Minister of National Revenue v. Cisse, 2016 ONSC 7217
CITATION: Minister of National Revenue v. Cisse, 2016 ONSC 7217
COURT FILE NO.: CV 13-487680
DATE: 2016/12/21
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Her Majesty the Queen in Right of Canada as Represented by The Minister of National Revenue
AND:
Sockhna-Dior Cisse
BEFORE: The Honourable Madam Justice Jasmine Akbarali.
COUNSEL: Gabriel C. Brutto, Agent for David L. Nakelsky, for the Plaintiff
Sokhna-Dior Cissé, Self-Represented
HEARD: November 18, 2016
ENDORSEMENT
[1] The defendant/moving party, Sokhna-Dior Cissé, brings this motion to set aside default judgment obtained on February 20, 2014. I granted her motion with written reasons to follow.
[2] Cissé obtained Canada student loans beginning in 2006. After 2007, her loans were obtained under a program for students with disabilities. Cissé provided me with evidence indicating that she continues to be disabled.
[3] Cissé did not repay her loans. However, she entered into a payment arrangement with the plaintiff, The Queen in Right of Canada as Represented by the Minister of National Revenue (the “Minister”), and began making monthly payments of $300 towards her indebtedness. On January 29, 2014, about a week after the parties entered into this arrangement, Cissé was served with a statement of claim. After being served, Cissé contacted the Canada Revenue Agency. The representative with whom she spoke confirmed the payment arrangement and told Cissé she could ignore the claim. As a result, Cissé did not defend the claim.
[4] The Minister acknowledges that there was a payment arrangement between it and Cissé.
[5] Remarkably, in the face of this agreement, and the CRA’s advice to Cissé that she could ignore the claim, the Minister then proceeded to obtain default judgment on its claim. As a liquidated debt, the default judgment was signed by the Registrar. Cissé received notice of the default judgment in late March, 2014, and again contacted the CRA. She was told that “nothing could be done” about the judgment, but that they had her payment arrangement on file, and she should just continue making her payments. She did continue to make the payments.
[6] Even more remarkably, the Minister then obtained a Notice of Garnishment and began to garnish Cissé’s wages while she was making payments under the payment arrangement. Cissé received notice of the garnishment from her employer in early September, 2014. Understandably, Cissé stopped making payments under the payment arrangement in the face of the garnishment of her wages.
[7] The Minister’s evidence is that, after Cissé had contact with the CRA on September 5, 2014, the Minister’s lawyers were advised of the contact and they then contacted Cissé. The Minister’s lawyer’s law clerk deposed that, on being advised by Cissé of the payment arrangement between the parties, the law clerk contacted the Canada Student Loans office which confirmed the payment arrangement. However, the law clerk says that she was “instructed that unless the garnishment caused hardship, the garnishment would remain in force”. This is a clear admission that the Minister breached its agreement with Cissé.
[8] The Minister’s lawyers then contacted Cissé to tell her that the garnishment would continue unless it caused her hardship (a position the Minister was not entitled to take in view of the agreement between the parties). The Minister’s Counsel told Cissé to contact them if the garnishment caused her hardship. Cissé did contact them and indicated she wanted to file a complaint.
[9] Two months later, the Minister’s lawyer, on instructions from the Minister, contacted Cissé to tell her that the Minister would put the garnishment “on hold” and accept the payment arrangement Cissé had made with CRA. That payment arrangement continues. The Minister’s counsel sought to put before me a statement of account which he said would show that payments under the payment arrangement have been inconsistent. I declined to exercise my discretion to accept the statement. It had not been filed in accordance with the time limits under the Rules. Cissé, a self-represented party, had not had the opportunity to review it. In any event, it was not appended to an affidavit. I also declined to order an adjournment of the motion to allow the statement to be filed. There is no reason a current statement of account, assuming it was relevant, could not have been filed in accordance with the Rules.
[10] The default judgment and notice of garnishment has obviously caused Cissé hardship. Importantly, the default judgment, which the Minister was not entitled to obtain, disqualifies Cissé from repayment assistance programs for which she deposes she would otherwise qualify. She now seeks to have the default judgment set aside. She explained that she did not move earlier because she was overwhelmed coping with her disabilities and because she did not have the assistance of a lawyer, which she could not afford.
[11] In Mountain View Farms Ltd v. McQueen, 2014 ONCA 194 at paras. 48-50, the Court of Appeal for Ontario set out five factors that are relevant when considering whether to set aside default judgment. The factors are not rigid rules, but the court must consider the particular circumstances of each case to decide whether it is just to relieve the defendant from the consequences of her default. I comment on each of these below.
Whether the motion was brought promptly after the defendant learned of the default judgment
[12] Here the motion was not brought promptly, although Cissé has explained the delay. I will address her explanation below.
Whether there is a plausible excuse or explanation for the defendant’s default in complying with the Rules
[13] I accept Cissé’s explanation for not defending the action in view of her discussions with the CRA. I also accept Cissé’s explanation for not moving to set aside the default judgment earlier.
Whether the facts establish that the defendant has an arguable defence on the merits
[14] I accept that the pre-existing payment arrangement between the parties is an arguable defence to the statement of claim. Cissé has also raised other arguable defences, including that certain grants were not applied to her balance such that the loan balance reflected in the default judgment may be inflated.
The potential prejudice to the moving party should the motion be dismissed, and the potential prejudice to the respondent should the motion be allowed
[15] The potential prejudice to Cissé if the motion is dismissed is great. The conduct of the Minister to date indicates that Cissé remains at risk for further garnishment outside the terms of the payment arrangement. Moreover, she is automatically disqualified from repayment assistance programs which could be of great benefit to her. In contrast, there is no potential prejudice to the Minister. It has been receiving funds from Cissé under the agreement between the parties towards the loan balance – an agreement that was in place before the statement of claim was served. There are remedies available to the Minister to address any future default.
The effect of any order the court might make on the overall integrity of the administration of justice
[16] This factor weighs very heavily in my decision. In my view, dismissing this motion would harm the integrity of the administration of justice. It is wholly unacceptable for the plaintiff – Her Majesty the Queen in Right of Canada as Represented by the Minister of National Revenue – to make a payment plan with Cissé for repayment of student loans, many of which were obtained under the Students with Disabilities program, and then serve and prosecute an action when Cissé’s payments under the payment arrangement were in good standing. To do so - and then obtain default judgment against Cissé after assuring her the claim could be ignored in favour of the payment plan - is exploitative and abusive conduct.
[17] More than that, the Minister obtained default judgment from this court without disclosing that it had entered into a payment plan with Cissé and that the payments were in good standing. The Minister’s actions were an abuse of this court’s process. The Minister was not honest with the court.
[18] The Minister’s choice to then have its cake and eat it too, by taking two months to decide whether it would proceed with the payment plan or the garnishment (to which, I stress again, it was not entitled) was a further instance of abusive and exploitative conduct. The Minister was able to get away with it because, by virtue of its garnishment of Cissé’s wages, Cissé could not afford a lawyer to protect her interests.
[19] Accordingly, I set aside the default judgment. It should never have been obtained in the first place.
[20] I also set aside the Notice of Garnishment and any Writs of Seizure and Sale that have been obtained. I direct the Minister’s counsel to provide notice to the sheriff forthwith that the default judgment, Notice of Garnishment and any Writs of Seizure and Sale that were obtained are now set aside.
[21] I also direct that the Minister’s counsel arrange a case conference with Cissé to be convened before me under Rule 50.13, and to take place between January 16, 2017 and January 31, 2017. At that time we will discuss the next steps in the action, including the timing for filing the statement of defence.
[22] I further direct that counsel for the Minister shall attend to preparing a formal order reflecting this endorsement for Cissé’s approval as to form and content. Counsel for the Minister shall then attend to having the order issued and entered forthwith.
[23] On the matter of costs, I rely on the decision of the Court of Appeal for Ontario in Fong v. Chan (1999), 181 DLR 4th 614 (Ont. C.A.) at paras. 21-26. A self-represented litigant may be awarded costs at the court’s discretion. Costs awards are designed to foster three fundamental purposes: indemnifying the successful party; encouraging settlement; and discouraging and sanctioning inappropriate behavior by litigants.
[24] In this case, Cissé sought $1,000 in costs for indemnification and an additional $2,000 to sanction the abusive behavior of the Minister. The Minister submitted that an award of $500 was appropriate for indemnification and that no costs award was required to sanction its behavior.
[25] I award $1,250 in costs payable by the Minister to Cissé within fourteen days. This amount is not to be set off by the Minister against any monies owing to the Minister by Cissé. I make this award to both, indemnify Cissé for the time she spent preparing her materials, which were very helpful to the court, and to discourage and sanction the wholly inappropriate behaviour in which the Minister has engaged, both towards Cissé and in its abuse of this court’s process.
The Honourable Madam Justice Akbarali
Date: December 21, 2016.