Court File and Parties
Court File No.: CV-13-493095, CV-14-503613 Date: 2018-12-10 Superior Court of Justice – Ontario
Re: GOULD LEASING LTD., Plaintiff And: 665750 ONTARIO LIMITED operating as CAMROB ENTERPRISES, and ROBERT CAMPAGNA, Defendants
Counsel: Chad Kopach, for the Plaintiff Todd Robinson and Robyn Blumberg, for the Defendants
Heard: December 4, 2018
Endorsement
DIAMOND J.:
Overview
[1] On June 8, 2018, Master Graham struck out the Statements of Defence in both the above-noted proceedings, and granted default judgment against the defendants requiring them to pay the plaintiff (a) $130,420.47 plus costs of $6,040.37, and (b) $184,569.18 plus costs of $5,588.87 in the 2013 and 2014 actions respectively (the “default judgments”).
[2] The defendants now bring motions in each proceeding seeking an order setting aside the default judgments and any writs of seizure and sale issued and registered in respect of the default judgments. Both motions were argued before me on December 4, 2018 and I took my decision under reserve.
[3] For the reasons which follow, I have granted the relief sought by the defendants.
Summary of Relevant Facts
[4] In or around December 2016, the plaintiff sought to schedule motions for summary judgment in both proceedings. By Order dated December 6, 2016, Justice Firestone found that the plaintiff’s contemplated motions for summary judgment were premature, and ordered the parties to complete examinations for discovery by February 15, 2017. The parties thereafter agreed to extend that deadline, and ultimately scheduled examinations for discovery to proceed on February 9, 2018.
[5] Prior to the scheduled examinations for discovery, the solicitors for the defendants brought motions to remove themselves as solicitors of record for the defendants in both proceedings. Of note, in their original motion records, the solicitors for the defendants listed the defendants’ last known address as 24 Spurs Court, Brampton, Ontario, L6B 0P1 (the “Brampton address”).
[6] The motions to remove the solicitor for the defendants from the record were scheduled to proceed on January 26, 2018. In a supplementary affidavit filed by the solicitors for the defendants, the defendant Robert Campagna (“Campagna”) confirmed that the defendants’ address was in fact 5289 Highway #7, Unit 7, Woodbridge, Ontario, L4L 8V3 (the “Woodbridge address”).
[7] On January 26, 2018, Master Short granted Orders removing the solicitors for the defendants from the record in both proceedings. The Orders listed the defendants’ last known address as the Woodbridge address, and mandated the defendants to appoint a new lawyer of record, or serve a Notice of Intention to Act in Person on behalf of Campagna and obtain leave for a person other than a lawyer to represent the corporate defendant 665750 Ontario Limited (“665”). Paragraph 8 of Master Short’s Order specifically provided that in the event the defendants failed to comply with their obligations as ordered therein, the Court could dismiss their proceeding or strike out their defence.
[8] Approximately ten days after the plaintiff was served with copies Master Short’s Orders, the plaintiffs proceeded with the scheduled examination for discovery of the defendants. The defendants did not attend, and the plaintiffs obtained certificates of non-attendance.
[9] The defendants did not appoint new counsel of record. Campagna did not serve a Notice of Intention to Act in Person, and 665 did not obtain leave permitting it to be represented by a person other than a lawyer. As a result, the plaintiff decided to bring a motion to strike the defendants’ Statement of Defence and seek default judgment in both proceedings. There is no evidence in the record before me that, prior to bringing its motion to strike, the plaintiff sought to contact the defendants with a view to seeking delivery of the defendants’ Affidavit of Documents or rescheduling examinations for discovery.
[10] The plaintiff’s motion was served by mail at the Woodbridge address, which was the defendants’ address for service set out in Master Short’s Orders. However, the plaintiff’s motion materials were ultimately returned as “address incomplete” prior to the return of its motion.
[11] Master Graham was assigned to hear the plaintiff’s motion on May 8, 2018. On that date, Master Graham expressed a concern that the defendants may not have had notice of the plaintiff’s motion, and adjourned the motion to June 8, 2018 to permit the plaintiff to attempt personal service of the motion materials upon the defendants.
[12] On these motions before me, Campagna has admitted that he did receive copies of Master Short’s Orders, which presumably means that the Woodbridge address was effective for service. However, when the plaintiff’s process server attended the Woodbridge address, it was nothing more than a construction site. The process server subsequently learned that the defendants had apparently moved from the Woodbridge address five years earlier. On these motions, the defendants have not explained how they received copies of Master Short’s Order if service was apparently carried out at an empty construction site.
[13] In any event, the plaintiff served its motion materials by mail at the Brampton address, which was 665’s registered corporate head office. There is evidence in the record before me of other service attempts on the part of the plaintiff’s process server to effect service of the plaintiff’s motion materials upon the defendants. Unfortunately, the evidence of the process server was served very close to the hearing date, and as a result, the defendants contend that they were unable to provide responding evidence on this point.
[14] The plaintiff’s motion proceeded before Master Graham on June 8, 2018. As previously stated, Master Graham found that service of the motion materials was properly attempted at the Woodbridge address, and further found that the plaintiff had made reasonable efforts to serve the defendants in accordance with his May 8, 2018 Endorsement. Master Graham then granted the default judgments.
Setting Aside a Default Judgment
[15] When asked to set aside a default judgment, the Court’s ultimate task is to determine whether the interests of justice favour granting the order requested. As held by the Court of Appeal for Ontario in Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, I must consider the following five factors:
a) whether the motion was brought promptly after the defendants learned of the default judgment;
b) whether there is a plausible excuse or explanation for the defendants’ default in complying with the Rules of Civil Procedure;
c) whether the facts establish that the defendants have an arguable defence on the merits;
d) the potential prejudice to the defendants should the motion be dismissed, and the potential prejudice to the plaintiff 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.
[16] As stated in Mountain View, the above five factors are not to be treated as rigid rules, as I must consider the particular circumstances of the case when deciding whether it is just to relieve the defendants from the consequences of their default.
[17] The plaintiff relies on the decision of Justice Perell in 420-450 Britannia Road East Ltd. v. Kennedy Transportation Network Ltd., 2015 ONSC 1791 in support of its submission that when hearing a motion to set aside a default judgment where a Statement of Defence has been struck out, the Court must place emphasis on the fact that a defendant has likely made “an advertent decision to defend…and is then irresponsible in advancing that defence”. I do not read the 420-450 Britannia Road decision to place any greater emphasis upon that fact, as Justice Perell clearly cited the five Mountain View factors and explicitly noted that those factors are not to be treated as rigid rules. While I agree that I must consider any conscious decision made by a party not to participate in a proceeding, that is still but one factor to consider.
[18] I shall now access the five Mountain View factors.
Was this motion brought promptly after the defendants learned of the default judgments?
[19] According to Campagna, he first learned of the default judgments in or around August 2018 when he was made aware of garnishment proceedings undertaken by the plaintiffs pursuant to the default judgments. Campagna was not cross-examined upon his affidavit, and subject to my comments when considering the second Mountain View factor, there is no real evidence to the contrary showing that the defendants learned of the existence of the default judgments any sooner.
[20] The defendants originally secured a September 27, 2018 return date for their motions to set aside the default judgments. That date was then adjourned on consent to December 4, 2018.
[21] There is no dispute that the defendants moved promptly after learning the existence of the default judgments. As such, I find this factor to favour the defendants.
Is there a plausible excuse/explanation for the defendants’ default in complying with the Rules?
[22] Campagna gave evidence that at the time his counsel was removed from the record, he was recovering from a November 2017 surgery and his wife was undergoing treatment for a “serious medical condition”. To summarize, Campagna received Master Short’s Orders, but never received anything further until learning of the garnishment proceedings. This evidence is not easy to reconcile with the fact that the Woodbridge address was a construction site, and there would thus be little to no way to serve any court documents there. In any event, the defendants already knew of their obligation to attend discoveries which had been scheduled in advance of the date of Master Short’s Orders. There is no evidence before me to explain why the defendants believed they could avoid attending their previously scheduled examinations for discovery other than Campagna’s evidence that he and his wife were suffering from health issues during that time period.
[23] Prior to the first attendance before Master Graham, the plaintiff never contacted the defendants with a view to rescheduling the examinations for discovery, renewing their request for delivery of the plaintiff’s affidavit of documents, or simply addressing the continued prosecution of these proceedings. It was only after Master Graham adjourned the plaintiff’s motion that the plaintiff instructed its process server to “ramp up” efforts to serve the defendants in accordance with Master Graham’s direction. The evidence of the process server confirms that he did encounter difficulty serving anything on each attendance at the Brampton address.
[24] In Koohestani v. Mahmood, 2015 ONCA 56, the Court of Appeal for Ontario held that striking out a Statement of Defence is a “severe remedy” which should generally not be imposed as a remedy of first resort. A defaulting party should be afforded an opportunity to cure its alleged default.
[25] At the time the plaintiff’s motion was scheduled before Master Graham, the defendants were self-represented. While that reality ought not to be visited upon the plaintiff, on occasion self-represented litigants may be extended courtesies and provided direction on how to keep their case on track. This does not mean that self-represented litigants are free to disregard Court Orders or their obligations under the Rules of Civil Procedure. However, when pursuing a potential Order striking out a pleading, given that these proceedings were on the eve of scheduled examinations for discovery, I believe that the plaintiff could have tried to contact the defendants to allow them an opportunity to comply with the terms of Master Short’s Orders, and perhaps agree to reschedule examinations for discovery, prior to proceeding with its motions.
[26] The plaintiffs have not led satisfactory evidence explaining why they took no steps in the face of Master Short’s Orders, including retaining counsel or contacting counsel for the plaintiff. That said, the remedy granted by Master Graham was a significant one and the plaintiff could have exerted more effort in ensuring that the defendants were aware of the extent of their jeopardy.
[27] I find this factor to be neutral.
Do the facts establish that the defendants have an arguable defence on the merits?
[28] The Statements of Defence were served and filed at the outset of these proceedings. Given that Justice Firestone already concluded that the plaintiff’s contemplated motions for summary judgment were premature before the conclusion of examinations for discovery, and as I need not be satisfied that those defences will inevitably succeed, I am satisfied that the defendants have met their burden of showing that they have an arguable defence on the merits.
[29] I find that this factor favours the defendants.
The potential prejudice to the defendants if the motion is dismissed and, the potential prejudice to the plaintiff if the motion is granted.
[30] Apart from being potentially reimbursed for its costs thrown away in obtaining the default judgments and taking subsequent enforcement steps, I do not find there to be substantive prejudice to the plaintiff if the default judgments are set aside. The fact that the plaintiff may experience a delay in ultimately securing judgments does not amount to the type of prejudice necessary to sway this factor in the plaintiff’s favour.
[31] Conversely, there is some prejudice to the defendants if the motions are dismissed. The defendants have significant default judgments against them with high interest rates. This action is already more than four years old, and examinations for discovery were only scheduled to proceed earlier this year. I do not find the delay occasioned by the defendants’ default and the subsequent bringing of these motions to offset the prejudice of being subject to the default judgments.
[32] I find this factor to favour the defendants.
The effect of any Order the Court may make on the overall integrity of the administration of justice
[33] I do not believe that setting aside the default judgments would adversely impact the overall integrity of the administration of justice. As stated, while the defendants’ evidence was not as particularized or responsive as it could have been, I believe these proceedings ought to be determined at trial, or perhaps on motions for summary judgment.
[34] I therefore find it appropriate and in the interest of justice to relieve the defendants from the consequences of their default, and I grant their motions to set aside the default judgments and any writs of seizure and sale issued and registered in respect of those judgments.
Costs
[35] At the conclusion of the hearing, I advised counsel for the parties that in the event I was to grant the relief sought by the defendants, my Order would likely include a term requiring the defendants to reimburse the plaintiff for its costs thrown away as a result of obtaining and enforcing the default judgments (estimated by counsel for the plaintiff to total approximately $2,200.00).
[36] Subject to further submissions from the parties, that remains my intention. However, I believe the parties ought to be afforded an opportunity to make formal costs submissions having now received my decision.
[37] If they are unable to agree upon the costs of these motions, they may serve and file written costs submissions, totaling no more than five pages including a costs outline, in accordance with the following schedule:
a) the defendants shall serve and file their costs submissions within 14 business days of the receipt of this Endorsement; and,
b) the plaintiff shall thereafter have an additional 14 business days from the receipt of the defendants’ costs submissions to serve and file its responding costs submissions.
Diamond J.