Court File and Parties

CITATION: D’Amore v. Salter, 2022 ONSC 1047 COURT FILE NO.: 17-24910 DATE: 20220215

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: THE ESTATE OF PATRICK D’AMORE, BY HIS ESTATE TRUSTEE, SCOTT D’AMORE, Plaintiff AND: PETER JEFFREY ORLIE SALTER, Defendant

BEFORE: TRANQUILLI J.

COUNSEL: Mr. Pickard, S., for the Plaintiff/Responding Party Mr. Gatti, D., for the Defendant/Moving Party

HEARD: February 7, 2022

Endorsement

[1] This contested dispute on a four-year old mortgage action harkens attention to principles of proportionality and the court’s preference for matters to be determined on the merits, where reasonable.

[2] The defendant moves to set aside the noting of default in this action, with proposed terms for alternative and ancillary relief. The plaintiff opposes the motion, arguing that any proposed defence is meritless.

[3] At its essence, a debt of about $16,500 is in dispute. This is significantly less than the Superior Court jurisdiction, but for the plaintiff’s claim for a writ of possession. Nevertheless, both parties seem committed to use further time, expense, and this court’s limited resources to litigate the dispute over procedural issues that threaten to overtake the value of the merits.

[4] This is a motion for setting aside a noting in default and not a default judgment. It is premature for the court to make any determination as to the merits of the action pending the appropriate final disposition of the action by motion or trial. For the reasons that follow, I conclude it is in the interests of justice the noting of default be set aside, in the context of the history of these proceedings to date.

Facts

[5] In March 2007, the plaintiff secured a $50,000 loan to the defendant, secured upon property municipally known as 1052 Campbell Avenue, Windsor, Ontario. The parties extended the mortgage in August 2011. The mortgage went into default and on April 11, 2017, the plaintiff issued a Notice of Sale, stipulating a balance owing of $51,511.62 and the right of redemption to May 31, 2017. On April 20, 2017, the plaintiff issued the claim.

[6] In disputed circumstances, the plaintiff’s then counsel accepted a payment of $50,000 from the defendant in May 2017. The defendant was unrepresented and did not seek legal advice. The defendant contends the plaintiff accepted this payment in full satisfaction of the mortgage debt. This payment was only short by $1,511.62 of the amount claimed in the Notice of Sale. He therefore did not submit a defence and considered the matter to be resolved. The plaintiff did not provide a discharge or release of the mortgage.

[7] The plaintiff claims the payment was not accepted in full satisfaction of the debt and points to three unanswered letters sent by plaintiff counsel to the defendant between June 2017 and May 2018 in that regard. In any event, nothing further occurred for almost the next three years.

[8] The reasons for the plaintiff’s delay in prosecuting this action during that time were not explained on the record. On the hearing, the court understood from counsel it is undisputed the plaintiff’s previous counsel experienced health issues that eventually resulted in assigning some of his files to the present counsel. This file was given fresh attention, leading to the motion before the court.

[9] On March 22, 2021, the plaintiff issued a new Notice of Sale which advised the defendant had been noted in default. Of the initial $50,000 loan, the plaintiff now claims outstanding principle of $12,181, interest to March 2021 of $2,727.97 and costs of $1,500 for a total of $16,408.97. The defendant then brought this motion to set aside the noting in default, with cross-examinations on affidavits, leading to this special appointment.

Positions of the Parties

[10] The defendant’s motion initially sought an array of relief, including declaring the plaintiff’s claim a nullity, staying the power or sale, directing a trial of the dispute in the Small Claims Court and paying the disputed shortfall into court pending disposition of the matter. The defendant acknowledged there was no precedent that would support his proposal for transferring this matter to Small Claims in the face of a writ of possession. The defendant now seeks only the setting aside of the noting in default, with terms for its delivery of its Statement of Defence. He submits he has satisfied the requirements for setting aside the noting in default. He claims he has explained the circumstances of his default.

[11] The defendant alleges myriad deficiencies in proceedings to date (including inaccurate/inconsistent claims as to the amount(s) in default) and his intention to defend the claim on bases such as settlement, estoppel, and part performance. The defendant contends any issues as to the merits of his proposed defences are properly deferred to a disposition motion (i.e. Rules 20, 21 or 25) or trial of the action.

[12] The plaintiff opposes the motion. It submits the noting in default should not be set aside as there is no defence available in law. The correspondence sent by then plaintiff counsel to the defendant contradicts the defendant’s position the 2017 payment was accepted in satisfaction of the mortgage debt. More importantly, any such oral agreement between the defendant and previous plaintiff counsel is defeated by the Statute of Frauds. Any concerns as to the actual amount outstanding can be addressed through an accounting.

Analysis

[13] The court may set aside a noting of default on such terms as are just: R. 19.03, Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The test for setting aside a noting in default as opposed to a default judgment are distinct: Intact Insurance v. Kisel, 2015 ONCA 205. I am guided by the following principles at paragraph 13 of that decision:

a. When exercising discretion to set aside a noting of default, a court should assess the context and factual situation of the case and such non-exhaustive factors as:

b. The behaviour of the plaintiff and defendant;

c. The length of the defendant’s delay;

d. The reasons for the delay;

e. The complexity and value of the claim;

f. Prejudice to the party relying on the default; and

g. Only in extreme circumstances, should the court require a defendant noted in default to demonstrate an arguable defence on the merits.

[14] In balancing the required considerations in the context of this dispute, I find it is in the interests of justice to set aside the noting of default, as requested by the defendant.

[15] The crux of the plaintiff’s objection is his confident anticipation the defendant’s position has no merit. I acknowledge his reliance on the Statute of Frauds and the conflicting evidence as to whether the then plaintiff lawyer did or did not accept the payment of $50,000 in May 2017 in satisfaction of the debt. In my view, the merits of this position cannot be determined on this record.

[16] I recognize this is an almost five-year old action and that there are likely other common-sense methods for the parties to reckon the existence of and extent of the obligation.

[17] However, the plaintiff did not take any steps to enforce the proceedings until March 2021, almost three years after there was last documented communication by or between the parties. This may or may not be consistent with the defendant’s contention that he thought the action was settled. Apart from how this may inform an analysis as to whether the loan was satisfied in law, the delay in prosecuting the action following payment of the sum of $50,000 in May 2017 requires the noting of default in March 2021 to be set aside as a matter of fairness.

[18] I did not hear the plaintiff to raise any issue of prejudice during argument. Any prejudice to this point is belied by his own delay in seeking to prosecute the 2017 claim before he issued a renewed Notice of Sale in 2021 and then noted the defendant in default, some two and half to three years after any communication between the parties and after the defendant paid a significant amount on partial or full satisfaction of the mortgage. The defendant promptly moved to set aside the noting in default.

[19] The defendant proposed the court consider orders directing the streamlining of this action to abrogate steps such as examinations for discovery or mediation. The plaintiff opposed such measures in light of the issues that may need to be reviewed on the merits of the defence(s). In any event, even if I were persuaded I had jurisdiction to waive compliance with these steps, in my view, the history of this action underscores the importance of the parties’ adherence to the Rules so that this action can now proceed in an orderly and accountable fashion.

Disposition

[20] The defendant’s motion is therefore granted as follows:

a. The Notice of Default in this action is hereby set aside.

b. The Defendant shall deliver his Statement of Defence within 20 days of the date of the release of this decision.

[21] The parties are encouraged to resolve costs. If costs are unresolved, the defendant shall deliver his submissions within 14 days of the release of this decision and the plaintiff shall deliver his submissions within 7 days thereafter. No reply without leave. Submissions are limited to two pages excluding a costs outline and any formal offers to settle.

Justice K. Tranquilli Date: February 15, 2022