Court File and Parties

Court File No.: CV-19-3141-00 (Milton) Date: 2021 02 24 Ontario Superior Court of Justice

Between: Larry Westcott and Sharon Lea Westcott, Plaintiffs Larry Westcott and Sharon Lea Westcott, Self-Represented Plaintiffs

And: Dr. Yasser Khan, Dr. Yasser A. Khan Medicine Professional Corporation and Carrot Eye Surgery Clinic, Defendants

Counsel: Dena N. Varah for the Defendants, Yasser Khan and Dr. Yasser A. Khan Medicine Professional Corporation J. Siemon, for the Defendant, Carrot Eye Surgery Clinic

Heard: February 1, 2021, by video-conference

Reasons for Decision

Emery J.

[1] The plaintiffs Larry Westcott and his wife Sharon Lea Westcott commenced this action on July 26, 2019 at Milton. They served the statement of claim on the defendant Carrot Eye Surgery Clinic (“CESC”) on January 6, 2020, and on the defendants Dr. Yasser Khan and Dr. Yasser A. Khan Medicine Professional Corporation (collectively, the “Khan defendants”) on January 7, 2020.

[2] None of the defendants contacted the Westcotts through their insurer or by counsel as the time ran out to deliver a statement of defence in January 2020. On January 31, 2020, the Westcotts had all defendants noted in default.

[3] The Khan defendants and the defendant CESC bring motions to set that noting of default aside.

The facts in brief

[4] In the action, the Westcotts claim damages totalling $1,350,000 for an alleged “botched cataract surgery” on Mr. Westcott. This surgery was performed by Dr. Khan at CESC on January 30, 2017. Specifically, the Westcotts claim:

a) Non-pecuniary damages in the amount of $250,000 on behalf of Mr. Westcott;

b) Special damages, including lost wages in the amount of $1,000,000 on behalf of Mr. Westcott;

c) Family Law Act damages in the amount of $100,000 on behalf of Mrs. Westcott;

d) Pre-judgment and post-judgment interest; and

e) Costs.

[5] Dr. Khan retained Lenczner Slaght to defend this action on or about January 28, 2020. Scott Azzopardi, a lawyer at Lenczner Slaght, made inquiries at the time to confirm that no further documents had been filed with the court office in Milton. He received that confirmation in early February 2020. Later, in September 2020, Mr. Azzopardi would learn that this confirmation had been given in error.

[6] On February 14, 2020, Dena Varah, a partner at Lenczner Slaght, wrote to the Westcotts. Ms. Varah advised them that Lencnzer Slaght had been retained by Dr. Khan. She advised them that she was seeking instructions with respect to the whether the firm was retained to represent the remaining defendants. As Ms. Varah explained:

We act for Dr. Khan in the above noted matter. We have not yet been retained to represent Dr. Yasser A. Khan Medicine Professional Corporation or Carrot Eye Surgery Clinic, so have not included a Notice of Intent to Defend at this time.

At this time, I am obtaining the information necessary to prepare a Statement of Defence. If we are retained to act for one or more of the other defendants, I anticipate serving one Statement of Defence after we receive instructions. I ask that you not take any steps to note any of the physician defendants in default without prior notice. I trust this will not be a problem.

[7] It is for this reason that Ms. Varah did not serve a notice of intent to defend, even on behalf of Dr, Khan, at the time. However, Ms. Varah took the opportunity to request that the Westcotts provide the relevant medical records in order to prepare a statement of defence for Dr. Khan. She encouraged the Westcotts to contact Pro Bono Ontario or the Law Society of Ontario’s referral service for potential assistance with their claim.

[8] The Westcotts did not respond to Ms. Varah’s letter dated February 14, 2020.

[9] On March 15, 2020, the Chief Justice of the Superior Court of Justice issued a Notice to the Profession suspending regular operations of the court across Ontario as the first wave of the COVID-19 virus swept the province.

[10] Soon thereafter, the Province of Ontario issued an order under s. 7.1(2) of the Emergency Management and Civil Protection Act, retroactively suspending limitation and filing periods as of March 16, 2020.

[11] Dr. Khan encountered disruptions to his medical practice for reasons related to the COVID-19 pandemic during this time. This included difficulty with locating documents required to determine the issue of representation for the other defendants, causing some delay with retaining counsel.

[12] Lenczner Slaght received instructions on September 3, 2020, to defend the action on behalf of Dr. Khan’s professional corporation in addition to Dr. Khan himself.

[13] On September 8, 2020, Lenczner Slaght served the Westcotts with the notice of intent to defend on behalf of the Khan defendants. The evidence shows that they instructed a process server to file that notice of intent to defend in Milton on or about September 14, 2020.

[14] CESC retained counsel to defend the action in July 2020. On September 8, 2020, counsel for CESC served a notice of intent to defend. Upon taking steps to file the notice of intent to defend, the process server learned that CESC had been noted in default. This information was communicated by counsel for CESC to counsel for the Khan defendants on September 16, 2020.

[15] Lenczner Slaght immediately asked its process server to confirm whether the Khan Defendants’ notice of intent to defend had been filed, and whether the Khan defendants had been noted in default. On September 17, 2020, that process server confirmed he could not file the notice of intent to defend as the Khan defendants had been noted in default as well.

[16] Mr. Azzopardi contacted Mr. Westcott immediately upon learning of the noting in default to seek the Westcott’s consent to set the noting in default aside. On that call, Mr. Westcott confirmed he received earlier correspondence from Lenczner Slaght, including the letter from Ms. Varah dated February 14, 2020. Mr. Azzopardi explained to Mr. Westcott that he was under the mistaken belief that the Khan defendants had not been noted in default prior to Ms. Varah’s letter in February.

[17] Mr. Westcott requested a copy of the Khan defendants’ proposed consent materials, and agreed to take no further steps against the Khan defendants. On September 18, 2020, Mr. Azzopardi wrote to Mr. Westcott to provide the proposed consent materials Mr. Westcott had requested.

[18] After sending the letter seeking the Westcotts’ consent, Mr. Azzopardi made numerous attempts to contact Mr. Westcott. On October 2, 2020, Mr. Westcott contacted Mr. Azzopardi to explain that he was recovering from surgery and had been unable to answer Mr. Azzopardi. Mr. Westcott advised Mr. Azzopardi that he and his wife would give their consent to set aside the noting in default if the defendants paid them $1,000 in costs. Mr. Westcott states in his responding affidavit that the amount requested had been reduced from approximately $2,500 in actual expenses they had incurred in the case up to that time.

[19] The parties were unable to reach an agreement on terms for the consent to set aside the noting in default against all three defendants.

[20] The Khan Defendants brought the first motion to set aside the noting in default in November 2020. Although the notice of motion of the Khan defendants is dated October 30, 2020, Mr. Azzopardi swore the affidavit in support of the motion on November 12, 2020. CESC also brought a motion for the same relief, to be heard concurrently with motion of the Khan defendants. The Westcotts do not take issue with the delay between service of the defendants’ motion materials and the date the motions were heard by me as long motions.

Issues and analysis

[21] Setting aside a noting in default is governed by Rule 19.03(1) of the Rules of Civil Procedure. which reads: “[t]he noting of default may be set aside by the court on such terms as are just.” The threshold for setting aside a noting in default is low: Kyles v. MBNA Mastercard Canada, 2017 ONSC 5037 (Ontario Master).

[22] The court has discretion when making an order on a motion to set aside a noting in default. In exercising its discretion, the court must look to the context and factual background of the case. In Intact Insurance Company v Kisel, 2015 ONCA 205, the Court of Appeal restated the test for setting aside a noting of default against a defendant at paragraph 13:

[13] When exercising its discretion to set aside a noting of default, a court should assess “the context and factual situation” of the case: Bardmore, at p. 285. It should particularly consider such factors as the behaviour of the plaintiff and the defendant; the length of the defendant’s delay; the reasons for the delay; and the complexity and value of the claim. These factors are not exhaustive. See Nobosoft Corp. v. No Borders Inc., 2007 ONCA 444, 225 O.A.C. 36, at para. 3; Flintoff v. von Anhalt, 2010 ONCA 786, [2010] O.J. No. 4963, at para. 7. Some decisions have also considered whether setting aside the noting of default would prejudice a party relying on it: see e.g. Enbridge Gas Distribution Inc. v. 135 Marlee Holdings Inc., [2005] O.J. No. 4327, at para. 8. Only in extreme circumstances, however, should the court require a defendant who has been noted in default to demonstrate an arguable defence on the merits: Bardmore, at p. 285.

[23] The test on a motion to set aside a noting in default is different from the test on a motion to set aside a default judgment under Rule 19.08 of the Rules of Civil Procedure. The test for setting aside a default judgment was articulated in Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, and in Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd., 2007 ONCA 333 before it. This test includes a requirement that the moving defendant adduce facts in evidence that there is an arguable defence on the merits as one of the five factors to apply.

[24] In contrast, the Court of Appeal confirmed the following non-exhaustive factors for the court to consider on a motion to set aside a noting in default in Intact Insurance:

(a) The behaviour of the plaintiffs;

(b) The behaviour of the defendants;

(c) The length of the defendants’ delay; and

(d) the complexity and value of the claim.

[25] In addition, the court may also assess prejudice to the party relying on the noting in default. In a distinct departure from the test to set aside a default judgment, it is only in extreme circumstances that the court should require a defendant who has been noted in default to demonstrate there is an arguable defence to the claim on the merits.

[26] The moving defendants submit that each factor under Intact Insurance strongly supports their respective motions to set aside the noting in default:

a) The Khan defendants always intended to defend the action, and moved promptly when they discovered they were noted in default;

b) The Westcotts noted the defendants in default at the earliest opportunity without any prior attempted communication and allowed at least the Khan defendants to continue under the mistaken belief that no steps had been taken in the litigation;

c) The Khan defendants obtained the first available motion date at the filing of their materials;

d) The Westcotts’ allegations raise complex issues of medical negligence, and seek a significant sum for damages;

e) There is no evidence of any prejudice whatsoever that the setting aside the noting of default will cause the Westcotts; and

f) By contrast, the Khan defendants will suffer serious consequences if this motion is not granted.

[27] There are also overarching considerations to keep in mind. Chief among them is the principle that the court prefers to have civil disputes resolved on their merits. This principle is magnified when factors of the test are applied to the facts, and the interests of justice become manifest to guide the exercise of the court’s discretion.

[28] In Nobosoft Corporation v No Borders, Inc, 2007 ONCA 444, the Court of Appeal adopted Justice Molloy’s observation in McNeill Electronics Ltd v American Sensors Electronics Inc. (1996), 5 C.P.C. (4th) 266 (reversed on other grounds at (1998) O.A.C. 257), where she stated:

“ Motions to extend the time for delivery of pleadings and to relieve against defaults are frequently made and are typically granted on an almost routine basis. Usually opposing counsel will consent to such relief as a matter of professional courtesy. Where there is opposition to a motion of this kind, it is usually related to additional terms which are sought as a condition to the indulgence being granted or to issues of costs…It is not in the interests of justice to strike pleadings or grant judgments based solely on technical defaults. Rather, the Court will always strive to see that issues between litigants are resolved on their merits whenever that can be done with fairness to the parties.”

[29] In Architecture Unfolded Inc v Fortress Charlotte 2014 Inc., 2019 ONSC 6885, Myers J. (sitting as a judge of the Divisional Court) set aside a noting in default, overturning the decision below for focussing solely on the issue of delay. Justice Myers held that the discretion of the court must nonetheless consider the speed with which the defendants moved to set aside the noting in default, the total absence of prejudice to the plaintiffs, and “most particularly” Justice Molloy’s observation in McNeill Electronics.

[30] In this case, the Westcotts have not alleged they have suffered prejudice to their case caused by any of the defendants.

The behavior of the Westcotts

[31] The Westcotts noted all three defendants in default just 24 calendar days after serving their statement of claim. They never provided any notice prior to noting the defendants in default, despite the fact they had made a serious claim that asks for a substantial amount of money for damages.

[32] The evidence that Mr. Westcott received Ms. Varah’s February 14, 2020 letter and offered no response at the time is uncontradicted. From the date of that letter, the Westcotts knew that the Khan defendants were under the mistaken belief that they had not been noted in default. They knew that the Khan defendants had requested additional time and records to sort out representation issues, and to prepare a statement of defence.

[33] It was reasonable for the Westcotts to assume that they had not heard from CESC because it was also sorting out representation and record keeping issues.

[34] The Mr. and Mrs. Westcott did not move the case forward even after they had noted the defendants in default. This fact suggests that they should have known to engage with the defendants to ask how they intended to proceed with the litigation, or even to explore settlement. To note the defendants in default and then stay silent about it served no practical purpose.

[35] When counsel for the defendants finally contacted the Westcotts about the noting in default, the Westcotts asked for the consent materials to have the noting set aside. This implies that the Westcotts acknowledged that there was no legal reason to withhold their consent. However, the Westcotts also asked for costs in exchange. Mr. Westcott explained that he and Mrs. Westcott considered the $1,000 they demanded to be a “reasonable amount”, as though it were an advance on expenses related to the claim incurred for starting the action and serving the parties.

[36] Asking for costs as they did indicated the Westcotts did not understand the function costs are intended to serve. It may or may not have also been intended to “teach the defendants a lesson” for seemingly ignoring them after service of the statement of claim.

[37] While the Westcotts may have had the right to seek costs thrown away, those costs would have been minimal. At best, they would have been limited to the expense of having a process server attend at Milton to note the defendants in default, and perhaps some photocopying charges. As self-represented parties, they had incurred no legal costs. This was not the time to claim any disbursements they had incurred to commence the action, or to serve the defendants, or for medical consultations regarding the case. Those disbursements or expenses might be claimed as costs at a later stage.

[38] After considering the behavior of the Westcotts in relation to the defendants’ default, I am of the view there is no reason not to set aside the noting in default.

The behavior of the defendants

[39] The Khan defendants always intended to defend the action. Lenczner Slaght was retained for that purpose by Dr. Khan shortly before he was noted in default. Service of a notice of intent to defend was delayed because counsel were seeking instructions about the status of the action, and looking at appropriate representation for the remaining defendants. When it became apparent that these issues would take time, Ms. Varah wrote her letter to Mr. Westcott.

[40] There is no evidence about when Dr. Khan or CESC reported the action to their respective insurers. I assume that they turned over the statement of claim to their own solicitors or insurer in a timely way. In my view, the insurer or a lawyer for the Khan defendants could have sent a letter to the Westcotts to acknowledge that the defendants, having been served, had passed the statement of claim to legal counsel. That would have been an opportune time to ask for an extension of time to file a statement of defence. Ms. Varah conceded when answering a question of the court that a letter should have been sent right away.

[41] Ms. Varah’s letter dated February 14, 2020, as professional as it was, asked for courtesies that are routinely seen when lawyers make first contact with opposing counsel at the beginning of a case. As routine as the requests in the letter may have been for a lawyer, the timing and tone of Ms. Varah’s letter was anything but routine for the Westcotts.

[42] It is clear from page 12 and from the backing page of the statement of claim that the Westcotts were representing themselves. It was apparent from the pleading that Mr. and Mrs. Westcott were upset by Mr. Westcott’s vision after the surgery. It was obvious that the Westcotts were unfamiliar with standard operating procedures known to litigation counsel.

[43] The impact of COVID-19 only compounded the situation.

[44] Although the various defendants or the responsible insurers could have contacted the Westcotts to acknowledge their claim, they did not. However, the behavior of the defendants did not disentitle them to have the noting in default set aside.

The defendants moved promptly

[45] The court should assess any defendant’s delay in bringing a motion starting from the date the noting in default came to the defendants’ attention.

[46] One month after Ms. Varah wrote to Mr. Westcott, Ontario’s justice system was significantly impacted by COVID-19 restrictions. Dr. Khan’s practice was also affected, which impacted the resolution of the retainer issues.

[47] Immediately after discovering they had been noted in default, the Khan defendants took steps to obtain the Plaintiffs’ consent to set aside the default. When it became apparent that such consent was not forthcoming, the Khan defendants brought their motion, and scheduled that motion for the first available date as a long motion. Counsel for the defendant CESC followed suit by bringing the same motion on behalf of their client.

[48] The defendants’ conduct demonstrates their continuing intention to defend the action. As I have observed above, the Westcotts have not made delay after the defendants discovered the noting in default an issue on these motions.

The action is complex and involves a significant claim for damages

[49] The action raises complicated allegations of medical negligence. The issues will require the Westcotts and both sets of defendants to follow the path of the complex civil action it is. In view of the nature of the action, this will in all likelihood require each side to retain medical experts.

[50] A medical negligence action involves liability issues and proof of damages, both of which will be contested in this action. The amount claimed by the Wescotts for damages will require significant actuarial analysis by each side because of Mr. Westcott’s claim for special damages of $1 million, including “lost wages.” The court will also likely require expert evidence of Mr. Westcott’s limitations on his capacity and function due to the alleged impairment to his vision.

[51] I conclude that the complexity of the action and the value of the damages at issue will require all parties to file pleadings, and to produce evidence through the discovery process under the Rules of Civil Procedure. This is the only way the court can properly adjudicate the claims made by the Westcotts on their merits.

No prejudice to the Westcotts

[52] The court’s assessment of prejudice is often informed by the quantum of the damages claimed, and by any hindrance to prove those damages. In Ali v. Gonzales, 2019 ONSC 4887, Master Abrams considered a motion involving a “not insubstantial” claim for $400,000. Holding it should be resolved on the merits, she stated:

The evidence of plaintiffs’ counsel of record is that, for some time, the plaintiffs have been attempting to seek redress for those grievances that gave rise to this litigation--without success. That may be so and, if the grievances are borne out, unfortunate, but permitting the defendants an opportunity to respond to the claims against them is not, in and of itself, prejudicial. Further, there is no evidence before me of lost or destroyed documents or missing or deceased witnesses or of anything that could or would impair the ability of the plaintiffs to prosecute their claims.

[53] Here, the Westcotts seek $1,350,000 in damages. They have tendered no evidence of prejudice. There is no suggestion that evidence has been lost, destroyed, or is missing. The Westcotts are themselves the keepers of most of the evidence in the form of ongoing medical records and damage documentation. There is no suggestion that granting an indulgence to allow the defendants to defend this action would impair the Westcotts’ ability to pursue their claim in any way.

[54] On the other hand, the prejudice to the Khan defendants if this motion is not granted is clear. As Master Muir observed in 2355305 Ontario Inc v. Savannah Wells Holdings Inc, 2019 ONSC 1220, which involved a claim in excess of $600,000, and an unexplained delay in excess of three years: “[the defendants] will be facing a very significant judgment against them. The preference in our system of civil justice is for a determination of disputes on their merits.”

The Khan defendants have an arguable defence on the merits

[55] This is not an extreme case where the court must look at whether the defendants have an arguable defence to decide the motion. An extreme case could arise where the court cannot make a determination after considering the four main factors, as well as the issue of prejudice to the plaintiff. If that was the situation in this case, I would find that the defendants have met their burden to show they have an arguable defence in any event. I reach this conclusion, remembering the “arguable defence” threshold on this kind of motion is low.

[56] The Khan defendants plead various defences in their proposed statement of defence, one or more of which might possibly have merit if established later in the action by evidence, or at law.

[57] First, it is arguable that a limitations defence may be available to them under the Limitations Act, 2002. If a limitation period is found to begin between March and June 2017 when Mr. Westcott received ongoing treatment following his cataract surgery, the defendants may have a limitations defence as they commenced the action on July 26, 2019.

[58] Second, Dr. Khan pleads that he met the standard of care in his examination, diagnosis and treatment of Mr. Westcott. Dr. Khan obtained Mr. Westcott’s informed consent prior to performing any operation on Mr. Westcott.

[59] Following his January 30, 2017 cataract procedure, Mr. Westcott was informed that Dr. Khan was required to perform a limited anterior vitrectomy to address a small posterior capsular tear that occurred during the surgery. Dr. Khan appropriately managed Mr. Westcott’s post-operative care, culminating in his referral to a retina specialist after Mr. Westcott was diagnosed with clinically significant macular edema by Dr. Khan.

[60] Third, the Westcotts’ theory of liability with respect to Dr. Khan’s professional corporation is, at best, difficult to discern. The corporation was not involved in Mr. Westcott’s care.

[61] Fourth and finally, CESC provided the location where Dr. Khan provided medical services to Mr. Westcott. CESC was not involved in providing medical advice, services or care to Mr. Westcott at any time.

Conclusion

[62] The motions brought by each the Khan defendants and the defendant CESC is granted. The noting in default against every defendant is set aside. The defendants shall file serve and file their respective statements of defence by March 15, 2021.

[63] I am awarding no costs to any party on either motion. Costs are generally claimed by the successful party on a motion. The Westcotts were unsuccessful on both motions. Although they were unsuccessful, they took their position with respect to the motion of each defendant because they had a reasonable expectation a legal representative from one or more defendants would have contacted them within 20 days following the service. No costs are awarded to any defendant for the reasons given in the above review of their conduct after service. The Khan defendants do not seek costs for their motion in any event.

Emery J. Released: February 24, 2021