Oz Merchandising Inc. v. Greenspoon, 2023 ONSC 5771

Court File and Parties

COURT FILE NO.: CV-04-26293 DATE: 20231012 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: OZ MERCHANDISING INC, Plaintiff AND: IRA GREENSPOON, EASTERN ONTARIO DISTRICT SOCCER ASSOCIATION, THE ONTARIO SOCCER ASSOCIATION, CANADIAN SOCCER ASSOCIATION and CARY KAPLAN, Defendants

BEFORE: Justice A. Kaufman

COUNSEL: Colin C.G. Pye, Counsel for the Plaintiff Paul Ingrassia, Counsel, for the Defendant, Ira Greenspoon

HEARD: October 12, 2023

Endorsement

1The defendant, Ira Greenspoon, (“Mr. Greenspoon”) moves to set aside the noting in default requisitioned on April 15, 2019. This action was initiated by way of Notice of Action issued on January 2, 2004. Mr. Greenspoon was added as a party defendant on consent by order of Master P.E. Roger (as he then was) on December 13, 2012.

2Mr. Greenspoon delivered a defence and participated in discoveries. Through counsel, he participated in numerous motions.

3On December 15, 2016, Maranger J. heard a motion brought by the plaintiff to strike the defendants' defences. Justice Maranger granted the defendants "one last opportunity" to comply with their obligations under the Rules and previous court orders. He ordered Mr. Greenspoon to appoint new counsel (after his former counsel were removed from the record), to pay an outstanding costs award, and answer outstanding undertakings.

4On February 3, 2016, Beaudoin J. struck Mr. Greenspoon's Statement of Defence for failure to comply with Maranger J.'s order of December 2016.

5The trial of this action took place before Justice Ryan-Bell between April and June 2019. The plaintiff's action against EODSA, OSA, and CSA was dismissed entirely, but Ryan-Bell J. indicated that the claims against the remaining defendants, including Mr. Greenspoon, would be addressed subsequently.

6The plaintiff’s appeal of Justice Ryan Bell’s order was ultimately dismissed.

Applicable principles

7Rule 19.03(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides the Court with the discretion to set aside a noting in default on terms that are deemed just. Both parties concur that the criteria for setting aside a noting in default are articulated in the case of Intact Insurance Co. v. Kisel, 2007 ONCA 444, 225 O.A.C. 36 (ONCA). The relief is discretionary, and the Court must consider the context and the factual situation of the case. Particularly, the Court should account for the conduct of the parties, the duration of Mr. Greenspoon's delay, the reasons for the delay, as well as the complexity and value of the claim. These factors are not to be construed as inflexible rules: Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194.

Analysis

8Mr. Greenspoon waited six years from the moment he became aware of Justice Beaudoin's order to initiate this motion. While this delay is substantial, it is vital to contextualize it within the broader complexity of this case. As highlighted by Hackland J. in an endorsement dated March 27, 2018, this case stands as one of the longest-running proceedings in this jurisdiction. The case has been fraught with numerous motions, pleading amendments, appeals, changes in legal representation, substitutions of parties, and costs awards. Hackland J. attributed blame for these delays to both the plaintiff and the defendants. Given this extensive context, the delay is considered a neutral factor in the Court's analysis.

9Mr. Greenspoon presents several reasons for his delay. He argues that he genuinely, albeit mistakenly, believed that the trial's outcome would also resolve the claims against him. He also claims that the civil justice system was halted during the COVID-19 pandemic. However, the Court deems these justifications as relatively weak, particularly in light of Mr. Greenspoon's professional legal background, which should have enabled him to recognize his errors by reviewing Justice Ryan-Bell's reasons for judgment and seeking further clarification.

10Additionally, Mr. Greenspoon contends that he refrained from bringing a pre-trial motion to reinstate his pleadings based on a verbal representation by the plaintiff's principal, Mr. Sezerman, assuring him that no relief would be sought against him as set out in the claim. While Mr. Sezerman responds that Mr. Greenspoon does not offer specific details of these verbal representations, he also does not explicitly deny their existence. Given these circumstances, the Court accepts that this justification provides a reasonable explanation for a significant portion of the delay.

11The conduct of the parties does not significantly tip the balance in either direction in this specific case. Prior endorsements and judgments by the court in this matter have cited blameworthy behaviour by both the plaintiff and the defendants.

12Finally, I assess that the defendant would suffer significant prejudice if his motion was denied as compared to the plaintiff. The plaintiff alleges that Mr. Greenspoon was a director for the defendants CSL and CPSL. According to the plaintiff, the corporate defendants ceased CPSL's operations, transferring their business to CSL and CSLA with the aim of making these corporations "judgment proof" in the event of an unfavorable outcome in this action. The plaintiff further alleges that Mr. Greenspoon managed these corporations in a manner deemed oppressive and unfairly prejudicial to the plaintiff's interests.

13Mr. Greenspoon asserts that his involvement was strictly as a solicitor assisting in the incorporation of CPSL and CSL. While he concedes his directorship, he maintains that it was in name only, with no actual governing or decision-making role or interest in the corporation. He also clarifies that he was listed as a director of CPSL Inc. as a placeholder director in anticipation of an initial board of directors meeting to elect a new slate of directors, a common practice in incorporating new companies. Mr. Greenspoon testified at his examination about his lack of involvement in the management of league affairs.

14If Mr. Greenspoon’s motion were denied, the plaintiff could move for judgment with the factual claims in the statement of claim considered admitted. While it remains true that the plaintiff would still need to substantiate its damages, Mr. Greenspoon would be exposed to substantial claims for monetary, punitive, and exemplary damages. Considering Mr. Greenspoon’s position that he was a “placeholder” director without any involvement in the corporation’s affairs, such an outcome would be unjust. Although Mr. Greenspoon was copied on two emails pertaining to league affairs, this evidence fails to demonstrate his involvement in the allegations against him.

Disposition

15Having regard to the applicable factors, and considering the Court’s preference for resolving disputes on their merits, Mr. Greenspoon's motion is granted. The Court sets aside his default noting and reinstates his Statement of Defence.

Costs

16Pursuant to Rule 57.01(6), in the absence of mutual agreement on costs for a particular step in the proceedings, each party intending to seek costs for that step must furnish the other party with a costs outline (Form 57B) and present it at the hearing. Given that neither party has provided such cost outlines, the Court makes no order as to costs.