LABOURERS’ INTERNATIONAL UNION OF NORTH AMERICA, LOCAL 183 v. CARRIE LYNN PEARCEY and ARMANDO RODRIGUEZ NARANJO
COURT FILE NO.: 16-4074-SR
DATE: 2017/12/13
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: LABOURERS’ INTERNATIONAL UNION OF NORTH AMERICA, LOCAL 183, Plaintiff
AND:
CARRIE LYNN PEARCEY and ARMANDO RODRIGUEZ NARANJO, Defendants
BEFORE: The Honourable Justice D.A. Broad
COUNSEL: Maheen Merchant, for the Plaintiff Roger N. MacIntosh, for the Defendant Carrie Lynn Pearcey
HEARD: December 5, 2017
ENDORSEMENT
[1] The defendant Carrie Lynn Pearcey (“Pearcey”) has brought a motion to set aside a judgment, obtained on default, reversing the conveyance to her of her former common law spouse and co-defendant’s interest in the jointly-owned family home. The action was brought pursuant to the Fraudulent Conveyances Act, RSO 1990, C. F.29 (the “FCA”).
Background
[2] The defendants were in a common-law relationship and jointly owned a family home in Kitchener, Ontario (the “property”). They separated on December 20, 2015 when the defendant Armando Rodriguez Naranjo (“Naranjo”) moved from the property.
[3] Pursuant to an arbitrator’s award made under s. 48 of the Labour Relations Act, 1995 Naranjo was found liable to pay to the plaintiff the sum of $12,538.88 and pursuant to a further arbitrator’s award dated September 29, 2015 he was found liable to pay to the plaintiff the further sum of $21,422.78. The awards were filed on June 29, 2015 and December 7, 2015 respectively with the Superior Court of Justice at Toronto pursuant to section 48(19) of the Labour Relations Act, 1995. The total amount owing by Naranjo to the plaintiff pursuant to the awards filed with the court, exclusive of interest, is $33,961.66.
[4] The defendants entered into a separation agreement dated February 25, 2016 (the “separation agreement”). In the separation agreement the defendants agreed that the property had a value of $350,000 and provided for Naranjo to transfer all of his interest in the property to Pearcey, and for Pearcey to obtain sufficient financing to discharge Naranjo from all mortgage obligations. Pearcey agreed to be solely responsible for repairs and maintenance for the property and to be responsible for payment of the mortgage on the property and of all taxes, insurance, heat, water and other charges and to keep the property fully insured and to indemnify Naranjo from all liability relating to these expenses.
[5] The separation agreement did not specifically provide for custody of the two children of the defendants, aged 10 and 8, but provided that their principal residence would be with Pearcey, with access to Naranjo. Naranjo agreed to pay combined spousal and child support in the sum of $4,000 per month. The separation agreement did not disclose that Naranjo had any assets other than his interest in the property.
[6] By Transfer/Deed of Land registered April 19, 2016 Naranjo transferred his interest in the property to Pearcey (the “impugned conveyance”). The consideration stated on the face of the Transfer was the sum of $137,115.94. Counsel for Pearcey acknowledged that the stated consideration represented one half of the amount owing on the mortgage and that Pearcey did not pay to Naranjo any further amount in respect of the transfer of his interest. The equity in the property, being the difference between the agreed-upon value in the separation agreement and the amount owing on the mortgage was the sum of $75,768.12. Naranjo’s one half share of the equity was therefore $37,884.06. This approximates the amount which counsel, in submissions, agreed to be Naranjo’s equity at the time of the transfer in the sum of $40,000.
[7] On the same day as the impugned conveyance Pearcey refinanced the property, discharging the existing mortgage and granting a new first mortgage to MCAP Service Corporation in the amount of $264,000.
[8] By Statement of Claim issued May 11, 2016 the plaintiff brought an action (the “FCA Action”) seeking to set aside the impugned conveyance pursuant to the Fraudulent Conveyances Act, RSO 1990, C. F.29 (the “FCA”) and brought a motion returnable on June 2, 2016 for a Certificate of Pending Litigation against the property (the “CPL Motion”). The Statement of Claim and the CPL Motion materials were personally served on Pearcey at the property on May 24, 2016, and were served separately on Naranjo on May 26, 2016. Neither of them appeared on the return of the CPL Motion and, by order dated June 2, 2016, Justice Gordon authorized the issuance of a Certificate of Pending Litigation for registration against the title to the property.
[9] The plaintiff noted Pearcey in default on June 13, 2016 and Naranjo in default on June 16, 2016.
[10] On July 18, 2016 plaintiff’s counsel was contacted by a representative of the law firm acting for Pearcey on a refinancing of the property, Rabideau Law. On July 19, 2016 counsel for the plaintiff made a settlement offer to Pearcey’s lawyer and requested a response within seven days, failing which it would bring a motion for default judgment. Pearcey proceeded with a refinancing of the property and on July 22, 2016 a second mortgage was registered on title to the property in favour of an individual named Kenric Allim in the principal amount of $29,450, without the CPL being lifted.
[11] On August 8, 2016 counsel for the plaintiff advised Pearcey’s lawyer that, because no response was received to its letter sent on July 19, 2016, the plaintiff had proceeded with a motion for summary judgment. On August 12, 2016 judgment was granted by Justice Sloan, reciting that the defendants had been noted in default, declaring that the impugned conveyance constituted a fraudulent conveyance and was null and void, and ordering the Land Registrar to delete the registration related to that conveyance and to reinstate Naranjo as a registered owner. The judgment also granted costs against the defendants in sum of $6,248.16.
[12] On August 29, 2016 counsel for the plaintiff sent letters addressed solely to Pearcey at the property by regular and registered mail each enclosing a copy of the default judgment. The letter sent by registered mail was returned with the envelope marked “refused” but the letter sent by regular mail was not returned.
[13] The plaintiff also sent letters addressed only to Naranjo by regular and registered mail to the property enclosing the default judgment on August 29, 2016. The letter sent by registered mail was sent back with the envelope marked “refused” but the letter sent by regular mail was not returned.
[14] On September 15, 2016 Pearcey was served by personal service with a notice of examination in aid of execution for examination on October 11, 2016. Pearcey did not attend on the appointment for her examination and the plaintiff obtained a certificate of non-attendance.
[15] In October, 2016 the plaintiff issued an application for a judicial sale of the property and attempted to serve the Application Record on Pearcey on October 31, 2016 but was unable to do so. The plaintiff delivered a copy of the application for judicial sale to the lawyers acting for Pearcey as a courtesy. Pearcey was provided with a copy of the application by her lawyers. The plaintiff decided not to proceed with the judicial sale application, and on March 7, 2017 filed directions to enforce the writs of execution against the defendants with the Sheriff of the Regional Municipality of Waterloo.
[16] On April 27, 2017 Pearcey’s lawyers wrote to the plaintiff advising that they had been retained by her to bring a motion to set aside the default judgment. The plaintiff and Pearcey subsequently entered into an agreement that an order be taken out providing for Pearcey to pay the sum of $42,240.01 into court, removing Naranjo from the title to the property, and requiring Pearcey to bring her motion to set aside the default judgment by August 17, 2017. On July 12, 2017 I granted an order on consent on that basis. The order also provided that, should Pearcey be successful on her motion to set aside the default judgment, the funds paid into court shall remain in court pending resolution of the action and, should she be unsuccessful on her motion, the funds paid into court shall be paid out to the plaintiff forthwith.
[17] Counsel for the plaintiff was served with Pearcey’s motion to set aside the default judgment on July 27, 2017.
Governing Principles
[18] A motion judge’s discretionary decision whether to set aside a default judgment is governed by the following well-known three-part test:
(a) whether the motion was brought without delay after the defendant learned of the default judgment;
(b) whether the circumstances giving rise to the default were adequately explained; and
(c) whether the defendant has an arguable defence on the merits.
(see HSBC Securities (Canada) Inc. v. Firestar Capital Management Corp. 2008 ONCA 894 (C.A.) at para. 21)
[19] The Court of Appeal has cautioned against treating the principles governing the exercise of discretion on a motion to set aside a default judgment as rigid preconditions to the exercise of that discretion but rather the motion judge must ultimately determine whether the interests of justice favour an order setting aside the default judgment. In doing so the motion judge will have regard to the potential prejudice to the moving party should the motion be dismissed, the potential prejudice to the respondent should the motion be allowed, and the effect of any order the motion judge may make on the overall integrity of the administration of justice (see Peterbilt Ontario Inc. v. 1565627 Ontario Ltd. (2007) 2007 ONCA 333, 87 O.R. (3d) 479 (C.A.) at paras. 1 and 2).
Analysis
(a) Explanation for the Default
[20] Pearcey advances an explanation for not defending the FCA Action on two bases.
[21] The first basis is that she relied upon assurances from Naranjo that documents relating to the action which were delivered to her were none of her concern. She deposed that certain individuals attended at the property in the period from June to September, 2016, identifying themselves as representatives of the plaintiff, and asking to speak with Naranjo and on one occasion sought to deliver an unmarked sealed package for him. She deposed that “during the same time span” (that is from June to September, 2016) an individual came to the property, identifying himself as an officer of the court, and asked her to identify herself. The individual indicated that he had documents in a folder to deliver to Naranjo. Pearcey advised him that Naranjo did not reside at the property. The individual placed the folder containing the documents on the porch. She deposed that she placed the folder with the documents by the door and gave them to Naranjo the next time he attended to exercise access to the children. Naranjo once again told her that the matter was none of her concern and she did not need to worry about it. Pearcey deposed that, in reliance on Naranjo’s assurances that the documents did not concern her and that “nothing was ever indicated that I or the property was implicated,” she took no steps in response to delivery of the documents to the property.
[22] The second basis for Pearcey’s explanation is that she mistakenly believed that she had retained Rabideau Law in July, 2016 to act on her behalf to deal with the CPL which had been registered by the plaintiff against the property. She deposed that she had two conversations at that time with Geoff Rabideau (“Rabideau”), who was assisting her with a refinancing of the property, about his discovery that a CPL was registered against the title. She deposed further that around September or October, 2016 she was contacted by a representative from Rabideau Law, asking if she wished to retain the firm to act on the defence of the litigation matter. Thinking that she had already retained the firm to act on her behalf, she responded that she would get back to the firm. She deposed further that “this admittedly slipped my mind as I thought I had already retained the law firm.”
[23] There are a number of difficulties with Pearcey’s explanation of the default. Firstly, the suggestion that she relied upon assurances given by Naranjo that the documents delivered to the property did not concern her or her interest in the property is inconsistent with her statement that she was under a mistaken impression in July, 2016 that she had retained Rabideau Law to act on her behalf in connection with the CPL, which she understood did affect title to the property.
[24] Rabideau deposed in his affidavit that, when he discovered the registration of the CPL on the title search of the property conducted on July 15, 2016 (Exhibit H to his affidavit), he informed Pearcey of it and discussed it with her. He deposed as follows:
“at such time she advised that she had erroneously been included as a defendant in the within action, she advised me of the details of what the plaintiff was claiming and that the action was without merit versus her and the property. At such time I informed her that she would need to submit a statement of defence to the within action. Contemporaneously I informed her that I would be in touch with the plaintiff and look into the removal of the CPL to allow for the registration of the mortgage.”
[25] Rabideau deposed further that he spoke with a representative of the plaintiff regarding the “removal of the CPL” during which the representative of the plaintiff explained that they believed the transfer from Naranjo to Pearcey was fraudulent. Rabideau reported his conversation with the representative of the plaintiff to Pearcey, and advised her that she should be able to defend the action and have the CPL removed.
[26] The second difficulty with Pearcey’s explanation is that, although she described certain events in the period from June to September, 2016, she did not, in her affidavit, address the fact that the Statement of Claim, Motion Record for the CPL, Book of Authorities and Factum were served on her on May 24, 2016. Even if Pearcey was mistaken on the date, and her recitation of the episode involving delivery of a folder of documents to the property referred to the service on her on May 24, 2016, her explanation that the individual stated that the documents were intended for Naranjo and not her is inconsistent with the fact that the Statement of Claim, Motion Record for the CPL, Book of Authorities and Factum were served separately on Naranjo at his workplace, as confirmed by the Affidavit of Service of Domenic Pileggi.
[27] Pearcey deposed that she placed the folder containing the documents by the door, but she did not state that she did not read them or look at them. Rabideau deposed that when he spoke with Pearcey on or after July 15, 2016 about the CPL she advised him of the details of the plaintiff’s claim and that the action was without merit as against her and the property. It is evident from this that Pearcey did read the documents following service on her and had an understanding of the claim against her and the property prior to speaking to Rabideau and prior to the default judgment being obtained by the plaintiff.
[28] Neither Pearcey nor Rabideau made reference to the fact that counsel for the plaintiff wrote to Mr. Rabideau by fax on July 19, 2016 (see Ex K to the Affidavit of Domenic Pileggi), confirming commencement of the FCA action, the CPL motion and registration of a CPL against title to the property, and setting forth the plaintiff’s position that the conveyance of the property from Naranjo to Pearcey was fraudulent. The letter contained a proposal for settlement, advised that Pearcey had been noted in default, and that the plaintiff would proceed with the motion for default judgment if the matter was not resolved by July 26, 2016.
[29] Domenic Pileggi was not cross-examined on his affidavit and no reply affidavit from Rabideau was filed taking issue with the fact that the July 19, 2016 letter was received by him, nor from Pearcey alleging that she was not informed by Rabideau or his firm of the contents of the July 19, 2016 letter.
[30] The plaintiff’s position was fully clearly disclosed in the letter dated July 19, 2016 to Pearcey’s lawyer. The suggestion that there was some misunderstanding between Pearcey and Rabideau regarding the scope of Rabideau’s retainer and that this provides an explanation for the default is unreasonable and without merit. There is no question that Rabideau was retained to act on a refinancing of the property involving the placing of a second mortgage on title to it. The registration by the plaintiff of the CPL directly affected the title to the property. A necessary inference must be drawn that Rabideau did report to Pearcey the contents of the July 19, 2016 letter from counsel for the plaintiff, and that Pearcey chose to take no steps in response to the clear advice from plaintiff’s counsel that default judgment would be sought after July 26, 2016.
[31] I find that no adequate explanation has been given by Pearcey for her failure to defend the action.
(b) Was the motion brought without delay after Pearcey learned of the default judgment?
[32] Pearcey states that it was not until March, 2017, when she had a conversation with Rabideau, that she understood the extent of the claim and the judgment against her and that she then took immediate steps to retain and instruct legal counsel to bring a motion to set aside the default judgment.
[33] Pearcey deposed that she was experiencing a lot of stressors in 2016. In addition to the breakdown in her relationship with Naranjo, she lost her job and was experiencing severe financial problems and was focusing her attention on making ends meet in order to support her children. In October, 2016 she wrote and failed licensing exams to acquire her RIBO insurance licence, which caused her distress, and she decided to retake the course, with a plan to rewrite the exams at the end of November, 2016. She also continued to be affected by the death of her father in 2015.
[34] Pearcey also deposed that, in the Fall of 2016, she received notification from Canada Revenue Agency (“CRA”) that it was reassessing her income and child tax benefits. From September, 2016 to January, 2017 she was in contact with CRA regarding the issue.
[35] Pearcey deposed further that in November, 2016 she was contacted by a representative of Rabideau Law regarding service on their office by the plaintiff of an Application Record seeking a judicial sale of the property. The firm was served with this document on behalf of the second mortgagee Kenric Allim. She deposed that “it was at this time that I first came to learn that there were judgments against Naranjo and myself and that the property was involved in ongoing litigation.”
[36] She stated that since she was preparing to rewrite her licensing exams at the end of November, 2016 “I did not have the ability to put my attention to the Application.”
[37] It is noteworthy that Pearcey did not address in her affidavit the fact that a copy of the default judgment was sent to her by letter dated August 29, 2016, delivered by registered and ordinary mail. As indicated, Domenic Pileggi was not cross-examined on his affidavit and Pearcey did not file a reply affidavit denying receipt of the letter or denying that she read the letter and the default judgment. As indicated above, it is a necessary inference that Pearcey had notice on or shortly after July 19, 2016 that the plaintiff intended to seek default judgment after July 26, 2016. It is also a necessary inference that the fact that default judgment had been obtained against her by the plaintiff came to her attention shortly after August 29, 2016 upon delivery to her of a copy of the default judgment by registered and ordinary mail. Pearcey offered no explanation as to why she took no steps to move to set aside the default judgment after she became aware of it by early September, 2016.
[38] Pearcey similarly did not address in her affidavit the service on her of a Notice of Examination in Aid of execution on September 15, 2016.
[39] Pearcey’s choices to focus her attention on preparing to rewrite her licensing exams at the end of November, 2016 and later to focus her attention on her issues with Canada Revenue Agency (which were resolved in January, 2017) rather than on the default judgment, do not provide a reasonable explanation for her delay until March, 2017 in moving to set it aside, after learning of it early September, 2016, or even, as she asserts, in November, 2016 when she was informed by Rabideau Law of the plaintiff’s application for a judicial sale. It was not until she needed the default judgment set aside in order to remove Naranjo from the title to complete a refinancing in March, 2017 that she chose to bring her motion.
[40] I find that the motion to set aside the default judgment was not brought promptly, and no reasonable explanation for the delay has been shown by Pearcey.
(c) Is there an arguable defence on the merits?
[41] The question of whether Pearcey has an arguable defence on the merits is dependent upon application of sections 2, 3 and 4 of the FCA, as follows:
Every conveyance of real property or personal property and every bond, suit, judgment and execution heretofore or hereafter made with intent to defeat, hinder, delay or defraud creditors or others of their just and lawful actions, suits, debts, accounts, damages, penalties or forfeitures are void as against such persons and their assigns. R.S.O. 1990, c. F.29, s. 2.
Section 2 does not apply to an estate or interest in real property or personal property conveyed upon good consideration and in good faith to a person not having at the time of the conveyance to the person notice or knowledge of the intent set forth in that section. R.S.O. 1990, c. F.29, s. 3.
Section 2 applies to every conveyance executed with the intent set forth in that section despite the fact that it was executed upon a valuable consideration and with the intention, as between the parties to it, of actually transferring to and for the benefit of the transferee the interest expressed to be thereby transferred, unless it is protected under section 3 by reason of good faith and want of notice or knowledge on the part of the purchaser. R.S.O. 1990, c. F.29, s. 4.
[42] The effect of these sections was usefully summarized by Spence, J. in the case of CIT Financial Ltd. v. Zaidi, [2006] O.J. No. 1072 (S.C.J.) at para. 21, as follows:
Pursuant to section 3, if the conveyance is made upon good consideration, it is not subject to section 2, if the transferee was acting in good faith and without notice or knowledge of the fraudulent intent of the transferor. But if the conveyance was not made for good consideration it is not protected under section 3 and is subject to being set aside under section 2 regardless of the intent of the transferee. Accordingly, where a plaintiff establishes prima facie that a conveyance was made with fraudulent intent for purposes of section 2 and without good consideration for purposes of section 3, the conveyance is subject to be set aside unless the defendant establishes either that the transferor lacked the fraudulent intent or else (as required by section 3) that the conveyance was made for good consideration and that the transferee acted in good faith and without notice or knowledge of the fraudulent intent of the transferor.
[43] It is noteworthy that Pearcey did not include a draft Statement of Defence in her motion materials, or otherwise attest to the basis of her defence in her affidavit. It is expected that the moving party will file a draft Statement of Defence setting out the defence and the material facts that support it (see Boufford v. Globe Span Capital Inc. 2010 ONSC 1211 (S.C.J.) at para. 9).
[44] Nevertheless, in the present case, none of the material facts which bear on whether Pearcey has a defence to the action are in dispute. By virtue of rule 19.02(1)(a), Naranjo is deemed to admit the truth of all allegations of fact made in the Statement of Claim, and hence is deemed to admit that he transferred his interest in the property with the intent to defeat, hinder, delay and/or defraud his creditors. Pearcey led no evidence with respect to Naranjo’s intent. Accordingly, the conveyance of Naranjo’s interest in the property to Pearcey is subject to be set aside unless Pearcey establishes that the transaction is saved by section 3 of the FCA on the basis that it was made for good consideration and that she acted in good faith and without notice or knowledge of the fraudulent intent of Naranjo.
[45] There is no evidence that Pearcey, in entering into the separation agreement and receiving the transfer of Naranjo’s interest, was not acting in good faith, nor that she had notice or knowledge of Naranjo’s fraudulent intent. The question is therefore whether the transfer was made without good consideration for the purposes of section 3 of the FCA.
[46] There are no issues of fact or credibility which require a trial in order to assess whether there was “good consideration” for the transfer, as required by section 3. The value of the property on the date of the transfer is known, as is the amount that was owing on the existing mortgage on the date of the transfer, and hence, the value of Naranjo’s equity interest in the property on the date of the transfer is known. The parties agreed that his equity interest was worth approximately $40,000. The fact that Pearcey made no payment to Naranjo in exchange for the transfer of his equity interest in the property to her is not in dispute.
[47] Pearcey argues in her Factum and in oral submissions by her counsel that her assumption of the existing mortgage and her agreement, in the separation agreement, to take primary responsibility for the care of the children is “good consideration” for the purpose of section 3.
[48] Pearcey relies upon the case of Stathakis v. Sara [1983] O.J. No. 496 (Ont. S.C.) for the proposition that the assumption of an existing mortgage may be considered good consideration. Justice R.E. Holland in that case stated, as para. 16 “the conveyance here was for valuable consideration, that is, the assumption of the two mortgages.”
[49] Pearcey also refers to the case of Klymas v. Burkholder, (1976) 22 C.B.R. (N.S.) 216 (Ont. Co. Ct.) in which Dymond, J. found, at para. 13, that the assumption by the husband/transferee of the full mortgage debt and full liability for the care of the infants was valuable consideration for the transfer of the lands.
[50] In Houlden, Morawetz and Sarra, Bankruptcy and Insolvency Law of Canada, (4th ed.) at p. 4-34.4 the authors state:
Where property is transferred on the basis that the grantee will assume existing encumbrances, there are cases which hold the conveyance is made for good consideration even though there is substantial equity in the property: Leighton v. Muir (1962), 1961 CanLII 414 (NS SC), 4 C.B.R. (N.S.) 137 (N.S.S.C.); Klymas v. Burkholder, (1976) 22 C.B.R. (N.S.) 216 (Ont. Co. Ct.); Stathakis v. Sara (1983), 48 C.B.R. (N.S.) 286 (Ont. S.C.). However, there are cases which have taken a contrary position: see Vasey v. Kreutzweiser (1965), 8 C.B.R. (N.S.) 225 (Ont. S.C.). With respect, it would seem that the law as stated in Vasey v. Kreutzweiser is to be preferred.
[51] In the case of Re Nonis (1984) 52 C.B.R. (N.S.) 297 (Ont. S.C.) Sutherland, J., at para. 34, expressed reservations, albeit in obiter, with the proposition that the assumption by the transferee of obligations under an existing mortgage takes the transfer out of the category of “voluntary” conveyances where no other consideration moves to the transferor from the transferee. Justice Sutherland posited two contrasting examples, the first involving the transfer of an unencumbered property worth $200,000, and the second involving the transfer of the property worth $500,000 and subject to a mortgage of $300,000. The equity of the transferor in each case was equal, namely $200,000. He stated “in each example the transferor is seeking to put his equity beyond the reach of his creditors. I suggest it is preferable to focus on the equity owned by the transferor and the consideration, if any, given for that equity, so that the result in both my examples would be the same, in that each would be treated as a “voluntary” conveyance with respect to which the intent of the transferee would not be required to be proved by the plaintiff.”
[52] It is noted that the stated propositions relied upon by Pearcey from the Stathakis v. Sara and Klymas v. Burkholder cases were not accompanied by any detailed analysis, and neither case appears to have been followed on these issues by any subsequent cases. Moreover, Vasey v. Kreutzweiser does not appear to have been cited to the judge in either case.
[53] On the question of whether the assumption of responsibility for children may represent “good consideration” for the purposes of section 3 of the FCA, it is noted that in the present case Pearcey’s assumption of primary responsibility for the care of the two children of the relationship may be considered to be offset by Naranjo’s agreement to pay child support. There is no reference to any agreement by the transferor to pay child support in Klymas v. Burkholder.
[54] It is not necessary for me to attempt to resolve the divergence in the two lines of authority on whether the assumption of an existing mortgage may constitute “good consideration” for the purposes of section 3 of the FCA, except to note that I find the analysis of Justice Sutherland in Re Nonis to be persuasive. It is sufficient for present purposes to find Pearcey’s defence to be weak.
Summary and Disposition
[55] D.L. Corbett, J. in the case of Canadian Imperial Bank of Commerce v. Petten 2010 ONSC 6726 (S.C.J.) stated “the test to set aside a default judgment has three parts. Showing a weak case, on the merits, is not sufficient, by itself, to set aside the judgment: the first two steps in the test also matter.” citing Canadian Imperial Bank of Commerce v. Csorba 2007 ONCA 211 (C.A.).
[56] At para. 6 Justice Corbett also cautioned that the analysis of relative “prejudice” is to be seen in the context of the overall goal of the orderly and efficient processing of cases, and not just the immediate impact on the parties to the dispute. He observed that “an atomistic analysis of the “prejudice” to the moving party and to the responding party will almost always favour the moving party.” If the over-arching principle is “relative prejudice” as between the parties, then the three-part test for setting aside a default judgment would be rendered largely nugatory.
[57] As stated by the Court of Appeal in Peterbilt, at para. 2, ultimately I must determine whether the interests of justice favour an order setting aside the default judgment.
[58] In my view, given the lack of an adequate explanation for the failure to defend the action, the unreasonable delay in moving to set aside the default judgment, and the weak defence on the merits, to set aside the default judgment would have an adverse impact on the overall integrity of the administration of justice. The interests of justice to not favour setting the default judgment aside.
[59] The motion of Carrie Lynn Pearcey is therefore dismissed and the sum of $42,240.0, together with accumulated interest thereon shall be paid out of court to the plaintiff, in accordance with my Order dated July 12, 2017.
Costs
[60] The parties filed Costs Outlines at the conclusion of submissions and agreed that costs should follow the event and that no further submissions on costs would be required. It is therefore ordered that the defendant Carrie Lynn Pearcey pay to the plaintiff costs of the motion fixed on a partial indemnity basis in the sum of $5,674.68, in accordance with the plaintiff’s Costs Outline, such payment to be made within 30 days hereof.
D.A. Broad, J.
Date: December 13, 2017