Court File and Parties
ONTARIO – SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-18-602558
MOTION HEARD: 2019 07 12
COUNSEL:
S. Chhina for the defendant
J. Singh Chahal for the plaintiff
Endorsement
Master R. A. Muir –
This is an urgent motion brought by the defendant pursuant to Rule 19.08(1) of the Rules of Civil Procedure, RRO 1990, Reg. 194 (the “Rules”). The defendant seeks an order setting aside his noting in default and the related default judgment. The plaintiff is opposed to the relief sought.
This is a claim on a residential second mortgage loan by the plaintiff to the defendant. The defendant and his family have been evicted from the home. It was therefore necessary for this matter to be heard and decided on an urgent basis.
The parties agree on the test to be applied on a motion such as this. It can be found in the decision of the Court of Appeal in Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194. The court states as follows beginning at paragraph 47 of Mountain View:
[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 OR (3d) 479 (CA), 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 not show that the defence will inevitably succeed. The defendant must show that his or her defence has an air of reality.
These are the factors and principles I have considered and applied in determining the issues on this motion.
I am satisfied for the purposes of this motion that the defendant was unaware of this proceeding until June 2019. His unchallenged evidence is that the statement of claim could not have been served on him because he was at work at the time the affidavit of service states that he was served at home. It also makes no sense for the defendant to have ignored the statement of claim in the circumstances when he knew that his home was at stake. This conclusion is reinforced by the fact that the defendant moved quickly, having regard to his financial and personal circumstances, once he became aware of this proceeding.
However, the unfortunate fact for the defendant is that there is simply no evidence of a defence on the merits, subject to an issue about the name of the plaintiff which I address below. The evidence on this motion shows that the mortgage is in default. No payments have been made since May 2018. I certainly sympathise with the defendant’s personal and financial circumstances but they were not caused by the plaintiff. This defendant borrowed money from this plaintiff on the security of his property. The required payments under the mortgage have not been made since May 2018. The defendant is in default. The mortgage agreement permits the mortgagee to take possession in such circumstances. A very generous reading of the evidence supports the conclusion that there may be some accounting issues about legal and perhaps other fees but principal and interest is owing and it has not been paid. In any event, Master McGraw’s judgment would appear to include principal and interest only. It simply makes no sense to set aside the judgment now only to have it reinstated on a summary judgment motion a few months and a few thousand dollars down the road.
Moreover, it is my view that further delay will prejudice the plaintiff. The first mortgage is in default and amounts accruing under that judgment are consuming equity in the property.
One further issue must be addressed. The name of the plaintiff on the statement of claim does not match the name of the mortgagee on the mortgage. I am satisfied that the original plaintiff and the mortgagee are the same person. However, in my view, it was completely improper to simply change the name of the plaintiff on subsequently filed court documents, including the judgment, without properly and formally amending the title of proceedings. To set aside the judgment on that basis alone would elevate form over substance, however, it is a proper matter for costs, which are in the discretion of the court. In my view, the plaintiff’s enforcement costs and any costs for this motion should be reduced to reflect the court’s displeasure with such actions.
I therefore order as follows:
(a) the defendant’s motion is dismissed;
(b) the title of proceedings is hereby amended nunc pro tunc to the date the statement of claim was issued to change the name of the plaintiff from Manjit Aujla to Manjit Kaur; and,
(c) the plaintiff shall be entitled to maximum pre and post-litigation legal costs to date of $5,000.00, inclusive of disbursements and HST, which costs include any costs in relation to this motion.
2019 07 12
Master R. A. Muir