CITATION: Moll v. Campbell, 2015 ONSC 3868
COURT FILE NO.: CV-13-490986
DATE: 20150616
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DAVID JACK MOLL IN HIS CAPACITY AS ESTATE TRUSTEE OF THE ESTATE OF OLIVE NORTH HARMAN, DECEASED
Plaintiff
– and –
WAYNE CAMPBELL, HEATHER CAMPBELL, ROBERT WILLIAM WILSON, THE PUBLIC GUARDIAN AND TRUSTEE (ONTARIO) and TRAVELERS INSURANCE COMPANY OF CANADA AS SUCCESSOR FOR THE LONDON GUARANTEE INSURANCE COMPANY
Defendants
David Moll, for the Plaintiff
Jane E. Sirdevan, for the Defendant Robert William Wilson
No one appearing for the other Defendants
HEARD: June 4, 2015
FAIETA, j
REASONS FOR DECISION
[1] The defendant Wilson brings this motion for an Order to: (1) set aside the Noting in Default dated April 15, 2014; and, (2) set aside the Judgment of the Honourable Mr. Justice Perell dated August 27, 2014.
Background
[2] The Statement of Claim in this action was issued on October 17, 2013. Damages in the amount of $80,000 are claimed.
[3] It is alleged that:
• Olive North Harman (“Ms. Harman”) had not been capable of managing her property since about 1994;
• Ms. Harman’s son acted as her guardian for property from about 1994 until his death in the late 1990s;
• The Office of the Public Guardian and Trustee (“PGT”) acted as the guardian for Ms. Harman’s property until September 7, 2000;
• On September 7, 2000, the PGT approved an application by the defendants Wayne Campbell and Heather Campbell (the “Campbells”) to act as guardian of Ms. Harman’s property;
• The application to the PGT included a surety bond for the benefit of Ms. Harman’s estate obtained from the London Guarantee Insurance Company that was paid for by the Estate of Ms. Harman;
• The defendant Robert William Wilson (“Wilson”) is a lawyer who represented the Campbells;
• Wilson acted unreasonably by not consulting with the beneficiaries of Ms. Harman’s estate regarding investment decisions he made unilaterally concerning Ms. Harman’s assets;
• Wilson neglected to modify the investment plan for Ms. Harman’s assets and acted as an imprudent and unreasonable guardian for property as most of her assets were in low income cash investment;
• Upon the Campbells learning that they were not beneficiaries under Ms. Harman’s will, they neglected their duties as guardians of Ms. Harman’s property and they allowed the defendant Wilson to act as the de facto guardian of Ms. Harman’s property;
• Ms. Harman died on November 27, 2004, at the age of 105;
• Wilson provided the plaintiff with a partial Statement of the Assets of Ms. Harman’s Estate on February 23, 2005;
• The plaintiff obtained a Certificate of Appointment of Estate Trustee With a Will on August 16, 2005;
• The plaintiff is the Estate Trustee of Ms. Harman’s estate;
• On August 24, 2005, the plaintiff requested an accounting from Wilson including particulars of the Estate’s property, including particulars of the BMO Nesbitt Burns account, the storage locker and monies held by Wilson in trust;
• In June 2006 the plaintiff commenced an application seeking, amongst other things, an accounting;
• On October 30, 2008 Wilson was examined by the plaintiff in relation to this application and Wilson claimed privilege with respect to investment discussions;
• On June 16, 2010 a court order was obtained that required the Campbells to undertake an accounting for the period of their statutory guardianship by an expert to allow the Campbells to satisfy an order for the passing of accounts for their period of statutory guardianship;
• An accounting, dated October 18, 2011, was prepared for the Campbells for the period from September 21, 2000, to April 11, 2006 (the “Adelman Report”);
• The plaintiff alleges that he discovered the following damages to Ms. Harman’s Estate upon reviewing the Adelman Report: (1) $2,160 unaccounted for; (2) $11,322 unnecessarily spent for the storage of Ms. Harman’s personal property; (3) $28,836 paid to Wilson for legal fees; (4) $3,228 paid towards a surety bond premium upon removal of the guardianship from the PGT to the Campbells; (5) compensation in the amount of $9,002.59 paid by the Estate to the PGT; (6) annual rate of return on investments of the Estate’s assets was 2.6 percent and should have been 4 percent;
• The plaintiff states that Wilson was responsible for most of the damages as lawyer for the Campbells and by assuming de facto guardianship over the property and acting negligently in that capacity, and by breaching fiduciary and statutory duties.
[4] Wilson was personally served with a copy of the Statement of Claim on October 29, 2013.[^1]
[5] On November 29, 2013 the plaintiff’s solicitors sent the following letter to Wilson:
We suggest that you contact the Lawyers’ Professional Indemnity Corporation (LawPRO) with respect to this claim if you have not already done so.
We also expect to receive from you a Statement of Defence, or a reasonable settlement offer with respect to this claim, by December 15, 2013, failing which we will pursue default proceedings against you, without further notice to you.
[6] On December 11, 2013, the plaintiff’s solicitors sent another letter to Wilson which advised him that although the claim against the PGT was being discontinued, a claim was still being pursued against him. The letter states:
…Please note that the above-noted procedures do not affect your obligation to provide a Statement of Defence, or a reasonable settlement offer in lieu thereof, to us in respect of the above-noted action, by December 15, 2013, as indicated to you in our correspondence of November 29, 2013.[^2]
[7] The plaintiff’s solicitor left messages for Wilson on December 30, 2013, February 6, 2014, and February 13, 2014, which were not returned.[^3]
[8] On April 2, 2014, the plaintiff’s solicitor sent the following letter to LawPRO:
We are writing to advise that we commenced the above-noted action on October 17, 2013, against various parties, including Robert Wilson, a lawyer practicing in Ontario, who has apparently neglected to respond to this action in any manner despite our numerous efforts to reach him.
The defendant lawyer, whose full name is Robert William Wilson, was served with the Statement of Claim in the above-noted action on October 29, 2013.
Thereafter, we forwarded correspondence to Robert William Wilson dated November 29, 2013 and December 11, 2013, requesting that he respond to the Statement of Claim and suggesting that he contact LawPRO with respect to the claim against him. A copy of these letters to Robert William Wilson are enclosed. In addition, we left telephone messages with legal staff at this office on December 30, 2013, and February 6, 2013, requesting that he contact us. However, he has still not responded to us with respect to the above-noted action.
Please advise as to whether LawPRO intends to contact Robert William Wilson with respect to this matter, and if so, please advise as to Robert William Wilson’s intentions with respect to this action. We intend to commence default proceedings against him if he does not deliver his Statement of Defence shortly.[^4] [emphasis added]
[9] On April 14, 2014, LawPRO responded as follows:
Please be advised that we are unable to accept this matter, as it is the responsibility of the lawyer involved to report any claim or potential claim to LawPRO.
We have forwarded a copy of your correspondence to the lawyer inviting a report in accordance with our usual procedure.[^5] [emphasis added]
[10] On April 15, 2014, Wilson was noted in default.
[11] On August 27, 2014, default judgment was granted against Wilson and the Campbells in the amount of $76,129.81 plus costs of $18,000.
[12] By letter dated November 5, 2014 the firm of Gardiner Roberts LLP advised the plaintiff that they had been retained to represent Wilson. They had been jointly retained by LawPRO and Wilson. The letter stated “…I have limited information about the matter and trust that you will not initiate any default proceedings against Mr. Wilson without providing me with reasonable notice of your intention to do so.”[^6]
[13] Wilson served a Notice of Intent to Defend on November 19, 2014.[^7]
[14] On December 1, 2014, counsel for the plaintiff advised counsel for Wilson that default judgment had been granted on August 27, 2014.
[15] On December 2, 2014, counsel for Wilson advised that it was bringing this motion to set aside the default judgment as against Wilson.
[16] On December 4, 2014, Wilson served this Notice of Motion on the plaintiff. It was originally returnable on January 27, 2015, but was adjourned to April 14, 2015, to accommodate the plaintiff’s availability.[^8]
[17] The defendant Wayne Campbell passed away on November 14, 2014. The plaintiff is now unable to obtain relevant evidence from the defendant Wayne Campbell.[^9] Further, the defendant Heather Campbell is living in a group home and is likely a “mentally incapable person.”[^10]
Discussion
[18] Rule 19.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides that a judgment against a defendant who has been noted in default that is signed by the registrar may be set aside or varied by the Court on such terms as are just. On setting aside a judgment the Court may also set aside the noting of default.
[19] The following factors must be considered on a motion to aside a default judgment:
a. Was the motion brought promptly after the defendant learned of the default judgment?
b. Is there a plausible excuse or explanation for the defendant’s default in complying with the Rules?
c. Do the facts establish that the defendant has an arguable defence on the merits? In other words, does the defence have an “air of reality”?
d. Does the potential prejudice to the moving party if the motion is dismissed outweigh the potential prejudice to the respondent should the motion be granted?
e. What is the effect of any order that the Court might make on the overall integrity of the administration of justice?[^11]
[20] The above factors are not rigid rules. The Court’s ultimate task is to determine whether the interests of justice favour granting the Order. Accordingly, the particular circumstances of each case must be considered to determine whether it is just to relieve the defendant from the consequences of its default even if not all of the factors are satisfied.[^12]
Was the motion to set aside the default judgment brought promptly?
[21] The default judgment was issued on August 27, 2014. On December 1, 2014, the plaintiff advised counsel for Wilson that default judgment had been granted. A motion to set aside the default judgment was delivered on December 4, 2014.
[22] The plaintiff submits that Wilson has not provided any evidence of when he learned of the default judgment or what prompted him to contact LawPRO. Accordingly, the plaintiff suggests that, as a result, I infer that Wilson contacted LawPRO in November 2014 because he had become aware of the default judgment.
[23] It is not reasonable to infer that Wilson was aware of the default judgment prior to contacting LawPRO as both the letter from Gardiner Roberts LLP dated November 5, 2014, and the delivery of a Notice of Intent to Defend on November 19, 2014, suggests that both Wilson and his counsel were unaware that default judgment had been entered. Further, there is no evidence that the plaintiff advised Wilson that default judgment had been entered against him prior to December 1, 2014.
[24] Accordingly, I find that Wilson learned of the existence of the default judgment on December 1, 2014, and moved promptly to set aside the default judgment after learning of its existence.
Is there a plausible excuse or explanation for the defendant Wilson’s default in complying with the Rules?
[25] Wilson provides the following explanation for failing to respond to the Statement of Claim:
…I confirm that I was served with the Statement of Claim on October 29, 2013. However, I did not respond to the claim because I believed it to be so wholly lacking in merit that it did not require a response. Unfortunately, at the time, I did not consider the consequences to me of not defending, regardless of the merits, and that by failing to do so I may be deemed to admit the allegations against me.
I appreciate now the error of judgment on my part. The claim has now been reported to LawPRO who have appointed defence counsel on my behalf to respond to the plaintiff’s claim. I verily believe that I have an arguable defence on the merits as set out below and appeal to the discretion of this Honourable Court to permit me the opportunity to defend the allegations against me on a full evidentiary record.
In the circumstances, the within motion was scheduled as quickly as possible once my counsel, Jane Sirdevan, and I first became aware of the default judgment against me.[^13]
[26] This explanation is not plausible for several reasons.
[27] First, Wilson admits having read the Statement of Claim and having determined that it did not have any merit whatsoever. In reading the claim he would have seen the bold text found on page 1 of the Statement of Claim that warns defendants about the consequence of ignoring a Statement of Claim. It states:
IF YOU FAIL TO DEFEND THIS PROCEEDING, JUDGMENT MAY BE GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. If you wish to defend this proceeding but are unable to pay legal fees, legal aid may be available to you by contacting a local Legal Aid Office.
[28] Second, Wilson was reminded of the above consequences of failing to defend this action in letters, described above, sent to him on November 29, 2013, and December 11, 2013.
[29] Third, Wilson has been a member of the Law Society of Upper Canada at least since 2001. Given his profession, and many years of experience, it is ridiculous for him to suggest that he was unaware that a default judgment might result if he did not defend against the Statement of Claim. He characterized this alleged ignorance as an “error of judgment.” To suggest that he only learned otherwise on December 1, 2013, is beyond belief.
[30] In my view, Wilson has not provided a plausible excuse for his default in complying the Rules of Civil Procedure.
Is there an arguable defence?
[31] A defendant who seeks to set aside a default judgment must adduce evidence disclosing an arguable defence on the merits. The affidavits must show the nature of the defence and set forth facts which will enable the Court to decide whether or not there was a matter which would afford a defence to the action.[^14]
[32] In showing a defence on the merits, the defendant need not show that the defence will inevitably succeed; to set aside a default judgment, the defendant should show that his or her defence has an air of reality and that there is a genuine issue requiring a trial.[^15] The Court should not engage in a detailed examination of the merits of the defence proposed as it would only serve to turn a motion to set aside a default judgment into a motion for summary judgment.[^16]
[33] Wilson’s affidavit[^17] and the proposed Statement of Defence assert that:
a. Wilson was retained by the Campbells and he was not retained by Ms. Harman or her Estate. Accordingly, he did not owe any duties to Ms. Harman or her Estate;
b. Whether Wilson assumed the role as Ms. Harman’s de facto statutory guardian is a genuine issue requiring a trial;
c. In the alternative, if such duties were owed to Ms. Harman, Wilson submits that no such duties were breached and that expert evidence and a trial is required to determine the standard of care in those circumstances and whether any loss was caused by such breach, if any;
d. The Substitute Decisions Act, 1992, S.O. 1992, c. 30, s. 17(12) requires that a statutory guardian shall manage the property in accordance with the management plan approved by the PGT (which, amongst other things, required storage of Ms. Harman’s general household items for disposal in accordance with her will, and which required consolidation of her financial assets), and accordingly, any alleged loss to Ms. Harman must be measured against what was required by the management plan;
e. There is no basis in law to hold Wilson personally liable for fees paid in connection with the surety bond which was required by the PGT as a condition of the approval of the Campbells’ application to be appointed as joint statutory guardians;
f. Wilson was not unjustly enriched on the basis of the legal fees that he charged throughout the period of the statutory guardianship and is not obliged to return all the fees he received over four years related to the guardianship;
g. Wilson submits that the claims against him are barred pursuant to the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, in light of the fact that all matters complained of in the Statement of Claim were discoverable more than two years prior to the claim being issued.
[34] In my view, Wilson’s affidavit generally sets forth sufficient facts to show that the defences raised by the defendant Wilson have an air of reality and raise arguable defences on the merits.
Relative Prejudice
[35] Wilson submits if the default judgment is not set aside then he will be denied an opportunity to present a defence on the merits. He also submits that the amount of the default judgment, totaling $94,129.81, would have the potential to cause him serious financial hardship. Wilson has submitted no evidence to support this assertion. In response, the plaintiff states that LawPRO will most likely cover a significant portion, if not all, of the default judgment. Similarly, the plaintiff has submitted no evidence to support this assertion.
[36] The plaintiff states that it will be prejudiced by the loss of two key witnesses if the default judgment is set aside. Specifically, the plaintiff will be without the evidence of the Campbells in relation to their dealing with Wilson and, in particular, related to whether Wilson was a de facto guardian of the Estate.
[37] Wilson does not deny that the plaintiff’s case is prejudiced by the death of Mr. Campbell on November 14, 2014, nor does he explain why the plaintiff is not prejudiced by Mr. Campbell’s death.
[38] With respect to Ms. Campbell, in oral argument Wilson submitted that there has been no change in her mental status since the time of default. However there is no evidence to support this assertion as Dr. Brennagh’s assessment was dated June 1, 2014, but Wilson was obliged to file a Statement of Defence over six months earlier by November 18, 2013.
[39] The plaintiff also claims that if the default judgment is set aside that it will incur further legal costs. In my view, this form of prejudice will likely be compensated, at least partially, in the event that the action is successful depending on whether costs are awarded on a partial, substantial or full indemnity basis.
[40] In my view, the prejudice to the plaintiff, described above, outweighs the prejudice to Wilson.
Administration of Justice
[41] In oral argument Wilson stated that the default judgment is based on an affidavit which was unfair, inaccurate and misleading. He takes issue with paragraph 30 of the affidavit of David Moll, sworn July 30, 2014, which states that upon his appointment as Estate Trustee on August 16, 2005, he unsuccessfully attempted to obtain from Wilson an accounting with respect to his de facto period of statutory guardianship. Wilson asserts that records from the Bank of Montreal were provided and that he attended an examination in 2008. In my view, this hardly constitutes an accounting. As noted earlier, an accounting was ordered by this Court on June 16, 2010 and resulted in the Adelman Report.
[42] On the other hand, the plaintiff takes the position that Wilson’s failure to defend this action was unreasonable and showed a careless disregard for this Court’s legal process.
[43] The plaintiff relies on Hanratty v. Woods,[^18] where the Court stated:
Looking at all the circumstances in this case, I see no reason why it would be in the interests of justice to set aside the default judgment. The chronology of events reveals that the defendants were well aware of the need to reach an agreement with the plaintiff or to file a defence. They ignored the clear warning by plaintiffs’ counsel that they would be noted in default if they did not file a defence by a specified date, and they only came to life again once the plaintiff took steps to enforce his judgment. While debtors have rights, so too do creditors. It is not open to an alleged debtor to turn his back deliberately on a claim initiated against him and then, when it suits his purposes (and may protect his pocket book) seek to do that which he should have done a good year before. Such conduct, in my view, is simply an attempt by a debtor to game the system and no interest of justice is served by rewarding such conduct. [emphasis added]
[44] The plaintiff also relies upon Canadian Imperial Bank of Commerce v. Petten:[^19]
Civil litigation is slow. The Rules of Civil Procedure are the framework within which a plaintiff may bring its action and move that action forward to eventual judgment. This process is an essential feature of an ordered society under the Rule of Law. Those fundamental principles are compromised if the process for obtaining judgment is too slow and too costly. And those fundamental principles are compromised if defendants may defy the process for months or years, thereby delaying a just resolution, on the merits.
Thus it is a default judgment resulting from a defendant “gaming the system” or taking a “calculated risk” in not defending will not be set aside: …
Certainly where the court can conclude that there is an oblique motive by a defendant in failing to defend a claim, then a motion to set aside a default judgment is unlikely to succeed. But there does not have to be an oblique motive. Indeed, the court may pile insult on top of misery in making such a finding, as is often the case, debtors fail to defend because of stress and anxiety. There is an objective standard of reasonableness to be applied to the totality of the circumstances given rise to the default, and any delay in moving to set the default aside. Where a defendant has not acted reasonably, the court should not set aside the default, even if the court cannot determine why the defendant proceeded as he did. [emphasis added]
[45] The plaintiff submits that Wilson was well aware of the need to file a Statement of Defence but nevertheless flouted his obligation to do so. If his explanation is believed, he took a calculated risk that his inaction would be a sufficient answer to this lawsuit.
Conclusions
[46] The Court’s ultimate task on a motion to set aside a default judgment is to determine whether the interests of justice favour granting the order.[^20]
[47] Having regard to the considerations described above, I conclude that the interests of justice do not favour setting aside the aside the default judgment. Accordingly, I dismiss the motion.
[48] The explanation provided by Wilson for his failure to file a Statement of Defence is implausible, if not ridiculous.
[49] Further, the administration of justice favours the plaintiff. Wilson did not respond to repeated warnings and communications from the plaintiff, including a letter from the plaintiff forwarded to him by LawPRO. If Wilson’s explanation is believed, he ignored the plaintiff’s action and hoped it would be dismissed. He took a calculated risk and lost. It is not in the interests of justice to condone the action of a defendant who buries his head in the sand once he is sued, especially if he is a member of the Law Society of Upper Canada, and therefore should have appreciated the risks and potential consequences of that strategy.
[50] As well, the prejudice suffered by the plaintiff outweighs the prejudice suffered by the defendant as the plaintiff’s ability to establish that Wilson was the de facto guardian of the Estate is compromised by the loss of one, if not both, of the Campbells.
[51] While Wilson has an arguable defence on the merits, and, perhaps with the intervention of LawPRO, moved quickly to bring a motion to set aside the default judgment, it is my view that the interests of justice do not favour setting aside the default judgment.
[52] I ask that the parties make best efforts to settle the issue of costs. If they are unable to do so, then the plaintiff shall file his submissions by June 24, 2015 and Wilson shall file his submissions by June 30, 2015. The parties’ submissions on costs shall be a maximum of two pages in length along with an outline of costs.
Mr. Justice M. Faieta
Released: June 16, 2015
CITATION: Moll v. Campbell, 2015 ONSC 3868
COURT FILE NO.: CV-13-490986
DATE: 20150616
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DAVID JACK MOLL IN HIS CAPACITY AS ESTATE TRUSTEE OF THE ESTATE OF OLIVE NORTH HARMAN, DECEASED
Plaintiff
– and –
WAYNE CAMPBELL, HEATHER CAMPBELL, ROBERT WILLIAM WILSON, THE PUBLIC GUARDIAN AND TRUSTEE (ONTARIO) and TRAVELERS INSURANCE COMPANY OF CANADA AS SUCCESSOR FOR THE LONDON GUARANTEE INSURANCE COMPANY
Defendants
REASONS FOR JUDGMENT
Mr. Justice M. Faieta
Released: June 16, 2015
[^1]: Affidavit of Ali Mian, sworn May 28, 2015, para. 6. [^2]: Affidavit of Ali Mian, sworn May 28, 2015, Exhibit B. [^3]: Affidavit of Ali Mian, sworn May 28, 2015, paras. 9-11. [^4]: Affidavit of Ali Mian, sworn May 28, 2015, para. 12. [^5]: Affidavit of Ali Mian, sworn May 28, 2015, para. 13. [^6]: Affidavit of Robert William Wilson, sworn March 23, 2015, Exhibit J. [^7]: Affidavit of Robert William Wilson, sworn March 23, 2015, Exhibit K. [^8]: Affidavit of Robert William Wilson, sworn March 23, 2015, paras. 40-44. [^9]: Affidavit of Ali Mian, sworn May 28, 2015, para. 19. [^10]: Affidavit of David Jack Moll, sworn July 30, 2014, Exhibit G, Letter from Dr. Michael Brennagh, June 1, 2014. [^11]: Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, 119 O.R. (3d) 561, at paras. 47-51. [^12]: Mountain View Farms, at paras. 47, 50-51. [^13]: Affidavit of Robert William Wilson, sworn March 23, 2015, at paras. 31-33. [^14]: Bayview Financial, L.P. v. Spartan Collision Corp., 2007 CanLII 14304 (ON SC), [2007] O.J. No. 1609, at para. 33. [^15]: Education Invention Centre of Canada v. Algoma University, 2015 ONSC 1200, [2015] O.J. No. 855, at para. 8. [^16]: Xpress View Inc. v. Daco Manufacturing Inc., [2002] O.J. No. 4078, at para. 11. [^17]: Affidavit of Robert William Wilson, sworn March 23, 2015, paras. 45-53. [^18]: [2009] O.J. No. 3448, at para. 18. [^19]: [2010] O.J. No. 5236, at paras 7-9. [^20]: Mountain View Farms Ltd., at para. 47.```