Court of Appeal for Ontario

Date: 2022-08-26 Docket: C70040

Judges: Huscroft, Harvison Young and Sossin JJ.A.

Between: FS Partnership/UPI Energy FS, a Division of Growmark Inc. Plaintiff (Respondent)

And: Mr. Refuel Inc., Roy Nirwal and Amandeep Kaur Defendants (Appellant)

Counsel: Matthew Kersten, for the appellant Matthew McMahon, for the respondent

Heard: August 19, 2022

On appeal from the order of Justice Judy A. Fowler Byrne of the Superior Court of Justice, dated October 7, 2021.

Reasons for Decision

[1] The issue on this appeal is whether the motion judge exercised her discretion unreasonably by refusing to set aside a default judgment because the appellant was six days late in paying the costs component of an initial order.

[2] We see no basis to interfere with the motion judge’s decision and dismiss the appeal.

Overview

[3] The respondent, FS Partnership/UPI Energy FS, a Division of Growmark Inc. (“Growmark”), is an American agricultural company in the business of, among other things, distributing fuels, lubricants, crop nutrients, and crop protection products in the United States and Canada.

[4] The appellant, Amandeep Kaur, is an officer and director of Mr. Refuel Inc. (“Mr. Refuel”), a Canadian corporation in the business of supplying fuel and refueling services. Roy Nirwal is also an officer and director of Mr. Refuel.

[5] In January 2020, Growmark commenced an action against Mr. Refuel, Mr. Nirwal, and Ms. Kaur (collectively, “the defendants”) for breach of contract, seeking $1,065,713.32 in damages. Growmark alleged that Mr. Refuel entered into a contract in February 2018 under which Growmark would supply and deliver fuel to Mr. Refuel under a credit agreement, and that Ms. Kaur and Mr. Nirwal were personally liable under this agreement. It further alleged that the defendants continued to take delivery of fuel but stopped paying Growmark’s invoices.

[6] On February 19, 2020, the corporate defendant Mr. Refuel and Ms. Kaur were served personally with the Statement of Claim. Mr. Nirwal was served by alternative to personal service. It is uncontested that none of the defendants filed a Notice of Intent to Defend or Statement of Defence.

[7] On March 13, 2020, Growmark filed a requisition with the court asking the defendants to be noted in default, which was done.

[8] In July 2020, Growmark brought a motion in writing before a judge for default judgment. On July 22, 2022, Lemon J. granted default judgment against the defendants for $1,013,420.60 in damages, plus interest and costs.

[9] In August 2020, Growmark sent a copy of the judgment to the defendants. The letter sent to Ms. Kaur was sent to the same address where personal service of the Statement of Claim was effected.

[10] The defendants did not respond to any of the proceedings until November 2020. The defendants state that they were unaware of the default judgment until they were served with the Notice of Examination, at which time they immediately retained counsel to respond. Following correspondence between the parties, the defendants eventually served a notice of motion to set aside the default judgment in January 2021, which was heard on March 23, 2021.

The motion to set aside default judgment

[11] On June 22, 2021, the motion judge found the test for setting aside the default judgment was met. With respect to the defendant Mr. Nirwal, the judgment was set aside and a date set for the filing of a Statement of Defence. With respect to Ms. Kaur, however, the default judgment was set aside on terms. Ms. Kaur was ordered to pay the plaintiff’s costs in the amount of $9,566.85, within 30 days. If this cost payment was not made within the time frame provided, the default judgment would remain in full force as against Ms. Kaur.

[12] The costs ordered against Ms. Kaur were not paid within 30 days. Six days after that deadline, Ms. Kaur and Mr. Nirwal purported to serve a Statement of Defence. The plaintiff rejected service of the pleading on the basis that the costs had not been paid. Within hours of receiving that correspondence, Ms. Kaur paid the costs.

[13] At an appointment before the motion judge to settle the June 2021 order, the plaintiff sought to settle the order to reflect that the default judgment against Ms. Kaur remained in force. While filing no materials, Mr. Kersten, the lawyer who was to become Ms. Kaur’s new counsel, argued that the order should be varied to extend the time for payment of costs, so that the default judgment could be set aside.

[14] In oral submissions before the motion judge, Mr. Kersten characterized Ms. Kaur’s non-compliance with the court order as “inadvertent”. He argued that Duffin v. NBY Enterprises Inc., 2010 ONCA 765, 328 D.L.R. (4th) 571, provides authority that a court should be reluctant to deprive a party of a hearing on the merits, and that a motion judge should extend time limits under r. 3.02(1) of the Rules of Civil Procedure where the justice of the case warrants relieving a party of strict compliance with a court-ordered deadline.

[15] The motion judge refused to exercise her discretion to vary the order as requested by Mr. Kersten on behalf of Ms. Kaur. She stated that an appointment to settle an order under r. 59.04(10) should result in changes to an order “sparingly” and only where there has been a technical error or to avoid a miscarriage of justice, relying on Beard Winter LLP v. Shekhdar, 2015 ONSC 4517, at paras. 29-39. The motion judge emphasized that, “No miscarriage of justice is at stake. If I sign the order that Mr. McMahon requested, the Defendant Kaur still has various remedies open to her to address.”

Analysis

The fresh evidence motion

[16] Ms. Kaur first brings a motion to introduce fresh evidence. This evidence primarily consists of two affidavits, one from herself and one from her co-defendant, stating that Ms. Kaur was never informed of the obligation to pay costs by her former counsel. As soon as she was informed, six days after the 30-day period ordered by the motion judge had expired, she paid the costs within hours.

[17] The respondent opposes the motion, arguing that with due diligence, the evidence could have been provided to the motion judge at the time the order was settled, and further that it would not have affected the outcome.

[18] We agree.

[19] The principles which should be applied to determine the admissibility of fresh evidence were set out in R. v. Palmer and Palmer, [1980] 1 S.C.R. 759, at p. 775, as follows:

(1) The evidence should generally not be admitted if, by due diligence, it could have been adduced at the earlier proceeding;

(2) The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the decision;

(3) The evidence must be credible in the sense that it is reasonably capable of belief; and

(4) It must be such that if believed it could reasonably, when taken with the other evidence before the decision-maker, be expected to have affected the result.

[20] The proposed fresh evidence in this case does not meet the Palmer standard. There is no basis to conclude that even if the motion judge had been aware that Ms. Kaur was not informed of the costs order, she would not have settled the order as she did.

[21] First, the motion judge had earlier commented on Ms. Kaur’s non-responsive approach to this litigation, which resulted in the original default judgment. Second, the submission that Ms. Kaur’s non-payment of costs was inadvertent was before the motion judge. Her conclusion that no miscarriage of justice would arise did not depend on whether Ms. Kaur’s failure to comply with the costs order was intentional or unintentional. Rather, her conclusion was explained with reference to the other avenues of recourse open to Ms. Kaur to address the consequences of the order. The basis for that conclusion would not have been altered by the proposed fresh evidence.

[22] The motion to introduce fresh evidence is dismissed.

The motion judge did not act unreasonably in settling the order

[23] With respect to the appeal itself, Ms. Kaur argues that the motion judge exercised her discretion unreasonably when she declined to vary the order to extend the time for payment of costs, which would have permitted her to settle the order as setting aside the default judgment.

[24] The respondent argues that Ms. Kaur’s appeal is statute-barred as it was brought more than 30 days from the time the motion judge issued her original reasons. In the alternative, the respondent submits that the motion judge’s decision is entitled to deference, and that she acted properly in settling the order.

[25] We do not accept that Ms. Kaur was out of time to bring this appeal. The appeal was of the order settled by the motion judge on October 7, 2021, arising from the decision of June 22, 2021. The appeal was brought on November 4, 2021, within 30 days of the order being settled.

[26] We see no basis to interfere with the motion judge’s discretion on the settling of the order, which is entitled to deference. The appointment to settle an order that has not been signed and entered is an opportunity, if necessary, to correct technical errors or to avoid a miscarriage of justice: Brown v. The Municipal Property Assessment Corp., 2014 ONSC 7137 (Div. Ct.), at para. 20.

[27] The motion judge properly instructed herself on her narrow authority to change an order. She did not act unreasonably in determining that those narrow grounds did not arise in this case, and in particular that there would be no miscarriage of justice as other avenues of recourse were open to Ms. Kaur.

[28] On this point, the motion judge did not determine whether the order she settled should be varied or whether grounds to do so are present in this case. No such motion to vary was brought, nor were there materials before her in support of such a motion. The motion judge also did not comment on any potential liability of Ms. Kaur’s prior counsel.

[29] For this reason, and in light of the specific context of the settling of an order under r. 59.04(10), the reasoning of this court in Duffin did not apply.

Disposition

[30] For these reasons, the appeal is dismissed.

[31] Costs shall be paid by Ms. Kaur to the respondent in the agreed amount of $10,000, all-inclusive.

“Grant Huscroft J.A.”

“A. Harvison Young J.A.”

“L. Sossin J.A.”