Court File and Parties
COURT FILE NO.: CV-17-580357
MOTION HEARD: 20180305
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: David Clark, Plaintiff
AND:
David Snow, Eesti Kodu Inc. and Enn Allan Kuuskne, Defendants
BEFORE: Master Jolley
COUNSEL: Michael Jordan, Counsel for the Moving Party Defendants David Snow and Eesti Kodu Inc.
David Clark, Respondent, In Person
HEARD: 5 March 2018
REASONS FOR DECISION
[1] The defendants Eesti Kodu Inc. and its president David Snow bring this motion to set aside their noting in default and for leave to deliver a statement of defence within 30 days of this decision.
[2] The defendants were served with the plaintiff’s statement of claim in mid August 2017. They retained counsel who filed a notice of intent to defend on 29 August 2017. There was a voicemail from Mr. Clark to Mr. Murray, defence counsel, that day, the contents of which are disputed but I am told that the notice of intent was acknowledged.
[3] The defendants discovered on 28 November 2017 that they had been noted in default. They requested the plaintiff’s consent to set the noting aside which was not forthcoming. This motion was requisitioned on 4 December 2017 and ultimately heard today.
[4] The plaintiff takes the position that the defendants were well aware that they had 30 days to file their defence. The defence was very straightforward and could have been done. The fact that their counsel was busy with other matters, the plaintiff says, is an insufficient excuse for the court to exercise its discretion under Rule 19.03(1) and set aside the noting in default. Further, the defendants do not have an arguable defence. Lastly, the defendants have placed untruthful information before the court and their motion should be denied on that basis.
[5] The test for setting aside a noting in default was set out succinctly in Intact Insurance Company v. Kisel 2015 ONCA 205, paragraphs 12 and 13:
Rules 19.03(1) and Rule 19.08(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provide the basis for setting aside a noting of default and a default judgment, respectively. Both rules give the court discretion to set aside the default “on such terms as are just”. This court has held that the tests to be met under these rules are not identical. See Metropolitan Toronto Condominium Corp. No. 706 v. Bardmore Developments Ltd. (1991) 1991 CanLII 7095 (ON CA), 3 O.R. (3d) 278, [1991] O.J. No. 717 (C.A.), at pp. 24-285 O.R.
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 page 284 O.R. 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] O.J. No. 2378, 2007 ONCA 444, 225 O.A.C. 36 at para. 3; Flintoff v. vonAnhalt [2010] O.J. No. 4963, 2010 ONCA 786, 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, [2005] O.T.C. 891 (S.C.J.), at para. 9. 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 O.R.
[6] While Mr. Clark strongly believes in his case and believes that he is protecting the interests of the individuals who reside at Eesti Kodu, this motion is not the place for a decision to be made on the merits of his claim or on the strength of the defendants’ defence.
[7] Looking at the behaviour of the parties, it is true that Mr. Clark knew the defendants intended to defend as he had received their notice of intent to defend before he noted them in default. However, he believed he would receive their defence within the time allotted in the Rules, now twenty days instead of thirty days. He was of the view that he was not required to give them notice that he would note them in default when the time for delivery of the defence passed and he had not heard from the defendants either filing a defence or requesting an extension. He was, in his view, entitled to enforce the Rules, particularly where the defendants had invited him to sue them should he insist on answers to his questions about their financial management.
[8] The defendants admit that their defence was not filed in time and come to court seeking an indulgence. The evidence before the court is that between the end of August 2017 and late November 2017, Mr. Snow and counsel were involved in assembling the documents necessary to respond to the claim and draft a defence. While Mr. Clark was of the view that preparation of the defence is a three paragraph exercise, it is also the fourth paragraph that requires time – a party must set out in separate, consecutively numbered paragraphs each allegation of material fact relied on by way of defence. Further, a party cannot know which paragraphs to admit or deny or of which paragraphs they have no knowledge without undertaking some investigation, including assembling their documents. Counsel also advised in his affidavit by way of explanation and part of the “context and factual situation”, although not excuse, that his practice was heavy in the fall of 2017.
[9] The delay is not lengthy. The defence was due in mid September 2017. The defendants were noted in default some time before 28 November 2017. The defendants moved within a week of discovering the noting in default to requisition a motion date.
[10] The claim is complex. Mr. Clark alleges negligence on the part of the moving party defendants in their management of the financial affairs of Eesti Kodu. He argues fraud, conspiracy, attempted assault and slander and seeks $850,000 in general damages as well as punitive and exemplary damages.
[11] Mr. Clark is genuine in his complaint and is seeking answers that he says he has been promised, but ultimately never provided, about the financial management of the property where he and others reside. Instead, in a letter sent to him and all the shareholders of Eesti Kodu, he was invited to sue them. His insistence on holding the defendants to the timelines in the Rules is understandable in that context, if he had done so.
[12] Mr. Clark also argues that the defendants put untruthful information before the court and should not be permitted an indulgence of the court as a result. Counsel for the defendants alleged in a letter circulated to the Eesti Kodu shareholders in November 2017 that Mr. Clark had agreed to give him an extension to file the statement of defence. Mr. Clark vehemently disagreed with that statement and demanded proof, at which point counsel conceded that he may have misinterpreted Mr. Clark’s voicemail message. As the message has not been produced, I cannot say which version is accurate, although it seems unlikely that Mr. Clark would have consented or that counsel would not have confirmed that consent in writing.
[13] However, these allegations are serious and the courts wish to have disputes heard on the merits. Reviewing the factors set out above, I am satisfied that the defendants have met the test for setting aside the noting in default. I exercise my discretion to set aside the noting in default and permit the defendants to file a defence on or before 4 April 2018.
[14] The defendants sought their costs as a result of the plaintiff’s refusal to consent to setting aside the noting in default and making this motion necessary. While I am prepared to exercise my discretion in favour of the defendants on the noting in default, in light of the circumstances set out above, I am not prepared to award costs against Mr. Clark for opposing the motion and I make no order as to costs.
Master Jolley
Date: 5 March 2018