Court of Appeal for Ontario

Date: 2017-08-30

Docket: C62436 & C63026

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

Parties

Between

Randy Misir Plaintiff (Respondent in Appeal)

and

Geree Misir and Rajendra Narine (a.k.a. Hardial Singh) Defendants (Appellants)

And Between

Randy Misir Applicant (Respondent in Appeal)

and

Geree Misir and Rajendra Narine (a.k.a. Hardial Singh) Respondents (Appellants)

Counsel

For the Appellants: David Reiter, Selwyn Hicks and Brian Chung

For the Respondent: Abba Chima

Heard: August 18, 2017

On appeal from: The order of Justice Edward M. Morgan of the Superior Court of Justice, dated July 19, 2016 and the order of Justice Peter J. Cavanagh of the Superior Court of Justice, dated November 23, 2016.

Reasons for Decision

Overview

[1] An action was commenced in 2001, and not defended. The plaintiff (who is the respondent in this appeal) obtained a judgment after an assessment of damages for almost $86,000. In the following years, the judgment was set aside on motion by the defendants (who are the appellants) but later reinstated. The appellants' unsuccessful attempt to set aside the reinstatement of the judgment is the subject of this appeal.

[2] The issue on appeal is whether the motion judge erred in dismissing the appellants' motion to set aside the reinstated default judgment, and in authorizing the respondent to sell the appellants' property in satisfaction of the judgment. The appellants appeal the order of Morgan J. dated July 19, 2016 (the "motion judge"), and the order of Cavanagh J. dated November 23, 2016 which varied the Morgan J. order.

[3] For the reasons that follow, the appeal is allowed.

Facts

[4] It is sufficient for the purpose of this appeal to set out a summary of the action and a chronology of steps taken in the litigation, based on the evidence that was before the motion judge. The record is voluminous, and contains affidavits from the parties with contradictory accounts of misconduct and subterfuge on all sides in connection with the litigation. Fortunately, the disposition of the appeal does not require these contradictory accounts to be reconciled. Except as otherwise noted, the relevant facts are undisputed, or based on information or documents contained in the respondent's own affidavits.

[5] The action was commenced by statement of claim issued in April 2001. The respondent Randy Misir claims damages against the appellants Geree Misir (who is his ex-wife) and Hardial Singh. The action claims that Geree Misir made false allegations against the respondent to the police, leading to criminal charges that were tried and dismissed, and that both appellants conspired to injure him and to cause him emotional distress and harm, through various acts of harassment that are detailed in the claim.

[6] The appellants did not respond to the claim and were noted in default. On October 29, 2001, Wilkins J. granted judgment against the appellants in favour of the respondent in the sum of $85,984, following an undefended trial (the "Wilkins J. judgment").

[7] In 2004, the appellants moved to set aside the Wilkins J. judgment, after they learned of the judgment and writs of execution that had been filed. Swinton J. granted an order that set aside the judgment of Wilkins J. and the noting in default, and required the appellants to serve their statement of defence by June 30, 2004 (the "Swinton J. order"). The Swinton J. order was amended in August 2004 to lift the writs of execution.

[8] A statement of defence on behalf of both appellants was filed with the court on June 28, 2004. The statement of defence, which is only nine paragraphs long, consists mainly of general denials of the facts pleaded in the statement of claim. The affidavit of service filed with the statement of defence states that the defence was sent by mail to "340 College Street" (without showing the suite number indicated on the statement of claim) and by fax to the fax number of the solicitor who had acted for the respondent in the motion to set aside the default judgment, although no fax confirmation is attached to the affidavit. The respondent contends, and Morgan J. accepted, that he was never served with the statement of defence.

[9] The respondent prepared a trial record in June 2005 that included the statement of claim issued April 3, 2001, the statement of defence dated June 10, 2004 and a certificate of trial record, and served it on the appellants' counsel of record. The respondent asserts that he located the statement of defence in the court file.

[10] The respondent contends that in 2007 he wrote to the appellants and their former counsel, but did not receive a response. He asked the court to set the matter down for an assessment of damages.

[11] On September 8, 2008, Brown J. (as he then was) issued a judgment restoring the default judgment of Wilkins J. nunc pro tunc and awarding costs against the appellants of $11,000, inclusive of GST. A transcript was filed by the appellants, indicating what transpired in the attendance before Brown J. (We note here that the respondent was represented by counsel other than Mr. Chima, who represented him before Morgan J. and on appeal). The following is a summary of what transpired:

• Brown J. was given a trial record containing the Wilkins J. judgment (it is unclear whether anything else was in the trial record). The respondent's counsel advised that he would be asking the court to reinstate the judgment. After counsel informed the court that the Wilkins J. judgment had been set aside, Brown J. adjourned the matter briefly so that counsel could provide the materials relevant to the setting aside of the judgment.

• When counsel returned to the court room without materials, Brown J. adjourned the matter to the afternoon, indicating that he wanted "a pretty clear picture of what's happened since, communications between the parties, why defendants who moved to set aside an order are not showing up today". He stated, "I'm going to insist on having a very clear picture of what's gone on and why the defendant isn't here today before proceeding".

• In the afternoon, counsel attended with the order and endorsement of Swinton J., requiring a defence to be served by June 30, 2004. Brown J. asked whether a defence was filed and counsel responded, "No. No defence was filed. Nothing has been filed ever." Brown J. then asked when the defendants were noted in default and counsel advised, "September of '04". Brown J. observed that it was a long time for something that had been noted in default to get onto the trial list and asked what happened. Counsel advised that the respondent's former counsel was trying to find the appellants and that they moved, and left the country. Counsel then stated that the respondent filed a trial record and got the matter on the list, and then retained him to assess the damage. Counsel asked that Brown J. restore the default judgment nunc pro tunc.

• Brown J., after marking the documents provided by counsel as exhibits, asked the respondent to provide evidence under oath that no defence was filed and that he did not know where the appellants were. The respondent testified that a statement of defence was never served on him by or after June 30, 2004, and that he noted the defendants in default "in September, or sometime of that year, of 2004". He also testified that the appellants had commenced an action against him which had been administratively dismissed. Finally, he testified that he did not know where the defendants live, that they disappeared, and that Immigration was looking for them.

[12] In his brief endorsement Brown J. referred to the fact that the respondent testified that the appellants failed to serve statements of defence by June 30, 2004 and that the respondent noted the appellants in default around September 2004. He noted that another action commenced by the appellants against the respondent had been administratively dismissed earlier that year and that the respondent did not know where the appellants currently lived. Brown J. concluded:

The defendants were given the opportunity to present a defence to this court, which they have failed to do. It appears their objective was solely to lift the execution filed against the property. When the judgment was set aside, without any financial condition, they lost interest in the litigation and appear to have left the jurisdiction.

[13] In May 2010, the respondent filed writs of execution in respect of the reinstated judgment.

[14] In early 2015, the appellants moved to set aside the judgment of Brown J. after Hardial Singh, in 2014, discovered the writs of execution registered against his name. The motion was before Master Short on three occasions before it was adjourned to a judge. In the interim, the respondent brought an application to enforce the judgment by a court-supervised sale of the appellants' property.

Issues and Analysis

[15] The appellants assert that the motion judge made palpable and overriding errors of fact in refusing to set aside the Brown J. judgment and ordering that certain property be sold. They also contend that the Brown J. judgment ought to have been set aside on the basis that the respondent did not make full and fair disclosure when he and his counsel attended before the court without notice to the appellants.

[16] We agree with the latter submission. As a result, it is unnecessary to address the motion judge's findings of fact or the appellants' submissions about them.

[17] A party who seeks relief from the court in proceedings without notice is obliged to make full and fair disclosure of all material facts. This is a common law rule that is enshrined in Rule 39.01(6). See also Sangster v. Sangster, [2003] O.J. No. 69 (C.A.), at para. 7. It is unnecessary to find that the court was deliberately misled before a court will set aside such an order. The basis of the rule is fairness. As the rule confirms, the failure to make such disclosure is a reason, in itself, to set aside the order made: Mariani v. Mariani, [2010] O.J. No. 1464 (S.C.); Balanyk v. Greater Niagara General Hospital, [1997] O.J. No. 4867 (C.A.).

[18] Here, the respondent's counsel, who had only been retained for an assessment of damages, provided information to the court that was inaccurate – that no statement of defence had been filed, and that there had been no communication between the parties in the interim. The respondent did not correct this information, and he testified that the appellants had been noted in default in 2004. As a result, Brown J. proceeded on the assumption that the action was not defended when he granted a judgment restoring the Wilkins J. judgment. There is nothing on this record to support the respondent's submission on appeal that Brown J. must have known that a defence had been filed and that he granted judgment based on lack of service of the defence on the respondent. Brown J. was clearly proceeding on the basis that there was no defence – the respondent's counsel said none had been filed, and the respondent testified that the appellants had been noted in default. What was material to Brown J. was whether the action was being defended, and why the matter was proceeding ex parte.

[19] The respondent did not make full and fair disclosure of material facts. The Brown J. judgment ought to have been set aside on this basis.

Disposition

[20] The appeal is therefore allowed. The orders of Morgan J. and Cavanagh J. are set aside. If the parties are unable to agree on costs, we will receive written submissions from the appellants within 15 days and from the respondent ten days thereafter, limited to five pages each, including any costs outline.

"S.E. Pepall J.A."

"K. van Rensburg J.A."

"G.T. Trotter J.A."