Nobosoft Corporation v. No Borders, Inc., 2007 ONCA 444

CITATION: Nobosoft Corporation v. No Borders, Inc., 2007 ONCA 444

DATE: 20070618

DOCKET: C46105

COURT OF APPEAL FOR ONTARIO

DOHERTY, MacPHERSON and CRONK JJ.A.

BETWEEN:

NOBOSOFT CORPORATION

Respondent (Plaintiff)

and

NO BORDERS, INC., RAUL HINOJOSA, MICHAEL ROSENFELD and RUBEN SANCHEZ

Appellants (Defendants)

Jonathan L. Rosenstein, for the appellants

Edward L. D’Agostino, for the respondent

Heard and orally released: June 12, 2007

On appeal from the order of Justice Patrick J. Flynn of the Superior Court of Justice dated November 24, 2006.

BY THE COURT:

[1] The appellants appeal the denial of their motion for an order setting aside the noting in default obtained against the appellant No Borders, Inc. (“No Borders”) by the respondent.

[2] In our view, the motion judge erred by inquiring only as to whether there was an intent to defend formed by No Borders prior to the expiry of the time for delivery of its defence set by Ontario’s Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[3] On the authority of this court’s decision in Metropolitan Toronto Condominium Corp. No. 706 v. Bardmore Developments Ltd. (1991), 1991 7095 (ON CA), 3 O.R. (3d) 278 at para. 18, the full context and factual matrix in which the court is requested to exercise its remedial discretion to set aside a noting in default are controlling factors. In particular, as noted by the court at para. 18 of Bardmore, such factors as the behaviour of the plaintiff and of the defendant, the length of the defendant’s delay in seeking to respond to the plaintiff’s claim, the reasons for the delay and the complexity and value of the claim involved, are all relevant matters to be taken into consideration.

[4] In this case, there was no evidence that No Borders formed an intent to defend within the requisite time period. Indeed, to the contrary, the evidence indicated that No Borders formed an intent not to defend in Ontario because it feared that to do so would result in attornment to this jurisdiction. It was the uncontradicted sworn evidence of No Borders’ representative that it did not defend the action “to avoid attorning to the juris-diction”. Although the appellant’s representative was cross-examined on his affidavit, this part of his evidence was unchallenged.

[5] The motion judge made no assessment of this explanation for No Borders’ conduct. Nor does he appear to have considered whether, on the evidence before him, No Borders has an arguable defence on the merits to the respondent’s claim.

[6] There is no evidence here that No Borders sought to flout or abuse the Rules of Civil Procedure. It moved relatively promptly to set aside the noting in default. At the very least, its delay in seeking relief was not inordinate. Moreover, there is nothing on this record establishing prejudice to the respondent if the requested relief was granted.

[7] We agree with the observations of Molloy J. of the Superior Court of Justice at para. 2 of McNeill Electronics Ltd. v. American Sensors Electronics Inc. (1996), 5 C.P.C. (4th) 266 (Ont. Gen. Div.), reversed on other grounds (1998), 1998 17693 (ON CA), 108 O.A.C. 257 (C.A.):

Motions to extend the time for delivery of pleadings and to relieve against defaults are frequently made and are typically granted on an almost routine basis. Usually opposing counsel will consent to such relief as a matter of professional courtesy. Where there is opposition to a motion of this kind, it is usually related to additional terms which are sought as a condition to the indulgence being granted or to issues of costs…It is not in the interests of justice to strike pleadings or grant judgments based solely on technical defaults. Rather, the Court will always strive to see that issues between litigants are resolved on their merits whenever that can be done with fairness to the parties.

[8] Accordingly, the appeal with respect to the noting in default is allowed and the noting in default of No Borders is set aside. No Borders shall serve and file its statement of defence in this action within thirty days from the date of this decision.

[9] Although the appellants also seek leave to appeal the award of costs made against them by the motion judge, in our view it is unnecessary to deal with the costs issue raised by the appellants. Even if the error alleged concerning the fees and disbursements associated with the relevant out-of-province examination was demonstrated, respon-sibility for these costs could have been imposed as a term of setting aside the noting in default. Accordingly, in these circumstances, leave to appeal costs is denied.

[10] The respondent is entitled to its costs of this appeal, and of the motion before this court for security for costs, on the partial indemnity scale as against No Borders, fixed in the total amount of $5,000, inclusive of disbursements and G.S.T. Because leave to appeal the costs award below is denied for the reasons given, that award stands.

RELEASED:

“JUN 18 2007” “D. Doherty J.A.”

“DD” “J.C. MacPherson J.A.”

“E.A. Cronk J.A.”