COURT FILE NO.: CV-10-413343
DATE: 20180404
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N :
DINA’S SUPERMARKET INC.
Plaintiff
– and –
651535 ONTARIO LIMITED CARRYING ON BUSINESS AS ROLLED METAL PRODUCTS AND SURINDER SINGH SARIN ALSO KNOWN AS JAGDEEP SARIN, JAGDEEP SARIN AND PRIYA SARIN
Defendants
William Ribeiro
for the Plaintiff Dina’s Supermarket Inc.
Surinder Singh Sarin
representing himself and the Defendant
651535 Ontario Limited carrying on
business as Rolled Metal Products
HEARD: March 6, 2018
FAVREAU J.:
Introduction
[1] The defendants Surinder Singh Sarin ("Mr. Sarin") and 651535 Ontario Limited carrying on business as Rolled Metal Products ("Rolled Metal") (collectively referred to as the "Original Defendants"), seek to set aside the default judgment granted by Goldstein J. on September 21, 2012.
[2] For the reasons that follow, I am not satisfied that the Original Defendants have a satisfactory explanation for the default or for the delay in bringing this motion, or that they have a meritorious defence to the action. Furthermore, I do not find that it is in the interests of justice to set aside the default judgment.
Procedural issue
[3] Mr. Sarin has represented himself throughout these proceedings, although he has received some assistance from his daughter, Priya Sarin, who is a litigation lawyer and, also as explained further below, a party to the proceedings.
[4] At the hearing of the motion before me, Priya Sarin sat with her father at the counsel table, although she was not gowned. She requested permission to make some submissions on behalf of her father. While I expressed concerns about allowing her to represent Mr. Sarin given that she is not counsel of record and that she is a party to another aspect of the claim, after Mr. Sarin reviewed the facts and provided arguments supporting his position that default judgment should be set aside, I did allow Ms. Sarin to make brief submissions outlining the law and how it should be applied in this case.
[5] I make a note of these circumstances because, while Mr. Sarin is self-represented, it is evident that he has had the benefit of some legal assistance, at least since the default judgment came to his daughter's attention.
Facts giving rise to the motion
[6] The plaintiff, Dina's Supermarket Inc., is the owner of a commercial building located at 33 Jenet Avenue in Toronto.
[7] Rolled Metal was a commercial tenant in the building starting around 1986, where it was in the business of manufacturing metal parts. Mr. Sarin was the president of Rolled Metal.
[8] The plaintiff acquired the building in 2005.
[9] The most recent lease between the owner of the building and Rolled Metal ran from 2001 to 2006. The evidence on the motion is that Rolled Metal's corporate status was cancelled in 2006. Therefore, while Rolled Metal is named as a defendant in this action, it does not in fact have any legal status.
[10] Despite the cancellation of Rolled Metal's corporate status in 2006, it is undisputed that Mr. Sarin continued the manufacturing business in the rented premises from 2006 to October 2010. There does not appear to have been a formal lease between the parties in that time period.
[11] It is also undisputed that Mr. Sarin stopped paying his share of the property taxes in 2008, and that he stopped paying any rent in October 2009.
[12] In July 2010, the plaintiff gave notice to Mr. Sarin that it intended to exercise its rights to distrain pursuant to the Commercial Tenancies Act, R.S.O. 1990, c.L.7, unless Mr. Sarin paid the outstanding rent within five days. Mr. Sarin did not pay the outstanding rent, and on October 19, 2010, the plaintiff terminated the tenancy, locked Mr. Sarin out of the premises, and ultimately sold some items left in the premises in partial payment of the outstanding rent.
[13] On November 1, 2010, the plaintiff commenced an action against the Original Defendants, seeking payment in the amount of $105,680.07 for the remaining unpaid rent and taxes.
[14] Initially, the action against Mr. Sarin was commenced against "Surinder Singh Sarin also known as Jagdeep Sarin". It turns out that Jagdeep Sarin is Mr. Sarin's wife. The plaintiff's evidence is that, based on a title search of Mr. Sarin's residential address, which is at 35 Thorney Brae Drive in Thornhill and is in the name Jagdeep Sarin, and initials on the 2001-2006 lease which appeared as "JS", the plaintiff's representative and counsel concluded that Mr. Sarin also went by the name Jagdeep Sarin. The reasonableness of this conclusion is not an issue on this motion, but the consequences of this assumption are relevant as reviewed below.
[15] Mr. Sarin, representing himself and Rolled Metal, served a statement of defence on December 3, 2010. In the statement of defence, Mr. Sarin pleaded that he was not known and was never known as Jagdeep Sarin, although he did not state that Jagdeep Sarin is in fact his wife. In addition, he pleaded that he stopped paying rent in 2009 because the premises were in very poor condition, that the plaintiff had agreed to relieve him from paying the property tax component of the rent as of 2008 because business was slow, and that the plaintiff locked him out without giving him an opportunity to sell the contents of the rented premises which he could have done for a far higher rate of return than realized by the plaintiff.
[16] After serving the statement of defence, besides responding to one letter, Mr. Sarin took no further steps to defend the action.
[17] Following service of the statement of defence, the following events led to the default judgment:
a. On March 1, 2011, counsel for the plaintiff served the plaintiff's affidavit of documents and requested Mr. Sarin's affidavit of documents.
b. On January 10, 2012, counsel for the plaintiff wrote to Mr. Sarin again requesting the Original Defendants' affidavit of documents, and advising that if the affidavit was not received within 10 days, the plaintiff would bring a motion to strike the statement of defence.
c. On January 19, 2012, Mr. Sarin responded to the January 10, 2012 letter, stating the following:
This refers to your letter dated Jan 10, 2011 (apparently dated incorrectly).
This letter mentions about the service of your client's Affidavit of Documents sent to me by your letter dated march 1, 2011. Unfortunately I did not receive that letter.
However we will be sending you our Affidavit of Document within the next two weeks and will request you to remail your client's Affidavit of Documents to us at your convenience.
We regret the delay.
d. On January 23, 2012, counsel for the plaintiff re-sent the plaintiff's affidavit of documents and put Mr. Sarin on notice that if he did not serve his affidavit of document within 10 days of that date, the plaintiff would bring a motion to strike the statement of defence.
e. On February 3, 2012, counsel for the plaintiff wrote to Mr. Sarin again, noting that he had not yet received the affidavit of documents and proposing a discovery plan.
f. Having still not received an affidavit of documents or any other communications from Mr. Sarin, the plaintiff brought a motion to strike the statement of defence. The motion record was served on Mr. Sarin via mail on April 20, 2012, and the motion was scheduled for June 12, 2012.
g. On June 12, 2012, Mr. Sarin did not appear on the motion, and Master Dash made an order striking the statement of defence.
h. On June 13, 2012, at the plaintiff's request, Mr. Sarin was noted in default.
i. On September 21, 2012, the plaintiff brought a motion for default judgment without giving notice to Mr. Sarin. At the motion, Goldstein J. granted default judgment in the amount of $105,680.07 in damages, plus pre-judgment interest of $1,997.79, plus costs of $8000.00.
[18] Following the motion, on October 25, 2012, counsel for the plaintiff wrote to Mr. Sarin, enclosing a copy of the judgment, demanding payment and giving him an opportunity to enter into a payment plan, and warning him that the failure to respond would result in a judicial sale of his property which was identified as being at 35 Thorney Brae Drive:
Unless our office is in receipt of a bank draft made payable to our client, Dina's Supermarket Inc. in the amount of $113,680.07 within 30 days of the date of this letter, be notified that we will proceed with a judicial sale of your property at 35 Thorney Brae Dr., so that the proceeds from such sale will be paid into Court and used to pay our client's outstanding Judgment, plus all interest accrued thereon. We will also request that our client's legal costs in connection with the sale be paid from the sale proceeds.
If you are not able to make such a lump sum payment, please contact the undersigned to make a payment plan. If we do not hear from you within 30 days, we will have to proceed with the judicial sale of your property.
[19] Mr. Sarin did not respond to the letter.
[20] As Mr. Sarin had been warned, the plaintiff then took steps to commence the judicial sale of the property. As part of that process, on July 31, 2013, the Newmarket Court's civil enforcement office wrote a letter addressed to Jagdeep Sarin at the 35 Thorney Brae Drive address, to advise that the office was proceeding with the sale of the house, and providing a fifteen day opportunity to pay the outstanding judgment. Again, on September 25, 2013, the enforcement office wrote a letter addressed to Jagdeep Sarin advising that the judicial sale was to proceed on October 31, 2013.
[21] In his affidavit, Mr. Sarin says that he first learned about the judicial sale and default judgment on October 31, 2013, when someone made a call to his home to say that the house had been sold. It is evident that, at that point, his wife and daughter also became aware of the sale and default judgment, and that, soon after, the plaintiff became aware that Jagdeep Sarin was not Mr. Sarin but his wife.
[22] What followed is the subject ongoing proceedings that are to be decided at a later date. The events following the judicial sale are only relevant to this motion insofar as Mr. Sarin claims that they explain his delay in bringing this motion to set aside the default judgment. At a very high level, the chronology is as follows:
a. On October 31 and November 1, 2013, the plaintiff's lawyer entered into negotiations with Priya Sarin, which the plaintiff claims resulted in an agreement that Jagdeep Sarin, Priya Sarin and Mr. Sarin would pay the outstanding judgment, with an agreement to immediately pay $20,000, after which the plaintiff would agree to terminate the judicial sale. These amounts were evidently never paid.
b. On November 1, 2013, Jagdeep Sarin brought an ex parte motion to the Court in Newmarket that resulted in an Order staying the execution of the sale of the property.
c. On March 25, 2014, Jagdeep Sarin brought a motion to terminate the judicial sale. At the same time, the plaintiff sought to amend its statement of claim to add Jagdeep Sarin and Priya Sarin as defendants. It also appears that Mr. Sarin was present at the motion and indicated that he intended to bring a motion to set aside the default judgment. Lederer J. who presided on the motion, made an order that contains the following terms:
i. The Court declared that Mr. Sarin and Jagdeep Sarin are not the same person;
ii. The Court amended the statement of claim to include a claim against Jagdeep Sarin and Priya Sarin to enforce the agreement allegedly made after they became aware of the judicial sale;
iii. The judicial sale of the property was terminated; and
iv. Mr. Sarin's motion to set aside the default judgment and any motions for judgment by the plaintiff against Jagdeep Sarin and Priya Sarin were to be brought on October 7, 2014.
d. On October 7, 2014, it appears that the motions contemplated by Lederer J.'s order had not been scheduled and instead the parties attended scheduling court, where Himel J. noted that "Mr. Sarin has taken no steps to set aside a default judgment against him and his company". She directed that he take steps to bring the motion to set aside judgment before a Master, and approved a timetable for the hearing of a motion for summary judgment to be brought by the plaintiff against Jagdeep Sarin and Priya Sarin.
e. Mr. Sarin served materials for his motion to set aside default judgment on October, 14, 2014, with a return date of February 20, 2015.
f. In November 2014, Jagdeep Sarin and Priya Sarin served statements of defence to the claims advanced against them. Jagdeep Sarin also included a counterclaim against the plaintiff and a third party claim against the plaintiff's counsel.
g. In February 2015, the parties agreed to adjourn Mr. Sarin's motion to set aside the default judgment and the plaintiff's motion for summary judgment, for the purpose of attending mediation, which took place on October 7, 2015. Unfortunately, the mediation was unsuccessful.
h. Mr. Sarin did not reschedule the motion to set aside default judgment until November 3, 2017, when he served a motion record with a return date of November 27, 2017. Mr. Sarin's explanation for this delay is that he tried to reschedule the motion immediately following the failed mediation, but that the plaintiff's lawyer advised him that he could not schedule the motion because he had to consult Lawpro given that he was now named personally in the third party claim brought by Jagdeep Sarin. Mr. Sarin also claims that he was told that the plaintiff's representative intended to consult a new lawyer, but that she was delayed in doing so because she was traveling in Portugal.
i. The motion originally served by Mr. Sarin in November 2017 was ultimately adjourned on consent to be heard by a judge on March 6, 2018, because it had erroneously been brought before a Master.[^1]
Issue and analysis
[23] The only issue on this motion is whether the default judgment against the Original Defendants should be set aside.
Test to set aside default judgment
[24] Rule 19 of the Rules of Civil Procedure provides as follows:
19.08 (1) A judgment against a defendant who has been noted in default that is signed by the registrar or granted by the court on motion under rule 19.04 may be set aside or varied by the court on such terms as are just.
(2) A judgment against a defendant who has been noted in default that is obtained on a motion for judgment on the statement of claim under rule 19.05 or that is obtained after trial may be set aside or varied by a judge on such terms as are just.
(3) On setting aside a judgment under subrule (1) or (2) the court or judge may also set aside the noting of default under rule 19.03. R.R.O. 1990, Reg. 194, r. 19.08 (3).
[25] In Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194 (C.A.), at paras. 47 to 51, the Court of Appeal described the test for setting aside default judgment as follows:
[47] The court's ultimate task on a motion to set aside a default judgment is to determine whether the interests of justice favour granting the order. The approach to be taken to this determination has been considered numerous times by this court. The following draws heavily on the summary of the principles in those cases by Perell J. in Watkins v. Sosnowski, 2012 ONSC 3836, at paras. 19-20 and 23-24.
[48] The court must consider the following three 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 default in complying with the Rules; and
(c) whether the facts establish that the defendant has an arguable defence on the merits.
[49] To this list, I would add the following two factors the court should have regard to, as set out in Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd. 2007 ONCA 333, 87 O.R. (3d) 479 (C.A.), at para. 2:
(d) the potential prejudice to the moving party should the motion be dismissed, and the potential prejudice to the respondent should the motion be allowed; and
(e) the effect of any order the court might make on the overall integrity of the administration of justice.
[50] These factors are not to be treated as rigid rules; the court must consider the particular circumstances of each case to decide whether it is just to relieve the defendant from the consequences of his or her default.
[51] For instance, the presence of an arguable defence on the merits may justify the court exercising its discretion to set aside the default judgment, even if the other factors are unsatisfied in whole or in part. In showing a defence on the merits, the defendant need need not show that the defence will inevitably succeed. The defendant must show that his or her defence has an air of reality.
[26] As reviewed above, following the default judgment, this action had a complicated procedural history. However, in my view, that history should not overtake the application of the test for determining whether to set aside default judgment. The near judicial sale and subsequent dispute over whether Jagdeep Sarin and Priya Sarin had agreement to pay the judgment do not explain the default, fully explain the delay is moving to set aside default judgment or inform the issue of whether there is any merit to the defence,
[27] Therefore, in weighing the factors set out above, my focus is on Mr. Sarin's conduct and the claim against him by the plaintiff, and not on the fallout from the assumption made by the plaintiff that Mr. Sarin and Jagdeep Sarin are the same person. Those are issues to be decided at a later date.
[28] Ultimately, weighing the factors identified by the Court of Appeal and considering the particular circumstances of the case, I am not persuaded that this is an appropriate case for setting aside default judgment.
Explanation for the default
[29] I start with Mr. Sarin's explanation for his default because it comes first chronologically.
[30] The only explanation provided by Mr. Sarin for his default is that he did not receive many of the letters and motion materials that would have alerted him to the possibility that he was at risk of default judgment. In his affidavit in support of the motion, he states bluntly on a number of occasions that he did not receive notice of certain documents or events. For example:
a. He claims to not have received the plaintiff's affidavit of documents which was addressed to his home address on March 1, 2011;
b. He claims that after he sent his letter of January 19, 2012 advising that he would serve his affidavit of documents within two weeks, he did not receive any further communication from the plaintiff and "believed that the plaintiff had simply decided not to pursue the Action any further"; and
c. He claims that he was not aware of the motion to strike his defence.
[31] I find this aspect of Mr. Sarin's evidence implausible and self-serving.
[32] In order to accept this evidence, I would have to be persuaded that at least seven pieces of correspondence addressed to his home address did not come to his attention. The plaintiff's lawyer sent Mr. Sarin five separate pieces of correspondence he claims never to have received, including the materials for the motion to strike his defence and the letter following the default judgment notifying him of the judgment. Inaddition, there were two letters sent to his home address addressed to his wife advising of the intended judicial sale.
[33] He does not deny that the address to which these documents were sent was his home address, and in fact confirmed during the motion that they were properly addressed to his home address. He has provided no explanation as to why these pieces correctly addressed correctly addressed pieces of correspondence never came to his attention. For example, there is no evidence that he was out of the country at the relevant time, or that he has had issues receiving mail at this address in this time period.
[34] The only letter he acknowledges receiving from the plaintiff's lawyer is the letter dated January 10, 2012, wherein he was advised that if he did not serve an affidavit of documents within 10 days, a motion would be brought to strike his defence. By his own admission, he was therefore aware that there could be significant consequences if he did not serve an affidavit of documents. Yet, his excuse for not serving an affidavit of documents or for not communicating with the plaintiff's counsel further is that he could not find any documents. (In his affidavit, he claims that he contacted the plaintiff's representative to see if he could get access to the rented premises because he believed that any relevant documents would still be at that location. The plaintiff's representative in her affidavit denies receiving any calls from Mr. Sarin. Given Mr. Sarin's overall course of conduct, I find her evidence more credible than his evidence.)
[35] Despite the warning in the letter from counsel for the plaintiff and Mr. Sarin's clear undertaking that he would serve his affidavit of documents within two weeks, he did not communicate with counsel for the plaintiff and took no further steps to defend the claim.
[36] From my review of the evidence above, I conclude that it is evident that Mr. Sarin was well aware of the ongoing proceedings against him, and that besides his statement of defence and his one letter promising to serve an affidavit of documents, he chose to ignore the claim until the consequences of doing so came to the dramatic attention of his wife and daughter. There may be any number of reasons why Mr. Sarin chose to ignore the proceedings and avoid bringing them to his family's attention, but his contention that he did not receive the ongoing communications that were sent to his attention is simply not plausible and does not provide a satisfactory explanation for the default.
Delay in bringing the motion to set aside default judgment
[37] There is a five and a half year delay between the time when Mr. Sarin acknowledges becoming aware of the default judgment and the date of this motion.
[38] Mr. Sarin has a number of explanations for the delay in bringing this motion. Given the length of the delay, I find that cumulatively his explanations are unsatisfactory, and continue his earlier pattern of ignoring the claim and its consequences.
[39] Mr. Sarin claims to have become aware of the default judgment on October 31, 2013, when someone called to say the house had been sold. While Jagdeep Sarin brought a motion before Lederer J. on March 24, 2014, to terminate the sale, Mr. Sarin did not bring a motion to set aside the default judgment at that time. Rather, it is apparent that Mr. Sarin attended on the motion and indicated an intention to bring a motion. Lederer J.'s endorsement contains the following:
The remainder of the matter is adjourned to October 7, 2014 for ½ day. At that time, I expect Surinder Singh Sarin will bring a motion to set aside Default Judgment. I have advised him to obtain retain [sic] counsel if he can.
[40] On October 7, 2014, Himel J. noted that Mr. Sarin had still not brought his motion to set aside the default judgment, and suggested that the motion should be brought before a Master.
[41] Mr. Sarin finally scheduled the motion on October 14, 2014 to be heard on February 20, 2015, but it was adjourned to allow the parties to participate in mediation.
[42] There is some explanation for the delay that followed given the mediation and the plaintiff's counsel's indication that he needed to consult counsel before the motion could be rescheduled. However, it was not until November 2017 that Mr. Sarin renewed his efforts to bring a motion to set aside the default judgment.
[43] Defendants noted in default are expected to move "promptly" when they become aware of the default. In my view, by the time Mr. Sarin indicated that he intended to bring his motion at the attendance before Lederer J. and again before Himel J., he had already not moved "promptly" to set aside the default judgment. While there may be explanations for some of the delays that followed, there is no reasonable explanation for the cumulative delay of five and half years.
Merits of defence
[44] While the case law does not require Mr. Sarin to establish a defence, it does require that his defence have an "air of reality": Mountain View Farms Ltd. v. McQueen, supra, para. 51.
[45] In this case, his defence has three prongs:
a. He claims he did not pay the property taxes as of 2008 because there was a verbal agreement that allowed him to defer payment because his business was slow;
b. He claims he did not pay the rent starting in 2009 because the plaintiff was failing to maintain the premises in a satisfactory state; and
c. He should not have been locked out of the premises, and instead given an opportunity to sell the materials in the premises at a higher price than was achieved by the plaintiff.
[46] The difficulty with these proposed defences is that they include an admission that he did not pay the amounts owing, and an admission that business was slow at the relevant time.
[47] In addition, other than the blunt statements in his affidavit, he has produced no contemporaneous documents or other evidence in support of the alleged agreement or the poor state of the premises.
[48] Finally, I have not been presented with any law that supports Mr. Sarin's position that a commercial tenant is entitled to remain in possession of premises without paying any rent due to dissatisfaction with the state of the premises.
[49] In my view, the proposed defence lacks an air of reality.
Prejudice to the parties
[50] As held in Mountain View Farms Ltd. v. McQueen, supra, prejudice to the parties is one of the factors to be weighed in considering whether to set aside default judgment.
[51] However, as recognized in CIBC v. Petten, 2010 ONSC 5236 (Sup. Ct.), at para. 6, there will always be prejudice to the moving party if the motion is not granted.
[52] In my view, this is why prejudice is one factor to be weighed amongst others. Ultimately, where a defaulting defendant has a meritorious defence, the prejudice in requiring the defendant to pay a judgment that could have been defeated on the merits may weigh strongly in favour of setting aside a default judgment even if the explanations for the default and delay are not entirely satisfactory.
[53] In a case such as this one, where the defence lacks an air of reality and where Mr. Sarin claims to have no documents available to make out his defence, the prejudice to the defendants is less obvious as it is not evident that any kind of real defence is available.
Interest of justice
[54] This factor looks at the effect of the order on the overall integrity of the administration of justice.
[55] In my view, setting aside the default judgment in this case would have the effect of sanctioning Mr. Sarin's decision to essentially ignore the proceedings until the eleventh hour when the family home which was in his wife's name was almost sold.
[56] There is an underlying suggestion to Mr. Sarin's motion that default judgment should be set aside because the plaintiff was careless in assuming that he also went by the name of his wife. However, in my view, it would be an error to take this into account. The primary reason why the house was almost sold is that Mr. Sarin chose to ignore the plaintiff's claim in the apparent hope that the action would go away if he ignored it.
[57] Ultimately, the Court will have to decide the merits of the claims between the plaintiff and Mr. Sarin's wife and daughter at a later date. But in my view, in this case, the integrity of the justice system does not militate in favour of permitting Mr. Sarin to defend the claim given the circumstances under which default judgment was obtained, the delay in moving to set aside the default judgment and a defence that lacks an air of reality.
Conclusion
[58] As set out above, I conclude that this is not an appropriate case for setting aside default judgment, and the motion is therefore dismissed.
[59] The plaintiff is to provide written submissions on costs not exceeding two pages within 10 days, and Mr. Sarin is to provide submissions not exceeding two pages within 10 days thereafter.
FAVREAU J.
RELEASED: April 4, 2018
COURT FILE NO.: CV-10-413343
DATE: 20180404
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N :
DINA’S SUPERMARKET INC.
Plaintiff
– and –
651535 ONTARIO LIMITED CARRYING ON BUSINESS AS ROLLED METAL PRODUCTS AND SURINDER SINGH SARIN ALSO KNOWN AS JAGDEEP SARIN, JAGDEEP SARIN AND PRIYA SARIN
Defendants
REASONS FOR JUDGMENT
FAVREAU J.
RELEASED: April 4, 2018
[^1]: While Himel J. had made a direction on October 7, 2014, that Mr. Sarin was to bring the motion before a Master, given that default judgment was granted by Goldstein J., the motion to set aside default judgment could only be granted by a judge.