DATE: 20040726

DOCKET: C40914

COURT OF APPEAL FOR ONTARIO

RE: HALTON CONDOMINIUM CORPORATION NO. 242 (Plaintiff/Respondent) – and – LAW DEVELOPMENT GROUP (GEROGETOWN) LIMITED, THE CORPORATION OF THE TOWN OF HALTON HILLS and THE ONTARIO NEW HOME WARRANTY PROGRAM (Defendants/Appellant)

BEFORE: CATZMAN, SHARPE and GILLESE JJ.A.

COUNSEL: Ronald G. Slaght, Q.C. and Scott D. Price for appellant

Blaine Fedson for the respondent

HEARD: July 21, 2004

On appeal from the order of Justice Russell G. Juriansz of the Superior Court of Justice dated October 7, 2003.

E N D O R S E M E N T

[1] It is apparent to us that significant relevant evidence was not drawn to the attention of Master Polika when he struck out the appellant’s statement of defence for failure to satisfy undertakings or to Juriansz J. when he dismissed the appellant’s motion to set aside the default judgment. In our view, on a full and fair reading of this record, the appeal must be allowed.

[2] At the root of the appeal is the question of what the appellant’s former solicitors did or did not do in relation to this file. The motions judge accepted their evidence to the effect that they communicated in a timely manner with their client and made every effort to have the client provide the required answers to undertakings. He rejected the evidence of Richard Law that they failed to communicate with him and that he was essentially left in the dark as to the status of the action and not told about the motion to strike the defence for failure to comply with the undertakings. While his finding is entitled to deference on appeal, in view of the evidence to which we have been directed, we are satisfied that it cannot be sustained.

[3] The record is replete with contradictions and unexplained gaps on both sides. However, we accept the appellant’s submission that the evidence gives rise to a concern that its former solicitors failed to act appropriately in its defence.

[4] With respect to the supposedly unsatisfied undertakings that led Master Polika to strike the statement of defence, the letters from Soil-Eng to the appellant’s first solicitors dated December 28, 2000 and the appellant’s letters dated January 8, 2001 to R.V. Anderson, together with the direction to that same firm dated August 15, 2001, are capable of supporting Law’s evidence that he thought that he had provided his solicitors with the required answers or at least that appropriate action had been taken to get the information. It is not clear from the record how much of this information was passed on to the plaintiff or, if it was not passed on, why that did not happen. However, what we are left with is that the documents are capable of supporting Law’s version that he made reasonable efforts to answer the undertakings, particularly in the face of nothing in writing to support his former solicitors’ claims that he neglected their urgings in that regard.

[5] With respect to what Law was or was not told by his former solicitors about the motion to strike the defence and the default judgment, we find the almost total lack of documentation from the solicitors again gives ground for serious concern. They were unable to produce any notes, correspondence or docket entries supporting their assertion that they were in regular communication with their client and that they warned Law of the impending motion to strike out the defence. They could not explain why phone calls they claimed to have made to him were not recorded in keeping with their usual practice. We attach significance to Law’s letter of July 13, 2002 and e-mail of July 15, 2002 and which, on their face, support Law’s evidence that he was completely in the dark and unaware of the default judgment for some considerable period of time after it had been granted. If these communications were wrong and merely written for a “self-serving” purpose, as suggested by the solicitors, it is difficult to understand that they would not have immediately responded to set the record straight.

[6] In the end, we do not deem it necessary or appropriate to resolve in any definitive manner the dispute between the appellant and its former solicitors. What we do say, however, is that the version of events put forward by the appellant is sufficient to give rise to a concern that its former solicitors did not act appropriately with respect to the undertakings and the motion to strike the defence. As stated by this court in Halton Community Credit Union Ltd. v. ICL Computers Ltd. (1985), 1 C.P.C. (2d) 24 at 27, “it is a principle of very long standing that the client is not to be placed irrevocably in jeopardy by reason of the neglect or inattention of his solicitor, if relief to the client can be given on terms that protect his innocent adversary as to costs thrown away and as to the security of the legal position he has gained.”

[7] In our view, the appellant has put forward sufficient evidence which, if established, would explain the reason for its apparent default in answering undertakings and any delay in moving to set aside the default judgment.

[8] We are also of the view that the appellant’s draft expert reports provide sufficient grounds to satisfy the requirement that the appellant make out an arguable defence. We agree with the submission that these reports are tentative and inconclusive on many points, they do suggest that the appellant may have a defence to liability and quantum of significant aspects of the plaintiff’s claim.

[9] Finally, we note that in the circumstances of this case, there is minimal, in any, prejudice to the respondent. The action continues against the other defendants and the third party guarantor of the appellant has asserted a defence in the main action to the respondent’s claim.

[10] Accordingly, we allow the appeal, set aside the default judgment and the order of the master striking the statement of defence and permit the appellant to defend the action. As this appeal came about as a result of the appellant’s default, we agree with Mr. Slaght’s submission as to costs, namely, that there be no order as to costs of the appeal and that the costs order in favour of the respondents below should be maintained in their favour.

“M.A. Catzman J.A.”

“Robert J. Sharpe J.A.”

“E.E. Gillese J.A.”