Siivonen et al. Trustees of the Estate of Halow v. Halow, Sr. [Indexed as: Halow Estate v. Halow, Sr.]

59 O.R. (3d) 211

[2002] O.J. No. 1446

Docket No. C36690

Court of Appeal for Ontario,

McMurtry C.J.O., Weiler and Charron JJ.A.

April 19, 2002

Civil procedure -- Appeal -- Defendant's statement of defence struck -- Defendant subsequently noted in default -- Defendant appealing and seeking order setting aside both order striking statement of defence and subsequent noting of default -- Appeal quashed -- Noting in default meant that no appeal lay from order striking statement of defence -- Defendant's remedy lay in motion to set aside noting of default under rule 19.03 -- Under rule 19.03 court could set aside noting of default and require that defendant serve and file statement of defence despite earlier order striking statement of defence -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 19.03.

The defendant's statement of defence was struck and he was subsequently noted in default. He appealed, seeking an order setting aside both the order striking his statement of defence and the subsequent noting of default.

Held, the appeal should be quashed.

The defendant having been noted in default, no appeal lay to the Court of Appeal from the order striking his statement of claim. The defendant had to exhaust his remedies in the court of first instance before an appeal would lie to the Court of Appeal. His remedy lay under rule 19.03 of the Rules of Civil Procedure. Under that rule, if the court decides to set aside the noting in default, it may impose such terms as are just. Those terms may include a requirement that the defendant serve and file a statement of defence, despite the earlier order striking the statement of defence.

APPEAL from an order striking a statement of defence and from an order noting a defendant in default.

Cherry Central Cooperative Inc. v. D'Angelo (2001), 2001 27940 (ON CA), 56 O.R. (3d) 655n, 14 C.P.C. (5th) 2 (C.A.), affg (2001), 2001 28041 (ON SC), 53 O.R. (3d) 200 (S.C.J.); 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.), apld Statutes referred to Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 6(1)(b), 19(1) (c) Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 19.01(2), 19.03, 19.04, 19.08, 34.15(1)

W.D. Newton, for respondents. Robert W. Sager, for appellant.

The judgment of the court was delivered by

[1] CHARRON J.A.: -- The appellant appealed from the order of Wright J., dated June 14, 2001, striking his statement of defence. Subsequent to this order, on June 22, 2001, the appellant was noted in default pursuant to rule 19.01(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. By Notice of Appeal dated July 13, 2001, he sought an order setting aside both Wright J.'s order and the subsequent noting of default, together with other related relief.

[2] The respondents raised a preliminary issue with respect to this court's jurisdiction to entertain the appeal. They argued that it was incumbent upon the appellant to first move to set aside the noting of default under rule 19.03 before appealing to this court. After hearing the argument of counsel on this preliminary issue, this court quashed the appeal for reasons to follow. These are those reasons.

[3] Two decisions of this court are particularly relevant to this issue: 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.) and Cherry Central Cooperative Inc. v. D'Angelo (2001), 2001 27940 (ON CA), 56 O.R. (3d) 655, 14 C.P.C. (5th) 2 (C.A.).

[4] In National Bank, the respondent moved to quash the appellant's appeal from a default judgment granted by a motions judge under rule 19.04. The moving party argued that because of the remedy provided by rule 19.08 for setting aside a default judgment, the judgment was not a final judgment for the purposes of an appeal to this court under s. 6(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43. This court agreed with that position and quashed the appeal. The court stated as follows [at pp. 534-35 O.R.]:

It is our view, therefore, that a default judgment granted under Rule 19 is not a final judgment for the purposes of an appeal to the Court of Appeal within the meaning of s. 6(1) (b) and does not become a final judgment, if at all, until the remedy provided by rule 19.08 has been sought and refused.

In our view, the policy that underlies rule 19.08 is to preclude appeals to the Court of Appeal from the multitude of default judgments which are granted throughout the province. Absent rule 19.08, a default judgment would be a final judgment under s. 6(1)(b) of the Courts of Justice Act, which would result in a multitude of appeals to the Court of Appeal. Accordingly, the Civil Rules Committee has provided through rule 19.08 an expeditious remedy to set aside or vary default judgments without the need to institute an appeal to this court.

[5] In Cherry Central, the defendant's statement of defence was struck by master's order. The plaintiff then obtained a default judgment. The defendant moved under rule 19.08 to set aside the default judgment. The motions judge dismissed the motion for want of jurisdiction. He held that the effect of the order being sought was to overrule the master's final decision and that any challenge to that decision was by way of appeal to the Divisional Court pursuant to s. 19(1)(c) of the Courts of Justice Act. The defendant appealed the motions judge's decision to this court.

[6] This court, based on the authority of National Bank, held that the motions judge erred in finding that he lacked the jurisdiction to hear the rule 19.08 motion to set aside the default judgment. In accordance with the principle in National Bank, this court held as follows [at p. 657 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.

[7] The same principle applies to this case. The appellant having been noted in default, no appeal lies to this court from Wright J.'s order striking his statement of defence under rule 34.15(1). For policy reasons discussed in National Bank, the appellant must exhaust his remedies in the court of first instance before an appeal will lie to this court. In this case, at the time the appellant filed his Notice of Appeal, he had already been noted in default. His remedy therefore lay under rule 19.03. Under that rule, if the court decides to set aside the noting of default, it may impose such terms as are just. Those terms may include a requirement that the defendant serve and file a statement of defence within a particular period of time, despite the earlier order striking the statement of defence. Otherwise, as this court stated in Cherry Central [at p. 656 O.R.]"there would be no point to setting aside . . . 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."

Disposition

[8] It is for those reasons that the appeal was quashed with costs fixed at $3,500, inclusive of disbursements and GST.

Appeal quashed.