Court of Appeal for Ontario

Date: 2017-12-27 Docket: C63540

Judges: Pepall, van Rensburg and Trotter JJ.A.

Between

Tadeusz Mazgaj Plaintiff (Respondent)

and

Profitable Plots (Canada) Inc., Profitable Plots Pte Ltd., Syndications Canada Inc., John Andrew Nordmann, Geraldine Anthony Thomas, Timothy Nicholas Goldring, Douglas William Chaddock, Daniel Strumos, Michael Baum, Jemimah St. Hilaire, Gordon Edward Buell, Stephen Bailey, Lila Truman, Lisa Laurine Davies, Samual Schwatz, Davis LLP, and Black Sutherland LLP Defendants (Appellant)

Counsel

Eldar Babayev, for the appellant

Harold Albrecht, for the respondent

Hearing

Heard and released orally: December 15, 2017

On appeal from: the order of Justice Kendra D. Coats of the Superior Court of Justice dated February 22, 2017.

Reasons for Decision

[1] The appellant, Daniel Strumos, appeals from an order dismissing his motion to set aside a default judgment that was granted to the respondent who was defrauded in a land banking scheme.

[2] The appellant was personally served with the Statement of Claim on March 5, 2014. He took no steps to defend the action and was noted in default on August 1, 2014. After an undefended trial, on November 9, 2015, before Justice William LeMay of the Superior Court of Justice, the respondent was successful in his claim for fraudulent misrepresentation jointly against the appellant and his co-defendant, Douglas William Chaddock. The trial judge awarded $276,031.06 on this basis, plus $29,384.26 in pre-judgment interest. Punitive damages in the amount of $25,000 were awarded against the appellant. Lastly, the appellant and Chaddock were ordered jointly to pay costs in the sum of $25,000, inclusive. See Mazgaj v. Profitable Plots (Canada) Inc. et al., 2015 ONSC 7139.

[3] The appellant was first made aware of this judgment on September 15, 2016, when he received the Notice of Examination compelling his attendance for an examination in aid of execution. A motion to set aside the default judgment was booked for November 10, 2016, but heard on January 12, 2017, after the respondent requested an adjournment.

[4] Applying the principles in Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, the motion judge refused to set aside the default judgment. We would not interfere with this decision.

[5] The appellant concedes that he provided an inadequate explanation for his default, but argues that the motion judge erred in finding that he consciously decided not to participate in the action. We disagree. It was open on the evidence for the motion judge to reach the conclusion that she did.

[6] The appellant took the position that he was in difficult personal and financial circumstances that affected his ability to defend the claim at the time it was issued. However, as the motion judge observed, the appellant was not forthcoming in providing information to support his position. The appellant was unresponsive on a number of important issues on his cross-examination. The motion judge found that the appellant failed to establish that stress prevented him from defending the action. She noted that the appellant appeared on a Small Claims court action in 2015.

[7] The motion judge also rejected the appellant's claim that he relied on Chaddock to defend the action. Moreover, as Justice LeMay observed at para. 30, the appellant and Chaddock were subject to proceedings before the Ontario Securities Commission in relation to the same fraudulent scheme underlying this action. The appellant defended those proceedings.

[8] Furthermore, the motion judge found that the appellant did not have a strong, or even an arguable, defence on the merits. As she concluded at para. 42: "I find that the defences raised by Mr. Strumos are mere bald assertions, and that he failed to provide any details in support of his defences". It should also be noted that the appellant did not file a draft Statement of Defence. Moreover, during his cross-examination, the appellant admitted that the land banking scheme was fraudulent after he had seen documents to this effect. However, he declined to say when he had become aware of the true nature of the scheme.

[9] Finally, the motion judge assessed the relative prejudice to the parties, and the impact on the integrity of the administration of justice, as she concluded at para. 57:

In my view, setting aside the default judgment in this case would undermine the integrity of the justice system. Mr. Strumos was properly served by Mr. Mazgaj and chose to ignore the proceedings until judgment had been obtained and enforcement proceedings were imminent. He did not present a plausible reason for his default, nor did he raise an arguable defence on the merits.

[10] All of these findings were available to the motion judge on the basis of the record before her. Taking all of these factors into account, the overall justice of the case supported the order that she made.

[11] The appeal is dismissed.

[12] The appellant shall pay to the respondent costs fixed in the amount of $15,500, inclusive of disbursements and applicable taxes.

"S.E. Pepall J.A."

"K. van Rensburg J.A."

"Gary T. Trotter J.A."