Umlauf v. Umlauf et al.

[Indexed as: Umlauf v. Umlauf]

53 O.R. (3d) 355

[2001] O.J. No. 1054

Docket No. C35166

Court of Appeal for Ontario

Finlayson, O'Connor and MacPherson JJ.A.

March 27, 2001

Civil procedure--Default judgment--Defendant noted in default --Assessment of damages--Defendant noted in default deemed to admit allegations of fact made in statement of claim--On assessment of damages hearing following default being noted against defendant, it is not proper for trial judge to enter into inquiry about liability of defendant--Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 19.02, 19.05.

In April 1992, the plaintiff DU suffered brain damage and was left unemployable as a result to an unprovoked assault by the defendant SB, who was the brother of the defendant SU. At the time of the assault, DU was married to SU, but they had separated and DU had moved from the matrimonial home, which is where the assault occurred. DU sued SB and SU for damages and neither defendant filed a statement of defence. They were noted in default and never took steps to set aside the noting in default. On September 18, 2000, on a motion pursuant to rule 19.05 for an assessment of unliquidated damages, Durno J. awarded damages against SB but dismissed the action against SU. In dismissing the action, Durno J. concluded that it could not reasonably be concluded that SU was negligent or owed the duty of reasonable care on the facts admitted. DU appealed and requested that both defendants be found jointly and severally liable and that the award of general damages be increased.

Held, the appeal should be allowed in part.

On an assessment of damages hearing following a default being noted against a defendant, it is not proper for a trial judge to enter into an inquiry about the liability of the defendant. Under rule 19.02(1), a defendant who has been noted in default is deemed to admit the allegations of fact made in the statement of claim. This rule provides a mechanism for proceeding in circumstances where a defendant refuses to participate in the court process, but does not speak directly about the issue of damages. Pursuant to rule 19.05, where the plaintiff's claim is for unliquidated damages, on motion, he or she must present evidence with respect to the quantum of damages. There is nothing in either the Rules of Civil Procedure or the established jurisprudence to authorize a judge on an assessment of damages to enter into an inquiry into the facts or the underpinning of the torts that the defendant noted in default is deemed to have admitted. Therefore, the inquiry of the trial judge in this case was improper. Accordingly, the appeal should be allowed and the defendants should be found jointly and severally liable. However, the trial judge's decision not to award damages in excess of those claimed in the statement of claim was within his discretion in declining an upward amendment of the statement of claim.

APPEAL from a judgment on an assessment of damages under rule 19.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

Cases referred to Beals v. Saldanha (1998), 1998 14709 (ON SC), 42 O.R. (3d) 127, 27 C.P.C. (4th) 144 (Gen. Div.), supp. reasons (1999), 85 A.C.W.S. (3d) 277 (Ont. Gen. Div.); Family Trust Corp. v. Harrison (1986), 7 C.P.C. (2d) 1 (Ont. Dist. Ct.) Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 19.02(1), 19.05

Donald A. McNeill, for appellant. No one for respondents.

The judgment of the court was delivered by

FINLAYSON J.A.: --

Background

[1] Before examining the primary issue under appeal, it is necessary to briefly consider the circumstances which led to the action before this court. The following summary of events is reproduced from the September 18, 2000 endorsement of Durno J. [at paras. 1-2]:

In April of 1992 the Plaintiff [Derek Umlauf] separated from his wife, the Defendant Suzanne Umlauf, and moved from the matrimonial home. In August 1992, at the invitation of his wife, he went to a church service at which both of their children were baptized into the Roman Catholic Church without the prior knowledge or consent of the Plaintiff who left the church in anger before the end of the service. That night he went to the matrimonial home to discuss the events of the day. When he arrived he was attacked and beaten by his wife's brother, the Defendant Sean [Begley]. The unprovoked assault left the Plaintiff unconscious and comatose for four days, with severe and permanent brain damage. At the time of the incident he was an executive for an international corporation with secure income and excellent prospects of advancement. He is now unable to work.

In late 1993, the Statement of Claim was filed seeking one million dollars each for general and specific damages, prejudgment and post-judgment interest and costs. Neither defendant filed a statement of defence and [both] were noted in default. No action or steps have been taken by either Defendant in the over six and one half years to set aside the noting in default. The Plaintiff seeks judgment against both defendants jointly and severally, for $2,561,192, plus pre- judgment interest and costs.

[2] On September 18, 2000, the Honourable Mr. Justice Durno issued his judgment in this matter, wherein he dismissed the action against Suzanne Umlauf and awarded damages against Sean Begley in the following amounts: special damages of $715,592; general damages comprised of $900,000 for future loss of income and $100,000 for non-pecuniary loss; pre-judgment interest on the general damages for non-pecuniary loss in the total amount of $34,453.55; pre-judgment interest on the special damages in the total amount of $102,442.74; and costs fixed in the amount of $10,000.

[3] In his endorsement, Durno J. concluded that while Mr. Umlauf was entitled to judgment against Sean Begley, the facts did not entitle him to judgment against Suzanne Umlauf:

There is no basis upon which it could reasonably be concluded Ms. Umlauf was negligent or owed the duty of reasonable care on the facts admitted. As noted above, there is no indication she had invited the Plaintiff over, was aware he was coming, was home or aware of her brother's intentions or actions.

[4] The plaintiff now appeals from the judgment of Durno J. and requests that both defendants in the original action be found jointly and severally liable, and that the award for general damages be increased.

Issue

[5] The main issue on appeal concerns the liability of Suzanne Florence Umlauf. The primary question before this court is whether it was proper for the trial judge, at an assessment of damages hearing following a default being noted against both defendants, to enter into an inquiry as to the liability of one of the defendants.

Analysis

[6] Rule 19.02(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, reads:

19.02(1) A defendant who has been noted in default,

(a) is deemed to admit the truth of all allegations of fact made in the statement of claim; and

(b) shall not deliver a statement of defence or take any other step in the action, other than a motion to set aside the noting of default or any judgment obtained by reason of the default, except with leave of the court or the consent of the plaintiff.

[7] Rule 19.02(1) provides a mechanism for proceeding in circumstances where defendants refuse to participate in the court process. It enables plaintiffs to recover from defendants who choose not to contest liability before the court. Rule 19.02(1) does not, however, speak directly to the issue of damages.

[8] Pursuant to rule 19.05, where a plaintiff's claim on default is for unliquidated damages, the plaintiff must adduce evidence to support his or her claim. In such circumstances, and before making a finding on a motion for unliquidated damages, the trier must be presented with supporting evidence and must weigh the facts in order to make a judicial determination with respect to the quantum of damages to be awarded against the defendant(s) in default. As noted by Borins D.C.J. in Family Trust Corp. v. Harrison (1986), 7 C.P.C. (2d) 1 at p. 6 (Ont. Dist. Ct.):

. . . In my view, the policy of the Rules is to restrict the need for a trial only to those cases where, from the statement of claim, the registrar or the Motions Court Judge is unable to calculate or determine the sum of money to which the plaintiff is entitled. Typically these will be cases in which the plaintiff has sustained damage by reason of the commission of a tort or the breach of a contract. A trial in such cases is necessary, not to prove the tort or breach of contract which is deemed to be admitted by the default, but to require the plaintiff to prove whatever damage it can show it suffered as the measure of recovery cannot be ascertained by recourse to the statement of claim alone. Although the damage sustained by the plaintiff and caused by the defendant is a fact, the measure of damages consequent to the damage is not.

[9] Therefore, where a defendant has been noted in default, unlike liability, unliquidated damages cannot be said to be assumed. That is, in default hearings, facts going to liability are deemed to be true but the facts going to damages must be proven: Beals v. Saldanha (1998), 1998 14709 (ON SC), 42 O.R. (3d) 127 at p. 142, 27 C.P.C. (4th) 144 at p. 158 (Gen. Div.), supplementary reasons (1999), 85 A.C.W.S. (3d) 277 (Ont. Gen. Div.). [See Note 1 at end of document]

[10] In the case at bar, as a result of the noting in default and by virtue of rule 19.02(1)(a), Suzanne Umlauf is deemed to have admitted the following allegations, as contained in the Statement of Claim:

(i) As the occupier of the premises where the injury to the Plaintiff occurred, she was negligent in failing to exercise adequate or any control over her brother, the Defendant Begley, and thus exposing the Plaintiff to a situation of danger from which he could not extricate himself.

(ii) Alternatively, she was negligent in failing to take reasonable steps to protect the Plaintiff, while in her premises, from injury caused by person or persons unknown, or arising out of improper or inadequate care and maintenance of the premises of which she was the occupier.

(iii) In any event, as the occupier of the premises where the injury to the Plaintiff occurred, she failed to carry out the duty imposed on her by section 3 of the Occupiers' Liability Act, R.S.O. 1990, Chap. O.2, to take such care as in all the circumstances of the case is reasonable to see that persons entering on the premises are reasonably safe while on the premises.

[11] Despite the above-noted deemed admissions, before assessing the damages suffered by the plaintiff, Durno J. first considered whether there was a sufficient basis to hold Suzanne Umlauf liable for such damages. After examining the Statement of Claim and the facts of the action, Durno J. concluded that there was no such basis, and dismissed the action against Suzanne Umlauf.

[12] It is my opinion that Durno J. erred in his approach to this matter.

[13] There is nothing in either the Rules of Civil Procedure or the established jurisprudence to authorize a trial judge on an assessment of damages to enter into an inquiry into the facts or the underpinning of the torts that the defendants are deemed to have admitted by their default.

[14] Further, there is nothing in either the Rules or the established jurisprudence to authorize a judge to determine that factual allegations in the statement of claim should be divided into two categories: pure allegations of fact, which are deemed to be admitted, and conclusions of law, which are not.

[15] Therefore, the trial judge was in error in characterizing certain allegations made in the Statement of Claim as "conclusions of law", and in then refusing to accept that Suzanne Umlauf was deemed to admit those allegations pursuant to rule 19.02(1)(a). The manner in which the trial judge inquired into the allegations and facts of the case in order to dismiss the action against Suzanne Umlauf was improper and exceeded the scope of the judge's authority in the circumstances of this case.

[16] Accordingly, I would allow the appeal with respect to the first issue and order that the judgment below be amended to read that the defendants Suzanne Florence Umlauf and Sean Begley are found jointly and severally liable to the plaintiff for the damages suffered.

[17] I am not, however, prepared to interfere with the decision of the trial judge to refuse to award damages in excess of those claimed in the Statement of Claim. Even though the damages proven at trial were higher than those claimed in the Statement of Claim, the trial judge acted within his discretion in declining to allow an upward amendment of the Statement of Claim.

[18] Accordingly, the appeal is allowed to the extent necessary to give effect to these reasons and with costs.

Order accordingly.

Notes

Note 1: Note that while an appeal of the decision of Jennings J. is currently under reserve in this court, that appeal focused almost exclusively on the issue of whether a foreign judgment should be enforced in Ontario.