COURT FILE NO.: CV-20-4572
DATE: 2022 01 21
ONTARIO
SUPERIOR COURT OF JUSTICE
SUMMARY CONVICTION APPEAL COURT
B E T W E E N:
BVD PETROLEUM INC.
P. Baxi, for the Plaintiff
Plaintiff
- and -
CANADIAN BASE TRANSPORT LTD.
MANINDER SINGH JAWANDA
D. Palmer, L. Dyer for the Defendants
Defendants
HEARD: January 14, 2022
REASONS FOR JUDGMENT
Dennison J.
Introduction
[1] This is a motion to set aside a default judgment that was granted on January 20, 2021 for $37,308.34, plus costs of $1,579.65 at an interest rate of 2.0% per year. The Defendants also seek an order lifting any writs of execution that BVD may have registered against either of the Defendants.
Background Facts
[2] The Plaintiff issued a Statement of Claim against the Defendants on December 8, 2020 for failure to pay approximately $32,233.35 USD in outstanding invoices. The Plaintiff, BVD, and the Defendant, Canada Base Transport Ltd. entered into a contract where BVD provided fuel to the Defendants. The agreement between BVD and Canadian Base Transport Ltd. was guaranteed by Maninder Singh Jawanda. The Statement of Claim states that the Defendants failed to pay several invoices between October 2019 and May 2020.
[3] The Plaintiffs served the Statement of Claim on the Defendant, Canadian Base Transport Ltd. on December 8, 2021, and the Defendant, Maninder Singh Jawanda was served on December 11, 2021.
[4] Pursuant to the Rules of Civil Procedure, the Statement of Defence was to be filed 20 days after the Statement of Claim was served on the parties.
[5] On January 19, 2021, the Defendants prepared a document that was filed in the Small Claims Court (Form 9a). Only two pages of Form 9a were attached to the motion material. In that material, the Defendants did not dispute that some money is owing but they state that the Plaintiff did not deduct all the discounts the Defendants were entitled to pursuant to the contract. The Defendants also stated that when COVID-19 hit, the Defendants they ran into financial difficulties. The Defendants also claimed the Plaintiffs withdrew $4,000 without their consent. In the Small Claims form, the Defendants requested the Plaintiffs provide a detailed explanation for each invoice and the discount adjustments because that information was not provided from July 16, 2019 onward.
[6] The Defendants were advised they had filed their Statement of Defence in the wrong court. They tried to file their Statement of Defence in the Superior Court of Justice. On February 12, 2021, the Defendants were notified that their Defence could not be accepted because the Defendants had already been noted in default and Judgment had been issued against them on January 19, 2021. The Plaintiff has also commenced reciprocal enforcement in British Columbia.
[7] The Defendants retained Counsel on March 8, 2021 to set aside the default judgment. Counsel for the Defendants reached out to counsel for the Plaintiff on March 11, 2021. Counsel for the Plaintiff asked for a copy of the Statement of Defence. It was not provided.
[8] The Plaintiff takes the position they provided a summary of the discount/rebate pages which summarized the rebates provided by BVD to the Defendants on March 26, 2021.
[9] The Defendants responded that they had this discount sheet but what they required was the discount adjustment for each day.
[10] On April 6, 2021, counsel for the Plaintiff advised that BVD did not perform daily calculations and the Defendants had the daily price sheets and transaction history if they wanted to make their own calculations.
[11] In early May, the parties exchanged what they both stated were the proper calculations and deductions. On May 5, 2021, the Plaintiff advised the Defendants’ counsel to serve the motion material to set aside the default judgment as soon as possible because the Plaintiff did not accept the Defendants’ calculations. On May 17, 2021, counsel for the Defendants proposed a motion date of July 13, 2021.
[12] The Defendants do not dispute they owe the Plaintiff some of the money claimed. The dispute between the parties is about whether the Defendants should have been given additional discounts of approximately $9,000.
[13] A motion to set aside the default judgment was scheduled for July 13, 2021. On July 5, 2021, the Defendants advised the Plaintiff that the motion could not proceed because the Defendants could not obtain the necessary documents from the Plaintiff, showing the allocated daily discounts for the fuel. The Plaintiff submits this was information within the Defendants’ own knowledge
[14] The motion was adjourned to September 14, 2021. The motion did not proceed on that date because counsel did not receive the required documents from the Defendants. The Defendants claim that the officer administrator who worked for them “sporadically left the employment.” There was a time when the Defendants had no officer administrator. In the fall of 2021, the Defendants filled the office administrator position and provided their counsel with the updated documents showing the applicable discounts the Defendants state should have been deducted from the amounts owed.
[15] Counsel for the Defendants then scheduled the earliest date to hear the motion to set aside the default judgment, which was January 14, 2022. The Defendants did not provide a copy of their proposed defence until serving the Motion Record.
Position of the Parties
The Defendants’ Position
[16] The Defendants submit they had every intention of defending the action and simply filed their defence in the wrong court. Once they discovered their error, they promptly tried to file the defence in the proper court and learned that a default judgment had already been granted.
[17] The Defendants took steps to bring the motion to set aside the default judgment as promptly as they could, but they ran into some difficulties obtaining the necessary documents to defend the matter because the Plaintiff would not provide the daily discounts sheets and the Defendants’ administrative assistant quit.
[18] The Defendants submit there is merit to the claim that the Plaintiffs did not apply the proper discounts when determining the amounts owed.
[19] It is the position of the Defendants that they will suffer significant prejudice if the default judgment is not set aside. The amount in dispute is approximately $9,000. In addition, the Defendants are subject to an annual interest rate of 24 per cent on the amounts owed pursuant to the terms of the agreement.
[20] The Defendants submit it would bring the administration of justice into disrepute if the Defendants were not provided with the opportunity to properly put their defence forward.
The Plaintiff’s Position
[21] The Plaintiffs submit that the affidavit filed by the Defendant’s law clerk does not provide sufficient reasons for why it took the Defendants so long to have the motion to set aside the default judgment heard.
[22] The affidavit says the Statement of Defence was filed in the Small Claims court and that the Defendants learned of the default judgment in February. There is no evidence that the Form 9a was ever filed with the Small Claims Court. Even accepting that the Form was filed, it took the Defendants a further three weeks to retain counsel after learning there was a default judgment.
[23] The July motion date did not proceed because the Defendants were not ready to proceed. There is no evidence of what, if any steps, the Defendants took between February to July to obtain the documents. There are insufficient reasons provided for why it took until the fall to obtain the documents the Defendants state they required for the motion.
[24] It is the position of the Plaintiff that there is insufficient evidence to establish that the Defendants have an arguable defence on the merits. All the court can glean from the allegations is the Defendants state they are entitled to a greater discount than the Plaintiff provided. There is no explanation as to how these numbers were calculated. There is no proposed Statement of Defence to explain the Defence.
[25] The Plaintiff submits they will suffer significant prejudice if the default judgment is set aside. The Plaintiff has had to wait for more than a year to receive their money. The Defendants have not mitigated the Plaintiff’s damages by paying the undisputed amounts. The Plaintiff has also incurred costs of enforcement in other provinces.
[26] The Plaintiff submits that setting aside the default judgment would adversely impact the administration of justice. The Defendants have dragged their feet in moving to set aside the default judgment and this should not be rewarded.
Analysis
[27] Rule 19.08 of the Rules of Civil Procedure, R.R.O., 1990, Reg 19, provides the motion judge with discretion to determining whether to set aside a default judgment.
[28] Both parties agree that the test to be applied is as set out by the Court of Appeal in Mountain View Farms Ltd. v. McQueen 119 O.R. (3d) 561, [2014] O.J. No. 1197, 2014 ONCA 194, 372 D.L.R. (4th) 526, at paras. 48-50. The court’s ultimate task is to determine whether the interests of justice favour granting the order. In doing so, the court should consider by the following factors:
a. Whether the motion was brought promptly after the defendant learned of the default judgment;
b. Whether there was a plausible excuse of explanation for the default in complying with the Rules;
c. Whether the facts establish that the defendant has an arguable defence on the merits in that there is an air of reality to it;
d. The potential prejudice to the defendant should the motion be dismissed;
e. The potential prejudice to the plaintiff should the motion be allowed; and
f. The effect of any order the court might make on the overall integrity of the administration of justice.
[29] The list of factors are not rigid rules. The court has to decide whether, in the particular circumstances of the case, it is just to relieve a defendant from the consequences of default.
[30] The first issue to consider is whether the Defendants brought the motion to set aside the default judgment promptly after they learned the default judgment had been granted. I am satisfied that the time spent from February 2021 to May 2021 should not be viewed as time counting against the promptness of the Defendants bringing the motion. The Defendants learned they had filed their Statement of Defence in the wrong court and by February 12, 2021 learned that the default judgment had been granted. The Defendants retained counsel within a couple of weeks. Counsel for the Defendants and the Plaintiff had discussions to try and resolve the dispute from March until May 5, 2021, at which time the Plaintiff’s counsel advised the Defendants to bring a motion to set aside the default judgment.
[31] I find that from May, 3, 2021 to the “Fall of 2021” the Defendants did not act as promptly as they should have in bringing the motion to have the default judgment set aside. The first motion date was set for July 13, 2021. The motion date had to be adjourned because the Defendants did not have the necessary documents to demonstrate there was an air of reality to their defence regarding the daily discounts. I find this odd given that between March and May, 2021 the parties were trying to resolve the dispute about what were the proper discounts the, so every effort should have been made to obtain that information. It was the key piece of information for the Defence.
[32] The motion was adjourned from July to September 2021. The motion still did not proceed. The Defendants state it is because their office administrator quit, and it took time for find a replacement. Again, I do not understand why it took so much time to obtain documents that are crucial to the defence. The Defendants should have made a more concerted effort to obtain these documents. The affidavit is vague as to when the Defendants’ counsel received the proper information as it only states in the Fall of 2021. The Defendants should have been ready to proceed with the Motion in July, 2021. They were not in a position to address the motion until the Fall 2021, some three to four months later.
[33] The Defendants’ excuse that they filed the Statement of Defence in the wrong court is plausible. At the time, the Defendants were unrepresented. The amounts owing were within the Small Claims Appeal Court’s jurisdiction. I recognise the Defendants did not file any documents from the Small Claims court advising them that they filed in the wrong court, but there is no evidence to contradict their assertion and they filed two pages of the Form 9a and therefore I find the explanation plausible.
[34] When the Defendants learned they had filed in the wrong court they promptly took steps to correct this. They tried to file a Statement of Defence in the Superior Court but learned the Plaintiff had obtained a default judgment against them on January 19, 2021, approximately two weeks after the Statement of Defence was due.
[35] With respect to the merits of the defence, I agree that the evidence filed on the motion makes it difficult to assess the merits of the defence. While deficient, the Defence filed at the Small Claims court and the chart is sufficient to put the defence “in play:” See Peterbilt of Ontario v. 156527 Ontario Ltd., 2007 ONCA 333 at para. 4. The Statement of Defence filed with the Small Claims Court sets out that the Plaintiff did not deduct the proper amounts for rebates. The Chart included in the motion material contains a chart and sets out what the difference the Defendants allege for each invoice. Admittedly, there is no evidence as to how the difference was arrived at but there is some evidence to suggest that the deductions applied to the invoices are not accurate.
[36] I accept that the Defendants will suffer prejudice if the default judgment is not set aside. They will be forced to pay $9,000 they claim they do not owe as well as interest on the amount owed at a rate of 24 per cent annually based on the contract.
[37] The Plaintiff will also suffer some financial consequences if the default judgment is set aside. The Plaintiff has not been paid any portion of the money owed, and a year has now passed. The Plaintiff has also spent funds pursuing enforcement in Ontario and in British Columbia.
[38] This was a close call; however, I find that the overall effect of the administration of justice would be enhanced if the Defendants were allowed to defend this action. While I find the Defendants should have acted more prudently in obtaining the necessary documents to bring the motion to set the default judgment aside sooner, this is outweighed by the fact that the Defendants demonstrated an intent to defend the action from the beginning when they were unrepresented. The Defendants moved promptly to correct the filing of their defence only to learn that default judgment had already been granted. I find the Defendants would suffer greater prejudice than the Plaintiff because the Defendants would be denied the right to have their defence heard on its merits.
Conclusion
[39] The motion to set the default judgment aside is granted.
[40] I am not prepared, however, to order that any writs of execution that BVD may have already registered against either of the Defendants be set aside at this time. It is not disputed that the Plaintiff is owed at least some of the money and that the Plaintiff has taken some steps to enforce the judgment. I do not know exactly what those steps are or what costs were incurred to obtain them. In the circumstances, any writs issued may remain in effect subject to a further court order. The Plaintiff may not however move forward with any enforcement or collection without further order of the court.
[41] The Defendants submitted that if they were the successful party on the motion, they would not seek costs. The Plaintiff submitted if they were the successful party, they would seek costs in the amount of $4,000. I am satisfied that although the Defendants were the successful party on the motion, given that it was there conduct that required the default judgment to be set aside that it is just and reasonable that no costs should be awarded in this motion.
Dennison J.
Released: January 21, 2022
COURT FILE NO.: CV-20-4572
DATE: 2022 01 21
ONTARIO
SUPERIOR COURT OF JUSTICE
SUMMARY CONVICTION APPEAL COURT
B E T W E E N:
BVD PETROLEUM INC.
Plaintiff
- and -
CANADIAN BASE TRANSPORT LTD.
MANINDER SINGH JAWANDA
Defendants
REASONS FOR JUDGMENT
Dennison J.
Released: January 21, 2022