COURT FILE AND PARTIES
COURT FILE NO.: CV-12-450941
DATE: 20140403
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Mill Creek Motor Freight Ltd, Plaintiff
AND:
Ishwinderpreett Wadhwa a.k.a. Harry Wadhwa, Defendant
BEFORE: Carole J. Brown J.
COUNSEL: Rory Barnable, for the Plaintiff
Christopher J Sparling, for the Defendant
HEARD: March 12, 2014
ENDORSEMENT
[1] The defendant brings this motion pursuant to Rule 19.08(2) and (3) to have the Order of Matheson J. dated December 2, 2013 noting the defendant in default set aside, and pursuant to Rule 37.14(1)(b) and (2) to set aside or vary the Order of Matheson J. The plaintiff opposes this motion.
[2] The history of these proceedings is as follows. On June 25, 2008, the plaintiff, on behalf of Lenovo Group Limited contracted with the defendant's corporation, Canadian Sea & Air Ltd ("CSA"), to transport cargo to the Lenovo warehouses in Brampton, Ontario which were ultimately lost, when the cargo was stolen while in the possession of CSA, prior to delivery. On May 17, 2010, the plaintiff issued a first statement of claim against CSA, alleging loss by theft of the subject cargo between June 28 and June 30, 2008 through the negligence or breach of contract of CSA.
[3] CSA failed to defend the action, was noted in default on April 28, 2011 and, on August 9, 2011, default judgment was rendered as against CSA in the amount of $214,947.27.
[4] The plaintiff, thereafter, conducted an examination in aid of execution of the defendant, on behalf of CSA on February 6, 2012. At the examination in aid of execution, the defendant confirmed that CSA had ceased operations in January of 2008. However, the defendant subsequently testified that CSA stopped operating in October 2009, after the loss of the cargo. In another action, he testified that CSA was still operating as at February 6, 2012, but only as a broker. In the motion before this Court, the defendant states in his affidavit that CSA was operating in June of 2008, at the time it contracted with the plaintiff.
[5] As a result of the information learned at the initial examination in aid regarding CSA, the plaintiff commenced the second action arising from the theft of the cargo against the individual defendant. The second statement of claim alleged that the defendant was fraudulently operating as CSA, an incorporated entity that was no longer in operation and that the defendant was masquerading as CSA to contract with others who believed they were contracting with CSA and not with the individual defendant directly.
[6] The individual defendant, Mr. Wadhwa initially defended the action. The statement of defence denied all allegations in the statement of claim and alleged that CSA continued to exist. However, defendant’s counsel removed himself from the record on April 3, 2013, and the defendant failed to appoint new counsel or serve a Notice of Intention to Act in Person, as required pursuant to the Order of Master McAfee dated April 3, 2013, which clearly set forth the obligation on the defendant and the consequences of failing to comply with the Order pursuant to Rule 15.04(9). That Order was served on the defendant on April 5, 2013 pursuant to the Affidavit of Service contained in the motion record and, as such, the Order clearly came to the attention of the defendant.
[7] Counsel for the plaintiff received nothing from the defendant or new counsel retained by him and, seven months later, on November 18, 2013, the plaintiff served a Notice of Motion and motion record returnable December 2, 2013, to have the defendant's statement of defence struck pursuant to Rule 15.04(9) for failure to comply with the Order of Master McAfee, and to have the defendant noted in default.
[8] The defendant acknowledges service of the Notice of Motion and motion record on that date. Two days later, on November 20, the defendant purchased airline tickets for a trip to India, leaving Canada on November 23 and returning on December 3, one day after the scheduled December 2 motion. It is the evidence of the defendant that he did this "to see my elderly grandfather who was ill". The defendant did not provide evidence of the nature or seriousness of his grandfather’s illness, did not provide evidence in his affidavit in support of this motion as to whether there was any urgency to the trip, nor give any other details in this regard.
[9] In his affidavit, the defendant states that on November 22, he met with a lawyer, who was retained "to request an adjournment, but not to take any further steps in this action". He had not, at that time, filed a Notice of Intention to Act in Person. On November 25, 2013, Gordon Meakings wrote to counsel for the plaintiff stating as follows:
"Please be advised that I have been engaged by Mr. and Mrs. Wadhwa to handle certain non litigious matters. As a consequence of a brief meeting with Mr. and Mrs. Wadhwa on November 22, 2013, to review the non litigious matters, I was made aware of a motion that is returnable on December 2nd, 2013, regarding Mill Creek Motor Freight Ltd……
As I am not retained to act for Mr. Wadhwa in this action, nonetheless as a courtesy to him, I have agreed to write a letter to you advising that Mr. Wadhwa has been called out of the country on an urgent matter to India and will not return until late in the evening of December 3, 2013.…
Accordingly, Mr. Wadhwa has asked me to write to you to advise of the problems that he presently has and the difficulty that he apparently has had over the past several months in trying to retain new counsel to come forward in the middle of this litigation. Therefore, please take this letter as notice that Mr. Wadhwa would respectfully request that the motion be adjourned so that he can retain counsel to represent him in this matter as he feels he has a full defence to the allegations contained in the statement of claim.
[10] On November 27, counsel for the plaintiff wrote to Mr. Meakings to advise that the plaintiff would not agree to an adjournment. Counsel wrote in that correspondence "Though I understand that Mr. Wadhwa has an unscheduled trip planned to India, Mr. Wadhwa has had over seven months to retain new counsel or serve a Notice of Intention to Act in Person, as per Master McAfee's Order of April 3, 2013. This being the case, I will be proceeding with the motion on December 2, 2013. As a courtesy, I will bring your letter and this response to the court's attention.”
[11] On the same day, November 27, 2013, Mr. Meakings e-mailed Mr. Wadhwa's wife, who had not accompanied him to India, but had remained in Canada, enclosing the November 27 letter received from counsel for the plaintiff. The letter from Mr. Meakings stated as follows:
Please find enclosed a copy of the letter which we have just received from the plaintiff's lawyer McCague Borlack. As you can see, the plaintiff's counsel is going ahead with the motion to be heard on Monday, December 2nd, 2013. Please ensure that Harry receives this so that he can make whatever arrangements might be available to him for this motion.
Any counsel who would be engaged to represent Harry would have to spend some considerable time getting up to speed to know all of the facts and background. Additionally, material in reply to the motion is necessary for the court to adjudicate this and I am fearful that the court may proceed without Harry's presence notwithstanding the fact that counsel for the plaintiff will advise the judge hearing the motion of my letter of the November 25th, 2013.
Kiran, could you please send Harry a copy of the letter that we e-mailed to you on November 25th, 2013.
[12] Following this e-mail, with enclosure, on December 1, 2013, Mr. Meakings again wrote to the wife of Mr. Wadhwa to follow up, as he had "not had any input from you despite sending the information and documents to you during the middle of last week.… I assume that Harry has made arrangements to have counsel appear at the Courthouse in Toronto or has made some contact with the plaintiff's lawyer. Failure to appear or have an adjournment confirmed could be very damaging for him as they are seeking a judgment against him and if they are successful, then, it would be very hard for him to have it set aside".
[13] On this motion, the defendant has adduced no evidence to indicate that he attempted to obtain an agent to appear on his behalf on December 2, nor to explain in any way what steps were taken by himself or his wife. No one appeared on his behalf at the return of the motion on December 2, 2013 and, despite the fact that the letter requesting adjournment was brought to the attention of Matheson J., she nevertheless, on the evidence before her, granted an Order noting the defendant in default.
[14] Upon his return from India on December 3, 2013, the defendant retained counsel two weeks later on December 17, 2013 to bring this motion. The Notice of Motion was served on December 24 and the Motion Record and Affidavit of the defendant were served on January 10, 2014.
The Law and Analysis
[15] The defendant brings this motion pursuant to Rule 19.08 of the Rules of Civil Procedure and Rule 37.14(1)(b) and (2). The plaintiff argues that the motion should not be brought pursuant to Rule 19.08 which deals with setting aside a default judgment, of which there is none in this case, but rather under Rule 19.03 which deals with setting aside a noting in default. The defendant argues that the motion is brought pursuant to Rule 19.08 "by analogy", given that the statement of defence had been delivered.
Rule 19.08
[16] As regards the motion under Rule 19.08, the plaintiff has nevertheless responded in its factum and in submissions to the defendant’s arguments regarding the evidence and tests relevant to Rule 19.08.
[17] Pursuant to Rule 19.08 of the Rules of Civil Procedure, a judgment against the defendant who has been noted in default that is obtained on a motion for judgment on the statement of claim under Rule 19.05 or that is obtained after trial, may be set aside or varied by a judge on terms as are just. Where the defendant asks the court to exercise its discretion to set aside a default judgment, the defendant must satisfy three conditions or tests as follows:
whether the motion was brought without delay after the defendant learned of the default judgment;
whether the circumstances giving rise to the default were adequately explained; and
whether the defendant has an arguable defence on the merits.
[18] In making such determination, the court must consider the potential prejudice to the moving party if the motion were dismissed, the potential prejudice to the respondent if the motion were allowed, and the effect of any order on the overall integrity of the administration of justice.
[19] While the plaintiff takes no issue with the first branch of the test, and concedes that the defendant moved without undue delay, approximately two weeks after the Order of the court, to have that Order set aside, the plaintiff argues that the default was not adequately explained. The defendant received the Notice of Motion on November 18 and thereafter, two days later, purchased airline tickets for a trip to India, leaving on November 23 and returning on December 3, 2013. The only explanation given is that he was visiting his grandfather who was ill. There is no explanation of any urgency as regards the trip, no explanation or detail regarding the "illness" or its seriousness and no explanation of why the defendant, with knowledge of the return date of the motion, chose to return on December 3, after the motion had been heard.
[20] I note that from April 5, 2013, when Master McAfee's Order was served on the defendant, which clearly indicated the obligations on the defendant pursuant to Rule 15.04(9) and the consequences of failing to meet those obligations, the defendant neither retained counsel nor served a Notice of Intent to Act in Person. There is no evidence proffered in this motion to indicate whether he took any steps at all between April 5, 2013 and the date of the Order of Matheson J. as regards the Order in this litigation.
[21] The defendant states that he did retain counsel to seek an adjournment, but admitted that the retainer was only to seek the adjournment and not to proceed further. However, the correspondence from his corporate counsel retained by him on other matters, Mr. Meakings, clearly indicated that he was not retained to act for Mr. Wadhwa in this action, but as a courtesy to him, agreed to write a letter to advise that Mr. Wadhwa had been called out of the country on an urgent matter to India, would not return until late in the evening of December 3, 2013 and, therefore, that Mr. Wadhwa was requesting an adjournment.
[22] Notification was given to the defendant, through his wife, who did not accompany him to India, but remained in Canada, on November 27, 2013 that the plaintiff would not consent to an adjournment, but there is no evidence proffered by the defendant on this motion to indicate that the defendant took further steps to retain an agent to appear on December 2, as Mr. Meakings had advised. While counsel for the defendant submits that this was not possible given that the defendant was in India, there is no evidence to indicate that he had discussed with his lawyer what would occur if no consent to adjournment were forthcoming, which indeed was the case. Further, there is no evidence before this Court to indicate what other steps, if any, he or his wife took to ensure that somebody would be present on his behalf at the motion after being apprised by Mr. Meakings that plaintiff’s counsel would not agree to an adjournment. I do not find there to be any adequate explanation for the failure to make arrangements for attendance at the motion in the event that an adjournment could not be agreed upon, nor any explanation of any steps that were taken following notification by Mr. Meakings on November 27, indicating that the plaintiff did not agree to an adjournment and advising Mr. and Mrs. Wadhwa to retain counsel.
[23] It was not until after the defendant was noted in default on December 2, 2013, that he made any attempt to proceed with defence of the action. It is clear that he booked his trip to India after the motion materials for the December 2 motion were served. There is nothing to indicate that his non-attendance at the motion was through accident or mistake. He was aware of the motion, retained counsel only to seek an adjournment, but not to appear at the motion and, nevertheless, left for India before ensuring that an adjournment could be secured. It appears that he did not follow up in this regard during his time in India.
Rule 19.03
[24] As indicated above, counsel for the plaintiff argues that this motion has been brought under the wrong rule, as no judgment has been rendered, but only a noting in default. Accordingly, the motion should be brought under Rule 19.03.
[25] Rule 19.03 permits the court to set aside a noting in default on such terms as are just.
[26] While the language in both Rules are identical, the same tests are not required to be applied. It is the context and factual situation in which the issue arises which should determine the exercise of the court's discretion in its application. Relevant factors, similar to those in Rule 19.08, include the reason for the omission to file a statement of defence within the required time, the behavior of the parties, the length of delay in bringing the motion, the reasons for the delay and the complexity and value of the claim involved.
[27] As stated in 1316845 Ontario Limited v Es-Lea Holdings Ltd as regards the general test for setting aside a noting in default:
It is true that the factual matrix in which the court is requested to exercise its remedial discretion to set aside a noting in default is the controlling factor. At its essence, however, while 131 and DiLollo need not show the defence on the merits to succeed on this motion, they must present evidence which responds to the three principal questions that the Court must ask: (1) Is there believable evidence that the defendants had any intent to defend in the time permitted for responding to the counterclaim? (2) What prevented the defendant from responding to the counterclaim in a timely fashion? (3) Has the motion to set aside the noting in default been brought with reasonable dispatch?
1316845 Ontario Limited v Es-Lea Holdings Ltd, 169ACWS (3d) 735
[28] Based on the evidence before me and having consideration for the context in which this motion arises, the history of all of the proceedings and the factual matrix, I am of the view that the defendant has failed to provide sufficient evidence to demonstrate an intention to defend this action from the time that his statement of defence was struck on April 3, 2013 to his failure to appear to have anyone appear on his behalf at the motion on December 2, 2013. During that time he failed to take any steps to comply with the Order of Master McAfee, of which he had knowledge. There is no satisfactory explanation for this failure. There is further no satisfactory explanation for why he did not respond to the December 2 motion. I find that the defendant has failed to provide any adequate explanation of the circumstances giving rise to the default, as set forth at paragraphs 19 to 23, supra.
[29] Accordingly, based on all of the evidence before me, as set forth above, I exercise my discretion to dismiss this motion, as the moving party has not established the tests required to have the noting default set aside under either Rule 19.08 or Rule 19.03.
Rule 37.14 (4)
[30] Rule 37.14 (4) provides that a party may move to have an order set aside, inter alia, where the party failed to appear on a motion through accident, mistake or insufficient notice.
[31] Having regard to Rule 37.14 (4) and my findings above, I find no reason to set aside or vary the Order of Matheson J. The defendant's counsel argues that it should be set aside as the defendant failed to appear on the motion through mistake. The defendant's counsel argues that the defendant did not understand what would happen if he failed to appear.
[32] His counsel also argues that it was due to Mr. Meakings failure to take any action to appear in court to obtain the adjournment, once plaintiff's counsel refused to consent to an adjournment, which caused the Order of Matheson J. to be rendered. He argues that the errors of counsel should not be visited on the defendant, and that in the interest of justice, the Order should be set aside. I do not find the error to be on the part of Mr. Meakings, based on the evidence before me.
[33] While Mr. Wadhwa, in his affidavit before this Court states that Mr. Meakings was retained to obtain an adjournment, the correspondence of November 25 sent by Mr. Meakings to plaintiff’s counsel clearly states that he was not retained by the defendant in this matter, but was writing as a courtesy to his client who had retained him in unrelated corporate matters, to advise that Mr Wadhwa was in India and that Mr. Wadhwa was requesting an adjournment. He followed up with the defendant's wife as of November 27, warning them to make arrangements to obtain counsel and warning of the consequences to the defendant of a failure to do so. I do not find any evidence to suggest that Mr. Meakings was at fault or in error in the circumstances. I do not accept the defendant's arguments in this regard.
[34] I find that the Order was granted as against Mr Wadhwa due to his own failure to act and due to his own choice to absent himself from the country during the material time. There is no evidence to otherwise explain the urgency of his trip out of country, any attempts he made to retain counsel to appear at the motion, nor what steps he took if any regarding the Order of Master McAfee from April 5 to November 18, 2013. Further, I find no reason to vary or rescind the Order. I do not find the initial decision to be incorrect.
[35] Accordingly, I dismiss this motion.
Costs
The parties provided me with their bills of costs. The plaintiff was wholly successful on this motion and is entitled to its costs, which it seeks on a partial indemnity basis in the total amount of $3,666.72. I find this amount to be reasonable and award the plaintiff $3,666.72 all inclusive, to be paid by the defendant forthwith.
Carole J. Brown J.
Date: April 3, 2014