SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 1502/12
DATE: 2012-12-19

RE: ROYAL BANK OF CANADA, Plaintiff

AND:
US DISTRIBUTION SERVICES INC. and LINDA EARLE-BARRON, Defendants

BEFORE: Hourigan J.

COUNSEL:
Carrie Kennedy, Counsel for the Plaintiff

Simon Schneiderman, Counsel for the Linda Earle-Barron

HEARD: December 19, 2012

ENDORSEMENT

[ 1 ] This is a motion to set aside a default judgment brought by the defendant, Linda Earle-Barron.

[ 2 ] In considering such a motion pursuant to Rule 19.08, I must consider:

(i) whether the motion was brought as soon as possible after Ms. Earle-Barron became aware of the judgment;

(ii) whether Ms. Earle-Barron has set out the circumstances under which default arose and provided a plausible explanation for the delay; and

(iii) whether the defendant has set forth facts to support the conclusion that there is at least an arguable case on the merits.

(see Portus Alternative Asset Management Inc. v. Boaz Manor (2009) CarswellOnt 4049 (S.C.J.) These considerations are conjunctive.

[ 3 ] Our Court of Appeal has recognized that in addition to these factors, a motions judge must ultimately determine whether the interests of justice favour the granting of the order (see Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd ., (2007) 2007 ONCA 333 , 87 O.R. (3d) 479 (C.A.) and HSBC Securities (Canada) Inc. v. Firestar Capital Management Corp. 2008 ONCA 894 , 2008 CarswellOnt 7956 (C.A.)).

[ 4 ] In the case at bar, the plaintiff does not take issue with the first factor.

[ 5 ] With respect to the second factor, Ms. Earle-Barron admits to being served in March of 2012. The only explanation proffered for her failure to respond is that she was “engaged in a lengthy family law proceeding” and was “awaiting a decision that had been reserved”. This does not meet the test of providing a plausible explanation. It is not enough to simply rely upon inattention to one’s financial affairs as an explanation for the default (see HSBC Securities, supra , at paragraph 24).

[ 6 ] Turning to the issue of the defence on the merits, I conclude that Ms. Earle-Barron has not met the onus of establishing facts that support the conclusion that there is at least an arguable case on the merits. The defence as described in argument is somewhat different than the defence outlined in Ms. Earle-Barron’s materials. Three primary arguments are made.

[ 7 ] First, Ms. Earle-Barron says that there were times that interest was not paid on the 26 th of a month and that this constitutes a default under the loan agreement. She argues that demand should have been made at that point and had it been then Ms. Earle-Barron would have the benefit of the expiry of the limitation period. There is no merit to this defence because interest payments were permitted to be charged on the 26 th , 27 th or 28 th of a given month. Moreover, there is no obligation on the bank to make demand on every breach of a loan agreement. To find otherwise would lend to chaos in our banking system whereby demand would have to be on all manner of technical breaches to avoid the running of a limitation period. Not surprisingly, counsel for Ms. Earle-Barron has not provided the court with any authority in support of this argument.

[ 8 ] The second argument is that the bank improperly credited $250 to the line of credit at times when it was not permitted to do so under the loan agreement. I disagree. The activity complained of was contemplated by paragraph 9(a) of the standard charge terms. That section permitted the transfer of funds between the line of credit and the business account. Moreover, even if some technical breach could be established, I fail to see how it would provide a defence. This is especially the case given that paragraph 15 of the standard charge terms provides that the absent manifest error, the statements are conclusive proof of the amounts owing. This is not a case of manifest error. At the highest, Ms. Earle-Barron’s objection is that money was transferred between the accounts when it should not have been. This argument does not raise an arguable defence.

[ 9 ] The third defence advanced was that the judgment is invalid because the costs awarded of $1,732.29 were too high. Counsel for Ms. Earle-Barron argues that these costs were too high because the judgment is for an amount that is within the jurisdiction of the Small Claims Court. He relies upon Rule 57.03(5). Reliance on that rule is misplaced. That rule provides that if a plaintiff “obtains a default judgment which is within the monetary jurisdiction of the Small Claims Court, costs shall be assessed in accordance with that court’s tariff”. The judgment obtained against Ms. Earle-Barron was only $14,537.46. However, the overall judgment was $49,830.63. That amount is well in excess of the Small Claims Court’s maximum jurisdiction of $25,000. Rule 57.05(3) has no application as the default judgment is for a total amount in excess of the Small Claims Court’s jurisdiction.

[ 10 ] I find that Ms. Earle-Barron has not met her onus with respect to factors 2 and 3 of the test enunciated above.

[ 11 ] The final issue for consideration is whether the interests of justice favour granting the order sought. I conclude that they do not. This is a situation where Ms. Earle-Barron simply did not bother to defend the action because she was busy with other matters, specifically waiting for a court decision. She comes to the court now asserting what I consider to be spurious defences. This case has all the hallmarks of a debtor who seeks simply to delay the inevitable. First, by not responding to the bank’s demand and then by waiting some six weeks after receiving the judgment until the first tentative steps were taken to even raise the issue of a potential motion to set aside the judgment. In contrast, the bank has acted responsibly in providing her with sufficient notice in making demand and proceeding with this action when no repayment was made.

[ 12 ] The motion is dismissed. Ms. Earle-Barron shall pay costs of $2,000 to the plaintiff within 30 days. This amount is less than what the bank is entitled to under the standard charge terms.

HOURIGAN J.

Date: December 19, 2012