SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Canadian Imperial Bank of Commerce v. Donald Desrochers also known as Don Desrochers and We Care Community Operating Ltd.
BEFORE: Van Melle J.
COUNSEL: R. Aisenberg, for the Plaintiff O. Ogunniyi, for the Defendants
HEARD: October 29, 2019
ENDORSEMENT
1This is the defendants’ motion to set aside a default judgment.
2The Statement of Claim in this matter was issued on July 12, 2018. A motion for substitutional service was heard on December 6, 2018. Service pursuant to the order for substitutional service was effective January 7, 2019.
3The defendants were noted in default on February 6, 2019. Default judgment was signed on June 19, 2019. Plaintiff’s counsel became aware of the default judgment on August 13, 2019 and advised defendants’ counsel.
4There is some discussion as to whether or not this motion could have been brought earlier, however, I find that the defendants were in communication with the plaintiff and brought this motion in a timely manner.
5The factors that a court should consider in deciding whether or not to set aside a default judgment are well known:
whether the motion was brought promptly once the defendant became aware of the default judgment;
whether there is a plausible excuse or explanation for the defendant’s default in complying with the Rules;
whether the facts establish that the defendant has an arguable case on the merits;
the potential prejudice to the moving part should be motion be dismissed, and the potential prejudice to the respondent should the motion be allowed; and
the effect of any order the court might make on the overall integrity of the administration of justice.
6The plaintiff argues that the defendants have not explained their failure to respond to the Statement of Claim within the time limits and that they have not adduced evidence as to an arguable case on the merits.
7The defendants argue that the plaintiff has not demonstrated that it would suffer prejudice if the default were set aside.
8The defendants rely upon an affidavit sworn by Roslyn Solomon who is a law clerk in the office of the defendants’ lawyer. It appears that the defendant Donald Desrochers was out of the country for a short time during the time period that the Statement of Claim was served on him. The plaintiff noted the defendants in default at the first possible opportunity. Thus the failure to explicitly explain the defendants’ failure to file a Statement of Defence within the time period is not fatal, in these circumstances.
9The most important factor in this case is whether or not the defendants have an arguable case on the merits. The evidence of an arguable case is the draft Statement of Defence and Third Party claim appended as an exhibit to Ms. Solomon’s affidavit. While it would have been preferable to have had the information produced by way of a sworn affidavit of one of the defendants, and to have the information contained in the affidavit itself, I am not going to dismiss the motion on that basis alone.
10Paragraph 19 and 20 of the affidavit are as follow:
In order to provide this Honourable Court with additional background and context, it must be noted that the substance of the Plaintiff’s Claim relates to management consulting work validly carried out by the Defendant, We Care Community Operating Ltd (“We Care”), with respect to Concept Lofts Ltd’s project. Attached hereto and marked as Exhibit “F” to this Affidavit is a copy of We Care’s Invoice to Concept Lofts Ltd.
Based on the foregoing, in order for the Defendants to adequately defend themselves in the within proceedings, Concept Lofts Ltd will be added as a Third Party in the within action. Attached hereto and marked collectively as Exhibit “G” to this Affidavit, are copies of the Defendants’ draft Statement of Defence and Third Party Claim against Concept Lofts Ltd.
11It appears that the defence is that the plaintiff should not have reimbursed Concept Laws for $45,000 that was withdrawn from its account and paid to the defendant We Care. A generous reading of the Statement of Defence and Third Party claim, satisfies me that the defendants have an arguable defence on the merits.
12I am also satisfied that the plaintiff will not suffer any prejudice that cannot be compensated for in costs.
13An order will issue setting aside the noting of default and the default judgment against the defendants herein. The defendants have 30 days to serve and file the Statement of Defence.
14Turning now to the issue of costs. The defendants were successful and as such presumptively entitled to costs. Counsel for the plaintiff provided me with two cases where, despite default judgments being set aside, costs were awarded to the plaintiffs. I have reviewed those cases 1775323 Ontario Inc., cob as Sylvite Fuels & Lubricants v. AAH GAS Inc et al., 2012 ONSC 6735 and Hilson v. 1336365 Albert Ltd et al 2015 ONSC 1564 and find that they are distinguishable. In both cases the behaviour by the defendants ran up significant legal costs unnecessarily. In the case at bar, the plaintiff was awarded $1,000 in costs for the appearance before Justice Shaw if the plaintiff was successful in its position that the default judgment should not be set aside. It was not so no costs are awarded for the appearance before Justice Shaw.
15The motion before me was relatively straightforward. The plaintiff could have agreed to have the judgment set aside with the proviso that the defendants pay any costs thrown away. It did not do so. The defendants have provided a Costs Outline. They seek costs on a substantial indemnity basis on the ground that the plaintiff acted unreasonably. The behaviour of the plaintiff does not rise to the level required and I decline to award costs on a substantial indemnity basis. Costs of $3,000 inclusive of disbursements and HST are hereby awarded to the defendants, payable forthwith.
Van Melle J.
DATE: November 4, 2019
COURT FILE NO.: CV-18-2904-0000
DATE: 20191104
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: CANADIAN IMPERIAL BANK OF COMMERCE and DESROCHERS also known as DON DESROCHERS and WE CARE COMMUNITY OPERATING LTD.
COUNSEL: R. Aisenberg, for the Plaintiff O. Ogunniyi, for the Defendants
ENDORSEMENT
Van Melle J.
DATE: November 4, 2019