SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: 413554 Ontario Limited c.o.b. as Chouinard Bors. Roofing, Weston Hardwood Design Centre Inc., National Fireplaces and Facings Inc., National Air Systems Inc., Pave Plumbing & Heating Inc., Basecrete Inc., Internazionale Electrical Contractors Ltd., Miranda Painting Inc., North York Tile Contractors Limited, Brudel Grading & Sodding Ltd., and E.N.J. Excavating Limited, Plaintiffs

AND:

Eldin Building Corporation, 2062601 Ontario Limited, Dino Sciavilla, Elio Valente and Town of Markham, Defendants

BEFORE: D. M. Brown J.

COUNSEL:
B. Morris, for the Plaintiffs

P. Martin, for the Defendants (except Town of Markham)

HEARD: June 25, 2013

REASONS FOR DECISION

I. Motion to set aside default judgments

[1] The defendants (except the Town of Markham) move to set aside (i) a default judgment dated January 7, 2013 against Eldin Building Corporation, 2062601 Ontario Limited and Elio Valente (the “January 7 Judgment”), and (ii) a default judgment dated January 8, 2013 against Dino Sciavilla (the “January 8 Judgment”).

II. Relief consented to

[2] In paragraph 3 of their Factum the plaintiffs consented to setting aside the entirety of the January 8, 2013 Judgment against Dino Sciavilla. Order to go setting aside the January 8 Judgment.

[3] In paragraph 3 of their Factum the plaintiffs consented to setting aside the January 7, 2013 Judgment as against Elio Valente. Order to go to setting aside paragraphs 1 through to 10 of the January 7 Judgment as against Elio Valente.

[4] In paragraph 4 of their Factum the plaintiffs consented to setting aside those portions of the January 7 Judgment in favour of the plaintiff, Brudel Grading and Sodding Ltd. Accordingly, order to go setting aside paragraph 8 of the January 7 Judgment.

[5] In paragraph 5 of their Factum the plaintiffs consented to setting aside those portions of the January 7 Judgment in favour of the plaintiff, Basecrete Inc. Order to go setting aside paragraph 6 of the January 7 Judgment.

[6] In paragraph 5 of their Factum the plaintiffs consented to setting aside those portions of the January 7 Judgment in favour of the plaintiff, Pave Plumbing and Heating Inc. Order to go setting aside paragraph 5 of the January 7 Judgment.

III. Contested issues

[7] Left for determination are the requests by the defendants to set aside what remains of paragraphs 1 through to 4, 7, 9 and 10 of the January 7 Judgment. The three factors generally taken into account on such a motion are well-known. To them must be added the need to determine whether the interests of justice favour an order setting aside the default judgment – i.e. assessing the respective prejudices to the parties of granting or not granting the order and the effect of any order “on the overall integrity of the administration of justice”: Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd. (2007), 2007 ONCA 333, 87 O.R. (3d) 479 (C.A.), para. 2.

[8] The plaintiffs acknowledged that the defendants had brought this motion as soon as possible after they became aware of the judgments and that the defendants have filed evidence setting out a plausible explanation for the default. Those concessions were proper; the evidence supported making such findings.

[9] Those plaintiffs submitted that the corporate defendants, Eldin Building Corporation and 2062601 Ontario Limited, have not demonstrated, on the evidence, that a valid defence on the merits exists.

[10] The defendants filed a proposed Statement of Defence and Counterclaim. Unusually, the defendants’ affiant, David Chong, did not depose to the truth of the material facts pleaded in that draft pleading. Consequently, the pleaded facts stand as mere assertion.

[11] Mr. Chong, who filed the only affidavit on behalf of the defendants, is not a principal or employee of the corporate defendants; he is their corporate lawyer. No principal or employee of the corporate defendants filed an affidavit on this motion.

[12] The main contemplated defence is that serious deficiencies existed with respect to the work performed by the plaintiffs, especially the concrete and tile work. No particulars were given in the draft pleading of the alleged deficiencies. As to the dollar amount of those deficiencies, the defendants plead set-off of the costs of repairing them, but pleaded that the “cost of repairing these deficiencies is not yet known”. Mr. Chong offered no details of this part of the claim in paragraph 13 of his affidavit, nor any explanation about why the defendants’ set-off claim could not be quantified at this point of time, some six months after the commencement of the action. His evidence on cross-examination to the effect that calculations of the amount of the deficiencies was on-going was vague.

[13] It was apparent from the transcript of the cross-examination of Mr. Chong that he possessed no personal knowledge about the alleged deficiencies and had relied solely on general information provided to him by the principals of the corporate defendants. Read as a whole, the transcript revealed little about the defendants’ defence, set-off or counterclaims because their affiant knew almost nothing about the issues in dispute. I conclude that the corporate defendants put forth an affiant who knew almost nothing to evade having to provide concrete particulars of their defence. As a result, the cross-examination in large part was a waste of time.

[14] The 215 pages of documents filed by the defendants in response to the undertakings given on that cross-examination were not organized in any coherent fashion. They consisted simply of a document dump of Tarion Statutory Warranty Forms without any link provided to the elements of the proposed defence.

[15] The defendants intend to plead that E.N.J. Excavating overbilled by $80,000 by charging for extras. No particulars were offered in the pleading or affidavit. The answer given to an undertaking reduced the overbill claim to a mere $3,125.27. The defendants propose to plead that National Air Systems Inc. and National Fireplaces and Facings Inc. also overcharged. Again, no particulars were offered in the pleading or affidavit. The plaintiffs’ claims in respect of those three companies total approximately $294,000.

[16] The defendants also intend to plead that the claim asserted by E.N.J. Excavating was premature in that the claim was issued before the due date of the invoices. I asked defence counsel if the invoices ultimately were paid. He informed me that they had not because this litigation had started. Accordingly, paragraph 12 of the proposed Statement of Defence discloses no viable defence.

[17] When considering the main intended defences of set-off by reason of deficient plaintiffs’ work and over-billing, the evidence filed by the corporate defendants on this motion was thin, to put the matter charitably. It certainly did not rise to the level of demonstrating a genuine issue for trial. By putting forth their uninformed-as-to-the-facts corporate lawyer as their only affiant, the defendants certainly did not put their best feet forward. Such a feeble effort at attempting to demonstrate the existence of a defence on the merits normally would incline me to dismiss the motion to set aside.

[18] Two countervailing factors exist. First, the Statement of Claim was served just before the Christmas/New Year’s vacation, a time when many people are away. Defendants’ litigation counsel was provided with inaccurate information about the date of service, yet attempted to deal with the action immediately following his return from vacation. By that time default judgments had been granted. While the plaintiffs enforced their strict rights under the Rules of Civil Procedure, common sense dictates giving some notice to the opposite party before noting them in default. As mentioned above, the plaintiffs are consenting to setting aside the default judgments in respect of the two personal defendants and in respect of claims by three of the plaintiffs. Hardly a consistent approach by them as to the adequacy of the defences raised by these motion materials.

[19] In addition, the defendants adduced evidence that the plaintiff, Internazionale Electrical Contractors Ltd., had not authorized plaintiffs’ counsel to include it in the lawsuit. That evidence was uncontradicted.

[20] Under those circumstances, I conclude that after considering the respective prejudices to each side, an order should go setting aside paragraphs 1 through to 4, 7, 9 and 10 of the January 7 Judgment, but on condition that the corporate defendants pay into court some security for the plaintiffs’ claims. The claims of the six plaintiffs who opposed setting aside the January 7 Judgment totaled approximately $900,000. I think a fair amount for the corporate defendants to pay into court would be one-third of the amount claimed, or $300,000.

[21] In addition, any Statement of Defence and Counterclaim filed by the defendants must provide full particulars of all defences and any counterclaim.

IV. Conclusion and orders

[22] By way of summary, I make the following orders:

(i) the January 8 Judgment is set aside;

(ii) paragraphs 1 through to 10 of the January 7 Judgment as against Elio Valente are set aside;

(iii) paragraphs 5, 6 and 8 of the January 7 Judgment are set aside;

(iv) paragraphs 1 through to 4, 7, 9 and 10 of the January 7 Judgment are set aside upon payment by the corporate defendants into Court to the credit of this action of the sum of $300,000;

(v) any Statement of Defence and Counterclaim filed by the defendants must provide full particulars of all defences and any counterclaim; and,

(vi) within 10 days of the date of this order plaintiffs’ counsel must deliver a Rule 15.02(1) response to defendants’ counsel regarding his authority to commence this action on behalf of Internazionale Electrical Contractors Ltd.

[23] I would encourage the parties to try to settle the costs of this motion. If they cannot, the plaintiffs may serve and file with my office written cost submissions, together with a Bill of Costs, by July 5, 2013. The defendants may serve and file with my office responding written cost submissions by July 12, 2013. The costs submissions shall not exceed three pages in length, excluding the Bill of Costs.

[24] As I mentioned to counsel at the hearing, I do not understand how this action came to be started on the Commercial List. It is a straight-forward debt collection action, coupled with a Construction Lien Act breach of trust claim. Although the prayer for relief included a request for the appointment of a receiver over the books, records and assets of the corporate defendants, no material facts were pleaded in support of that claim. This action does not qualify for the Commercial List. Accordingly, I order that this action be transferred to the Toronto Region Civil List.

D. M. Brown J.

Date: June 25, 2013