SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 12-53484
DATE: 2013-04-17
RE: Dundas Power Line Ltd., Plaintiff
AND
Cory Brown, Defendant
BEFORE: Mr. Justice Michael Z. Charbonneau
COUNSEL:
Martin Diegel, Counsel, for the Plaintiff
K. Parameswaran, Counsel, for the Defendant
HEARD: April 16, 2013
ENDORSEMENT
Nature of Motion
[1] The Defendant Cory Brown brings a motion to set aside the default judgment obtained against him in this action on November 16, 2012. The motion is being brought pursuant to Rule 19.08(2).
The Law
[2] The test on such a motion is set out by the Court of Appeal in Morgan v. Toronto Police Services Board [2033] O.J. No. 1106 at paragraphs 19 and 26:
- (…) The Karas case refers to the factors the court should consider in exercising its discretion to set aside a default judgment:
(a) the motion must be brought without undue delay;
(b) the circumstances which led to the default must be explained; and
(c) the Defendant must present a triable defence on the merits.
[26] This court has previously held that the factors considered by a judge in setting aside a default judgment are not to be treated as if they were rigid rules. (…) The underlying premise of rule 19.08(2) is that a judge in exercising the court’s discretion will see that justice is done in the particular circumstances of the case before the court.
The Facts
[3] The parties entered into an employment contract in September 2009. The Defendant terminated the contract without giving the Plaintiff the notice required by the terms of the contract.
[4] On November 4, 2011 counsel for the Plaintiff wrote to the Defendant and told him the Plaintiff had suffered damages as a result of the Defendant’s breach of contract and demanded payment of $16,750.00.
[5] On January 30th, 2012 the Plaintiff initiated a Small Claims Court action claiming $10,377.65 for breach of the contract. On that same date the Plaintiff sued the Defendant on the same contract claiming $100,000 in damages for loss of profits and other heads of damages together with a claim for declaratory and injunctive relief. Both claims were served on the Defendant by the same process server on February 27, 2012.
[6] The Defendant did not defend either action. He swears in his affidavit that he did not receive the Superior Court claim and was only aware of the Small Claims Court action which he decided not to defend.
[7] On September 4, 2012, the Plaintiff obtained a default judgment against the Defendant in the amount of $11,449 and $1,200 for costs.
[8] On October 24, 2012 he was served with a notice of garnishment in the Small Claims Court action. He paid the full amount owed under that judgment.
[9] In February 2013 he noticed a deduction in the amount of $314.00 on his pay cheque. He made inquiries and found this was as a result of a notice of garnishment issued pursuant to a Superior Court Judgment obtained by default in this action. He consulted counsel and brought this motion to set aside the default judgment granted after trial before Annis J. on November 16, 2012 in the amount of $79,694.94 plus costs of $4,209.07.
Analysis
[10] There is no issue about the timeliness of the motion. The issues are whether the Defendant has provided an explanation for his failure to defend the claim and whether he has demonstrated that he has a viable defence.
[11] I find that the Defendant was not aware of the Superior Court claim when he was served on February 27, 2012. I accept that he was served with a bunch of court documents which included both claims. Given the express terms of the contract and the demand letter of Mr. Diegel, I find his confusion about there being two separate actions in two different counts was not unreasonable in all the circumstances.
[12] I therefore find that the Defendant has provided a reasonable explanation for his failure not to act when he was served.
[13] Turning to the third factor, counsel for the Defendant has raised a number of defences which are based on the existence at this time of the Small Claims Court judgment, namely res judicata, issue estoppel and abuse of process. Those defences were not available on February 27, 2012 when the claims were served. It would be unjust to prevent the Plaintiff from pursuing further valid relief he might have had pursuant to the terms of the contract on the basis of any of these defences. After all it was the Defendant’s failure to properly read all the documents he received which in large part created the present imbroglio. This will be, however, for another judge to finally decide if those defences are ultimately raised in the statement of defence.
[14] However, I find the Defendant has a potential defence to the reliefs or at least part of the relief claimed and which were ultimately allowed by the default judgment. It is far from certain that the contract provides for the recovery of damages for loss of profits over and above the specific damages clearly spelled out in the contract. That is certainly a triable issue.
[15] I find that this is a case where the default judgment must be set aside and the Defendant allowed to defend in order for justice to be done.
[16] In order to alleviate the prejudice suffered by the Plaintiff, the Defendant will have to reimburse the Plaintiff the costs of $4,209.07 thrown away to obtain the default judgment. It would be unfair to have the Plaintiff absorb those costs when they were the results of the Defendant’s negligence in not properly reviewing all the court documents at the opportune time.
[17] There will be no costs of this motion.
[18] Therefore I order:
the noting of pleadings closed and the default judgment of November 16, 2012 are hereby set aside;
the Defendant must deliver his statement of defence within 20 days;
the Defendant is ordered to pay to the Plaintiff costs thrown away in the amount of $4,209.07 within 90 days;
there will no costs of this motion.
Michel Z. Charbonneau, Judge
Date: April 17, 2013
COURT FILE NO.: 12-53484
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Dundas Power Line Ltd., Plaintiff
AND
Cory Brown, Defendant
BEFORE: Mr. Justice Michael Z. Charbonneau
COUNSEL: Martin Diegel, Counsel, for the Plaintiff
K. Parameswaran, Counsel, for the Defendant
ENDORSEMENT
Michel Z. Charbonneau, Judge
Released: April 17, 2013