Case Summary

The plaintiff obtained default judgment against the defendant for wrongful dismissal. The defendant moved to set aside the default judgment, arguing a plausible excuse for default and arguable defenses, and that the plaintiff had acted unreasonably by obtaining default judgment without notice during ongoing settlement discussions. The court applied the five factors under Rule 19.08 of the Rules of Civil Procedure, finding that the defendant acted promptly, had a plausible excuse based on an understanding to suspend litigation, and raised arguable defenses. The court also found that the plaintiff's conduct in obtaining default judgment without notice during settlement discussions was not in the interests of justice. Consequently, the default judgment was set aside, and the plaintiff's motions to lift a stay and amend the judgment were dismissed as moot. Case management was ordered. interesting_citations_summary: > This decision provides a practical application of the five-factor test for setting aside default judgment under Rule 19.08, emphasizing the importance of promptness, plausible excuse, arguable defense, relative prejudice, and the integrity of the administration of justice. It highlights that a course of conduct indicating a suspension of litigation for settlement purposes can constitute a plausible excuse for default, and that obtaining default judgment without notice during such a period can be viewed as contrary to the interests of justice. final_judgement: > The default judgment granted to the plaintiff was set aside. The plaintiff's motions to lift the stay and amend the default judgment were dismissed as moot. Case management was ordered for the action. winning_degree_applicant: 1 winning_degree_respondent: 5 judge_bias_applicant: 0 judge_bias_respondent: 0 year: 2016 decision_number: 4215 file_number: "CV-13-486705" source: "https://www.canlii.org/en/on/onsc/doc/2016/2016onsc4215/2016onsc4215.html" keywords: - Default judgment - Setting aside - Rule 19.08 - Rules of Civil Procedure - Wrongful dismissal - Human rights - Disability benefits - Settlement discussions - Administration of justice - Case management areas_of_law: - Civil Procedure - Employment Law - Human Rights Law cited_cases: legislation: - title: "Rules of Civil Procedure, R.R.O. 1990, Reg. 194" url: "https://www.ontario.ca/laws/regulation/900194" - title: "Employment Standards Act, 2000, S.O. 2000, c. 41" url: "https://www.ontario.ca/laws/statute/00e41" - title: "Human Rights Code, R.S.O. 1990, c. H.19" url: "https://www.ontario.ca/laws/statute/90h19" case_law: - title: "Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, 119 O.R. (3d) 561" url: "https://www.canlii.org/en/on/onca/doc/2014/2014onca194/2014onca194.html" - title: "Intact Insurance Company v. Kisel, 2015 ONCA 205, [2015] O.J. No. 1473" url: "https://www.canlii.org/en/on/onca/doc/2015/2015onca205/2015onca205.html" --- # Court File and Parties **COURT FILE NO.:** CV-13-486705 **DATE:** 20160624 **ONTARIO SUPERIOR COURT OF JUSTICE** **BETWEEN:** MONIQUE SAVIN Plaintiff – and – GRANITE CLUB Defendant **Counsel:** Monique Savin, on her own behalf Allyson M. Fischer for the Defendant **HEARD:** June 22, 2016 **M. D. FAIETA, J.** --- # INTRODUCTION [1] The Plaintiff was employed by the Defendant for seven months. Her employment was terminated without cause on March 26, 2012. The Plaintiff subsequently brought an application before the Human Rights Tribunal against the Defendant. That application was withdrawn on November 28, 2013. This action for wrongful dismissal was commenced on August 13, 2013. The Plaintiff also brought an action on August 13, 2013 against Manulife Financial (Court File CV-13-486703), being the Defendant’s insurer of short term disability and long term disability benefits, for payment of disability benefits. The action against Manulife was settled in April 2016. [2] Justice Goldstein granted default judgment with respect to the action against Granite Club on April 6, 2016 (the "Default Judgment"). His endorsement states: Granite Club never defended this action and was noted in default. Ms. Savin moves for default judgment. In my view she is entitled to liquidated damages of $125,385 (see para. 15 of her affidavit). There is, however, insufficient evidence to support a claim for unliquidated damages of $100,000 and that part of her motion is denied. Costs in the amount of $750 are awarded as partial indemnity costs. [3] On April 20, 2016, Justice Dunphy stayed the execution of the Default Judgment by an endorsement, which reads as follows: Plaintiff has signed default judgment allegedly without notice to defendant following lengthy settlement and mediation procedures. Defendant is moving to set aside and has a motion date scheduled for June 22, 2016 that has been obtained speedily. The Plaintiff did not appear this am but left a note indicating her opposition but not agreeing to preserve the status quo pending the defendant’s motion. In my view the defendant is moving diligently and has advanced grounds to set aside default judgment that are not frivolous. There is a chance of success and the status quo should be preserved. Accordingly, I am ordering a stay of execution procedures on the judgment until the motion to set aside is heard or further order of the court. The plaintiff has alleged no prejudice and I can see none. The plaintiff has acted unreasonably in my view and a costs award in favour of the defendant is appropriate. Costs of $750 payable forthwith. [4] The Plaintiff brings a motion to lift the stay issued by Justice Dunphy and to amend the Default Judgment to obtain a judgment for unliquidated damages. The Defendant brings a motion for an Order to set aside the Default Judgment. For the reasons described below, I have set aside the Default Judgment. As a result, the Plaintiff’s motions are dismissed as moot. # ANALYSIS [5] Under [Rule 19.08 of the Rules of Civil Procedure](https://www.ontario.ca/laws/regulation/900194), judgment against a defendant who has been noted in default may be set aside or varied by the court on such terms as are just. Whether the interests of justice favour setting aside a default judgment requires the consideration of the following factors: (a) Was the motion brought promptly after the defendant learned of the default judgment? (b) Does the defendant have a plausible excuse or explanation for the default? (c) Does the defendant have an arguable defense on the merits? (d) What is the potential prejudice to the defendant should the motion be dismissed, and the potential prejudice to the plaintiff should the motion be allowed? (e) What would be the effect of any order the court might make on the overall integrity of the administration of justice? [6] The above factors are not rigid rules. Not all of the above factors have to be satisfied in order to set aside a default judgment. However, a court must be satisfied that it is just to set aside a default judgment in the circumstances. [1] ## Factor #1: Was the motion brought promptly after the defendant learned of the default judgment? [7] On April 6, 2016, the Plaintiff delivered a copy of the Default Judgment to counsel for the Defendant demanding payment. [8] On April 8, 2016, counsel for the Defendant advised the Plaintiff that the Defendant would bring a motion to set aside the Default Judgment. She asked that the Plaintiff not proceed with enforcement proceedings. [9] On April 12, 2016, counsel for the Defendant and the Plaintiff exchanged correspondence regarding attending CPC court to schedule the motion for setting aside the Default Judgment. [10] On April 18, 2016, counsel for the Defendant attended CPC Court. Justice Firestone scheduled the motion to set aside default Judgment for June 22, 2016. His endorsement states: Motion to set aside default judgment fixed for June 22, 2016 for 1½ hours. Timetable signed by me to apply. Plaintiff is self-represented and was notified of today’s attendance and is not present. Moving party to serve a copy of this order on the Plaintiff. [11] In my view, the Defendant brought this motion promptly after learning of the Default Judgment. ## Factor #2: Does the defendant have a plausible excuse or explanation for the default? [12] Donna D’Andrea had carriage of this action for the Defendant. She states: It was always my understanding that the parties had an agreement that defence was required while we were attempting to resolve this matter first by way of mediation then through discussion following mediation. In fact, as of April 6, 2016, the date on which I received notification that the Plaintiff had obtained default judgment against the Granite Club, it remained my understanding that no defence was required. My understanding was based on various discussions and written communications with counsel on this issue (which were confirmed in writing at Exhibits 28 and 32 to Joanne Hogg’s affidavit sworn on April 28, 2016) as well as the parties’ conduct since I began having discussions with counsel to work toward a resolution. (Affidavit, paragraph 5) [13] A Notice of Intent to Defend was served on March 4, 2014. [14] A Notice of Change of Lawyers was received on March 17, 2014. [15] An Amended Statement of Claim was served on March 21, 2014. Ms. D’Andrea advised that a motion to strike portions of the Amended Statement of Claim may be necessary. [16] By letter dated April 16, 2014, Ms. D’Andrea advised Plaintiff’s counsel, Ian Hurley, as follows: We are writing further to our telephone discussion in respect of the above noted matter. Our client intends to Defend the Claim. However, there are several paragraphs in the Statement of Claim that require amendment prior to the filing of our client’s Statement of Defence. If the Plaintiff is not willing to amend the Claim, we will have no option but to bring a Motion to have parts of the Claim struck. It is our intention to review with you the paragraphs of the Claim that we believe require amendment before we schedule a date in Motions Court. In the interim, on a without prejudice basis, Granite Club is agreeable to attending an early mediation before mediator Michael Silver. We are prepared to temporarily dealy addressing the portions of the Claim that require amendment. We also do not intend to file a Statement of Defence prior to Mediation. We will provide a Mediation Brief to Mr. Silver in advance of the mediation. This was the agreement we had reached with Mr. Muller at Share Lawyers and trust that you will be agreeable to proceeding in the same manner. In these circumstances we do not expect that you wisll take any steps to have our client noted in Default. [Emphasis added] [17] There was no reply to the above letter. [18] Mediation did not take place on October 16, 2014 as scheduled as the Plaintiff ended her retainer with counsel a few weeks earlier. The Plaintiff retained another lawyer in November 2014. Counsel for the Plaintiff and Ms. D’Andrea spoke on February 2, 2015. It was Ms. D’Andrea’s understanding that mediation would be scheduled and that she would not be proceeding with a motion to strike the Claim nor would she be required to file a Statement of Defence. Mediation was scheduled for August 27, 2015. Although this action did not settle at mediation, the parties agreed to continue settlement discussions. [19] On December 3, 2015, the Plaintiff delivered a Notice of Intention to act in Person. [20] On December 7, 2015, the Plaintiff sent the following email to Ms D’Andrea: I wish to pursue a discontinuance, thus resolving the matters. [21] On December 14, 2015, the Plaintiff sent the following email to Ms. D’Andrea: Would you reply to my email about my self representation and your client’s thoughts about next steps. I suspect I should receive some release from you on your client’s behalf. I have not obtain [sp] this to review. Please send. [22] On December 17, 2015, Ms. D’Andrea sent Minutes of Settlement, Consent to Order Dismissing Action without Costs and a draft Order dismissing action without costs for the Plaintiff’s signature. [23] The Plaintiff responded on February 17, 2016. She stated: Mediation last year was unsuccessful. Thus, your inclusion of Minutes of Settlement in your email was irrelevant. Your terms of dismissal or discontinuance without costs are unreasonable. [24] Prior to sending the above email, the Plaintiff noted the Defendant in default on February 2, 2016, without notice and without subsequently advising the Defendant that this step had been taken. [25] Ms. D’Andrea states that the Plaintiff did not advise her that she would be pursuing her action, would be moving to note the Defendant in default or that she required the Defendant’s Statement of Defence. [26] The Plaintiff states that none of her former counsel agreed to waive the Defendant’s requirement to file a Statement of Defence. However, the course of conduct since this action was commenced suggests otherwise. It appears that the parties had responsibly put their resources towards making best efforts to resolve this action rather than towards litigating it. [27] I accept the Defendant’s submission that it had attempted to defend this action in the most cost-effective manner by attempting to reach a settlement prior to incurring the cost of a motion to strike the Statement of Claim and filing a Statement of Defence. ## Factor #3: Does the Respondent have an arguable defence to the application on the merits? [28] The Plaintiff’s Amended Statement of Claim makes the following claims against the Defendant. Wrongful Dismissal [29] The Plaintiff claims that she became disabled due to major depressive disorder, post-traumatic stress disorder and anxiety during her employment with the Defendant. The Plaintiff claims that she was dismissed without cause on the day after she advised the Defendant that she was suffering from a psychiatric disability. The Plaintiff also claims that she was told that her disability benefits would end on that day. [30] The Plaintiff claims that she was terminated without cause. She seeks compensation in lieu of reasonable notice, any statutory entitlements that are owed under the [Employment Standards Act](https://www.ontario.ca/laws/statute/00e41) as well as any employment/fringe benefits that she would have received during the period of reasonable notice. [31] Joanne Hogg is the Defendant’s Director of Human Resources. She states that the Plaintiff was paid 4 weeks’ pay to assist while she searched for new employment. Further, the Defendant continued to pay premiums for disability insurance, life insurance and other insurance until April 2, 2012. The Defendant paid the premiums for medical and dental benefits until April 24, 2012. Ms. Hogg states that these payments and benefits exceeded the Plaintiff’s entitlement under her employment agreement. Human Rights Code claim [32] The Plaintiff seeks damages under the [Human Rights Code](https://www.ontario.ca/laws/statute/90h19) on the basis that the Defendant discriminated against her based on her disability, in that, her termination was motivated by the fact that the Plaintiff had commenced a medical leave and the Defendant had failed to accommodate the Plaintiff’s disability. [33] Ms. Hogg states that the Plaintiff was terminated due to performance issues and unsubstantiated allegations against managers which irreparably damaged the employment relationship. Ms. Hogg also states that the decision to terminate the Plaintiff was made before she raised any medical issues. Disability Benefits Claim [34] The Plaintiff claims that the Defendant interfered with her ability to collect disability benefits from Manulife Financial to which she was entitled. The Plaintiff claims damages for loss of disability benefits from the Defendant in the event that it is determined that she is not entitled to disability benefits. [35] Ms. Hogg states that she fully cooperated with the Plaintiff’s application for short term disability benefits. [36] The Plaintiff’s own evidence is that she has settled her action against Manulife Financial for disability benefits. Conclusion [37] In my view, the Defendant raises arguable defences to the Plaintiff’s claim. ## Factor #4: Relative Prejudice [38] The Plaintiff states: … I was correctly, legally, justly awarded Default Judgment and costs – this is money I can collect on now. Not only would I have to again prove my case on merits but also endure the costs to do so, endure further intentional and deliberate massive delay by the defendant, which are not steps taken in the administration of justice. [39] The Defendant submits that it will be prejudiced if the Default Judgment is not set aside because it will become liable for claims that it disputes and may have no obligation to pay. [40] In my view the Plaintiff is the author of her own alleged prejudice. While the parties chose to try to mediate and settle their differences, the Plaintiff decided to litigate rather than mediate without notifying the Defendant of her change in approach until after she had obtained Default Judgment. ## Factor #5: Administration of Justice [41] While the parties had pursued a course of conduct whereby they had chosen to suspend litigation while attempting to settle their differences, the Plaintiff (while in receipt of settlement documents that she had requested) unilaterally decided to litigate without informing the other party, as noted above. Such conduct is obviously not in the “interests of justice”. # CONCLUSIONS [42] In my view, the circumstances described above justify that the Default Judgment issued by Justice Goldstein be set aside. [43] The Defendant shall provide its costs submissions by June 29, 2016. The Defendant shall provide any responding costs submissions by July 6, 2016. The costs submissions shall be no more than two pages in length exclusive of an outline of costs and any offer(s) to settle that were made in respect of this motion. [44] Further, given the various appearances before this court and given that the Granite Club has filed a Notice of Intent to Defend, I have ordered case management of this action pursuant to [Rule 77.05(2) of the Rules of Civil Procedure](https://www.ontario.ca/laws/regulation/900194) without seeking the consent of the parties. It is my hope that such oversight will assist the parties in making this process more efficient and effective. --- Mr. Justice M. Faieta Released: June 24, 2016