NEWMARKET COURT FILE NO.: CV-11-105310-00

DATE: 20120528

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: METALDOOR HARDWARE AND INSTALLATIONS LTD., Plaintiff

AND:

YORK REGION DISTRICT SCHOOL BOARD AND MAYSTAR GENERAL CONTRACTORS INC., Defendants

BEFORE: THE HON. JUSTICE J.P.L. MCDERMOT

COUNSEL: M. Michael Title, for the Plaintiff

Rocco Ruso, for the Defendant, Maystar General Contractors Inc.

York Region District School Board not appearing

HEARD: February 29, 2012

ENDORSEMENT

INTRODUCTION

[1] In 2009, the Plaintiff, Metaldoor Hardware and Installations Ltd. (“Metaldoor”) contracted with the Defendant, Maystar General Contractors Inc. (“Maystar”) to provide metal doors and hardware for a school being constructed by Maystar for the York Region District School Board (the “Defendant School Board”). The doors and hardware were supplied and invoices issued by Metaldoor on March 24, 2010 and May 11, 2011.

[2] Part of the contract price remains unpaid, and a construction lien was registered by Metaldoor on June 21, 2011. A Statement of Claim and Certificate of Action were issued on July 27, 2011. The Statement of Claim was served by registered mail on Maystar at their registered office on August 3, 2011; unfortunately, and presumably because Maystar had moved, the Statement of Claim did not come to its attention until early September, 2011 when the Defendant school board served its Statement of Defence on Maystar. By the time Maystar’s solicitor got in touch with the Plaintiff’s solicitor, the Plaintiff had already noted Maystar in default. Notwithstanding several letters from Maystar’s counsel, Metaldoor subsequently obtained default judgment against Maystar and issued a Notice of Garnishment to Maystar’s bankers.

[3] Maystar now seeks to set aside the judgment and noting in default. Metaldoor’s counsel objects and states that service was in order, and that Maystar has not met the criteria for setting aside the noting in default as provided for in the Rules of Civil Procedure[^1] and s. 54 of the Construction Lien Act.[^2]

[4] For the reasons set out below, I have set aside the Plaintiff’s noting in default and the default judgment as requested. There shall be no order as to costs, including the Plaintiff’s costs thrown away.

BACKGROUND FACTS

[5] Maystar is a general contractor and it contracted with the Defendant School Board to construct the Young-Regatta Secondary School located at 36 Regatta Avenue, Richmond Hill, Ontario. On September 24, 2009, Maystar contracted with Metaldoor for the supply of steel doors and frames for the school. The contract price was $127,445.70.

[6] The steel doors were presumably supplied by Metaldoor, and an invoice was issued to Maystar in the amount of $127,050 on March 24, 2010. A supplementary invoice for $565 was issued on May 11, 2011. A Certificate of Substantial Performance was published on March 31, 2011, well before the last invoice issued by Metaldoor.

[7] The sum of $25,184.16 remains unpaid. A lengthy deficiency list was issued by Maystar’s consultant respecting the steel doors and hardware supplied by Metaldoor; presumably this was the reason for Maystar not paying the entire account.

[8] On June 21, 2011, the Plaintiff registered a Claim for Lien against the lands. The lien states that the last date that services or materials were supplied was on May 11, 2011, the date of the supplementary invoice noted above. The amount of the Claim for Lien is the balance outstanding as noted above.

[9] The Plaintiff issued its Statement of Claim and Certificate of Action on July 27, 2011. The Statement of Claim was served on the solicitors for the Defendant School Board; its solicitors, Stiver Vale, admitted service on the back of the Statement of Claim. The Defendant School Board has defended on the basis that the Claim for Lien was not registered in time.

[10] In contrast to the apparent cooperation between the Plaintiff and the Defendant School Board, service of the Statement of Claim on Maystar was in accordance with the Rules of Civil Procedure, but in a manner which would almost certainly result in Maystar being noted in default because of the chosen method of service. Maystar operates out of premises located at 71 Buttermill Avenue in Concord, Ontario. At one time this was its registered office as set out in a Corporation Profile Report provided by Metaldoor’s counsel and issued on March 16, 2000. An invoice issued by Metaldoor dated December 17, 2010 was sent to that address. That was the address that was used for Maystar in the published Certificate of Substantial Completion. It appears that all parties were aware that the Buttermill Avenue address was the address that Maystar operated out of for business purposes.

[11] Unfortunately, Maystar appears to have changed its registered office for corporate purposes sometime between March 16, 2000, the date of the Corporation Profile Report noted above, and the date of the commencement of this litigation. Metaldoor provided very little evidence on this motion, but it did provide the affidavit of service of the Statement of Claim on Maystar. That affidavit has attached to it a more recent Corporation Profile Report issued on June 20, 2011 and that report indicates that the registered office of Maystar was changed to 2500 Medowpine (sic.) Blvd., Mississauga, Ontario. The process server indicates that he went there and found that Maystar was not occupying those premises and that there was a different company at that address. Instead of seeking out Maystar or using the address to which the Plaintiff had sent at least one invoice, the Statement of Claim was served on Maystar by registered mail at the Meadowpine address as permitted under Rule 16.03(6) of the Rules of Civil Procedure.

[12] It is unknown as to whether the registered mail was returned or forwarded on to Maystar. It is the evidence of Vincenzo Ruso, a solicitor at the firm representing the Applicant that Metaldoor only determined that it was a party to a lawsuit in early September, 2011, when served with the Statement of Defence of the Defendant School Board. At that time, Maystar contacted Mr. Ruso (Rocco Ruso, who appeared on the motion, as opposed to Vincenzo Ruso who swore the solicitor’s affidavit in support of this motion). The affidavit states that Mr. Ruso contacted Plaintiff’s counsel by telephone and Mr. Title then advised that Maystar had already been noted in default. The noting in default apparently took place on September 12, 2011.

[13] Apparently, during this conversation, Mr. Ruso told Mr. Title that he was seeking instructions from his client and there may be no issue as to payment of the claim by Maystar. He asked that Mr. Title and his client not take any steps against Maystar until he obtained instructions. No evidence was filed by the Plaintiff denying that this conversation took place, or Mr. Ruso’s version of that conversation.

[14] This telephone call (which was at an unknown time, but presumably after September 12, 2011 when the noting in default took place) was followed up with correspondence from Mr. Ruso dated October 27, 2011. That correspondence stated the same thing; it confirmed a conversation of “several weeks ago” as well as a conversation the day before. It stated that “given the amount outstanding,” Maystar did not necessarily wish to undergo the costs of setting aside the noting in default. The letter confirmed that Mr. Ruso expected to have his client’s position the next day; it also stated that, in the event that Maystar wished to defend, “I trust that I will have your consent to the setting aside of the noting of default.”

[15] That proved to be overly optimistic on several fronts. It took until November 9, 2011 for Mr. Ruso to write to Mr. Title and advise that his client wished to defend the action. Mr. Title wrote back on November 11, 2011 stating that Maystar “has delayed significantly in responding to our client’s claim” and that he had received instructions to obtain default judgment against Maystar. The letter confirmed that judgment was signed against Maystar on November 8, 2011. No notice of the intention to obtain this default judgment was given to Mr. Ruso.

[16] Several days later, on November 14, 2011, Mr. Ruso wrote back to Mr. Title expressing the fact that he found it “disconcerting” that judgment was signed against his client. He asked for a consent to the setting aside of the noting in default and judgment, failing which he would seek an order setting aside the default judgment alone with costs on a substantial indemnity basis.

[17] Nothing further, in fact, was done. On January 5, 2012, Mr. Title issued a Notice of Garnishment against Maystar’s bank accounts with Canada Trust. That has been withdrawn pending the hearing of this motion. This motion was served on February 22, 2012 returnable on February 29, 2012. Approximately five months have elapsed between the date that Maystar discovered that the Statement of Claim had been issued and served on it and argument of this motion.

ANALYSIS

[18] The sole issue to be considered in this motion is the ability of this Defendant to set aside a noting in default and default judgment in this construction lien matter. It is the position of the Plaintiff that Maystar has not demonstrated sufficient cause to allow the noting in default and judgment to be set aside.

[19] Neither counsel spoke to whether leave to bring this motion should be granted pursuant to s. 67(2) of the Construction Lien Act. It is apparent that this motion is necessary in order to determine whether the Defendant should have an opportunity to defend. Leave is granted to proceed with this motion.

[20] The noting in default of a party and the setting aside of that noting of default in construction lien matters is dealt with in s. 54 of the Construction Lien Act, which reads as follows:

54. (1) The time for delivering a statement of defence to a lien claim, crossclaim, counterclaim or third party claim shall be twenty days.

(2) Where a person against whom a claim is made in a statement of claim, counterclaim, crossclaim or third party claim defaults in the delivery of a defence to that claim, the person against whom the claim is made may be noted in default.

(3) Where a defendant or third party has been noted in default under subsection (2), the defendant or third party shall not be permitted to contest the claim of the person who named the defendant or third party as a defendant or third party, or to file a statement of defence, except with leave of the court, to be given only where the court is satisfied that there is evidence to support a defence, and where leave is granted, the court,

(a) may make any order as to costs that it considers appropriate; and

(b) may give directions as to the conduct of the action.

(4) Except where leave has been granted under subsection (3), a defendant or third party who has been noted in default under subsection (2) shall be deemed to admit all allegations of fact made in the statement of claim, counterclaim, crossclaim or third party claim, as the case may be, and shall not be entitled to notice of or to participate in the trial of the action or any step in the action and judgment may be given against the defendant or third party.

[21] Accordingly, under s. 54(3), in a construction lien action, a party that has been noted in default may only file a defence with leave of the court, and then only when the court “is satisfied that there is evidence to support a defence.”

[22] The Construction Lien Act generally contains its own code for the conduct of a construction lien action; the Ontario Rules of Civil Procedure are only imported under certain circumstances; see s. 67(3) of the Act which reads as follows:

(3) Except where inconsistent with this Act, and subject to subsection (2), the Courts of Justice Act and the rules of court apply to pleadings and proceedings under this Act.

[23] Although Rule 19.03 allows for a noting in default to be set aside “on such terms as are just”, this rule is in conflict with s. 54(3) which, as noted above, requires a moving party show evidence to support a defence. Accordingly, I must approach the cases decided under Rule 19.03 with some caution.

[24] Moreover, in the present case, there is not only a noting in default; the Plaintiff has also signed default judgment against this Defendant, an issue that the Construction Lien Act does not specifically deal with. As such, I may have recourse to Rule 19.08(1), which states:

19.08 (1) A judgment against a defendant who has been noted in default that is signed by the registrar or granted by the court on motion under rule 19.04 may be set aside or varied by the court on such terms as are just.

[25] The normal requirements for the setting aside of a default judgment in civil matters is set out in Bank of Montreal v. Chu, 1994 CanLII 7246 (ON SC), [1994] O.J. No. 388 (Gen. Div.). In that case, Wilson J. states that there are three requirements to be satisfied by a litigant seeking to set aside a default judgment:

13 In deciding whether discretion will be exercised to set aside default judgment, a court will consider three factors. They are: whether the motion was made as soon as possible, whether the circumstances giving rise to the default are adequately explained, and a consideration of the defence on the merits: James Sturino Realty Ltd. v. Andrew Michaels Group Ltd. (1988), 64 O.R. (2d) 410, 28 O.A.C. 354 (Div. Ct.).

[26] In cases of this nature, the courts have generally interpreted the rules liberally in order to allow a party his or her day in court where it is in the interests of justice to do so: see Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd., 2007 ONCA 333. As set out in 441612 Ontario Ltd. v. Albert, [1995] O.J. No. 271 (Gen. Div.), at para. 48, a “defendant is still entitled to have a full hearing and a determination on the merits.” In Chitel v. Rothbart, [1988] O.J. No. 1197 (C.A.), Houlden J.A. states that the Chambers Judge was “wrong” to have “applied the rules as if they were rigid rules.” Accordingly, it is apparent to me that the courts have generally applied the rules with some flexibility in order to reasonably allow a party to defend a matter where that party has failed to appear through inadvertence. This is especially so where the matter did not come to the party’s attention because of the method of service used; see Rule 16.07 which states:

16.07 Even though a person has been served with a document in accordance with these rules, the person may show on a motion to set aside the consequences of default, for an extension of time or in support of a request for an adjournment, that the document,

(a) did not come to the person’s notice; or

(b) came to the person’s notice only at some time later than when it was served or is deemed to have been served.

[27] Mr. Title on behalf of Metaldoor states, however, that these cases do not apply in the case of a construction lien matter. He relies upon M.J. Dixon Construction Limited v. Hakim Optical Laboratory Limited, 2009 CanLII 14046 (S.C.J.) which is a decision of Master Polika. In that case, the learned master conducted a careful examination of the criteria to set aside a default judgment (as opposed to a noting in default) in a construction lien matter.

[28] In essence, Master Polika stated that the test in such a case is similar to that of a normal civil matter brought under the Rules of Civil Procedure. In his analysis, he noted that the first two criteria set out in the Bank of Montreal case are applicable to a construction lien matter; in considering those two issues, a court may exercise its discretion in light of the prejudice to the Plaintiff resultant from the setting aside of the default judgment; if no prejudice is shown or the prejudice to the Plaintiff can be dealt with through the terms of the order, then the judgment should be set aside.

[29] According to Master Polika, however, because of s. 54(3) of the Construction Lien Act requiring evidence of a defence, setting aside a judgment in a construction lien matter requires an evidentiary foundation for a defence, and not just “a consideration of the defence” on the merits as set out in Bank of Montreal, supra. As such, Master Polika stated that the third criteria is different as evidence proving a defense must be filed, failing which the judgment cannot be set aside. Moreover, he stated that the issue of prejudice cannot be raised respecting that last criterion as evidence of a defence is a statutory requirement and prejudice is not a consideration under s. 54(3) of the Construction Lien Act. In sum, Master Polika states:

38 The issue then becomes whether the requirement to consider the potential prejudice to the parties applies to a motion seeking to set aside a default judgment and noting in default in an action under the Construction Lien Act such as the one before me. Given the express provisions of section 54(3) respecting the setting aside of default, that is that the onus is on the moving party to show "evidence to support a defence", it follows that the issue of prejudice is not applicable at least to the third requirement. To hold otherwise would be to re-write the statute by stating that even if there is no evidence to support a defence the order may be granted after a consideration of prejudice as the court has mandated in Peterbilt in motions brought pursuant to Rule 19.08.

39 In conclusion given the provisions of the Construction Lien Act and the Rules of Civil Procedure and the decisions set out above for the reasons set out above I find that on a motion to set aside both a default judgment and the noting in default in this action under the Construction Lien Act the onus is on the moving defendants to satisfy the following three requirements:

(i) they must show they have moved promptly once becoming aware of the default judgment;

(ii) they must show that there is an explanation for the default; and

(iii) they must show that there is evidence to support a defence.

Further if the third condition is satisfied and there is a failure to satisfy either the first or second condition then the court is obligated to consider the potential prejudice to the parties, whether any such prejudice is compensable by appropriate terms and the effect of any order on the overall integrity of the administration of justice.

[30] I accordingly disagree with Mr. Title’s assertion that the cases considering the setting aside of a default judgment under Rule 19.08(1) are not applicable to construction lien matters. Although I agree with Master Polika that an evidence supporting a defence must be provided in a construction lien matter (rather than just an outline or theory of a defence with a consideration of issues of prejudice as in the normal case), the cases considering the first two criteria under Rule 19.08(1) are obviously useable and applicable in a construction lien matter.

[31] I will consider each of the criteria set out above in turn.

(i) Did the Defendant move promptly to set aside the default judgment?

[32] As noted above, the within motion was argued approximately five months after the default was discovered. There were significant periods of time between discovery of the default and correspondence; for example, counsel for Maystar called Mr. Title after the noting in default took place on September 12, 2011; he took approximately four to six weeks after this to write to Mr. Title on October 27, 2011. When he discovered that judgment had been signed on November 11, 2011, he did not promptly bring a motion but waited until after a garnishment was issued against his client on January 5, 2012. There is no explanation for the delay contained in the solicitor’s affidavit of Vincenzo Ruso filed in support of the motion. He noted in argument, although not in evidence, that he canvassed dates in January for the motion and that the February date was the soonest date available for argument.

[33] Mr. Title says this is not good enough. He states that the defense was due on August 21, 2011 and that he granted far too many indulgences to Mr. Ruso in this matter. He states that the failures to explain the delays in moving promptly in this matter are fatal to this motion.

[34] In many of the cases considering Rule 19.08(1), there were significant delays in taking steps to set aside the judgment, some of which have been held to be unreasonable; notwithstanding those delays in taking steps to set aside the judgment, the court determined that the judgment would be set aside based upon the terms of the order setting aside the judgment.; see, for example, 442612 Ontario Ltd. v. Albert, supra, where the delay was three years from the date the Statement of Claim was served and ten months after the Defendant had notice of the default judgment.

[35] In effect, there was here a delay, but it was not for five months as alleged by Mr. Title. In fact, it appears that there was a course of negotiations, and that Mr. Ruso apparently was not aware that Mr. Title had instructions to proceed by way of default judgment until November 11, 2011. Until then, the correspondence from Mr. Ruso had been fairly clear insofar as he was seeking instructions as to whether the action would be defended under the circumstances; he wrote to Mr. Title on October 27, 2011 stating that he would be seeking those instructions and the letter, perhaps incorrectly, confirmed the assumption that the Plaintiff would consent to the setting aside of the noting in default.

[36] Instead of achieving its purpose, that letter appears to have spurred the Plaintiff into taking steps to obtain judgment as this was done within 12 days of that correspondence. That judgment was taken out without notice to the Defendant and the correspondence dated November 11, 2011 from Mr. Title (which was the first correspondence from Mr. Title to Mr. Ruso after the October 27, 2011 letter), is the first notification from the Plaintiff that it was not willing to grant indulgences of any sort to the Defendant; once Mr. Ruso was aware of this, he then clearly had a duty to act promptly to set aside the judgment. Until that correspondence, he was unaware that there was an issue as to the setting aside of the noting in default. I find that the delay in bringing the motion was several months, from November 11, 2011 to January, 2012, when counsel states that this motion was scheduled.

[37] Mr. Title relies upon Valente v. Personal Insurance Company, 2010 ONSC 975 as authority for the proposition that there must be a clear and cogent explanation of the delay for the motion to succeed. However, in that case there was a Statement of Claim served on September 2, 2007; on several occasions, the Plaintiff in that case provided indulgences in consenting to the late filing of a Statement of Defense and it was only when there was a Notice of Action Dismissal from the clerk of the court in January, 2009 that the indulgences were withdrawn, and fair warning given of the intention to note in default. Even then, it took the Defendant nearly seven months after March, 2009, when it discovered the noting in default, to bring a motion.

[38] Another distinguishing feature between Valente and the present case is the numerous indulgences given by the Plaintiff and notice being given in that case by Plaintiff’s counsel to file the defense failing which judgment would be signed. No such notice was given to Mr. Ruso by Mr. Title prior to obtaining default judgment against this Defendant. Mr. Title stated in argument that he did not owe any sort of obligation to give Mr. Ruso notice of his client’s instructions; that may be so strictly speaking, but I believe that Defendant’s counsel was entitled to rely upon opposing counsel extending the courtesy of a response to either the September telephone conversation or the October 27, 2011 correspondence indicating that the Plaintiff was requiring the Defendant to adhere strictly to the Rules and the provisions of the Construction Lien Act. The absence of such a response is, in my view, a reasonable excuse for Defendant’s counsel not acting immediately.

[39] Considering that there have been cases where the delay has been up to three years, I do not find the Defendant’s delay in bringing this motion unreasonable. I find that Maystar’s solicitor acted in a sufficiently prompt manner in this case. Moreover, I also find that if the delay can be seen as unreasonable, Mr. Ruso’s reliance upon the courtesy of counsel not to take steps against his client without some sort of notice is a reasonable excuse for that delay.

[40] Mr. Title argues that there is prejudice to his client in setting aside the judgment as this is a construction lien claim for a relatively small amount. That may be so, and it is understood that lien claims should be completed in a summary manner; however, the Plaintiff could have chosen to bring this action in debt against Maystar under the simplified rules and did not. Once it chose to exercise its remedies under the Construction Lien Act, the Plaintiff must live with the consequences of that, which is dealing with the complexities of a construction lien matter for a relatively small outstanding amount. It is to be noted that the costs of bringing in Maystar as a defending party do not significantly increase the costs when the Defendant School Board is also vigorously defending the matter.

(ii) Is there a satisfactory excuse for the default in this matter?

[41] In this matter, the Plaintiff served the Defendant by registered mail at an office which its process server knew the Defendant was not occupying. Even though Maystar had a duty to change its registered office with the Ministry of Consumer and Corporate Relations so that service of documents could properly take place, the Plaintiff was almost willfully blind in serving Maystar at the registered office set out in the corporate profile search.

[42] I say this for several reasons. Firstly, the Plaintiff’s process server knew that Maystar was not at the Meadowpine Road address; that is clear from the affidavit of service. That process server is an agent of both the Plaintiff and Plaintiff’s counsel, and they are therefore deemed to have notice of the fact that Maystar was not occupying those offices. The Plaintiff would have to know that it was unlikely that anyone at that office would have brought the matter to the attention of Maystar.

[43] Secondly, the Plaintiff was also well aware of the Defendant’s business address which was 71 Buttermill Avenue, Concord, Ontario. That is apparent from the invoice that was passed up to me during argument as well as the published Certificate of Substantial Completion which set out Maystar’s correct address. By the time that Maystar was served with the Defendant School Board’s Statement of Defense, the noting in default may very well have already taken place. Again, one must ask why there was such cooperation with the Defendant School Board in arranging for service of the Statement of Claim, but almost none with respect to Maystar.

[44] There are finally the provisions of Rule 16.07 which provides that proper service under the rules is not necessarily determinative in a review of default proceedings, where it can be shown that process did not come to the attention of the party being served because of the manner through which the document was served.

[45] Accordingly, I find that the Statement of Claim did not come to the attention of Maystar until service of the Defendant School Board’s Statement of Defence. I therefore find that the Defendant Maystar has adequately explained its default in appearance in this matter.

(iii) Has the Defendant Maystar provided sufficient evidence of a defense to the Plaintiff’s claim?

[46] Maystar has filed a solicitor’s affidavit outlining the defenses that it relies upon; there are two:

(a) Firstly, there are a number of deficiencies outlined in the draft Statement of Defense and Counterclaim; these deficiencies are set out in the Project Consultant’s deficiency list which is set out in para. 27 of the affidavit of Vincenzo Ruso;

(b) That affidavit also notes that the construction lien was registered out of time; as noted in the affidavit, the Certificate of Substantial Performance was published on March 31, 2011 and the lien registered on June 21, 2011, well after the 45 days for registration of a lien had expired.

[47] Mr. Title firstly states that the Plaintiff is unable to rely upon a solicitor’s affidavit. As in Valente v. Personal Insurance Company, he notes that “the solicitor is not in a position to attest to the truth of allegations in the pleadings as is reasonably expected of an affiant in a motion to set aside a default judgment.” [para. 24]. He states that to be effective to set aside a default judgment, a solicitor’s affidavit will not do; it has to be from an individual who has personal knowledge of the defense. Otherwise, evidence to “support” a defense has not been filed within the meaning of s. 54(3) of the Construction Lien Act.

[48] These motions are often argued on solicitor’s affidavits, and to do this always involves a risk where the defence relied upon is deposed to by the solicitor, but the facts in the affidavit are based upon information and belief, and should, strictly speaking, be placed before the court by a deponent having personal knowledge of the evidence in question. Although evidence may be used in a motion based upon information and belief (see Rule 39.01(4)), there is some doubt as to whether this type of evidence should be used where one of the specific issues on the motion is the evidence required to be made out by the Defendant to establish a defense on the merits. It is noted that the affidavit of Vincenzo Ruso does not state the source of his information and belief regarding the consultant’s report, or whether he has a belief in that information as required under Rule 39.01(4).

[49] That being said, it has to be noted that the Plaintiff has led no evidence whatsoever regarding the claim itself and the defense put forward by the Defendant’s material. It does not have to do this if the Defendant has not satisfied the onus of providing sufficient evidence of a defense to set aside the default judgment; however, the Plaintiff’s decision not to lead any evidence strikes me as being as unsafe a course of action as that of using a solicitor’s affidavit as done by Maystar.

[50] The Defendant bases its defense partly on a consultant’s report outlining a number of deficiencies. Mr. Title described these deficiencies as “minor” but that is not for me to assess; if these were, in fact, substantial deficiencies in the material supplied by the Plaintiff, there would be a good defense to the Plaintiff’s claim both by way of a defense and by way of set off. The issue of whether these deficiencies were or were not minor is a matter of credibility for determination by the justice at trial.

[51] Although this type of evidence would be better provided by an officer of Maystar, that officer would still be advising of a consultant’s report which outline a number of deficiencies in the material supplied and that officer’s affidavit would assert a defense based upon that report. It is not expected that the consultant himself would have to supply the affidavit or quantify the claim; all that has to be done according to Master Polika in M.J. Dixon is to “show that there is evidence to support a defence.” This has been done by mention of the consultant’s report and the deficiencies, which indicates that there is evidence of the defense. The evidence need not be admissible at a trial; the

Defendant’s material need only prove that there is evidence of the defence and that has been provided in the Vincenzo Ruso affidavit.

[52] Moreover, the other major defense is the failure to comply with the time limits set out in the Construction Lien Act. That is not something that need be deposed to by anyone other than the solicitor reviewing the file who may refer to the published Certificate of Substantial Completion and the registered construction lien.

[53] Mr. Title states, however, that this Defendant cannot rely upon the failure to comply with the Construction Lien Act; this is a action between the Plaintiff and this Defendant which lies in debt and the date of the registration of the construction lien does not affect this claim.

[54] That may be so, but again, the Plaintiff has elected its remedies. This action was brought pursuant to the provisions of the Construction Lien Act. The Plaintiff relies upon the stricter provisions of the Construction Lien Act to avoid the setting aside of this default judgment, stating that the Rules of Civil Procedure are inapplicable to this claim. It cannot both state that the Construction Lien Act applies to the process of this claim, and then also state that this Defendant cannot rely upon the provisions of that Act in respect of the registration of the claim for lien. That would be a completely inconsistent position. Moreover, this Defendant, as general contractor on this project, may have duties to the landowner to deal with and defend construction lien actions brought regarding this project and accordingly may be very interested in the issue of whether the lien was registered on a timely basis.

[55] Accordingly, I find that the Defendant, Maystar, has proven evidence of a defense in this matter sufficient to meet the criteria for the setting aside of the default judgment under both the Rules of Civil Procedure and the Construction Lien Act.

DISPOSITION

[56] I accordingly find that the Defendant, Maystar, is entitled to have the default judgment set aside. There shall be an order to go according to para. 1, 2 and 3 of the Notice of Motion filed by Maystar, provided that the Statement of Defense and Counterclaim shall be served and filed within 20 days of the date of this order.

[57] This Defendant has not requested costs of the motion. The Plaintiff would normally be entitled to its costs thrown away; however, in light of the failure by the Plaintiff to take the extra effort to serve the Defendant at its business address as well as the failure to at least advise the Defendant of the intention to insist upon adherence to the rules and obtain judgment, I am exercising my discretion not to award costs thrown away to the Plaintiff.

[58] Accordingly, there shall be no order as to costs.

MCDERMOT J.

Date: May 28, 2012

[^1]: R.R.O. 1990, Reg. 194

[^2]: R.S.O. 1990, c. C.30