SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: 99-CV-165261
DATE: 20140207

RE: SHARON COHEN AS ESTATE TRUSTEE WITH A WILL, Plaintiff

AND:

LESLIE CHARLES COHEN, Defendant

BEFORE: Stinson J.

COUNSEL:
James C. Davies, for the plaintiff/responding party

Leslie Charles Cohen, defendant/moving party, appearing in person,

HEARD at Toronto: January 16, 2014

ENDORSEMENT of STINSON J.

[1] On December 20, 1999, Spence J. of this court made an order granting default judgment against the defendant Leslie Charles Cohen. That order was granted pursuant to a motion for judgment brought under Rule 19 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. In September 2013, almost 14 years later, the defendant brought a motion seeking to set aside the order of Spence J. This endorsement contains my decision concerning that motion.

facts

[2] The plaintiff and the defendant are children of the late Jack Cohen, who died October 11, 1995. They have another sister Darleen Cohen. Their mother, Deborah Cohen, died March 5, 2011. For ease of reference in this endorsement, I shall refer to each of them by their first names. Sharon is the sole executor of Jack's estate. Prior to Jack’s death in October 1995, Sharon was overseeing his personal care and his assets pursuant to a power of attorney. Subsequent to his death, she assumed responsibility for the administration of his estate.

[3] This proceeding had its origins in a motion brought by Sharon in relation to Jack’s estate in April 1998. At that time she sought orders, among other things, restraining Leslie from dealing in any way with the assets of the estate and compelling him to restore amounts allegedly misappropriated by him from the estate. Leslie was served with notice of that motion and was notified of the hearing date, July 10, 1998. He filed a written response, but failed to appear in court when the motion was argued. On July 10, 1988, Greer J. granted an order restraining Leslie from dealing in any way with the assets of the estate and further directed the trial of an issue as to Leslie’s dealings with the assets of the estate.

[4] In furtherance of the order of Greer J. dated July 10, 1988, Sharon’s lawyers prepared a statement of claim against Leslie. In that pleading Sharon alleged conversion by Leslie of Jack’s assets prior to his death, conversion of the estate's cash assets with the Canadian Imperial Bank of Commerce, and attempted conversion of Jack’s shares in various public companies. The statement of claim sought damages against Leslie for fraudulent misrepresentation and theft by conversion, punitive and exemplary damages, and a declaration that any amounts found due by Leslie to the estate be set off from Leslie’s share of the estate as a beneficiary under Jack’s will.

[5] In the fall of 1997, Leslie himself had commenced proceedings in this court seeking relief in relation to Jack’s estate. At the time he listed his address as being in Oshawa, Ontario. In December 1997, Leslie filed with the court a notice of change of address changing his address for service from the Oshawa address to a Post Office Box in the Sheraton Center on Queen Street in Toronto, across from Osgoode Hall. In January 1998, Leslie served a second notice of change of address changing his address for service from the Sheraton Center address to another private mailbox on Yonge Street in Toronto. Subsequently, in September 1998, Leslie served a third notice of change of address changing his address for service from the Yonge Street address to a Post Office Box in Los Angeles, California.

[6] Sharon’s statement of claim that was prepared pursuant to the order of Greer J. dated July 10, 1998 was filed in February 1999. By that stage, Leslie was no longer living in Ontario and had relocated to the United States. In April 1999, the statement of claim was mailed to Leslie at the Los Angeles address he had provided to the court as his address for service in September 1998. Attempts were made to locate the street address of Leslie from the post office box holder records in Los Angeles. A residential address was provided in Tampa, Florida. Multiple attempts were made to serve the statement of claim on Leslie at the Tampa address, and a copy of the statement of claim was left at that location. Before me in court Leslie advised that he had never lived in Florida, but he acknowledged that the Tampa address was that of an acquaintance of his and a friend of the family.

[7] On August 10, 1999, Leslie contacted by telephone Sharon’s then-lawyer, Robin Basu, inquiring as to when he would receive the balance of the estate he asserted it was owing to him. Mr. Basu told Leslie that the administration of the estate was proceeding. He further told Leslie that this action had been commenced against him due to his theft from the estate. Mr. Basu indicated to Leslie that the court had ordered a trial of the issue and further advised him that he should review the statement of claim. When asked whether he was in Los Angeles or Florida, which he denied, Leslie said he was in Mexico, but declined to give more details. Mr. Basu told him that he would seek an order validating service or for substituted service. Leslie then agreed to give Mr. Basu an address where he would be for about 4 to 6 weeks, commencing in 10 to 15 days. Leslie could not give the address to Mr. Basu immediately, but phoned back 10 minutes after his first call, with an address in San Jose, Costa Rica. Leslie also gave Mr. Basu an Internet email address. According to Mr. Basu, Leslie told him that he could be served personally at the Costa Rica address.

[8] On August 12, 1999, Mr. Basu received an email from Leslie making inquiries with respect to this action. Mr. Basu responded to that email message by an email message sent August 12, 1999 in which he attached a copy of the statement of claim and confirmed the Costa Rica address for service. He further advised that he would be mailing a copy of the statement of claim to the Costa Rica address.

[9] Based upon the foregoing information, on August 13, 1999, a motion was brought for an order for substituted service of the statement of claim. That order was granted by Master Cork on that date. It ordered substitutional service by mail to the Queen Street address, the Yonge Street address, the Los Angeles address, and the Costa Rica address. On August 17, 1999, the statement of claim was mailed to all those addresses.

[10] On August 12, 1999, Leslie responded to Mr. Basu's email of that date, claiming that he was unable to open the Microsoft Word document (the statement of claim) that had been attached to Mr. Basu's email message. He nevertheless went on to assert that the lawsuit against him was frivolous and meritless and that he was judgment proof. Further email exchanges between Sharon’s lawyers and Leslie ensued in August and September 1999. In his final email dated September 17, 1999, Leslie stated "I do not consent to judgment on your stupid lawsuit and waste of estate money assets including my inheritance." He went on to state "[i]f you pursue default proceedings, I may move to set aside everything you did and at your personal expense, file complaint [sic] of unethical conduct with the law society, & sue you for recovery/return of wasteful dissipation & losses to my inheritance money in my father’s estate."

[11] Nothing further was heard from Leslie. He did not file a notice of intent to defend or a statement of defence in response to the statement of claim. On November 12, 1999, in reliance of service having been effected pursuant to the order for substituted service, he was noted in default.

[12] The next step in the proceeding was the motion for default judgment before Spence J. on December 20, 1999. It was supported by a detailed affidavit setting out the manner in which efforts had been made to serve the statement of claim, Leslie’s awareness of the existence of the action, the noting in default, and the damages suffered by the estate by reason of Leslie’s actions. On the basis of that affidavit and Leslie's deemed admissions of the facts alleged in the statement of claim to which he had not responded, Spence J. made his order granting default judgment against Leslie on December 20, 1999.

[13] The lawyer who had carriage of the matter subsequent to the motion before Spence J. on December 20, 1999 was Mr. Basu's colleague, Kimberly Morris. Ms. Morris no longer practices law and currently resides and works in Switzerland. According to information supplied by her, however, she is confident that she provided Leslie with a copy of the judgment granted by Spence J. at the time.

[14] Leslie returned to Canada in mid-2011. One of the reasons he was unable to do so earlier was that he was incarcerated in the United States, serving a nine-year prison sentence for, among other offences, bank fraud, misuse of a Social Security account number, and fraud in connection with identification information. Upon his return to Ontario he was arrested and charged with 15 counts of criminal conduct, including fraudulent impersonation of a deceased individual. These charges did not relate to Jack's estate, but instead concerned other events that took place in 1997 and 1998, involving allegations that Leslie had applied for identification documents, including a Canadian passport, in the name of an infant who died in 1944. Leslie pleaded guilty to the offence of fraud over $5,000, and was sentenced to the equivalent of seven months and two weeks. Leslie’s appeal of his sentence to the Court of Appeal was dismissed in March 2013. Although the police had investigated Leslie's activities involving Jack's estate in the 1990s before he left Canada, upon his return the Crown opted not to prosecute due to the passage of time, the unavailability of evidence and witnesses, and the consequent difficulty in proving the case.

[15] After his return to Canada, Leslie renewed his interest in his parents' estates. In April 2012, he brought a motion seeking to set aside the order of Greer J. made on July 24, 1998. Although no one appeared to oppose that motion, on June 4, 2012, it was dismissed by Kenneth Campbell J. On December 12, 2012, Leslie brought a motion in the estate of his mother Deborah seeking to set aside the appointment of her estate trustees and freezing the estate assets. That motion, too, was unsuccessful.

[16] In May 2013, Leslie served a motion in Jack's estate seeking an order against Sharon requiring her to pass her accounts and to file a statement of assets of the estate. In August 2013 Sharon filed a responding record containing a detailed response to that motion. It has yet to be heard.

[17] After receiving Sharon's responding record, in September 2013 Leslie served a further motion, seeking to set aside the December 20, 1999 order of Spence J. by which judgment was granted against him. In his affidavit in support of that motion, Leslie swore that he first learned about the December 20, 1999 order in August 2013 when he received a copy of Sharon’s responding record. He also swore that he had not seen the statement of claim before.

[18] Leslie’s motion to set aside the order of Spence J. was adjourned to enable Sharon to file a response. She did so and the matter came on for hearing before me on January 16, 2014.

analysis

1. Nature of the Motion

[19] In his motion material and in his submissions before me, Leslie characterized his motion as a motion under rule 38.11, seeking to set aside a judgment granted on an application made without notice Sharon submitted that, more properly, Leslie’s motion was a motion under rule 19.08, since it sought to set aside a default judgment. As explained below, I agree with Sharon’s submission.

[20] Rule 38 governs the procedure on applications. Sharon's proceeding was initially brought as an application. Leslie was duly served and thus he had notice of the proceedings. The order of Greer J. dated July 10, 1998, directed the trial of an issue regarding Leslie’s dealings with the assets of the estate. As contemplated by rule 38.10(3), that issue was thereafter treated as it would be in an action, which in turn led to the filing of the statement of claim. Thereafter, steps were taken to serve the statement of claim on Leslie, as detailed above. An order for substituted service was obtained and complied with. In due course, Leslie was noted in default under rule 19.01(1). Ultimately, Sharon brought a motion under rule 19.05 for judgment. The result was the order of Spence J. dated December 20, 1999.

[21] Based upon the foregoing, the procedure followed by Sharon resulted in a judgment in default of defence, granted by a judge on a motion. As a result, I conclude that rule 19.08 is the provision applicable to Leslie's current motion since it is the rule that that governs a motion to set aside a default judgment obtained in that fashion.

2. The Legal Test

[22] There are three factors to be considered in exercising the court's discretion under rule 19.08 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.

See Morgan v. Toronto (City) Police Services Board (2003), 2003 14993 (ON CA), 34 C.P.C. (5th) 46 at para. 19.

[23] I acknowledge that the principles that govern the exercise of the discretion to set aside a default judgment are not rigid preconditions, such that the failure to satisfy any one of them necessitates the dismissal of the motion to set aside. The court must ultimately determine whether the interests of justice favor an order setting aside the default judgment. In doing so, it will have regard to the potential prejudice both to the moving party and the respondent, and the effect of any order on the integrity of the administration of justice. See Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd., 2007 ONCA 333.

3. Application of the Test

(a) Timeliness of motion

[24] With respect to the first item in the three-part test, Leslie claims that he was unaware of the default judgment until August 2013. Ms Morris' recollection is that she provided him with a copy of the judgment at the time, but there is no documentary record of this. With the passage of time some of the legal files and copies of electronic communications (such as emails) have been misplaced or not preserved. Leslie more or less "disappeared from view" in the fall of 1999, and only returned to Canada in 2011. Despite the fact that he brought motions in relation to both his mother’s estate and his father’s estate, there is nothing in the documentary record to indicate that he specifically received a copy of the default judgment prior to the date he asserts. For present purposes, therefore, I am prepared to accept that, by moving in September 2013, Leslie acted promptly after he learned of the default judgment, and that he meets the first branch of the test.

(b) Explanation for default

[25] The second branch of the test involves an explanation of the circumstances which led to the default. Leslie asserts that he was never served with the statement of claim and that he had never seen it. I have difficulty accepting that evidence. In light of the events and communications of August and September 1999 described above, I do not believe Leslie's assertion that he had not previously seen the statement of claim. It was mailed to him at the very address for service he had provided to the court. Moreover, it is apparent from the evidence of Mr. Basu that Leslie was aware at that time of the litigation by Sharon against him in Ontario. He went so far at the time as to provide Mr. Basu with a fresh address for service in Costa Rica. There is ample evidence he knew about Sharon's lawsuit.

[26] In any event, Leslie's statement that he was not served with the statement of claim is not the same as him denying knowledge of the existence of the lawsuit, something he does not and could not assert. The record contains several indicia that Leslie was well aware that his sister was pursuing her claim against him in relation to his diversion of assets from Jack's estate. These include the following:

(a) Leslie was served with Sharon’s initial motion seeking to compel him to restore amounts misappropriated from the estate, and he was notified of the hearing date. He filed a written response, but failed to appear when the motion was argued. He was thus aware of the claim and he set out a detailed response at the time, denying the allegations. He chose not to participate in the hearing before Greer J. that resulted in her order of July 10, 1998.

(b) In his telephone conversation on August 10, 1999 with Sharon’s lawyer, Leslie was expressly informed that this action had been commenced due to his theft from the estate. He was told that the court had ordered the trial of an issue and advised that he should review the statement of claim. Leslie declined to give details as to his whereabouts, but provided an address in Costa Rica where he could be served, as well as an Internet address. The statement of claim was sent to Leslie at all the addresses he gave and an order for substituted service was obtained and acted upon.

(c) Further email exchanges between Leslie and Sharon’s lawyer confirmed that Leslie was aware of the lawsuit and the nature of the claims made against him as well as the risk of default proceedings.

[27] I am alert to the fact that, by the time the statement of claim was filed in February 1999, Leslie had left Canada. He was not in Ontario at the time he was notified of the statement of claim or at the time the default judgment was obtained. That said, he was served personally with the original notice of motion that gave rise to the order of Greer J. of July 10, 1998. Moreover, Leslie himself had invoked the jurisdiction of the court when he himself commenced proceedings seeking relief in relation to Jack’s estate. It does not lie in his mouth to dispute the jurisdiction of the court over him.

[28] Further, there can be no question whether this proceeding has a real and substantial connection with Ontario. The deceased lived and died in Ontario. His estate is administered pursuant to letters of administration issued by the Superior Court of Justice. The misconduct alleged against Leslie took place in Ontario. Leslie himself invoked the jurisdiction of the Ontario court in relation to the estate. The nature of the claim, that is, a proceeding in respect of the administration of Jack’s estate, falls within rule 17.02, and thus is properly the subject of service outside Ontario without leave. The jurisdiction of the Ontario court was properly invoked as against Leslie.

[29] Apart from denying having been served with the statement of claim, Leslie’s evidence contains no explanation for the circumstances which led to his default. Based on the evidence I have recited, there can be no question that Leslie was aware of the proceeding well before he was noted in default. He does not deny this fact in his affidavit; nor in the circumstances, could he. He was expressly told about the lawsuit and he provided an address at which a copy of the statement of claim could be served upon him personally. His denial of having been served with a copy of the statement of claim rings hollow in the circumstances.

[30] Having himself invoked the jurisdiction of the court in relation to Jack’s estate, having been served with the initial process by which Sharon’s claim against him was commenced, having been told about and being familiar with the claim being made against him, having provided an address at which he could be served, and having thereafter ignored the process, Leslie’s purported explanation for his default – that he had not seen the statement of claim – is inadequate. Even if that statement was believable (which I do not accept), at the very least Leslie intentionally chose to ignore the pending proceeding. He has offered no satisfactory explanation for doing so, and he has therefore failed to satisfy the second branch of the test.

(c) Triable defence

[31] The third element of the three-part test is the need for the defendant to present a triable defence on the merits. The affidavit relied upon by Leslie contains no detailed facts that respond to the claim. It does contain a recitation that "the facts set forth in the motion are true and correct". In his motion he asserts that "the plaintiff’s allegations were a fairytale without any admissible evidence" and goes on to assert that the plaintiff "misled the court by deposing that the alleged funds involved in the 1998 issue were bank account assets of [the estate]" while adding that they were "illegal personal/funds bank accounts operated by the plaintiff in a dead man’s name". These are broad allegations without any detail or evidence to support them.

[32] Leslie's non-specific assertions are to be contrasted with the detailed information that was included in the motion record that was placed before Spence J. in December 1999 on the occasion of the motion for default judgment. That evidence included a copy of a cheque for $118,700 payable to "L.C. Cohen in trust for Jack Cohen's beneficiaries" that was negotiated through an account in the name of L.C. Cohen on January 23, 1998. Leslie’s affidavit says nothing about that transaction. It likewise says nothing about a further cheque in favor of "L.C. Cohen in trust for Jack Cohen's beneficiaries" in the amount of $3,600, that was also deposited in L.C. Cohen's account on January 23, 1998. There is similarly no explanation for the transfer of $119,000 from that account to another account in the name of L.C. Cohen. The evidence before Spence J. also included a signed agreement of indemnity in relation to certain lost share certificates purportedly executed in the name of Jack Cohen on February 19, 1998 (2½ years after Jack’s death). This document showed Jack’s address as the Post Office Box in the Sheraton Center used by Leslie as his address for service. Leslie's motion materials say nothing about this evidence.

[33] The foregoing evidence, which was placed before Spence J. in December 1999, supports the conclusion that that Sharon’s allegations were well-founded. Save for the broad denials made in his motion, Leslie does not address them at all. One would have expected that he would have proffered some explanation for this evidence, but he failed to do so. I conclude that he has failed to present a triable defence on the merits. The third branch of the test is not satisfied.

(d) Interests of justice

[34] I am mindful of the directive in Peterbilt, supra, that "[t]he motion judge must … ultimately determine whether the interests of justice favor an order setting aside the default judgment. In doing so, the motion judge will have regard to the potential prejudice to the moving party should the motion be dismissed, the potential prejudice to the respondent should the motion be allowed, and the effect of any order the motion judge may make on the overall integrity of the administration of justice."

[35] I acknowledge the prejudice to Leslie should the motion be dismissed, since the judgment against him will stand. Should the motion be allowed, however, Sharon will be put in the position of attempting to prove allegations that are now at least 16 years old. As mentioned above, the Crown has already decided that it will not take any steps to pursue a prosecution against Leslie in relation to his activities in connection with Jack’s estate, by reason of the unavailability of witnesses. Sharon will be similarly disadvantaged if she is now put to the test of proving her case, given the passage of time. Some of her lawyers' records from that era are unavailable. The prejudice to her is substantial. To allow a defendant to return to court 14 years after the fact, to set aside a judgment that was obtained against him regularly, in a proceeding of which he had notice and to which he chose not to respond, and to compel the plaintiff to attempt to prove facts this long after the events in question, would reflect adversely on the integrity of the administration of justice. This consideration therefore dictates against granting the relief sought by Leslie.

conclusion and disposition

[36] For these reasons, I conclude that the moving party defendant, Leslie Charles Cohen has failed to establish that the order of Spence J. dated December 20, 1999 should be set aside. His motion is therefore dismissed, and the judgment against him stands.

[37] In relation to costs, if the parties cannot agree, they may make written submissions as follows:

(a) Sharon shall serve her bill of costs on Leslie, accompanied by written submissions, within fifteen days of the release of these reasons.

(b) Leslie shall serve his response on Sharon within fifteen days thereafter. Should he fail to do so as required, Sharon may skip step (c) and submit the materials she has prepared as provided in (c) below.

(c) Sharon shall serve her reply, if any, within ten days thereafter.

(d) In all cases, the written submissions shall be limited to three pages, plus bills of costs.

(e) I direct that counsel for Sharon shall collect copies of all parties' submissions and arrange to have that package delivered to me in care of Judges' Administration, Room 170 at 361 University as soon as the final exchange of materials has been completed. To be clear, no materials should be filed individually: rather, counsel for Sharon will assemble a single package for delivery as described above.

Stinson J.

Date: February 7, 2014