CITATION: Fortier v. Hope, 2015 ONSC 2749
COURT FILE NO.: 08-CV-350570PD1
DATE: 20150427
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JEFF FORTIER and KATHRYN LONG
Plaintiffs
– and –
KEVIN R. HOPE and HMP HOME INSPECTION INC. and HARRY MAURICE POCKETT
Defendants
Charles Wagman for the Plaintiffs
Margaret A. Hoy for the Defendant Harry Maurice Pockett
HEARD: April 16, 2015
PERELL, J.
REASONS FOR DECISION
[1] The Defendant Harry Maurice Pockett brings a motion to set aside the default judgment granted by Justice Grace on May 17, 2011 to the Plaintiffs Jeff Fortier and Kathryn Long. They were awarded a default judgment of $54,954.15, plus costs fixed at $5,000.
[2] On a motion to set aside a default judgment, the court will consider the following five factors: (i) whether the motion to set aside the judgment was brought promptly; (ii) whether there is a plausible excuse or explanation for the defendant’s default in complying with the Rules of Civil Procedure; (iii) whether the facts establish at least an arguable defence; (iv) the competing potential prejudice to the parties of granting or refusing to set aside the default judgment; and (v) the effect of any order on the overall integrity of the administration of justice: Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194; HSBC Securities (Canada) Inc. v. Firestar Capital Management Corp., 2008 ONCA 894; Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd., 2007 ONCA 333; Laredo Construction Inc. v. Sinnadurai (2005), 2005 CanLII 46934 (ON CA), 78 O.R. (3d) 321 (C.A.); Morgan v. Toronto (Municipality) Police Services Board, 2003 CanLII 14993 (ON CA), [2003] O.J. No. 1106 (C.A.); Nelligan v. Lindsay, [1945] O.J. No. 91 (H.C.J.).
[3] The factors, however, are not treated as rigid rules, and the court must consider the particular circumstances of each case to decide whether it is just to relieve the defendant from the consequences of his or her default: Mountain View Farms Ltd. v. McQueen, supra at para. 50; Morgan v. Toronto (Municipality) Police Services Board, supra; Chitel v. Rothbart, [1988] O.J. No. 1197 (C.A.), leave to appeal refused [1988] S.C.C.A. No. 427 (S.C.C.).
[4] In circumstances where the plaintiff has obtained a default judgment, the factor of showing a defence on the merits is particularly important because it may justify the court exercising its discretion to set aside the default judgment, even if the other factors are unsatisfied in whole or in part: Chitel v. Rothbart, supra; Morgan v. Toronto (Municipality) Police Services Board, supra. Where the defendant’s default is not inadvertent but a purposeful decision or calculated risk not to contest the action, the court may decide that it is inappropriate to set aside the default judgment: Sunlife Assurance Co. of Canada v. Premier Financial Group Inc. (c.o.b.) Premier Financial, 2013 ONCA 151; Toronto-Dominion Bank v. 718699 Ontario Inc., [1993] O.J. No. 260 (Div. Ct.); Schill & Beninger Plumbing & Heating Ltd. v. Gallagher Estate, 2001 CanLII 24134 (ON CA), [2001] O.J. No. 260 (C.A.).
[5] In the circumstances of this case, described below, if I were cynically-minded and only concerned about maintaining the Rules of Civil Procedure, I would dismiss Mr. Pockett’s motion. As a cynically-minded judge, I would conclude that his motion to set aside the default judgment was not brought promptly and that his excuses for non-compliance with the Rules of Civil Procedure, while plausible, were not convincing. As a cynically-minded judge, I would grudgingly concede that the facts established a possibly meritorious defence, but I would also note that in a fact-based standard of care and contract interpretation case, it is not difficult to show at least an arguable defence. As a cynically-minded judge, I would have to concede that in the circumstances of this case with the passage of time, Mr. Fortier and Ms. Long’s ability to prove their case of negligence or to reprove damages has not been prejudiced and I would conclude that to ensure respect for the Rules of Civil Procedure and meaningful access to justice through the court system, Mr. Pockett’s motion to set aside the default judgment should be refused.
[6] However, in the circumstances of this case, if I were concerned that I was being too cynical and too stern and that Mr. Pockett’s advanced age, poor health, pleas for procedural mercy, and his plausible excuses for delay and the possible meritorious defence of the tort claim against him combined with the absence of any genuine prejudice to Mr. Fortier’s and Ms. Long’s ability to prove their case against him with the passage of time favoured the imposition of terms and directing that the case be decided on its merits (which the administration of justice generally prefers), then I would conclude that it was appropriate to set aside the default judgment on terms.
[7] Those terms would be that: (a) the judgment would only be set aside as against Mr. Pockett; (b) the writ of execution remain in place; (c) Mr. Pockett pay to the Plaintiffs $5,000 for the costs thrown away from the default judgment; (d) Mr. Pockett pay the costs of this motion to set aside the default judgment; the costs to be settled or assessed; (e) Mr. Pockett pay $10,000 into court as security for the costs of the action; (f) the payments be made within 30 days after the costs of this motion are settled or determined; and (g) if the payments are not made, then the judgment is not set aside.
[8] For the reasons set out below, I have decided not to be cynically-minded and, therefore, I shall provide Mr. Pockett with the opportunity to prove his defence on its merits subject to the imposition of the above terms.
[9] The factual and procedural background begins in 2006, when Mr. Fortier and Ms. Long were in the market to purchase a property as an investment and as a place in which each would reside. A real estate agent showed them a property at 64 Rosedale Avenue West in Brampton, Ontario. They put in an offer, and on June 1, 2006, they signed an Agreement of Purchase and Sale to purchase the property. The Agreement of Purchase and Sale provided that the agreement was conditional upon an inspection of the property by a home inspector at their expense.
[10] Mr. Fortier and Ms. Long retained a Brampton lawyer to act for them on the purchase transaction, and Mr. Fortier and Ms. Long retained HMP Home Inspections, Mr. Pockett’s corporation, to inspect the property. Here it may be noted that there is no privity of contract with Mr. Pockett and there are several limitations on the scope of work and exculpatory provisions in the contract between Mr. Fortier and Ms. Long and HMP Home Inspections.
[11] Mr. Pockett, who is a home inspector, performed the inspection, and he delivered a building inspection report. The report did not disclose any deficiencies. In particular, the report did not disclose that the foundation of the house at the rear addition was deficient and that water was running into the rear addition and rot and mould had developed. Further, carpenter ants had infested the rear addition. But for the default judgment, it would be a triable issue about whether the failure to report these deficiencies was a breach of contract and/or professional negligence.
[12] Relying on Mr. Pockett’s inspection report, Mr. Fortier and Ms. Long waived the inspection clause in their Agreement of Purchase and Sale and closed the transaction. After the closing, they discovered deficiencies in the rear addition, and they retained In Motion Restoration and Design Team to effect repairs. The cost of removing the rear addition (which in fact never occurred) was estimated to be $47,664.26. This sum plus interest quantified Mr. Fortier’s and Ms. Long’s damage claim, and the damages claim remains as provable today as it was before Justice Grace.
[13] On March 10, 2008, Mr. Fortier and Ms. Long commenced an action against the Brampton lawyer and HMP Home Inspections. The action against the lawyer concerned his alleged failure to confirm the zoning of the property. The claim against HMP Home Inspections was for the alleged deficient property inspection.
[14] On March 13, 2008, the Statement of Claim was served on the Brampton lawyer, and on March 19, 2008, the Statement of Claim was served on HMP Home Inspections. HMP Home Inspections did not defend the action.
[15] Around this time, Mr. Pockett was added as a defendant, and Mr. Fortier and Ms. Long delivered an Amended Statement of Claim, which was personally served on Mr. Pockett on July 29, 2008. As will be noted below, Mr. Pockett was suffering from ill health at the time of service.
[16] On August 7, 2008, HMP Home Inspections was served with the Amended Statement of Claim. Mr. Pockett and HMP Home Inspections, once again, did not defend, and they were noted in default.
[17] Two years went by and in July 2010, the claim against the lawyer was mediated, and that claim was settled in accordance with written Minutes of Settlement.
[18] After the settlement was reached with the lawyer, Mr. Fortier and Ms. Long brought a motion to obtain default judgment against Mr. Pockett and HMP Home Inspections. On March 17, 2011, the motion for a default judgment came on before Justice Healy. He adjourned the motion to May 17, 2011 and directed Mr. Fortier and Ms. Long to provide additional evidence on the issue of the damages.
[19] On May 17, 2011, almost five years after the alleged deficient inspection, Justice Grace granted Mr. Fortier and Ms. Long a default judgment in the amount of $47,664.26 for damages, plus pre-judgment interest of $7,289.89, plus costs fixed at $5,000.
[20] On June 3, 2011, HMP Home Inspections and Mr. Pockett were personally served with a copy of the judgment and Justice Grace’s endorsement. Mr. Pockett has admitted that he received the judgment and that he initially took no steps to have it set aside.
[21] No payments have been made on the judgment.
[22] Recalling that the allegedly negligent inspection that is the subject of this case occurred in 2006, Mr. Pockett’s explanation for not defending the action and for not moving promptly to have the default judgment set aside in 2011 was that he had become very ill in January 2008 due to coronary artery disease. He underwent an angioplasty but suffered a mild heart attack due to the remaining blockage. After 2008, he suffered from severe rheumatoid arthritis, which included a severe flare up in 2011. The severe rheumatoid arthritis caused ongoing pain, physical complications of daily living, severe joint restrictions, and fatigue. Through 2011, Mr. Pockett says he was depressed by the pain, anxiety and incapacity. Also in 2011, he underwent bilateral knee replacements but became anemic and underwent transfusions following discharge from hospital. Mr. Pockett says that he was preoccupied with his health and was incapable of dealing with the default judgment. He, however, was ambulatory, able to drive a vehicle, and certainly capable of phoning and instructing a lawyer.
[23] The matter then appears to have become dormant until August 20, 2013, when Mr. Pockett was personally served with a Notice of Examination for a judgment debtor examination scheduled for November 13, 2013.
[24] On November 4, 2013, Margaret Hoy, a lawyer acting for Mr. Pockett, wrote a letter to Charles Wagman, Mr. Fortier’s and Ms. Long’s lawyer. Ms. Hoy stated that Mr. Pockett had been suffering from serious health problems and had been unable to defend the action. She said that she had instructions to bring a motion to set aside the default judgment and the notice of examination in aid of execution. Finally, Ms. Hoy advised that she was unable to attend the judgment debtor examination on November 13, 2013.
[25] On November 6, 2013, Mr. Wagman responded that Mr. Fortier and Ms. Long would not consent to an order setting aside the default judgment and that if Mr. Pockett wanted to bring a motion, Ms. Hoy should coordinate the date with Mr. Wagman’s assistant.
[26] Mr. Pockett did not attend the scheduled examination and a certificate of non-attendance was obtained.
[27] More time passed, and when no motion was brought to set aside the default judgment, Mr. Fortier and Ms. Long brought a motion to compel Mr. Pockett to attend an examination in aid of execution. The motion was made returnable on June 11, 2014. Mr. Wagman provided Ms. Hoy with a copy of the motion record by correspondence on January 14 and January 16, 2014.
[28] Again there was no immediate response from Ms. Hoy until June 2, 2014, at which time, she wrote to Mr. Wagman to request an adjournment of the motion returnable on June 11, 2014. The next day, Mr. Wagman responded and said an adjournment would be opposed.
[29] On June 4, 2014, Ms. Hoy wrote Mr. Wagman, and at long last, she enclosed Mr. Pockett’s Responding Record and Cross-Motion for an order setting aside the now three-year-old judgment of Justice Grace.
[30] The cross-motion was returnable on June 11, 2014 before a master, which was incorrect, because the motion is within the jurisdiction of a judge. As a result, Mr. Pockett’s motion to set aside the default judgment was adjourned, and Mr. Fortier’s and Ms. Long’s motion to compel Mr. Pockett’s attendance was adjourned sine die.
[31] More time passed until Mr. Pockett’s cross-motion was rescheduled for December 10, 2014. That motion was adjourned several more times, until it finally came on for argument on April 16, 2015 almost eight years after Mr. Pockett’s allegedly negligent inspection of a property that Mr. Fortier and Ms. Long had by then long resold.
[32] This is not a pretty picture about the progress of a civil action, and, in my opinion, Mr. Fortier and Ms. Long were acting reasonably and within their rights to refuse to set aside the default judgment.
[33] There are no technical irregularities, and the Plaintiffs complied with the Rules of Civil Procedure, and Mr. Pockett did not. Mr. Pockett would have it that he was battling for his life and too preoccupied to worry about his and his corporation’s responsibilities as a litigant, but this seems exaggerated and unlikely to have continuously been the case over the seven years of this litigation.
[34] This all said, on the merits there are several genuine issues to be tried, the litigation was slumbering for long periods, and it is conceivable that Mr. Pockett was seriously incapacitated at the crucial moments in the long history of this litigation, when he could and ought to have responded and when he easily could have avoided going into default.
[35] In my opinion, the strongest factors in Mr. Pockett’s favour for setting aside the default judgment are that there is no reason why the merits of this case can not be fairly adjudicated at this time, especially because some of the critical issues are matters of interpreting the scope of the inspection contract, which can still be fairly done notwithstanding the passage of time and provided that terms are imposed to the order setting aside the default judgment.
[36] I have set out the terms earlier in this judgment and for the above reasons and subject to those terms, I set aside Justice Grace’s default judgment.
[37] If the parties cannot agree about the costs of this motion, they may make submissions in writing beginning with the Plaintiffs’ submissions within 20 of the release of these Reasons for Decision followed by Mr. Pockett’s submissions within a further 20 days.
Perell, J.
Released: April 27 2015
CITATION: Fortier v. Hope, 2015 ONSC 2749
COURT FILE NO.: 08-CV-350570PD1
DATE: 20150427
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JEFF FORTIER and KATHRYN LONG
Plaintiffs
– and –
KEVIN R. HOPE and HMP HOME INSPECTION INC. and HARRY MAURICE POCKETT
Defendants
REASONS FOR DECISION
PERELL J.
Released: April 27, 2015