Court File and Parties

COURT FILE NO.: 08-CV-350398 PD3

MOTION HEARD: October 7, 2015

SUPERIOR COURT OF JUSTICE – ONTARIO

Re:

LUBA CASTRACANE, Estate Trustee of the Estate of IRENE CZUCZMAN, Deceased, Plaintiff

v.

ST. DEMETRIUS (UKRAINIAN CATHOLIC) DEVELOPMENT CORPORATION, Defendant

BEFORE: Master Lou Ann M. Pope

APPEARANCES: Michael Kealy, Rochon Genova LLP, for responding plaintiff Fax: 416-363-0263

Christopher Moore, Genest Murray LLP, for moving defendant Fax: 416-360-2625

REASONS FOR ENDORSEMENT

[1] The issue to be determined on this motion is whether the court should set aside the noting of default of the defendant for failure to deliver a statement of defence.

Background

[2] The underlying action involves Irene Czuczman’s alleged slip and fall on ice on January 22, 2006 at the defendant’s seniors’ residence. The plaintiff, Luba Castracane, is Irene’s Czuczman’s daughter and trustee of her mother’s estate.

[3] The statement of claim was issued on March 6, 2008, beyond the two-year limitation period.

[4] On June 3, 2008, plaintiff’s counsel sent a notice letter to the defendant advising that he had been retained for the purpose of commencing an action against the defendant. Plaintiff’s counsel requested that the defendant forward the letter to its insurance carrier. Marta Krywonis (“Krywonis”), the Director of Quality, Organizational Development and Housing of the defendant, forwarded the notice letter to the defendant’s insurer broker, Aon Canada (“Aon”). Thereafter, Krywonis was put in touch with Karen Davison (“Davison”), adjuster for Claims Pro (formerly SCM Adjusters Canada Ltd.). On June 13, 2008, Davison reported the claim to Zurich Insurance, the defendant’s insurer. Subsequently, Paul Bereza (“Bereza”) was assigned by Zurich as claims examiner. Bereza in turn gave Davison instructions on the investigation of the claim.

[5] Between June and October 2008, there is evidence of communications between Davison and plaintiff’s counsel and his office. Davison’s evidence is that on June 24, 2008 she telephoned plaintiff’s counsel and spoke with Mr. Durant’s clerk and indicated that she needed to speak to him right away; however, she did not receive a response from Mr. Durant (“Durant”). Davison did not produce documentary evidence of this telephone call. It is also Davison’s evidence that on the same day that she telephoned Durant, she met with Krywonis to investigate the claim and to obtain Krywonis’ statement. This meeting is corroborated by Krywonis evidence. It is also Krywonis’ evidence that the defendant always intended to defend this claim which was why she cooperated with Davison’s investigation, why she promptly notified Aon of Durant’s notice letter and promptly notified Davison of being served with the statement of claim on September 3, 2008.

[6] Davison’s evidence includes a letter she sent to Durant in early July, 2008 advising that her office had been retained by the defendant’s insurer to investigate the claim, that the limitation period had expired prior to the date of the notice letter and requested that he contact her to discuss the matter. Not having heard from Durant by early August, 2008, Davison sent a follow-up letter to him; however, she did not hear back from him.

[7] Subsequently on September 3, 2008, Durant’s office arranged to have the statement of claim served on the defendant, which Kryworis immediately turned over to Davison. Davison’s evidence is that she reported receipt of the statement of claim to Bereza on September 11, 2008 by way of her Adjuster Report #3; however, Davison was unable to produce any evidence that the statement of claim and her Report were sent to Bereza. Similarly, Zurich’s file does not indicate receipt of Davison’s Report or a copy of the statement of claim. There is no evidence of any communication between Bereza and Davison between September 11, 2008, the date of Davison’s report, and October 2, 2008, when Bereza instructed Davison by email to close her file, which she did the following day. Zurich’s file indicated that Bereza closed his file on October 24, 2008. Bereza’s email to Davison makes no reference to the statement of claim, which states:

Karen [Davison], please close out your file as our position is that this claim has proscribed. We can’t both keep our files open indefinitely just because the third party solicitor doesn’t have the courtesy to reply to you. Send your closing report and final fee. Thanks for your work on this.

[8] After closing her file, Davison’s evidence is that she did not receive any communications from Durant.

[9] The defendant did not obtain Bereza’s evidence for this motion regarding whether he knew that the statement of claim had been issued and served. Apparently he is no longer employed by Zurich, he was on a leave of absence from his current employment and his employer would not contact him. Rather, the defendant produced the evidence of Sisi Pan (“Pan”), Bereza’s successor at Zurich, who advised that Zurich’s claims file did not contain Davison’s report or the statement of claim.

[10] The plaintiff’s evidence is that Durant received Davison’s letter of early July 2008 in which Davison acknowledged receipt of the notice letter of June 3, 2008. Durant telephoned Davison two weeks later and left a telephone message to return his call. Davison did not return his telephone call; however, Durant acknowledges receipt of Davison’s follow-up letter of early August, 2008 which reiterates the contents of her first letter to him. Shortly thereafter on September 3, 2008, Durant’s office arranged to have the statement of claim served on the defendant.

[11] Subsequent to serving the statement of claim on September 3, 2008, the plaintiff’s evidence is that Durant made several attempts between October and December, 2008 to discuss this matter with Davison. According to the firm’s dockets, Durant docketed for telephone calls to Davison on September 15 and 16, 2008; however, there are no notes in his file of making those calls. He left a telephone message for Davison on October 8, 2008 and made a contemporaneous note to file regarding this message. Subsequently, he sent a letter to Davison dated October 27, 2008, which states that he had called her office on several occasions but had been unable to reach her. The letter states further that he would like to discuss the matter and address her concerns, presumably, regarding the expiry of the limitation period as raised by Davison in her letter. Having received no response to his telephone message and letter, Durant sent another letter to Davison on November 11, 2008 in which he indicated that if he received no response the defendant would be noted in default. He wrote again on December 1, 2008 warning Davison that if he had not heard from her within five days, he would note the defendant in default and take steps to conclude the matter.

[12] Davison’s evidence is that she does not recall receiving Durant’s letters sent in the fall of 2008, nor were they in ClaimsPro’s file. Similarly, she did not recall receiving a telephone message from him and there is no reference to a telephone call from him in the ClaimsPro electronic file notes. Davison’s evidence is that it was her practice to respond to correspondence and telephone messages from counsel even after she closed her file and to notify the insurer if the insured is about to be noted in default. It is important to note that Mr. Durant’s three letters referenced above were sent after Davison closed her file on October 3, 2008.

[13] Pan testified that Zurich’s file does not contain the three letters from Durant sent between October and December, 2008. Her evidence is also that had Zurich received the letters, it would have been normal procedure for Bereza to reopen the file and to either retain counsel or to seek a waiver of defence. The next time this claim came to Zurich’s attention was in late July 2014 after Justice Del Frate directed the plaintiff to serve the motion material for the default trial on the defendant, Zurich and Aon.

[14] The defendant was noted in default on December 18, 2008. Thereafter, the plaintiff made two failed attempts to obtain default judgment because they had not filed the plaintiff’s evidence regarding her injuries. The plaintiff, Irene Czuczman, swore an affidavit on August 18, 2009. She passed away on October 9, 2009. Therefore, the action was stayed until plaintiff’s counsel obtained an Order To Continue on January 12, 2010. Thereafter, plaintiff’s counsel took numerous steps to reschedule the uncontested trial; however, the court issued a Notice that Action will be Dismissed on March 8, 2010. This was followed by plaintiff counsel’s second attempt to obtain default judgment, in writing. On April 1, 2010, Justice Roberts endorsed the record that a court attendance was required given the limitation period issue and the nature of the damages claimed. After much delay, in January 2012, plaintiff’s counsel learned that the action had been struck from the trial list pursuant to the Notice dated March 8, 2010. After another lengthy delay, the plaintiff obtained an order dated January 9, 2013 restoring the action to the trial list. After yet another delay of almost a year, in January 2014, plaintiff’s counsel made attempts to reschedule the trial. Ultimately the matter came before Justice Del Frate on June 12, 2014 as an uncontested trial on liability and damages. Justice Del Frate noted on his endorsement that the defendant was insured and “for whatever reasons”, no defence had been filed. Therefore, he adjourned the trial to July 11, 2014 and directed the plaintiff to serve the material and a copy of his endorsement on the defendant, its insurer and its adjuster.

[15] For the purposes of the trial, the plaintiff filed the affidavit of Irene Czuczman, and a supplementary affidavit sworn by Ms. Castracane dated May 28, 2014 which described her recollection of the slip and fall and her mother’s injuries. The plaintiff also filed a medical and special damages brief which included the clinical notes and records of Irene Czuczman’s family physician, Dr. Armstrong, and the hospital she attended after the accident.

[16] Kryworis’ evidence is that she received the Notice that Action will be Dismissed from the court on March 16, 2010. She did not send the Notice to Davison or Zurich as she believed the lawsuit was being taken care of and the fact that the notice stated that the action was going to be dismissed. Thereafter, she received no further correspondence with respect to this claim until June 19, 2014 when she received Durant’s letter enclosing Justice Del Frate’s endorsement. She sent this letter immediately to the defendant’s corporate counsel.

Motion to Set Aside a Noting in Default

[17] Rule 19.03(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides that the noting of default may be set aside by the court on such terms as are just.

[18] In a very recent case from our Court of Appeal in Kisel v. Intact Insurance Co. 2015 ONCA 205, [2015] O.J. No. 1473, the court dealt with the appeal of a decision on a motion to set aside the noting of default where the motions judge had applied the test to set aside a default judgment. At paragraphs 12-13, the court noted that Rules 19.03(1) and 19.08(1) provide the basis for setting aside a noting of default and a default judgment, respectively. It stated that both rules give the court discretion to set aside the default “on such terms as are just.” It further stated that the Ontario Court of Appeal has held that the tests to be met under these rules are not identical. (Metropolitan Toronto Condominium Corp. No. 706 v. Bardmore Developments Ltd., 1991 CanLII 7095 (ON CA), 3 O.R. (3d) 278 (Ont. C.A.), at pp. 284-85)

[19] The Court of Appeal went on to state:

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.

[20] Courts have consistently noted that motions to set aside a noting of default, as well as motions to extend the time for delivery of pleadings and relieve against defaults are typically and frequently granted as it is not in the interest of justice to strike pleadings or grant judgments based solely on technical defaults. In most cases opposing counsel will consent to such relief as a matter of professional courtesy. Courts prefer to dispose of proceedings on their merits whenever possible rather than the matter being struck out based on a technicality. (Speck v. Alma Mater Society of Queen’s University Incorporated, 2015 ONSC 137, at para. 14; Garten v. Kruk, 2009 CanLII 58071 (ON SCDC), at para. 16; Nobosoft, at para. 7)

Behaviour of the Plaintiff

[21] The plaintiff did not put the defendant on notice of the claim until three months after the action had been commenced, and approximately six months after the expiry of the two-year limitation period. This was noted by Davison in her first letter to Durant. These, in my view, are important facts because it may have led to Bereza’s decision to close his file and instruct Davison to close her file. This point will be addressed in more detail below.

[22] The plaintiff’s evidence is that Durant attempted to contact Davison and left telephone messages several times in July, September and October 2008. On the other hand, Davison claims that she did not receive these messages. Conversely, Davison’s evidence is that she telephoned Durant on June 24, 2008 and spoke with his clerk and indicated that she needed to speak to him right away. However, Durant’s file does not contain any evidence of this conversation or message.

[23] Durant acknowledges receiving Davison’s letters sent in July and August 2008. He claims to have left telephone messages for Davison in September and October 2008; however, Davison’s file contains no evidence of those messages.

[24] Durant’s first written communication to Davison after his notice letter of June 3, 2008 was not until his October 27, 2008 letter, which was after the statement of claim had been served and, notably, after Davison had closed her file. Durant sent further letters to Davison with warnings of noting the defendant in default. These letters were not in Davison’s file.

[25] The evidence bears out that Durant did not contact Davison’s manager or anyone else at Claims Pro that he was having difficulty reaching Davison. Further, he did not notify Zurich or the defendant directly that a noting in default was imminent. The defendant submits that Durant could have obtained the name of the defendant’s insurer by contacting the defendant directly because he knew that the defendant had forwarded his notice letter to its insurer as he acknowledged receipt of Davison’s letter of June 24, 2008. It is further submitted that as Durant had received Davison’s initial letter advising that she had been appointed to investigate this claim, it would have been prudent for Durant to have taken the above-noted steps. Durant knew that the defendant had insurance as Davison’s letter identified the defendant as an insured. He was also aware from her letter that the defendant was alive to the limitation period issue. Thus, it is argued, that it would have been extremely unusual for the defendant not to do anything to avoid being noted in default.

[26] In summary, it is clear from the evidence that Durant had knowledge of the following facts. Firstly, he knew that the defendant turned over his notice letter to his insurer because he received a letter from its adjuster. He knew that the insurer had retained an adjuster and that the adjuster wrote to him on at least two occasions requesting that he contact the adjuster to discuss the claim and that they were aware of the limitation period issue. He also knew that the defendant had been served personally, and at the same address that his notice letter was sent. In my view, given the defendant’s past conduct, Durant ought to have known that the defendant would turn over the statement of claim to its insured.

[27] Based on the above, in my view, Durant ought to have taken additional steps to contact the defendant’s insurer prior to noting the defendant in default and moving for default judgment.

Agency Argument

[28] The plaintiff submits that the adjuster, who was appointed by Zurich, acted as agent for the defendant; therefore, the court ought to consider only the behaviour of the agent and not the defendant. Further, it is submitted that given the agency relationship, Durant was not obligated to attempt to contact the insurer or the defendant.

[29] Before proceeding with this issue, I point out that this submission is not contained in the plaintiff’s factum or fresh as amended factum; therefore, the defendant was unaware of this argument until the hearing thus it had no opportunity to reply to it in a reply factum. This, in my view, was inappropriate on the part of plaintiff’s counsel. As a result, I give this submission minor consideration.

[30] The plaintiff relied on no case law or secondary source of law for this proposition.

[31] Further, as the defendant submits, there is a plethora of decided cases, particularly in the context of motions to set aside an administrative dismissal order, which reiterate the principle that the errors of a party’s legal counsel ought not to be visited on the party. This is so because, as in the herein action, if found liable for the accident, the defendant will have a claim registered against it under its insurance policy which may result in increased premiums.

[32] Therefore, as well as in a solicitor and client relationship, and irrespective of whether there is, in law, a formal agency relationship between insured and insurer, I am not persuaded that the court should consider only the behaviour of the insurer on a motion to set aside a noting of default.

Behaviour of the Defendant

[33] The plaintiff submits that the court must consider whether there is believable evidence that the defendant had an intention to defend in the time permitted as well as a continuing intention to defend. (1316845 Ontario Ltd., v. Es-Lea Holdings Ltd., 2008 CarswellOnt 2744, at paras. 15-16) Although this was not specifically identified as a consideration by the Court of Appeal in Kisel, I concur that this factor relates to the defendant’s behaviour and ought to be a consideration.

[34] The plaintiff’s first contact with the defendant after the incident was Durant’s notice letter dated June 3, 2008, more than two years after the incident that occurred on January 22, 2006. Immediately after receipt of the letter, Krywonis provided it to the defendant’s insurer. The insurer, through its broker, was prompt in retaining an adjuster to investigate the claim. Shortly thereafter, the adjuster, Davison, contacted the defendant to arrange to obtain a statement. Her evidence is that she also left a telephone message for Durant to call her to discuss the claim.

[35] Based on the above, I find that the defendant acted promptly upon learning of the claim. Further, the defendant was cognizant of the limitation date issue as stated by Davison in her letter to Durant in early July 2008, receipt of which was acknowledged by Durant.

[36] Davison followed up with Durant by letter in early August 2008 not having had a response to her earlier letter the previous month.

[37] Upon being served personally with the statement of claim, Krywonis immediately gave it to Davison who she believed was taking care of the matter on behalf of the defendant.

[38] Thereafter, Davison claims to have reported service of the claim and provided a copy of it to Bereza; however, there is no evidence of that report or a copy of the statement of claim in Zurich’s file and there is no evidence in Davison’s file that it was sent to Bereza.

[39] On October 2, 2008, Bereza instructed Davison to close her file and he closed his file shortly thereafter. Bereza stated in his communication to Davison at that time that the claim had proscribed and Zurich and ClaimsPro could not keep their files open indefinitely “just because the third party solicitor doesn’t have the courtesy to reply to you”. Bereza stated nothing about the statement of claim, retaining counsel to defend the action or seeking a waiver of defence. On the other hand, of those two people, Davison was the one who knew that the statement of claim had been issued and served and that there was a deadline to enter a defence or seek a waiver of defence. Her evidence is that it is her practice to immediately notify the insurer if she is advised that an insured is about to be noted in default. In that respect, it is puzzling and unexplained by Davison why she did not question Bereza’s instructions to close the file.

[40] There is no explanation for Davison not having received Durant’s letters sent in October, November and December 2008 regarding noting the defendant in default and moving for default judgment. Davison’s fax number was confirmed to be the correct number used by Durant and Durant produced fax confirmation sheets for all three letters. Davison was cross-examined on this point and it was her evidence that there were employees who were responsible to receive faxes, but that there had been a high turnover of these employees. In my view, a reasonable explanation for Davison not having received Durant’s letter is that they were received by Claims Pro but not given to Davison because the file had been closed. I accept Davison’s evidence that had she received Durant’s letters she would have provided them to Zurich as their insured was at risk of being noted in default. The evidence regarding Davison’s actions in handling and investigating this claim are that she was diligent and prompt, thus there is no valid basis to conclude that she received Durant’s letters and that she, intentionally or not, overlooked them.

[41] I find that it is more likely than not that through inadvertence Davison’s Adjuster Report #3 and a copy of the statement of claim were not sent to Bereza. Therefore, it follows that the only information Bereza had on October 2, 2008 when he was reviewing his file and deciding the next step, was Durant’s notice letter which clearly was dated beyond the applicable limitation period, and no response from Durant to Davison’s telephone call and letters. Furthermore, by October 2, 2008, it was some four months after Durant’s notice letter and ten months beyond the expiry of the limitation period.

[42] I also find that there is no valid basis to conclude based on the evidence that had Bereza been in receipt of the statement of claim on October 2, 2008 that he would have closed his file and instructed Davison to close her file and not have retained counsel to defend the action. The evidence is consistent that the defendant, the insurer and the adjuster were, in my view, extremely attentive to this claim and that the insurer would have retained legal counsel to defend the action had it received the statement of claim.

[43] In addition, the defendant brought this motion promptly after it learned that the plaintiff had proceeded to obtain default judgment.

[44] Moreover, I find there was a failure of communication between Durant and Davison particularly with respect to the apparent telephone calls and messages. The evidence that neither Durant nor Davison received the others’ telephone messages is peculiar. The court is not expected to speculate on the reason for this evidence.

[45] In conclusion, I find that the defendant has met its onus of establishing that it had an intention to defend this action in the time permitted as well as a continuing intention to defend.

Length and Reasons for Defendant’s Delay

[46] After closing their files in October 2008, it is the defendant’s position that it had no knowledge that the defendant had been noted in default. Subsequently, the defendant, Zurich and ClaimsPro learned of the noting of default upon receipt of Durant’s letter in June 2014 in which he enclosed Justice Del Frate’s endorsement dated June 12, 2014.

[47] I find that the defendant has provided an adequate explanation for the delay in not defending this action. There is no evidence of any communications between Durant and the defendant, Zurich or ClaimsPro after Durant’s letter sent to Davison in early December 2008.

Complexity and Value of the Claim

[48] The plaintiff claims damages for personal injuries sustained in a slip and fall accident in the amount of $250,000, plus interest and costs. However, as the plaintiff passed away on October 9, 2009, any damages will be restricted to a period of less than four years from January 22, 2006 when the alleged slip and fall occurred to her date of death. In fact, in his affidavit sworn June 2, 2014, plaintiff’s counsel, Mr. Genova, states that the plaintiff, by her estate, seeks $75,000 for Irene Czuczman’s pain and suffering and that OHIP’s subrogated claim is in the amount of $22,074.80 plus pre-judgment interest and costs.

[49] At the time of the fall, the plaintiff was eighty years old; therefore, she would have been eighty-three years old at her death. It appears from Ms. Castracane’s affidavit which she swore in support of the motion for default judgment that she is asserting that her mother’s injuries from the slip and fall contributed to her death. (See paras. 9 -16 of the Supplementary Affidavit of Luba Castracane, sworn May 28, 2014) However, there is no medical opinion filed on that motion to support that assertion.

[50] If the defendant is permitted to defend this action, it is likely that liability will be in issue as it involves an alleged slip and fall accident by an eighty year old person. The expiry of the limitation period will be an issue. This will require evidence from the plaintiff to explain the passing of the limitation period and possibly evidence regarding the discoverability of her claim. Given the plaintiff’s age at the time of the alleged fall, causation may be an issue as well as quantum of damages.

[51] In my view, although there will be several issues at trial, the issues are not complex and the value of the claim is fairly low. There was no suggestion by either party that the law is unsettled in the area of slip and fall accidents and discoverability.

Prejudice

[52] In Kisel, at paragraph 13, the Court of Appeal held that prejudice to the party relying on the noting of default may be a factor to be considered by the court.

[53] The onus is on the party claiming prejudice to demonstrate that she will be prejudiced should the motion be granted.

[54] The plaintiff submits that she will suffer prejudice if the motion is granted given Irene Czuczman’s death and thus her unavailability to testify at trial. It is further argued that Irene Czuczman’s only sworn evidence is her affidavit which was sworn in response to the direction of the court on an uncontested trial and is focussed on her damages claim. It is submitted that the plaintiff will be prejudiced if she has to respond to liability defences.

[55] The defendant submits that had the action been defended in the normal course, it is unlikely that examinations for discovery and a trial would have taken place prior to the plaintiff’s death. It is further argued that the plaintiff’s evidence was recorded in her affidavit sworn August 18, 2009, and her daughter and estate trustee, Luba Castracane, who witnessed the fall and the effect of the fall on her mother, remains available to testify at trial. The plaintiff also produced her medical records for the default hearing.

[56] It is important to put the following relevant dates in perspective. The statement of claim was served on the defendant on September 3, 2008. The defendant had 30 days thereafter to deliver a statement of defence which would take it to on or about October 3, 2008. Irene Czuczman died almost one year later on October 9, 2009. She swore her affidavit in support of the default judgment hearing on August 17, 2009.

[57] Importantly, the plaintiff adduced no evidence with respect to the prejudice claim. The plaintiff’s submission is based solely on the fact of the plaintiff’s death that occurred one year after the deadline to deliver a statement of defence.

[58] For the following reasons, I reject the plaintiff’s argument that she will be prejudiced if she has to respond to liability defences.

[59] In her affidavit, Irene Czuczman described the circumstances of the fall, including the time of day, the cause, witnesses to the fall, her injuries, post-fall attendance at the hospital, her treatment at the hospital, and her activities of daily living pre and post fall. Further, she addressed the limitation period issue in paragraphs 3 and 4 of her affidavit.

[60] In Luba Castracane’s affidavit, also sworn in support of the default judgment hearing, she states in paragraph 1 that she has “direct knowledge” of the matters to which she deposed. Her evidence is that she saw her mother fall and she described how the fall happened (paragraph 4). She described the type of boots her mother was wearing at the time and her complaints, or lack of, after the fall. She stated that her mother had not consumed any alcohol. There were also two other eye witnesses who offered to call an ambulance. In paragraph 7, she states her observations of area of the fall, including the condition of the pavement, presence of ice, no presence of salt or sand, no signs to warn of ice and no evidence of any effort to remove the ice. The next day she took photographs of the area of the fall that are included as exhibits to her affidavit. Further, she attested to her mother’s complaints after the fall at the hospital and the diagnoses of fracture at the L1 vertebral body and a wedge compression fracture of the T12 vertebrae. She goes on to describe her mother’s lifestyle pre-fall and her medical history. She describes her mother’s health, psychological state and lifestyle post-fall. Lastly, her evidence addresses the limitation period issue with respect to when her mother retained legal counsel for advice with respect to her legal rights regarding the accident.

[61] Therefore, in my view, the plaintiff’s evidence with respect to any liability issue for the accident, as well as any limitation period defence has been preserved in their affidavits. The reason their evidence is set out in their affidavits is because the issues of liability and the limitation period were live issues for the default judgment hearing. For the above reasons, I find there would be no prejudice to the plaintiff regarding the limitation period issue if the motion were granted.

[62] The plaintiff filed medical records for the default judgment hearing consisting of the hospital records and the clinical notes of records of the plaintiff’s family doctor. As well as the results of investigations, the records indicate that she remained in the hospital until February 17, 2006.

[63] Essentially, the plaintiff was ready for trial, being the default judgment hearing, and presented all their evidence in order to address the issues of liability, damages and the limitation period issue. The evidence included Luba Castracane’s affidavit in her capacity as eye witness to the accident and having full knowledge of the plaintiff’s pre and post-accident lifestyle and medical condition. The plaintiff had preserved all medical records and they are available for trial. Based on all the evidence, I find that the there is no element of the plaintiff’s claim that cannot be proven at trial with the available evidence.

[64] It is also my view that it is highly unlikely that examinations for discovery would have taken place before the plaintiff passed away a year later as it would be expected that Zurich, had it received the statement of claim, would have requested a waiver of defence in order to retain counsel and investigate the claim. However, even if Zurich had not requested a waiver of defence, it remains my view that it is unlikely that affidavits of documents would have been exchanged and discoveries completed before the plaintiff passed away. In other words, the plaintiff would be in the same position she is in today had the action been defended in the normal course.

[65] However, I find that the defendant will be prejudiced if this motion is not granted as it will eliminate its right to defend the action and have it heard on its merits. Further prejudice would be visited on the defendant if it were found liable at a default hearing and liable to pay damages. This would affect its status with respect to its liability insurance policy with possible increased premiums into the future.

[66] Balancing the prejudice that may be suffered by each party if this action is allowed to proceed, I find that there will be clear and unequivocal prejudice to the defendant as opposed to no prejudice to the plaintiff.

[67] Lastly, it is my view that it is not appropriate to examine the merits of the action at this stage where no defence has been filed. However, it is clear from the statement of claim and the evidence filed herein that the plaintiff had a fall, she suffered injuries and that there is a limitation period issue. Therefore, in my view, it could not be said that the action is unmeritorious or that the defendant does not have valid defence that can be made.

[68] In conclusion and for the above reasons, if find that it is just in the circumstances to set aside the noting of default of the defendant and to permit the defendant to deliver a statement of defence within 15 days of the date of this order.

Costs

[69] The defendant seeks costs of this motion in the amount of $15,774 on a partial indemnity scale. The plaintiff also seeks costs of $13,278. The plaintiff conducted cross-examinations of all the affiants tendered by the defendant. Citing subrule 39.02(4)(b), the plaintiff submits that the defendant is liable for the plaintiff’s partial indemnity costs for the four cross-examinations and two follow-up examinations it conducted regardless of the outcome of the proceeding unless the court order otherwise.

[70] There is also the issue of the costs of attendance on July 21, 2015 where preliminary issues were addressed. Firstly, the plaintiff’s late delivery of its factum and brief of authorities was due to the defendant’s late delivery of its factum and brief of authorities; therefore, the plaintiff should have their costs of that attendance. On the other hand, the defendant was successful in obtaining leave to file a supplementary affidavit; therefore, the defendant should have its costs of that attendance. In my view, there shall be no costs of that attendance.

[71] I find that the cross-examinations were not excessive or unnecessary given that the motion involved important issues and the necessity to ensure all of the evidence regarding the communications, or lack of, between plaintiff’s counsel and the adjuster, Zurich and the defendant were before the court.

[72] Another consideration regarding costs is the fact that although the defendant has been successful on the motion, the cause of failing to defend the action and the cause for this motion was, in my view, the miscommunication between the defendant’s adjuster and insurer. On the other hand, there is some fault that must be attributed to the plaintiff in her counsel not taking additional steps to notify the defendant directly, or its insurer regarding the noting of default. This last point has been made obvious by Justice Del Frate’s directions that required the plaintiff to notify the defendant, adjuster and insurer of the default hearing which resulted in immediate action taken by the defendant.

[73] For the above reasons, there shall be no order as to costs of this motion.

_(original signed) __

February 10, 2016 Master Lou Ann M. Pope