Court of Appeal for Ontario

Citation: Royal Bank of Canada v. Datanet Wireless Inc., 2013 ONCA 706

Date: 2013-11-18

Docket: C57035

Before: Cronk, Pepall and Strathy JJ.A.

Between

Royal Bank of Canada

Plaintiff (Respondent)

and

Datanet Wireless Inc., Janet Nelson, Douglas Brent Hooton, 1754903 Ontario Ltd., VirtuallyAnywhere.ca Inc., Wayne Cook, and Toronto Dominion Bank

Defendants (Appellant Janet Nelson)

Counsel:

Jeffrey C. Silver, for the appellant

Natalie Marconi, for the respondent

Heard: November 12, 2013

On appeal from the order of Justice James M. Spence of the Superior Court of Justice, dated May 30, 2013.

Endorsement

[1] The appellant, Janet Nelson, appeals from the order of Spence J. of the Superior Court of Justice, dated May 30, 2013, dismissing her motion to set aside a default judgment granted against her on April 15, 2011. By that judgment, the appellant and certain of her co-defendants were held liable to the respondent bank for damages for fraud in relation to a loan made to the defendant Datanet Wireless Inc.

[2] The appellant advances four main grounds of appeal. She argues, first, that the motion judge misapprehended and misapplied the governing test for setting aside a default judgment, in particular, the concept of an “arguable defence” under that test. We do not accept this submission.

[3] The motion judge explicitly addressed the applicable pre-requisites for the setting aside of a default judgment, as described in HSBC Securities (Canada) Inc. v. Firestar Capital Management Corp., 2008 ONCA 894, 245 O.A.C. 47, leave to appeal to S.C.C. refused (2009), 399 N.R. 398 (note) (S.C.C.), Morgan v. Toronto (City) Police Services Board (2003), 2003 CanLII 14993 (ON CA), 34 C.P.C. (5th) 46, 169 O.A.C. 390 (C.A.) and related authorities. He considered all the relevant factors in the context of the evidentiary record before him and concluded that the appellant had failed to satisfy any of the requirements for the setting aside of the judgment in question. He found that the appellant: (1) failed to provide a satisfactory explanation for her failure to appear on the motion to strike her statement of defence; (2) failed to furnish an adequate explanation for her delay of at least four months in moving to set aside the default judgment; and (3) failed to demonstrate that she had an arguable defence to the respondent’s action.

[4] In our view, the motion judge’s identification of the relevant test and his consideration of the requirements for setting aside the default judgment reveal no error. His pertinent findings were amply supported by the record. We see no basis for appellate intervention with his findings.

[5] In particular, we note that there was evidence before the motion judge from both a Bank official and one of the co-defendants that almost one-half of the loan proceeds advanced by the respondent bank for the benefit of Datanet Wireless Inc. was transferred to a bank account controlled by the appellant in her personal capacity on the same day that the funds were advanced. In the face of this powerful, inculpatory evidence, the appellant’s only explanation for the use of the loan proceeds was a bald denial that she personally had received any of the funds advanced by the respondent.

[6] Second, the appellant contends that she was denied natural justice and procedural fairness when her pleading was struck and that this excuses her default. The record belies this contention.

[7] The appellant’s statement of defence was struck by court order dated February 11, 2011. As we have said, default judgment was granted on April 15, 2011. The appellant was informed in mid-November 2010 that her former lawyers intended to seek an order removing them from the record. She was also informed, as early as November 26, 2010, that the respondent`s motion to strike her statement of defence was scheduled to proceed on February 11, 2011.

[8] Notwithstanding this advance notice, the appellant elected not to participate in either motion, instead ostensibly relying on her brother – a co-defendant who, like the appellant, had been accused of fraud by the respondent – to protect her interests. Having decided for her own reasons to pursue this course of action, the appellant was not entitled to notice of any further steps taken by the respondent to collect the monies owed to it.

[9] Third, the appellant claims that the motion judge erred by finding that there was undue delay in bringing the motion to set aside the default judgment. We disagree.

[10] Delay was but one factor considered by the motion judge when determining whether to set aside the default judgment. Although the appellant maintains that she did not learn of the default judgment until she attended her examination-in-aid-of-execution in mid-December 2011, she took no steps to contact counsel until mid-April 2012. By her own admission, the appellant had learned of the default judgment in December, approximately four months earlier.

[11] In these circumstances, the motion judge did not err in finding that the appellant had delayed, without adequate explanation, in moving to set aside the default judgment. By the time she did so, the respondent had compromised its claims against, and hence its ability to recover its judgment from, certain of the other key defendants. This, too, was a factor that told against granting the discretionary relief sought by the appellant.

[12] Finally, the appellant argues that the motion judge applied the foregoing factors as though they were rigid rules and without balancing the prejudice to the parties or the interests of justice. We disagree. The appellant failed to satisfy any of the factors and the respondent demonstrated actual prejudice. The motion judge was clearly of the view that the interests of justice did not favour setting aside the default judgment.

[13] The appeal is dismissed. The respondent is entitled to its costs of the appeal, fixed in the amount of $25,000, inclusive of disbursements and all applicable taxes.

“E.A. Cronk J.A.”

“S.E. Pepall J.A.”

“G.R. Strathy J.A.”