Court File and Parties

COURT FILE NO.: CV-18-136609 MOTION HEARD: 20190418 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Arif Shaikh and Isaratben Shaikh, Plaintiffs AND: Tasneem Vohra, Defendant

BEFORE: Master Karen Jolley

COUNSEL: R. Swaine, Counsel for the Moving Party Defendant Jamie Sanderson, Counsel for the Responding Party Plaintiffs

HEARD: 18 April 2019

REASONS FOR DECISION

Relief Sought

[1] The defendant brings this motion to set aside: (a) default judgment against her issued by Justice de Sa on 14 November 2018 (the “Default Judgment”); (b) her noting in default; and (c) writs of seizure and sale issued by the plaintiffs pursuant to the Default Judgment.

[2] The plaintiffs oppose the motion. If the Default Judgment is set aside, they seek terms.

Facts

[3] This action arises from an agreement of purchase and sale entered into by the parties on 13 February 2017 pursuant to which the defendant agreed to purchase the plaintiffs’ property located at 74 Abercrombie Crescent, Brampton (the “Property”). The closing was set for 28 August 2017 and it was agreed that time was of the essence.

[4] On 29 June 2017 the parties agreed to extend the closing to 8 November 2017, the date the plaintiffs were advised their new home would be ready. On 21 July 2017 the plaintiffs’ builder advised that the new home would not be ready until 13 December 2017 and the plaintiffs requested a further extension to that date, which the defendant refused.

[5] On 11 September 2017 the defendant requested an 11 month extension of her own, to 30 September 2018, a date that would have been more than 8 months after the plaintiffs’ closing of their new house. The plaintiffs refused to consent.

[6] On 24 October 2017 the real estate lawyer for the plaintiffs advised that the plaintiffs were ready, willing and able to close on 8 November 2017 but would also extend the date to 13 December 2017. The defendant did not close on 8 November 2017 and the plaintiffs relisted the Property for sale. On the date of closing, the defendant sent a letter to the plaintiffs advising that she intended to close the sale of the Property on 8 November 2028, 11 years hence. She further took the position that the plaintiffs’ could not sell the Property in the intervening 11 years unless they gave her a release.

[7] The plaintiffs resold the Property and commenced this action against the defendant for damages incurred as a result of her failure to close.

[8] The plaintiffs advise that they served the defendant four times through various means with the statement of claim. She denies ever having received it. First, they sent a copy to her lawyer by email on 17 July 2018 to determine if he had instructions to accept service. While the email address used was correct, Mr. Swaine denies having received the email and the attached statement of claim.

[9] Next they retained a process server who served the defendant’s uncle on 27 July 2018 at the defendant’s home and then mailed a copy of the statement of claim on 14 August 2018. The defendant does not address these two deliveries of the statements of claim as she takes the position that she never received the claim and so was presumably unaware of these attempts.

[10] On 16 August 2018, the plaintiffs discovered that the statement of claim left earlier with the defendant’s uncle had not been mailed the day after the July 27 service. They instructed the process server to re-attend and he did so on 28 August 2018 at 5:50 p.m. and gave a copy of the statement of claim to the defendant personally after she identified herself as Tasneem Vohra. The defendant denies that she was served with the claim. She deposed that she was out shopping that day and could not have been served.

[11] Not having heard from the defendant’s counsel after having emailed the statement of claim, and not having received a defence to the statement of claim served on the defendant, on 19 September 2018 the plaintiffs noted the defendant in default. As the Registrar was of the view that the claim was unliquidated, the plaintiffs brought a motion for judgment which was ultimately heard and granted on 14 November 2018 in the amount of $96,702.65.

[12] That same date, a writ of seizure and sale was issued in the Regional Municipality of York and a further writ issued in the Regional Municipality of Peel the following day.

[13] On 20 March 2019 the defendant served her motion to set aside the Default Judgment.

[14] With that background, I turn to the applicable law.

The Law

Test on Setting Aside Default Judgment

[15] The parties are agreed that the applicable test for this motion is as set out in Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, where the Court of Appeal stated:

(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….

(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 (CA) at paragraph 2: (d) the potential prejudice to the moving party should the motion be dismissed, and the potential prejudice to the respondent should be 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 consequence of his or her default.

Application of the Law to the Facts

Did the defendant bring the motion to set aside the Default Judgment promptly after she learned of it?

[16] The defendant deposes that she learned of the Default Judgment, or at least the writs, on 27 February 2019 when her real estate lawyer advised her that there was a writ registered against her home. She swore an affidavit in support of this motion on 7 March 2019. However, the motion record was not served until 20 March 2019.

[17] While there is no explanation for the two week delay in serving the motion record after the date the affidavit in support was sworn, I am satisfied that the defendant was sufficiently prompt in her action after learning of the writ on 27 February 2019 to meet the test.

Is there a plausible excuse or explanation for the defendant’s default?

[18] The plaintiffs rely on the personal service made on 28 August 2018 at 5:50 p.m. The defendant has appended sales receipts to her affidavit to indicate that she was shopping that day and could not have been served at home. There is no time of purchase on the visa statement (although there would have been time stamps on the receipts themselves) and the defendant does not depose as to the hours she was away from home.

[19] She further says that she was not put on inquiry about any statement of claim because her lawyer had written to the plaintiffs’ lawyer on 23 August 2018 advising that he would accept service. In a continuation of the comedy of errors after the stray email, defence counsel mistyped the plaintiffs’ counsel’s facsimile number and plaintiffs’ counsel never received the faxed letter. As a result, the plaintiffs went to the expense of personally serving the defendant.

[20] It would be surprising for the defendant not to respond had she been served as she had already retained counsel and instructed him to accept service and defend any claim. While the explanation is not comprehensive, I am satisfied that there is plausible excuse for her failure to defend.

Does the defendant have an arguable defence on the merits?

[21] The test is not whether the defence will inevitably succeed but whether the defence has an air of reality in the context of all the evidence (Mountain View, supra at paragraph 51). The defendant did not file a draft statement of defence. However, her counsel advises that she intends to defend on the basis that the agreement was void as the parties were not ad idem on the closing date and had no reasonable means of setting the date. Alternatively, she will argue that the plaintiffs were in breach of the agreement by not accepting the defendant’s new closing date of 8 November 2028. She will also challenge the damages if she succeeds in having the Default Judgment set aside.

[22] I do not need to decide whether these defences will succeed and, if that were the test, I am doubtful that the defendant could meet it. However, had the defendant admitted that she had been served, she would have been entitled to raise these same defences and the plaintiffs would have to meet them. Had the defendant chosen to advance a defence on the damages alone, I would not have found that her defence had an air of reality. It is apparent on the record, as it was before de Sa, J. that each head of damage flowed from the defendant’s failure to close.

[23] However, as to the closing, when the parties negotiated an extension of the closing to 8 November 2017, the defendant’s real estate agent, who was also her husband, inserted a clause into the agreement was follows:

“Buyer or Seller will have one more chance to change the closing date….”

[24] It is this language alone that give the defendant’s defence an air of reality as the meaning and intent of this clause is unclear. Does it mean that either party could ask the other to consent to another extension, in which case the clause seems superfluous as they could both request and agree at any time to a further extension. Does it mean that either party could unilaterally choose a closing date? If so, did the date need to be a reasonable one or could it be arbitrary? If the clause is vague, what impact does it have on the closing and the validity of the agreement of purchase and sale?

[25] Defendant’s counsel advised that his client would be relying on the 30 September 2018 closing date request and not on the 8 November 2028 closing date request in her defence. The plaintiffs may well reference the 2028 date to show the defendant never intended to close and was unreasonable.

[26] Given the ambiguity in the extension language and given that the closing date issue is the basis for the failure to close, I find that the defence proposed make it across the “arguable” line.

The prejudice to the defendant should the motion not be granted and the prejudice to the plaintiffs should the motion be granted

[27] If the defendant is not successful on the motion, the plaintiffs may move on the writs of seizure and sale.

[28] If the defendant is successful, the plaintiffs will be deprived of a judgment in their favour, at least for the time being, and will need to prove a defended claim.

[29] Plaintiffs’ counsel is concerned that the defendant may dissipate her only asset as she listed her house for sale on 6 February 2019. This can be dealt with by a term of the setting aside.

Integrity of the justice system

[30] While I have sympathy for the plaintiffs’ position, given the defendant’s sworn statement that she was not served with the statement of claim, I find that enforcing a judgment without providing her with the opportunity to defend the action brings more harm to the integrity of the justice system than requiring the plaintiffs to prove their claim and respond to the defendant’s defences.

Conclusion and Terms

[31] For the reasons set out above, the defendant’s motion is granted and the Default Judgment is set aside, together with the noting in default.

[32] However, this order comes with terms. The plaintiffs incurred $14,376.51 in fees, disbursements and HST in obtaining Default Judgment. The defendant has agreed to pay the costs thrown away, acknowledging that the firm failed to ensure its letter was sent to the correct facsimile number. However, she objects to the quantum of the costs sought. I have reviewed the costs and find them to have been reasonably incurred by the plaintiffs as part of their efforts to obtain Default Judgment. The costs were borne because the defendant did not defend and the plaintiffs should not be out of pocket as a result.

[33] In light of the ongoing listing, there is a risk that the defendant will sell her main, if not only, asset and therefore thwart a judgment that the plaintiffs already have. The court has the discretion to leave the writs in place provided the Default Judgment was regularly obtained, as it was here (Hegedus v. Liciani 1981 CarswellOnt 403 at paragraph 5). There is sufficient grounds here for such an exercise of discretion, particularly in light of the defendant’s ongoing efforts to sell her home and my conclusion that the plaintiffs’ prospect of ultimate success is strong (Hodgson v. Mandulai, 2012 ONSC 4913 at paragraph 37). I exercise my discretion to have the writs remain in place, although the plaintiffs may take no action to enforce those writs without a further court order.

[34] To ensure the matter moves expeditiously, the defendant shall file her statement of defence with 14 days of this decision. She shall pay the costs thrown away of $14,376.51 by 24 May 2019 and shall not take any further steps in this action until those costs are paid.

[35] By 27 May 2019, the parties shall either advise the court that they have settled the issue of costs or shall provide the court with their costs submissions by email to Christine Meditskos at Christine.meditskos@ontario.ca.

Master Jolley Date: 24 April 2019