Redabe Holdings v. I.C.I. Construction, 2017 ONSC 1553

COURT FILE NO.: C-443-16

DATE: 2017-03-07

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: REDABE HOLDINGS INC., Plaintiff

AND:

I.C.I. CONSTRUCTION CORPORATION, GLENN STEVEN ABUGOV and LUC STANG, Defendants

BEFORE: The Honourable Mr. Justice P.J. Flynn

COUNSEL: Robert W. Scriven, Counsel for the Plaintiff Rahul Shastri, Counsel for the Defendant (Moving Party)

HEARD: February 22, 2017

ENDORSEMENT

[1] The Defendant, Luc Stang, moves under rule 19.08(1), on February 2, 2017, to set aside the Default Judgment of Skarica, J. granted July 4, 2016.

[2] He also seeks to vacate the Notice of Garnishment and Writ of Seizure & Sale against the corporation of which he is Director and President.

[3] That Notice of Garnishment was served on December 19, 2016.

[4] These are my reasons for dismissing his motion.

The Law

[5] The discretionary Order sought requires the Court to determine whether the interests of justice call out for it to be made.

[6] The case law submitted demonstrates that the factors to be considered by the Court are not to be treated as rigid rules.

[7] Rather the Court must consider all the circumstances of the case to determine whether it is just to release the Defendant from the consequences of his own default.

[8] In other words, the Court must stand back and look at the whole picture in order to arrive at a just result, even where that would mean denying relief to a Defendant where there is an arguable defence on the merits. Or, as I said in my exchange with counsel, the motions judge must apply a “smell” test.

The Factors

[9] In looking at the whole picture, the court must consider these 5 factors:

(a) whether the motion was brought promptly after the Defendant learned of the default judgment;

(b) whether there is a plausible excuse or explanation for the Defendant’s delay in bringing the motion;

(c) where the facts establish that the Defendant has an arguable defence on the merits;

(d) the potential prejudice to either party in granting or denying the motion; and

(e) the effect of any putative order on the overall integrity of the administration of justice.

The Circumstances

[10] The $50,000 claim was served on Stang personally on May 4, 2016.

[11] Stang acknowledged to the Plaintiff on June 3, 2016 that he owed $50,000 and on June 16, 2016 offered to make monthly payments to the Plaintiff over 5 years.

[12] Stang did not defend the action, so on July 4, 2016 the Plaintiff obtained default judgment against him.

[13] On July 28, 2016, the Plaintiff’s owner (Jewitt) personally delivered to Stang a copy of the judgement and Stang confirmed his indebtedness for $50,000.

[14] In August 2016 Jewitt requested that Stang formalize the repayment plan, but Stang replied that he had passed the request to his solicitors. He then failed to respond to any of the Plaintiff’s further enquiries.

[15] In November 2016 the Plaintiff’s solicitor made a demand which threatened enforcement, including garnishment. That too got no response.

[16] Finally, on December 28, 2016 the garnishment materials were served on Stang. It was only then, when his company necessarily became involved, that Stang came to life.

[17] In his Affidavit on the motion, Stang deposed that the only reason he failed to defend for 9 months was that he was told by the co-defendant Abugov that Abugov would deal with the claim and that Stang need not worry about it.

Analysis

[18] In my view, this is exactly the case where the Defendant’s motion ought to be dismissed.

[19] The motion to set aside the default judgment was not brought as soon as possible after the moving party learned of the Judgment. Nor has the Defendant proffered a plausible explanation for the delay.

[20] Indeed, the only realistic explanation for the delay was the deliberate choice of the Defendant. The Judgment was wilfully ignored for over 6 months by a sophisticated Defendant who only sprang into action when enforcement, and particularly, when a garnishment was served against his corporation.

[21] And while the Plaintiff concedes that the Defendant has an arguable defence (even though the Defendant’s conduct belies this) and while the dismissal of the Defendant’s motion will result in prejudice against him, namely an enforceable judgment and garnishment against his company, in my view, on balance, to grant the motion would have a more adverse effect on the overall integrity of the administration of justice than to deny it. It might very well demonstrate that clever and sophisticated Defendants could easily avoid their legal obligations by delaying the legal process against them and then seeking the court’s absolution once the system catches up with them.

[22] On this Court’s careful review of the circumstances, this is one of those cases where an arguable defence does not tip the balance. In my view, the interests of justice favour denying the motion.

Conclusion

[23] For these reasons, the motion must be dismissed.

Costs

[24] At the conclusion of the hearing, I invited the parties to file their Costs Outlines in sealed envelopes for my review after I had decided the motion. They did that.

[25] I have now reviewed those Costs Outlines.

[26] The Moving Party enclosed an Offer to Settle, but since the Plaintiff was totally successful, that Offer is without consequence and the Plaintiff is entitled to its costs.

[27] When considering what are fair and reasonable costs of the Plaintiff within the reasonable expectation of the losing Defendant, I need look no further than the Defendant’s Costs Outline.

[28] Nothing has demonstrated that the Plaintiff is entitled to substantial indemnity costs.

[29] I would adjust the Plaintiff’s costs claim by reducing by about one-third the time spent by Mr. Scriven’s articling student.

[30] Accordingly, the Plaintiff shall have costs in the total, all-inclusive amount of $5,500.00.

P.J. Flynn J.

Date: March 7, 2017