MOTION HEARD: 20200915
REASONS RELEASED: 20210211
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
BETTY SNELL and DWAYNE SNELL
Plaintiffs
(Respondents)
- and -
SUGI FINANCIAL SERVICES INC., HETTI GROUP INC., JOSE SUGUITAN a.k.a. JOE SUGUITAN, LASANTA HETTIARACHCHI a.k.a. LANCE HETTIARACHCHI a.k.a. LANCE HETTIARACHICHI, JORDAN SUGUITAN, and GAMINI DE SILVA a.k.a. ROY GAMINI DE SILVA
Defendants
(Moving Parties)
BEFORE: MASTER D. E. SHORT
COUNSEL: D. Jared Brown F (416) 975-1825
-for responding plaintiffs
-Esmaeil Mehrabi F (647) 689-2059
-for moving defendants:
Sugi Financial Services Inc.,&. Jose Suguitan A.K.A. Joe Suguitan
RELEASED: February 11, 2021
Reasons on Motion to Set Aside Noting in Default
I. Overview
1This is a motion brought in late 2020, by two of the defendants, Sugi Financial Services Inc., and. Jose Suguitan A.K.A. Joe Suguitan, who, to set aside a default judgment granted against them in January of 2019.
2The plaintiff Betty Snell was involved in the real estate business and had known Mr. Suguitan for a number of years. In about 2015 Mr. Suguitan, who was also in the real estate business, sought to obtain a loan in the amount of $200,000 from her, with respect to the acquisition , retention and ultimate sale of a residential property in Toronto. Ultimately, she agreed to provide a two-year term. The loan was not repaid when it came due, nor at any time prior to the commencement of this litigation.
3Dwayne Snell is the son of Betty Snell and he was also involved with. Mr. Suguitan with regard to a separate real estate loan. In his case the principal amount of the loan was $160,000.
4The defendant, Jose Suguitan a.k.a. Joe Suguitan ("Suguitan"), is a director of Sugi Financial, and was formerly a licensed mortgage agent until his license apparently expired on March 31, 2018.
5The defendant, Sugi Financial Services Inc., ("Sugi Financial"), is a corporation incorporated pursuant to the Province of Ontario. Mr. Suguitan controls that company and together they now seek leave to file a defence to the plaintiffs’ claims.
6The developer that was seeking to buy, improve and sell properties involving parties is the defendant, Hetti Group Inc., ("Hetti Group"), which is a corporation incorporated pursuant to the Province of Ontario.
7At the time this action was commenced in 2018 my colleague, Master Karen Jolley, perhaps ironically, on Friday, the 13th of July, 2018 issued an ex parte order for Certificates of Pending Litigation to be issued against three properties in Toronto and Cobourg. Her order concluded with this provision:
“2. THIS COURT ORDERS that the plaintiffs shall forthwith serve the within Order, together with the materials filed, on the Defendants.”
Thus, the moving defendants were well aware of this action from mid-2018.
8A Case History printed on September 14, 2020 reflects a motion having been brought (about six months later) to remove one of the CPL’s on January 31, 2019. On that occasion Master Graham made an Order dealing with the sale of one of the CPL properties. His Order was recorded on the court’s Case History in this abbreviated form:
“Solicitor acting for the Defendants shall remit Pymnt in the Amt $184,765.3 to the ACCT of SCJ . Upon completion of sale CPL to be discharged. Pymnt to remain in court. No Costs”
9What I find of interest is that the same Case History Report reflects that on January 22, 2019 (less than 10 days prior to Master Graham’s Order), The SCJ Registrar , noted the moving parties on the present motion, in default for failing to file a defense to the plaintiffs’ action and had as a consequence awarded a judgment in favour of the plaintiffs for $432,173.42, together with $ 1,320. for costs.
10The moving parties now seek to set that judgment aside and to enter a full defence to this action.
11Against that background I turn to the appropriate tests to be applied on a motion such as this, with delays of the nature evidenced to date and the apparent lack of an assertion of any, patently valid, defence.
II. Applicable Tests
12A default judgment granted by a court on motion under Rule 19.04, or on a motion for judgment on the Statement of Claim under Rule 19.05, of the Rules of Civil Procedure may be set aside or varied by the court on such terms as are just: Rule 19.08(1) and (2).
13In Hanratty v. Woods , [2009 O.J. No. 3448; 2009 CanLII 43649] Justice D. M. Brown has observed that on a motion to set aside a default judgment, the court ultimately must determine whether the interests of justice favour an order setting aside the default judgment [ see also Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd. (2007), 2007 ONCA 333, 87 O.R. (3d) 479 (C.A.).
14In Hanratty Justice Brown set out the appropriate tests to be applied in cases such as this. I now adopt and seek to apply this approach in the present case
15In particular, I will consider three factors to guide my ultimate determination:
[16]
(i) whether the motion was launched forthwith after the default judgment came to the defendant's attention;
(ii) whether the default was unintentional, and the defendant has a valid explanation for the default;
and,
(iii) whether the defendant can present a triable defence on the merits: HSBC Securities (Canada) Inc. v. Firestar Capital Management Corp., 2008 ONCA 894.
17However, these factors must not be regarded as rigid preconditions to the exercise of judicial discretion. In looking at the circumstances in their entirety, the court must also have regard to the potential prejudice to the moving parties should the motion be dismissed, the potential prejudice to the respondents should the motion be allowed, and the effect of any order the motion judge may make on the overall integrity of the administration of justice.
18In applying these criteria, I have examined a series of exchanges between Betty Snell and Mr. Suguitan, while their loans were in place. It appears that various repayment arrangements and other commitments were discussed or made and not fulfilled. The somewhat unique factor in this case is that the interactions were specifically recorded, electronically, in real time and preserved.
19What were intended to be, a maximum of two-year long loans, were placed in 2015. As a result of a number of circumstances, none of which were caused by the plaintiffs, the borrowers failed to make the contacted repayments, on or before the scheduled dates.
III. Testing the Moving Defendant’s Position
i. Was the motion launched forthwith after the default came to the parties’ attention?
20Put simply I see no reasonable explanation for the extreme delay in moving this motion when the parties were moving to set aside one of the Certificates of Pending Litigation to facilitate a sale of that property.
21On the evidence available to me, I conclude that Mr. Suguitan decided either that he had no defence or to ignore the obligation of these defendants to file a defence and that this default was intentional.
ii. Was the default unintentional and is there valid explanation for default?
22The motion record filed by Betty Snell in July of 2018, at the time Certificate of Pending Litigation were awarded, contains extracts from a series of text messages that were exchanged between that plaintiff and the moving defendant, Mr. Suguitan.
23This plaintiff has, prudently, taken screenshot copies of communications to and from the moving individual moving defendant. This is not a situation of hearsay but rather reproduction of what was “said” on specific occasions, electronically, to the plaintiff by the individual defendant who is bringing this motion
24In order to put the present motion in a clearer context, I have selected several extracts, set out below, from a series of chat messages exchanged between the parties [generally, without spelling or other corrections to what appeared on the screen].
2017/10/05:
“Gd morning Joe. You indicated that you had an offer on young blvd and it would be sold by September. Listing has now expired. I am not certain that you truly understand that I cannot afford the $700 mo. Payments I have to make on this loan. This needs to be dealt with immediately. Please advise
Thanks and have a great day.
Betty”
2017/11/15
Good morning Joe… I am texting you today because I am DESPERATE … I truly cannot afford to make anymore payments on the money I gave you which I borrowed. money. My income is just under $1400 mo.
This investment is causing a major rift between Mike and I. He is really upset. he will read the paperwork I signed and he said that money is due December 2016. Please help me…
25Later that day the account seems to have insulted to a degree and here’s the exchange of correspondence on the iPhone’s following that request for help:
You’ll have a cheque Monday. Also there is an offer on Densmore which will clear all investors from Hetti
A cheque for investment in Yonge Boulevard +int.???
Just to get some income. I will record the interest payments in our books as a payment for quarter 2017 so we will so we don’t mess up the accounting. I will ask the account his advice on that first.
I can’t do the principal repayment obviously but it will be interest
Joe, I can’t thank you enough…
That would really help me get through till the deal closes, as the interest payments are killing me and I have no excess money:):)
I will make it happen
26A week later, on November 21, the plaintiff sent a simple text message: “You didn’t make it happen!!!”
27It appears on 27 November a cheque did arrive. At 5:37 PM she sent a message that read:
A cheque arrived, thank you so much, I will be able to breathe for a while.… So this is the first quarter int. Payment for 2017 correct.?
28Three hours later Mr. Suguitan responds “No problem. I have your back.”
29Some four months later, on March 22, 2018, Mr. Suguitan writes: “March Break so really tied up with the kids. I took the week off. I will respond this weekend. Sorry” The plaintiff’s response a minute later read “Well today is Friday. It is very disappointing to me that I received NO response from MY FINANCIAL ADVISOR. The one who has all my money. The one I trusted to look after my money. Thanks Joe.”
30There being no response she wrote to a half hour later “Evidently we are not very high on your priority list. Thanks Joe.”
31Subsequently, on Friday, March 30, 2018 the plaintiff wrote:
“Joe… We will be home wed Apr 4. Might and I want a face-to-face meeting with you and Lance with respect to the return of our $200K + interest. We have been extremely patient considering this contract was due and payable Dec 2016. We are so stressed worrying about this loan. You told us that it would be paid out December 2016 and we are still waiting. Please respond with the date and time for you and plans to meet with us”
32What apparently was an exchange in early April 2018 contains these apparent transmissions from the defendant Joe Suguitan with respect to the concerns raised by this plaintiff indicating “Not sure why you are not responding. Does not give me a good feeling”.
33The relatively prompt response from Joe reads:
“The odd thing is that the problems in front of me aren’t that bad. They can all be but I am handcuffed by 300 texts and about 80 phone calls each and every day.
“Because you are my friend I have no problem picking on you but you’re also my client so you have every right to feel nervous.”
“At least being a real estate agent you know that because I am on title on Yonge Boulevard you are totally covered. Lance does not control the house and I can sell it at any time and get your money out. I am in full control. [My emphasis]
34I am particularly influenced by these extracts from the early April of 2018 text messages which follow this plaintiff’s communication of 1:11pm that day which read:
“I truly understand the feeling about having a heart attack because that is how we are feeling. Joe you know that we have always trusted you with our money but….when all the [s…] hits the fan you are only one we can turn to. We bought into Yonge Blvd because of what you told us and that was the only reason. Everything changed so I understand why Dwayne is upset as we are too. I am certain that you will repay us on all ours [sic] investments and I know you are under a severe amount of stress… everyone is. I hope it ends soon so we all can breathe… Just please keep us informed and please make it happen soon, I can’t afford the payments, neither can Dwayne :)”
35Within 20 minutes of that transmission Mr. Suguitan responds:
“I’m in control of Yonge with no input from Lance so your funds are absolutely safe. [My emphasis]
36On April 6 at 6:17 PM Mr. Suguitan wrote again to the plaintiff in support of their relationship:
I really value our relationship above everything and will continue to work until all the funds are bank [sic] in the accounts. Just to reiterate even if I have to personally give you the fund to make you whole I absolutely will. I don’t want to be a source of stress for you I want to be your relief. Thank you for trusting me I won’t let you down [my emphasis]
37Lastly, I turn to a text message from the moving party which was sent a month before my colleague Master Jolley issued a Certificate of Pending Litigation with respect to the Yonge Street property and others. The moving party, Mr Suguitan, expressed these sentiments on June 14, 2018:
As difficult as the meeting was for all of us I just want to say that I appreciate your friendship and I’m sorry if I violated your trust in any way. As stated I will continue to work towards retrieval of all your investments in Hetti, Fortress and Paramount and I won’t stop until it’s done. I feel strongly that we are getting close to achieving that goal. [my emphasis]
38Against this background I see no justification whatsoever to set aside the noting of default against the moving individual defendant. In my view there is even less reason to support any relief for Sugi Financial Services Inc.
iii. Have the defendants presented a triable defence?
39On a motion to set aside a default judgment a court must take a "good hard look at the merits" and assess whether the moving parties have established an arguable defence: HSBC Securities, supra., para. 28. To assist the court in assessing its proposed defence, the better practice is for the moving party to attach a draft statement of defence to his affidavit setting out the defence. This enables the court to understand the material facts and law underpinning the defence, and the preparation of a draft pleading also signals to the court that the defendant seriously intends to defend the action. Of course, in addition, the affidavit in support of the motion must contain the material evidence upon which the defence rests.
40In the present case the moving defendants did not deliver a draft defence until the eve of this motion. I see no potentially valid defences based upon the facts placed before me.
IV. The Interests of Justice: Expeditious and Cost-effective Completion
41Ultimately, in my view, this case comes down to a simple question. Is it fair or just for the defendant José Suguitan to be allowed to defend against the claims of the plaintiffs for repayment of the monies lent by them to some of the defendants in reliance upon Mr. Suguitan’s repeated assurances that they would be paid? What other interpretation is possible in the face of this text sent by him to the plaintiff Betty Snell?
42I considered the positions of the parties in this case and consulted an Online Etymology Dictionary found at: https://www.etymonline.com to better understand the origin and history of the phrase relating to the importance of the interaction of an individual’s “word” and his “bond”.
43In my view, the long-standing phrase “your word is your bond” still must have meaning today. The concept of “word-bond equivalence”—the reaches back centuries. For example in the book of Numbers, the Hebrew elder Moshe instructs the tribes of Israel: “When a man … swears an oath to bind his soul with a bond, he shall not break his word; he shall do according to all that proceeds out of his mouth.”
44Chaucer, too, punned on the idea of “trouthe”—to “pledge one’s trouthe” meant both to enter into an indissoluble contract and to affirm the semantic “truth” of the words manifesting that contract. The Bishop of Exeter, Joseph Hall, wrote in 1608 of “the honest man”: “His word is his parchment.”
45According to Rachael Ferguson, an ethnographer and lecturer at Princeton University, the principle “word is bond” allowed merchant traders in the late 1500s to make agreements legally binding before the advent of written pledges. When the London Stock Exchange needed a motto in 1801, it harkened back to that foundational promise of integrity with a Latin expression: dictum meum pactum.
46We now come to a generation where written pledges can be done electronically in an instant the parties are nowhere near each other. I see no reason not to hold Mr. Suguitan to his statement:
Just to reiterate even if I have to personally give you the fund to make you whole I absolutely will. I don’t want to be a source of stress for you I want to be your relief. Thank you for trusting me I won’t let you down.
47In light of the moving party’s clear, electronically transmitted, statements, which were clearly intended to be, and were relied upon by the plaintiffs I see no possibility of “plausible deniability” in this case.
V. Conclusion
48To grant the relief sought by the moving parties would clearly be letting down the Plaintiffs in a situation where, in my view, Mr Suguitan ought to be bound by his “word”, given electronically to the plaintiffs.
49For the reasons set out above I dismiss the moving parties’ motion.
50However, as the moving parties have a number of cross-claims against other defendants which are continuing, I am deferring the quantification of costs on this motion to the trial judge, to be established on a partial indemnity basis, in addition to the costs already awarded in the Registrar’s 2018 Order,
R. 350/DS __________________
Master D.E. Short