Court File and Parties

CITATION: Kelly v. Mikhael, 2016 ONSC 6296

COURT FILE NO.: 15-63131

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Joseph Kevin Marc Kelly and Stephen James Kelly - Plaintiffs v. Tony Mikhael, Chady Mikhael and Mikhael Holdings Inc. - Defendants

BEFORE: Mr. Justice Robert L. Maranger

COUNSEL: Self-represented (Philip Burger as agent to argue motion), for the Plaintiffs (responding party) Nizar Ayoub, for the Defendants (moving party)

HEARD: October 7, 2016

Endorsement

[1] This was a motion brought by the defendants for an order pursuant to rule 19.03 of the Rules of Civil Procedure, R.R.O. 1990, setting aside the noting of default and allowing the filing of a statement of defence. The defendant moving party at the outset abandoned a motion to dismiss the action on the basis of a limitation period defence.

[2] After considering the affidavit evidence, the factums, and the representations of each side I make the following relevant findings of fact necessary to adjudicate the single issue:

• On June 04, 2015 a Notice of Action, amended Notice of Action and Statement of Claim were served upon Tony Mikhael and Mikhael Holdings Inc.
• The self-represented defendant, requested and was granted an extension to file a statement of defence to July 20, 2015 by counsel representing the plaintiffs.
• On July 21, 2015 the plaintiffs noted Tony Mikhael and the Holding company in default. Chady Mikhael was not yet served.
• On July 22, 2015 the self-represented defendant attempted to resolve the matter by providing copies of releases signed by the plaintiffs concerning issues raised in the Statement of Claim.
• On July 22, 2015 a Statement of Defence was faxed to counsel representing the plaintiffs. The defendant was not aware that he had been noted in default until the following day July 23, 2015 when he attempted to file the Statement of Defence.
• The defendant then attempted to obtain a consent to file a Statement of Defence, ultimately only receiving a response of November 9, 2015 by counsel representing the defendants indicating that one of the terms for setting aside the noting of default would be a waiver of the limitation period defence.
• The plaintiff took no steps of any kind to obtain a default judgment, simply maintaining the position that setting aside the noting of default was conditional on waving the limitation period defence.
• On March 7, 2016 Mr. Ayoub was hired by the defendants. He prepared a draft Statement of Defence which was faxed to counsel for the plaintiffs.
• The defences raised in the Statement of Defence are meritorious.
• The plaintiff’s would not be prejudiced by any order setting aside the default that could not be remedied by way of a costs order.
• Each side is responsible for the delay in moving this matter forward.

[3] The court has a broad discretion to set aside a noting of default on terms that are just. In the case of Intact Insurance Company v. Kisel, 2015 ONCA 205 set out some of the relevant factors to be considered at paras: 12 and 13:

[12] Rules 19.03(1) and 19.08(1) provide the basis for setting aside a noting of default and a default judgment, respectively. Both rules give the court discretion to set aside the default “on such terms as are just.” This court has held that the tests to be met under these rules are not identical. See Metropolitan Toronto Condominium Corp. No. 706 v. Bardmore Developments Ltd. (1991), 1991 CanLII 7095 (ON CA), 3 O.R. (3d) 278 (Ont. C.A.), at pp. 284-85.

[13] When exercising its discretion to set aside a noting of default, a court should assess “the context and factual situation” of the case: Bardmore, at p. 285. It should particularly consider such factors as the behaviour of the plaintiff and the defendant; the length of the defendant’s delay; the reasons for the delay; and the complexity and value of the claim. These factors are not exhaustive. See Nobosoft Corp. v. No Borders Inc., 2007 ONCA 444, 225 O.A.C. 36, at para. 3; Flintoff v. von Anhalt, 2010 ONCA 786, [2010] O.J. No. 4963, at para. 7. Some decisions have also considered whether setting aside the noting of default would prejudice a party relying on it: see e.g. Enbridge Gas Distribution Inc. v. 135 Marlee Holdings Inc., [2005] O.J. No. 4327, at para. 8. Only in extreme circumstances, however, should the court require a defendant who has been noted in default to demonstrate an arguable defence on the merits: Bardmore, at p. 285.

[4] The motion to set aside the default was originally scheduled for June 28, 2016 this was adjourned due to the unavailability on that date of that particular counsel.

[5] This is a case where the noting of default should be set aside, and in my estimation could have easily been set aside on July 23, 2015 and later on March 7, 2016.

[6] The terms for setting it aside should have been a reasonable amount for the costs of any delay. Nothing more nothing less. That being said the defendants waited an inordinate amount of time to bring this motion.

[7] Counsel representing the defendants now seek an order setting aside the noting of default without cost. While that is tempting, as indicated in my findings of fact, the amount of time that has expired between July 23, 2015 and now is in part the responsibility of the defendants and cannot be exclusively visited upon the plaintiffs. In my view justice would be served here by granting an order setting aside the noting of default, allowing the defendants 15 days to file a statement of defence and fixing costs against them in the all-inclusive sum, for all attendances, including the attendance on June 28, 2016 in the sum of $1500 payable forthwith.

[8] Therefore the court orders that the noting of default is hereby set aside, the defendants will be allowed until 15 days from the release of this decision to file a statement of defence, the defendants will also take costs fixed the sum of $1500 to the plaintiffs.

Mr. Justice Robert L. Maranger

Date: October 7, 2016

CITATION: Kelly v. Mikhael, 2016 ONSC 6296

COURT FILE NO.: 15-63131

SUPERIOR COURT OF JUSTICE

RE: Joseph Kevin Marc Kelly and Stephen James Kelly

Plaintiffs

AND

Tony Mikhael, Chady Mikhael and Mikhael Holdings Inc.

Defendants

BEFORE: Mr. Justice Robert L. Maranger

COUNSEL: Self-represented (Philip Burger as agent to argue motion), for the Plaintiffs (responding party) Nizar Ayoub, for the Defendants (moving party)

ENDORSEMENT

Maranger J.

Released: October 7, 2016