ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO: CV-11-425053
DATE: 20120920

B E T W E E N:

Bodkin Capital Corporation Plaintiff - and - Plen Organics Inc., Nancy Ciancibello and Angelo Ciancibello Defendants

H. Keith Juriansz , for the Plaintiff
Nancy Ciancibello,, Defendant, Acting in Person

HEARD : August 8, 2012

GOLDSTEIN J.:

[ 1 ] The defendant Nancy Ciancibello (“Ms. Ciancibello”) is in the organic food business. She operates her current business, Manotas Organics and Fine Foods, out of the St. Lawrence Market. She and her former husband previously operated another organic food business, Plen Organics Inc. (“Plen”). The Plaintiff, Bodkin Capital Corporation (“Bodkin”) leased some commercial food equipment to Plen in December, 2008. The Lease Agreement names Plen as the lessee, and Ms. Ciancibello and her former husband as co-lessees.

[ 2 ] In 2010, the lease went into default when the payments were not made. Bodkin seized the equipment and sold it for $10,000.00. Bodkin claims that approximately $44,000.00 is still owed on the lease.

[ 3 ] In April, 2011, Bodkin issued a statement of claim against Ms. Ciancibello, her former husband, and Plen. The former husband has been noted in default. Plen no longer exists. Bodkin claims that on June 16, 2011, Ms. Ciancibello was served with the statement of claim at her place of business. Ms. Ciancibello did not file a Notice of Intent to Defend or a Statement of Defence and was noted in default. Default judgment was obtained in August 2011. On November 15, 2011, Ms. Ciancibello was served with a Notice of Examination in Aid of Execution. She says that this is when she first became aware of Statement of Claim. As a result, Ms. Ciancibello now seeks to set aside the default judgment.

[ 4 ] The test for setting aside a default judgment was set out by the Ontario Court of Appeal in HSBC Securities Canada Inc. v. Firestar Capital Management Corp. , [2008] O.J. No. 5345 (C.A.) , 2008 ONCA 894 as follows:

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

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

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

[ 5 ] A judge is not to rigidly apply the test as if each element of the test is a precondition that must be satisfied: Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd. et al. (2007), 2007 ONCA 333 , 87 O.R. (3d) 479 (C.A.) .

[ 6 ] I find the comments of D. Brown J. in Marino v. Marino Estate , 2010 ONSC 5237 , [2010] O.J. No. 4024 , 100 C.P.C. (6 th ) 232 (S.C.J.) helpful in applying the test:

37 Stepping back from the particular factors, the overarching task of the court on a motion to set aside is to consider the potential prejudice to the moving party if the motion were dismissed, the potential prejudice to the respondent if the motion were allowed, and the effect of any order on the overall integrity of the administration of justice.

[ 7 ] Was the motion to set aside the default judgment commenced as soon as possible after the applicant became aware of the judgment? Ms. Ciancibello stated in her affidavit that she became aware of the default judgment when she was served with the Notice of Examination In Aid of Execution. She states that she moved quickly to seek assistance from Law Help Ontario, and prepared the motion. I have reviewed the Case History Report in the file, which indicates that a motion was brought on December 29, 2011 to set aside the default judgment. The motion was adjourned on consent to January 11, 2012, and further adjourned on consent on March 8, 2012. Bodkin filed a responding motion record on March 13, 2012. The Case History Report is a matter of public record. I find that the delay from November 16, 2011, to the bringing of the motion on December 29, 2011, is not unreasonable under the circumstances and that Ms. Ciancibello meets the first part of the test.

[ 8 ] Is there a plausible explanation for the default? In her affidavit, Ms. Ciancibello denies that she was served with the Statement of Claim. Before me, in argument, she stated that she works at her food stall at St. Lawrence Market from early in the morning until at least until 6 pm, later on Fridays. When she needs to be away from her stall, she explained, another vendor will watch her stall. None of this information was provided in her affidavit. Even if that information was provided in a sworn form, I do not think it assists her.

[ 9 ] Bodkin relies on an affidavit of service of Jeremiah McCarthy, a process server. Mr. McCarthy states in his affidavit that he personally served Ms. Ciancibello with the Statement of Claim at 92 Front Street East, Toronto. He further indicates that “I was able to identify the person served by means of verbal admission.”

[ 10 ] In her supplementary material, Ms. Ciancibello provides her business licence, which states that her business address is 91 Front Street East. Ms. Ciancibello argues that since Mr. McCarthy had an address of 92 Front Street East in his affidavit it proves that he did not serve her. With respect, I do not agree. Ms. Ciancibello admits that she was served with the Notice of Examination in Aid of Execution in November 2011. That affidavit also states that Ms. Ciancibello was served at:

Manotas Fine Foods
St. Lawrence Market
92 Front Street East

[ 11 ] The affidavit further states: “I was able to identify the person served by means of verbal admission.”

[ 12 ] It is clear from both affidavits, as well as from Ms. Ciancibello’s own evidence, that the process servers were in the right place, regardless of whether St. Lawrence Market is found at 91 or 92 Front Street East.

[ 13 ] I accept the comment of Master Peppiatt in Allfur Trading Company v. Polizos (1991), 7 C.P.C. (3d) 39 , 1991 CarswellOnt 471 (Ont.Master) that there is an onus on a defendant to rebut the evidence of service. A bare denial, with no further evidence, will not suffice. Even if I were to accept Ms. Ciancibello’s unsworn comments to me, thos e comments would still not provide a sufficient explanation. I do not accept that there is a plausible explanation for the default.

[ 14 ] Are there facts to support at least on arguable case on the merits? Ms. Ciancibello’s argument, boiled down to its essentials, is that Bodkin was under a duty to explain that she was a co-lessee on the lease, and should have required her to obtain independent legal advice. Ms. Ciancibello signed the lease on behalf of Plen as lessee, and on her own behalf as co-lessee. The terms make it clear that as co-lessee she was responsible for all the terms of the lease.

[ 15 ] In the absence of any undue influence, fraud, or misrepresentation, or any evidence of non est factum , a bank is not required to ensure that a guarantor has received independent legal advice: Bank of Montreal v. Featherstone (1989), 68 O.R. (2d) 541 (C.A.) . Where the guarantor of a loan is also an officer and director of a corporation and has received the benefit of the loan, there is no requirement to obtain independent legal advice: Bank of Nova Scotia v. 2156909 Ontario Inc., 2012 ONSC 2536 , [2012], O.J. No. 1883 (S.C.J.) . A bank owes no duty of care to a guarantor on a loan absent any evidence a special relationship or exceptional circumstances. The relationship between a lender and a borrower is purely a commercial one and unless there are special factors no fiduciary duty arises: Bank of Nova Scotia v. 2156909 Ontario Inc., supra.

[ 16 ] Although this case concerns an equipment lease, there can be no doubt that the relationship between Ms. Ciancibello and Bodkin was functionally one of lender and borrower. Bodkin was essentially financing equipment chosen by Ms. Ciancibello. She was the guarantor of Plen’s obligations. The terms of the lease make it clear that Bodkin had no duty other than to finance. Ms. Ciancibello does not argue that there was any undue influence, fraud, or misrepresentation. Ms. Ciancibello and Bodkin operated at arm’s length in a commercial relationship. Accordingly, her argument that she should have been advised to obtain independent legal advice is not arguable on the merits.

[ 17 ] I am very sensitive to the fact that Ms. Ciancibello is unrepresented and operates a small business as a sole practitioner where she works long hours. I accept that I should not apply the test rigidly. I understand that by dismissing her motion it is the ultimate prejudice – she has no opportunity to defend the action. Regrettably, I do not believe that her defence has a reasonable chance to succeed. It is not in the interests of justice to have cases proceed that are without merit no matter how sympathetic the defendant. The motion must be dismissed. Under the circumstances, I exercise my discretion and make no order as to costs.

GOLDSTEIN, J.

DATE: September 20, 2012

COURT FILE NO: CV-11-425053
DATE: 20120920

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N:

Bodkin Capital Corporation Plaintiff - and - Plen Organics Inc., Nancy Ciancibello and Angelo Ciancibello Defendants

JUDGMENT GOLDSTEIN J.

Released: September 20, 2012