Court File and Parties

Court File No.: CV-18-606807 Motion Heard: 2019-07-19 Superior Court of Justice - Ontario

Re: Daniel Strauss et al., Plaintiffs And: Howard Teperman, Defendant

Before: Master Abrams

Counsel: S. Panzer, for the Plaintiffs B. Belmont, for the Defendants

Heard: June 21, 2019

Reasons for Decision

[1] The defendant moves for an Order setting aside his noting in default and commits to filing his statement of defence within only a few days of the release of my decision.

[2] The defendant deposes—and he has not been cross-examined on his evidence—that he received an envelope containing the statement of claim herein on or about March 11/19. He denies having attempted to avoid personal service and questions why it was necessary to have served him substitutionally, as was done.

[3] There is no question but that the defendant was served in accordance with the December 24/18 Order of Master Muir. I make no comment on whether that Order was required. The Order was obtained and complied with by the plaintiffs.

[4] After the statement of claim was mailed to the defendant, there was no follow-up by the plaintiffs advising the defendant, by letter or otherwise, that he was going to be noted in default. He was noted in default on March 8/19.

[5] On March 11/19, the date on which the defendant says he learned of the claim, his lawyer wrote to plaintiffs’ counsel advising that a statement of defence was forthcoming. On March 13/19, two days after the defendant says he learned of the plaintiffs’ claim and five days after he was noted in default, the defendant served his statement of defence.

[6] The parties disagree as to who knew what and when, save that the only evidence as to what the defendant knew about service of the claim is that of the defendant; and, the March 11/19 letter from defendant’s counsel and the statement of defence served by him only two days later suggest that the defendant did not, in fact, learn of the claim until March 11/19.

[7] Rule 19.03(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 gives the court discretion to set aside the defendant’s default on such terms as are just. In Kisel v. Intact Insurance Company, 2015 ONCA 205, the Court of Appeal confirmed that, when exercising its discretion to set aside a noting of default, the court should assess the context and factual situation of the case, including: the behaviour of the parties; the length of the defendant’s delay; the reasons for the delay; the complexity and value of the claim; and whether setting aside the noting in default would prejudice the plaintiffs. “Only in extreme cases should the court require a defendant who has been noted in default to demonstrate an arguable defence on the merits” (Harlson et al. v. Lewis et al., 2016 ONSC 1675, at para. 29).

[8] In the case at bar, the defendant has deposed as to there being a delay in his receipt of the statement of claim and has conducted himself as though he did indeed receive the statement of claim on the date he says he did. The plaintiffs seek payment from the defendant of no less than $2.5 million and, given the manner in which the claim has been drafted, potentially more than $11 million (a substantial amount, in either case). The defendant delayed, at most (if the defendant is not to be believed as to the timing of his receipt of the claim) by approximately two months from the time that his defence was due (a brief delay, in any event); and, if the defendant is to be believed (and, as stated above, he conducted himself in a way that supports what he says), the defendant did not delay in addressing the claim and bringing this motion [^1]. As for the issue of prejudice, there will be none if this action is permitted to proceed. The plaintiffs will be able to pursue their claims against the defendant who now denies all claims and has proffered a draft statement of defence, so that any further delay may be minimized.

[9] In all, therefore, I think it appropriate that the noting in default be set aside on terms, as follows. The statement of defence is to be filed by July 29/19. As for the request by the plaintiffs that documents/books/records be preserved and “delivered up for preservation”, I am content to order that affidavits of documents (each with a particularized Schedule “C”) and Schedule “A” documents be exchanged by August 31/19, unless the parties otherwise agree or the court otherwise orders. Beyond that, the plaintiffs may deliver a request to inspect or bring a Rule 45.01(1) motion of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, if they so wish.

[10] The plaintiffs posit that, if the defendant is permitted to file a defence, Mr. Belmont ought to be precluded from acting for anyone other than the defendant in this or other, related, litigation. There is no factual or legal basis, on the record now before me, for me to make this Order and I decline to do so.

[11] I note that the plaintiffs have included in their motion material some statements suggestive of improper conduct or motives on the part of the defendant’s lawyer. No allegation of impropriety, I am told by plaintiffs’ counsel, is being made. Indeed, and having regard to the evidence before me, I reject any notion of impropriety.

[12] Failing agreement as to the costs of the motion, I may be asked to entertain submissions. If, by August 31/19, counsel do not ask me to rule on costs [^2], I will assume that the issue has been settled.

July 22, 2019

[^1]: The defendant’s motion record was delivered on April 25/19. [^2]: Costs against counsel, personally, were requested in the parties’ respective motion materials. I note that these requests have been withdrawn.