Court File and Parties

Superior Court of Justice - Ontario

Re: CASA MANILA INC. And: ELIO STEFANO IANNUCCILLI and MARIA CRISTINA IANNUCCILLI

Before: Sanfilippo J.

Counsel: Ryan Zigler, for the Plaintiff No one appearing for the Defendant.

Heard: November 23, 2018

Endorsement

SANFILIPPO J.

Overview

[1] In this uncontested trial, Casa Manila Inc. seeks judgment against the defendant Elio Stefano Iannuccilli for liquidated and unliquidated damages said to result from the breach of an agreement to supply a mobile catering vehicle. The first issue raised in this trial today was whether the plaintiff served the Noting in Default and Trial Record on this defendant. It did not. Although he was served with the Statement of Claim, the defendant did not defend and did not receive any notice that the plaintiff was seeking judgment against him today.

[2] For the reasons that follow, I exercised my discretion to require that the plaintiff provide notice of this hearing to the defendant Elio Stefano Iannuccilli by service of the Trial Record, which contains the Noting in Default, together with my endorsement.

I. BACKGROUND

[3] The plaintiff initiated this action on May 24, 2017. The Statement of Claim was served on the defendant Mr. Iannuccilli on October 3, 2017. The plaintiff did not serve Mr. Iannuccilli’s wife, the co-defendant Maria Christina Iannuccilli, such that it can seek judgment only against Mr. Iannuccilli, whom I will at times refer to as “the Defendant”.

[4] The Defendant did not deliver a Statement of Defence.

[5] On November 16, 2017, the plaintiff requisitioned the Local Registrar at Toronto to note Mr. Iannuccilli in default on the basis of his failure to serve and file a Statement of Defence. The Local Registrar issued a Noting in Default on December 1, 2017.

[6] On February 2, 2018, the plaintiff mailed a Notice of Discontinuance to the Woodbridge address at which Mr. Iannuccilli had been served, purporting to discontinue this action as against his co-defendant, Maria Cristina Iannuccilli, only. This was not necessary because she had not been served and the time for service on her of the Statement of Claim had by then expired.

[7] On March 6, 2018, the plaintiff filed its Trial Record. The plaintiff seeks judgment against the Defendant on an uncontested basis, claiming entitlement to both liquidated damages for payments made for the specialized catering vehicle not received, and unliquidated damages for loss of income said to have been realized by resultant lost catering contracts.

[8] The plaintiff did not serve the Defendant with the Registrar’s Noting in Default or the Trial Record. There was no notice to the Defendant that the plaintiff intended to proceed with an uncontested trial today. The plaintiff submitted that it has no obligation to provide notice, of any nature, to Mr. Iannuccilli after noting him in default on the basis of Rule 19.02(3) of the Rules of Civil Procedure, R.R.O 1990, Reg. 194, which provides as follows:

19.02 (3) Despite any other rule, a defendant who has been noted in default is not entitled to notice of any step in the action and need not be served with any document in the action, except where the court orders otherwise or where a party requires the person attendance of the defendant, and except as provided in, … [list omitted]

II. ANALYSIS: WHEN IS NOTICE REQUIRED?

[9] The plaintiff is correct that, technically, the defendant in default is not entitled to notice of any step in this action. The question that I must consider, before hearing this uncontested trial, is whether this is a case in which I ought to “order otherwise”. By this I mean whether I ought to require that the plaintiff provide the Defendant with notice of the Trial Record, which contains the Noting in Default, and notice of the hearing date of the uncontested trial, even though the Defendant has not pleaded. I would ask the same question, albeit in a different procedural context, if the relief sought by the plaintiff today were brought as a motion for default judgment.

[10] In Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416 at para. 115, Binnie J. commented that Rule 19.02 “leaves notice in the discretion of the court”, and that the requirement of notice on the defaulting defendant will “depend on the circumstances” of the case. In Greey v. Greey, [1994] O.J. No. 1344 (C.A.) at para. 4, the Court of Appeal directed, on the basis of the discretion afforded by Rule 19.02(3), that notice of any motion for judgment be provided to a defendant whose defence had been struck on the finding that it was “in the interest of justice” to do so.

[11] In Elekta Ltd. v. Rodkin, 2012 ONSC 2062 at para. 10, D.M. Brown J., as he then was, directed a plaintiff to provide notice to a defaulting defendant, under Rule 19.02(3), on the basis that this allows the judge hearing the undefended trial, or motion for judgment, to be satisfied that the defaulting defendant was provided with proper notice of the claim and of the motion or hearing pending for judgment:

Although once noted in default a party is not entitled to notice of a motion for default judgment, by far the better practice is to serve the default judgment motion materials on the defendant in any event. The main reason for this practice is a simple, but important, one. Often the materials filed on a Rule 19.05 motion for default judgment will raise questions about the adequacy of the service of the Statement of Claim. … . Even where the Registrar has noted a defendant in default, a judge will want to satisfy himself or herself that the defendant was given proper notice of the claim. By serving the default judgment motion record on the responding party and filing proof of such service, a court can satisfy itself that the person against whom default judgment is sought knew about the claim, knew about the motion for default judgment yet, nevertheless, elected not to defend or respond. [Emphasis added].

[12] Several courts have followed this approach. In Western Steel and Tube Ltd. v. Technoflange Inc., 2017 ONSC 2697 at para. 24, Myers J. observed that the “court frequently requires notice to be provided in default proceedings although the Rules do not technically require it.” He commented in L-Jalco Holdings Inc. v. Bell, 2017 ONSC 1035, 45 C.B.R. (6th) 320 at para. 20 that the “best practice” in default proceedings is for the plaintiff to serve its motion record on the defendant, citing Elekta. Similar statements are made by Favreau J. in Canada Mortgage and Housing Corporation v. CMC Medical Centre Inc., 2017 ONSC 7551 at para. 11 and in CF/Realty Holdings Inc. v. Midtowns Tiny Tots Inc., 2017 ONSC 7647, at para. 10, and by Koehnen J. in Ott v. Canadian Standard Home Services, 2017 ONSC 7114 at para. 3. In DCR Strategies Inc. v. Vector Card Services LLC, 2013 ONSC 5881, 117 O.R. (3d) 551 at para. 27, Firestone J. applied the ratio from Elekta in finding that the party seeking to set aside a default judgment ought to have been served with notice of the default proceeding.

[13] These cases all recognize that a judge hearing a motion for default judgment or an uncontested trial must be satisfied that the defendant in default was given proper notice of the claim. Proof of the service of the Statement of Claim is necessary for the defendant to know that a claim is being advanced and is thereby a predicate to obtaining a Noting in Default. Proof of the defaulting defendant’s knowledge of the claim is critical to two elements: the legitimacy of the court’s rendering of the judgment, and the ability of the judgment to withstand challenge on the basis of lack of notice.

[14] In serving the default judgment motion materials, or the Trial Record in the case of an uncontested trial, the plaintiff is re-affirming the service of the Statement of Claim to leave no doubt that the court is in a position to render judgment in the absence of the defendant. That is not to say that this is necessary in all cases. There are undoubtedly some cases where the service is so clearly established, where the election by the defendant not to respond to the proceeding is so evident, so purposeful that it would be unnecessary to require that the defendant had notice of the motion for default judgment or hearing of an uncontested trial. In such a case, Rule 19.02(3) operates to relieve the plaintiff from the requirement to provide any further notice and denies the defaulting defendant the opportunity of further participation.

[15] However, Rule 19.02(3) provides the judge with discretion to order that the defendant in default knows something more: not only that a claim has been advanced but also that the claim is about to be considered by a court for the purpose of issuing judgment. By providing notice that the claim is about to be considered by a court, the plaintiff satisfies the court of both the validity of the service of the Statement of Claim, which is effectively replicated through service of the motion materials or trial record filed to obtain default judgment, and that the defendant has made a purposeful decision not to contest judgment.

[16] This is why “by far the better practice” is to provide the defaulting defendant with the material necessary to understand, without doubt, that the claim for judgment against the defaulting defendant is about to be determined. Where the plaintiff has not followed this practice, the court must consider whether the interests of justice, and of procedural and trial fairness, demand that the court’s discretion be exercised in favour of requiring notice to the defaulting defendant. The court must balance the plaintiff’s entitlement to proceed without participation of the defendant who has elected to abstain against the defendant’s entitlement to have sufficient notice on which to make this election.

[17] The objective is always to “secure the just, most expeditious and least expensive determination of every civil proceeding on its merits”, and a liberal application of Rule 19.02(3) is a tool in doing so: Rule 1.04. The motion for default judgment or the uncontested trial ought to be the last step in the action, not the precursor to a motion to set aside a default judgment due to inadequacy of notice (Rule 37.14; Rule 19.08(1), (2)) or a motion to set aside or vary a trial judgment due to a party’s failure to attend through lack of notice (Rule 52.01; Rule 19.08(2)). To a plaintiff seeking a judgment on default, notice is not a nuisance: it is key to the viability of the default judgment.

III. CONCLUSION

[18] The Statement of Claim was served on Mr. Iannuccilli on October 3, 2017. Neither the Noting in Default nor the Trial Record were served on him, with the result that the only document he received from the plaintiff in over a year is the Notice of Discontinuance. It is clearly worded to be a discontinuance of this action solely against the Defendant’s spouse, but it was not accompanied or followed by any notification of continued pursuit of this claim against the Defendant. In these circumstances, the best way to ensure that the Defendant has notice of the claim and also has notice that the claim is about to be considered by the court is by providing notice of the pending trial.

[19] I exercise my discretion to order, under Rule 19.02(3), that the plaintiff serve the Defendant with the Trial Record, which contains the Noting in Default, together with my endorsement. This trial will proceed on January 29, 2019 before me. If the Defendant seeks to respond to this claim, he must do so in the meantime.

Sanfilippo J. Released: November 26, 2018