Court File and Parties
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Lurdes CARREIRO, Plaintiff
AND:
Malgorzata SKRZECZKOWSKA and Leszek SKRZECZKOWSKI, Defendants
BEFORE: Conlan J.
COUNSEL: Mina Ghabryal, for the Plaintiff
Mathieu Bélanger, for the Defendants
HEARD: May 17, 2021
ENDORSEMENT
The Motion
1The Defendants move to set aside the noting in default (December 7, 2020) and the default judgment (December 29, 2020) entered against them. The Motion is opposed by the Plaintiff.
2The case is all about construction work done at the home of the Defendants in Mono, Ontario. The Defendants no longer live there but rather are in Poland, presumably permanently.
3The Plaintiff had filed a construction lien and served the Claim in May 2020.
The Order
4For the following reasons, the Motion is granted. Looking at the Notice of Motion dated February 2, 2021, the prayer for relief at pages 1-2 therein, items (a) and (b) are hereby granted. Costs submissions, if necessary, shall be done in writing. The Defendants shall have thirty calendar days after May 17, 2021 to file their submissions, and the Plaintiff shall have fifteen calendar days after her counsel’s receipt of the Defendants’ submissions to file hers. There shall be no reply permitted without leave of the Court. Each submission shall be limited strictly to two pages in length, excluding attachments.
The Reasons for the Order
5The parties agree completely on the law; they differ only on its application to our facts. Set out below are paragraphs 22 through 27 of the factum filed on behalf of the Defendants, which submissions I agree accurately set out the issue to be decided by this Court and the law to be applied.
The issue to be determined on this motion is whether the default judgment dated December 29, 2020, and the noting in default dated December 7, 2020, should be set aside and the defendants should be allowed to file the statement of defence they served on the plaintiff on December 17, 2020.
The test for setting aside a default judgment requires satisfying three criteria: (i) that the motion to set aside was brought without delay after learning of the default order; (ii) that there is an adequate explanation for the default; and (iii) there is an arguable defence on the merits.
In assessing these criteria, the court must determine whether the interests of justice favour an order setting aside the default judgment having regard to the potential prejudice to the moving party if the motion is dismissed, the potential prejudice to the responding party if the motion is allowed, and the effect of any order the court may make on the overall integrity of the administration of justice.
In Mountain View, the court explained that these factors are not to be applied rigidly. It added that “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 the context of claims under the Construction Act, the third factor (whether the facts establish that the defendant has an arguable defence on the merits) must be read together with the regulations under the Act. The regulations provide that once noted in default, a defendant may file a statement of defence with leave, which the court may only grant if “satisfied that there is evidence to support a defence.”
In Quadform Ltd. v. Rock Con Forming Ltd., the court found that even in construction lien matters, the test to set aside a default judgment requires essentially the same thing: “A party seeking to set aside a default judgment must demonstrate facts (through evidence) that provide it with an arguable defence to the claim. In other words, that its defence has an air of reality.”
6In oral submissions, counsel for the Plaintiff conceded the first factor – that the Motion was brought without delay. I agree with that concession.
7In oral submissions, counsel for the Plaintiff took issue with factor number two – that there is an adequate explanation for the delay. I respectfully disagree with Plaintiff’s counsel. This Motion was brought by LawPro, and there was certainly an inordinate delay between the service of the Claim on the Defendants (in May 2020) and the eventual attempt to file their Defence (in December 2020). Counsel for the Defendants will deal with those issues on his own. Having said that, I am persuaded on balance that the evidence filed by the moving parties grounds an adequate (albeit imperfect) explanation for the delay. That explanation includes but is not limited to (i) the Defendants’ focus initially on vacating the lien and the certificate of action, (ii) the Defendants’ travel abroad, (iii) the Defendants’ non-proficiency in English, and (iv) Mr. Skzeczkowski’s lengthy hospitalization in Poland after contracting COVID-19.
8On the latter point, I do not accept the argument by Plaintiff’s counsel that this Court should be wary of the virus argument because of a lack of independent medical evidence in support of the diagnosis. I accept the evidence of Mr. Malik contained at paragraph 34 of his January 19, 2021 affidavit.
9In oral submissions, counsel for the Plaintiff took issue with factor number three – that there is an arguable defence on the merits. I respectfully disagree with Plaintiff’s counsel. This is not a high threshold for the moving parties to meet. This Court need only be persuaded on balance that there is an air of reality to the defence. I think that there is, and the evidence is contained in the supplementary affidavit of Mr. Malik dated February 24, 2021. Contrary to what is being argued on behalf of the Plaintiff, the defence is not limited to an alleged $5000.00 discrepancy in favour of the Defendants.
10Finally, I find that the integrity of the administration of justice is much better served here by allowing the Motion. The prejudice to the Plaintiff in doing so is vastly outweighed by the prejudice to the Defendants in not doing so. The granting of the Motion does nothing to take away the $38,067.66 paid into Court to the credit of the Plaintiff, which sum includes not only the full amount of the Claim but also 25 per cent extra for security for costs. Counsel for the Plaintiff is correct that his client will very likely incur additional legal costs, and she would rather have access to her money now, but those points do not tip the balance of prejudice in her favour.
11In deciding to grant the Motion, I want to make clear that I make no finding of sharp practice or unprofessional conduct by counsel for the Plaintiff regarding how the default judgment was obtained. That issue is unnecessary to decide, and I have reached this disposition for other reasons.
(Original signed by)
Conlan J.
Date: May 18, 2021