CITATION: Themer v. Posie, 2019 ONSC 7173

DIVISIONAL COURT FILE NO.: 690/18 DATE: 20191210

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

SACHS, DUCHARME and TZIMAS JJ.

BETWEEN:

HARALD THEMER AND ESTELLE MONTPELLIER

Albert G. Formosa and Caitlin Steven, for the Plaintiffs (Appellants)

Plaintiffs (Appellants)

– and –

JOSEPH POSIE and PAULA POSIE

D. Andrew Thomson, for the Defendants (Respondents)

Defendants (Respondents)

HEARD at Toronto: December 10, 2019

DUCHARME J. (Orally)

NATURE OF PROCEEDING:

1The Appellants appeal an order to set aside default judgment and a costs order to pay partial indemnity costs to the Respondents. The order was made by the Honourable Justice Carole Brown (hereafter referred to as the "Motion Judge"), with reasons dated October 19, 2018.

2The Appellants argue that the Motion Judge made significant errors in exercising her discretion to set aside default judgment such that the decision should be set aside. The Appellants also ask for the Respondents' statement of defence and counterclaim, dated November 2018, to be struck out; to be awarded costs for the motion to set aside default judgment, including costs thrown away; and costs for this appeal.

3The Respondents disagree and ask for costs for this appeal.

STANDARD OF REVIEW:

4The parties agree that the decisions to set aside a default judgment and to award costs are discretionary ones. Therefore, the standard of review is based on the standard of reviewing a discretionary decision, that is, if there was some error in law or principle, a palpable and overriding error of fact, or the decision is so clearly wrong as to amount to an injustice.

THE DECISION BY THE MOTION JUDGE

5The Motion Judge relied on the test set out in Mountain View Farms Ltd. V. McQueen, 2014 ONCA 194, at paras. 48-49, which sets out five major factors to consider in setting aside a default judgment:

(a) whether the motion was brought promptly after the defendant learned of the default judgment;

(b) whether there is a plausible excuse or explanation for the defendant’s default in complying with the Rules;

(c) whether the facts establish that the defendant has an arguable defence on the merits.

(d) the potential prejudice to the moving party should the motion be dismissed, and the potential prejudice to the respondent should the motion be allowed; and

(e) the effect of any order the court might make on the overall integrity of the administration of justice.

6The Motion Judge went through each of the five factors in her decision. She was alive to the fact that the factors are not rigid rules, but must be considered taking into account the particular circumstances in each case. Indeed, at para 51 of Mountain View Farms, the Court of Appeal found a Court can exercise their discretion to set aside a default judgment on the basis of one factor that weighed heavily in favour of the defendant, even if the other factors were not satisfied

ALLEGED ERRORS OF THE MOTION JUDGE

1) Did the Motion Judge err in concluding that the motion to set aside the Default Judgment was brought without delay?

7Counsel for the Appellants did not strenuously advance this argument in oral submissions. In our view, the Motion Judge made no error in concluding that the motion to set aside the Default Judgment was brought without delay.

2) Did the Motion Judge err in concluding the circumstances giving rise to the default were adequately explained?

8The Appellants allege that the Motion Judge committed an error in principle in finding that not understanding and doing nothing could constitute an adequate explanation for delay. In oral argument, the Appellants conceded that the Respondents did do something after they received the Statement of Claim and the amended Statement of Claim. Thus, they focused their submission on the fact that when the Respondents received the motion materials for the default judgment motion they did nothing.

9The Motion Judge reviewed the evidence and accepted that when the Respondents received the motion materials for the default judgment motion, they did not understand them and did not understand that they had to appear in Court. In view of this, it was open to her to conclude that their failure to oppose the motion was explained. The Appellants could not point to any authority that stood for the proposition that it is an error in principle to set aside a default judgment when a defendant has failed to take any action to appear on the motion for default judgment.

3) Did the Motion Judge err in concluding that the Respondents have an arguable defence on its merits?

10The Appellants argue that given the evidence in this case the Respondents had to do more than offer bare denials or assertions. The Appellants argue that they had to put their best foot forward and, in light of their expert evidence, this would require that some evidence be led that would contradict or undermine the Plaintiff’s expert evidence, including possibly having the Respondents lead expert evidence of their own.

11The Appellants concede that this argument essentially equates a motion to set aside a default judgment with a motion for summary judgment. This is an error. The proper way to assess the factor of finding there is a defence on the merits for the purposes of setting aside default judgment is that the defendant does not need to show that the defence will inevitably succeed, but only that it is an "arguable" defence that has an "air of reality": Mountain View Farms, at para. 51. Relevant questions include: Does the defence on the merits raise a genuine issue for trial? Does the defence have an air of reality about it in light of the evidence brought forward in the motion? Are there real credibility issues relating to important facts?: Bank of Montreal v. Chu, 1994 7246 (ON SC), [1994] O.J. No 388 (Gen. Div), at para. 21.

12The Respondents replied to each of the three main grounds for the overall nuisance claim with their affidavit evidence. The Motion Judge concluded that their defence had an air of reality and their evidence went directly to the legal determination of whether their actions rose to a level such that they unlawfully interfered with the use and enjoyment of the Appellants’ land. The Motion Judge committed no error in principle in arriving at this conclusion nor was her decision clearly wrong.

4) Did the Motion Judge err in concluding the prejudice to the Respondents was greater than the prejudice to the Appellants?

13The Appellants allege that the Respondents continue to interfere with their use and enjoyment of their property. They submit that upholding the decision of the Motion Judge would unduly prolong the litigation process. However, counsel for the Appellants conceded in oral argument that the prejudice this occasioned would be no different than what would occur while waiting for trial. Further the Motion Judge concluded, as she was entitled to, that this prejudice was outweighed by the prejudice that the Respondents would suffer if the default judgment was not set aside.

5) Did the Motion Judge err in finding that the administration of justice would be brought into disrepute if the default judgment were to stand?

14The Appellants submit that the Respondents did understand the motion materials for default judgment, but chose to do nothing about it. Therefore, to allow this order to stand would be to absolve the Respondents of any consequences for their inaction which would bring the administration into disrepute. This submission ignores the fact that the Motion Judge accepted that the Respondents did not understand the motion materials for default judgment.

FAILURE TO AWARD THE APPELLANTS THEIR COSTS THROWN AWAY

15The Appellants submit the Motion Judge was wrong to depart from a general principle that the defendants must pay the plaintiffs' costs thrown away when setting aside a default judgment. They submit, at the very least, that it was an error for the Motion Judge not to provide reasons about why she chose not to do so.

16While the Courts have awarded Plaintiffs cost thrown away when a motion to set aside a default judgment is successful and have refused to do so when the default judgment was improperly obtained, there is not a rule that if such costs are not awarded or discussed that this constitutes an error in principle.

17The costs decision of the Motion Judge was a discretionary decision. The decision discloses no error in principle, no misapprehension of the facts, nor was it clearly wrong.

18For all these reasons, the appeal is dismissed.

SACHS J.

19I have endorsed the Appeal Book and Compendium of the Plaintiffs/Appellants as follows: “The appeal is dismissed for reasons given orally by Ducharme J. As agreed, the appellants shall pay to the respondents their costs of the appeal fixed in the amount of $8,981.69, all inclusive.”

___________________________ Ducharme J.

I agree

Sachs J.

I agree

Tzimas J.