Court of Appeal for Ontario

Date: 2018-06-01 Docket: C64853

Judges: Feldman, MacPherson and Rouleau JJ.A.

Parties

Between

Charles Sammut Plaintiff/Respondent (Respondent)

and

Susanne Sammut and Josephine Spiteri Defendants/Moving Party (Appellant/Respondent)

And Between

Josephine Spiteri Plaintiff by Counterclaim

and

Charles Sammut, Royal Bank of Canada, Manju Gujot Sekhon, The Estate of Dennis Ray Cook, deceased, by his Estate Trustee, Roberta Gladys McLean Defendants by Counterclaim

Counsel

Domenico N. Magisano and Christopher Shorey, for the appellant

Mark A. Ross, for the respondent

Heard

May 29, 2018

Appeal

On appeal from the order of Justice Bonnie J. Wein of the Superior Court of Justice, dated December 20, 2017.

Reasons for Decision

Background

[1] The appellant, Susanne Sammut, appeals from the order of Wein J. of the Superior Court of Justice denying the appellant's motion to set aside the order of Woollcombe J. of the Superior Court of Justice. Woollcombe J.'s order granted summary judgment to the respondent, Charles Sammut, for $466,420.22, plus interest and costs of $5,000. In her endorsement, Woollcombe J. said:

[3] The plaintiff's claim against Ms. Sammut is based on his affidavit evidence that, beginning in about 2005, she began to divert and steal money from him without his knowledge and consent. In his affidavit, the plaintiff sets out the various aspects of the defendant's conduct that led to his financial losses.

[4] Ms. Sammut was not present in court and has not provided any materials in response to the motion. She is well aware of the plaintiff's claim and appeared in court on the first return of the application before Donohue J. on July 22, 2014. At that time, she provided an address at which she was to be served. Subsequently, on August 19, 2014, Justice André ordered that the plaintiff could serve Ms. Sammut by email. An attempt was made by the plaintiff to serve Ms. Sammut with the motion material by email, but that email no longer functions. I understand that her whereabouts are unknown. In these circumstances, I heard the motion in Ms. Sammut's absence.

[8] Ms. Sammut has put no material before me. I am advised that she has been noted in default, the consequences of which are set out in rule 19.02. Of significance, Ms. Sammut is deemed to admit the truth of all allegations of fact made in the statement of claim.

[9] The plaintiff has provided an affidavit setting out in detail the various losses that he claims. The various heads of loss correspond to those set out in his statement of claim.

[10] On the unchallenged evidence before me, I am prepared to grant summary judgment against Ms. Sammut in the amount of $466,420.22.

[11] On the basis of the unchallenged evidence before me, I accept that Susanne Sammut used fraud and theft to obtain funds that are now owed to the plaintiff. This finding will mean that, by virtue of s. 178(1) of the Bankruptcy and Insolvency Act, the money owing to the plaintiff will survive bankruptcy.

Service and Notice Issues

[2] Ms. Sammut moved to set aside Woollcombe J.'s order on the basis that she was not served with the respondent's Statement of Claim and, therefore, did not have an opportunity to defend the case against her. The appellant's home address and email address had been incorporated into a previous court order. However, at some point the appellant moved to a new address and there was a one letter error in the email address. Hence, the appellant says, she did not receive relevant legal documents, including the Statement of Claim.

[3] After an extensive analysis, Wein J. rejected this argument. She said:

[36] In summary, then, even on the most charitable view of the case, largely because of her actions and inactions with respect to updating her address for service, and failing to note the deficiency in the email address for service, Susanne Sammut is the author of her own misfortune in having the motion proceed unopposed. On the most viable view of the history of the file, she simply decided to avoid her actions by moving for bankruptcy and ignoring the action taken by Charles.

[37] While there was an error in recording her email address, she was served at the mail address she had given, and there are ample indications that she was aware of the action against her.

Grounds of Appeal

[4] The appellant challenges Wein J.'s judgment on three bases: (1) her refusal to set aside the default judgment as of right; (2) her failure to properly consider and apply the test for setting aside a default judgment; and (3) her failure to properly review the quantification of damages arrived at by the judge who granted summary judgment.

Standard of Review

[5] We do not accept the first two of these arguments. We begin by noting that a motion judge's decision concerning setting aside a default judgment is discretionary; it should not be interfered with absent an error in principle, a palpable and overriding error of fact, or unless the decision is so clearly wrong as to amount to an injustice: see Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, at para. 55.

Service and Obligation to Update Address

[6] In our view, the appellant has not established that the motion judge made an error in any of these categories. The appellant had a clear obligation to advise the respondent of a change in her mailing address. She did not do this. The initial one letter error in her email address was of no moment; it is clear that the appellant received the relevant legal documents throughout the litigation. As explained by the motion judge:

[26] In summary then, with respect to the issue of service, there were some problems with the service prior to the motion. Although Susanne was present in court when the email was incorporated into the order, there is no direct evidence that she deliberately gave the misspelled email address. She is at fault for failing to update her mail service address. In the final analysis, whatever interim problems there were with service, it is apparent that Susanne had notice of the motion for judgment through her counsel, and through the materials that would have been subsequently provided to her by her former counsel after he was no longer retained.

Damages Quantification

[7] On the third issue, the appellant challenges this component of the motion judge's reasons:

[39] On behalf of Susanne, it is now, belatedly, argued that there are deficiencies in the calculation of the amount of damages that are apparent on the face of the record. These include reimbursement for mortgage payments overpaid on account of the Homes Equity Line of Credit on all lost equity, although Charles' interest is only 25 percent of the home, Charles' failure to defend the power of sale proceedings, and allegations of unfulfilled undertakings relating to discrepancies in the damage calculations.

[40] However, Susanne has not provided any evidence that would undermine the conclusion that a substantial amount of money was owing to Charles because of her fraudulent actions in relation to Charles' interests. It is simply too late now to bring forward arguments concerning the quantification of the amount owing, particularly in her circumstances of bad faith.

Court of Appeal's Analysis of Damages

[8] The appellant asserts that the motion judge erred by saying that "Susanne has not provided any evidence that would undermine the conclusion that a substantial amount of money was owing to Charles" and by concluding that "[i]t is simply too late now to bring forward arguments concerning the quantification of the amount owing". We agree on both points.

[9] On the first point, unlike the summary judgment motion before Woollcombe J. where the appellant filed no material, on the motion to set aside before Wein J., the appellant was represented by counsel and filed extensive material, including a comprehensive affidavit. In our view, it was not "too late" for her to challenge the quantification in the summary judgment order.

[10] Having reviewed the record and read and heard extensive submissions, we are of the view that the global damages award of $466,420.22 must be reduced in three respects.

First Adjustment: Mortgage Payments

[11] First, the respondent's claim for capital and interest payments of $78,595.23 on account of the fraudulent mortgage obtained by the appellant fails to recognize that, at the relevant time, the respondent was only a one-quarter owner of the home. Accordingly, his entitlement under this head of damages is $19,648.81.

Second Adjustment: Principal Payments

[12] Second, and similarly, the respondent claimed 100 per cent of the principal payments he made, namely, $149,779.21. However, upon sale of the house his loss is only 25 per cent of this amount in accordance with his interest in the home. Hence the respondent's entitlement is $37,444.80, not $149,779.21.

Third Adjustment: Personal Expenses

[13] Third, on the cross-examination on his affidavit, the respondent admitted that his claims for $2,200 in trailer park fees and $2,400 in car insurance related to personal items.

Revised Damages Award

[14] Taking these three adjustments together, the appellant is entitled to damages of $289,740.39 ($466,420.22 minus $58,946.42 minus $112,334.41 minus $4,600).

Decision

[15] The appeal is allowed but only to the extent of reducing the damages award to $289,740.39. In our view, success on the appeal is divided. Accordingly, each party should bear its own costs of the appeal.

K. Feldman J.A.

J.C. MacPherson J.A.

Paul Rouleau J.A.