NEWMARKET COURT FILE NO.: CV-16-126026-00 DATE: 20170301 SUPERIOR COURT OF JUSTICE – ONTARIO IN THE MATTER OF THE CONSTRUCTION LIEN ACT, R.S.O. 1990, Chap. C-30 , as amended
RE: Brian Swanson, Plaintiff AND: Rene Vogrin and Heli Vogrin (a.k.a. Heli Later), Defendants
BEFORE: THE HON. MR. JUSTICE G.M. MULLIGAN
COUNSEL: R. Grad, Counsel for the Plaintiff J.R. Allingham, Counsel for the Defendants
HEARD: February 2, 2017
Endorsement
[1] Rene Vogrin and Heli Vogrin (the defendants) bring a motion to set aside a noting in default against them. Because this matter proceeds under the Construction Lien Act, R.S.O. 1990, c. C.30, they also seek leave to bring this motion. If granted, they are seeking leave to deliver a Statement of Defence and Counterclaim.
[2] Brian Swanson (the plaintiff) opposes the relief sought.
Background
[3] The following background facts will provide context for the discussion that follows. This dispute arises as a result of a construction contract entered into between the plaintiff and defendants. The defendants’ residential property in Mount Albert suffered extreme damage due to freezing and flooding. With the approval of their insurance company, they entered into a substantial renovation contract with the plaintiff. Work commenced, but the relationship between the parties broke down. The plaintiff registered a construction lien on January 13, 2016, and commenced an action on March 13, 2016, serving the defendant, Heli Vogrin on May 4, 2016 with a Statement of Claim. The defendants retained counsel and their counsel began a series of communications with counsel for the plaintiff. On several occasions, counsel for the defendants requested extensions for time to serve a Statement of Defence.
[4] On July 19, 2016, counsel for the plaintiff noted the defendants in default, without prior notice to counsel for the defendants.
[5] Counsel for the defendants, not having been notified about the noting in default, proceeded to serve a Statement of Defence and Counterclaim on counsel for the plaintiff on July 26, 2016.
[6] On September 8, 2016, defendants’ counsel was able to file a Statement of Defence and Counterclaim at the Newmarket court filing office in spite of the prior noting in default.
[7] Having delivered a counterclaim, counsel for the Vogrins (the plaintiffs by counterclaim) requested a defence to the counterclaim from counsel for Swanson on November 11, 2016. No defence to the counterclaim having been served, counsel then attended at the Newmarket court filing office to note Swanson in default. Counsel for the Vogrins then learned for the first time that its clients had been noted in default for failing to file a defence on June 19, 2016.
[8] Correspondence was then engaged between both counsel but no agreement was reached as to a consent to setting aside the noting in default.
[9] Certain pieces of correspondence between counsel bear close scrutiny. Through May and July of 2016, counsel for the defendants requested an indulgence to deliver its Statement of Defence late. Some indulgences were granted. On July 22, 2016, the defendants’ counsel required a further extension. The reply from the plaintiff’s counsel is puzzling. On July 25, 2016, he wrote:
Further to your e-mail of July 22, 2016, in which you requested a third extension to deliver a Statement of Defence in the above matter, please be advised that my clients are not inclined to grant same. Consequently, they have instructed me to note your clients in default.
It is puzzling because counsel for the defendants were not told that noting in default had already taken place a few days earlier. Consequently, no immediate steps could be taken by the defendants to set the noting in default aside.
Analysis
[10] Section 54(3) of the Construction Lien Act deals with the effect of a noting in default by the defence:
54(3) Where a defendant or third party has been noted in default under subsection (2), the defendant or third party shall not be permitted to contest the claim of the person who named the defendant or third party as a defendant or third party, or to file a statement of defence, except with leave of the court, to be given only where the court is satisfied that there is evidence to support a defence, and where leave is granted, the court,
(a) may make an order as to costs that it considers appropriate; and
(b) may give directions as to the conduct of the action.
[11] In Walker Brothers Quarries Ltd. v. 1276304 Ontario Inc., Henderson J. summarized the test for setting aside a default in a construction lien action at para. 11:
To be successful in a motion to set aside the noting in default, a party must show
(a) promptness; and
(b) evidence of a good defence.
[Citations omitted.]
[12] In DM Urban-Scape Property Developments Ltd. v. Body Blitz Spa East Inc. et al., 2014 ONSC 1616, 39 C.L.R. (4th) 119, Master Albert restated the test at para. 20:
The Construction Lien Act (the “Act”) provides at section 54 that a defendant noted in default may not contest the claim or file a defence without leave of the court, given only upon satisfying the court that there is evidence to support a defence. The requirement to provide evidence to satisfy the court that there is merit to the proposed defence is mandatory.
[13] Master Albert stressed the importance of proper evidence to assist the court in an assessment of this issue. On the facts before her, she noted that the moving party had brought a similar motion earlier unsuccessfully. She found that the purported evidence advanced were bald statements and unsupported allegations, and dismissed the motion.
The Merits of the Defence
[14] In this case, the defendants have filed a copy of their defence and counterclaim which was previously served on the plaintiff, and through clerical error at the courthouse, filed in the filing office. In addition, both defendants filed affidavits in support of this motion. I find the affidavit of the defendant, Rene Vogrin particularly helpful. When alleging breach of contract by the plaintiff, his affidavit goes beyond mere bald allegations and is specific. E-mails between the parties are attached as exhibits.
[15] I am satisfied that the defendants have met the requirements of the Construction Lien Act and that the requested relief should be granted. They have moved promptly to cure the defect and they have established by an affidavit in support that they have evidence to support their defence and counterclaim.
Advocacy and Civility
[16] In addition to its principal submissions asking to set aside the noting in default, counsel for the defendants also submit that certain principles of advocacy and civility warrant consideration.
[17] The Advocates’ Society has established certain principles of professionalism for advocates. Rule 19 of the Principles of Civility for Advocates provides, “Subject to the Rules of Practice, counsel should not cause any default or dismissal to be entered without first notifying opposing counsel, assuming the identity of opposing counsel is known.”
[18] Section 7.2 of the Law Society of Upper Canada’s Rules of Professional Conduct deals with responsibility to lawyers and others. Rule 7.2-2 provides:
A lawyer shall avoid sharp practice and shall not take advantage of or act without fair warning upon slips, irregularities, or mistakes on the part of other legal practitioners not going to the merits or involving the sacrifice of a client’s rights. [Emphasis added.]
[19] In Groia v. The Law Society of Upper Canada, 2016 ONCA 471, 131 O.R. (3d) 1, Cronk J.A. provided context for the rules and the principles of advocacy at para. 121:
[W]hile ‘civility’ is a useful short form, the concept of civility “captures many forms of professional communications that go well beyond rudeness or lack of courtesy”. Given the range of conduct that is captured under the rubric of civility, various courts and senior members of the litigation bar have attempted to provide clarity to the term and guidance as to the type of behaviour that will constitute uncivil conduct by advocates. It was for this very purpose that the Advocates’ Society developed the Principles , referenced above. The Law Society’s commentaries to the Conduct Rules also seek to achieve the same ends.
[20] Cronk J.A. provided further guidance at para. 122:
The Divisional Court also attempted to provide guidance on this issue by providing non-exhaustive examples of uncivil conduct, at para. 75:
It is conduct that risks bringing the administration of justice into disrepute because it is conduct that strikes at the very qualities of what the justice system represents. It is conduct that would make an impartial outside observer question the central tenants upon which the justice system is based. It is the difference between impassioned, but reasoned, disagreements and…uninformed, nasty, personal tirades….
[21] In this case, the following facts bear consideration:
- Plaintiff’s counsel did not give fair warning that he was about to note the defendants in default.
- The letter sent by the plaintiff’s counsel could be considered misleading. It provided: “They have instructed me to note your clients in default.” But the noting in default had already occurred.
- Months later, the defendants’ counsel served a Statement of Defence and Counterclaim but once again, was not advised that noting in default by the plaintiff had already taken place.
[22] I am satisfied that the conduct here, failing to notify of a noting in default, offends the guidance provided by the Advocates’ Society. It therefore further informs my decision to grant the relief sought by the defendants, setting aside the noting in default.
Conclusion
[23] It is therefore ordered that leave is granted to bring this motion pursuant to the Construction Lien Act. Further, it is ordered that the noting of default be set aside against the defendants, Rene Vogrin and Heli Vogrin. It is further ordered that the defendants have leave to deliver a defence and counterclaim within 10 days of the release of this endorsement.
Costs
[24] The parties are encouraged to settle the issue of costs. If costs cannot be agreed upon, I will receive written submissions not exceeding two pages from the moving party within 20 days. The responding party will then have 10 days to reply. Submissions should be sent in writing to my Judicial Assistant at the Barrie Courthouse.