Harlson et al. v. Lewis et al, 2016 ONSC 1675

CITATION: Harlson et al. v. Lewis et al, 2016 ONSC 1675

COURT FILE NO.: CV-14-145 CV-14-146

DATE: 2016-03-10

SUPERIOR COURT OF JUSTICE - ONTARIO

BETWEEN: CV-14-145 Ted Harlson, Christine McHale, Gary McHale, Hetty VanHalteren and Jacob VanHalteren Plaintiffs

• and-

OPP Commissioner Chris Lewis, Sergeant Brad Moore, Inspector Phil Carter, Chief Superintendent John Cain and Her Majesty the Queen in right of Ontario Defendants

AND BETWEEN: CV-14-146 Stuart Laughton, Ted Harlson, Gary McHale, Randy Fleming, Jacob VanHalteren and Doug Fleming Plaintiffs

-and-

OPP Commissioner Chris Lewis, Sergeant Brad Moore, Inspector Phil Carter, and Her Majesty the Queen in right of Ontario Defendants

BEFORE: The Honourable Mr. Justice R.J. Nightingale

COUNSEL: Gary McHale, Ted Harlson, Christine McHale, Jacob VanHalteren, Stuart Laughton, Randy Fleming, Doug Fleming, self-represented plaintiffs appearing; Hetty VanHalteren, self-represented plaintiff not appearing

Domenica Polla, Counsel for the Defendants

HEARD: February 25, 2016

ENDORSEMENT

[1] The Defendants bring this motion for both actions under Rule19.03 (1) to set aside their being noted in default because of their failure to deliver statements of defence. The defendants’ lawyer had accepted service of the Statements of Claim on their behalf on December 2, 2014. Only the plaintiff Gary McHale (“McHale”) noted all the defendants in both actions in default on April 7, 2015. Most of the remaining plaintiffs in both actions did so later as well but only after being served with the defendants’ motion to set aside the notings in default.

[2] The plaintiffs individually filed affidavits in response and agreed McHale would be the lead plaintiff in submissions and that they would then consider making additional submissions if they wished. Randy Fleming and Jacob VanHalteren did.

The plaintiff filed notices of discontinuance against the OPP defendants in both actions on September 21, 2015, five months after these motions were served, leaving only the Her Majesty the Queen (“the Crown”) as defendant in both actions.

Chronology of Events

[3] The chronology of events was described in the detailed affidavit of Mr. Bala (“Bala”), counsel for the defendants.

[4] These two actions were commenced by the plaintiffs on November 3, 2014 against the defendants after the defendant the Crown was served in August 2014 with Bala accepting service from the plaintiff McHale of the required 60 days notice under the Proceedings against the Crown Act (“PACA”).

[5] The two actions claim substantial damages based on the wrongful arrest, conspiracy of the defendants and the defendants’ breach of the plaintiffs’ rights under the Canadian Charter of Rights and Freedoms (“the Charter”) arising out of incidences that occurred in Caledonia on August 26 and September 12, 2012 respectively. Each action claims a total of $20 million in damages from the defendants.

[6] McHale then forwarded the statements of claim to Bala on November 14, 2014 asking that he accept service on behalf of all the defendants. The plaintiffs were aware he was counsel for them because of other existing and related actions commenced by McHale and some of the plaintiffs.

[7] Bala responded by email that same day confirming he was out of the office and asked McHale if he was available to discuss how to move several outstanding matters along (i.e. these and other existing actions), more details of which are provided below. McHale stated he was available and hoped Bala could get back to them prior to a meeting with the other co-plaintiffs on November 22, 2014.

[8] Bala attempted to contact counsel for McHale acting in these other existing actions on November 24, 2014 to discuss the next steps in those actions.

[9] On December 2, 2014 McHale forwarded an email at 12:22 AM to Bala insisting on a response and his acceptance of service of the statements of claim by the end of that day.

[10] Bala responded five hours later at 5:36 AM confirming he was unsure which lawsuit McHale was talking about and was fairly sure he had accepted service of one of them. He confirmed he had tried calling McHale.

[11] McHale responded by email at 11:18 AM stating he had no record of Bala accepting service and asked that he acknowledge service on the defendants and that they could talk by telephone later that week.

[12] Bala that day confirmed that he accepted service of the statements of claim and indicated his availability to talk to the McHale by telephone that week.

[13] On December 10, 2014 McHale left a voice message at Bala’s office stating that he was available to discuss lawsuit issues. Bala responded by email on December 17 confirming he had been away for a few days and noticed McHale’s voicemail and asked McHale to call him at his cell phone number.

[14] Bala confirms McHale did not return his call and that they did not speak until April 8, 2015 when Bala learned from the courthouse that the defendants had been noted in default in these two actions.

[15] Within an hour of learning that, Bala telephoned McHale and asked him for his consent to set aside the noting in default. His affidavit confirmed McHale indicated a willingness to consent, they discussed a tentative plan and McHale stated he would discuss the same with the other plaintiffs.

[16] That evidence was not denied or disputed by any of the plaintiffs in their responding affidavits. McHale on April 9 in an email to Bala stated that he had scheduled a motion for summary judgment on May 5, 2015 despite his not notifying the defendant of the default as required under section 18 of the PACA. He suggested that he had received no letters or email stating that the defendants intended to defend the case nor did he receive anything seeking any changes to the statement of claim. He stated he would have an answer from the other plaintiffs by the following day regarding whether they would consent to setting aside the notings in default.

[17] Bala responded the same day by email to McHale referring to developing a timetable and the plaintiffs making amendments to the statements of claim in both actions and to the other outstanding related actions.

[18] McHale responded by email to Bala on April 12 confirming that as a group the plaintiffs decided not to consent to setting aside the default proceedings and made reference to the May 5, 2015 court appearance being available for the defendants’ motion or alternatively the plaintiffs’ summary judgment default motion.

[19] Four days later on April 16, 2015, Bala served the plaintiffs by overnight courier and regular mail to all eight plaintiffs and in addition to McHale by email notices of the defendants’ cross motion to set aside the noting in default for both these actions scheduled for the same date of May 5, 2015.

[20] On April 21, after the defendants’ notices of this motion had been served, McHale sent an email to Bala officially putting the government on notice in accordance with Section 18 of PACA that he was seeking judgment against the defendants for being in default. He also stated he was aware the other plaintiffs had filed to note the defendants in default.

[21] However, in fact, McHale had attended with some but not all the other plaintiffs to do so on April 21. Laughton did not at all and Randy Fleming did not do so until December 14, 2015.

[22] Defendants’ counsel immediately prepared and served their motion record and factum by courier dated April 22, 2015 on all of the plaintiffs to set aside the notings of default returnable on May 5, 2015. Their motion record included the defendants’ statements of the defence in both actions which responded to all of the plaintiffs’ allegations in their statements of claim.

[23] McHale that same day confirmed his desire to cross examine Bala which McHale acknowledged would be only after he filed the plaintiffs’ affidavits in response to the defendants’ motion.

[24] Bala confirmed on April 23 his availability for those cross examinations before the May 5 court date.

[25] That same day McHale again confirmed he knew that he had to file a motion record before he could conduct Mr. Bala’s cross-examination and the parties agreed to adjourn the defendants’ motions pending those cross examinations.

[26] The parties then entered into settlement discussions to set aside the noting of the defendants in default, the terms of which were not disclosed to the Court, but they were not successful in reaching a settlement.

[27] After a series of delays, details which are referred to below, the plaintiffs finally served their responding affidavits and motion record to these motions eight months later on December 21, 2015. Cross examinations were conducted in January 2016 and this motion was heard on February 25, 2016.

Applicable Law

[28] Rule 19.03(1) gives the Court discretion to set aside the default on such terms as are just.

[29] The Ontario Court of Appeal in Kisel v. Intact Insurance Company 2015 ONCA 205 confirmed that when exercising its discretion to set aside a noting of default, the Court should assess the context and factual situation of the case. It should particularly consider the following factors which are not exhaustive:

(1) the behaviour of the plaintiff and the defendant;

(2) the length of the defendants’ delay;

(3) the reasons for the delay;

(4) the complexity and value of the claim;

(5) whether setting aside the noting in default would prejudice a party relying on it.

Only in extreme circumstances should the Court require a defendant who has been noted in default to demonstrate an arguable defence on the merits.

Contextual Background of these Two Actions

[30] Bala in his affidavit explained that these two default actions were in addition to four other related actions involving some of these plaintiffs and the defendants.

[31] Initially, two actions were commenced in 2007 by McHale and a Mr. Vandermas through their legal counsel against the Crown because of incidents arising in Caledonia in 2006. Similar claims of wrongful arrest, conspiracy and breach of the plaintiffs’ rights under the Charter were made therein because of those incidents. The Crown delivered statements of defence in June 2008. The actions stalled and the defendants’ motion was heard on July 21, 2014 to strike portions of the statements of claim and the decision of Justice Gordon granting it with leave to the plaintiffs to make amendments was made on September 22, 2014.

[32] McHale and others had also personally commenced another action alleging similar causes of action on April 7, 2014 against the Crown and the OPP officers arising out of their alleged wrongful arrest in Caledonia on July 7, 2012 (CV-14-50). McHale advised Bala on several occasions that amendments to the statement of claim would be forthcoming after Bala advised him of defects in the wording of the claims. McHale however never did provide an amended statement of claim.

[33] McHale then in July 2014 provided the Crown through Bala as its counsel with notice of another claim which contains some factual and legal overlap to the 2007 actions and the CV-14-50 action. In November 2014 McHale advised Bala that the action had been issued but would be amended prior to service.

[34] Bala’s affidavit confirms that Mr. McHale was well aware of Bala’s and other Counsel’s involvement of the Crown Law Office Civil (CLOC) in responding to and defending all of these actions since 2013 for him personally and earlier for the others. At the hearing, McHale acknowledged he was the lead plaintiff, did not act for the other plaintiffs but effectively was the conduit of all correspondence with Bala involving these 2 actions although each plaintiff acted for himself/herself otherwise.

[35] Bala deposed in his affidavit that as of December 17, 2014, which was the last time he had any communication with McHale prior to the defendants being noted in default in these two actions, he understood that the statements of claim in these two actions would either be amended further or that McHale and he would discuss the best way to advance them.

[36] He referred to his correspondence with McHale including on September 22, 2014 proposing that McHale proceed with commencing any actions in the normal course as the parties awaited the decision of Justice Gordon regarding the pleadings in the 2007 actions and that the plaintiffs would amend the pleadings in the new actions prior to the defendants bringing any motions with respect to those pleadings. This would speed up the process and reduce the level of disagreement the parties had on the adequacy of the plaintiffs’ pleadings.

[37] Bala deposed that the correspondence between them confirmed he was unsure on December 17 as to the status of McHale’s multiple claims, that this would be a subject of discussions between them and that he believed the statements of claim in the default actions did not comply with the decision of Gordon J. This fueled his belief that there was some intent of the plaintiffs to amend these pleadings further because of the conspiracy claims in the 2007 actions being struck by Gordon J because they were statute barred and lacked particularity.

[38] All of the plaintiffs filed affidavits in response to the defendants’ motion albeit not until December 21, 2015.

[39] In McHale’s 44 paragraph affidavit, almost all of them refer to the allegations he has made against the Crown and OPP from 2006 forward. The only paragraphs relating to the issues in this motion regarding the default issue is paragraph 40 referring to a telephone conversation between him and Bala on April 28, 2015. McHale stated he wanted Bala to swear an affidavit due to several lies in the assistant’s affidavit. He said he provided Bala with some examples of false statements in that affidavit including that there was “no activity in this file until October 2013” referring to his 2007 lawsuit handled by his lawyer. However, that affidavit was withdrawn in April 2015 and Bala then filed his own affidavit based on his personal information for use on this motion at McHale’s request.

[40] In particular no reference to or denial whatsoever was made by McHale in his affidavit of the evidence of Bala regarding his reasons for not delivering statements of defence in these actions. The very short individual affidavits of the other plaintiffs also do not dispute that evidence of Bala except to confirm that Bala had no direct communication with them at the outset of these claims which is consistent with McHale being the lead plaintiff and conduit for all information on their behalf on these claims.

[41] Bala in cross examination confirmed that he read the statements of claim when they were received but couldn’t remember the date. McHale submitted that Bala was not in fact mistaken in his belief that he thought further amendments were forthcoming because of Gordon J’s decision as McHale had made the required amendments already. He went further and suggested Bala was intentionally lying and misleading the Court in that evidence suggesting he never read those statements of claim that he received and that he was not awaiting amended statements of claim.

[42] McHale was advised by the Court that that was a very serious allegation to make especially since none of the plaintiffs in their own affidavit material or during their cross-examinations disputed or denied that evidence.

[43] Moreover, even when a defendant originally has no intent to defend, the noting default should be set aside where the defendant moves relatively promptly to set aside the default and there is no prejudice to the plaintiff. Speck v. Alma Mater Society of Queens University Inc. 2015 ONSC 137.

[44] Moreover it is also significant that McHale in his own affidavit and in submissions confirmed that one these two actions started originally as a Small Claims Court claim by Christine McHale against the defendant Brad Moore of the OPP in 2012. The Court was advised that after defences were filed in that and 3 related Small Claims Court claims, those claims were withdrawn with costs payable by the plaintiffs to defendants of $500 for each action in order that they could be refiled in this Court.

[45] Accordingly, McHale prepared and handled those claims and McHale and the plaintiffs who were named in those Small Claims Court claims were obviously aware that as those claims arising out of these incidents in Caledonia had been defended, any new actions arising out of the same incidents in the Superior Court of Justice were also going to be defended.

The Behaviour of the Plaintiffs and Defendants

[46] Given the contextual background of these two actions with all of the other similar and overlapping actions of the plaintiffs, Bala’s explanation for not delivering statements of defence as required within the strict timelines of the Rules is a reasonable and plausible one.

[47] As it turns out, the adequacy of the amendments to the statements of claim in the 2007 actions was still not resolved as at the hearing of this motion, a further motion to Gordon J to resolve that had been heard in early February 2016 with the decision reserved.

[48] In any event, in view of the nature of these actions, their complexity and quantum of damages claimed, that would normally result in some indulgence by opposing counsel or self-represented parties being granted to the defendants’ counsel to deliver statements of defence outside the strict timelines of the rules.

[49] The plaintiffs obviously would have known by reasonable inference on this evidence and on the sworn admissions by some of the plaintiffs in their cross-examination that McHale had been corresponding with Bala regarding service of the statements of claim which included their claims. Despite that, all of the plaintiffs admit that at no time after they knew Bala was involved as counsel for the defendants and had accepted service of the statements of claim to save them time and that expense, none of them requested statements of defence in these actions from him or put him on notice that if he did not file statements of defence, the defendants would be noted in default.

[50] Once Bala learned that the plaintiff McHale had taken that step, he immediately asked that the default be set aside so he could file statements of defence and when that was refused, he immediately brought this motion to do so.

[51] Counsel is retained by McHale for the 2007 actions and the plaintiffs all admit they have received legal advice with respect to these two actions including this motion which originally came before me in December 15, 2015 and to date. The plaintiffs had Counsel retained by McHale for the 2007 actions attend with them on their cross-examinations on their affidavits on January 22, 2016.

[52] If counsel had done what McHale and the other plaintiffs did regarding the noting in default, he or she would likely be sanctioned because of their obligations to deal with other counsel fairly and not take advantage of missteps by opposing counsel.

[53] The lawyer should avoid sharp practice and should not take advantage without fair warning upon slips, irregularities or mistakes on the part of other lawyers not going to the merits or involving the sacrifice of the client’s rights. Garten v. Kruk 2009 CanLII 58071 (ON SCDC), 2009 O.J. No. 4438 [Div. Ct.]. Similar to that case, that obligation would be evident on the particular facts of this case.

[54] Although the plaintiffs are self represented in these actions, McHale has had considerable experience as a self represented party in Ontario courts as well as acting on behalf of others in court when he is permitted to do so. He has extensive knowledge of the Rules of Civil Procedure and an ability to conduct legal research and complete court documents as required under the Rules. All of the plaintiffs had the defendants’ factum since April 2015 and brief of legal authorities dealing with the merits of the defendants’ position on this motion since August 2015.

[55] Despite the remaining plaintiffs having been served with the defendants’ notice of motion on April 16, 2015 or shortly thereafter, they decided obviously after discussions with McHale to also note the defendants in default.

[56] It is also noteworthy that after the plaintiffs were served with the defendant’s motion, McHale recognized the plaintiffs’ obligation to deliver their motion record including their affidavits before the parties proceeded to cross examinations. McHale assured Bala he would on several occasions and in fact stated the written copy would be forwarded the next day or so. Despite that, he did not do so and missed 6 agreed upon deadlines to deliver his motion record and the motion was adjourned on four occasions including December 15, 2015.

[57] When it came before me on December 15, the plaintiffs’ record had still not been served or filed. I adjourned the motion as the plaintiffs requested the Court’s indulgence so that this motion could be heard on the merits. The plaintiffs then delivered their motion record and affidavits on December 21.

[58] The plaintiffs’ position effectively was that their requested indulgence then should be granted despite their delay of eight months in delivering their responding record so that the motion could be heard on the merits yet the defendants should not be allowed to defend these actions on the merits because of their four month delay in delivering their statements of defence.

Length of the Defendants’ Delay

[59] As indicated above, in the context of what was happening in the other actions, the initial delay of the defendants in delivering statements of defence from December 2014 to April 2015 is not unusual or unreasonable.

[60] Moreover, immediately upon being advised that the plaintiffs had noted the defendants in default, defendants’ counsel contacted McHale one hour later the same day, discussed setting it aside and a timetable for the these actions. He immediately brought this motion to do so when the plaintiffs declined to consent.

Reasons for the Delay

[61] As indicated above, Bala’s explanation for the delay appears plausible and reasonable especially as the plaintiffs provided no evidence contradicting that in their evidence. If the plaintiffs were upset that the defendants had not delivered their statements of defence, all they had to do was ask Bala for them including a warning that the defendants would be noted in default if they did not do so promptly. They did not do so.

Complexity and Value of the Claims

[62] The damages claimed by the plaintiffs are substantial totaling $20 million in each action. The issues raised by the plaintiffs involve significant public interest potentially and complex issues of tort law including the obligations of public bodies and rights of individual citizens.

[63] The plaintiffs conceded that there is significant societal interest in having these actions heard on the merits with the evidence presented on behalf of both plaintiffs and defendants rather than on the evidence of the plaintiffs only during a default hearing. It is noteworthy that section 18 of PACA requiring plaintiffs to advise the Crown of its default in proceedings is meant to allow the Crown the opportunity to rectify default issues and ensure cases are decided in the public’s interests on the merits of the claim rather than by default proceedings.

[64] Moreover, there are different dates of these overlapping claims by the plaintiffs against the defendants from 2006 to 2012. Conflicting decisions on the facts for actions tried on the merits versus by way of default proceedings should be avoided and serious consideration should be given to all actions being tried together.

Prejudice to the Plaintiffs

[65] The plaintiffs alleged no grounds of prejudice to them in their responding affidavits and factum if the defendants’ motions were allowed. McHale conceded in his submissions that there is no such prejudice.

[66] None of the actions have even reached the examination for discovery stage. I have been appointed to case manage these actions so that all future procedural issues in these actions can be handled in an expeditious manner.

Defendants’ Arguable Defence on the Merits

[67] This is not one of those extreme cases where the defendants should be required to establish they have an arguable defence on the merits. In any event, their statements of defence already included in their motion record deal with the issues raised by the plaintiffs’ statements of claim in a reasonable and plausible fashion.

Conclusion

[68] In assessing these factors, all of which favour the defendants’ position, and applying the applicable law on the motion, this is a clear case that the plaintiffs’ noting the defendants in default in both action should be set aside with the defendants, likely being the Crown only at this stage, being allowed to defend the actions on the merits.

[69] The defendants are granted leave to deliver their statements of defence within 30 days from the date of this decision unless the defendants require further directions or order from the Court regarding the adequacy of the plaintiffs’ pleadings in their statements of claim. If so the defendants can apply for directions to the Court for that purpose.

[70] If the parties are unable to agree on the issue of costs for this motion, the defendants shall provide their written submissions of no more than three pages in length together with their bill of costs and copies of any relevant offers to settle within 10 days of this decision. The plaintiffs will have a similar right of response within 7 days thereafter.

[71] I have asked the Trial Coordinator in Cayuga to canvass available dates with the parties so that I can schedule a date for a case management conference of all parties in all of these 6 related actions within the next 60 days to resolve any procedural issues and make orders to ensure all actions proceed promptly.

[72] If the plaintiffs are content that all communications regarding the case management conference with them can be conducted as a group through Mr. McHale as lead plaintiff in those actions where they are self-represented, that would save considerable time and effort for all concerned including the trial coordinator’s office. They need not do so and if not, the trial coordinator will communicate individually with them. I would ask that they notify the trial coordinator of their position within 15 days.

“Nightingale, J.”

The Honourable Justice R.J. Nightingale

Date: March 10, 2016