COURT FILE NO.: 664/01
DATE: 20021003
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
MEXAM CORP.
Plaintiff
- and -
COFFEE, TEA OR…ME BAKERY & CAFÉ INC., 1308682 ONTARIO INC., JAMES GNYDJENKO and COFFEE, TEA OR ME BAKERIES INC.
Appellant
Orie H. Niedzviecki, for the Respondent
James Gnydjenko, In Person
HEARD: October 3, 2002
ARCHIE CAMPBELL J.: (Orally)
[1] The defendant appeals from the order of Master Haberman dismissing his motion to set aside the plaintiff's default judgment and awarding the plaintiff costs of $850.
[2] The facts are set out in the factums and the endorsement of the learned Master.
[3] Having found that:
(i) the defendant moved against the default judgment in a reasonable time, and
(ii) that he may have a defence to the action although the Master did not consider it a strong one.
the results are largely on two conclusions:
(i) that the defendant did not offer a plausible explanation for the default, and
(ii) it was just and equitable to let the default judgment stand having regard to the irreparable harm to the plaintiff and having regard to the defendant's conduct in relation to the settlement made.
[4] The standard of review of this final order is correctness coupled with some deferences to the Master's expertise in the field. Hudon v. Colliers MacAulay Nicols Inc. [2001] O.J. No. 1588 (Blair, Dunnet and Jennings JJ., April 27, 2001).
[5] The first conclusion, lack of plausible explanation for the default, turns largely on the Master's finding that no further notice was required in all of the circumstances than that already given. There is great merit in the thoughtful and detailed analysis which led the Master to that conclusion.
[6] Having regard however to the fact that the overall settlement was a fresh step, the lack of any provision dispensing with further notice in this particular action, and the fact that the remedy for default of settlement was against a new company and not by signing default judgment in this action, there is not enough evidence in the overall circumstances to displace the strong presumption that reasonable notice is required before default judgment is signed against someone who expresses an intention to defend. Reasonable notice in the circumstances of this case requires something more than the earlier notices already given before the settlement and require something closer to actual notice.
[7] The second finding is equally supported by thoughtful and detailed analysis. So far as irreparable harm is concerned there is always some risk inherent in any settlement and the crystallization of that risk is not in itself enough to deprive the defendant of reasonable notice. Although the Master expressed concern about the defendant's attitude towards his obligations under the settlement, there was no express finding that he acted in bad faith or that the settlement represented some fraudulent attempt to delay payment.
[8] In the absence of such a finding there is not enough evidence to displace the strong presumption referred to above. The defendant should therefore be given a reasonable opportunity to demonstrate his good faith and to defend the action.
[9] Because of the harm to the plaintiff through the defendant's default, it is reasonable to impose terms, particularly because the defendant did not provide the security which he agreed to provide under the settlement and because of the harm done to the plaintiff by his failure to provide the security or to pay some money to restore the plaintiff to its rightful and fair position under the settlement.
[10] Having regard to the repeated indulgences given by the plaintiff to the defendant, the evidence that he did not provide security as he had agreed, and the harm he has caused the plaintiff by failing to honour the settlement, it is only fair that something be done to restore the plaintiff in some small way closer to the position it was in at the time of the settlement.
[11] An order shall therefore go:
That the appeal is dismissed and the judgment shall remain in force unless the defendants on or before October 25th :
Pay to the plaintiff the amount of $3000 fixed as costs thrown away;
Provide to the plaintiff and file in the court a receipt from the accountant of the court evidencing the payment into court to the credit of this action the sum of $15,000;
That if the defendant complies with these terms, the appeal is allowed and the judgment shall be set aside.
The defendant's approval of the form and content of the order is dispensed with.
[12] I have endorsed the record: "For oral reasons judgment to go as set out in the judgment on terms there stated."
ARCHIE CAMPBELL J.
Date of Reasons for Judgment: October 3, 2002
Date of Release: October 7, 2002
COURT FILE NO.: 664/01
DATE: 20021003
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
MEXAM CORP.
Plaintiff
- and -
COFFEE, TEA OR…ME BAKERY & CAFÉ INC., 1308682 ONTARIO INC., JAMES GNYDJENKO and COFFEE, TEA OR ME BAKERIES INC.
Appellant
ORAL REASONS FOR JUDGMENT
ARCHIE CAMPBELL J.
Date of Reasons for Judgment: October 3, 2002
Date of Release: October 7, 2002