SUPERIOR COURT OF JUSTICE - ONTARIO
2014 ONSC 1045
COURT FILE NO.: CV-13-472531
DATE: February 18, 2014
RE: Volvo Rents, a Division of Volvo Group Canada Inc. v. ABCO One Corporation and The City of Toronto
BEFORE: Master C. Albert
COUNSEL:
A. Assuras, for the defendant ABCO, moving party, Fax: 416-601-1462
no one appearing for Volvo, responding party, (counsel of record: R. Payne,
F: 416-224-9313
ENDORSEMENT
Volvo Rents, a Division of Volvo Group Canada Inc. (“Volvo”) registered a claim for lien for $18,912.56 on December 10, 2012 and issued an action against ABCO One Corporation (“ABCO”) and City of Toronto on January 23, 2013. Volvo noted ABCO in default on April 29, 2013. The lien was vacated upon the posting of security but Volvo has neither discontinued the action against nor noted City of Toronto in default.
Now ABCO moves to set aside the noting in default on grounds that Volvo 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.
Counsel for Volvo did not appear. Its absence may be related to the modest quantum of its claim.
Having reviewed the motion materials filed and having heard the submissions of counsel for the moving party, 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 Volvo 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).
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. This 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 February 12, 2013 Adrienne Hunt, Process Server, attended at 448 Centre Street East, Richmond Hill, Ontario L4C 1B7 for the purpose of serving ABCO with the statement of claim and certificate of action. Ms Hunt deposes:
"I was unable to affect (sic) service on ABCO ONE CORPORATION, as the company was not located there as recorded with the Ministry of Consumer and corporate Affairs asshown on the Corporate Perofile attached.
"Therefore on February 12 , 2013 I mailed a copy of the Statement of Claim to ABCO ONE CORPORATION, at the above address and served the said company pursuant to Rule 16.03(6) of the rules of Civil Procedure."
Mr. Tkach maintains that ABCO maintains an office at 448 Centre Street East, including in February 2013. Her does not depose whether or not an adult was present at that address on February 12, 2013. Nor does he depose whether or not there is any corporate signage at that address to identify it as the place that the ABCO business is located.
Mr. Tkach operates the business from his home. His business is construction. He would be away from his residence, perhaps on construction sites, from time to time.
It is reasonable that a process server, attending on a residence address that shows no signage of a business would conclude that the company was not located at that address. The process server does not depose that she knocked ont he door or rang the doorbell. However I draw the inference that she did so as it is the usual practice of a process server, upon arriving at an address for service, to make their presence known by either entering the premises (if the address is a typical place of business where members of the public can walk in without requiring someone on the inside to unlock the door to allow them entry), or else they ring the doorbell or knock on the door to get the attention of someone inside the premises.
Rule 16.03(6) provides that where the registered office or principal place of business of a corporation cannot be found at the last address recorded with the ministry of Consumer and Commercial Relations, service may be made on the corporation by mailing a copy of the document to the corporation at that address.
The process service attended at the last place of business that ABCO had recorded with the Ministry. No one was there to take the document. The process server mailed the document.
I find that Volvo's statement of claim was served on ABCO by mail on February 12, 2013 (deemed served five days later) in accordance with the rules of civil procedure.
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 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 (and under the Act).
In the absence of an agreement or order to extend time ABCO was required to deliver its statement of defence by March 9, 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 a 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 April 29, 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 April 29, 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 Volvo's claim against it. The proposed statement of defence filed with the motion materials is merely a bald denial, as follows:
The said 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 4, 5 and 6 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. There is no evidence that this defence has any merit.
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.
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 Volvo'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: ANCO filed its costs outline at the conclusion of the motion hearing. Volvo did not appear. ABCO was unsuccessful on the motion. There shall be no costs of this motion.
Master C. Albert .
DATE: February 18, 2014
2014 ONSC 1045
COURT FILE NO.: CV-13-472531
DATE: February 18, 2014
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Volvo Rents, a Division of Volvo Group Canada Inc. v. ABCO One Corporation and The City of Toronto
BEFORE: Master C. Albert
COUNSEL: A. Assuras, for the defendant ABCO, moving party
R. Payne, for the plaintiff, responding party (not appearing)
ENDORSEMENT
Master C. Albert
[^1]: 2007 37676 (ONSC)
[^2]: To attend a funeral
[^3]: 2004 34928 (ONSC Div Ct)
[^4]: 1992 7660 (ONSC)