2014 ONSC 1044
COURT FILE NO.: CV-13-471940
DATE: February 18, 2014
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Canada-Wide Reinforcing Steel Co. (1987) Ltd. v. ABCO One Corporation, City of Toronto and Toronto Transit Commission
BEFORE: Master C. Albert
COUNSEL: A. Assuras, for the defendant ABCO, moving party, Fax: 416-601-1462
C. Riveros, for the plaintiff, responding party, Fax: 416-926-9483
ENDORSEMENT
Canada-Wide Reinforcing Steel Co. (1987) Ltd. (“Canada-Wide”) registered a claim for lien for $304,905.98 on November 16, 2012 and issued an action against ABCO One Corporation (“ABCO”), City of Toronto and TTC on January 15, 2013. The action has been discontinued against City of Toronto and TTC. Canada-Wide noted ABCO in default on May 1, 2013.
Now ABCO moves to set aside the noting in default on grounds that Canada-Wide failed to serve the statement of claim in accordance with the rules of civil procedure and that the statement of claim did not come to ABCO’s attention until after the time for delivering a statement of defence had expired.
The motion is refused for the reasons that follow.
The test for setting aside noting in default
The Construction Lien Act (the “Act”) provides at section 54 that a defendant noted in default may not contest the claim or file a defence without leave of the court given only upon satisfying the court that there is evidence to support a defence. The Act further provides at section 67 that where the Rules of Civil Practice and the Act conflict, the Act prevails.
Under the rules the relevant considerations on a motion to set aside the noting of a defendant in default are:
a) Whether the defendant has a good reason for failing to deliver a defence in time; and
b) Whether the defendant had a continuous intention to defend and acted promptly to set aside the default upon learning of it.
- Under the Act the defaulting defendant must meet the additional test of leading evidence to show that the defaulting defendant has a meritorious defence.
Applying the tests
a) Does ABCO have a good reason for failing to file a defence?
Default will not be set aside if a defendant is aware that a lawsuit has been issued against it, has an opportunity to defend it and fails to explain why it did nothing in the face of that knowledge. A conscious decision by a defendant not to participate in an action is a complete bar to setting aside a default judgment: Edwards Builders Hardware (Toronto) Ltd. v Aventura Properties Inc.[^1]
According to ABCO’s notice of motion its reasons for failing to file a defence are that Canada-Wide failed to serve the statement of claim in strict compliance with the rules of civil procedure and the statement of claim did not come to ABCO’s attention. ABCO’s evidence is given by its general manager Bogden Tkach (affidavit sworn November 10, 2013) and its counsel’s law clerk Yulian Fu (affidavit sworn November 27, 2013).
Mr. Tkach deposes that the statement of claim was not served in accordance with the rules. He provides no evidence of ABCO’s second ground for the motion, namely that the statement of claim did not come to ABCO’s attention. Mr. Tkach deposes that ABCO’s registered business address and his personal home address are both 448 Centre Street East, Richmond Hill. The business address is corroborated by a corporate profile report dated July 30, 2013. He attaches as an exhibit to his affidavit the affidavit of service of the statement of claim which provides that on April 5, 2013 at 4:25 p.m. David Dunkelman served ABCO with the statement of claim by leaving it with “Mila”, “a person who acknowledged herself to be in control or management of the head office address of Abco One Corporation at 448 Centre Street East Richmond Hill, Ontario. I was able to identify the person by means of her verbal identification”.
The same affidavit of service is attached as an exhibit to the affidavit of Canada-Wide’s General Manager Leonardo Triolo with the evidence of Mr. Triolo that Canada-Wide served ABCO at its head office.
In its responding evidence Canada-Wide filed the further affidavit of David Dunkelman, the process server, who attests by affidavit sworn November 19, 2013 that when he attended at the 448 Centre Street East, Richmond Hill on April 5, 2013:
“a female answered the door and I advised her that I have legal documents for Abco One Corporation. She nodded and said “yes” in acknowledgement so I handed her the document and she identified herself as ‘Mila’, the mother of Yuliya Lepetunova. Her English was not very good but she seemed to understand me, accepted the document and then provided me with her name. I was in possession of the Corporate Profile Report and I was aware that this is the head office address for Abco One Corporation, as well I had previously served Abco Once Corporation at this address in the past. I served the document on April 5, 2013 and felt that to the best of my knowledge ‘Mila’ was a person in care, control or management at the head office address of the corporation at the time of service.”
Mr. Tkach attests that there is no one named ‘Mila’ who is in control or management at the head office of ABCO and that Lyndmyla is his elderly Russian mother-in-law who does not speak English and who from time to time visits his home. Mr. Tkach does not attest that Lyndmyla never received the statement of claim from Mr. Dunkelman. If that were the case then he would have deposed directly (or ABCO would have filed an affidavit from Lyndmyla) to the effect that that the person named Mila referred to in the affidavit of Mr. Dunkelman is not Lyndmyla and that she did not receive the statement of claim from him on April 5, 2013. The glaring omission of such evidence by ABCO is significant. I conclude that the ‘Mila’ referred to in Mr. Dunkelman’s affidavit of service and Mr. Tkach’s mother-in-law Lyndmyla are the same person.
Rule 16.02(1) provides that a corporation may be served personally by “leaving a copy of the document with an officer, director or agent of the corporation, or with a person at any place of business of the corporation who appears to be in control or management of the place of business.” Emphasis added
ABCO’s registration with the Ministry of Government Services shows that its registered office address, according to a corporation profile report printed on April 4, 2013 and filed as exhibit D to the affidavit of Mr. Triolo, is 448 Centre Street East, Richmond Hill. It is also Mr. Tkach’s home address. Apparently he conducts business from his home. A person answered the door, understood that legal documents were being delivered to ABCO and accepted the documents. There is no requirement that the process server verify the exact relationship to the business of an adult person who answers the door of a place of business conducted from a home. By ABCO registering Mr. Tkach’s home as ABCO’s place of business, persons attending at that address are entitled to assume that documents given to an adult at that place of business will come to ABCO’s attention, unless told otherwise by the person answering the door. Despite Mr. Tkach’s evidence that his mother-in-law does not speak English, there is no evidence filed from Lyndmyla to that effect and the evidence of Mr. Dunkelman, which I accept as more credible, is to the contrary.
I find that on April 5, 2013 the statement of claim was personally served on ABCO by leaving the documents with Mila, who appeared to be a person in control of the place of business, namely 448 Centre Street East, Richmond Hill.
On November 7, 2012 ABCO registered a construction lien as instrument AT3171048 in the registry office for Toronto. In that registered document ABCO provided as its address for service “8171 Yonge Street, Suite 239, Thornhill, Ontario L3T 2C6”.
The statement of claim was served on ABCO by registered mail on March 9, 2014, that date being five days after it was sent by registered mail to 8171 Yonge Street, Suite 239, Thornhill, Ontario. Service in that manner is authorized by section 87 of the Act which provides that documents may be served by registered mail to the recipient’s last known mailing address “as stated on the most recently registered document identifying the recipient as a person having an interest in the premises”.
Where the Act and the rules conflict section 67 of the Act provides that the Act prevails. Consequently service in the manner provided for by section 87 of the Act is valid service.
Having been served with the statement of claim, I find that ABCO was aware that this lawsuit had been issued against it, had an opportunity to defend it and failed to explain why it did nothing in the face of that knowledge. ABCO made a conscious decision not to defend. The Edwards Builders case applies because the test to set aside the noting in default under the Act is the same as the test for setting aside a default judgment in a civil action.
In the absence of an agreement or order to extend time ABCO was required to deliver its statement of defence by April 25, 2013 (rule 18.01). ABCO failed to do so and failed to take any steps to respond to the claim for several months thereafter.
Mr. Tkach did not depose that he never received the statement of claim. Nor did he depose as to when it first came to his attention. The absence of such evidence by ABCO is another glaring omission. The only evidence of the reason for ABCO’s failure to defend is Mr. Tkach’s affidavit evidence that the statement of claim was not served “according to the rules”.
I find that ABCO fails the first test in that it has not adequately explained its failure to deliver a statement of defence prior to May 1, 2013 when it was noted in default.
b) Did ABCO have a continuous intention to defend and act promptly?
ABCO provided no evidence as to when the statement of claim first came to its attention. Mr. Tkach, who is in the best position to provide such evidence, failed to provide any evidence of when the time begins to run. ABCO’s only evidence of whether it had a continuous intention to defend is that ABCO’s former lawyer removed himself from the record on May 6, 2013 (coincidentally less than a week after ABCO was noted in default), that ABCO spoke to “various counsel”, including Ms Assuras on July 22, 2013, that ABCO retained Ms Assuras on September 19, 2013 and that after retaining Ms Assuras a burst water pipe kept her from practice until October 22, 2013. The relevant period for consideration ends December 2, 2013, the date originally scheduled for the motion hearing and adjourned at the court’s request[^2].
I am not satisfied that this delay in retaining counsel in an action in which ABCO had already been noted in default meets the test of a continuous intention to defend. Nevertheless, were the period of delay from May 1, 2013 to December 2, 2013 the only difficulty on ABCO’s part in meeting the applicable tests for setting aside a noting in default against it, I would have allowed the motion. But that is not the case.
c) Has ABCO provided evidence of a meritorious defence to the claim?
- ABCO filed no evidence to persuade me that it has a meritorious defence to Canada-Wide’s claim against it. The proposed statement of defence filed with the motion materials is merely a bald denial, as follows:
The Defendant denies it is indebted to the Plaintiff for the amount claimed.
The said Defendant alleges that the Plaintiff failed to preserve its lien within the time allowed for doing so under Section 31 of the Construction Lien Act, R.S.O.1990, c. C30, and accordingly, the Plaintiff is not entitled to a lien in respect of the premises.
The said Defendant further alleges that the Plaintiff failed to perfect its lien within the time allowed for doing so under Section 36 of the Construction Lien Act, R.S.O.1990, c. C30, and accordingly, the Plaintiff’s lien has expired.
ABCO filed no evidence of probative value to support the allegations pleaded in paragraphs 3, 4 and 5 of its statement of defence, contrary to the requirements of section 54 of the Act. The Divisional Court in Deman Construction Corporation v 1429036 Ontario Inc. et al[^3] found that a motions judge, in making findings of fact based on evidence filed on such a motion, must assess whether there is a meritorious defence.
Master Sandler considered the test for setting aside a default judgment in a construction lien case in St. Clair Roofing & Tinsmithing Inc. v Davidson[^4]. The case is relevant because Master Sandler opines that under the Act the test for setting aside a default judgment is the same as the test for setting aside the noting of a defendant in default and the moving party must provide evidence of a meritorious defence.
ABCO’s first denial is that it is not indebted to the plaintiff in the amount claimed. The only evidence of a defence to that pleading is the supplementary affidavit of Yulian Fu, a legal assistant to ABCO’s counsel, who deposes:
“5. I have reviewed the Ledger of ABCO relating to the invoices rendered by the Plaintiff and there appears to be a discrepancy between from sic what is claimed by the Plaintiff and what invoices were rendered and paid according to ABCO’s records of approximately $85,000.00.” emphasis added
The deponent does not file as exhibits to the affidavit the ledger or the invoices to which she refers. She does not explain how she calculates this purported discrepancy in accounting. I find that there is insufficient evidence filed on this motion to conclude that there is any merit to the defence that ABCO is not indebted to the plaintiff in the amount claimed.
ABCO’s second and third denials in its proposed pleading are that the lien was registered and perfected out of time. ABCO filed no evidence to support these “boilerplate” allegations. On the face of the registered construction lien document it was filed in time and the action was issued in time. The action was set down for trial within the two year limitation period.
ABCO argues that the delivery document at page 95 of the responding motion record places in issue the timeliness of the lien because it has two different dates. The date on the document, which appears to be a bill of lading, is October 12, 2012 and the stamp on the document is “delivered October 18, 21012”. If the date of last supply was October 12, 2012 then arguably the lien was not perfected in time but if the date of last supply was October 18, 2012 then the lien was perfected in time.
Mr. Triolo of Canada-Wide deposes at paragraphs 23 and 24 that the date of last supply was October 18, 2012. This evidence is consistent with the stamp on the bill of lading. ABCO provided no evidence to the contrary. I find that there is no evidence of a meritorious defence on the basis pleaded by ABCO that the lien was out of time.
ABCO’s proposed pleading does not include allegations of set-off for deficiencies or incomplete work. However, the affidavit of Yulian Fu addresses that issue and even if the proposed pleading included such allegations, I would find that there is no evidence filed to support them. Ms Fu deposes:
“4. I am advised by Ms Assuras that if the Defendant Polerleau asserts that there were either deficiencies or incomplete work by the Plaintiff, ABCO will seek to amend the statement of defence to allege those particulars and to seek a set-off any sic amounts found payable by ABCO to Pomerleau against any monies found owing to the Plaintiff by ABCO.”
This evidence is insufficient for two reasons. The first reason is a technical one: it is evidence on information and belief of the counsel appearing on the motion. As such it is the evidence of the counsel appearing on the motion and on that basis it is not properly before the court. The second reason is that Pomerleau is not a party to this action[^5] and there is no evidence on this motion that Pomerleau has asserted any deficiencies or incomplete work by Canada-Wide. The affiant does not depose that any such allegations were made. The Scott Schedule filed in ABCO’s supplementary motion record is not properly evidence before the court as it is not an exhibit to an affidavit. If it were, and if the court were to consider it, there is no evidence that any of the items in Pomerleau’s Scott Schedule pertain to materials and services supplied by Canada-Wide.
In any event, there is no evidence filed that the materials and services supplied by Canada-Wide were deficient or incomplete. I find that there is insufficient evidence filed on this motion to conclude that there is any merit to a defence, if pleaded, that the supply of materials and services by Canada-Wide was deficient or incomplete.
Claims under the Act are intended to be summary in nature. A party seeking equitable relief from the court must put their best foot forward and present their best evidence. A defendant in default who fails to provide evidence of a meritorious defence should not be permitted to drag construction lien proceedings out unnecessarily.
ABCO has failed to provide evidence of a meritorious defence to Canada-Wide’s claim against it.
Conclusion
For all of the reasons given I find that ABCO has not met the test for setting aside a noting in default under the Construction Lien Act. The motion is dismissed.
Costs: The parties filed their costs outlines at the conclusion of the motion hearing. Counsel may make brief oral submissions as to costs of this motion at the next or a subsequent hearing for directions on the reference.
Master C. Albert .
DATE: February 18, 2014
2014 ONSC 1044
COURT FILE NO.: CV-13-471940
DATE: February 18, 2014
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Canada-Wide Reinforcing Steel Co. (1987) Ltd. v. ABCO One Corporation, City of Toronto and Toronto Transit Commission
BEFORE: Master C. Albert
COUNSEL: A. Assuras, for the defendant ABCO, moving party
C. Riveros, for the plaintiff, responding party
ENDORSEMENT
Master C. Albert
[^1]: 2007 37676 (ONSC)
[^2]: To attend a funeral
[^3]: 2004 34928
[^4]: 1992 7660
[^5]: Although Pomerleau is a party under section 60 of the Act by reason of related lien proceedings