Edward Goldentuler Professional Corporation v. Sorger, 2016 ONSC 6300
CITATION: Edward Goldentuler Professional Corporation v. Sorger, 2016 ONSC 6300
DIVISIONAL COURT FILE NO.: 244/16 DATE: 20161006
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
EDWARD GOLDENTULER PROFESSIONAL CORPORATION Appellant/Plaintiff
– and –
ROBERT SORGER Respondent/Defendant
Edward Goldentuler, for the Appellant/Plaintiff
D. Czutrin, for the Respondent/Defendant
HEARD at Toronto: October 6, 2016
L.A. PATTILLO J. (Orally)
[1] This is an appeal by the plaintiff, Edward Goldentuler Professional Corporation (the “Appellant”) from the order of Deputy Judge Shapiro (the “Motions Judge”) dated April 19, 2016 (the “Order”) wherein the Motions Judge dismissed the Appellant’s claim, vacated the writ of seizure and sale filed against the defendant Robert Sorger (the “Respondent”) and awarded the Respondent costs of $100.
[2] The Appellant is a legal firm. The Appellant and a predecessor firm rendered legal services to the Respondent pursuant to a written retainer agreement dated July 19, 2006.
[3] In April 2009, the Respondent retained another law firm to deal with his claim.
[4] On May 19, 2009, the Appellant sent the Respondent an account for services rendered in the amount of $17,545.48. In the absence of payment, the Appellant commenced a Small Claims Court action on January 9, 2012. The Claim was served on the Respondent on April 15, 2012.
[5] In the absence of filing a defence, the Respondent was noted in default on May 12, 2012. The Appellant was subsequently contacted by counsel for the Respondent and advised that he intended to bring a motion to set aside the noting in default but no motion was ever brought.
[6] On August 13, 2012, the Appellant obtained default judgment against the Respondent following a hearing before Deputy Judge Murowitz. The Judgment is for the full amount of the claim plus costs of $300.
[7] On January 27, 2015, the Appellant issued a writ of seizure and sale.
[8] On March 16, 2016, the Respondent brought a motion in Small Claims Court to set aside the default judgment and noting of default and extending the time to file a defence. The Respondent’s affidavit was filed in support of the motion.
[9] In his oral reasons granting the Order dismissing the Appellant’s claim, the Motions Judge concluded that the Appellant’s claim fell within s. 23 of the Solicitors Act which excludes the jurisdiction of the Small Claims Court. He also found that the claim was not in compliance with the two year limitation period in the Limitation Act. He relied on the Small Claims Court r. 12.02 which permits the court to, among other things, strike out a document that discloses no reasonable cause of action.
[10] The Appellant submits that the Motions Judge did not have the jurisdiction to dismiss the Claim. The Appellant further submits that the Respondent cannot meet the test to set aside a default judgment.
[11] In response, the Respondent submits that the Motions Judge did not err in dismissing the claim. Pursuant to s. 23 of the Solicitors Act, the Small Claims Court had no jurisdiction to deal with the Claim. Accordingly, the Claim was a nullity. The Respondent further submits that the Motions Judge did not err in dismissing the Claim on the basis that it was issued outside of the limitation period.
[12] In my view, the Motions Judge erred in granting the Order. He had no jurisdiction to dismiss the Appellant’s claim given the default judgment.
[13] As noted, the Respondent’s motion was to set aside the noting of pleadings closed and the default judgment. Rather than deal with that issue, at the outset of his reasons, the Motions Judge framed the motion as being to strike the Appellant’s claim based on a limitation defence and s. 23 of the Solicitor Act and then proceeded on that basis and determined that the Appellant’s Claim could not succeed on both of those grounds. Nowhere in his reasons does the Motions Judge deal with the issue of setting aside the noting of pleadings closed and the default judgment.
[14] By not addressing the setting aside of the default judgment and dismissing the Appellant’s claim in the manner in which he did, the Motions Judge was effectively, in my view, sitting on appeal of the default judgment granted by a fellow judge. There is no provision, either in the Courts of Justice Act or the Small Claims Court Rules that grants jurisdiction to a Small Claims Court Judge to deal with an appeal from a final judgment of a fellow judge.
[15] Nor does r. 12.02, give the Motions Judge the authority to make the Order he did. While that rule permits the dismissal of a claim on the basis it discloses no cause of action, it is not applicable in circumstances where a default judgment has been obtained.
[16] The Respondent, relying on the decision of Nordheimer J. in Jane Conte Professional Corp.v. Smith, 2014 ONSC 6009, 2014 CarswellOnt 14894 (Ont. Div. Ct.), submits that because there was no jurisdiction pursuant to s. 23 of the Solicitors Act, the Claim was a nullity from the outset. While that may be, the Respondent’s remedy is to set the default judgment aside. The Motions Judge had no jurisdiction to deal with that issue in the face of the default judgment.
[17] The Small Claims Court Rules do give a Small Claims Court Judge jurisdiction to set aside the noting of default and default judgment. Rule 11.06 provides that the court may do it “on such terms as are just” and where it is satisfied that (a) the party has a meritorious defence and a reasonable explanation for the default; and (b) the motion is made as soon as is reasonable possible in all the circumstances.
[18] The Respondent’s affidavit filed in support of his motion to set aside the noting of default and the default judgment sets out the facts concerning the relationship with the Appellant, his retainer of new counsel and the fees he has paid. Nowhere does it deal with any explanation of why he did not file a defence to the claim, why he did not bring a motion to set aside the noting of default (as was indicated by his counsel) or why he took no steps to deal with the default judgment prior to the writ of seizure and sale first coming to his attention some three and a half years after the judgment.
[19] Even accepting as the Motions Judge did that the Respondent has a meritorious defence to the Claim, there was no evidence before him that provided a reasonable explanation for the delay. Nor, on the evidence, can it be said that the Respondent’s motion was brought as soon as reasonably possible. Accordingly, there is no basis upon which to set aside the noting of default or the default judgment.
[20] For the above reasons therefore, the Appeal is allowed and the Order is set aside.
[21] During argument it became apparent that some of the third party amounts which form part of the Appellant’s account to the Respondent and accordingly the judgment have been resolved directly between the Respondent and those third parties. The parties are encouraged to meet to resolve the actual amount owing under the judgment.
COSTS
[22] I have endorsed the Appeal Book and Compendium as follows: “For oral reasons given in court, the appeal is allowed and the order being appealed is set aside. Costs to the Appellant fixed at $6,500.00 in total.”
___________________________ L.A. PATTILLO J.
Date of Reasons for Judgment: October 6, 2016
Date of Release: October 7, 2016
CITATION: Edward Goldentuler Professional Corporation v. Sorger, 2016 ONSC 6300
DIVISIONAL COURT FILE NO.: 244/16 DATE: 20161006
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
EDWARD GOLDENTULER PROFESSIONAL CORPORATION Appellant/Plaintiff
– and –
ROBERT SORGER Respondent/Defendant
ORAL REASONS FOR JUDGMENT
L.A. PATTILLO J.
Date of Reasons for Judgment: October 6, 2016
Date of Release: October 7, 2016