COURT FILE NO.: CV-17-74669
DATE: 2022/05/18
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Singhko Inc. and Gurprit (Gary) Singh, Plaintiffs
AND
Armenia Flooring Inc., Nikolaos Sioris, Carly Teckles, Maria Sioris and Peter Sioris, Defendants
BEFORE: Madam Justice Robyn M. Ryan Bell
COUNSEL: Christopher E. Clermont, for the Plaintiffs (Responding Parties)
James Barnes, for the Defendants Maria Sioris and Peter Sioris (Moving Parties)
HEARD: May 13, 2022
ENDORSEMENT
Overview
[1] This is a motion by the defendants Maria and Peter Sioris[^1] to set aside a default judgment.
[2] The court’s ultimate task on a motion to set aside a default judgment is to determine whether the interests of justice favour granting the order.[^2] In approaching this determination, the court must consider the following factors:
(i) whether the motion was brought promptly after the defendant learned of the default judgment;
(ii) whether there is a plausible excuse or explanation for the defendant’s default in complying with the Rules of Civil Procedure[^3];
(iii) whether the facts establish that the defendant has an arguable defence on the merits;
(iv) the potential prejudice to the moving party should the motion be dismissed, and the potential prejudice to the responding party should the motion be allowed; and
(v) the effect of any order the court might make on the overall integrity of the administration of justice.[^4]
[3] These factors are not to be treated as rigid rules; the court must consider the particular circumstances of the case to decide whether it is just for the defendant to be relieved from the consequences of their default.[^5] In this case, having regard to these factors and the particular circumstances, I have determined that Maria and Peter should be relieved from the consequences of their default. The default judgment will be set aside.
Background
[4] The plaintiffs commenced this action against the defendants on November 21, 2017. The plaintiffs obtained default judgment against Maria and Peter (in the amount of $48,569.73), and their son, Nikolaos Sioris (in the amount of $50,984.44), on April 27, 2018.
[5] On June 12, 2018, the plaintiffs obtained a writ of seizure and sale against Maria and Peter and a separate writ of seizure and sale against Nikolaos. Nikolaos filed an assignment in bankruptcy on January 24, 2019.
[6] Maria and Peter are, respectively, 83 and 86 years old. Their evidence is that they first learned of the writ of seizure and sale against them in September 2021 when they were attempting to refinance their home. Their real estate lawyer sent them a copy of the writ. It is Maria’s evidence that they “immediately attempted to retain counsel, however, due to COVID-19 pandemic, the lawyer was unable to meet with us. We finally retained counsel in or around February 2022.”
[7] On February 25, 2022, Maria and Peter’s lawyer provided them with affidavits of service of the statement of claim. Maria and Peter deny that they were ever served with the statement of claim and state that they were unaware of the claim against them. Their evidence is that they brought this to the attention of counsel as soon as they were able to retain counsel.
[8] Peter’s evidence is that if he and Maria are unable to refinance by June 1, 2022, they will be in default of their mortgage and could be subject to mortgage enforcement proceedings.
Analysis
[9] Rule 19.08(1) provides that a judgment against a defendant who has been noted in default under r. 19.04 may be set aside or varied by the court on such terms as are just.
[10] Maria and Peter first learned of the writ of seizure and sale in September 2021. They “immediately attempted” to retain counsel; however, that process appears to have been frustrated due to the pandemic. I note both Maria and Peter are in their 80s. They retained counsel in February 2022, and this motion was initiated in early May.
[11] The plaintiffs submit there is an inconsistency in the fact that Maria and Peter were able to retain a real estate lawyer in the fall of 2021 but were unable to meet with a litigation lawyer until February 2022. While the evidence before me can best be described as limited, some evidence has been provided to explain the delay. In the particular circumstances of this case, which include the COVID-19 pandemic, I find that Maria and Peter moved reasonably promptly after they learned of the default judgment.
[12] The default has been explained by Maria and Peter: they deny they were served with the statement of claim and state that they were unaware of the claim against them. Relying on the decision in Jarbeau v. Delorme,[^6] the plaintiffs submit that once they produced prima facie evidence of service, the onus shifted to Maria and Peter to provide evidence to support their assertion that service was not made. The plaintiffs submit that Maria and Peter’s failure to respond to the statement of claim is consistent with a “let’s ride it out” strategy.
[13] The facts in Jarbeau were very different than those before me. In Jarbeau, cross-examinations of the process server and the defendant were conducted. The defendant claimed that the statement of claim was served on his friend who was house sitting for him while he was visiting family in Nova Scotia. On cross-examination, the defendant was unable to provide the exact dates of his trip to Nova Scotia and failed to provide proof of his trip after promising to do so. In this case, I have an affidavit from the process server’s employer – by whom the process server is still employed – but not the process server himself. No cross-examinations were conducted. In these circumstances, I am left with a plausible explanation for Maria and Peter’s default.
[14] I am satisfied that Maria and Peter have put forward an arguable defence to the action on the merits. The plaintiffs claim that Maria and Peter are indebted to them because of a dishonoured cheque. The cheque purports to have been signed by Peter. Upon being provided with a copy of the cheque in the context of this motion, Peter provided a supplementary affidavit in which he denies that the signature on the cheque is his. Maria and Peter’s evidence is that they had no dealings of a commercial nature with the plaintiffs. I also note Mr. Singh’s evidence that he cannot remember whether Peter was with Nikolaos when Nikolaos delivered the cheque to Mr. Singh.
[15] I need not engage in a comparison of the signature on the cheque and Peter’s signatures on other documents. I am satisfied that the facts establish that Maria and Peter have an arguable defence on the merits. This is a low threshold.
[16] On a motion to set aside a default judgment, the motion judge must ultimately determine whether the interests of justice favour an order setting aside the default judgment, having regard to the potential prejudice to the moving parties should the motion be dismissed, the potential prejudice to the responding parties should the motion be allowed, and the effect of any order on the overall integrity of the administration of justice.[^7] In this case, there is evidence that if Maria and Peter are unable to refinance their home by June 1, 2022 (due to the writ of seizure and sale), they may be subject to mortgage enforcement proceedings. At the same time, if they are not permitted to defend the action on its merits, they will be facing a judgment of close to $50,000.
[17] There will be no prejudice to the plaintiffs if the default judgment is set aside that cannot be compensated for by an order for costs thrown away. There is no suggestion that witnesses are unavailable or that documents have been destroyed. While the plaintiffs raise issues arising as a result of Nikolaos’ bankruptcy, Mr. Singh’s own evidence is that, after Nikolaos declared personal bankruptcy, Mr. Singh instructed his counsel not to take active steps to enforce the judgment and that he was satisfied to leave the writ in place “in the expectation that Maria and Peter would eventually refinance or sell the condominium unit.” In other words, he was content to bide his time. The plaintiffs waited for more than four years.
[18] In Zeifman Partners Inc., at para. 47, the Court of Appeal emphasized that the preference in our system of civil justice is for a determination of disputes on their merits:
One of the overarching principles in the Rules of Civil Procedure...is reflected in r. 1.04(1) which provides that the objective of our civil process is to ensure “the just, most expeditious and least expensive determination of every civil proceeding on its merits”...Determining the result of civil proceedings on technical failings is, and must remain, the exception to the general principle reflected in r. 1.04(1). [emphasis in original]
[19] In my view, given all the circumstances of this case, it would be unjust to prevent Maria and Peter from defending the action.
Conclusion
[20] For these reasons, the default judgment and the noting in default as against Maria and Peter are set aside. The writ of seizure and sale against Maria and Peter is vacated. Maria and Peter shall file a statement of defence within 20 days, and they shall serve their affidavits of documents within 30 days thereafter.
[21] The plaintiffs are entitled to their costs thrown away which I fix in the amount of $1,500. Maria and Peter were successful on the motion, but they are getting an indulgence. Accordingly, there will be no order as to costs of the motion.
Madam Justice Robyn M. Ryan Bell
Date: May 18, 2022
COURT FILE NO.: CV-17-74669
DATE: 2022/05/18
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Singhko Inc. and Gurprit (Gary) Singh, Plaintiffs
AND
Armenia Flooring Inc., Nikolaos Sioris, Carly Teckles, Maria Sioris and Peter Sioris, Defendants
COUNSEL: Christopher E. Clermont, for the Plaintiffs (Responding Parties)
James Barnes, for the Defendants Maria Sioris and Peter Sioris (Moving Parties)
ENDORSEMENT
Justice Ryan Bell
Released: May 18, 2022
[^1]: For clarity, I have referred to the defendants by their first names only. [^2]: Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, 119 O.R. (3d) 561, at para. 47. [^3]: R.R.O. 1990, Reg. 194. [^4]: Mountain View Farms, at paras. 48-49; Zeifman Partners Inc. v. Aiello, 2020 ONCA 33, at para. 21. [^5]: Zeifman Partners Inc., at para. 46. [^6]: 2010 ONSC 1174, at para. 33. [^7]: Peterbilt of Ontario v. 1565627 Ontario Ltd. (2007), 2007 ONCA 333, 87 O.R. (3d) 479 (C.A.), at para. 2.