COURT FILE NO.: 06-CV-315887SR

DATE: 20120904

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Demetra Toula Pournaras, Athena Pournaras and Georgia Pournaras (Plaintiffs/Responding Parties) and Qiang Zuo (Defendant/Moving Party) and The Wawanesa Mutual Insurance Company (Defendant)

BEFORE: Justice Beth Allen

COUNSEL:
Timothy Kinnaird , for the Plaintiffs/Responding Parties
Sue Chen , for the Defendant/Moving Party, Qiang Zuo
No one appearing, for the Defendant, The Wawanesa Mutual Insurance Company

HEARD: August 30, 2012

ENDORSEMENT

BACKGROUND

[ 1 ] The Defendant Qiang Zuo (“the Defendant”) brings a motion to set aside default judgment under Rule 19.08 of the Rules of Civil Procedure .

[ 2 ] The facts relevant to this motion are as follows:

[ 3 ] The Defendant and the Plaintiffs were involved in an automobile accident on July 31, 2004. The Plaintiffs’ vehicle proceeded through an intersection on a green light as the Defendant’s vehicle proceeded through the intersection on a red light. His vehicle collided several times with the Plaintiffs’ vehicle. The Plaintiffs sustained injuries. The Defendant was uninsured at the time of the accident. The Defendant was ultimately convicted of running a red light and driving while uninsured.

[ 4 ] The Plaintiffs brought this action against their insurer, The Wawanesa Mutual Insurance Company and against the Defendant personally.

[ 5 ] It is of note in this case that Ministry of Transportation searches and an Equifax search conducted by the Plaintiffs reveal that from 2006 to 2009 the Defendant moved his residence several times. This resulted in the Plaintiffs having to make many attempts to serve him at various addresses. The evidence shows the Defendant was living at the respective residences reflected on the searches at the pertinent times when service was attempted and at the time service was effected subject to an order for substituted service. On no occasion when mail was left at the Defendant’s residence did the mail return to the Plaintiffs’ lawyer. Nor did the Defendant contact the Plaintiffs’ lawyer until he did so through his lawyer after he received the default judgment in 2012.

[ 6 ] On October 22, 2004, the Plaintiffs served notice of their claims against the Defendant at his residential address, leaving a copy of the letter with an adult on the premises. The Defendant alleges he did not receive the letter.

[ 7 ] On September 22, 2006, a process server attempted to serve the statement of claim at the Defendants’ Lee Centre address in Toronto without success. Pursuant to information on the Equifax search, service was attempted on several occasions at the Ellenhall Square address in Toronto to no avail. On January 3, 2007 the process server placed a copy of the statement of claim in the mail box at the Ellenhall Square address and mailed a copy to the Defendant on January 4, 2007. The process server made subsequent attempts at the latter address on January 8, 9 and 12, 2007, again without success.

[ 8 ] The Plaintiffs’ counsel appeared before Master Peterson on January 18, 2007 and obtained an order for substituted service requiring service by prepaid ordinary mail at both the Lee Centre and Ellenhall Square addresses. In compliance with the order, on January 24, 2007, the Plaintiffs served the two addresses. Master Peterson’s order provided service would be deemed effective seven days after service. The Defendant did not respond or acknowledge service.

[ 9 ] The Defendant was noted in default and the Plaintiffs thereafter sought default judgment. An undefended trial was conducted before Whitaker, J. on December 14, 2011. The Plaintiffs gave viva voce evidence and their medical evidence was filed as exhibits. Whitaker, J. held that the Plaintiffs’ injuries were caused by the Defendant’s negligence. He further held that the Plaintiffs’ injuries met the threshold under the Insurance Act in that they had sustained permanent, serious impairments of important physical and psychological functions and their impairments significantly constrained their activities of daily living.

[ 10 ] Judgment was entered for damages for all three Plaintiffs totalling $220,000 for general damages and loss of housekeeping and costs were fixed at $9,600.

[ 11 ] A further search disclosed that the Defendant was residing at a condominium owned by him on Pond Drive in Thornhill. The Defendant was served with the default judgment under cover of a letter dated April 16, 2012. The Defendant asserts the first notice he had of the Plaintiffs’ claims was when he received the judgment in May 2012.

[ 12 ] On August 7, 2012 the Defendant brought this motion.

THE PARTIES’ POSITIONS AND COURT’S ANALYSIS

[ 13 ] On a motion to set aside default judgment the court must determine: (a) whether or not the service of the statement of claim was regular and proper; (b) whether or not the statement of claim came to the attention of the defendant; and (c) whether or not the defendant has met the three-part test governing the judge’s discretion on a motion to set aside summary judgment.

[ 14 ] The Defendant asserts he did not receive the statement of claim or have notice of the Plaintiffs’ claims until he received the default judgment in May 2012. The Defendant did not comment in his affidavit on a critical area of evidence, the order for substituted service. He merely made sweeping statements that he did not receive the Plaintiffs’ statement of claim.

[ 15 ] The fact of substituted service is important to the determination on this motion. If all steps required to effect service are taken, substituted service is deemed to be regular and proper service on a party [ Balla v. Fitch Research Corp . 2004 CarswellBC 2582, at paras. 5 and 6, (B.C.S.C) and Ruby & Edwardh v. Jaffe (1986), 1986 2790 (ON SC) , 56 O.R. (2d) 177 (Ont. H.C.J.)]. The focus is on compliance with the order, not on whether service was actually effected.

[ 16 ] I find the service on the Defendant was regular and proper. The Plaintiffs complied with the Master’s order by serving the statement of claim by pre-paid ordinary mail within in the required time-line at both the Lee Centre and Ellenhall Square addresses.

[ 17 ] Once a plaintiff has established compliance with an order for substituted service the onus shifts to the defendant to show an error or irregularity in the service [ Grinnell Supply Sales Co. v. Heger Contracting 2001 CarswellBC 1744, para. 12, (B.C.S.C) and H-Net com Inc. v Jackson 2003 CarwellOnt 5621, para. 13, (Ont. S.C.J.)]. It is incumbent on the party seeking to set aside judgment to establish that the statement of claim did not come to his attention following service under an order for substituted service. The Defendant’s affidavit contained no evidence that satisfactorily shows an irregularity or error in the service. This is fatal to the Defendant’s contention that he did not receive service [ Matthes v. Manufacturers Life Insurance Co . 2008 CarswellBC 7, para. 17, (B.C.S.C.) ]. The Defendant did not address the issue of substituted service in his materials in spite of the critical effect of the deeming rule.

[ 18 ] The Defendant does not for instance allege that at the relevant times he was having general problems with mail delivery. He simply alleges he did not receive mail from the Plaintiffs’ counsel, citing his many residence changes as an explanation. Even on the latter point, the Defendant did not deny, and in fact the evidence shows, that he was residing at the pertinent times at the addresses when mail from the Plaintiffs’ counsel was delivered and attempted to be delivered.

[ 19 ] The Defendant asserts the process servers did not attend early enough in the day to effect service because he would leave home very early in the morning. However service was attempted on some 15 occasions from as early as 9:15 a.m. to as late as 10:20 p.m., even on a Saturday on one occasion. I find in these circumstances for the Defendant to contend he did not receive mail from the Plaintiffs’ lawyer is questionable at best and at worst suggests he deliberately avoided service.

[ 20 ] In considering the latter point one cannot ignore the context. This is not a situation like some where until a prospective defendant is served he is unaware of a wrong he is alleged to have committed. The Defendant in this case knew he had committed a wrong. He caused an accident and was subsequently convicted. Surely, he could not have reasonably thought the three victims of his accident would not seek redress for their loss. It is reasonable to conclude the Defendant expected to hear from the Plaintiffs and given the numerous attempts at service he intentionally made himself unavailable for service.

[ 21 ] I find the Defendant did not succeed in rebutting the presumption of proper substituted service and therefore service is deemed to have been regular and proper on January 31, 2007.

[ 22 ] Pursuant to Rule 19.08, the defendant must meet the following three-part test:

(a) whether the motion was brought without delay after the defendant learned of the default;

(b) whether the circumstances giving rise to the default judgment were adequately explained; and

(c) whether the defendant has an arguable defence on the merits.

[ 23 ] Consideration of any delay in bringing the motion comes into play if it is established that a defendant did not receive service of a statement of claim. The Defendant in this case was reasonably prompt in bringing the motion to set aside judgment. However, since he is deemed to have been served with the statement of claim, the delay test would not be applicable. That is, the promptness with which a defendant brings the motion after learning of the default would not be a factor to consider if service of the claim was effected especially in circumstances where service occurred many years earlier.

[ 24 ] The Defendant is deemed to have been served with the statement of claim over five years before the default judgment was delivered so giving him credit for promptness in bringing the motion in this situation would not be reasonable. Allowing this would defeat the rules designed to bring about expeditious proceedings and work an injustice on plaintiffs who as in this case have waited over eight years to have their claims heard. This would encourage defendants to thwart the rules by deliberately avoiding service with the prospect of possibly having a chance to raise a defence many years later.

[ 25 ] I find however that even were the Defendant able to satisfy the court that he was not served due to some irregularity or deficiency in the substituted service, he could not succeed on the other two tests.

[ 26 ] On the second test, the Defendant is required to provide affidavit evidence that satisfactorily explains to the court the reasons for the default. There must be a “plausible” explanation for his failure to take steps to defend himself upon becoming aware of the existence of the statement of claim [ Lenskis v. Roncaioli et al 1992 CarswellOnt 345, para. 11, (Ont. S.C.J.) ; appeal dismissed 1996 45 C.P.C (3d) 57 (Ont. C.A.) ; and Lapointe v. Gaz Speciaux M.E.G.S. Inc. 2008 CarswellOnt 6959, at para. 51, (Ont. S.C.J.) ].

[ 27 ] The Defendant did not give a “plausible” explanation for his failure to take steps to raise a defence. The Defendant’s flat denial of receiving service of the statement of claim is not sufficient to explain the default.

[ 28 ] On the third test, a defendant is required to satisfy the court he has a good and valid defence. He cannot merely assert there is a possible defence. He must produce an affidavit containing facts that establish he has a defence on the merits. For the purposes of the defence he must provide the source of the information and the details of the defence must be set out such as to allow the court to assess the merits. [ Mantia v. Honour Oak Investments Ltd. 1985 Carswell 407, paras. 10-13, (Ont. H.C.J)]. A defendant need not establish the defence will inevitably succeed. He must however show his defence has “an air of reality and that there is a genuine issue requiring a trial.” [ Watkins v. Sosnowski 2012 CarswellOnt 8083, para. 24 . (Ont. S.C.J.)]

[ 29 ] The Defendant did not address the issue of liability in his affidavit. He did not set out the facts of the accident. The police report of the accident shows there was a passenger in his vehicle at the time of the accident. He did not obtain affidavit evidence from that or any other person with information that could assist him with a defence. The Defendant clearly did not present a defence on the merits to negligence.

[ 30 ] The Defendant also relied on an affidavit sworn by a lawyer. As I understand it, the affiant lawyer was not with the Defendant’s lawyer’s firm. The affiant lawyer’s evidence on the service issue and the assessment of damages issues was gathered from a review of the file and consultation with the Defendant’s lawyer. The affiant lawyer in summary offers an opinion on the service issue and on the merits of a defence to damages.

[ 31 ] It appears the affiant lawyer did not at any time have personal carriage of the matter or perform any services on the file. His information is mainly based in second-hand hearsay evidence from the Plaintiffs’ lawyer who obtained the information from the Defendant.

[ 32 ] The affiant lawyer provides an opinion on the merits of a defence and yet there is very little information in the affidavit about this lawyer aside from the fact he has experience in personal injury litigation. Generally, it is not appropriate for opinion evidence to be given in an affidavit, unless the expertise of the affiant is established [ Chamberlain v. Surrey School District 36 , 1998 6723 (BC SC) , 1998 BCJ 2923 (B.C.S.C.) ].

[ 33 ] Attached to the lawyer’s affidavit is the Defendant’s proposed statement of defence. Neither does this establish evidence of a defence on the merits. Courts have held pleadings are insufficient as evidence of a defence on the merits [ Smith v. Old Chicopee Motors Inc. 1996 CarrswellOnt 1304, para. 9 (O.C.J.-Gen. Div.)].

[ 34 ] I therefore do not find the lawyer’s affidavit useful in establishing a valid defence on the merits to damages.

[ 35 ] Whitaker, J. heard the viva voce evidence of the plaintiffs, reviewed their medical evidence and arrived at a determination on liability and damages at the end of a half-day undefended trial. I find as others have that a court should be reluctant to intervene on the basis of a judgment on quantum where there is a general damage award that involves an important element of discretion and judgment in determining the appropriate amount of the award [ Luciano v. Spadafora 1994 CarswellOnt 4307, at para. 16, (Ont. S.C.J.) ]. I find this was the case in the trial before Whitaker, J. He exercised his discretion and arrived at a judgment on liability and quantum of damages with which I am not prepared to interfere.

DISPOSITION

[ 36 ] I therefore decline to set aside the default judgment and dismiss the motion.

COSTS

[ 37 ] The parties submitted costs outlines. The Plaintiffs seek total costs of $13,431.38 inclusive of disbursements and H.S.T. The Defendant seeks $2,637.18 inclusive of disbursements and H.S.T. The Plaintiffs were successful and are entitled to costs. Considering the factors set out in Rule 59.01 of the Rules, this motion did not raise complex or novel issues since the law on setting aside default judgments is well settled. The motion was not unduly prolonged by either party’s conduct and was completed within a reasonable time. I find the Plaintiffs’ counsel’s bill to be somewhat excessive. While the rates billed by the Plaintiffs’ lawyers for legal services were not in themselves unduly high, I find the involvement of three counsel to have been unnecessary.

[ 38 ] I therefore fix costs at $7,500 inclusive of disbursements and H.S.T. which takes into account the cost of attendance on the motion.

ORDER

[ 39 ] Order accordingly.

Allen J.

Date: September 4, 2012