CITATION: Canada Mortgage and Housing Corporation v. CMC Medical Centre Inc., 2017 ONSC 7551

COURT FILE NO.: CV-17-572007

DATE: 20171215

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: CANADA MORTGAGE AND HOUSING CORPORATION Plaintiff

AND:

CMC MEDICAL CENTRE INC. AND MJ & AJ HOLDINGS LTD. Defendants

BEFORE: FAVREAU J.

COUNSEL: Dina Peat No one appearing for the Defendants

for the Plaintiff (Moving party) (Responding parties)

HEARD: December 14, 2017

ENDORSEMENT

[1] The plaintiff, Canada Mortgage and Housing Corporation ("Canada Mortgage"), seeks default judgment against the defendants, CMC Medical Centre Inc. ("CMC Medical") and MJ & AJ Holdings Ltd ("MJ & AJ"). For the reasons set out below, default judgment is granted.

[2] The claim arises from a commercial lease entered into on December 14, 2011, between Canada Mortgage as the lessor and CMC Medical as the tenant (the "Lease"). As part of the Lease, MJ & AJ provided an indemnity to Canada Mortgage. The term of the lease was for six years, from May 1, 2012 to April 20, 2018. The indemnity provided by MJ & AJ was to cover all amounts owed by CMC Medical in the event of a default under the Lease.

[3] CMC stopped paying rent in January 2015. In May 2015, Canada Mortgage gave notice to CMC Medical to cure the default, failing which Canada Mortgage would re-enter the premises. CMC Medical did not cure the default, and on June 2, 2015, Canada Mortgage re-entered the premises and terminated the Lease.

[4] Despite ongoing efforts that are detailed in the record on the motion, Canada Mortgage has not been able to rent the premises.

[5] The statement of claim was issued on March 22, 2017, and served on the defendants on March 23, 2017.

[6] The defendants did not defend the action and were noted in default on April 25, 2017.

[7] The plaintiff served the notice of motion for default judgment on the defendants on May 3, 2017, and the motion record was served on August 2, 2017. At that time, the motion was scheduled to be heard on August 14, 2017.

[8] On August 7, 2017, a representative of CMC Medical wrote to counsel for the plaintiff, advising that he had not received any prior notice of the proceedings before receiving the materials on the motion for default judgment, and indicating that he intended to retain counsel to respond to the motion.

[9] On August 9, 2017, the plaintiff's counsel consented to an adjournment of the motion to December 1, 2017, to give CMC Medical an opportunity to retain counsel. There were no further communications from the defendants, despite several letters to CMC Medical providing a reminder of the date for the motion for default judgment.

[10] The motion was ultimately moved from December 1 to December 14, 2017. It is not clear from the record why the date was moved or whether the defendants were specifically given notice of the new date. However, it is clear from the record that the defendants never filed any responding materials and no one appeared on behalf of the defendants in response to the motion.

[11] While the Rule 19.02(3) of the Rules of Civil Procedure does not require that defendants noted in default be given notice of a motion for default judgment, the case law makes clear that it is a best practice to give notice: Elekta Ltd. v. Rodkin, 2012 ONSC 2062 (Sup. Ct.), at para.10.

[12] In this case, given the history of the plaintiff's efforts to give the notice to the defendants of the claim and the motion for default judgment, I am satisfied that the defendants had notice and chose not to respond.

[13] I am also satisfied that default judgment should be granted in this case.

[14] When a defendant is noted in default under Rule 19.01 of the Rules of Civil Procedure, Rule 19.02(1) provides that the party "is deemed to admit the truth of all allegations of fact made in the statement of claim". Under Rule 19.05(1), where the claim is for unliquidated damages and the motion for default judgment is brought before a judge, the motion is to be supported by an affidavit. Rule 19.06 requires the judge to inquire into whether the deemed factual admissions resulting from the default support a judgment on liability as well as damages. As held by Himel J. in Fuda v. Conn, 2009 1140 (ON SC), [2009] OJ 188 (Sup. Ct.) at para 16:

[A]lhough the Rules provide the consequences for noting in default, the court has the jurisdiction and the duty to be satisfied on the civil standard of proof that the plaintiff is able to provide the claim and damages. If the court finds the evidence to be lacking in credibility or lacking "an air of reality", the court can refuse to grant judgment or grant partial judgment regardless of fault.

[15] In this case, the statement of claim and affidavit filed on the motion establish that CMC Medical defaulted on the Lease, and that both CMC Medical and MJ & AJ have an obligation to pay outstanding amounts under the Lease. I am also satisfied that the plaintiff has taken reasonable steps to mitigate its losses through efforts to find a new tenant for the premises.

[16] The evidence demonstrates that the plaintiff's losses are $318,358.00 calculated as follows:

Rent arrears: $41,329.01

Lost rent from date of termination to end of the lease: $285,177.36

Additional charges: $274.03

Security deposit deduction: ($8,422.40)

Total: $318,358.00

[17] The Lease provides that the tenant is to pay all costs of enforcement. The plaintiff seeks costs in the amount of $12,582.49, inclusive of HST and disbursements, on a substantial indemnity scale. I have reviewed the plaintiff's cost outline, and am satisfied that the costs sought are reasonable.

[18] Accordingly, default judgment is granted to the plaintiff in the amount of $318,358.00 in accordance with the judgment signed today, which includes pre-judgment and post judgment interest at the rate provided for in the Lease and costs in the amount of $12,582.49.

FAVREAU J.

Date: December 15, 2017