the Defendant/Appellant

Heard: At Toronto, October 9, 2009

ENDORSEMENT

[1] The defendants appeal the decision of Master Albert refusing to grant leave to defend this claim pursuant to s. 54(3) of the Construction Lien Act, R.S.O. 1990 c. C 30 (the Act.)

[2] The defence had been struck for failure to comply with a court order regarding undertakings. An appeal of that decision to the Divisional Court was dismissed and leave to appeal that decision was denied by the Ontario Court of Appeal. The defendant then applied under s. 54(3) of the Act for leave to defend the claim.

[3] Master Albert held that s. 54 is not available where the pleadings have been struck and that it would an abuse to give leave.

[4] The heading for s. 54 is "Timing for delivery of pleadings." Section (2) provides that "where a person… defaults in the delivery of a defence to that claim, the person against whom the claim is made may be noted in default". Section 54 (3) provides:

Where a defendant … has been noted in default under subsection (2), the defendant …shall not be permitted to contest the claim of the person who named the defendant …to file a statement of defence, except with leave of the court, to be given only where the court is satisfied that there is evidence to support a defence, and where leave is granted, the court,

(a) may make any order as to costs that it considers appropriate; and

(b) may give directions as to the conduct of the action.

[5] The rules of practice continue to apply to pleadings and proceedings, except where inconsistent with the Act: s.67(3).

[6] The defendants submit that in amending the Mechanic Lien Act in 1983 and adding s. 54, the legislators provided for a complete code for setting aside a noting in default and intended to replace the test under the Rules at the time of its enactment (including the requirement of an intention to defend, reason for the delay and merits of the defence). They submit that the legislators are presumed to have known the law at the time; and the language indicates that they clearly chose to remove the other requirements for setting aside a default judgment and required that leave be given if there is evidence to support a defence. The defendant submits that the language in s. 54(2) "defaults in the delivery of a defence" encompasses not just a failure to deliver a defence but also a failure to meet obligations relating to the delivery of a defence.

[7] A purposive approach to statutory interpretation requires that "words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament." Elmer Driedger in "Construction of Statutes" (2nd ed. 1983) at p. 87. See Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27, para. 21.

[8] By its wording, the heading, its placement and the context of the section, section s. 54 (3) applies to the delivery of pleadings and only where under (2) "a person defaults in the delivery of a defence to that claim" and not where pleadings have been delivered but subsequently struck.

[9] Furthermore, even if s. 54(3) applied where the defence has been struck, the language of the section does not remove the judicial discretion to refuse leave where the motion is a collateral attack on the appeal decisions and an abuse of process. The language of s. 54(3) sets out a precondition for the granting of leave – "to be given only where the court is satisfied that there is evidence to support a defence" but does not make leave mandatory if that precondition is met. I do not accept the language requires that leave be granted in every case even where to do so would constitute an abuse of process.

[10] The appellants' position would result in an absurd result, rendering meaningless the ability of the court to enforce its orders through contempt and providing leave to defend even where the Divisional Court has affirmed the order striking the defence.

[11] The Master was correct in her decision. The appeal is dismissed. The parties have agreed upon quantum of costs on this appeal. The responding party shall have costs of $5,000.

Karakatsanis J.

Released: October , 2009