1493201 Ontario Limited v. Giannoylis, 2016 ONSC 1210
CITATION: 1493201 Ontario Limited v. Giannoylis, 2016 ONSC 1210
COURT FILE NO.: CV-15-532639
DATE: 20160217
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1493201 ONTARIO LIMITED O/A ROYAL QUEEN DEVELOPMENTS
Applicant
– and –
SOPHIA GIANNOYLIS
Respondent
Gregory W. Roberts, for the Plaintiff
Sophia Giannoylis, on her own behalf
HEARD: February 8, 2016
M. D. FAIETA, J
REASONS FOR DECISION
INTRODUCTION
[1] The Respondent, Sophia Giannoylis, brings this motion for an Order to set aside the default Judgment issued by Justice Carole Brown on September 8, 2015. For the reasons set out below, I dismiss this motion.
BACKGROUND
[2] The Applicant, 1493201 Ontario Limited o/a Royal Queen Developments, sold a residential condominium unit (“Unit”), including a parking space and a storage unit, to the Respondent pursuant to an Agreement of Purchase and Sale dated April 21, 2012 (“APS”). An Occupancy Agreement was appended as Schedule “B” to the APS.
[3] The closing date for the sale of the Unit was June 26, 2015. The Respondent failed to tender performance in accordance with the APS. The Applicant accepted the Respondent’s termination of the APS. The Applicant changed the lock on the Unit on July 3, 2015. On July 6, 2015, the Respondent arranged for the lock to the Unit to be changed and she moved into the Unit without the Applicant’s permission. The Respondent refused to give up possession.
[4] On July 17, 2015 the Applicant commenced this application seeking: (1) a declaration that the Respondent breached the terms of the APS; (2) determination of the APS and the Occupancy Agreement and forfeiture of the deposits paid by the Respondent to the Applicant in the sum of $34,450,00; (3) leave to permit the Applicant to issue a Writ of Possession with respect to the Unit; (4) damages for all costs and expenses reasonably incurred by the Applicant to restore the Unit to the condition existing immediately before the occupancy date and for all legal fees and expenses incurred with respect to the taking of occupancy of the Unit.
[5] The Application was heard on September 8, 2015. The Respondent did not attend the hearing. Justice Carole Brown granted the Application and endorsed the Application Record as follows:
While the Respondent emailed Mr. Roberts on Aug. 29, 2015 to advise that she would seek an adjournment today, and was advised by return email that the Applicant would not consent to an adjournment, no one appeared today for the Respondent when this was heard.
Based on the Application Record, the affidavit of H. Shain with attached exhibits & on the factum, I am satisfied that the Applicant has established a breach of the terms of the Agreement and the Occupancy Agreement. The Respondent failed to deliver the required funds and documentation on closing and therefore wrongfully repudiated the APS. The Applicant then changed the locks and advertised the unit for sale to mitigate its losses. The Respondent then re-entered the unit, changed the locks and refused to vacate. She has been residing in the unit since July 16, 2015 unlawfully and has paid no occupancy rent since June.
The Applicant was entitled pursuant to the APS and the Occupancy Agreement to terminate the contract and re-take possession upon the Respondent’s breach of the APS.
The Applicant is entitled to forfeiture of the deposits paid by the Respondent in the amount of $34,450. The Respondent will forthwith vacate possession of the unit. The Applicant is granted leave to issue a Writ of Possession. I further order damages of $8,991.68 comprising legal fees incurred regarding the said breach and occupancy rent.
[6] By Order dated September 18, 2015 Justice Firestone set a timetable for the Respondent’s motion to set aside the Judgment granted by Justice Brown. The motion was returnable on October 21, 2015. On October 21, 2015 the Respondent sought, and was granted, an adjournment for the purpose of retaining a lawyer. Justice Dow granted an adjournment on the following terms:
Matter adjourned to December 17, 2015 at 10 a.m. PEREMPTORY to Ms. Giannoylis on the following terms:
Ms. Giannoylis deliver to counsel for 149 the certified draft for $6,040 today;
Ms. Giannoylis pay or reimburse 149 all proper utility expenses from June 1, 2015 to date (after receipt of reconciliation statement from counsel for 149 not to exceed $900 and subject to re adjustment;
Ms. Giannoylis will provide post-dated cheques dated November 1, 2015 and December 1, 2015 by October 25, 2015 for occupancy costs to counsel for 149;
149 will facilitate Ms. Giannoylis having access to the parking garage and a parking spot with same;
Ms. Giannoylis to pay costs thrown away for today of $1,000 within the next 30 days to counsel for 149 with the balance of costs regarding this matter reserved to the judge hearing the matter.
[7] On December 17, 2015 the Respondent’s motion was not on the court list. She attended the Court’s motions office and adjourned her motion to March 17, 2016. On December 21, 2015 counsel for the Applicant arranged to have its motion to dismiss the Respondent’s motion to set aside default judgment heard on January 11, 2016. On January 11, 2016 I adjourned the Applicant’s motion to February 8, 2016 at the Respondent’s request because she had not received a copy of the Applicant’s Motion Record despite having been sent the material by email and Canada Post. Both motions raise the same issue – namely, whether Justice Brown’s decision should be set aside.
ANALYSIS
[8] A judgment granted on an application may be set aside under Rule 38.11 of the Rules of Civil Procedure which states:
(1) A party or other person who is affected by a judgment on an application made without notice or who fails to appear at the hearing of an application through accident, mistake or insufficient notice may move to set aside or vary the judgment, by a notice of motion that is served forthwith after the judgment comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.
(3) On a motion under subrule (1), the judgment may be set aside or varied on such terms as are just. [Emphasis added]
[9] The parties did not provide me with any case law regarding the test for a motion under Rule 38.11. Rule 38.11 is similar to Rule 19.08 of the Rules of Civil Procedure, which permits the Court to set aside a default judgment granted after a defendant has been noted in default, in that both rules permit a Court to set aside a Judgment “on such terms as are just”.
[10] Given the similarity of these provisions and the circumstances in which they operate, it is my view that it is appropriate to adopt the test outlined in Intact Insurance Company v. Kisel[^1] for setting aside default judgments to motions to set aside judgment granted on an application under Rule 38.11.
[11] In Kisel the Ontario Court of Appeal stated that a Court has to decide whether, in the particular circumstances of the case, it is just to relieve a defendant from the consequence of default. The following criteria, although not rigid rules, apply to a motion under Rule 19.08:
(a) Was the motion brought promptly after the Defendant learned of the default judgment?
(b) Does the Defendant have a plausible excuse or explanation for the default?
(c) Does the Defendant have an arguable defence on the merits?
(d) What is the potential prejudice to the Defendant should the motion be dismissed, and the potential prejudice to the Plaintiff should the motion be allowed?
(e) What would be the effect of any order the Court might make on the overall integrity of the administration of justice?[^2]
[12] In light of Rule 38.11 and Kisel, the applicable criteria on a motion under Rule 38.11 are as follows:
(a) Was the application made without notice or did the Respondent fail to appear at the hearing of the application through accident, mistake or insufficient notice?
(b) Was the Respondent’s motion to set aside the judgment brought forthwith after the judgment came to her attention?
(c) Did the respondent’s motion name the first available hearing date that was at least three days after service of the notice of motion?
(d) Does the Respondent have an arguable defence on the merits?
(e) What is the potential prejudice to the Respondent should the motion be dismissed and what is the potential prejudice to the Applicant should the motion be allowed?
(f) What would be the effect of any order the Court might make on the overall integrity of the administration of justice?
[13] I now turn to consider these criteria in light of the evidence.
Was the application made without notice or did the Respondent fail to appear at the hearing of the application through accident, mistake or insufficient notice?
[14] The Respondent provides the following explanation:
The Applicant had a hearing scheduled for 10 am, on September the 8^th^, 2015, at 393 University Avenue. Unfortunately, there was some confusion about the time and I believed at the time that the matter was to be heard at 2 pm, as I had another pressing court matter that was scheduled for 2 pm the following week at another courthouse for an unrelated matter and mixed up the times, thus mistakenly missing the initial scheduled hearing time.
[15] I accept this explanation. It shows that the Respondent failed to attend the hearing through mistake. I do not accept the Applicant’s submission that the Respondent’s failure to attend the hearing was deliberate and, accordingly, for that reason, this Court’s decision in Gomes v. Poulos[^3] is distinguishable.
Was the Respondent’s motion to set aside the judgment brought forthwith after the judgment came to her attention?
[16] The Judgment came to the Respondent’s attention on September 8, 2015 when she attended at the court at 2 pm. The Respondent attended Civil Practice Court on September 18, 2015 to obtain a date for the hearing of this motion. In my view, the Respondent brought this motion “forthwith”. Any subsequent delays in the hearing of this motion were approved by this Court and, accordingly, do not bear on the conclusion that the motion was brought forthwith.
Does the Respondent have an arguable defence to the application on the merits?
[17] The Applicant’s evidence is as follows:
• The Respondent agreed to purchase the Unit on April 21, 2012;
• The Respondent paid deposits in the sum of $34,000.00;
• The City of Toronto granted an occupancy permit for the Unit on May 14, 2014;
• The Respondent signed a covenant on October 1, 2014 whereby it agreed to be bound by the Occupancy Agreement appended to the APS;
• The Description and Declaration was registered on June 1, 2015 thereby creating a condominium corporation;
• On June 3, 2015 counsel for the Applicant advised counsel for the Respondent that the closing date for the purchase of the Unit would be June 26, 2015;
• On June 23, 2015 counsel for the Respondent sent the following letter to counsel for the Applicant:
I apologize for the lateness of this request, but my client is asking for a 3 week extension for the final closing. The request is as a result of her needing more time to secure her first mortgage on the premises. Her mother, who was referred to in previous correspondence, passed away and my client is currently involved in a family law dispute which has occupied a great deal of her time. The 3 week extension would be greatly appreciated. Please advise. [Emphasis added]
• On June 24, 2015 counsel for the Applicant responded:
We acknowledge receipt of your correspondence of June 23, 2015. Our client is not prepared to grant any extensions of the Closing Date and requires that this transaction be completed on June 26, 2015.
• On June 26, 2015, counsel for the Applicant sent a further letter to counsel for the Respondent:
Further to our letter of June 24, 2015, your client has failed to deliver the required funds and documents on the Closing Date and has wrongfully repudiated the agreement of Purchase and Sale and Occupancy Agreement.
Accordingly, the transaction is now terminated, of no further force or effect except for our clients’ damages as of the date of this letter, your client’s former unit will be advertised for sale and sold immediately with all of the proceeds paid to our client. This is without prejudice to our clients’ rights to seek any further losses, costs and expenses or damages by our client.
In accordance with section 10 of the Occupancy Agreement, your client is to forthwith surrender occupancy ot our client. In the event that your client or any person under her authority has entered or resides in the unit, they must vacate on or before the 2^nd^ day of July, 2015. That is the date that my client has fixed as the date for retaking possession and will enforce this right through a bailiff or the Courts, all of which will be added to your clients costs on a full indemnity basis.
• On July 6, 2015 the Unit was accessed by an unknown male and the Respondent changed the lock, moved in and has refused to give up vacant possession.[^4]
[18] The Respondent states:
The funds and contract were not readily available to the developer by 5:00 p.m. on June 26, 2015 (the requested date), for a number of reasons, including but not limited to:
The steps I took in completing the transaction and obtaining the required funds by the timeframe given by the developer (through their legal counsel to my then lawyer, Stanley Clapp) were reasonable;
Please see attached Exhibit “E”, an email to my lawyer Stanley Clapp dated June 26, 2015 with an approval letter for the mortgage. I was assured by both lenders I was speaking with that day that the funds would be available early the following week, please see emails from two Mortgage Specialists, Lynne Gilchrist and Matt McCluskey in Exhibit “F”. The Developer’s lawyer refused to close, did not offer any flexibility in the matter, even though it was short notice and I had reasonably asked for an extension in advance which was denied.
I was told by my lawyer that they were granting extension to most if not all the other buyers in the building that were requiring one. They even provided an option in their “online closing documents” for extensions with reasonable fees penalty fees which I was not aware of at that time.
Please find attached “Exhibit G” a summary of events from June 3, 2015 – July 14, 2015 which includes some of the attempts that I made in obtaining the mortgage prior to June 26, 2015. This summary was sent by email to my second lawyer (for this matter), Mr. Allan Mohammed. Mr. Mohammed unsuccessfully attempted to rectify the issues and tender the funds.
There were also a number of outstanding issues pertaining to my parking spot, locker and a situation that occurred in the underground garage with another “unit owner” in November 2014; that I was requesting through my then lawyer, Mr. Clapp to be reasonably addressed, rectified and/or compensated for prior to any confirmed closing. Please see Exhibit “H”, a letter sent by Mr. Clapp on my behalf regarding the “parking spot” issue.
The “Occupancy Agreement” was signed on October 1, 2014. When I proceeded to make attempts to actually occupy the unit, my originally assigned locker and parking spot were being reassigned without my knowledge and being used by other at all times. This coupled with harassment at the building made it very difficult to freely, comfortably and safely enjoy my unit. The Applicant claims that I resided in the unit since July 16, 2015, even though my belongings (including furnishings and my son’s belongings) were in the unit since October 1, 2014. I did not stay in the unit on a consistent basis however, this was mainly due to the reasons mentioned above.[^5]
[19] The Respondent also notes that paragraph 9 of the Occupancy Agreement provides a five-day grace period in the event of default. It states:
The Purchaser shall be deemed to be in default under the Purchase Agreement and under this Occupancy Agreement in each and every of the following events, unless same has been remedied by the Purchaser within five (5) days of his being notified in writing by the Vendor or its solicitors of such default:
(d) upon the failure by the Purchaser to fully comply with the provisions of the Purchase Agreement or this Occupancy Agreement.
[20] However, that provision has no effect as the Respondent did not tender performance of the APS within that five-day period. Ms. Gilchrist of the Royal Bank of Canada provided a mortgage approval letter on June 30, 2015 to the Respondent. Mr. Clapp advised the Respondent that he had tried to get the APS “resurrected” and had provided a copy of the RBC mortgage commitment on July 6, 2015; however, the Applicant was not prepared to close with the Respondent under the terms of the APS and as such, they were re-listing the Unit for sale at a new price.
[21] The Respondent did not tender the required funds and documents to complete her purchase of the Unit on June 26, 2015. She was provided with slightly more than the three weeks’ notice of the closing date as required by the APS.[^6] The five-day grace period under the Occupancy Agreement raises no possible defence as the Respondent did not attempt to tender on the Applicant within that period which ended on July 1, 2015 and had only received a mortgage commitment one day earlier. Although the Respondent has submitted that she did not close because of concerns with the property, these grounds are not reflected in her contemporaneous emails and other records.[^7] No such concerns were raised in correspondence with Mr. Clapp nor were they communicated by Mr. Clapp to the Applicant. In my view, the Respondent has not raised an arguable defence to this application.
Relative Prejudice
[22] The Applicant submits that setting aside the Judgment would result in it having to incur additional legal costs to pursue this action. Such prejudice is compensable in the event that the Application is successful. The Applicant did not express any other concerns. On the other hand, the Respondent will have lost the purchase of the Unit that she purchased in 2012 and any increase in market value associated with that Unit.
Administration of Justice
[23] The Applicant submits that the Respondent is “gaming the system”. In my view, the Respondent is doing no such thing. The Applicant acknowledged that the Respondent has complied with the Orders of this Court, particularly all Orders related to the payment of costs, occupancy fees or other amounts.
CONCLUSIONS
[24] In my view, the interests of justice would not be served if Justice Brown’s Judgment were to be set aside given that I have found that the Respondent has not raised an arguable defence to the Application. Accordingly, I dismiss the Respondent’s motion to set aside the Judgment.
[25] The Applicant seeks costs on a partial indemnity basis in the amount of $9,596.40. Counsel for the Applicant has included in his outline of costs 4.0 hours at $350 per hour for his attendance before Justice Dow, who awarded $1,000.00 in costs. While the outline of costs reflected the amount ordered by Justice Dow it nevertheless includes the additional $400.00 for that attendance which was not awarded. In the circumstances, I find that it is fair and reasonable for the Respondent to pay costs of this motion in the amount of $5,000.00 to the Applicant.
Mr. Justice M. D. Faieta
Released: February 17, 2016
CITATION: 1493201 Ontario Limited v. Giannoylis, 2016 ONSC 1210
COURT FILE NO.: CV-15-532639
DATE: 20160217
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1493201 ONTARIO LIMITED O/A ROYAL QUEEN DEVELOPMENTS
Applicant
– and –
SOPHIA GIANNOYLIS
Respondent
REASONS FOR JUDGMENT
Mr. Justice M. D. Faieta
Released: February 17, 2016
[^1]: 2015 ONCA 205, 125 O.R. (3d) 365.
[^2]: Kisel, at para. 14.
[^3]: 2015 ONSC 5355, [2015] O.J. No. 4663.
[^4]: Affidavit of Howard Shain, affirmed August 4, 2015.
[^5]: Affidavit of Sophia Giannoylis, affirmed October 2, 2015.
[^6]: Section 10 of the Schedule of Additional Terms and Provisions to the APS requires at least 21 days’ notice of the closing date. The Respondent was provided with 23 days’ notice.
[^7]: See Exhibit “F” to the affidavit of Sophia Giannoylis, affirmed October 2, 2015, and in particular the summary of events sent by the Respondent to Mr. Mohammed on July 17, 2015.