Court File and Parties

COURT FILE NO.: CV 19-70436 DATE: 2023/04/25

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Frank D’Amico and Claudio D’Amico, Plaintiffs A N D: Marie Marjolaine Claveau and Pierre-Luc Claveau, Defendants

BEFORE: The Honourable Justice A.J. Goodman

COUNSEL: A. Conte, for the Plaintiffs G. Matlofsky for the Defendants

HEARD: April 13, 2023

E N D O R S E M E N T

[1] This is a motion brought by the defendants, principally Marie Marjolaine Claveau (“Claveau”) seeking an order to set aside my previous order dated June 1, 2022, along with all of the relief granted, pursuant to r. 37.14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”).

[2] For the following reasons, the defendants’ motion is dismissed. [i]

Positions of the Parties:

[3] The defendants submit that the setting aside of the judgment ought to be granted on either of two grounds. Principally, the defendant was not aware of the court date and she had repeatedly requested a French-speaking lawyer. She had attended court only to be informed that the matter had been dealt with. Further, the plaintiffs therefore did not serve the defendants in accordance with the Rules. On that basis alone, judgment ought to be set aside.

[4] The defendants submit that it would be more prejudicial to them should the order not be set aside and judgment remain in effect. The defendants have not had a fair opportunity to defend the merits of the plaintiffs’ claim regarding the alleged improvident sale of the properties. The sale was not conducted properly and the amounts received from the sale are subject to review by the court. In essence, the administration of justice would be in disrepute to allow the plaintiffs to enforce the existing judgment and enjoy a windfall without permitting the defendants a fair opportunity to defend the claims.

[5] The plaintiffs submit that the defendants have been given every reasonable opportunity to respond to the motion. It is the defendant herself who failed to abide by numerous court orders.

[6] The plaintiffs submit that the defendants had notice of the motion. The defendants did not demonstrate any prejudice with respect to any of the grounds advanced in this motion and there is no merit to the defence.

Legal Principles:

[7] The test to set aside an order is set out in r. 37.14, which provides that:

37.14 (1) A party or other person who,

(a) is affected by an order obtained on motion without notice;

(b) fails to appear on a motion through accident, mistake or insufficient notice; or

(c) is affected by an order of a registrar,

may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.

(2) On a motion under subrule (1), the court may set aside or vary the order on such terms as are just.

[8] These factors are not to be treated as rigid rules; rather, the court must consider the particular circumstances of each case to decide whether it is just to relieve the defendant from the consequences of his or her default. For instance, the presence of an arguable defence on the merits may justify the court in exercising its discretion to set aside the default judgment, even if the other factors are unsatisfied in whole or in part.

[9] In Attorney General of Ontario v. 15 Johnswood Crescent, Strathy J. (as he then was) described the purpose of r. 37.14(1)(b) at para. 29:

The purpose of Rule 37.14(1)(b) is to prevent unfairness or, worse, a miscarriage of justice, where a party’s inadvertence or the absence of sufficient notice has resulted in an order being obtained without that party being afforded an opportunity to present his or her case. A party who does not appear in these circumstances will usually be given a chance to present evidence and to argue the motion on its merits, assuming he or she moves promptly and provided there are no countervailing considerations.

[10] At para. 34, he provided the following factors to be considered under r. 37.14(1)(b):

(1) Proof of accident or mistake: The moving party must establish a failure to appear on the original motion through accident, mistake or insufficient notice. This is a precondition to relief under the rule. A party who has simply chosen not to appear on a motion cannot complain later if he or she does not like the outcome.

(2) The party must move forthwith after the order comes to his or her attention: This is also a precondition to relief under the rule, but there is room for flexibility in the interpretation of “forthwith”, depending on the circumstances. I will examine this requirement in more detail below.

(3) The length of the delay and the reasons for it: In considering whether to set aside an order, the court will consider whether there has been delay in bringing the motion and the reason for it. All other things being equal, the longer an order has been in effect, particularly where parties have acquired rights or changed their positions as a result of the order, the less likely it will be that the court will set it aside.

(4) The presence or absence of prejudice: The court should consider whether a party will be prejudiced by setting aside the order or by failing to set aside the order. There will always be prejudice if an order is made against a party without sufficient notice and there will always be some kind of prejudice to the other party if the order is set aside. Nevertheless, the exercise of the court’s discretion may require an examination of the relative prejudice to the parties.

(5) The underlying merits of the moving party’s case: It may be necessary to consider the underlying merits of the moving party’s case in weighing the various factors, balancing the interests of the parties, and determining what is just in the circumstances. Lengthy delay in bringing the motion may be more readily forgiven if the moving party has a very strong case on the merits. It will be less readily forgiven if the party’s case appears frivolous.

See also RiverRock Mortgage Investment Corporation v. Maheswaran, 2020 ONSC 7461, at paras. 67, 69, 77-78; Picov and Picov Farms Ltd. v. Generac Power Systems Inc. et al., 2020 ONSC 852, at paras. 43-44.

[11] While these are factors for the court to consider, there may well be other factors that also arise in a particular case: see Johnswood Crescent, at para. 35. The guiding principle is for the court to consider all relevant factors with a view to balancing the interests of the parties: see Leen Steels v. Atlas, 2019 ONSC 5100, at paras. 27-28.

Analysis:

[12] With respect to r. 37.14, the defendants in this case rely on subrule (b). As will be discussed, Claveau was provided notice and subrule (a) is not applicable.

[13] I address the five factors to be considered on motions under r. 37.14(1)(b) as set out by Strathy, J. (as he then was) in Johnswood Crescent. I observe that the defendants have not provided any reliable evidence as to how any of these factors apply to provide a basis to set aside the judgment.

[14] First, the moving party must establish a failure to appear through “mistake, accident or insufficient notice”. As Strathy J. points out, this is a precondition to relief under this rule.

[15] With respect to whether or not there had been insufficient notice, it is clear that notice of the motion for summary judgment had been properly served on her lawyer in January 2020. Each adjournment subsequent to this was at her request, and she managed to appear or have someone else appear or provide the court with excuses for each of these numerous attendances. About one month prior to the return of the motion for summary judgment, the defendants’ first lawyer (Mr. Weedon) obtained an order to get off the record, and their next two lawyers (Mr. Brennan and Ms. Racine) obtained adjournments on their stated intention to be retained, but then were never retained. All adjournments were made peremptory to the defendants.

[16] The transcript of the court proceedings on April 29, 2022 shows that the defendant attended on her own without a lawyer for a motion that had been made peremptory to her, that she asked for another adjournment, that she was told in French that the motion would be adjourned one final time and would be strictly peremptory to the defendants, that the final date for the hearing was June 1, 2022 and that she had to file her responding materials by May 27, 2022. Plaintiff’s counsel also forwarded all the motion material to her on the same day of April 29, 2022 at an email address she provided at the hearing, as he had promised to do. She denied all of this.

[17] The defendants failed to appear on June 1, 2022. No responding material was ever filed, and no evidence was provided to show that summary judgment should not issue. Accordingly, summary judgment was granted based on the documents and evidence provided by the plaintiffs. As per the motions judge’s request, an email was sent to the defendant with a copy of the judgment that same day at the same email she had provided on April 29, 2022. Contrary to the “facts” set out in the defendants’ factum and Claveau’s denial in cross-examination of having received this email, the request was complied with.

[18] The claim that Claveau did not get sufficient notice of the June 1, 2022 attendance is not true. In cross-examination, Claveau was evasive, denied what was in written documents which did not support her story, refused to answer many questions, and contradicted written documents, including court transcripts of what happened on April 29, 2022 and June 1, 2022. I ordered her attendance to the return date of June 1, 2022 on a peremptory basis with directions. She was given clear notice, in French, on April 29, 2022 by me.

[19] Nor was there any mistake made that prevented her attendance, since she states in her affidavit that she did in fact appear at the courthouse that day. In her cross-examination, she contradicted the evidence of her son that she took out a notebook at the counter to give the court file number. She said that she had this written on a lawyer’s business card, but would not produce that card. She also stated in her cross-examination, that unlike on May 26, 2022, she did not go up to the sixth floor on June 1, 2022. Instead, she inquired if she could have duty counsel, and when she was told it was not available in civil cases, she waited to speak to a Crown attorney. She admitted being in the courthouse for “a long time” but would not answer as to whether she was still there after 9:30 a.m. Though her name was paged twice, once around 9:30 a.m. and the other around 10:00 a.m., she denied her name ever being called over the speaker system. The fact that she failed to go to the courtroom or even to the sixth floor where all other attendances had taken place, or to ask in which court room I was sitting, is not a mistake that prevented her from attending. Allegedly, it was her own decision to try to get assistance from duty counsel and then a Crown attorney, rather than to attend at the hearing without any counsel. Finally, there is no evidence of any “accident” that prevented her from going to the courtroom.

[20] I do not accept Claveau’s affidavit evidence regarding her attendance on the return date that the matter commenced at 8:30 a.m. and that by 9:00 a.m. the matter had already been dealt with. This is utter nonsense. I have never commenced a motion at 8:30 a.2m. in my entire judicial career. The many “facts” relied upon by the defendants (for which there are no documents to support them) are simply not true. In fact, no documents or materials had been filed prior to the return of the motion. From the foregoing, it is crystal clear that the defendants were placed on notice of the motion dates, including June 1, 2022.

[21] There was also a series of delays by the defendants in bringing this motion. The chronology is as follows. After the June 1, 2022 attendance and email of June 1, 2022 attaching the order obtained on summary judgment, Claveau emailed plaintiffs’ counsel on August 24, 2022 requesting information about the file, including all endorsements and outstanding judgments and orders. Plaintiffs’ counsel resent the June 1, 2022 order the next day and told Claveau that if she did not arrange to pay the judgment, her house would be sold by the sheriff. On August 26, 2022, Claveau emailed in reply that she was moving to set aside the judgment. On September 30, 2022, a fourth lawyer for the defendants (Ms. Boyd) asked for all motion materials, and after getting a reply with enclosures on October 3, 2022, she did not proceed further. Claveau affirmed at her cross-examination that she did not go to Ms. Boyd in connection with the June 1, 2022 judgment. In mid to late October 2022, the defendants appointed a new lawyer (their fifth), whose name Claveau had obtained from the Law Society as a French speaking lawyer, who then decided to bring the current motion seeking an order to set aside the judgment under rr. 37.14(1)(b) and 59.06(2)(b). The defendants’ Notice of Motion was served on October 27, 2022 on an urgent basis, to be heard on November 4, 2022.

[22] In the present case, there was a four and one-half month delay from the email of June 1, 2022 to the time that a motion to set aside the judgment was first brought. There was no explanation whatsoever for the delay from June 1, 2022, nor even from August 26, 2022 when she herself wrote an email to plaintiffs’ counsel saying that she was going to set aside the judgment that was obtained on June 1, 2022. Rather than proceed on the return date, the defendants asked for an adjournment on November 4, 2022. The motions judge agreed to this request and suggested a return date in December, prior to Christmas. However, when dates were sought from the trial co-ordinator, the first date available to the presiding Justice and both parties was April 13, 2023.

[23] Furthermore, on the defendant’s attendance on April 29, 2022, as is clear from the transcript of the court proceeding that day, she was provided with a draft of the judgment that the plaintiffs would be seeking on June 1, 2022. These facts alone establish that the defendants knew as early as April 29, 2022 what was being sought by the plaintiffs. If, as the defendant claims, she was told by an anonymous clerk at the courthouse on June 1, 2022 when she attended for the motion, that the matter had been dealt with, there is no explanation as to why she did not ask the court at any time thereafter (by email or otherwise) for a copy of the order, and only requested it from plaintiffs’ counsel almost three months later at the end of August 2022.

[24] Contrary to their stated intentions in the defendants’ Notice of Motion, I agree with the plaintiffs that no timely, reasonable attempts were made to request that the order be set aside. I also agree with the plaintiffs that in these circumstances, the defendants have been in breach of numerous court orders and repeated directions marked peremptory on the defendants.

[25] The defendants have failed to meet the preconditions to relief under r. 37.14 and the motion ought to be dismissed on that basis.

[26] Perhaps, the most important factor for this Court to consider is that she had failed to file any responding material by the required date of May 27, 2022. It is trite law that on a motion for summary judgment, an opposing defendant must put his or her best foot forward and adduce evidence showing that there is a real issue to be tried on admissible evidence. The responding party must “lead trump or risk losing”: Sunnydene Homes Inc. v. Shouldice, 2012 ONSC 6264, at para. 22. In our case, there was no evidence whatsoever that was provided by the defendants for the hearing on June 1, 2022. Thus, even if Claveau had attended, she would not have been able to argue the motion on any evidence that she wished to present.

[27] Furthermore, there is no explanation whatsoever for the failure to file any responding material by the required date or at any time. Nor is there any evidence of fraud, or facts discovered or arising after the motion that could justify an order to set aside the judgment: see e.g. Zsoldos v. Ontario Association of Architects et al.. Accordingly, there is no basis whatsoever to set aside the judgment.

[28] For the sake of completeness, I briefly address the other issues raised by the defendants as to the merits of the defence.

[29] The alleged defences that the defendants claim are available to them on the merits, such that default judgment should be set aside, essentially, are that: 1) the sale of the two properties that were the subject of the mortgage were improvident; and 2) that the expenses claimed by the mortgagees were excessive. The second of these is the only defence raised in the statement of defence, which states at paragraph 11 that the “Defendants do not refute the allegation that the mortgage is due and payable and currently in default” and go on to explain that the defence is solely that the payment amounts claimed “are excessive, remote and in contravention of applicable legislation.” The defendants have not brought any motion to amend the Statement of Defence to include the first alleged defence, and have provided no evidence as to which expenses are claimed to be excessive, remote and in contravention of applicable legislation.

[30] With respect to the un-pleaded new defence and counterclaim based on a theory of improvident sale, even if an amendment is made (and it is to be noted that no motion seeking this amendment has ever been brought), none of the alleged facts in paras. 28 to 54 of the defendants’ factum support any conclusion that there is a triable issue as to whether or not the sales of the two properties were improvident.

[31] The test for a defendant to establish an improvident sale is that the mortgagee has not “taken reasonable precautions to obtain true market value of the property as of the date of the sale”: Centurion Farms Ltd. v. Citifinancial Canada Inc., 2013 ONCA 79 at para. 4. See also Armanasco v. Linderwood Holdings Inc., 2016 ONSC 1605. The mortgagee does not have a duty to actually obtain the true market value, and perfection is not required. Even if the mortgagee breaches his duty, it is still up to the mortgagor to show that in fact a higher price would have been obtained but for the breach: see Bank of Montreal v. Zaffino, 2013 ONSC 3090, at para. 37. See also Centurion Farms Ltd. v. Citifinancial Canada Inc. 2012 ONSC 4032; Bank of Nova Scotia v. Scholaert, 2017 ONSC 5960; Royal Bank of Canada v. 2021847 Ontario Limited., 2008 ONCA 628.

[32] This test has clearly not been met in our case. The properties were sold after the mortgagees were forced to take possession of them after they were boarded up by the City and by a prior mortgagee. The properties had both been allowed to deteriorate substantially, and appraisals obtained by the plaintiffs on May 10, 2019 (prior to maturity of the mortgages, contrary to the allegation in the statement of defence that the defendants were in possession even after maturity) contained photographs and statements that showed that they were boarded up and dangerous. The mortgagees then incurred expenses to rectify property standard breaches and to pay outstanding property taxes, and sold both properties for considerably more than the appraisal values that they had obtained: see e.g. Hornstein v. Gardena Properties Inc..

[33] Aside from some bald assertions, Claveau suggests that the sales were improvident because the properties sold for less than the appraised values she obtained for the properties as at November 1, 2019. However, the plaintiffs were not obligated to obtain further appraisals prior to listing the properties for sale. I find that they made reasonable attempts to secure a fair market value of the properties following the May 10, 2019 appraisal. There is no evidence that would justify a conclusion in this case, on these facts, and under the law, that the sale was improvident. Thus, even if this new defence were available on the motion for summary judgment, it has no merit.

[34] I have also considered that in this case, the sales occurred in late 2019, almost three years before counsel for the defendants raised the possibility of a new defence and counterclaim. The counterclaim is clearly out of time under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. See also Penn-Co Construction et al. v. Constance Lake First Nation et al, 2011 ONSC 5875.

[35] With respect to the argument that a party who is not represented by counsel should have more rights than those who are represented, it is to be noted that Claveau has been given every opportunity to contest the motion for summary judgment and managed to have it adjourned numerous times, even though each adjournment was peremptory on her, for a total of 15 months. She was treated with respect and given every opportunity to defend the motion in her official language.

[36] The original motion record for summary judgment was a motion brought by the plaintiffs, dated January 22, 2020, which set out in detail, and with supporting documents, why the defence raised in the statement of defence was not valid. No responding material has ever been filed to contest this.

[37] One of the arguments originally raised by the defendants in their statement of defence was that possession was obtained illegally while the defendants were in possession. This was clearly false, since the City of Brantford had issued property standards orders for both houses which the defendants had not complied with, and the houses were boarded up prior to January 2019.

[38] In addition, the defendants have sold a third property on Indian Line and could sell their remaining property as well, if the writ of execution were to be removed. On November 15, 2022, an order was issued by the City that this remaining property also contravened property standards. On August 9, 2022, the City registered a tax arrears certificate against this remaining property showing outstanding taxes of $17,041.07 and a notice of this registration was sent to the plaintiffs on September 21, 2022. The plaintiffs would then be prejudiced. As of November 1, 2022, this property tax debt had increased to $24,141.06 and continues to grow at 1.25% per month.

[39] The other argument by the defendants that the impugned order on its face indicates “parties and counsel attendance” for both parties. This is inaccurate as no one appeared for the defendants. However, I agree with the plaintiff that this is a mere technicality and does not impact the substantive nature of the order.

[40] The defendants also take issue with the fact that no discoveries have taken place. However, the law is clear that unless there has been a discovery plan, there is no obligation to serve any affidavit of documents when bringing a summary judgment motion. Indeed, a responding party has many tools in the Rules to obtain evidence to be able to “put his best foot forward”: see 1870553 Ontario Inc. v. Kiwi Kraze Franchise Co. Ltd., 2015 ONSC 1632, at para. 50.

Summary:

[41] The Rules provide for an orderly framework whereby plaintiffs can obtain judgment. It is trite law that courts should not set aside judgments lightly. A court will also consider the potential prejudice to the parties should the motion be allowed, and the effect of any order the court might make on the overall integrity of the administration of justice.

[42] While the Rules provide the court with discretion in such matters, and such discretion to set aside or not should be applied using a principled approach, the moving party must provide detailed facts and supporting evidence to satisfy this element of the analysis. The court will not set aside judgment for the purpose of allowing a flimsy defence devoid of factual or legal foundation.

[43] Irrespective of the defendants not being able to meet their onus, the defendants also make an argument that on balance, justice requires the judgment to be set aside. Given the history of this case, the deteriorating properties, the admission in the Statement of Defence that the mortgages were in default, the attempts to delay the motion for summary judgment while selling remaining assets and the unpaid property taxes which will soon allow the municipality to sell the property, and for other considerations, the scale is tilted greatly in favour of not setting aside the judgment. The underlying foundation for this segment of the analysis to set aside the order is unsubstantiated.

Conclusion:

[44] I find that there is no evidence of any accident, mistake, or of insufficient notice through which the defendants failed to appear on June 1, 2022, nor did the defendants move with reasonable dispatch after the order came to their attention. The defendants have failed to meet the preconditions or establish a basis upon which I ought to set aside the order under r. 37.14(1)(b). The defendants’ motion is dismissed.

[45] The plaintiffs are entirely successful and, in the normal course, would be entitled to costs. This is further exacerbated by the fact that the defendants have disregarded previous court orders. However, given the defendants’ precarious financial situation and Claveau’s documented health concerns, reluctantly, I will grant them an indulgence. In the exercise of my discretion under Rule 57.01, each side shall bear their own costs of this motion.

A.J. Goodman J.

DATE: April 25, 2023

[i] The hearing was conducted wholly in English with Ms. Claveau having the benefit of an interpreter. A French version of these reasons may be made available upon request.