Cherry Central Cooperative Inc. v D'Angelo [Indexed as: Cherry Central Cooperative Inc. v. D'Angelo]
56 O.R. (3d) 655
[2001] O.J. No. 4427
Docket No. C35983
Court of Appeal for Ontario
Weiler, Feldman and Sharpe JJ.A.
November 13, 2001
Judgments and orders -- Jurisdiction -- Setting aside Master's order -- Master striking statement of defence and counterclaim -- Default judgment requisitioned and signed -- Defendant moving before Superior Court of Justice to set aside default judgment and for leave to file fresh Statement of Defence -- Since Master's motion final, Divisional Court having jurisdiction to set aside default judgment and entertain leave to file fresh Statement of Defence -- Motion dismissed for want of jurisdiction -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 19.08
NOTE: An appeal of the judgment of the Superior Court of Justice for Ontario (Weekes J.), reported at 2001 28041 (ON SC), 53 O.R. (3d) 200, (the subject-matter and result of which are reflected in the catchlines) to the Court of Appeal for Ontario was dismissed on November 13, 2001. The endorsment of the court was as follows:
Gregory N. Hemsworth, for appellant D'Angelo. Thomas McRae, for respondent.
BY THE COURT: --
Nature of Appeal
[1] This is an appeal from the order of Weekes J. dismissing the appellant's motion which sought to set aside the noting in default and default judgment and to grant the appellant leave to deliver a statement of defence and counterclaim.
Facts
[2] The respondent, Cherry Central, was the supplier of canned apple juice for the appellant's corporation, The New York Food Company. In March 1998, the appellant, D'Angelo, signed a personal indemnity of the past and future debts of New York Food. In March 1999, the respondent sued both New York Food and the appellant for $1.7 million U.S. In January and February of 2000, the respondent requested affidavits of documents and production of documents and received no response. In April, the respondent served a motion to compel production of documents and an offer to settle. Again, there was no response. On May 18, Master Schreider ordered delivery of the affidavits of documents of both defendants, failing which, the respondent had leave to move ex parte to strike the defences and counterclaims. In a letter dated May 24, counsel for the appellant and New York Food advised Mr. D'Angelo about this order.
[3] On May 23, counsel for the appellant and New York Food advised counsel for the respondent that New York Food had been petitioned into bankruptcy. A petition in bankruptcy had been commenced against New York Food on February 2, 2000 and a receiving order made on March 1, 2000. The appellant's affidavit states that when he was advised by his former counsel of the order requiring the filing of the affidavit of documents, he nevertheless did not do so because he thought the proceedings against him had been stayed as a result of the bankruptcy.
[4] On August 15, the respondent, having obtained an ex parte order of Master Peterson on August 10 striking out the statement of defence and counterclaim of the appellant for failure to comply with the order of Master Schreider, had default judgment signed by the Registrar. When the appellant received the judgment and writ of seizure and sale from the respondent's solicitors on August 28, he retained new solicitors who moved in a timely fashion to set aside the default judgment.
[5] The motion was brought under rule 19.08 [Rules of Civil Procedure, R.R.O. 1990, Reg. 194] to the Superior Court of Justice for an order setting aside the noting in default as well as the default judgment and granting the appellant leave to file a statement of defence. A proposed affidavit of documents was attached as part of the motion material. Weekes J. held that the motion amounted to a collateral attack on the decision of Master Peterson, which was a final order, and that the only way to challenge that order was by an appeal to the Divisional Court (s. 19(1)(c) of the Courts of Justice Act [R.S.O. 1990, c. C.43]). Weekes J. concluded that he lacked jurisdiction and dismissed the motion on that basis.
Issues
- Is the relief sought available on a rule 19.08 motion?
[6] Under rule 19.08(1), the motions judge has discretion to set aside a default judgment on such terms as the court considers just. Under rule 19.08(3), if the motions judge decides to set aside the default judgment, the court may also set aside the noting in default. There would be no point to setting aside the default judgment and the noting in default if the court could not also order the terms on which any prior default may be cured with a view to having the action determined on the merits. Typically, those terms require that the draft statement of defence that has been filed with the application to set aside default judgment be served and filed within a particular period of time. We see no reason why the court cannot also order that the draft affidavit of documents that is filed with the motion to set aside the default judgment, or a fresh affidavit of documents dealing with any additional necessary documents, be served and filed with the statement of defence. In both cases, the court is delineating the terms on which the default that led to the signing of default judgment may be cured.
[7] The principle established in National Bank of Canada v. Royal Bank of Canada (1999), 1999 3733 (ON CA), 44 O.R. (3d) 533, 38 C.P.C. (4th) 285 (C.A.) applies. In that case, the court held that a default judgment granted by a judge under Rule 19 was not a final judgment within the meaning of s. 6(1)(b) of the Courts of Justice Act for the purposes of an appeal to the court of appeal, "and does not become a final judgment, if at all, until the remedy provided by rule 19.08 has been sought and refused" (p. 534 O.R.). Similarly, once default judgment has been signed by the Registrar following an order striking the statement of defence, those orders are not final orders for the purposes of an appeal to the Divisional Court under s. 19(1)(c) of the Courts of Justice Act; rather the remedy is under rule 19.08.
- If the motions judge erred on the jurisdiction issue, should default judgment be set aside and leave be granted to D'Angelo to deliver a statement of defence?
[8] Both parties asked that we deal with this issue rather than refer it back to a motions judge. The requirements for setting aside a default judgment are well-known. One of those requirements is that the defendant put forward a good defence to the action on the merits. It is the appellant's position that he signed the indemnity in exchange for the continued supply of apple juice at the best price, but that the respondent then supplied apple juice to a competitor at a better price. He said that it was agreed that the indemnity would not be enforced until new pricing for the supply of apple juice had been agreed.
[9] The appellant, however, nowhere says in his affidavit or cross-examination thereon that there was an agreement to that effect. Nor did the lawyer who acted for him on the indemnity transaction substantiate his position. Furthermore, the appellant's position is contradicted by the indemnity agreement itself, which contains a very full "entire agreement" clause that states in part:
For greater certainty the rights and remedies of the Supplier hereunder and the obligations and liability of each Indemnifier shall not be reduced, prejudiced or impaired by the provisions of any other agreement . . . This Indemnity sets forth the entire agreement between the Supplier and each Indemnifier concerning the terms and conditions of this Indemnity and there are no covenants, conditions, representations, agreements, warranties, undertakings, promises, inducements or understandings in any way relating to this Indemnity . .
[10] The appellant submits that the credibility of the parties requires a trial. However, in our opinion, the appellant has not put forward a good defence at law to the action on the merits, even if the facts he relies on were to be proved at trial. Accordingly, we would not grant leave to set aside the default judgment.
[11] The appeal is therefore dismissed with costs.